asian-income.co.uk
abrdn Asian
Income Fund Limited
(
formerly Aberdeen Asian Income Fund Limited
)
Targeting the income and growth potential of Asia’s
most compelling and sustainable companies
Annual Report 31 December 2021
The Company invests in DBS Group, the
leading Singapore bank and digital online
banking solution provider
abrdn Asian Income Fund Limited 1
“I am pleased to report that your Company
delivered an excellent performance for the 12
months to 31 December 2021, consolidating the
strong performance in the previous year. On a total
return basis the net asset value per share (NAV)
rose by 11.0%, surpassing the MSCI All Countries
Asia Pacific ex Japan High Dividend Yield Index’s
return of 8.1% as well as the MSCI All Countries Asia
Pacific ex Japan Index’s decline of 1.8%.”
Ian Cadby, Chairman
“Our focus on quality companies with potential to
generate both capital and dividend growth has
enabled the Company to outperform both market
indices while delivering an above-benchmark
dividend yield of 4.1%.”
Yoojeong Oh,
Investment Director
2 abrdn Asian Income Fund Limited
Dividend per Ordinary share – 2021
Earnings per Ordinary share – basic
(revenue) – 2021
9.50
p
8.95
p
2020 9.30p 2020 7.41p
Net asset value total return
AB
– 2021 Ordinary share price total return
AB
– 2021
+11.0% +5.2%
2020 +12.9% 2020 +12.1%
MSCI AC Asia Pacific ex Japan High
Dividend Yield Index total return (currency
adjusted)
B
– 2021
MSCI AC Asia Pacific ex Japan Index total
return (currency adjusted)
B
– 2021
+8.1% –1.8%
2020
–1.4%
2020
+19.0%
Dividend yield – 2021
ACD
Discount to net asset value per Ordinary
share – 2021
AC
4.1% 12.1%
2020
C
4.1% 2020
AC
6.9%
Ongoing charges
AE
– 2021 Net gearing
AC
– 2021
1.01% 9.6%
2020 1.10% 2020 6.9%
A
Alternative Performance Measure (see pages 118 to 120).
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 April 2021 to increase the scope of reporting the look-through costs of holdings in investment companies.
Performance Hi
g
hli
g
hts
abrdn Asian Income Fund Limited 3
Net asset value total return
A
Dividends per Ordinary share
To 31 December – percentage To 31 December – pence
16.0
-5.5
10.5
12.9
11.0
2017
2018
2019
2020
2021
9.00
9.15
9.25
9.30
9.50
2017
2018
2019
2020
2021
MSCI AC Asia Pacific ex Japan High
Dividend Yield Index total return (currency
adjusted)
MSCI Asia Pacific Ex Japan
Index total return (currency adjusted)
To 31 December – percentage To 31 December – percentage
15.4
-3.5
10.6
-1.4
8.1
2017
2018
2019
2020
2021
25.4
-8.3
14.9
19.0
-1.8
2017
2018
2019
2020
2021
Ordinary share price total return
A
Net Assets
To 31 December – percentage
£450.8m
Market Capitalisation
£396.3m
Capital Structure
Ordinary shares of no par value in issue
171,558,896
17.4
-6.2
14.2
12.1
5.2
2017
2018
2019
2020
2021
A
Alternative Performance Measure (see page 120)
4 abrdn Asian Income Fund Limited
“The Board is very aware of the importance of
dividends to shareholders and is pleased to
confirm that the Company intends to target a
total dividend of at least 9.75p per Ordinary
share for the years ending 31 December 2022
and 2023.”
Ian Cadby, Chairman
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR
IMMEDIATE ATTENTION
. If you are in any doubt about the
action you should take, you are recommended to seek
your own independent financial advice from your
stockbroker, bank manager, solicitor, accountant or other
independent financial adviser authorised under the
Financial Services and Markets Act 2000 if you are in the
United Kingdom or, if not, from another appropriately
authorised financial adviser. If you have sold or otherwise
transferred all your Ordinary shares in abrdn Asian
Income Fund Limited, please forward this document,
together with the accompanying documents immediately
to the purchaser or transferee, or to the stockbroker, bank
or agent through whom the sale or transfer was effected
for transmission to the purchaser or transferee.
Summary of Results 5
Strategic Report
Chairman’s Statement 8
Investment Manager’s Review 14
Overview of Strategy 21
Results 29
Performance 30
Portfolio
Ten Largest Investments 34
List of Investments 35
Currency/Market Performance 38
Geographical/Sector Analysis 39
Investment Case Studies 40
abrdn's ESG Engagement and Case Studies 42
Governance
Board of Directors 52
Directors’ Report 54
Audit Committee’s Report 62
Directors’ Remuneration Report 64
Statement of Directors’ Responsibilities 67
Independent Auditor’s Report to the Members of abrdn
Asian Income Fund Limited 68
Financial Statements
Statement of Comprehensive Income 76
Balance Sheet 77
Statement of Changes in Equity 78
Cash Flow Statement 79
Notes to the Financial Statements 80
Securities Financing Transactions Disclosure
(Unaudited) 104
Corporate Information
Information about the Investment Manager 108
The Investment Manager’s Investment Process 109
Investor Information 111
Glossary of Terms 114
Your Company’s Share Capital History 116
AIFMD Disclosures (Unaudited) 117
Alternative Performance Measures 118
General
Notice of Annual General Meeting 122
Corporate Information 125
Contents
abrdn Asian Income Fund Limited 5
Financial Highlights
31 December 2021 31 December 2020 % change
Net asset value total return
A
+11.0% +12.9%
Share price (Ordinary) total return
A
+5.2% +12.1%
MSCI AC Asia Pacific ex Japan High Dividend Yield Index total return
(currency adjusted)
+8.1% –1.4%
MSCI AC Asia Pacific ex Japan Index total return (currency adjusted) –1.8% +19.0%
Market capitalisation £396,301,000 £401,759,000
Discount to net asset value per Ordinary share
A
12.1% 6.9%
Ongoing charges ratio
A
1.01% 1.10%
Dividend and earnings
Total return per Ordinary share
B
25.88p 27.10p –4.5
Earnings per Ordinary share – basic (revenue)
B
8.95p 7.41p +20.8
Dividends per Ordinary share
C
9.50p 9.30p +2.2
Dividend cover per Ordinary share
A
0.94 0.80 +18.2
Revenue reserves
D
£6,858,000 £7,748,000
Dividend yield
A
4.1% 4.1%
A
Considered to be an Alternative Performance Measure as defined on pages 118 to 120.
B
Measures the relevant earnings for the year divided by the weighted average number of Ordinary shares in issue (see note 9 on page 87).
C
The figure for dividends reflects the years in which they were earned (see note 8 on page 86).
D
The revenue reserves figure takes account of the fourth interim dividend amounting to £4,712,000 (2020 – fourth interim amounting to £4,484,000).
Capital Performance to 31 December 2021
31 December 2021 31 December 2020 % change
Total assets (see definition on page 115) £497,543,000 £467,210,000 +6.5
Total equity shareholders’ funds (net assets) £450,790,000 £431,476,000 +4.5
Net asset value per Ordinary share 262.76p 245.40p +7.1
Share price per Ordinary share 231.00p 228.50p +1.1
Long Term Total Return Performance to 31 December 2021
1 year 3 year 5 year Since launch
B
% return % return % return % return
Net asset value
A
+11.0 +38.5 +51.8 +395.6
Share price (Ordinary)
A
+5.2 +34.7 +48.4 +337.2
MSCI AC Asia Pacific ex Japan High Dividend Yield Index (currency adjusted)
+8.1 +17.9 +31.3 +333.6
MSCI AC Asia Pacific ex Japan Index (currency adjusted)
–1.8 +34.3 +54.4 +331.3
A
Considered to be an Alternative Performance Measure (see page 120 for more details).
B
Launch date being 20 December 2005.
Summary of Results
6 abrdn Asian Income Fund Limited
Strategic
Report
The Company invests in AusNet Services, the Australian electricity
distribution and energy utility company
abrdn Asian Income Fund Limited 7
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 and sustainable companies
8 abrdn Asian Income Fund Limited
Ian Cadby
Chairman
25 March 2022
Dear Shareholders
This is the first Statement following my appointment as
Chairman on 1 January 2022. I should like to take this
opportunity to reiterate, on behalf of the Board, our
sincere thanks to Charles Clarke following his retirement
on 31 December 2021, for his enormous contribution to
the Company as a Director since 2012, as Senior
Independent Director and Audit Committee Chairman in
2017 and 2018 and as Chairman since 2018.
Background and Overview
For 2021, the second year of the coronavirus pandemic,
Asian equity markets experienced a fairly volatile market
environment. However, despite these choppy market
conditions, I am pleased to report that your Company
delivered an excellent performance for the 12 months to
31 December 2021, consolidating the strong performance
in the previous year. On a total return basis the net asset
value per share (NAV) rose by 11.0%, surpassing the MSCI
All Countries Asia Pacific ex Japan High Dividend Yield
Index’s return of 8.1% as well as the MSCI All Countries Asia
Pacific ex Japan Index’s decline of 1.8%. This robust result
attests to the portfolio’s composition, driven by the
Investment Manager’s prudent investment approach of
investing in quality companies with strong balance sheets.
As a fellow shareholder, it is pleasing to note the longer
term performance as well, with NAV per share increasing
38.5% over 3 years and 395.6% since inception in 2005.
The share price total return for the year was 5.2% which
was behind that of the NAV reflecting the widening out
of the discount at which the shares trade to 12.1% at
year end.
2021 was an eventful year for stock markets. Guarded
optimism prevailed for most of the first half amid vaccine
rollouts and a brightening economic outlook. The latter
half of the year saw a reversal of sentiment as the rapid
spread of more transmissible coronavirus strains, inflation
concerns and the prospect of monetary tightening by
major central banks put markets on tenterhooks. The
spectre of higher interest rates, in turn, drove a powerful
rotation from high-growth companies to value stocks.
Asian currencies have added yet another layer of volatility,
largely underperforming our base currency, sterling, over
the year as investors priced in growth risks from a hawkish
Federal Reserve, monetary policy normalisation,
inflationary headwinds and Omicron. A notable exception
was the Chinese renminbi which strengthened as
domestic monetary policy turned more benign in contrast
to the developed economies.
In this environment, market performance across Asia was
uneven. Taiwan and India emerged as the frontrunners,
while China was the standout laggard. China’s problems
are largely home-grown. Regulatory upheaval was and
remains, a major source of market stress. Liquidity
problems continue to plague heavily indebted property
developers, while economic activity is still disrupted by
clusters of Covid-19 cases and Beijing’s zero tolerance
stance. The travails of the past year have clearly
reinforced the need for deep fundamental company
research when investing in China.
At the corporate level, earnings rebounded as companies
recovered from losses in 2020 when the pandemic was at
its height. Many restarted payouts and issued special
dividends on robust results. There were several welcome
developments of note. Taiwan Semiconductor
Manufacturing Co raised dividends despite an increase in
capital spending. Samsung Electronics announced a
special dividend and an enhanced three-year
shareholder return programme. Australian miner Rio Tinto
declared its biggest ever interim dividend. Singapore
banks DBS Group, United Overseas Bank
and Oversea-
Chinese Banking Corp resumed their pre-pandemic
payouts after the central bank lifted restrictions.
“At the corporate level, earnings
rebounded as companies recovered
from losses in 2020 when the
pandemic was at its height. Many
restarted payouts and issued special
dividends on robust results.”
Chairman’s Statement
abrdn Asian Income Fund Limited 9
Overall, the case for income investing in Asia remains
strong. Dividends fell sharply relative to earnings during the
pandemic. However, looking forward, there is plenty of
room for significant increases over the next couple of
years, given low payout ratios and healthy free cashflow
generation. It is also worthwhile noting that the region’s
high-yielding universe offers immense value and a broad
opportunity set for investors. I should emphasise, however,
the importance of careful stock-picking. Your Company
has now delivered dividend increases for 13 consecutive
years, which the Board attributes to your Investment
Manager’s focus on high-yielding companies with
strong fundamentals.
Performance
The 11.0% NAV total return for the year ended 31
December 2021 compares favourably with the MSCI All
Countries Asia Pacific ex Japan High Dividend Yield Index’s
return of 8.1% and the MSCI All Countries Asia Pacific ex
Japan Index’s decline of 1.8%.
The share price at year end was 231.0p equating to a yield
of 4.1% and the share price total return for the year was
5.2% which was behind the NAV return. Despite regular
share buy backs over the year, the price return has been
impacted by the widening of the discount to NAV per
Ordinary Share to 12.1%. The Board, in conjunction with
the Manager, is actively continuing to promote the
Company to new and existing shareholders. Your
Company’s strong performance relative to the MSCI All
Countries Asia Pacific ex Japan Index was attributable to
both positive stock selection and asset allocation, which is
driven by where your Investment Manager finds quality
companies with attractive valuations. The increase in
gearing during the year to just below 10% further
enhanced the performance compared to the indices.
Of particular note, the portfolio’s light weighting in China
contributed handsomely, thanks to your Investment
Manager’s discernment in adjusting the holdings within
China and trimming the exposure over the year in view of
regulatory uncertainties. As highlighted in the half yearly
report, the portfolio has a modest weight to China, having
steered clear of the internet stocks that do not pay
dividends. Your Investment Manager is watching
developments closely and will remain selective over the
portfolio’s exposure. In your Investment Manager’s opinion,
the bulk of the big policy changes have been rolled out
and any further actions will likely be incremental. That said,
regulatory change will remain part of the landscape and
could continue to cause sharp lurches in investor
sentiment in the near term. Indeed subsequent to the
year end the holdings in China Mobile
and
CNOOC
were
sold entirely from the portfolio in compliance with the US
Executive Order14032.
Further contributing to performance was the choice of
companies in a broad swathe of countries, including
Australia, Taiwan and Singapore. In addition, your
Investment Manager capitalised on market swings to
divest select holdings and reinvest in companies with
better dividend and growth opportunities. Further insights
into your Company’s performance and portfolio changes
are contained in the Investment Manager’s Review.
“On the environmental, social and
governance (ESG) front, your
Investment Manager’s engagement
efforts with the portfolio’s
underlying companies yielded
some positive results.”
On the environmental, social and governance (ESG) front,
your Investment Manager’s engagement efforts with the
portfolio’s underlying companies yielded some positive
results. A key highlight was MSCI’s ESG rating upgrade for
AIA
from A to AA due largely to the pan-Asian life insurer’s
improved performance on human capital development.
Furthermore, Samsung Electronics announced a
reorganisation, which simplified the company’s structure,
streamlined the management hierarchy and placed
greater focus on a centralised sustainability committee.
This was heartening as your Investment Manager has had
a long-standing dialogue with the company on a range of
ESG issues. Continued constructive engagement with the
portfolio’s holdings is a vital part of your Investment
Manager’s efforts to reduce risks in the portfolio while
improving long-term gains.
10 abrdn Asian Income Fund Limited
Migration to UK tax residence and
Change of Name
In September 2021 shareholders approved proposals to,
amongst other things, migrate the Company’s tax
residency to the UK and to apply for UK investment trust
status. The Company earns investment income from a
diversified portfolio of investments with exposure to the
Asia Pacific region, much of which is subject to overseas
withholding taxes and this move to UK tax residency
should serve to mitigate the level of those taxes and allow
the Company to access lower rates in some jurisdictions
due to the existence of a number of double tax treaty
agreements between the UK and overseas jurisdictions.
Since the year end, and as a result of these changes, your
Company has also moved the provision of its custody
services onshore to the UK from Jersey and entered into a
new agreement with BNP Paribas Securities Services,
London Branch that will take effect in Q2 2022. The
Company remains a Jersey incorporated entity, subject to
Jersey law and regulation and the oversight of the Jersey
Financial Services Commission.
Shareholders also approved the change of the
Company’s name from 1 January 2022 to “abrdn Asian
Income Fund Limited’ in order to align the Company's
name with the name of the Manager's business, which has
changed to abrdn plc during 2021.
Dividends
Four quarterly dividends were declared over 2021. The
first three were paid at the rate of 2.25p with the fourth
interim at 2.75p for the year, representing a 2.2% increase
in total dividends from 9.3p to 9.5p for the year. This
increase maintains the trend that has been established
over each of the last 13 years and means that the
Company 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.
“Based upon the Ordinary Share price
of 231.0p the shares were yielding
4.1% at year end.”
Based upon the Ordinary Share price of 231.0p the shares
were yielding 4.1% at year end. The Board is very aware
of the importance of dividends to shareholders and is
pleased to confirm that the Company intends to target a
total dividend of at least 9.75p per Ordinary share for the
years ending 31 December 2022 and 2023.
“The Board is very aware of the
importance of dividends to
shareholders and is pleased to confirm
that the Company intends to target a
total dividend of at least 9.75p per
Ordinary share for the years ending
31 December 2022 and 2023.”
In 2021 the Board has again chosen to use some of the
Company’s accumulated revenue reserves, which have
been built up since the launch of the Company, with the
aim of smoothing the impact on dividend payments to
shareholders. In the year to 31 December 2021, about £0.9
million, or 0.5p per share, has been used (2020: £3.3m or
1.9p per share). The net revenue reserve at 31 December
2021, adjusting for the payment of the 4th interim dividend
that occurred after the year end, amounts to £6.9 million
(about 4.0p per Share) and any decision as to whether this
will be utilised in 2022 (and by how much) will be taken at
the time of each of the quarterly dividend declarations.
Having these revenue reserves as well as the ability to use
its capital reserves in support of dividend payments from
time to time provides an added level of comfort to your
Company’s ability to pay dividends and is a significant
benefit of the closed end investment company structure.
As we have cautioned in previous years, significant
movements in the value of sterling may also impact the
level of earnings from the portfolio as the Company earns
dividends in local Asian currencies and pays out its
dividend to shareholders in sterling. However, the Board is
very conscious of the ongoing demand for yield and will
continue to aim to reward shareholders when possible to
do so. We are proud to have maintained a progressive
policy despite the various economic, political and
currency fluctuation risks seen both in Asia and in the UK
since your Company’s inception.
Chairman’s Statement
Continued
abrdn Asian Income Fund Limited 11
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 has continued to buy back its shares into
treasury. During the year the Company bought back 4.3
million shares for treasury at a discount (2020: 1.8 million
shares). Subsequent to the year end we have continued
to buy back shares and a total of 763,391 further shares
have been acquired. These buybacks add 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, when the discount exceeds 5% of
the NAV (ex income) over the longer term. During the
year the level of discount at which the Ordinary shares
traded has widened from 6.9% to 12.1%. At the time of
writing the Ordinary Shares are trading at a discount of
13.2% to the prevailing NAV.
Gearing
On 3 March 2021, the Company announced that it had
renewed both its three-year £10 million term facility and
its £40 million revolving credit facility with Bank of Nova
Scotia, London Branch, on an unsecured basis, for three
years. £10 million has been drawn down under the term
facility and fixed for three years at an all-in rate of 1.53%.
Under the terms of the revolving credit facility, the
Company also has the option to increase the level of the
commitment from £40 million to £60 million at any time,
subject to the identification by the Investment Manager
of suitable investment opportunities and the lender’s
credit approval.
Reduction in Management Fee and Ongoing
Charges Ratio (“OCR”)
The Board continues to keep all costs under careful review
and remains focused upon delivering value to
shareholders and regularly reviews the OCR. It is pleasing
to note that the OCR has fallen from 1.10% to 1.01% during
the year reflecting in part the on-going emphasis on cost
control. As part of its oversight, the Board has negotiated
a reduction in the level of the investment management
fee payable to the Investment Manager. With effect from
1 January 2022, the management fee will be calculated
on the following amended tiered basis:
i. Average Value up to £350m – 0.8% per annum
(previously 0.85%); and
ii. Average Value in excess of £350m – 0.6% per annum
(previously 0.65%).
The Management Fee is calculated and accrued on a
monthly basis (being 1/12
th
of the value resulting from the
sum of (i) plus (ii) above) and will be payable quarterly in
arrears. This amendment will result in a reduction of
approximately £200,000 in management fees for 2022
which should flow through to a reduction in the OCR in
2022 and subsequent years. The Directors will continue to
review the Company’s expenses closely to ensure that
they are in line with the market.
It is pleasing to note that the OCR has
fallen from 1.10% to 1.01% during the
year reflecting in part the on-going
emphasis on cost control.
12 abrdn Asian Income Fund Limited
Annual General Meeting (“AGM”)
The AGM has been convened for 10:00 a.m. on 11 May
2022 at the offices of abrdn, Bow Bells House, 1 Bread
Street, London EC4M 9HH. There will be a short
presentation by videoconference from the Manager
followed by tea and coffee. This is the first time that the
Company has held its AGM in London and the Directors
very much look forward to meeting and engaging with as
many shareholders as possible. However, given the
evolving nature of the Covid-19 pandemic, should
circumstances or guidance change significantly,
rendering an in-person AGM inadvisable or not
permissible, we will notify shareholders of any changes to
the AGM by updating the Company’s website at asian-
income.co.uk and through an RNS News announcement.
The Board encourages questions and feedback which
can be submitted to the company secretary at:
Asian.Income@abrdn.com.
Directorate and Succession Planning
As well as bidding farewell to Charles Clarke from the
Board, we welcomed Robert Kirkby, a new independent
non-executive Director, to the Board on 1 November 2021.
Robert is a former advisory partner at KPMG Channel
Islands and a fellow of the Institute of Chartered
Accountants. In addition to his proven accountancy
background, he also brings to the Board an in depth
knowledge of the financial services industry, business
strategy as well as regulatory and governance
experience. He is a Jersey resident and has particular
experience of, and a continued interest in, China and Hong
Kong. Robert has a number of non-executive
appointments including being Chair of Trustees of the
Durrell Wildlife Conservation Trust, chairman of the audit
committees of Digital Jersey Limited and Stonehage
Fleming Family & Partners Limited and he is a director of
VenCap Channel Islands Limited.
“The Board continues its ESG-focused
dialogue with the Investment Manager
in the belief that companies with
good ESG practices will be the
winners over the longer term whilst
benefitting society.”
Environmental, Social and Governance
(“ESG”) Investing
The Board continues its ESG-focused dialogue with the
Investment Manager in the belief that companies with
good ESG practices will be the winners over the longer
term whilst benefitting society. The Directors are pleased
to note that the Investment Manager’s ESG engagement
is positive and the Company’s portfolio is rated ‘AA’ at year
end by Morningstar (2020: Morningstar rated ‘A’). Further
details pertaining to ESG and also climate change are
contained on pages 42 to 49.
Outlook
At the time of writing Russian troops have invaded Ukraine,
resulting in a tragic loss of life and war’s concomitant
effects of volatility on global stock, bond and commodity
markets. The enormity of this situation together with its
recency make it impossible to immediately foresee how
this might impact investor returns, beyond the obvious
supply chain disruption and its impact on inflation.
Alongside the ongoing conflict in Ukraine, there are other
important challenges for 2022. Asia appears behind
Europe in exiting the grip of the Covid pandemic, with the
associated disruptions it has caused. Additionally, even
prior to the Ukraine conflict, investor focus was drawn to
the increasing risk of higher inflation globally, together with
the interest rate hikes associated with that.
However, against this complicated back-drop, there is
cause for some optimism. Inflation remains moderate in
most of Asia compared to the rest of the world, so there is
less risk of disruptive policy moves from regional central
banks. Moreover, most governments have decided to live
with Covid, which should support a gradual normalisation
of economic activity. In addition, strong capex recovery
helped by infrastructure spending in countries like India,
also bodes well for the region. China continues to cause
investor concerns with fears that important commercial
centres are being affected by Covid-19 lockdowns.
Continued
Chairman’s Statement
abrdn Asian Income Fund Limited 13
However, looking at the broader context, these measures
are a continuation of rolling regional lockdown policies
with domestic authorities having displayed a track record
of balancing mobility restrictions whilst maintaining
economic activity. The good news is that Beijing can pull
the necessary policy levers to sustain growth thanks to
subdued inflation, as well as the fact that borrowing costs
have already been cut. Also China’s policy easing – at a
time of Fed tightening – could provide some support for its
neighbours in Asia. Your Investment Manager’s measured
view is that Beijing wants to strike a balance between
regulatory control and encouraging innovation, and a
heavy-handed clampdown on all private new economy
sectors is unlikely.
All in all, your Board remains cautiously optimistic. I believe
your Investment Manager’s long-held focus on companies
with high quality balance sheets and growing levels of
income will continue to prove advantageous during these
testing times. Importantly, companies with solid financials
and pricing power, such as those in the portfolio, will have
a competitive advantage in the year ahead. Their strong
balance sheets translate into more flexibility to invest in
growth and less reliance on borrowing in a rising rate
environment. Moreover, they can protect their profit
margins by passing on cost increases and continue to
generate positive cash flows, which is supportive of their
ability to pay dividends to shareholders.
Longer term, Asia remains a good place for dividend-
seeking investors. Business prospects are promising
thanks to favourable structural trends, such as growing
wealth, rising urbanisation and technological advances.
Also working in Asia’s favour is the abundance of solid
companies with clear earnings’ drivers, robust balance
sheets and healthy cash levels. I remain sanguine that
your Investment Manager will exploit these opportunities
to the full and continue to deliver sustainable returns in the
coming years.
Ian Cadby
Chairman
25 March 2022
14 abrdn Asian Income Fund Limited
Yoojeong Oh
Investment Director
abrdn Asia Limited,
25 March 2022
Q1. How did abrdn Asian Income Fund do in 2021?
The Company’s NAV total return was 11.0% in sterling
terms over the period, outperforming the benchmark
MSCI Asia Pacific ex Japan index, which fell by 1.8%.
Towards the latter half of the period, many investors
rebalanced their portfolios away from growth stocks
because of changing interest rate expectations. This
created more demand for value-style companies, which
had been out of favour and were trading on cheaper
valuation multiples. A key measure of value is dividend
yield, thus shareholders in companies with above average
yield were rewarded in 2021. As usual, we include the
MSCI Asia Pacific ex Japan High Dividend Yield (HDY) index
performance in the chart below, which shows the effect of
the rotation towards value seen in Asian markets. Against
this backdrop, our focus on quality companies with
potential to generate both capital and dividend growth
has enabled the Company to outperform both market
indices while delivering an above-benchmark dividend
yield of 4.1%.
Total Return of Ordinary Share Price and Ordinary Share NAV vs MSCI AC Asia
Pacific ex Japan Index (“Index”) and MSCI AC Asia Pacific ex Japan High Dividend
Yield Index (“High Yield Index)”
96
98
100
102
104
106
108
110
112
31/12/20 28/02/21 30/04/21 30/06/21 31/0 8/21 31/10/21 31/12/21
Share price NAV Index High Yield Index
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abrdn Asian Income Fund Limited 15
Your Company’s double-digit annual return can be
attributed to a reinvigorated interest in quality dividend
stocks that were overlooked in the previous growth rally.
Sectors, such as banking and telecoms, have been
notable beneficiaries of this change in market sentiment,
and have contributed to performance. Elsewhere the
demand for technology and software services remained
robust on the growing global desire for mobile working, as
well as emerging future trends, such as artificial
intelligence and the metaverse. This proved positive for
information technology, which is the highest weighted
sector within the Company’s portfolio. Meanwhile,
unexpected regulatory changes in China drove
indiscriminate selling across Chinese equities, resulting in
this market ending up being the worst performing country
in the region, falling 21%. Profit taking was concentrated
within the large internet companies, which were not held
in the portfolio due to their rich valuations and lack of
dividend yield.
Q2. Which of our holdings have contributed
to this performance?
Your Company’s investment in Taiwanese e-commerce
company Momo.com stood out. One of the key benefits of
a closed-end fund structure is the ability to invest in
companies with smaller market capitalisations, and
thereby gain exposure to some interesting investment
stories that would otherwise not be practical. Momo.com
is one such company, which over the last three years has
seen its share price rise more than ten-fold, spurred by
growing online sales during the lockdown. This is a position
we have been reducing, taking profits after a stellar run, as
valuations are now looking expensive. Despite a growing
absolute dividend, the sharp share price rally has
significantly reduced the dividend yield. Therefore, we
have been managing our position in this company to
reflect the lower yield on offer.
The Company’s utilities’ exposures did well too. Energy
network company AusNet Services’
growth in its core
regulatory asset base remained strong, driven by
customer connections. This reinforces our confidence that
AusNet’s growth trajectory to financial year 2026 remains
on track. We are not the only ones to see the value of
AusNet’s business franchise; its share price jumped in the
last quarter of 2021 after receiving two takeover offers.
We expect the takeover to be successful given the
premium offered to existing shareholders. Meanwhile,
state-owned electricity transmission player Power Grid
Corp of India also advanced, boosted by steady asset
capitalisation over the period. Power Grid has a robust
project pipeline, which provides earnings’ visibility for the
next two to three years.
The Company’s exposure to technology was once again
beneficial. In Asia, the sector encompasses a broad and
diverse range of companies, and the portfolio’s higher-
than-benchmark exposure to technology stocks is a result
of our stock picking process based on fundamentals.
Taiwan Semiconductor Manufacturing Co. (TSMC), the
world’s leading chip-manufacturer, delivered robust
earnings as it continued to benefit from strong demand
for its semiconductor chips that power next generation
technologies. Despite the high capital intensity
requirements to remain at the forefront of innovative
technologies, TSMC has a powerful combination of
profitability and dominant market share when it comes to
cash flow generation, enabling the company to build up a
cash position on its balance sheet, which in turn, offers
protection against financial risk. In India, IT-services
provider Infosys was similarly buoyed by an improving
demand outlook. The company’s robust results allowed it
to raise revenue guidance for the full year, prompting
upward revisions to earnings’ expectations. With the
majority of its business conducted overseas, Infosys
enjoyed revenues in US dollars while operating a
predominantly Indian rupee denominated cost base. This
added a foreign exchange tailwind to profit margins as
the dollar strengthened. Infosys also runs a net-cash
balance sheet and has been paying growing dividends
to shareholders.
While financial holdings had a poor start to the year, the
Company’s exposure to the three Singapore banks, DBS,
OCBC and UOB proved helpful. These lenders saw healthy
earnings over the period that pointed to a steady recovery
from the pandemic troughs. Furthermore, the Singapore
regulator finally lifted its cap on dividend payouts, which it
had earlier imposed to ensure that banks had sufficient
buffer to support lending in 2020. All three banks
subsequently restored their interim dividends to pre-
pandemic levels, and we expect them to continue to
benefit in 2022 amid a tightening monetary
policy environment.
Towards the year end, the diversified miners mounted a
comeback as inflationary fears picked up. Sharply rising
inflation expectations create a testing environment for
companies that do not have both pricing power and
strong control of their operational costs. Both BHP
and Rio
Tinto are backed by diversified revenue streams and low-
cost operating efficiencies, which has created defendable
moats, thus ensuring a competitive advantage in their
peer group. These companies were also lifted by record
iron ore prices that supported good cash flow generation,
which in turn, was positive for dividends.
16 abrdn Asian Income Fund Limited
Q3. What changes have you made
to the portfolio?
During a volatile year, we used our extensive research
experience in the region to top up good quality companies
that have become cheaper, while taking profits on those
stocks that have done particularly well. As noted earlier,
the robust share price rally seen in the technology sector
allowed us to trim several of our positions in tech holdings,
including Momo.com, Samsung Electronics and TSMC.
Conversely, China was the weakest market in the region,
which provided selective valuation opportunities for us to
pick up good quality companies that we had previously
considered too expensive. For example, we initiated China
Merchants Bank
(CMB), which we have long considered to
be the top retail lender in China with a track record of risk
management in a regulatory tightening environment. It
has generated superior returns over a number of years
and has a well-built capital position, making it one of the
higher-quality names in the sector. This is a company we
have been reviewing for many years and the China sell off
provided an opportunity for us to buy it for the Company.
Having exited both Standard Chartered and HSBC at the
start of the year, we built up our financials holdings in Asia
through companies that offered direct access to the
growth in the region. Alongside CMB, we also increased
our position in Asian insurance provider AIA, and added to
banks in Australia, Singapore and Thailand, where
valuations were attractive with good margin growth
potential backed by reopening economies. This also
shone a positive light on dividend growth as regulatory
dividend caps were removed and yields began to recover.
For example, in Australia, we bought National Australia
Bank
(NAB), which reflects our expectation of an
improving economic backdrop supporting a more
favourable lending environment. We particularly like NAB
for its good quality management team, and the stock was
attractively priced relative to its peers at the time of
initiation. Another quality financial holding we bought was
Macquarie Group, which is a well-diversified business
across asset management, banking and financial
advisory. It is underpinned by solid underlying demand for
infrastructure and renewables investment globally.
Coupled with Macquarie’s specialist background in
owning and operating assets, we expect to see its
asset management business continue to generate
attractive fees.
Meanwhile, also in Australia, we initiated industrial
property specialist Centuria Industrial REIT, which has a
high-quality portfolio of assets and good growth
prospects, underpinned by its management’s approach to
value creation via acquisitions and capital appreciation.
Elsewhere, in Singapore, we participated in the initial
public offer (IPO) of real estate investment trust, Digital
Core REIT. As an income investor, we have struggled to
find internet companies that pay dividends, and this REIT
gives us direct exposure to the growing demand for
internet and large-scale data centres, an area we believe
offers structural growth. Digital Core REIT pays an above-
market-average dividend yield and enjoys a solid growth
pipeline that is backed by its sponsor, while at the same
time, the stock is competitively priced. In addition, we
purchased Keppel Infrastructure Trust (KIT), which focuses
on developed markets in Asia, predominantly in its
Singaporean home market, and in Australia. Its diversified
assets in key areas, such as energy distribution, water and
waste-related infrastructure, provide steady and
predictable cash flows, and it pays an attractive yield of
close to 7%.
Lastly, in Taiwan, we initiated KMC, a leading bike-chain
maker that we expect will be a direct beneficiary of an
ongoing trend in developed markets to adopt cleaner
modes of travel, as well as growing demand for e-bikes.
The highly profitable company has a robust balance
sheet, and the stock is trading at fair valuations with a
generous yield.
Q4. Is Asia still attractive for income?
Asia is home to some of the world’s best companies and
presents a rich hunting ground for compelling stocks that
offer both income and growth potential. It may come as a
surprise but dividend contribution in Asia has been
increasing and now accounts for about half of total
returns to shareholders, as shown in the following chart,
where dividend contribution is represented in light blue.
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abrdn Asian Income Fund Limited 17
Moreover, companies that pay dividends in Asia are
diversified across sectors and geographies. For this
reason, your Company is able to invest in high-quality
holdings throughout the region with good capital and
income growth opportunities across several themes, as
highlighted below. Through the portfolio’s technology
holdings, the Company has exposure to tech enablers
such as TSMC, which we have discussed earlier, as well as
Samsung Electronics, which also taps into the building-
Asia thematic through its mobile and 5G infrastructure
businesses. The Company’s financial holdings straddle
both the aspirational consumer and digital future trends
through their online banking platforms and their ability to
provide the growing base of middle-class consumers with
increasingly sophisticated financial products and services.
The Company also finds dividends and growth in the
ongoing green space, where companies such as Taiwan’s
Hon Hai, which we initiated earlier in the period, and South
Korea’s LG Chem, are supplying the growing demand for
electric vehicles.
Where we are finding the best opportunities:
18 abrdn Asian Income Fund Limited
Q5. How do you choose which companies
to invest in?
Your Company’s investment team is made up of over forty
fund managers and ESG analysts on the ground across
Asia. The investment process places quality at the
forefront, implemented through the team’s bottom-up
stock picking approach. Quality companies are picked for
their good management track records, strong balance
sheets and cash generating businesses that can support
sustainable dividends for shareholders. We scout them out
by analysing company financial reports, we meet the
management teams to understand how the company
makes money, how it builds a competitive business model,
and how robust the balance sheet is. Companies with
strong balance sheets are less dependent on external
borrowings. This is especially important in a rising interest
rate environment, to identify holdings with lower risk of
refinancing and the ability to generate sustainable profits
through a business cycle. Moreover, a strong moat (ie the
company’s competitive advantage) leads to pricing
power, which is beneficial in inflationary environments, as
we see today. The ability to influence pricing allows
companies to pass through the cost of inflation rather
than having to absorb it as a loss. In this way, the
investment team forms its expectations of a company’s
growth potential and dividend paying ability.
Q6. How do you integrate ESG into the
Company’s investment strategy?
We view environmental, social and governance (ESG)
research as a way to generate alpha for shareholders
(‘alpha’ being the incremental extra return we aim to
provide, compared to a benchmark). We believe that
companies with a robust ESG framework, that willingly
look for ways to enhance and improve their operations on
key ESG factors, will be the companies to back over the
long run. Our engagements on ESG topics with your
Company’s underlying holdings cover diverse topics, such
as water recycling, energy efficiency, board refreshment
and talent management. Many companies in the region,
due to cultural factors, are perhaps only just beginning to
realise the importance that international investors place
on having transparent and clearly articulated ESG policies.
Therefore, we frequently liaise with the Company’s
holdings to advocate improvements to governance
practices. We have included examples of how we
measure the impact of our ESG engagement with AIA and
DBS in the ESG report on pages 48 and 49. We aim to help
these companies achieve a higher-than-benchmark ESG
quality score using external MSCI fund ratings, which in
turn, contributes to your Company’s own ESG rating
provided by MSCI. As seen in the following diagram, your
Company is rated above benchmark on overall ESG
quality by MSCI, and scores better than the benchmark
across all three E, S and G factors.
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abrdn Asian Income Fund Limited 19
Our primary goal is to generate better long term outcomes for our clients
Q7. What is the outlook for dividends in Asia?
While macro uncertainties around Covid-19 and rate
tightening continue to impact market sentiment, it is worth
remembering that Asia is in better shape compared to
other regions, with healthier current account balances
and stronger growth prospects, backed by a favourable
demographic story. We are, however, cautious about how
monetary policy could change over the course of the
coming year, alongside inflationary pressures, and the risk
that the coronavirus returns with new variants. As it stands,
with vaccinations ramping up across countries, most Asian
governments appear to be moving towards a stance of
living with Covid. This will support the normalising of
economic activity and as travel resumes, we should
expect positive effects for consumption, businesses and
the overall growth recovery.
Looking at dividends, corporates in Asia have less debt on
their balance sheets, which is helpful given the
expectations of tighter monetary policies. Quality
companies with solid balance sheets, that are not reliant
on debt financing, will face less risk and have financial
freedom to continue to invest in growth and to reward
shareholders. The following chart shows how debt on
corporate balance sheets is lowest in Asia, compared to
other regions.
20 abrdn Asian Income Fund Limited
Furthermore, Asia’s high-yielding income stocks offer
good value and capital protection, and we have seen
dividend payments in the region rebound since the
pandemic lows in 2020. The chart below shows how
quarterly dividends in Asia have been rising since the
beginning of last year. We expect this trend to continue as
we have seen dividends resumed across the region as
economies reopen.
The unfolding conflict in Ukraine is extremely concerning.
Whilst this Company does not have direct exposure to
Russia or Ukraine, we have been looking at any potential
indirect and critical supply chain issues this may cause for
our export focused holdings. Within our technology
holdings, global companies such as TSMC and Samsung
Electronics have been securing supply of critical raw
materials since supply disruptions emerged with the
US/China trade war. Looking ahead, there will clearly be
an indirect impact on economies from higher energy
prices and other commodities as well as increased market
risk. As bottom up stock pickers, we would caution against
reading too much into short term volatility, where liquidity
and panic can have a major impact even if unwarranted
by fundamentals. As ever, we remain focused on
companies with pricing power and the ability to pass
through costs pressures, as well as those with strong
balance sheets that face lower refinancing risk in a rising
rate environment. This is supportive of cash generation
and sustainable returns and income over the long run. We
maintain our belief that Asia has an abundance of good
quality companies - companies with robust balance
sheets and the potential to deliver income and capital
growth to shareholders in the long run. We will continue to
position the Company’s portfolio around structural growth
themes that offer the most compelling returns.
Yoojeong Oh
Investment Director
abrdn Asia Limited,
25 March 2022
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abrdn Asian Income Fund Limited 21
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
premium segment of the London Stock Exchange.
Change of Name
On 1 January 2022, the Company changed its name from
Aberdeen Asian Income Fund Limited to abrdn Asian
Income Fund Limited.
Change of Tax Residency
Following shareholder approval at the Extraordinary
General Meeting held on 8 September 2021, with effect
from 1 January 2022 the Company has migrated its tax
residency to the UK from Jersey and has elected to join the
UK's investment trust regime. The Company will continue
to be registered with limited liability in Jersey as a closed-
end investment company under the Companies (Jersey)
Law 1991. Further details on the rationale for, and benefits
of, the changes are disclosed in the Chairman’s Statement
on page 10.
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 growth
prospects of Asian companies including those with above
average dividend yields.
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 primarily invests 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;
Overview of Strate
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22 abrdn Asian Income Fund Limited
· 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
The Company does not have a fixed life.
Comparative Indices
The Company’s portfolio is constructed without reference
to any stockmarket 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) High Dividend Yield Index
and the currency-adjusted MSCI AC Asia Pacific (ex
Japan) Index.
Promoting the Company’s Success
In accordance with corporate governance best practice,
the Board is now 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”). This Statement, from “Promoting the Success
of the Company” to “Long Term Investment” on page 24
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 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 on page 21. 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. The Board reviews the culture and manner in which
the Manager operates at its regular meetings and
receives regular reporting and feedback from the other
key service providers.
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abrdn Asian Income Fund Limited 23
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. Your Company’s Board of Directors
sets the investment mandate, monitors the performance
of all service providers (including the Manager and
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 we engage with our shareholders:
AGM In more normal times 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 10:00 a.m. on 11 May 2022 in London. Subject to any developments in respect of the Covid
pandemic, the Board very much hopes to be able to hold a normal in-person AGM this year
with an opportunity for shareholders to meet the Directors. However, we encourage all
shareholders to lodge their votes by proxy on all the resolutions put forward.
Online Shareholder Presentation In April 2021 the Company held an interactive Online Shareholder Presentation which was well
attended by shareholders and potential shareholders.
Annual Report We publish 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 We issue announcements for all substantive news relating to the Company. You can find these
announcements on the website.
Results Announcements We release 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 Manager publishes monthly factsheets on the Company’s website including commentary
on portfolio and market performance.
Website Our website contains a range of information on the Company and includes a full monthly
portfolio listing of our 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 Manager’s Promotional and Investor Relations programme
(further details are on page 27).
The Manager
The key service providers for the Company are the
Manager, abrdn Capital International Limited (previously
known as Aberdeen Standard Capital International
Limited), and the Investment Manager, abrdn Asia Limited
(previously known as Aberdeen Standard Investments
(Asia) Limited) and the performance of both is reviewed in
detail at each Board meeting. The Investment Manager’s
investment process is outlined on pages 109 and 110 and
further information about the Investment Manager is given
on page 108.
Key Stakeholders - Shareholders
Shareholders are key stakeholders in the Company – they
are looking to the Manager and Investment Manager to
achieve the investment objective over time and to deliver
a regular growing income together with some capital
growth. In normal circumstances the Board is available to
meet at least annually 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
24 abrdn Asian Income Fund Limited
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. Our service providers look to the
Company to provide them with a clear understanding of
the Company’s 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 at least
annually in detail. 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,
Manager, Investment Manager and other relevant
stakeholders. Reviews include those of the Company’s
custodian, share 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
have been taken during the year:
Change in Tax Residency
During the year the Board and Manager undertook an
extensive review of the merits of moving the Company’s
tax residency onshore to the United Kingdom. As a result
and following the receipt of approval from shareholders at
the EGM held on 8 September 2021, with effect from 1
January 2022, the Company became tax resident in the
United Kingdom and joined the United Kingdom's
investment trust regime. This action will allow the
Company to benefit from the double tax treaty
arrangements that the UK currently has in place with
several of the jurisdictions in which the Company invests.
The average annual reduction in the amount of
withholding tax which would have been suffered by the
Company over the five financial years to 31 December
2020 would have been approximately £290,000 per
annum had the Company been UK tax resident.
Portfolio
The Investment Manager’s Review on pages 14 to 20
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. A list of the
key portfolio changes can be found on page 16.
Gearing
The Company utilises gearing in the form of bank debt
with the aim of enhancing shareholder returns over the
longer term. The Company has a £40m revolving credit
facility and a £10m fixed rate loan both scheduled to
mature in March 2024.
Share Buybacks
During the year, the Board has continued to buy back
Ordinary shares opportunistically in order to provide
liquidity to the market.
ESG
As highlighted on page 12, the Board is responsible for
overseeing the work of the Investment Manager and this is
not limited solely to the investment performance of the
portfolio companies. The Board also has regard for
environmental, social and governance matters that
subsist within the portfolio companies. The Board has
conducted regular meetings and met with the Investment
Manager’s ESG team in Singapore in order to discuss the
Investment Manager’s principles and policies. The Board is
supportive of, and encourages, the Investment Manager’s
pro-active approach to ESG engagement.
Long Term Investment
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 will continue 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.
Overview of Strate
g
y
Continued
abrdn Asian Income Fund Limited 25
Key Performance Indicators (KPIs)
The Board uses a number of financial performance measures to assess the Company’s success in achieving its objective
and 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 on page 29.
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) High Dividend Yield Index and the MSCI AC Asia Pacific (ex Japan)
Index 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) High Dividend Yield Index
(currency adjusted) and 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 on page 5 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 objective is twofold: (i) to maintain the price at
which the Ordinary Shares trade, relative to the exclusive of current period income NAV,
at a discount of no more than 5% in normal market conditions; and (ii) to avoid large
fluctuations in the discount/premium, relative to similar investment companies investing
in the region, by the use of share buy backs or the issuance of new shares, subject to
market conditions. A graph showing the share price premium/(discount) relative to the
NAV is also shown on page 30.
Ongoing Charges Ratio The Board monitors the Company’s operating costs carefully. Ongoing charges for the
year and previous year are disclosed on page 5.
Gearing The Board ensures that gearing is kept within the Board’s guidelines to the 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 overleaf 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
Manager, both of which are available on the Company’s website.
26 abrdn Asian Income Fund Limited
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 and a summary of the principal risks are set out below. The Board also has a process to
consider emerging risks and if any of these are deemed to be significant these risks are categorised, rated and added to
the risk matrix for closer monitoring.
The Board notes 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. 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.
Operationally, any re-emergence of Covid-19 or a new strain thereof may affect the suppliers of services to the
Company including the Manager, Investment Manager and other key third parties. To date these services have
continued to be supplied seamlessly and the Board will continue to monitor arrangements in the form of regular updates
from the Manager and Investment Manager.
In all other respects, the Company’s principal risks and uncertainties have not changed materially since the date of this
Annual Report and are not expected to change materially for the current financial year.
Risk Management Mitigating Action
Investment strategy and objectives – the setting of an
unattractive strategic proposition to the market and the failure
to adapt to changes in investor demand may lead to poor
performance, the Company becoming unattractive to investors,
a decreased demand for shares and a widening discount.
The Board keeps the investment objective and policy as well as
the level of discount and/or premium at which the Company’s
Ordinary Shares trade under review. In particular, there are
periodic strategy discussions where the Board reviews the
Investment Manager’s investment processes, analyses the work
of abrdn’s promotional and investor relations teams and
receives reports on the market from the Broker. In particular, the
Board is updated at each Board meeting on the make-up of and
any movements in the shareholder register. Details of the
Company’s share buyback policy are disclosed in the Directors’
Report on pages 60 and 61.
Investment portfolio, investment management – investing outside
of the investment restrictions and guidelines set by the Board
could result in poor performance and an inability to meet the
Company’s objectives or a regulatory breach.
The Board sets, and monitors, its investment restrictions and
guidelines, and receives regular reports which include
performance reporting on the implementation of the investment
policy, the investment process and application of the Board
guidelines. The Investment Manager is represented at all Board
meetings.
Financial obligations - the ability of the Company to meet its
financial obligations, or increasing the level of gearing, could
result in the Company becoming over-geared or unable to take
advantage of potential opportunities and result in a loss of value
to the Company’s Ordinary Shares.
The Board sets a gearing limit and receives regular updates on
the actual gearing levels the Company has reached from the
Investment Manager together with the assets and liabilities of
the Company and reviews these at each Board meeting.
Financial – the financial risks associated with the portfolio could
result in losses to the Company.
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 of the
steps taken to mitigate the financial risks associated with the
portfolio are set out in note 18 to the financial statements.
Overview of Strate
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y
Continued
abrdn Asian Income Fund Limited 27
Risk Management Mitigating Action
Regulatory - failure to comply with relevant regulation (including
Jersey Company Law, the Financial Services and Markets Act,
The Packaged Retail and Insurance-based Investment Products
(PRIIPS) Regulation, the Alternative Investment Fund Managers
Directive, Accounting Standards, the UK Corporation Tax Act
2010 and the FCA’s Listing Rules, Disclosure Guidance and
Transparency Rules and Prospectus Rules) may have an impact
on the Company.
The Board relies upon the abrdn Group to ensure the Company’s
compliance with applicable law and regulations and from time
to time employs external advisers to advise on specific concerns.
The Board also reviews the Manager’s compliance manual and
compliance monitoring plan.
Operational - the Company is dependent on third parties for the
provision of all systems and services (in particular, those of the
abrdn Group) and any control failures and gaps in these
systems and services could result in a loss or damage to the
Company.
The Board monitors operational risk and as such receives
internal controls and risk management reports from the
Investment Manager at each Board meeting. It also receives
assurances from all its significant service providers, as well as
back to back assurance from the Manager at least annually. The
Board has also received regular and frequent updates on the
implications for the Manager’s and Investment Manager’s
operations of the Covid-19 pandemic. Further details of the
internal controls which are in place are set out in the Directors’
Report on pages 58 and 59.
Income and dividend risk - there is a risk that the portfolio could
fail to generate sufficient income to meet the level of the annual
dividend, thereby drawing upon, rather than replenishing, its
revenue and/or capital reserves.
The Board monitors this risk through the review of income
forecasts, provided by the Investment Manager, at each Board
meeting.
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 Ordinary 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
Manager. abrdn’s closed end fund sales and promotional
teams report quarterly to the Board giving analysis of the
promotional activities as well as updates on the
shareholder register and any changes in the make-up of
that register. The Company, through the 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,
asian-income.co.uk.
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. The Board will continue to
ensure that all appointments are made on the basis of
merit against the specification prepared for each
appointment. At 31 December 2021, the Company did not
have any employees and there were four male Directors
and two female Directors on the Board. There are two
Directors based in Singapore, two Directors based in
Jersey and two Directors based in the UK.
28 abrdn Asian Income Fund Limited
Environmental, Social and Human
Rights Issues
The Company has no employees as management
of the assets is delegated to abrdn Capital International
Limited and sub-delegated to abrdn Asia Limited.
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, therefore, is not required to
make a slavery and human trafficking statement.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report
from the operations of its business, nor does it have direct
responsibility for any other emissions producing sources.
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
Manager, the Board acknowledges its role in setting the
tone for the effective delivery of stewardship on the
Company’s behalf. Further details on stewardship may be
found on page 60.
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 on
pages 25 to 27;
· 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;
· Current market conditions caused by the global impact
of Covid-19 and conflict in Ukraine;
· The liquidity of the Company’s portfolio; and,
· The flexibility and certainty provided by the £40m
revolving credit facility and £10m fixed term loan which
do not expire until March 2024.
Accordingly, taking into account the Company’s current
position, the fact that the Company’s 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 a
greater than anticipated economic impact of the spread
of Covid-19, economic shocks or significant stock market
volatility caused by other factors, 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 environmental, social and
governance 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 my
Chairman’s Statement on pages 12 and 13 whilst the
Investment Manager’s views on the outlook for the
portfolio are included on pages 19 and 20.
The longer term impact of both the Covid-19 pandemic
and war in Ukraine remains unclear at the time of writing
and increased economic risks remain for the Company.
These include currency volatility which may adversely
affect the translation rates of future earnings from the
portfolio and stock market volatility affecting valuations.
Ian Cadby
Chairman
25 March 2022
Overview of Strate
g
y
Continued
abrdn Asian Income Fund Limited 29
Dividends
Rate Ex-dividend date Record date Payment date
First interim 2021 2.25p 22 April 2021 23 April 2021 21 May 2021
Second interim 2021 2.25p 29 July 2021 30 July 2021 20 August 2021
Third interim 2021 2.25p 21 October 2021 22 October 2021 18 November 2021
Fourth interim 2021 2.75p 20 January 2022 21 January 2022 17 February 2022
2021 9.50p
First interim 2020 2.25p 23 April 2020 24 April 2020 22 May 2020
Second interim 2020 2.25p 30 July 2020 31 July 2020 21 August 2020
Third interim 2020 2.25p 22 October 2020 23 October 2020 18 November 2020
Fourth interim 2020 2.55p 21 January 2021 22 January 2021 17 February 2021
2020 9.30p
Ten Year Financial Record
Year to 31 December 2012
A
2013 2014 2015 2016 2017 2018 2019 2020 2021
Total revenue (£’000) 15,052 18,736 19,333 21,216 20,947 21,758 21,056 20,996 16,942 20,198
Per Ordinary share (p)
Revenue return 8.31 8.23 8.24 9.11 9.15 9.58 9.25 9.42 7.41 8.95
Total return 46.87 (6.69) 14.17 (18.86) 49.12 33.14 (13.17) 22.29 27.10 25.88
Dividends payable 7.15 7.90 8.00 8.50 8.75 9.00 9.15 9.25 9.30 9.50
Net asset value per Ordinary share (p)
Basic 205.90 191.56 197.84 170.58 211.82 235.63 213.96 227.15 245.40 262.76
Diluted 203.92 n/a n/a n/a n/a n/a n/a n/a n/a n/a
Share price per Ordinary share (p) 222.50 195.00 199.88 159.00 194.25 218.00 195.75 214.00 228.50 231.00
Equity shareholders’ funds (£’000) 311,287 371,117 384,868 329,432 396,028 431,869 382,199 403,403 431,476 450,790
A
At the 2012 year end there were 60,000,000 C shares in issue, with a net asset value of 102.80p per share. In the year to 31 December 2012 the net revenue return per C share was
0.32p and the total return per C shares was 4.34p. The C shares were converted into Ordinary shares on 4 February 2013.
Results
30 abrdn Asian Income Fund Limited
Total Return of Ordinary Share Price and Ordinary Share NAV vs MSCI AC Asia
Pacific ex Japan Index (“Index”) and MSCI AC Asia Pacific ex Japan High Dividend
Yield Index (“High Yield Index”)
Launch 20 December 2005 to 31 December 2021 (rebased to 100 as at 20/12/05)
50
100
150
200
250
300
350
400
450
500
Inception 2007 2009 2011 2013 2015 2017 2019 2021
Share price NAV Index High Yield Index
Share Price Premium/(Discount) to Diluted NAV
Launch 20 December 2005 to 31 December 2021
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Inception 2007 2009 2011 2013 2015 2017 2019 2021
Performance
OCR
1.01%
Yield
4.1%
Dividends
9.50p
abrdn Asian Income Fund Limited 31
Standardised Performance – Total Return (%)
5.2
34.7
48.4
11.0
38.5
51.8
-1.8
34.3
54.4
8.1
17.9
31.3
-10
0
10
20
30
40
50
60
1 year ended 31 December
2021
3 years ended 31 December
2021
5 years ended 31 December
2021
Share Price Net Asset Value Index High Yield Index
337.2
395.6
331.3
333.6
0
50
100
150
200
250
300
350
400
Ince
p
tion to 31 December 2021
Share Price Net Asset Value Index High Yield Index
+11.0%
NAV Total Return over
1 year
+5.2%
Share Price Total
Return over 1 year
+395%
NAV Total Return
since Launch
+337%
Share Price Total
Return since launch
32 abrdn Asian Income Fund Limited
Portfolio
The Company invests in Taiwan Semiconductor
Manufacturing Company, the world’s largest pure-
play semiconductor manufacturer
The Investment Manager believes
that markets are inefficient and
that companies may not be
priced correctly.
By doing all its own research and
undertaking substantial due diligence
before initiating any investment, the
Investment Manager’s fund
management team aims to identify
good quality companies that are
trading too cheaply, defined in terms
of company fundamentals that, in the
Investment Manager’s opinion, drive
share prices over the long term
abrdn Asian Income Fund Limited 33
34 abrdn Asian Income Fund Limited
As at 31 December 2021
Taiwan Semiconductor
Manufacturing Company
Samsung Electronics (Pref)
Holding: 7.9% Holding: 7.2%
The world’s largest pure-play
semiconductor manufacturer, TSMC
provides a full range of integrated
foundry services along with a robust
balance sheet and good cash generation
that enables it to keep investing in
cutting-edge technology and innovation.
One of the global leaders in the memory
chips segment, and a major player in
smartphones and display panels as well. It
has a vertically-integrated business model
and robust balance sheet, alongside good
free cash flow generation.
AusNet Services
DBS Group
Holding: 3.7% Holding: 3.4%
The Australian utility company engages
in electricity distribution and transmission,
and owns gas distribution assets in
Victoria state. It offers relatively stable
revenues, given that most of it is
regulated, and an attractive
dividend yield.
The largest Singapore bank, it is also the
best managed with a clear strategy. It is
backed by good digital infrastructure, and
operates with obvious focus on efficiency
of returns, as shown in the distinctively
better return on equity than local peers.
Oversea-Chinese Banking Corporation
Momo.com Inc
Holding: 3.4% Holding: 3.0%
A well-managed Singapore bank with
a strong capital base and impressive
cost-to-income ratio. In addition to its
core banking activities it has sizeable
wealth management and life
assurance divisions.
The largest online retailer in Taiwan, it is
benefitting from growth in the
underpenetrated e-commerce market, as
consumers and vendors increasingly shift
online. Its prospects are well supported by
its logistics edge, broad product offering
and scale benefits.
Venture Corporation
BHP Group
Holding: 3.0% Holding: 2.8%
Provides contract manufacturing
services to electronics companies. The
company’s major segments include
Printing, Imaging, Networking and
Communications. It has been increasing
its revenue contribution from Original
Design Manufacturing.
The Anglo-Australian miner is a proxy for
China and emerging markets’ secular
growth. It offers high relative returns, a
better social responsibility culture than its
peers and an asset mix that is better
leveraged to the energy sector’s recovery.
Infosys
Taiwan Mobile
Holding: 2.5% Holding: 2.1%
One of India’s best software developers,
Infosys continues to impress with its
strong management, solid balance sheet
and sustainable business model.
The second largest telco by size in Taiwan,
Taiwan Mobile has a dominant mobile
business and a significant stake in momo,
the largest e-commerce platform
in the country.
Ten Lar
g
est Investments
abrdn Asian Income Fund Limited 35
As at 31 December 2021
Valuation Total Valuation
2021 assets
A
2020
B
Company Country £’000 % £’000
Taiwan Semiconductor Manufacturing Company Taiwan 39,135 7.9 48,407
Samsung Electronics (Pref) South Korea 36,025 7.2 53,266
AusNet Services Australia 18,325 3.7 10,767
DBS Group Singapore 16,951 3.4 10,787
Oversea-Chinese Banking Corporation Singapore 16,699 3.4 13,380
Momo.com Inc Taiwan 15,095 3.0 8,243
Venture Corporation Singapore 15,056 3.0 16,848
BHP Group
C
Australia 14,155 2.8 7,662
Infosys India 12,594 2.5 8,409
Taiwan Mobile Taiwan 10,561 2.1 10,190
Top ten investments 194,596 39.0
Power Grid Corp of India India 10,021 2.0 6,989
GlobalWafers Taiwan 9,834 2.0 8,940
China Resources Land China 9,629 1.9 9,315
Rio Tinto
C
Australia 9,197 1.9 13,292
Hana Microelectronics (Foreign) Thailand 9,139 1.8 6,016
Commonwealth Bank of Australia Australia 8,923 1.8 7,628
Tisco Financial Group Foreign Thailand 8,835 1.8 4,211
LG Chem (Pref) South Korea 8,821 1.8 12,719
Hon Hai Precision Industry Taiwan 8,670 1.7 –
Charter Hall Long Wale REIT Australia 8,598 1.7 5,805
Top twenty investments 286,263 57.4
Centuria Industries REIT Australia 8,238 1.7 –
United Overseas Bank Singapore 8,165 1.6 5,555
Shopping Centres Australasia Australia 7,991 1.6 6,989
Spark New Zealand New Zealand 7,886 1.6 8,351
China Merchants Bank ‘A’ China 7,868 1.6 –
Tata Consultancy Services India 7,794 1.6 6,308
SAIC Motor ‘A’ China 7,745 1.6 8,899
ASX Australia 7,712 1.7 4,877
AIA Group Hong Kong 7,638 1.5 4,939
China Mobile
D
China 7,570 1.5 7,123
Top thirty investments 364,870 73.4
List of Investments
36 abrdn Asian Income Fund Limited
List of Investments
Continued
As at 31 December 2021
Valuation Total Valuation
2021 assets
A
2020
B
Company Country £’000 % £’000
Auckland International Airport New Zealand 7,085 1.4 7,451
NZX New Zealand 6,093 1.2 6,580
Siam Cement
E
Thailand 5,920 1.2 6,405
Singapore Technologies Engineering Singapore 5,858 1.2 7,194
Midea Group ‘A’ China 5,765 1.2 4,708
Accton Technology Taiwan 5,669 1.1 4,723
Hong Kong Exchanges & Clearing Hong Kong 5,606 1.1 1,804
Sunonwealth Electric Machine Taiwan 5,090 1.0 –
Bank Rakyat Indonesia 5,031 1.0 4,181
Keppel Infrastructure Singapore 5,026 1.0 –
Top forty investments 422,013 84.8
Capitaland Investment Singapore 4,931 1.0 4,309
KMC Kui Meng Taiwan 4,879 1.0 –
Digital Core REIT Singapore 4,851 1.0 –
Ascendas India Trust Singapore 4,835 1.0 4,749
Okinawa Cellular Telephone Japan 4,741 1.0 4,572
Hang Lung Properties Hong Kong 4,723 0.9 5,947
Singapore Telecommunications Singapore 4,670 0.9 8,001
Lotus’s Retail Growth Freehold And Leasehold Property Fund Thailand 4,571 0.9 –
National Australia Bank Australia 4,411 0.9 –
CNOOC
D
China 4,147 0.8 3,694
Top fifty investments 468,772 94.2
ICICI Bank
F
India 3,761 0.8 3,934
Amada Co Japan 3,752 0.8 6,309
Medibank Private Australia 3,695 0.7 3,480
China Vanke (H shares) China 3,432 0.7 3,062
Land & Houses Foreign Thailand 3,410 0.7 3,446
Convenience Retail Asia Hong Kong 2,779 0.6 524
China Resources Gas China 2,645 0.5 –
Waypoint REIT Australia 2,525 0.5 11,281
Macquarie Group Australia 2,125 0.4 –
SP Setia (Pref) Malaysia 474 0.1 409
Top sixty investments 497,370 100.0
abrdn Asian Income Fund Limited 37
As at 31 December 2021
Valuation Total Valuation
2021 assets
A
2020
B
Company Country £’000 % £’000
G3 Exploration
F
China – – –
Total value of investments 497,370 100.0
Net current assets
G
173 –
Total assets
A
497,543 100.0
A
Net assets excluding borrowings.
B
Purchases and/or sales effected during the year may result in 2020 and 2021 values not being directly comparable.
C
Incorporated in and listing held in United Kingdom.
D
Sold entirely from the portfolio subsequent to the year end, in compliance with the US Executive Order 14032.
E
Holding includes investment in common (£3,958,000) and non-voting depositary receipt (£1,962,000) lines.
F
Corporate bonds.
G
Excludes bank loans of £46,753,000
38 abrdn Asian Income Fund Limited
The Company’s base currency, GBP, has been volatile but has broadly strengthened over the course of 2021, benefiting
from support measures for businesses affected by Covid-19. As a result, Asian currencies have largely underperformed
against GBP as investors priced in growth risks from a hawkish Federal Reserve, monetary policy normalisation,
inflationary headwinds and Omicron. A notable exception was China, where monetary policy turned benign in contrast
to the developed economies which is reflected in the strength of the renminbi. The Taiwan dollar also outperformed
thanks to continued export strength from the domestic technology sector that supported the domestic currency. Both
these currencies operate under a managed float system, which helps to soften volatility. Looking ahead, the outlook for
Asian currencies continues to be influenced by US policy moves, while the Ukraine conflict is adding more uncertainty to
a slowing global economic recovery presenting yet another significant macro challenge for regional markets.
Currency Returns (in sterling terms) to 31 December 2021
-10% -8% -6% -4% -2% 0% 2% 4%
China Renminbi
Taiwan Dollar
US Dollar
Hong Kong Dollar
Bangladesh Taka
Indonesian Rupiah
Indian Rupee
Singapore Dollar
Malaysian Ringgit
New Zealand Dollar
Australian Dollar
Philippines Peso
South Korean Won
Sri Lanka Rupee
Pakistan Rupee
Thailand Baht
Japanese Yen
MSCI Country Index Total Returns (in sterling terms) to 31 December 2021
-25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30%
Taiwan
India
Australia
Sri Lanka
Singapore
Indonesia
Japan
Thailand
Philippines
Hong Kong
Malaysia
South Korea
New Zealand
China
Currency/Market Performance
abrdn Asian Income Fund Limited 39
Sector Breakdown
0% 5% 10% 15% 20% 25%
Technology
Financials
Real Estate
Telecommunications
Industrials
Utilities
Consumer Discretionary
Basic Materials
Energy
Consumer Staples
2021
2020
Geographic Breakdown
0% 5% 10% 15% 20%
Taiwan
Australia
Singapore
Chi na
South Korea
India
Thailand
New Zealand
Hong Kong
Japan
Indonesia
Malaysia
United Kingdom
2021
2020
Geo
g
raphical/Sector Analysis
M
ar
k
et
Capitalisation
£396.3m
Net Assets
£450.8m
Total
Assets
£497.5m
40 abrdn Asian Income Fund Limited
The Investment Manager takes into consideration a number of factors when deciding whether to invest in or divest
from a company. The Investment Manager’s investment process and ESG engagement are further illustrated in the
following case studies:
Sunonwealth Electric Machine Industry
In which year did we first invest? 2021
Where is their head office? Kaohsiung, Taiwan
Holding at year end: 1.01%
All electronic devices produce heat as the power comes
on. As a result, cooling fans are needed so that the device
works reliably and is less prone to premature failure
due to overheating.
One of the Company’s holdings thrives in this niche
segment. Founded in 1980, Sunonwealth is among the
leading global suppliers of cooling fans and micro
motors to a broad range of industries, including
information technology (IT), automotive electronics
and network communication.
We invested in Sunonwealth because we like the
company’s focus on its core competency of cooling
technology and commitment to innovation. For instance,
Sunonwealth has developed the first ever MagLev motor
fan, the world’s smallest and thinnest magnetic levitation
motor fan product.
Beyond this, its product mix is also evolving towards higher
margin non-IT segments, which enhances its long-term
prospects. Outside of IT, demand is rising for more
complex heat management solutions across the industrial,
automotive, telecom and server sectors – all of which
present new revenue opportunities for Sunonwealth.
Aside from providing the portfolio with access to this
structural growth, the company’s balance sheet and cash
flows are strong. This supports its healthy dividend payout
and attractive yield.
On the ESG front, Sunonwealth has improved disclosure in
some parts of its business, commendable for a small
company. It requires its suppliers to comply fully with the
relevant environment standards in the Restriction of
Hazardous Substances Directive in production processes
and raw material usage.
Sunonwealth also expressly specifies regulations on
prohibited substances, while a product’s R&D process
must meet environment protection requirements as well.
The company has received various industry and global
certifications for its environmental management and
quality systems.
In terms of external recognition, rating agency MSCI
initiated coverage of Sunonwealth with a BBB rating in
November 2021. MSCI highlighted Sunonwealth’s
involvement in clean tech, with offerings like automation
equipment and intelligent computing solutions for cooling
systems, which stood out.
In corporate governance, Sunonwealth’s ownership
structure follows the ‘one share, one vote’ principle, which
helps align shareholder voting rights with economic
exposure. MSCI noted weakness in disclosure around
labour management, especially in monitoring workforce
satisfaction, audits and staff training, which are key areas
of engagement with the company for us.
Investment Case Studies
abrdn Asian Income Fund Limited 41
Infosys Limited
In which year did we first invest?
2018
Where is their head office?
India
Holding at year end:
2.5%
India-listed Infosys Limited provides IT consulting and
software services, including e-business, programme
management and supply chain solutions. The group's
services include application development, product co-
development, and system implementation and system
engineering. Infosys targets businesses specialising in the
insurance, banking, telecommunications and
manufacturing sectors.
Founded in 1981, Infosys is a beneficiary of the large and
growing global IT services industry, which is estimated to
amount to around US$1 trillion. The sector is supported by
structural trends, such as digitalisation and the migration
to cloud, while cash generation tends to be healthy owing
to the relatively capex-light model.
Over the years, Infosys has successfully realigned its
offerings towards digital as its clients’ digital
transformation journey extended beyond a drive for
efficiency to changing entire business models. Today, it is
among the top three players with margins averaging 20%,
having navigated the competitive landscape well thanks
to good execution from management. The group has solid
financials and robust free cash flow.
Infosys emerged strongly from the Covid-19 crisis as the
pandemic propelled demand for its services. This is
evident in its market share gains, large deal wins and
margin expansion. Results over the year reflect the solid
recovery and explain why Infosys was among the top
performers for the Company over the period.
Looking ahead, Infosys should continue its revenue growth
momentum and deliver solid cash flow return on
investment, backed by its strong positioning and large
scale as well as the accelerating adoption of digital
technologies. Digital services, which is expected to
average a double-digit compound annual rate, will be a
key revenue driver. Moreover, the group will likely increase
its payout ratio, which could attract more income
investors, as the Indian government has equalised taxation
between buybacks and dividends.
Equally important, Infosys has a good record on
environmental, social and governance (ESG) matters, as
reflected in its A rating by MSCI. The group has underlined
the importance of ESG as an evaluation criterion for its
deal wins. One of the few carbon-neutral companies in
India, Infosys focuses on workforce diversity and
developing the economic value of its workers, and
maintains robust governance practices. Its ESG Vision
2030 includes clear targets such as remaining carbon
neutral each year, extending digital skills to 10 million-plus
people and increasing women representation in its
workforce to at least 45%.
42 abrdn Asian Income Fund Limited
Environmental, Social and Governance
(“ESG”) Engagement
Subject to the exception below, the management of the
Company’s investments is not undertaken with any
specific instructions to exclude certain asset types or
classes, the Investment Manager embeds ESG into the
research of each asset class as part of the investment
process. ESG investment is about active engagement, in
the belief that the performance of assets held around the
world can be improved over the longer term.
What is ESG, and why do we do it?
Environmental, social and governance (ESG)
considerations have been an integral part of the
Investment Manager’s decision-making process for
almost 30 years. The Investment Manager believes that
ESG factors are financially material and can meaningfully
affect a company’s performance.
During the year the Investment Manager released a White
Paper which summarised research on how ESG influences
companies and portfolios. The research found that there
is evidence that ESG integration can be beneficial for
investors. The paper arrived at three conclusions:
· ESG can benefit single-stock returns. Evidence shows
that shares of better-quality companies can perform
better than inferior peers.
· ESG can benefit portfolio risk and return. Evidence shows
that integrating ESG into the investment process, and
investing in companies with better ESG scores, can add
to performance.
· ESG integration can lead to lower risk. Evidence shows
that ESG analysis can help deliver a similar return while
reducing investment risk.
The Investment Manager believes that a company’s ability
to sustainably generate returns for investors depends on
the management of its environmental impact, its
consideration of the interests of society and stakeholders,
and on the way it is governed. By putting ESG factors at
the heart of its investment process, the Investment
Manager aims to generate better outcomes for the
Company’s shareholders. The three factors can be
considered as follows:
· Environmental factors relate to how a company
conducts itself with regard to environmental
conservation and sustainability. Types of environmental
risks and opportunities include a company’s energy
consumption, waste disposal, land development and
carbon footprint, among others.
· Social factors pertain to a company’s relationship with
its employees and vendors. Risks and opportunities can
include (but are not limited to) a company’s initiatives on
employee health and well-being, and how supplier
relationships align with corporate values.
· Corporate governance factors can include the
corporate decision-making structure, independence of
board members, the treatment of minority
shareholders, executive compensation and political
contributions, among others.
At the investment stage, ESG factors and analysis help to
frame where best to invest by considering material risks
and opportunities alongside other financial metrics. Due
diligence can ascertain whether such risks are being
adequately managed, and whether the market has
understood and priced them accordingly.
The Investment Manager is an active owner, voting at
shareholder meetings in a deliberate manner, working
with companies to drive positive change, and engaging
with policymakers on ESG and stewardship matters.
Furthermore, the Investment Manager has actively
chosen not to invest in tobacco companies and will
not invest in companies directly exposed to
controversial weapons.
Can we measure it?
There are elements of ESG that can be quantified, for
example the diversity of a board, the carbon footprint of a
company, and the level of employee turnover. While
diversity can be monitored, measuring inclusion is more of
a challenge. Although it is possible to measure the level of
staff turnover, it is more challenging to quantify corporate
culture. Relying on calculable metrics alone would
potentially lead to misleading insights. As active managers,
quantitative and qualitative assessments are blended to
better understand the ESG performance of a company.
The Investment Manager’s analysts consider such factors
in a systematic and globally-applied approach to assess
and compare companies consistently on their ESG
credentials, both regionally and against their peer group.
Some of the key questions asked of companies include:
· How material are ESG issues for this company, and how
are they being addressed?
· What is the quality of this company’s governance,
ownership structure and management?
· Are incentives and key performance indicators aligned
with the company’s strategy and the interests of
shareholders?
abrdn’s ESG En
g
a
g
ement
abrdn Asian Income Fund Limited 43
The questions asked differ from company to company;
the type of questions poised to a bank would be quite
different from those of a semiconductor manufacturing
firm. Having considered the regional universe and peer
group in which the company operates, an ESG score is
assigned ranging from 1 to 5. This proprietary ESG score is
applied to every stock within the Investment Manager’s
investment universe.
The ESG Scoring System
Having considered the regional universe and peer group in which a company operates, the Investment Manager
allocates it an ESG score between one and five. This is applied across every stock covered globally. Examples of each
category and a small sample of the criteria used are detailed below:
1. Best in class 2. Leader 3. Average 4. Below average 5. Laggard
ESG considerations are
material part of the
company’s core
business strategy
Excellent disclosure
Makes opportunities
from strong ESG risk
management
ESG considerations
not market leading
Disclosure is good, but
not best in class
Governance is
generally very good
ESG risks are considered
as a part of principal
business
Disclosure in line with
regulatory requirements
Governance is generally
good but some minor
concerns
Evidence of some
financially material
controversies
Poor governance or
limited oversight of key
ESG issues
Some issues in treating
minority shareholders
poorly
Many financially
material controversies
Severe governance
concerns
Poor treatment of
minority shareholders
Climate Change
Climate change is one of the most significant challenges of the 21st century and has big implications for investors. The
energy transition is underway in many parts of the world, and policy changes, falling costs of renewable energy, and a
change in public perception are happening at a rapid pace. Assessing the risks and opportunities of climate change is a
core part of the investment process. In particular, the Investment Manager considers:
Transition risks and opportunities
Governments could take robust climate change mitigation actions to reduce emissions and transition to a low-carbon
economy. This is reflected in targets, policies and regulation and can have a considerable impact on high-emitting
companies.
Physical risks and opportunities
Insufficient climate change mitigation action will lead to more severe and frequent physical damage. This results in
financial implications, including damage to crops and infrastructure, and the need for physical adaptation such as flood
defences.
The Investment Manager has aligned its approach with that advocated by the investor agenda of the Principles for
Responsible Investment (PRI) – a United Nations-supported initiative to promote responsible investment as a way of
enhancing returns and better managing risk.
44 abrdn Asian Income Fund Limited
PRI provides an intellectual framework to steer the massive transition of financial capital towards low-carbon
opportunities. It also encourages fund managers to demonstrate climate action across four areas: investments;
corporate engagement; investor disclosure; and policy advocacy, as explained below:
To assist in analysis, the Investment Manager has developed a proprietary climate scenario analysis tool. Climate
scenario analysis involves modelling the impact on financial assets of a range of pathways (for both physical climate
change and the transition to a low carbon economy) under plausible assumptions for future policy and technological
change. This allows the Investment Manager to explore the impact of climate change on portfolios and to inform
investment decisions.
Memberships and commitments
The Investment Manager is a signatory to the Net Zero Asset Manager Initiative, which informs the way in which the
Investment Manager conducts research, selects and manages investments. The Net Zero Asset Managers initiative is an
international group of asset managers committed to supporting the goal of net zero greenhouse gas emissions by 2050
or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius; and to supporting investing aligned with net
zero emissions by 2050 or sooner. For more information please see here: www.netzeroassetmanagers.org.
To support
this commitment, the Investment Manager has set a target of reducing the carbon intensity of assets it manages by 50%
by 2030 vs a 2019 baseline.
In order to achieve this, the Investment Manager will pursue three pillars of action:
1.
Decarbonisation: The Investment Manager will track and reduce the carbon intensity of its portfolios. That means
continuing to incorporate carbon analysis into the investment process and supporting credible transition leaders and
climate solutions.
2. Providing net zero solutions:
The Investment Manager will increase the proportion of assets flowing into net zero-
directed investing solutions. Around 30% of AUM is to be managed in line with net zero 2050. The Investment
Manager will aim to increase this by continuing to develop net zero solutions across all asset classes, actively
engaging with clients as well as transitioning its fund range to support net zero goals.
abrdn’s ESG En
g
a
g
ement
Continued
abrdn Asian Income Fund Limited 45
3. Active ownership: The Investment Manager will continue to vote and engage with its investee companies to drive
change and transition real assets. The Investment Manager will engage with the highest financed emitters across
equity and credit holdings seeking transparency on progress against clear transition milestones assessed against
relevant standards – such as the Climate Action 100+ net zero benchmark. The Investment Manager will divest from
companies where, after two years, it considers insufficient progress has been made against the transition milestones
set, unless it’s not in line with the client mandate.
Carbon footprint
The Company’s carbon footprint, as at 31 December 2021, is currently around 30% lower than that of the benchmark.
The main contributors towards the carbon footprint are AusNet Services, BHP, and Keppel Infrastructure Trust. BHP is
exposed to energy transition and stranded asset risk, but we view the group’s approach to ESG risk mitigation, including
and in particular climate risk, as industry leading. Keppel Infrastructure Trust recently announced that it would aim to
achieve a 30% carbon intensity reduction by 2030 (versus a 2019 baseline), and would look to increase portfolio
exposure to renewable energy by up to 25% of equity-adjusted AUM by 2030.
Fund Carbon Footprint
Weighted Average Carbon Intensity (tCO2e/USDm)
238
99
78
122
144
115
50 100 150 200 25 0 300 35 0 400 450 50 0
Benchmark
Portfolio
Scope 1 Scope 2 Scope 3
Portfolio Carbon Intensity versus Benchmark
How carbon intensive are the companies in my portfolio compared to benchmark?
(In tonnes of CO2e/
million USD revenue)
Weighted Average
Carbon Intensity Scope
1 + 2 Scope 1 Scope 2 Scope 3
Portfolio 221 99 122 115
Benchmark 315 238 78 144
Relative Carbon Intesity (%) 70.1 41.8 157.0 80.1
Source: Trucost
46 abrdn Asian Income Fund Limited
Importance of Engagement
The Investment Manager is committed to regular, ongoing engagement with the companies in which it invests, to help to
maintain and enhance their ESG standards into the future.
As part of the investment process, the Investment Manager undertakes a significant number of company meetings each
year on behalf of the Company. Your Company is supported by on-desk ESG analysts, as well as a well-resourced
specialist ESG Investment team. These meetings provide an opportunity to discuss various relevant ESG issues including
board composition, remuneration, audit, climate change, labour issues, human rights, bribery and corruption.
Companies are strongly encouraged to set clear targets or key performance indicators on all material ESG risks.
How We Embed ESG into Investment Process
Our Engagement Activity
We regulary engage with companies we invest in. The
following chart shows the engagements that have
included ESG topics. Over the period we met with 17
portfolio companies on ESG topics and had 32
engagements with them. This does not include positions
we have moved out of or are considering. These are the
themes that we have engaged on:
Climate
Environment
Labour Management,
Diversity & Inclusion
Human Rights &
Stakeholders
Corporate Behaviour
Corporate Governance
Our Voting Activity
Voting Summary Total
How many meetings were you eligible to vote? 70
How many meetings did you vote at? 68
How many resolutions were you eligible to vote on? 626
What % of resolutions did you vote on for which you
were eligible?
98.6%
Of the resolutions on which you voted, what % did
you vote with management?
95.9%
Of the resolutions on which you voted, what % did
you vote against management?
3.4%
Of the resolutions on which you voted, what % did
you abstain from voting?
0.6%
In what % of meetings, for which you did vote, did
you vote at least once against management?
22.1%
abrdn’s ESG En
g
a
g
ement
Continued
abrdn Asian Income Fund Limited 47
ESG engagements are conducted with consideration of the 10 principles of the United Nations Global Compact, and
companies are expected to meet fundamental responsibilities in the areas of human rights, labour, the environment and
anti-corruption.
This engagement is not limited to a company’s management team. It can include many other stakeholders such as non-
government agencies, industry and regulatory bodies, as well as activists and the company’s customers and clients.
Whilst the Investment Manager focuses on investing in quality companies, the investment team is aware that in some
cases Asian companies can lag those in Western Europe in terms of ESG. This is perhaps more true of emerging Asia
than developed Asia. In investing across Asia, the Investment Manager focuses on companies and management teams
exhibiting desirable behavioural traits and characteristics (for example, a track record of fair treatment of minority
shareholders, thoughtful capital allocation and return) rather than a strict focus on structures (for example, relating to
board composition). Subsequent to an investment, the Investment Manager engages energetically with companies to
improve and enhance ESG, aiming to encourage companies to implement processes and practises that will protect and
enhance shareholder value. The Investment Manager has a long track record of such constructive engagement,
drawing on investment experiences globally to bring these insights to the Company’s holdings.
48 abrdn Asian Income Fund Limited
AIA
The Investment Manager spoke with AIA, a leading
pan-Asian life and health insurer, about climate
change and net zero.
In the context of the group’s insurance operations, we
discussed the ways that the group is thinking about the
climate change impact on life expectancy and mortality
risk. Whilst the group believes they are relatively less
exposed on this front, they agree that literature is nascent,
and typically focuses on the direct impacts of
temperature change, rather than associated issues such
as a potential increase in the prevalence of vector borne
illnesses, including for example malaria. Given the role of
climate and temperature change on the distribution and
prevalence of, for example, mosquitoes, this is a key issue
for Asia’s population, and for the companies that insure
that population.
We also discussed the ways in which the group
incorporates physical risk analysis into the investment
process. The group has engaged with portfolio companies
on the issue and has asked companies to report on where
exposures might be, either in terms of assets or
operations. Again, though, this is an area where research
and data are incomplete, and where scenario analysis
can help. They are also looking closely at transition risks
and how they can conduct meaningful scenario analyses,
and can increase engagement with portfolio companies.
We also discussed the group’s thinking on net zero. We
were reassured that the group is thinking about this
carefully. At the time of our conversation the group had
already committed to divest from coal from 2021 and
2028 (for equities and fixed income, respectively), and
they were studying the portfolio impact of a net zero
pledge. What was comforting to us was that AIA wanted
to ensure there was integrity behind any pledge made,
and that their plans were credible and realistic. When we
spoke, the group was considering 2050 targets, across
both insurance operations and the investment portfolio,
and we encouraged them to continue this work and to
commit to a net zero target. We discussed the challenges
around modelling for net zero, the availability of data, and
constraints placed on the firm by national electricity grids
in the region.
Whilst the call was encouraging, we were pleased that,
following our call, AIA announced that a) it had completed
the divestment of directly-managed listed equity and
fixed income exposure to coal mining and coal-fired
power businesses, well ahead of schedule, b) committed
to achieving net-zero greenhouse gas emissions by 2050,
and c) committed to the Science Based Targets initiative.
ESG Case Studies
abrdn Asian Income Fund Limited 49
DBS
DBS is a leading Singapore bank, with a growing pan-Asian
exposure. While Singapore still represents the largest
single market, more than half of the bank’s loans were
made outside of the country in 2020, with a focus on
Greater China. Since the financial regulator lifted its cap
on banks’ dividend payouts in 2021, DBS has restored its
dividend to pre-pandemic levels, offering an attractive
blend of both capital growth and dividend yield.
DBS has mapped out its sustainability strategy through
three key pillars:
· Responsible banking – the bank’s commitment to
climate change goals and how it supports its clients as
they transition towards a low-carbon economy
· Responsible business practices – guidelines and
measurements for the bank to reduce its operational
footprint and energy consumption, and optimise
efficiencies
· Creating Social Impact – efforts to support the
community and encourage social entrepreneurship
The bank has been forward thinking in many of its ESG
policies, having ceased financing new coal-fired power
plants since 2019, and setting a target of net zero thermal
coal exposure by 2039. At the same time, DBS has been
focusing on financing renewable energy, and by 2020 its
exposure to renewable energy projects stood at S$4.2
billion, versus S$2.85 billion in 2019. The bank is thoughtful
about its impact in other areas, and has been vocal in
supporting responsible companies in the palm oil sector,
requiring customers to demonstrate alignment with No
Deforestation, No Peat, No Exploitation (“NDPE”) policies.
DBS was also the first Singapore bank to commit to net
zero by 2050 when it signed the United Nations-led
Net-Zero Banking Alliance (NZBA). At the same time,
it increased its support for the renewables sector
and raised its sustainable financing target to
S$50 billion by 2024 (approximately £27.5 billion).
A significant portion of DBS’s business is with
small- and medium enterprises (SMEs) in Asia,
and part of the bank’s strategy to reach its own
sustainability goals entails supporting its
customers to tackle their own green targets.
The bank’s broad portfolio of digital
technology solutions offers such support.
As part of the bank’s responsible business practices, it
adopted the Task Force on Climate-related Financial
Disclosures (TCFD) reporting recommendations and is
also actively collaborating with regulating authorities in
Singapore to develop a sustainability disclosure
framework. DBS had set tools in place to monitor its Scope
1, 2 and 3 greenhouse gas emissions, and it measures its
energy and water consumption across all its markets. In
this way, it seeks to develop new strategies to embed
green infrastructure throughout its operations. For
example, in line with its renewable energy commitments,
DBS has been working towards powering 100% of its
Singapore operations using renewable energy by 2030. It
aims to subsequently extend the goal to its global
operations.
This performance has been recognised externally, and
DBS has maintained its MSCI AA ESG rating since
November 2016, scoring well areas of governance,
access to finance, privacy and data security, and
human capital development.
50 abrdn Asian Income Fund Limited
Governance
abrdn Asian Income Fund Limited 51
The Board is committed to high standards
of corporate governance and applies the
principles identified in the UK Corporate
Governance Code and the AIC Code of
Corporate Governance
The Company invests in GlobalWafers, which specialises in
manufacturing wafers for the semiconductor
industry
52 abrdn Asian Income Fund Limited
Ian Cadby
Independent Non-Executive Chairman
Appointed a Director on 11 May 2016 and Chairman on 1
January 2022, he is a Jersey resident board executive and
investment manager with over 33 years' experience within
the asset management and wealth management industry
spanning a number of jurisdictions including Asia. Ian is the
former Group CEO of Ermitage Ltd with extensive
experience in derivatives trading, board strategy,
corporate governance and risk management. Ian is also a
director of CQS New City High Yield Fund Limited.
Mark Florance
Independent Non-Executive Director and Audit
Committee Chairman
Appointed a Director on 10 May 2017, he is a Singapore
Permanent Resident with over 30 years' experience in
corporate finance advisory, mergers and acquisitions,
equity capital markets, debt capital markets and debt
restructuring in Asia primarily at NM Rothschild & Sons
where he was the vice-chairman for S.E. Asia and co-
head of Asia. Mark is the chairman of Butterfield Trust
(Asia) Limited and is an independent member of the
investment committee of renewable energy fund, Climate
Investor One and water fund, Climate Investor Two. He
has a Bachelor of Commerce (accounting) and a
Bachelor of Laws from the University of New South
Wales. He also has a Diploma from the Securities
Institute of Australia.
Krystyna Nowak
Senior Independent Non-Executive Director
Appointed a Director on 7 May 2015, she is a partner at
Ridgeway Partners and former Managing Director of the
Board Practice at Norman Broadbent. Krystyna studied at
Oxford University, before joining Citibank, originally in
London followed by nine years in Hong Kong and
Singapore. Krystyna is also a director of Record PLC.
Robert Kirkby
Independent Non-Executive Director
Appointed a Director on 1 November 2021, he is s a former
advisory partner at KPMG Channel Islands and a fellow of
the Institute of Chartered Accountants with a background
as a business leader. He is a Jersey resident but has
particular experience of, and a continued interest in, China
and Hong Kong. Robert has a number of non-executive
appointments including being Chair of Trustees of the
Durrell Wildlife Conservation Trust, chairman of the audit
committees of Digital Jersey Limited and Stonehage
Fleming Family & Partners Limited and he is a director of
VenCap Channel Islands Limited.
Board of Directors
abrdn Asian Income Fund Limited 53
Nicky McCabe
Independent Non-Executive Director
Appointed a Director on 16 May 2018, she was formerly
head of product and investment trusts at Fidelity
International with experience across the full spectrum of
asset management in back office operations, the
investment team, proprietary investment, distribution and
product management. Nicky is currently a non-executive
director of BMO Capital and Income Investment Trust PLC,
Artemis Investment Management Limited and Vitality
Life Insurance.
Hugh Young
Non-Executive Director
Appointed a Director on 11 November 2005, he is a
resident of Singapore and is Chairman, Asia Pacific Region
at abrdn. Hugh is also a director of Aberdeen New Dawn
Investment Trust PLC, Aberdeen Australia Equity Fund Inc.,
abrdn Asia-Pacific Income Investment Company Limited
and The India Fund Inc
54 abrdn Asian Income Fund Limited
Introduction
The Directors present their Report and the audited
financial statements for the year ended 31 December
2021.
Results and Dividends
Details of the Company’s results and dividends are shown
on page 5 and in note 8 to the financial statements. The
Company’s dividend policy is to pay interim dividends on a
quarterly basis and for the year to 31 December 2021
dividends have been paid in May, August and November
2021 and February 2022. As at 31 December 2021 the
Company’s revenue reserves (adjusted for the payment
of the fourth interim dividend) amounted to £6.9 million
(approximately 4.0p per Ordinary Share).
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 in the premium segment and
are traded on the London Stock Exchange’s Main Market.
With effect from 1 January 2022 the Company has
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 14
to the financial statements. At 31 December 2021, there
were 171,558,896 fully paid Ordinary Shares of no par
value (2020 – 175,824,483) Ordinary Shares in issue. At the
year end there were 23,374,493 Ordinary Shares held in
treasury (2020 – 19,108,906).
During the year 4,265,587 Ordinary Shares were
purchased in the market for treasury (2020 - 1,767,492)
and no Ordinary Shares were issued or sold from treasury.
Subsequent to the year end 763,391 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
The Company has a three-year £10 million term facility
and a £40 million revolving credit facility with Bank of Nova
Scotia, London Branch on an unsecured basis, both
maturing in April 2024. £10 million has been drawn down
under the term facility and fixed for three years at an all-in
rate of 1.53%. Under the revolving credit facility, HKD73.5
million, US$19 million and GBP15.8 million is currently
drawn at the prevailing Sterling Overnight Index Average
(SONIA) plus the margin of 1.2%. Under the terms of the
revolving credit facility, the Company also has the option
to increase the level of the commitment from £40 million
to £60 million at any time, subject to the identification by
the Investment Manager of suitable investment
opportunities and the Lender’s credit approval.
Management Arrangements
abrdn Capital International Limited ("ACIL") is the
Company's Manager and Company Secretary. ACIL is a
wholly owned subsidiary of abrdn plc.
The investment management of the Company is
delegated from ACIL to abrdn Asia Limited.
Management Fee
Under the terms of the Management Agreement dated 21
March 2017, management services are provided by ACIL.
Directors’ Report
abrdn Asian Income Fund Limited 55
Further details are provided in note 5 to the financial
statements. In 2021, the Directors negotiated a new, lower,
level of management fee with the Manager and with
effect from 1 January 2022 the management fee has
been calculated on the following new tiered basis:
i. Average Value up to £350m – 0.8% per annum; and
ii. Average Value in excess of £350m – 0.6% per annum.
The Management Fee is calculated and accrued on a
monthly basis (being 1/12th of the value resulting from the
sum of (i) plus (ii) above) and is payable quarterly in
arrears.
Termination of the Management Agreement remains
subject to six months’ notice.
The Directors review the terms of the Management
Agreement on a regular basis and have confirmed that,
due to the investment skills, experience and commitment
of the Investment Manager, in their opinion the continuing
appointment of ACIL with the delegation arrangements to
the Investment Manager, on the terms agreed, is in the
interests of shareholders as a whole.
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
The Board has been advised that the following
shareholders owned 3% or more of the issued Ordinary
Share capital of the Company at 31 December 2021:
Shareholder No of Shares
Held
%
held
1607 Capital Partners 17,946,967 10.5
Rathbones 17,328,808 10.1
Hargreaves Lansdown
A
13,564,891 7.9
Interactive Investor
A
11,695,733 6.8
abrdn Retail Plans
A
8,244,547 4.8
Brewin Dolphin 7,463,763 4.4
Charles Stanley 6,776,640 4.0
City of London Inv. Management 5,534,851 3.2
AJ Bell
A
5,237,283 3.1
A
Non-beneficial interests
There have been no changes notified in respect of these
holdings in the period from 31 December 2021 to
25 March 2022.
Directors
The Board currently consists of six non-executive
Directors. Mark Florance, Ian Cadby, Nicky McCabe,
Krystyna Nowak and Hugh Young who each held office
throughout the year and Robert Kirkby, who was
appointed on 1 November 2021. On 31 December 2021,
Charles Clarke retired from the Board. The above
Directors were the only Directors to hold office during
the year.
Governance
The names and biographies of each of the six current
Directors are disclosed on pages 52 and 53 indicating their
range of experience. Mr Young is non-independent and
has served on the Board for more than nine years and, in
accordance with corporate governance best practice, will
retire at the Annual General Meeting on 11 May 2022
(“AGM”) and, being eligible, offers himself for re-election. In
accordance with Principle 23 of the AIC’s Code of
Corporate Governance which recommends that all
directors should be subject to annual re-election by
shareholders, all the members of the Board, will retire at
the forthcoming AGM and will offer themselves for re-
election. Details of each Director’s contribution to the long
term success of the Company are provided on page 57.
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 reappointments and concluded that each
of the Directors has the requisite high level and range of
business and financial experience and recommends their
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.
Policy on Tenure
Directors are not currently required to serve on the Board
for a limited period of time only. However, the Board’s
intention is to follow best practice in this area and for the
independent Directors to serve for up to a maximum of
nine years on the Board.
56 abrdn Asian Income Fund Limited
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.
The full text of the Company’s Corporate Governance
Statement can be found on the Company’s website,
asian-income.co.uk.
Directors have attended the following scheduled Board
and Committee meetings during the year ended 31
December 2021 as follows (with their eligibility to attend
the relevant meeting in brackets):
Board Audit MEC Nom
Total Meetings 4 2 1 1
C Clarke
A
4 (4) n/a 1 (1) 1 (1)
M Florance 4 (4) 2 (2) 1 (1) 1 (1)
I Cadby 4 (4) 2 (2) 1 (1) 1 (1)
R Kirkby
B
1 (1) n/a n/a n/a
N McCabe 4 (4) 2 (2) 1 (1) 1 (1)
K Nowak 4 (4) 2 (2) 1 (1) 1 (1)
H Young
C
4 (4) n/a n/a 1 (1)
A
Mr Clarke was not a member of the Audit Committee but attended both meetings by
invitation.
B
Mr Kirkby was appointed to the Board on 1 November 2021
C
Mr Young is not a member of the Audit or Management Engagement Committees
In addition to the above meetings there have been a
number of ad hoc Board Meetings to review and approve
dividends and other operational matters such as loan
facilities.
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.
Board Committees
The Directors have appointed a number of Committees as
set out below. Copies of their terms of reference, which
clearly define the responsibilities and duties of each
Committee, are on the Company’s website. The terms of
reference of each of the Committees are reviewed and
re-assessed by the Board for their adequacy on an
ongoing basis.
Audit Committee
The Audit Committee’s Report is on pages 62 and 63 of
this Annual Report.
Management Engagement Committee
The Management Engagement Committee comprises all
of the Directors except Mr Young. The Chairman of the
Company serves as Chairman of the Management
Engagement Committee. The Committee reviews the
performance of the Investment Manager and its
compliance with the terms of the management and
secretarial agreement. The terms and conditions of the
Directors’ Report
Continued
abrdn Asian Income Fund Limited 57
Manager and Investment Manager’s appointment,
including an evaluation of fees, are reviewed by the
Committee on an annual basis. The Committee believes
that the continuing appointment of the Manager on the
terms agreed is in the interests of shareholders as a whole.
Nomination Committee
All appointments to the Board of Directors are considered
by the Nomination Committee which comprises the entire
Board and is chaired by the Chairman of the Company.
Possible new Directors are identified against the
requirements of the Company’s business and the need to
have a balanced Board. Every Director is entitled to
receive appropriate training as deemed necessary. A
Director appointed during the year is required, under the
provisions of the Company’s Articles of Association, to
retire and seek election by shareholders at the next
Annual General Meeting. Notwithstanding the Articles of
Association requirement that one third of the Directors
retire by rotation at each Annual General Meeting, each
Director retires annually and submits themselves for re-
election at the AGM.
During the year the Company undertook a search for a
new independent non-executive Director, using the
services of Thomas Dessain, a company connected with
Mr Charles Clarke who retired on 31 December 2021. The
Directors, other than Mr Clarke, chose Thomas Dessain on
the basis of its expertise in the Jersey market and a very
competitive fee. The search culminated in the
appointment of Mr Kirkby, a former advisory partner at
KPMG. Although KPMG acts as auditor to the Company,
the Board has judged Mr Kirkby to be completely
independent as he has never been involved with
KPMG’s audit business and did not act as an audit
partner for KPMG.
The Company has put in place the necessary procedures
to conduct, on an annual basis, an appraisal of the
Chairman of the Board, Directors' individual self-
evaluation and a performance evaluation of the Board as
a whole. The Board also reviewed the Chairman’s and
Directors’ other commitments and is satisfied that the
Chairman and other Directors are capable of devoting
sufficient time to the Company. Given the ever changing
regulatory environment, it was agreed to increase focus
on continuing professional development and regulatory
and accounting developments as well as future corporate
governance changes. The last independent Board
evaluation was conducted in 2019 by BoardAlpha Limited
and the Directors have conducted a self-evaluation
exercise in 2021 which involved the use of self-appraisal
questionnaires followed up by one on one meetings with
the Chairman. Consideration will be given to conducting
another independently facilitated evaluation in 2022.
The independent members of the Committee have
appraised each of the Directors standing for re-election at
the forthcoming AGM. Ms Nowak, was appointed to the
Board in 2015 and became Senior Independent Director in
2018. She has continued to provide the Board with
excellent strategic and governance direction during the
year. Mr Cadby was appointed to the Board in 2016 and
has provided the Company with expert insight into the
management of derivatives as well as the benefit of his
international fund management experience. Mr Florance
was appointed to the Board in 2017 and has assumed the
role of Audit Committee Chairman in 2018. He has chaired
the Audit Committee expertly and being resident in Asia is
able to bring direct experience of the investment region to
the Board. Ms McCabe was appointed to the Board in
2018 and has brought detailed investment trust insight to
the Board from her previous industry experience. Mr
Young was appointed to the Board as a non-independent
Director at the launch of the Company in 2005 and has
stood for annual re-election ever since. He is Chairman of
the Asia Pacific Region for abrdn and based in Singapore
where he is able to bring first hand investment vision to the
Board. Mr Kirkby joined the Board in November 2021 and
has already started to contribute meaningfully to the
Board’s discussions.
Accordingly, the Board has no hesitation in
recommending to shareholders the reappointment of
each Director at the forthcoming AGM.
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 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
58 abrdn Asian Income Fund Limited
Director is also available to shareholders to discuss any
concerns they may have.
Remuneration Committee
As the Company only has non-executive Directors, the
Board has not established a separate Remuneration
Committee and Directors’ remuneration is determined by
the Board as a whole.
The Company’s policy on Directors’ remuneration,
together with details of the remuneration of each Director,
is set out in the Directors’ Remuneration Report on pages
64 to 66.
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. The Directors’ interests in contractual
arrangements with the Company are as shown in note 20
to the financial statements. No other 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 (refer to statement on page 28) 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 carefully considered the financial
position of the Company with particular attention to the
economic and social impacts of the Covid-19 pandemic.
As indicated above and in the Investment Manager’s
Review, Covid-19 has presented significant challenges to
all of the countries within the investment region as well as
the rest of the world. It is still too early to be able to assess
the longer term impacts on the individual companies in the
portfolio, however, the Board takes comfort from the
resilience of the balance sheets of those companies.
The Directors are mindful of the principal risks and
uncertainties disclosed on pages 25 to 27 and have
reviewed forecasts detailing revenue and liabilities and
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.
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 in May 2021 and a Resolution to reappoint
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 in May 2022.
Principal Risks
The Principal Risks and Uncertainties facing the Company
are detailed on pages 25 to 27. 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, and this
Directors’ Report
Continued
abrdn Asian Income Fund Limited 59
process 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 relating to strategy, investment
management, shareholders, marketing, gearing,
regulatory and financial obligations, third party service
providers and the Board. 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 Manager
which has, in turn, delegated the responsibility 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 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
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;
· as a matter of course the compliance department of
ACIL continually reviews the Investment Manager’s
operations;
· written agreements are in place which specifically
define the roles and responsibilities of the Manager,
Investment Manager and other third-party service
providers and the 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 the
abrdn Investment Vector ISAE3402 for the year to 30
September 2021, 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 Board meetings, the Board 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 Manager and Investment Manager ensure
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 BNP Paribas and
receives control reports covering the activities of the
custodian.
Representatives from the Internal Audit department of the
abrdn Group 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.
60 abrdn Asian Income Fund Limited
The UK Stewardship Code and Proxy Voting
Responsibility for actively monitoring the activities of
portfolio companies has been delegated by the Board
to the Alternative Investment Fund Manager (“AIFM”)
which has sub-delegated that authority to the
Investment Manager.
abrdn plc is a tier 1 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 the Investment Manager’s freephone information
service and the Company’s website (asian-income.co.uk).
The Notice of the Annual General Meeting 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 Annual General Meeting 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, the Manager 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”.
ACIL, 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, ACIL 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: asian-income.co.uk.
Annual General Meeting
The AGM will be held at 10:00 a.m. on 11 May 2022 at the
Investment Manager’s offices, Bow Bells House, 1 Bread
Street, London EC4M 9HH. The Board expects the AGM to
be an in-person meeting, subject to any prevailing
guidance and social distancing measures.
Resolutions including the following business will be
proposed at the AGM:
Dividend Policy
As a result of the timing of the payment of the Company’s
quarterly dividends, the Company’s Shareholders are
unable to approve a final dividend each year. In line with
good corporate governance, the Board therefore
proposes to put the Company’s dividend policy to
Shareholders for approval at the Annual General Meeting
and on an annual basis thereafter.
The Company’s dividend policy shall be that dividends on
the Ordinary Shares are payable quarterly in relation to
periods ending March, June, September and December. It
is intended that the Company will pay quarterly dividends
consistent with the expected annual underlying portfolio
yield. The Company has the flexibility in accordance with
its Articles to make distributions from capital. Resolution 3
will seek shareholder approval for the dividend policy.
Authority to Purchase the Company’s Shares
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 (excluding income) be at a
discount of more than 5% in normal market conditions.
Purchases of Ordinary Shares will only be made through
the market for cash at prices below the prevailing
estimated NAV per Share (ex income) where the Directors
believe such purchases will enhance shareholder value
Directors’ Report
Continued
abrdn Asian Income Fund Limited 61
and are likely to assist in narrowing any discount to NAV at
which the Ordinary Shares may trade. Subsequent to the
period end the Company has purchased for treasury
763,391 Ordinary Shares and at the time of writing the
Ordinary Shares are trading at a discount of 13.2% to the
prevailing exclusive of income NAV.
Resolution 11, a Special Resolution, will be proposed to
renew the Directors’ authority to make market purchases
of the Company’s Ordinary Shares in accordance with the
provisions of the Listing Rules of the Financial Conduct
Authority. Accordingly, the Company will seek authority to
purchase up to a maximum of 25,602,246 Ordinary Shares
(or, if less, 14.99% of the issued Ordinary Share capital as
at the date of passing of the resolution). The authority
being sought will expire on the earlier of 18 months from
the date of the resolution or at the conclusion of the
Annual General Meeting to be held in 2023 unless such
authority is renewed prior to such time. Any Ordinary
Shares purchased in this way will be cancelled and the
number of Ordinary Shares will be reduced accordingly, or
the Ordinary Shares will be held in treasury.
Under Jersey company law, Jersey companies can either
cancel shares or hold them in treasury following a buy-
back of shares. Repurchased shares will only be held in
treasury if the Board considers that it will be in the interest
of the Company and for the benefit of all shareholders.
Any future sales of Ordinary Shares from treasury will only
be undertaken at a premium to the prevailing NAV.
Authority to Allot the Company’s Shares
There are no provisions under Jersey law which confer
rights of pre-emption upon the issue or sale of any class of
shares in the Company. However, the Company has a
premium listing on the London Stock Exchange and is
required to offer pre-emption rights to its shareholders.
Accordingly, the Articles of Association contain pre-
emption provisions similar to those found under UK law in
satisfaction of the Listing Rules requirements. Ordinary
Shares will only be issued at a premium to the prevailing
NAV and, therefore, will not be disadvantageous to
existing shareholders. Any future issues of Ordinary Shares
will be carried out in accordance with the Listing Rules.
Unless previously disapplied by special resolution, in
accordance with the Listing Rules, the Company is
required to first offer any new Ordinary Shares or
securities (or rights to subscribe for, or to convert or
exchange into, Ordinary Shares) proposed to be issued for
cash to shareholders in proportion to their holdings in the
Company. In order to continue with such Ordinary Share
issues, as in previous years, your Board is also proposing
that its annual disapplication of the pre-emption rights is
renewed so that the Company may continue to issue
Ordinary Shares as and when appropriate. Accordingly,
Resolution 12, a Special Resolution, proposes a
disapplication of the pre-emption rights in respect of 10%
of the Ordinary Shares in issue at the date of the passing
of the resolution, set to expire on the earlier of 18 months
from the date of the resolution or at the conclusion of the
Annual General Meeting to be held in 2023.
Recommendation
Your Board considers Resolutions 11 and 12 to be in the
best interests of the Company and its members as a
whole. Accordingly, your Board recommends that
shareholders should vote in favour of Resolutions 11 and
12 to be proposed at the Annual General Meeting, as
they intend to do in respect of their own beneficial
shareholdings which amount to 92,144 Ordinary
Shares (0.05%).
Ian Cadby,
Chairman
25 March 2022
1st Floor, Sir Walter Raleigh House
48 – 50 Esplanade, Jersey JE2 3QB
62 abrdn Asian Income Fund Limited
The Audit Committee presents its report for the year
ended 31 December 2021.
Committee Composition
The Audit Committee operates within clearly defined
terms of reference and comprises four independent
Directors: Mr M Florance (Chairman), Mr R Kirkby, Ms N
McCabe and Ms K Nowak. The members of the Audit
Committee are each independent and free from any
relationship that would interfere with their impartial
judgement in carrying out their responsibilities. The
Committee has satisfied itself that at least one of its
members has recent and relevant financial experience.
The Committee met twice during the year. In accordance
with the UK Corporate Governance Code provision C.3.1
the Directors’ biographies on pages 52 and 53 describe
the wide range of recent and relevant financial
experience and the Committee’s competence in the
investment company sector.
The Audit Committee continues to believe that the
Company does not require an internal audit function of its
own as it delegates its day-to-day operations to third
parties from whom it receives internal controls reports.
Functions of the Committee
The principal function of the Committee is to assist the
Board in relation to the reporting of financial information,
the review of financial controls and the management of
risk. The Committee has defined terms of reference which
are reviewed and re-assessed for their adequacy on an
annual basis. Copies of the terms of reference are
published on the Company’s website.
The Committee’s main audit review functions are listed
below:
· to review and monitor the internal control systems
and risk management systems on which the Company
is reliant;
· to consider annually whether there is a need for the
Company to have its own internal audit function;
· to monitor the integrity of the interim and annual
financial statements of the Company by reviewing, and
challenging where necessary, the actions and
judgements of the Investment Manager and abrdn
Capital International Limited which acts as
Administrator and Company Secretary;
· to review, and report to the Board on, the significant
financial reporting issues and judgements made in
connection with the preparation of the Company’s
financial statements, half yearly reports,
announcements and related formal statements;
· to review the content of the Annual Report and financial
statements and advise the Board on whether, taken as a
whole, it is fair, balanced and understandable and
provides the information necessary for shareholders to
assess the Company’s position and performance,
business model and strategy;
· to meet with the external Auditor to review their
proposed audit programme of work and the findings of
the Auditor. The Committee uses this as an opportunity
to assess the effectiveness of the audit process;
· to develop and implement policy on the engagement of
the external Auditor to supply non-audit services. During
the period under review, no additional fees were paid to
KPMG (2020: £nil). Any future non-audit fees will be
considered in the light of the requirement to maintain
the Auditor’s independence;
· to review an annual statement from the Manager
detailing the arrangements in place within the Manager
whereby its staff may, in confidence, escalate concerns
about possible improprieties in matters of financial
reporting or other matters;
· to make recommendations in relation to the
appointment of the external Auditor and to approve the
remuneration and terms of engagement of the external
Auditor; and
· to monitor and review annually the external Auditor’s
independence, objectivity, effectiveness, resources
and qualification.
Activities During the Year
The Audit Committee met twice during the year when it
considered the Annual Report and the Half-Yearly Report
in detail. Representatives of the abrdn Group’s internal
audit, risk and compliance departments reported to the
Committee at these meetings on matters such as internal
control systems, risk and the conduct of the business in the
context of its regulatory environment.
Review of Internal Control Systems and Risk
The Committee considers the internal control systems
and a matrix of risks at each of its meetings. There is
more detail on the process of these reviews in the
Directors’ Report.
Financial Statements and Significant Issues
During its review of the Company’s financial statements
for the year ended 31 December 2021, the Audit
Committee considered the following significant issues, in
particular those communicated by the Auditor during its
planning and reporting of the year end audit:
Audit Committee’s Report
abrdn Asian Income Fund Limited 63
Valuation of Investments
The valuation of investments is undertaken in accordance
with the accounting policies, disclosed in notes 2(e) and 22
to the financial statements on pages 82 and 102. The audit
includes independent confirmation of the existence of all
investments. 99.2% of the portfolio is considered liquid and
quoted in active markets and has been designated as
Level 1 within the IFRS 13 fair value hierarchy and can be
verified against daily market prices. The remaining 0.8% of
the portfolio is not considered to trade in sufficiently active
markets and has been reclassified as Level 2. Further
details are provided in note 22 to the financial statements.
The portfolio is reviewed and verified by the Investment
Manager on a regular basis and management accounts
including a full portfolio listing are prepared each month
and circulated to all Directors for review. The work
undertaken by the Auditor on the valuation of investments
is disclosed on pages 68 and 69. The Company uses the
services of an independent Custodian (BNP Paribas) to
hold the assets of the Company. The investment portfolio
is reconciled regularly by the Investment Manager and an
independent confirmation is provided to the auditor by the
Custodian. The foregoing procedures and processes
provide comfort to the Directors in respect of this risk.
Recognition of Investment Income
The recognition of investment income is undertaken in
accordance with accounting policy note 2(b) to the
financial statements on page 81. Special dividends are
allocated to the capital or revenue accounts according to
the nature of the payment and the intention of the
underlying company. The Investment Manager circulates
monthly internal control reports which are reviewed and
analysed by the Board. The allocation of material special
dividends is also audited by the Auditor. The foregoing
procedures and processes provide comfort to the
Directors in respect of this risk.
Review of Auditor
The Company’s Annual Report and financial statements
for the year ended 31 December 2021 have been audited
by KPMG Channel Islands Limited at a cost of £39,500
(excluding disbursements). The Audit Committee has
reviewed the effectiveness of the Auditor including:
· independence – the Auditor discusses with the Audit
Committee, at least bi-annually, the steps it takes to
ensure its independence and objectivity and makes the
Committee aware of any potential issues, explaining all
relevant safeguards;
· quality of audit work including the ability to resolve issues
in a timely manner – identified issues are satisfactorily
and promptly resolved; its communications/
presentation of outputs including the explanation of the
audit plan, any deviations from it and the subsequent
audit findings are comprehensive and comprehensible;
and working relationship with management – the
Auditor has a constructive working relationship with the
Board, the Manager and the Investment Manager; and
· quality of people and service including continuity and
succession plans – the audit team is made up of
sufficient, suitably experienced staff with provision
made for retention of knowledge of the investment
company sector on rotation of the partner.
Re-appointment of KPMG Channel Islands
Limited as Independent Auditor
KPMG Channel Islands Limited has expressed its
willingness to be re-appointed independent auditor to the
Company. Resolution 10 which is to be put to shareholders
at the forthcoming AGM proposes the re-appointment of
KPMG Channel Islands Limited as independent auditor for
the year ending 31 December 2022 and authorises
Directors to determine their remuneration for the year
ending 31 December 2022.
Mark Florance,
Audit Committee Chairman
25 March 2022
1st Floor, Sir Walter Raleigh House
48 – 50 Esplanade, Jersey JE2 3QB
64 abrdn Asian Income Fund Limited
This Directors’ Remuneration Report comprises three
parts:
1. a Remuneration Policy which is subject to a binding
shareholder vote every three years (or sooner if
varied during this interval) – most recently voted on at
the AGM on 22 July 2020;
2. an Implementation Report which is subject to an
advisory vote on the level of remuneration paid during
the year; and
3. an Annual Statement.
The Company’s Auditor has not audited any of the
disclosures provided in this Directors’ Remuneration
Report.
Remuneration Policy
This part of the Remuneration Report provides details of
the Company’s Remuneration Policy for Directors of the
Company. This policy takes into consideration the
principles of UK corporate governance and the AIC’s
recommendations regarding the application of those
principles to Jersey-domiciled investment companies.
As the Company has no employees and the Board is
comprised wholly of non-executive Directors and given
the size and nature of the Company, the Board has not
established a separate Remuneration Committee.
Directors’ remuneration is determined by the Board
as a whole.
The Directors are non-executive and their fees are set
within the limits of the Company’s Articles of Association
which limit the aggregate fees payable to the Board of
Directors per annum to £200,000 (Article 84). The level of
cap may be increased by shareholder resolution from
time to time. Subject to this overall limit, the Board’s policy
is that the remuneration of non-executive Directors should
reflect the nature of their duties, responsibilities and the
value of their time spent and be fair and comparable to
that of other investment companies that are similar in size,
have a similar capital structure and have a similar
investment objective. Fees are reviewed annually against
the Company’s peer group and, if considered appropriate,
increased accordingly.
Appointment
· The Company only appoints non-executive Directors.
· All the Directors are non-executive appointed under the
terms of Letters of Appointment.
· Directors must retire and be subject to re-election at the
first AGM after their appointment, and annually
thereafter.
· New appointments to the Board will be placed on the
fee applicable to all Directors at the time of appointment
(currently £28,000 – see table overleaf).
· No incentive or introductory fees will be paid to
encourage a Directorship.
· Directors are entitled to be reimbursed for out-of-
pocket expenses incurred in connection with the
performance of their duties, including travel expenses.
· The Directors are not eligible for bonuses, pension
benefits, share options, long term incentive schemes or
other benefits.
· The Company indemnifies its Directors for all costs,
charges, losses, expenses and liabilities which may be
incurred in the discharge of duties, as a Director of
the Company.
Performance, Service Contracts,
Compensation and Loss of Office
· The Directors’ remuneration is not subject to any
performance related fee.
· No Director has a service contract.
· Mr Young is a director of the Investment Manager. No
other Director was interested in contracts with the
Company during the period or subsequently.
· The terms of appointment provide that a Director may
be removed upon the giving of three months’ notice.
· Compensation will not be due upon leaving office.
· No Director is entitled to any other monetary payment
or any assets of the Company.
Directors’ & Officers’ liability insurance cover is maintained
by the Company on behalf of the Directors.
There have been no changes to the policy during the
period of this Report nor are there any proposals for
change in the foreseeable future. No shareholder views
were sought in setting the remuneration policy although
any comments received from shareholders are
considered.
The Remuneration Policy was last approved by
shareholders at the AGM on 22 July 2020. The
Remuneration Policy is reviewed by the Board on an
annual basis and this Remuneration Policy will remain in
force for the three year period that started on 1 January
2020 and will end on 31 December 2022.
Directors’ Remuneration Report
abrdn Asian Income Fund Limited 65
Implementation Report
Directors’ Fees
The Board has carried out an annual review of the level of
Directors’ fees during the year which included a review of
the fees payable to peer group and other similar
investment companies. The Board concluded that the
level of fees would be increased from 1 January 2022 to
£42,000 for the Chairman, £34,000 for the Audit
Committee Chairman and £29,000 for other Directors.
The fees were last raised with effect from 1 January 2021.
There are no further fees to disclose as the Company has
no employees, Chief Executive or Executive Directors.
Company Performance
Also during the year the Board carried out a review of
investment performance. The following graph illustrates
the total shareholder return for a holding in the
Company’s Ordinary Shares as compared to the MSCI AC
Asia Pacific ex Japan Index (currency adjusted) and the
MSCI AC Asia Pacific ex Japan High Dividend Yield Index
(currency adjusted) for the period since the inception of
the Company (figures rebased to 100 at inception). Given
the Company’s investment objective these are considered
the most appropriate indices against which to measure
the Company’s performance. Shareholders should note
that the Company’s portfolio is constructed without
reference to any stockmarket 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 to
the Company’s advantage.
50
100
150
200
250
300
350
400
450
500
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Share price Index High Yield Index
Statement of Voting at General Meeting
At the Company’s last AGM, held on 12 May 2021,
shareholders approved the Directors’ Remuneration
Report (other than the Directors’ Remuneration Policy) in
respect of the year ended 31 December 2020 and
Directors’ Remuneration Policy.
The following proxy votes were received on the
resolutions:
Resolution
For*
%
Against
%
Withheld
%
(2) Receive and Adopt
Directors’ Remuneration
Report
75.9m
(99.6%)
338,849
(0.4%)
172,809
(3) Approve Directors’
Remuneration Policy**
76.5m
(99.6%)
275,679
(0.4%)
194,226
* Including discretionary votes
** Approved at the AGM on 22 July 2020
A resolution to approve the Directors’ Remuneration
Report (excluding the Directors’ Remuneration Policy) in
respect of the year ended 31 December 2021 will be
proposed at the Annual General Meeting.
Spend on Pay
As the Company has no employees, the Directors do not
consider it appropriate to present a table comparing
remuneration paid to employees with distributions to
shareholders. The total fees paid to Directors are below.
Fees Payable
The Directors who served in the year received the
following fees:
Director 2021
£
2020
£
C Clarke (Chairman until 31 December
2021 and highest paid Director)
40,500 39,500
K Nowak
A
29,000 28,000
I Cadby 28,000 27,000
M Florance 33,000 32,000
R Kirkby
B
4,666 n/a
N McCabe 28,000 27,000
H Young
C
n/a n/a
Total 163,166 153,500
A
Ms Nowak is Senior Independent Director and receives an extra £1,000 per annum
B
Mr Kirkby was appointed to the Board on 1 November 2021
C
With effect from 1 April 2018 Mr Young agreed to waive his entitlement to receive
fees from the Company.
Fees are pro-rated where a change takes place during a
financial year. None of the above fees (2020 - nil) were
payable to third parties in respect of making available the
services of Directors.
66 abrdn Asian Income Fund Limited
Annual Percentage Change in Directors’
Remuneration
The table below sets out the annual percentage change in
Directors’ fees for the past year.
Director
Year ended
31 December 2021
%
Year ended
31 December 2020
%
C Clarke 2.5 0
I Cadby 3.7 0
M Florance 4.7 0
R Kirkby n/a n/a
N McCabe 3.7 0
K Nowak 3.6 0
H Young
A
n/a n/a
A
With effect from 1 April 2018 Mr Young agreed to waive his entitlement to receive
fees from the Company.
Directors’ Interests in the Company
The Directors are not required to have a shareholding in
the Company. The Directors (including connected
persons) at 31 December 2021 and 1 January 2021 had
no interest in the Ordinary Share capital of the Company
other than those interests, all of which are beneficial
interests, shown in the table below.
31 December 2021 1 January 2021
Director Ordinary Shares* Ordinary Shares
C Clarke 60,000 60,000
I Cadby 7,000 7,000
M Florance 12,789 5,109
R Kirkby 16,937 n/a
N McCabe 5,121 5,121
K Nowak 17,797 17,797
H Young 27,500 27,500
Subsequent to the period end Mr Cadby’s beneficial
holding has increased to 12,000 Ordinary shares following
the purchase of 5,000 shares on 31 January 2022. With the
exception of this further disclosure, the Directors’ holdings
were unchanged at 25 March 2022, being the nearest
practicable date prior to the signing of this Annual Report.
Annual Statement
On behalf of the Board, I, Ian Cadby, Chairman, confirm
that the Report on Remuneration Policy and the above
Remuneration Implementation Report summarises, as
applicable, for the year to 31 December 2021:
· the major decisions on Directors’ remuneration;
· any substantial changes relating to Directors’
remuneration made during the year; and
· the context in which the changes occurred and
decisions have been taken.
The Directors’ Remuneration Report was approved by the
Board of Directors on 25 March 2022 and signed on its
behalf by:
Ian Cadby,
Chairman
25 March 2022
Directors’ Remuneration Report
Continued
abrdn Asian Income Fund Limited 67
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 the
Jersey governing the preparation and dissemination
of financial statements may differ from legislation in
other jurisdictions.
The Directors who hold office at the date of approval of
this Director’s Report 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
We confirm that to the best of our 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 issuer, together with a
description of the principal risks and uncertainties that
they face.
We 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 2022
1st Floor, Sir Walter Raleigh House
48 – 50 Esplanade, Jersey JE2 3QB
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website, but not the content of
any information included on the website that has been
prepared or issued by third parties. Legislation in Jersey
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions
Statement of Directors’ Responsibilities
68 abrdn Asian Income Fund Limited
Our opinion is unmodified
We have audited the financial statements of abrdn Asian Income Fund Limited (the “Company”), which comprise the
balance sheet as at 31 December 2021, the statements of comprehensive income, changes in equity and cash flows for
the year then ended, and notes, comprising significant accounting policies and other explanatory information.
In our opinion, the accompanying financial statements:
· give a true and fair view of the financial position of the Company as at 31 December 2021, and of the Company’s
financial performance and cash flows for the year then ended;
· are prepared in accordance with International Financial Reporting Standards; and
· have been properly prepared in accordance with the Companies (Jersey) Law, 1991.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of
the Company in accordance with, UK ethical requirements including the FRC Ethical Standard as required by the Crown
Dependencies' Audit Rules and Guidance. We believe that the audit evidence we have obtained is a sufficient and
appropriate basis for our opinion.
Key audit matters: our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of
the financial statements and include the most significant assessed risks of material misstatement (whether or not due to
fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. In arriving at our audit opinion above, the key audit matter was as follows
(unchanged from 2020):
The risk Our response
Valuation of investments held at fair
value through profit or loss (the
“investments”)
Investments held at fair value through
profit or loss £497,370,00 (2020:
£462,823,000)
Refer to note 2(e) of the accounting
policies, and notes 10 and 18 of the
financial statements.
Basis:
The Company invests in a diversified
portfolio of investments comprising listed
equities, funds and bonds. These
investments are measured at fair value
through profit or loss.
The valuation of the Company’s
investments is the main driver of the net
asset value of the Company, and is a
significant area of our audit.
The valuation of the Company’s
investments is also key to the calculation of
gains/(losses) on investments held at fair
value through profit or loss, and the
calculation of total return, which is an
Alternative Performance Measure
disclosed in the Company’s annual report.
Our audit procedures included:
Internal Controls:
We evaluated the design and
implementation of the controls over the
valuation of investments.
Use of KPMG Specialists:
We engaged our valuation specialists to:
Agree the price inputs into the fair value of
all investments in the Company’s portfolio
to quoted exchange prices as at 31
December 2021. Independent reference
prices were determined for all except one
security (a defaulted bond with a
reported fair value of £nil), for which
insufficient market data was available.
Independent Auditor’s Report to the Members of abrdn
Asian Income Fund Limited
abrdn Asian Income Fund Limited 69
The risk Our response
Risk
:
Should the reported value of the
Company’s investments diverge from fair
value, the Company’s reported net asset
value, gains/(losses) on investments held
at fair value through profit or loss, and total
return would be misstated.
Challenging managements’
judgements
:
For the one security noted above which
was not tested by our valuation specialist,
we assessed the judgments made by
management in estimating a £nil fair
value as at the balance sheet date.
Assessing disclosures:
We assessed the Company’s disclosures
in relation to valuation of investments,
specifically the accounting policies
described in note 2(e), the judgments and
estimates made by management, and
fair value disclosures in notes 10 and 18
for compliance with IFRS.
Our application of materiality and an overview of the scope of our audit
Materiality for the financial statements as a whole was set at £5,020,000, determined with reference to a benchmark of
total assets of £502,076,000, of which it represents approximately 1.0% (2020: 1%).
In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a
lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material amount across the financial statements as a whole.
Performance materiality for the Company was set at 75% (2020: 75%) of materiality for the financial statements as a
whole, which equates to £3,765,000 (2020: £3,528,000). We applied this percentage in our determination of performance
materiality because we did not identify any factors indicating an elevated level of risk.
We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding £251,000, in
addition to other identified misstatements that warranted reporting on qualitative grounds.
Our audit of the Company was undertaken to the materiality level specified above, which has informed our identification
of significant risks of material misstatement and the associated audit procedures performed in those areas as
detailed above.
Going concern
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the
Company or to cease its operations, and as they have concluded that the Company's financial position means that this is
realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its
ability to continue as a going concern for at least a year from the date of approval of the financial statements (the “going
concern period").
70 abrdn Asian Income Fund Limited
In our evaluation of the directors' conclusions, we considered the inherent risks to the Company's business model and
analysed how those risks might affect the Company's financial resources or ability to continue operations over the going
concern period. The risks that we considered most likely to affect the Company's financial resources or ability to
continue operations over this period were:
· Availability of capital to meet operating costs and other financial commitments;
· The ability to successfully refinance or repay debt which is due to mature;
· The ability of the Company to comply with debt covenants; and
· The recoverability of financial assets subject to credit risk.
We considered whether these risks could plausibly affect the liquidity in the going concern period by comparing severe,
but plausible downside scenarios that could arise from these risks individually and collectively against the level of
available financial resources indicated by the Company’s financial forecasts.
We considered whether the going concern disclosure in note 2(a) to the financial statements gives a full and accurate
description of the directors' assessment of going concern.
Our conclusions based on this work:
· we consider that the directors' use of the going concern basis of accounting in the preparation of the financial
statements is appropriate;
· we have not identified, and concur with the directors' assessment that there is not, a material uncertainty related to
events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as
a going concern for the going concern period; and
· we have nothing material to add or draw attention to in relation to the directors' statement
in the notes to the financial
statements on the use of the going concern basis of accounting with no material uncertainties that may cast
significant doubt over the Company's use of that basis for the going concern period, and that statement is materially
consistent with the financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a
guarantee that the Company will continue in operation.
Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could
indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment
procedures included:
· enquiring of management as to the Company’s policies and procedures to prevent and detect fraud as well as
enquiring whether management have knowledge of any actual, suspected or alleged fraud;
· reading minutes of meetings of those charged with governance; and
· using analytical procedures to identify any unusual or unexpected relationships.
As required by auditing standards, we perform procedures to address the risk of management override of controls, in
particular the risk that management may be in a position to make inappropriate accounting entries. On this audit we do
not believe there is a fraud risk related to revenue recognition because the Company’s revenue streams are simple in
nature with respect to accounting policy choice, and are easily verifiable to external data sources or agreements with
little or no requirement for estimation from management. We did not identify any additional fraud risks.
Independent Auditor’s Report to the Members of abrdn
Asian Income Fund Limited
Continued
abrdn Asian Income Fund Limited 71
We performed procedures including
· Identifying journal entries and other adjustments to test based on risk criteria and comparing any identified entries to
supporting documentation; and
· incorporating an element of unpredictability in our audit procedures.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial
statements from our sector experience and through discussion with management (as required by auditing standards),
and from inspection of the Company’s regulatory and legal correspondence, if any, and discussed with management
the policies and procedures regarding compliance with laws and regulations. As the Company is regulated, our
assessment of risks involved gaining an understanding of the control environment including the entity’s procedures for
complying with regulatory requirements.
The Company is subject to laws and regulations that directly affect the financial statements including financial reporting
legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of
our procedures on the related financial statement items.
The Company is subject to other laws and regulations where the consequences of non-compliance could have a
material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or
litigation or impacts on the Company’s ability to operate. We identified financial services regulation as being the area
most likely to have such an effect, recognising the regulated nature of the Company’s activities and its legal form.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to
enquiry of management and inspection of regulatory and legal correspondence, if any. Therefore if a breach of
operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect
that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have properly planned and performed our audit in
accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is
from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures
required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to
detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected
to detect non-compliance with all laws and regulations.
Other information
The directors are responsible for the other information. The other information comprises the information included in the
annual report but does not include the financial statements and our auditor's report thereon. Our opinion on the financial
statements does not cover the other information and we do not express an audit opinion or any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
72 abrdn Asian Income Fund Limited
Disclosures of emerging and principal risks and longer term viability
We are required to perform procedures to identify whether there is a material inconsistency between the directors’
disclosures in respect of emerging and principal risks and the viability statement, and the financial statements and our
audit knowledge. We have nothing material to add or draw attention to in relation to:
· the directors’ confirmation within the Viability Statement (page 28) that they have carried out a robust assessment of
the emerging and principal risks facing the Company, including those that would threaten its business model, future
performance, solvency or liquidity;
· the emerging and principal risks disclosures describing these risks and explaining how they are being managed or
mitigated;
· the directors’ explanation in the Viability Statement (page 28) as to how they have assessed the prospects of the
Company, over what period they have done so and why they consider that period to be appropriate, and their
statement as to whether they have a reasonable expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
We are also required to review the Viability Statement, set out on page 28 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures are materially consistent with the financial statements and
our audit knowledge.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material inconsistency between the directors’
corporate governance disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is materially consistent with the financial
statements and our audit knowledge:
· the directors’ statement that they consider that 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;
· the section of the annual report describing the work of the Audit Committee, including the significant issues that the
audit committee considered in relation to the financial statements, and how these issues were addressed; and
· the section of the annual report that describes the review of the effectiveness of the Company’s risk management and
internal control systems.
We are required to review the part of Corporate Governance Statement relating to the Company’s compliance with the
provisions of the UK Corporate Governance Code specified by the Listing Rules for our review. We have nothing to report
in this respect.
We have nothing to report on other matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to
report to you if, in our opinion:
· adequate accounting records have not been kept by the Company; or
· the Company's financial statements are not in agreement with the accounting records; or
· we have not received all the information and explanations we require for our audit.
Continued
Independent Auditor’s Report to the Members of abrdn
Asian Income Fund Limited
abrdn Asian Income Fund Limited 73
Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 67, the directors are responsible for: the preparation of the
financial statements including being satisfied that they give a true and fair view; such internal control as they determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error; assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern; and using 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.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The purpose of this report and restrictions on its use by persons other than the Company's
members as a body
This report is made solely to the Company’s members, as a body, in accordance with Article 113A of the Companies
(Jersey) Law 1991. Our audit work has been undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as
a body, for our audit work, for this report, or for the opinions we have formed.
Brian Bethell,
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors
Jersey,
25 March 2022
74 abrdn Asian Income Fund Limited
Financial
Statements
abrdn Asian Income Fund Limited 75
The Company’s Net Asset Value (“NAV”)
returned 11.0% over the year in sterling
terms versus the 8.1% gain of the MSCI All
Countries Asia Pacific ex Japan Index
and the -1.8% decline of the MSCI All
Countries Asia Pacific ex Japan High
Dividend Yield Index
76 abrdn Asian Income Fund Limited
Year ended Year ended
31 December 2021 31 December 2020
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Investment income 4
Dividend income 19,869 – 19,869 16,560 – 16,560
Interest income 294 – 294 320 – 320
Stock lending income 2 – 2 – – –
Traded option premiums 33 – 33 62 – 62
Total revenue 3 20,198 – 20,198 16,942 – 16,942
Gains on investments held at fair value through
profit or loss
10 – 33,354 33,354 – 37,573 37,573
Net currency (losses)/gains – (266) (266) – 217 217
20,198 33,088 53,286 16,942 37,790 54,732
Expenses
Investment management fee 5 (1,411) (2,116) (3,527) (1,248) (1,872) (3,120)
Other operating expenses 6 (862) – (862) (792) – (792)
Profit before finance costs and tax 17,925 30,972 48,897 14,902 35,918 50,820
Finance costs 7 (238) (357) (595) (332) (498) (830)
Profit before tax 17,687 30,615 48,302 14,570 35,420 49,990
Tax expense 2(d) (2,024) (967) (2,991) (1,482) (627) (2,109)
Profit for the year 15,663 29,648 45,311 13,088 34,793 47,881
Earnings per Ordinary share (pence) 9 8.95 16.93 25.88 7.41 19.69 27.10
The Company does not have any income or expense that is not included in profit for the year, and therefore the “Profit for the year” is
also the “Total comprehensive income for the year”.
All of the profit 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.
The accompanying notes are an integral part of the financial statements.
Statement of Comprehensive Income
abrdn Asian Income Fund Limited 77
As at As at
31 December 2021 31 December 2020
Notes £’000 £’000
Non-current assets
Investments held at fair value through profit or loss 10 497,370 462,823
Current assets
Cash and cash equivalents 3,268 6,177
Other receivables 11 1,438 1,422
4,706 7,599
Creditors: amounts falling due within one year
Bank loans 12(a) (36,788) (35,734)
Other payables 12(b) (2,917) (2,518)
(39,705) (38,252)
Net current liabilities (34,999) (30,653)
Total assets less current liabilities 462,371 432,170
Creditors: amounts falling due after more than one year
Bank loans 12(a) (9,965) –
Deferred tax liability on Indian capital gains 12(c) (1,616) (694)
(11,581) (694)
Net assets 450,790 431,476
Stated capital and reserves
Stated capital 14 194,933 194,933
Capital redemption reserve 1,560 1,560
Capital reserve 15 242,727 222,751
Revenue reserve 11,570 12,232
Equity shareholders’ funds 450,790 431,476
Net asset value per Ordinary share (pence) 16 262.76 245.40
The financial statements on pages 76 to 103 were approved by the Board of Directors and authorised for issue on 25 March 2022 and
were signed on its behalf by:
Ian Cadby
Chairman
The accompanying notes are an integral part of the financial statements.
Balance Sheet
78 abrdn Asian Income Fund Limited
For the year ended 31 December 2021
Capital
Stated redemption Capital Revenue Retained
capital reserve reserve reserve earnings Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Opening balance 194,933 1,560 222,751 12,232 – 431,476
Buyback of Ordinary shares for treasury 14 – – (9,672) – – (9,672)
Profit for the year – – – – 45,311 45,311
Transferred from retained earnings to
capital reserve
A
– – 29,648 – (29,648) –
Transferred from retained earnings to
revenue reserve
– – – 15,663 (15,663) –
Dividends paid 8 – – – (16,325) – (16,325)
Balance at 31 December 2021 194,933 1,560 242,727 11,570 – 450,790
For the year ended 31 December 2020
Capital
Stated redemption Capital Revenue Retained
capital reserve reserve reserve earnings Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Opening balance 194,933 1,560 191,412 15,498 – 403,403
Buyback of Ordinary shares for treasury 14 – – (3,454) – – (3,454)
Profit for the year – – – – 47,881 47,881
Transferred from retained earnings to
capital reserve
A
– – 34,793 – (34,793) –
Transferred from retained earnings to
revenue reserve
– – – 13,088 (13,088) –
Dividends paid 8 – – – (16,354) – (16,354)
Balance at 31 December 2020 194,933 1,560 222,751 12,232 – 431,476
A
Represents the capital profit 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 (2020 – £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.
Statement of Chan
g
es in Equity
abrdn Asian Income Fund Limited 79
Year ended Year ended
31 December 2021 31 December 2020
Notes £’000 £’000
Cash flows from operating activities
Dividend income received 18,432 15,765
Interest income received 298 328
Derivative income received 33 62
Investment management fee paid (3,148) (1,982)
Other cash expenses (860) (884)
Net cash generated from operating activities before interest paid and tax 14,755 13,289
Interest paid (557) (856)
Overseas taxation paid (2,009) (1,520)
Net cash inflows from operating activities 12,189 10,913
Cash flows from investing activities
Purchases of investments (98,164) (69,828)
Sales of investments 98,324 81,533
Net cash inflow from investing activities 160 11,705
Cash flows from financing activities
Purchase of own shares for treasury 14 (9,672) (3,508)
Dividends paid 8 (16,325) (16,354)
Loan arrangement expense paid (49) –
Drawdown of loans 25,800 –
Repayment of loans (14,900) –
Net cash outflow from financing activities (15,146) (19,862)
Net (decrease)/increase in cash and cash equivalents (2,797) 2,756
Cash and cash equivalents at the start of the year 6,177 3,458
Effect of foreign exchange on cash and cash equivalents (112) (37)
Cash and cash equivalents at the end of the year 2(f) 3,268 6,177
Non–cash transactions during the year comprised stock dividends of £1,373,000 (2020 – £936,000) (Note 4).
The accompanying notes are an integral part of the financial statements.
Cash Flow Statement
80 abrdn Asian Income Fund Limited
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 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 April 2021 to the
extent they are consistent with IFRS.
The Company’s assets consist substantially of equity shares in companies listed on recognised stock exchanges and in
most circumstances are realisable within a short timescale. The Board has set limits for borrowing and regularly reviews
actual exposures, cash flow projections and compliance with banking covenants. The Company has a revolving loan
facility which expires in March 2024. Having taken these factors into account as well as the impact of Covid-19 and
having assessed the principal risks and other matters set out in the Viability Statement on page 28, the Directors believe
that, after making enquiries, the Company has adequate resources to continue in operational existence for the
foreseeable future and has the ability to meet its financial obligations as they fall due for a period of at least twelve
months from the date of approval of this Report. Accordingly, they continue to adopt the going concern basis of
accounting in preparing the financial statements. Further detail is included in the Directors’ Report (unaudited)
on page 58.
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.
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 2021.
The financial statements are presented in sterling and all values are rounded to the nearest thousand (£’000) except
when otherwise indicated.
Notes to the Financial Statements
For the year ended 31 December 2021
abrdn Asian Income Fund Limited 81
New and amended accounting standards and interpretations. The Company applied for the first time certain standards
and amendments, which are effective for annual periods beginning on or after 1 January 2021. The adoption of these
standards and amendments did not have a material impact on the financial statements:
Standards
IFRS 4, 7, 9 and 16 Amendments Interest Benchmark Reform Phase 2
Future amendments to standards and interpretations. 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 2022:
Standards
IAS 1 Amendments Classification of Liabilities as Current or Non-Current
IAS 1 Amendments Disclosure of Accounting Policies
IAS 8 Amendments Definition of Accounting Estimates
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 financial results in the period of initial application although there may be revised
presentations to the Financial Statements and additional disclosures.
(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 10;
– 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. Profits arising in the Company for the year ended 31 December 2021 will be subject to Jersey income tax at
the rate of 0% (2020 – 0%).
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.
82 abrdn Asian Income Fund Limited
(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 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 “Gains/(losses) 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, including the difference between the purchase price of an investment and its bid price at the date
of purchase.
(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, they have been assessed for any expected credit losses
over their lifetime due to their short-term nature.
(h) Other payables. The Company has adopted the simplified approach under IFRS9 which allows entities to recognise
lifetime expected losses on all these assets without the need to identify significant increases in credit risk. Other payables
are non interest bearing and are stated at amortised cost.
(i) Dividends payable. Interim dividends payable are recognised in the financial statements in the period in which they
are 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.
Notes to the Financial Statements
Continued
abrdn Asian Income Fund Limited 83
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. The revenue reserve is the principal reserve which 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) Borrowings. The Company has adopted the classification and measurement provisions of IFRS 9 ‘Financial Instruments’.
Borrowings are measured at amortised cost using the effective interest rate method.
Borrowings are stated at the amount of the net proceeds immediately after draw down plus cumulative finance costs
less cumulative payments. The finance cost of borrowings 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.
84 abrdn Asian Income Fund Limited
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 2021 31 December 2020
£’000 £’000
Asia Pacific region 17,431 15,968
United Kingdom 2,767 974
20,198 16,942
4. Investment income
Year ended Year ended
31 December 2021 31 December 2020
£’000 £’000
Income from investments
Overseas dividend income 15,729 14,655
UK dividend income 2,767 969
Stock dividend income 1,373 936
19,869 16,560
Other income
Bond interest 294 315
Deposit interest – 5
Stock lending income 2 –
Traded option premiums 33 62
329 382
Total revenue 20,198 16,942
During the year, the Company was entitled to premiums totalling £33,000 (2020 – £62,000) in exchange for entering into option
contracts. At the year end there were no (2020 – nil) open positions. Losses realised on the exercise of derivative transactions
are disclosed in note 10.
Notes to the Financial Statements
Continued
abrdn Asian Income Fund Limited 85
5. Investment management fee
Year ended Year ended
31 December 2021 31 December 2020
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 1,411 2,116 3,527 1,248 1,872 3,120
The Company has an agreement with abrdn Capital International Limited (“ACIL”) for the provision of management services.
With the exception of stocklending activities, this agreement has been sub-delegated to abrdn Asia Limited (“abrdn Asia”). Any
stocklending activity has been sub-delegated to Aberdeen Asset Managers Limited.
The investment management fee is payable quarterly in arrears and is based on an annual fee of 0.85% on the average net
assets of the previous six months up to £350 million and 0.65% per annum thereafter. The balance due to ACIL at the year end
was £2,685,000 (2020 – £2,306,000). The investment management fees are charged 40% to revenue and 60% to capital in line
with the Board’s expected long term returns. With effect from 1 January 2022 the annual management fee is charged at 0.8%
of the average net assets of the previous six months up to £350 million and 0.6% per annum thereafter. All other terms and
conditions remain unaltered.
6. Other operating expenses
Year ended Year ended
31 December 2021 31 December 2020
£’000 £’000
Directors’ fees 166 154
Promotional activities
A
206 206
Auditor’s remuneration:
– statutory audit 40 38
Custody fees 178 140
Other 272 254
862 792
A
Promotional activities in relation to the Company’s participation in the abrdn Investment Trust share plan and ISA are provided by Aberdeen Asset Managers Limited
(“AAML”). The total fees paid are based on an annual rate of £206,000 (2020 – £206,000). An amount of £52,000 (2020 – £52,000) was payable to AAML at the year end.
No fees have been paid to the Company’s auditor during the period other than those listed here.
86 abrdn Asian Income Fund Limited
7. Finance costs
Year ended Year ended
31 December 2021 31 December 2020
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Interest on bank loans 232 349 581 332 498 830
Amortisation of loan arrangement expenses 6 8 14 – – –
238 357 595 332 498 830
Finance costs are charged 40% to revenue and 60% to capital as disclosed in the accounting policies.
8. Dividends on Ordinary equity shares
Year ended Year ended
31 December 2021 31 December 2020
£’000 £’000
Amounts recognised as distributions to equity holders in the year:
Fourth interim dividend 2020 – 2.55p per Ordinary share (2019 – 2.50p) 4,484 4,438
First interim dividend 2021 – 2.25p per Ordinary share (2020 – 2.25p) 3,954 3,981
Second interim dividend 2021 – 2.25p per Ordinary share (2020 – 2.25p) 3,951 3,976
Third interim dividend 2021 – 2.25p per Ordinary share (2020 – 2.25p) 3,936 3,959
16,325 16,354
The table below sets out the total dividends declared in respect of the financial year. The revenue available for distribution by
way of dividend for the year is £15,663,000 (2020 – £13,088,000).
2021 2020
£’000 £’000
First interim dividend 2021 – 2.25p per Ordinary share (2020 – 2.25p) 3,954 3,981
Second interim dividend 2021 – 2.25p per Ordinary share (2020 – 2.25p) 3,951 3,976
Third interim dividend 2021 – 2.25p per Ordinary share (2020 – 2.25p) 3,936 3,959
Fourth interim dividend 2021 – 2.75p per Ordinary share (2020 – 2.55p) 4,712 4,484
16,553 16,400
The fourth interim dividend for 2021, amounting to £4,712,000 (2020 – fourth interim dividend of £4,484,000), is not recognised
as a liability in these financial statements as it was announced and paid after 31 December 2021.
Notes to the Financial Statements
Continued
abrdn Asian Income Fund Limited 87
9. Earnings per share
Ordinary shares. The earnings per Ordinary share is based on the profit after taxation of £45,311,000 (2020 – profit
£47,881,000) and on 175,057,061 (2020 – 176,666,175) 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 2021 31 December 2020
Revenue Capital Total Revenue Capital Total
Net profit (£’000) 15,663 29,648 45,311 13,088 34,793 47,881
Weighted average number of Ordinary shares in issue
A
175,057,061 176,666,175
Return per Ordinary share (pence) 8.95 16.93 25.88 7.41 19.69 27.10
A
Calculated excluding shares held in treasury.
10. Investments held at fair value through profit or loss
Year ended Year ended
31 December 2021 31 December 2020
£’000 £’000
Opening book cost 313,692 333,903
Opening investment holding gains 149,131 102,081
Opening fair value 462,823 435,984
Analysis of transactions made during the year
Purchases at cost 99,517 70,750
Sales proceeds received (98,324) (81,484)
Gains on investments
A
33,354 37,573
Closing fair value 497,370 462,823
£’000 £’000
Closing book cost 346,679 313,692
Closing investment gains 150,691 149,131
Closing fair value 497,370 462,823
A
Includes losses realised on the exercise of traded options of £nil (2020 – £nil) which are reflected in the capital column of the Statement of Comprehensive Income in
accordance with accounting policy 2(n). Premiums received from traded options totalled £33,000 (2020 – £62.000) per note 4.
The Company received £98,324,000 (2020 – £81,484,000) from investments sold in the year. The book cost of these
investments when they were purchased was £66,530,000 (2020 – £90,961,000). 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.
88 abrdn Asian Income Fund Limited
Year ended Year ended
31 December 2021 31 December 2020
The portfolio valuation £’000 £’000
Listed on recognised stock exchanges:
Equities – UK – 15,005
Equities – overseas 493,609 443,884
Bonds – overseas 3,761 3,934
Total 497,370 462,823
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 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 2021 31 December 2020
£’000 £’000
Purchases 108 84
Sales 181 91
289 175
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.
11. Debtors: amounts falling due within one year
2021 2020
£’000 £’000
Prepayments and accrued income 1,438 1,422
None of the above assets are past their due date or impaired.
Continued
Notes to the Financial Statements
abrdn Asian Income Fund Limited 89
12. Creditors: amounts falling due within one year
(a) Bank loans. At the year end, the Company had the following unsecured bank loans:
2021 2020
Local Local
Interest currency Carrying Interest currency Carrying
rate principal amount rate principal amount
% amount £’000 % amount £’000
Unsecured bank loans repayable within one
year:
Hong Kong Dollar 1.374 73,500,000 6,960 1.544 73,500,000 6,934
United States Dollar 1.435 19,000,000 14,028 1.503 19,000,000 13,900
Sterling 1.310 15,800,000 15,800 1.393 4,900,000 4,900
Sterling – – – 2.179 10,000,000 10,000
Total 36,788 35,734
Unsecured bank loans repayable between
one and five years:
Sterling 1.530 10,000,000 9,965 – – –
Total 9,965 –
At the date of signing this report, loans of HKD 73,500,000, US$19,000,000 and £15,800,000 were drawn down at interest
rates of 1.35768%, 1.36448% and 1.6777% respectively under a £40 million multi currency revolving loan facility
agreement with Bank of Nova Scotia, London which runs until 2 March 2024. On 2 March 2021 the £10,000,000 term loan
with Scotiabank Europe PLC was replaced with a three year loan of £10,000,000 with Bank of Nova Scotia, London at an
interest rate of 1.53%. Financial covenants contained within the relevant loan agreements provide, 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 2021 adjusted NAV coverage was 9.6 to 1.0 based on borrowings of £46,753,000 and net
assets were £450,790,000. The Company has complied with all financial covenants throughout the year.
2021 2020
(b) Other payables £’000 £’000
Investment management fees
2,685 2,306
Other amounts due
232 212
2,917 2,518
Amounts falling due in more than one year:
2021 2020
£’000 £’000
(c) Deferred tax liability on Indian capital gains
1,616 694
90 abrdn Asian Income Fund Limited
13. Analysis of changes in financing during the year
2021 2020
£’000 £’000
Opening balance at 1 January 35,734 35,989
Net increase in loan drawdown 10,851 374
Amortisation of loan arrangement expenses 14 –
Foreign exchange movements 154 (629)
Closing balance at 31 December 46,753 35,734
14. 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 2020 175,824,483 19,108,906 194,933,389 194,933
Shares purchased for treasury (4,265,587) 4,265,587 – –
At 31 December 2021 171,558,896 23,374,493 194,933,389 194,933
During the year 4,265,587 (2020 – 1,767,492) Ordinary shares were bought back by the Company for holding in treasury at a
total cost of £9,672,000 (2020 – £3,454,000). At the year end 23,374,493 (2020 – 19,108,906) Ordinary shares were held in
treasury, which represents 11.99% (2020 – 9.80%) of the Company’s total issued share capital at 31 December 2021.
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 763,391 Ordinary shares have been bought back for holding in treasury at a cost of £1,736,000.
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.
Notes to the Financial Statements
Continued
abrdn Asian Income Fund Limited 91
15. Capital reserve
2021 2020
£’000 £’000
At 1 January 222,751 191,412
Net currency (losses)/gains (266) 217
Movement in unrealised fair value 1,560 47,050
Profit/(loss) on realisation of investments 31,794 (9,477)
Costs charged to capital (3,440) (2,997)
Buyback of Ordinary shares for treasury (9,672) (3,454)
At 31 December 242,727 222,751
16. 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
2021 2021 2020 2020
p £’000 p £’000
Ordinary shares 262.76 450,790 245.40 431,476
The net asset value per Ordinary share is based on 171,558,896 (2020 – 175,824,483) Ordinary shares, being the number of
Ordinary shares in issue at the year end excluding Ordinary shares held in treasury.
17. Analysis of changes in net debt
At At
31 December Currency Cash Non-cash 31 December
2020 differences flows movements 2021
£’000 £’000 £’000 £’000 £’000
Cash and short term deposits 6,177 (112) (2,797) – 3,268
Debt due within one year (35,734) (154) (900) – (36,788)
Debt due after more than one year – – (9,951) (14) (9,965)
(29,557) (266) (13,648) (14) (43,485)
92 abrdn Asian Income Fund Limited
At At
31 December Currency Cash Non-cash 31 December
2019 differences flows movements 2020
£’000 £’000 £’000 £’000 £’000
Cash and short term deposits 3,458 (37) 2,756 – 6,177
Debt due within one year (25,990) 629 (374) (9,999) (35,734)
Debt due after more than one year (9,999) – – 9,999 –
(32,531) 592 2,382 – (29,557)
A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences
from the above analysis.
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 Company also has the ability to enter into derivative transactions, in the form of traded options, for the purpose of
enhancing income returns and portfolio management. During the year, the Company entered into certain derivative
contracts. As disclosed in note 4, the premium received in respect of options written in the year was £33,000 (2020 – £62,000).
Positions closed during the year realised a loss of £nil (2020 – £nil). A realised loss would result if the underlying price on
exercise is higher than the exercise price for call options and lower than the exercise price for put options. The largest position
in derivative contracts held during the year at any given time was £20,000 (2020 – £33,000). The Company had no open
positions in derivative contracts at 31 December 2021.
The Board has delegated the risk management function to ACIL under the terms of its management agreement with ACIL
(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 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 ACIL 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.
ACIL is a fully integrated member of the abrdn plc Group (the “Group”), which provides a variety of services and support to
ACIL in the conduct of its business activities, including in the oversight of the risk management framework for the Company.
ASCIL has delegated the day to day administration of the investment policy to abrdn Asia Limited, which is responsible for
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). ACIL has delegated responsibility for
monitoring and oversight of the Investment Manager and other members of the Group which carry out services and support
to ACIL.
Notes to the Financial Statements
Continued
abrdn Asian Income Fund Limited 93
The 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 two (2020 – two) holdings in fixed rate overseas corporate
bonds, with G3 Exploration valued at £nil (2020 – £nil) and ICICI Bank at £3,761,000 (2020 – £3,934,000). 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 los
s may
be incurred.
94 abrdn Asian Income Fund Limited
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 12. Interest is due on the Bank of Nova Scotia,
London fixed term loan quarterly with the next interest payment being due on 2 March 2022. 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 25
March 2022.
The Board actively monitors its bank borrowings. A decision on whether to roll over its existing borrowings will be made prior to
their maturity dates, taking into account the Company’s ability to draw down fixed, long-term 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
period for which Weighted average Floating Fixed
rate is fixed interest rate rate rate
At 31 December 2021 Years % £’000 £’000
Assets
Indian Overseas Corporate Bond 2.60 9.15 – 3,761
Cash at bank – Sterling – – 3,227 –
Cash at bank – Taiwan Dollar – – 41 –
3,268 3,761
Weighted average
period for which Weighted average Floating Fixed
rate is fixed interest rate rate rate
At 31 December 2021 Years % £’000 £’000
Liabilities
Bank loan – Hong Kong Dollar 0.07 1.37 – (6,960)
Bank loan – US Dollar 0.07 1.43 – (14,028)
Bank loan – Sterling 0.07 1.31 – (15,800)
Bank loan – Sterling 2.17 1.53 – (10,000)
– (46,788)
Notes to the Financial Statements
Continued
abrdn Asian Income Fund Limited 95
Weighted average
period for which Weighted average Floating Fixed
rate is fixed interest rate rate rate
At 31 December 2020 Years % £’000 £’000
Assets
Indian Overseas Corporate Bond 3.60 9.15 – 3,934
Cash at bank – Sterling – – 2,655 –
Cash at bank – Hong Kong Dollar – – 3,476 –
Cash at bank – Taiwan Dollar – – 41 –
Cash at bank – Singapore Dollar – – 5 –
6,177 3,934
Weighted average
period for which Weighted average Floating Fixed
rate is fixed interest rate rate rate
At 31 December 2020 Years % £’000 £’000
Liabilities
Bank loan – Hong Kong Dollar 0.02 1.54 – (6,934)
Bank loan – US Dollar 0.02 1.50 – (13,900)
Bank loans – Sterling 0.11 1.39 – (4,900)
Bank loans – Sterling 0.17 2.18 – (10,000)
– (35,734)
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 (2020 – 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.
96 abrdn Asian Income Fund Limited
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 12, is in foreign
currency as at 31 December 2021.
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 2021 31 December 2020
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 87,514 – 87,514 62,324 – 62,324
Chinese Renminbi 21,378 – 21,378 51,564 – 51,564
Hong Kong Dollar 48,169 (6,960) 41,209 16,273 (3,458) 12,815
Indian Rupee 30,409 3,761 34,170 21,706 3,934 25,640
Indonesian Rupiah 5,031 – 5,031 4,181 – 4,181
Japanese Yen 8,493 – 8,493 10,881 – 10,881
Korean Won 44,846 – 44,846 65,985 – 65,985
Malaysian Ringgit 474 – 474 4,240 – 4,240
New Zealand Dollar 6,093 – 6,093 22,382 – 22,382
Singapore Dollar 82,191 – 82,191 72,876 5 72,881
Taiwanese Dollar 98,933 41 98,974 80,503 41 80,544
Thailand Baht 31,875 – 31,875 26,723 – 26,723
US Dollar 4,851 (14,028) (9,177) 4,246 (13,900) (9,654)
Total 470,257 (17,186) 453,071 443,884 (13,378) 430,506
Notes to the Financial Statements
Continued
abrdn Asian Income Fund Limited 97
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.
2021 2020
£’000 £’000
Australian Dollar
8,751 6,232
Chinese Renminbi
2,138 5,156
Hong Kong Dollar
4,121 1,282
Indian Rupee
3,417 2,564
Indonesian Rupiah
503 418
Japanese Yen
849 1,088
Korean Won
4,485 6,599
Malaysian Ringgit
47 424
New Zealand Dollar
609 2,238
Singapore Dollar
8,219 7,288
Taiwanese Dollar
9,897 8,054
Thailand Baht
3,188 2,672
US Dollar
(918) (965)
Total
45,306 43,050
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, as detailed on pages 110 and 111, both act to reduce market risk. The 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. A geographic analysis of the Company’s investment portfolio is shown on page
39, which shows that 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.
98 abrdn Asian Income Fund Limited
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% (2020 – 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.
2021 2020
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
Revenue return – increase /(decrease)
– – – –
Capital return – increase /(decrease)
49,361 (49,361) 45,889 (45,889)
Total profit after taxation – increase /(decrease)
49,361 (49,361) 45,889 (45,889)
Equity
49,361 (49,361) 45,889 (45,889)
(ii) Liquidity risk. This is the risk that the Company will encounter difficulty in meeting obligations associated with financial
liabilities, which stood at £51,286,000 (2020 – £38,946,000).
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 £3,268,000
and £497,370,000 (2020 – £6,177,000 and £462,823,000) 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 2021 £’000 £’000 £’000
Fixed rate
Bank loans
36,788 10,000 46,788
Interest on bank loans
237 191 428
37,025 10,191 47,216
Floating rate
Cash
3,268 – 3,268
Notes to the Financial Statements
Continued
abrdn Asian Income Fund Limited 99
Within Between
1 year 1-5 years Total
At 31 December 2020 £’000 £’000 £’000
Fixed rate
Bank loans
35,734 – 35,734
Interest on bank loans
93 – 93
35,827 – 35,827
Floating rate
Cash
6,177 – 6,177
Details of the Company’s borrowing arrangements are disclosed in note 12 on page 89.
(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 2021, the total of short–term other receivables was £1,438,000 (2020 – £1,422,000). 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 in 2020 or 2021.
– an Indian overseas corporate bond issued by ICICI Bank.
All 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.
100 abrdn Asian Income Fund Limited
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:
2021 2020
Balance Maximum Balance Maximum
Sheet exposure Sheet exposure
£’000 £’000 £’000 £’000
Non-current assets
Investments held at fair value through profit or loss
497,370 3,761 462,823 3,934
Current assets
Cash at bank
3,268 3,268 6,177 6,177
Other receivables
1,438 1,438 1,422 1,422
502,076 8,467 470,422 11,533
(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) on page 83 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.
Notes to the Financial Statements
Continued
abrdn Asian Income Fund Limited 101
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:
2021 2020
£’000 £’000
Debt
Borrowings under the multi-currency loan facility 36,788 25,734
Borrowing under the three year Sterling loan facility 9,965 10,000
46,753 35,734
2021 2,020
Equity £’000 £’000
Equity share capital 194,933 194,933
Retained earnings and other reserves 255,857 236,543
450,790 431,476
Debt as a % of net assets
A
10.37 8.28
A
The 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.
102 abrdn Asian Income Fund Limited
20. Related party transactions and transactions with the Manager
Fees payable during the period to the Directors are disclosed in note 6 on page 85 and within the Directors’ Remuneration
Report (unaudited) on pages 64 to 66, along with their interests in shares of the Company.
Mr Young, who is a Director of the Company, is employed by the Company’s Investment Manager, abrdn Asia Limited, which is
a wholly-owned subsidiary of abrdn plc. The Manager, abrdn Capital International Limited (“ACIL”) is also a subsidiary of abrdn
plc. Management, promotional activities and secretarial and administration services are provided by ACIL with details of
transactions during the year and balances outstanding at the year end disclosed in notes 5 and 6.
Mr Clarke, who was a Director and Chairman of the Company until 31 December 2021 is also Chairman of Thomas Dessain
who were paid £11,000 relating to services provided in the recruitment search for Mr Kirkby.
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 2021 Note £’000 £’000 £’000 £’000
Financial assets at fair value through profit or loss
Quoted equities a) 493,609 – – 493,609
Quoted bonds b) – 3,761 – 3,761
Net fair value 493,609 3,761 – 497,370
Level 1 Level 2 Level 3 Total
At 31 December 2020 Note £’000 £’000 £’000 £’000
Financial assets at fair value through profit or loss
Quoted equities a) 458,889 – – 458,889
Quoted bonds b) – 3,934 – 3,934
Net fair value 458,889 3,934 – 462,823
Notes to the Financial Statements
Continued
abrdn Asian Income Fund Limited 103
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 and
accordingly the Company’s holding in quoted bonds as at 31 December 2021 has been classified as Level 2.
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. The fair value of borrowings as at the 31 December 2021 has been estimated at £46,878,000
(carrying value per Balance Sheet – £46,753,000) which was calculated using a discounted cash flow valuation technique. At 31
December 2020 the fair value was £35,734,000 (carrying value per Balance Sheet – £35,734,000). Under the fair value
hierarchy in accordance with IFRS 13, these borrowings can be classified as Level 2.
23. Post Balance Sheet events
On 4 January 2022 the Company announced that with effect from 1 January 2022 it had changed its name to abrdn Asian
Income Fund Limited. In addition, the Company announced that it had migrated tax residency to the UK from Jersey and
elected to join the UK’s investment trust regime following a review of tax arrangements.
Subsequent to the year end, global stockmarkets have experienced increased volatility due to the Russian military offensive
against Ukraine. At the date this Report was signed, the NAV has fallen to 259.09p compared to 262.76p at the year end.
104 abrdn Asian Income Fund Limited
The Company engages in Securities Financing Transactions (SFTs) (as defined in Article 3 of Regulation (EU) 2015/2365, SFTs include
repurchase transactions, securities or commodities lending and securities or commodities borrowing, buy-sell back transactions or
sell-buy back transactions and margin lending transactions). In accordance with Article 13 of the Regulation, the Fund’s involvement in
and exposures related to securities lending for the accounting period are detailed below:
% of % of assets
Absolute value of assets engaged in SFTs £’000 lendable assets under management
31 December 2021
Securities lending 362 0.07 0.08
31 December 2020
Securities lending – – –
Top ten collateral issuers and collateral received
Based on market value of collateral received.
For all issuers, only equity securities with a main market listing were lent and the custodian was BNP Paribas.
2021 £’000 2020 £’000
Activision Blizzar 42 HSBC Holdings 2,444
United Airlines 42 Oversea-Chinese Banking Corporation 173
Constellation A 42 United Overseas Bank 3,611
APA Corp 42
Illimina 41
UnitedHealth Group 41
Relx 21
Amadeus IT Group 21
GN Store Nord 21
Daimler 21
334
6,228
2021 2020
Proportion held Proportion held
Market value in segregated Market value in segregated
of collateral held accounts of collateral held accounts
Collateral held per custodian £’000 % £’000 %
BNP Paribas 460 100 6,853 100
One custodian is used to hold the collateral, which is in a segregated account.
Securities Financin
g
Transactions Disclosure
(
Unaudited
)
abrdn Asian Income Fund Limited 105
Market value
of collateral received
2021 2020
Collateral analysed by currency £’000 £’000
Pound Sterling
21 6,853
Canadian Dollar
1 –
Swiss Franc
21 –
Danish Krone
62 –
Euro
104 –
US Dollar
251 –
Total collateral received
460 6,853
Market value Countries of
Securities lending of securities lending counterparty Settlement
Top Ten Counterparties per type of SFT
A
£’000 establishment and clearing
31 December 2021
BNP Paribas
362 France Tri-party
Total market value of securities lending
362 –
31 December 2020
Macquarie Bank
6,853 Australia Tri-party
Total market value of securities lending
6,853
A
All counterparties are shown
106 abrdn Asian Income Fund Limited
Maturity Tenor of SFTs (remaining period to maturity)
31 December 2021
Securities lending
The lending and collateral transactions are on an open basis and can be recalled on demand. As at 31 December 2021 and 31
December 2020 there were no securities on loan.
The Company does not engage in any re-use of collateral.
2021 2020
Return and cost per type of SFT £’000 % £’000 %
Securities lending
Gross return 2 120 – –
Direct operational costs (securities lending agent costs)
B
– (20) – –
Indirect operational costs (Investment Adviser operational costs) – – – –
Total costs – (20) – –
Net return 2 100 – –
B
The unrounded direct operational costs and fees incurred for securities lending for the 12 months to 31 December 2021 is £385 (2020 – £Nil)
Securities Financin
g
Transactions Disclosure
(
Unaudited
)
Continued
abrdn Asian Income Fund Limited 107
Corporate Information
The Company’s Investment Manager is
abrdn Asia Limited, a subsidiary of
abrdn plc, whose group companies as
at 31 December 2021 had £542 billion of
assets under management and
administration
108 abrdn Asian Income Fund Limited
abrdn Asia Limited
The investment management of the Company has been
delegated by abrdn Capital International Limited to abrdn
Asia Limited (“abrdn Asia”). abrdn Asia is based in
Singapore and is a wholly-owned subsidiary, and the Asia
Pacific headquarters of, abrdn plc (the “abrdn Group”), a
publicly-quoted company on the London Stock Exchange.
Worldwide, the abrdn Group manages and administers a
combined £542 billion (as at 31 December2021) in assets
for a range of clients, including individuals and institutions,
through mutual and segregated funds.
The abrdn Group has its headquarters in Edinburgh with
principal offices in Aberdeen, Bangkok, Hong Kong, Jersey,
London, Philadelphia, Singapore, Stockholm, Sydney,
Taipei and Tokyo.
The Investment Team Senior Managers
Hugh Young
Chairman Asia Pacific Region
BA in Politics from Exeter University. Started investment
career in 1980. He is Chairman of the abrdn Asia business
in Asia.
Yoojeong Oh
Investment Director, Asian Equities
CFA® charterholder, MEng in Engineering, Economics
and Management from the University of Oxford. Joined
abrdn Asia in 2005 and was initially a member of the UK
and European Equities Team in London before moving
to Singapore.
Flavia Cheong
Head of Equities – Asia Pacific
CFA® charterholder, Masters in Economics from
University of Auckland. Previously with Investment
Company of the People’s Republic of China and
Development Bank of Singapore. Started investment
career in 1987. Joined abrdn Asia in August 1996.
Christina Woon
Investment Manager, Asian Equities
CFA® charterholder, Bachelor of Accountancy from
Singapore Management University. Joined abrdn Asia in
January 2013 as a graduate.
Information about the Investment Mana
g
er
abrdn Asian Income Fund Limited 109
As active equity investors, we believe that deep
fundamental research, responsible stewardship with ESG,
and a disciplined investment process is the best approach
to meet our client’s investment needs – now and in the
future. Our approach to equity investing is underpinned by
three core investment beliefs.
Fundamental research delivers insights that can be used to
exploit market inefficiencies. In our view, company
fundamentals ultimately drive share prices but are often
valued inefficiently in the shorter term. We believe that
fundamental research is the key to delivering insights that
allow us to exploit these inefficiencies and identify the best
investment opportunities for client portfolios.
ESG assessment and corporate engagement enhance
returns. We place constructive engagement and
environmental, social and governance (ESG)
considerations at the heart of company research,
ensuring we are responsible stewards of our clients’
assets. We believe that this approach can mitigate risks
and enhance returns for our clients, as companies
with robust ESG practices tend to enjoy long-term
financial benefits.
Disciplined, active investment can deliver superior
outcomes for our clients. We aim to build high conviction
portfolios where our stock-specific insights drive
performance, giving our clients access to our best
investment ideas.
Our research drives performance
Research
The Investment Manager has developed a proprietary
research platform used by all its equity, credit and ESG
teams, giving instant access to research globally. The
research is focused on four key areas:
· Foundations – the Investment Manager analyses how
the company makes money, the attractiveness and
characteristics of its industry, and the strength and
sustainability of the economic ‘moat’. This includes a
thorough evaluation of the environmental, social and
governance (ESG) risks and opportunities of the
company. Face-to-face meetings anchor how the
Investment Manager understands and challenges the
key elements of a company’s fundamentals: the
evolution and growth of the business; the sustainable
competitive advantage; management’s track record of
execution and managing risk; past treatment of minority
shareholders; the balance sheet and financials; and ESG
risks and opportunities of the company in question.
· Dynamics – the shorter- and longer-term dynamics of
the business that will be the key determinants of its
corporate value over time. Specifically the Investment
Manager looks for changes in the factors driving the
market price of a stock, identifying the drivers that the
wider market may not be pricing in. Understanding the
dynamics behind these drivers allows the Investment
Manager to focus on the factors that will drive
shareholder returns from a particular stock.
The Investment Mana
g
er’s Investment Process
110 abrdn Asian Income Fund Limited
· Financials and Valuation – the Investment Manager
examines the strengths and weaknesses of the
company’s financials including a thorough analysis of
the balance sheet, cash flow and accounting, the
market’s perception of the company’s future prospects
and value, and its own forecasts of future financials and
how the stock should be priced. This includes significant
focus on the dividend paying capability of each
business, the potential for dividend growth and the
sustainability of the payout.
· Investment insight and risk – the Investment Manager
articulates its investment thesis, explaining how it views a
stock differently from the market consensus and how
the Investment Manager expects to crystallise value
from the holding over time.
Integrated ESG Analysis
The detailed analysis of the Investment Manager’s
embedded ESG process is contained on pages 42 to 47.
Idea Generation
Research coverage is organised on a sector basis, with
analysts developing deep expertise which enables them
to identify investment opportunities through fundamental
knowledge at both the sector and stock level. The
Investment Manager also uses quantitative screening
tools and risk tools to help us identify interesting
stock opportunities and the most appropriate
coverage universe.
Peer Review
Having a common investment language facilitates
effective communication and comparison of investment
ideas through peer review which is a critical part of the
process. All investment ideas are subject to rigorous peer
review, both at regular meetings and on an ad hoc basis –
and all team members debate stocks, meet companies
from all industries, and given their dual fund manager /
analyst role are incentivised to fully participate in the
entire process.
Portfolio Construction/Risk Controls
Portfolios are built from the bottom up, prioritising high
conviction stock ideas in a risk aware framework, giving
clients access to the best investment ideas. Portfolio risk
budgets are derived from clients’ investment objectives
and required outcomes. Peer review is an essential
component of the construction process with dedicated
portfolio construction pods (smaller dedicated groups of
senior team members that have clear accountability for
the strategy) debating stock holdings, portfolio structure
and risk profiles.
As an active equity investor the Investment Manager has
adopted a principled portfolio construction process which
actively takes appropriate and intentional risk to drive
return. The largest component of the active risk will be
stock-specific risk, along with appropriate levels of
diversification. Risk systems monitor and analyse risk
exposures across multiple perspectives breaking down
the risk within the portfolio by industry and country factors,
by currency and macro factors, and by other
fundamental factors (quality, momentum, etc.).
Consideration of risk starts at the stock level with the
rigorous company research helping the Investment
Manager to avoid stock specific errors. The Investment
Manager ensures that any sector or country risk is
appropriately sized and managed relative to the overall
objectives of the Company.
Operational Risk and Independent
Governance Oversight
Risk management is an integral part of the Investment
Manager’s management process and portfolios are
formally reviewed on a regular basis with the Investment
Manager’s Global Head of Equities, the Portfolio Managers,
the Investment Manager’s Investment Governance &
Oversight Team (IGO) and members of the Manager’s
Investment Risk Team. This third party oversight both
monitors portfolio risk and also oversees operational risk to
ensure client objectives are met.
The Investment Mana
g
er’s Investment Process
Continued
abrdn Asian Income Fund Limited 111
Keeping You Informed
Detailed information on the Company, including price,
performance information and a monthly fact sheet is
available from the Company’s website (asian-
income.co.uk) and the TrustNet website (trustnet.co.uk).
Alternatively you can call 0808 500 0040 (free when
dialling from a UK landline) for investment company
information.
Twitter: @abrdnTrusts
LinkedIn: abrdn Investment Trusts
Alternative Investment Fund Managers
Directive (“Directive”)
In accordance with the Alternative Investment Funds
(Jersey) Regulations 2012, the Jersey Financial Services
Commission ("JFSC") has granted permission for the
Company to be marketed within any EU Member State or
other EU State to which the Directive applies. The
Company's registration certificate with the JFSC is now
conditioned such that the Company "must comply with
the applicable sections of the Codes of Practice for
Alternative Investment Funds and AIF Services Business".
abrdn Capital International Limited ("ACIL"), 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 Directive) in the UK.
In addition, in accordance with Article 23 of the Directive
and Rule 3.2.2 of the Financial Conduct Authority (“FCA”)
Fund Sourcebook, ACIL 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: asian-income.co.uk. The periodic
disclosures required to be made by the Manager under
AIFMD are set out on page 117.
Investor Warning
The Board has been made aware by abrdn that some
investors have received telephone calls from people
purporting to work for the abrdn, or third parties, who
have offered to buy their investment company shares.
These may be scams which attempt to gain personal
information with which to commit identity fraud or
could be ‘boiler room’ scams where a payment from an
investor is required to release the supposed payment for
their shares.
These callers do not work for abrdn and any third party
making such offers has no link with the abrdn Group.
abrdn never makes these types of offers and does not
‘cold-call’ investors in this way. If investors have any doubt
over the veracity of a caller, they should not offer any
personal information, end the call and contact abrdn’s
investor services centre using the details provided below.
Dividend Tax Allowance
The annual tax-free personal allowance on dividend
income is £2,000 for the 2022/2023 tax year. Above this
amount, individuals will pay tax on their dividend income at
a rate dependent on their income tax bracket and
personal circumstances. The Company will provide
registered shareholders with a confirmation of dividends
paid by the Company and this should be included with any
other dividend income received when calculating and
reporting to HMRC total dividend income received. It is the
shareholder’s responsibility to include all dividend income
when calculating any tax liability.
Suitable for Retail/NMPI Status
The Company’s securities are intended for investors
primarily in the UK (including retail investors), professional-
advised private clients and institutional investors who are
wanting to benefit from the growth prospects of Asian
companies by investment in an investment company and
who understand and are willing to accept the risks of
exposure to equities. Investors should consider consulting
a financial adviser who specialises in advising on the
acquisition of shares and other securities before acquiring
shares. Investors should be capable of evaluating the risks
and merits of such an investment and should have
sufficient resources to bear any loss that may result.
The Company currently conducts its affairs so that its
securities can be recommended by IFAs to ordinary retail
investors in accordance with the Financial Conduct
Authorities’ (‘‘FCA’’) rules in relation to non-mainstream
pooled investments (NMPIs) and intends to continue to do
so for the foreseeable future.
The Company’s securities are excluded from the FCA’s
restrictions which apply to non-mainstream pooled
investments because the Company qualifies as an
investment trust.
Direct Investment
Investors can buy and sell shares in the Company directly
through a stockbroker or indirectly through a lawyer,
accountant or other professional adviser. Alternatively, for
retail clients, shares can be bought directly through the
abrdn Investment Plan for Children, abrdn Share Plan and
abrdn Investment Trusts ISA.
Investor Information
112 abrdn Asian Income Fund Limited
abrdn Investment Plan for Children
abrdn runs an Investment Plan for Children (the “Children’s
Plan”) which covers a number of investment companies
under its management including the Company. Anyone
can invest in the Children’s Plan, including parents,
grandparents and family friends (subject to the eligibility
criteria as stated within the terms and conditions). All
investments are free of dealing charges on the initial
purchase of shares, although investors will suffer the bid-
offer spread, which can, on some occasions, be a
significant amount. Lump sum investments start at £150
per company, while regular savers may invest from £30
per month. Selling costs are £10 + VAT. There is no
restriction on how long an investor need invest in the
Children’s Plan, and regular savers can stop or suspend
participation by instructing abrdn in writing at any time. In
common with other schemes of this type, all investments
are held in nominee accounts. Investors have full voting
and other rights of share ownership.
abrdn Share Plan
abrdn runs a Share Plan (the “Plan”) through which shares
in the Company can be purchased. There are no dealing
charges on the initial purchase of shares, although
investors will suffer the bid-offer spread, which can, on
some occasions, be a significant amount. Lump sum
investments start at £250, while regular savers may invest
from £100 per month. Selling costs are £10 + VAT. There is
no restriction on how long an investor need invest in a Plan,
and regular savers can stop or suspend participation by
instructing abrdn in writing at any time. In common with
other schemes of this type, all investments are held in
nominee accounts. Investors have full voting and other
rights of share ownership.
abrdn Investment Trusts ISA
An investment of up to £20,000 can be made in the tax
year 2022/2023.
The annual ISA administration charge is £24 + VAT,
calculated annually and applied on 31 March (or the last
business day in March) and collected soon thereafter
either by direct debit or, if there is no valid direct debit
mandate in place, from the available cash in the Plan prior
to the distribution or reinvestment of any income, or,
where there is insufficient cash in the Plan, from the sale of
investments held in the Plan. Investors have full voting and
other rights of share ownership. Under current legislation,
investments in ISAs can grow free of capital gains tax.
ISA Transfer to abrdn
You can choose to transfer previous tax year investments
to the abrdn ISA which can be invested in the Company
while retaining your ISA wrapper. The minimum lump sum
for an ISA transfer is £1,000 and is subject to a minimum
per investment company of £250.
Shareholder Enquiries
Registered Shareholders
In the event of queries regarding their holdings of shares,
lost certificates dividend payments, registered details, etc
registered shareholders holding their shares in the
Company directly should contact the registrars, Link
Market Services (Jersey) Limited, PO Box 532, St Helier
Jersey JE4 5UW (e-mail
shareholderenquiries@linkassetservices.com
) or Tel: 0371
664 0300 Lines are open 9.00 a.m. to 5.30 p.m. (London
Time) Monday to Friday. Calls may be recorded and
monitored randomly for security and training purposes.
Changes of address must be notified to the registrars
in writing.
General Enquiries
Any general enquiries about the Company should be
directed to the Company Secretary, abrdn Asian Income
Fund Limited, c/o abrdn Capital International Limited, 1st
Floor, Sir Walter Raleigh House, 48 – 50 Esplanade, St Helier,
Jersey JE2 3QB or by emailing C
CEF.CoSec@abrdn.com
.
abrdn Savings Plan Enquiries
If you have any questions about an investment held
through the abrdn Share Plan, abrdn ISA or abrdn
Investment Plan for Children, please telephone the
Manager’s Customer Services Department on 0808 500
0040. Alternatively, email inv.trusts@abrdn.com or write to
abrdn Investment Trusts, PO Box 11020, Chelmsford,
Essex CM99 2DB. Terms and conditions for the managed
savings products can also be found under the literature
section of invtrusts.co.uk.
Literature Request Service
For literature and application forms for the Company and
abrdn‘s investment company products, please contact:
Telephone: 0808 500 0040
www.invtrusts.co.uk/en/fund-centre/literature-order-
form
Investor Information
Continued
abrdn Asian Income Fund Limited 113
Key Information Document (“KID”)
The KID relating to the Company and published by the
Manager can be found in the ‘Key Literature’ section of the
Company’s website.
Online Dealing
There are a number of online dealing platforms for private
investors that offer share dealing, ISAs and other means to
invest in the company. Real-time execution-only
stockbroking services allow you to trade online, manage
your portfolio and buy UK listed shares. These sites do not
give advice. Some comparison websites also look at
dealing rates and terms. Some well-known online
providers, which can be found through internet search
engines, include:
AJ Bell YouInvest; Barclays Smart Investor; Charles Stanley
Direct; Fidelity; Halifax; Hargreaves Lansdown; Interactive
Investor; Novia; Transact; and Standard Life.
Discretionary Private Client Stockbrokers
If you have a large sum to invest, you may wish to contact
a discretionary private client stockbroker. They can
manage your entire portfolio of shares and will advise you
on your investments. To find a private client stockbroker
visit The Personal Investment Management and Financial
Advice Association at pimfa.co.uk.
Independent Financial Advisers
To find an adviser who recommends on investment
companies, visit unbiased.co.uk.
Regulation of stockbrokers
Before approaching a stockbroker, always check that
they are regulated by the Financial Conduct Authority:
Tel: 0800 111 6768 or
https://register.fca.org.uk/
register@fca.org.uk
The above information on pages 111 to 113 has been
approved for the purposes of Section 21 of the Financial
Services and Markets Act 2000 (as amended by the
Financial Services Act 2012) by Aberdeen Asset Managers
Limited which is authorised and regulated by the Financial
Conduct Authority.
114 abrdn Asian Income Fund Limited
abrdn Asia or Investment Manager
abrdn Asia Limited – the Company’s Investment Manager
(previously known as Aberdeen Standard (Asia) Limited.
AIC
The Association of Investment Companies – the AIC is the
trade body for closed-ended investment companies
(theaic.co.uk).
AIFMD
The Alternative Investment Fund Managers Directive – The
AIFMD is European legislation which created a European-
wide framework for regulating managers of ‘alternative
investment funds’ (AIFs). It is designed to regulate any fund
which is not a UCITS (Undertakings for Collective
Investments in Transferable Securities) fund and which is
managed/marketed in the EU. The Company has been
designated as an AIF.
ACIL
abrdn Capital International Limited – the Company’s
Manager (previously known as Aberdeen Standard
Capital International Limited).
Asset Cover
The value of a company’s net assets available to repay a
certain security. Asset cover is usually expressed as a
multiple and calculated by dividing the net assets
available by the amount required to repay the
specific security.
Derivative
A derivative is a financial security with a value that is reliant
upon or derived from an underlying asset or group of
assets. The derivative itself is a contract between two or
more parties based upon the asset or assets. Its price is
determined by fluctuations in the underlying asset.
Disclosure Guidance and Transparency
Rules or DTRs
The DTRs contain requirements for publishing and
distributing annual financial reports, half-yearly financial
reports and other regulatory statements, and are
applicable to investment companies which are listed on
the main market of the London Stock Exchange.
Discount
The amount by which the market price per share of an
investment company is lower than the NAV per share. The
discount is normally expressed as a percentage of the
NAV per share.
Dividend Cover
Earnings per share divided by dividends per share
expressed as a ratio.
Dividend Yield
The annual dividend expressed as a percentage of the
share price.
Key Information Document or KID
The Packaged Retail and Insurance-based Investment
Products (“PRIIPS”) Regulation requires the Manager, as
PRIIP manufacturer, to prepare a key information
document (“KID”) in respect of the Company. This KID
must be made available by the Investment Manager to
retail investors prior to them making any investment
decision and is available via a link on the Company’s
website. The Company is not responsible for the
information contained in the KID and shareholders should
note that the procedures for calculating the risks, costs
and potential returns are prescribed by the law. The
figures in the KID may not reflect the expected returns for
the Company and anticipated performance returns
cannot be guaranteed.
Financial Conduct Authority or FCA
The FCA issues the Listing Rules and DTRs.
Manager or ACIL
abrdn Capital International Limited.
Net Asset Value or NAV
The value of total assets less liabilities. Liabilities for this
purpose includes current and long-term liabilities. The
NAV divided by the number of shares in issue (excluding all
shares held in treasury) produces the NAV per share.
Net Gearing
Net gearing is calculated by dividing Total Assets (as
defined below) less cash or cash equivalents by
shareholders’ funds expressed as a percentage
(the AIC basis).
Official List
The FCA’s Official List is the definitive record of whether a
company’s securities are officially listed in the UK. Among
other things, each entry in the Official List shows the:
security listed; its issuer; and the security’s listing category
- the set of obligations that apply to the issuer regarding
that particular listing.
Glossary of Terms
abrdn Asian Income Fund Limited 115
Ongoing Charges
Ratio of expenses as percentage of average daily
shareholders’ funds calculated as per the industry
standard method.
Ordinary Shares
The Company’s 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. The Ordinary Shares are in
registered form and traded on the London Stock
Exchange’s Main Market. Subject to the Articles of
Association, on a show of hands every registered holder of
Ordinary Shares (a shareholder) who is present in person
(or, being a corporation, by representative) shall have one
vote. On a poll every shareholder present in person (or,
being a corporation, by representative) or by proxy shall
be entitled to one vote in respect of each Ordinary Share
held. In the case of joint holders, the vote of the senior who
tenders a vote, whether in person or by proxy, shall be
accepted to the exclusion of the votes of the other joint
holders, and for this purpose seniority shall be determined
by the order in which the names stand in the register
of members.
PIDD
The pre-investment disclosure document. The disclosures
that are required to be made to investors by ACIL and the
Company in accordance with the AIFMD.
Premium
The amount by which the market price per share of an
investment company exceeds the NAV per share. The
premium is normally expressed as a percentage of the
NAV per share.
Price/Earnings Ratio
The ratio is calculated by dividing the middle-market price
per share by the earnings per share. The calculation
assumes no change in earnings but in practice the
multiple reflects the stock market’s view of a company’s
prospects and profit growth potential.
Prior Charges
The name given to all borrowings including debentures,
loan and short term loans and overdrafts that are to be
used for investment purposes, reciprocal foreign currency
loans, currency facilities to the extent that they are drawn
down, index-linked securities, and all types of preference
or preferred capital and the income shares of split capital
trusts, irrespective of the time until repayment.
abrdn Group
The abrdn plc group of companies.
Total Assets
Total Assets less current liabilities (before deducting prior
charges as defined above).
Total Return
Total Return involves reinvesting the net dividend in the
month that the share price goes ex-dividend. The NAV
Total Return involves investing the same net dividend in the
NAV of the Company on the date to which that dividend
was earned, eg quarter end, half year or year end date.
Information relevant to the reporting period is disclosed on
page 120.
Voting 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 every
Ordinary Share held.
Winding-Up Entitlements
On a winding up of the Company, any surplus assets
available after payment of all debts and satisfaction of all
liabilities of the Company shall be applied in repaying the
Ordinary shareholders the amounts paid up on such
shares. Any surplus shall be divided among the holders of
Ordinary Shares pari passu according to the amount paid
up on such shares respectively.
116 abrdn Asian Income Fund Limited
Issued Share Capital at 31 December 2021
171,558,896 Ordinary Shares of no par value
23,374,493 Ordinary Shares of no par value held in Treasury
Capital History
20 December 2005
110,000,000 Ordinary Shares placed at 100p per share
and 22,000,000 Warrants issued at 10p per Warrant.
Ordinary Share issue applicants were entitled to purchase
Warrants on the basis of one Warrant for every 10
Ordinary Shares applied for.
Year to 31 December 2007
800,000 Ordinary Shares of no par value purchased in the
market for cancellation
Year to 31 December 2008
760,000 Ordinary Shares of no par value purchased in the
market for cancellation
Year to 31 December 2009
1,350,000 Ordinary Shares of no par value issued for cash
at a premium to the prevailing NAV
Year to 31 December 2010
7,199,001 Ordinary Shares of no par value issued for cash
at a premium to the prevailing NAV. 11 May 2010 160,999
Warrants exercised resulting in the issue of 160,999 new
Ordinary shares. 13 October 2010 885,062 Warrants
exercised resulting in the issue of 885,062 new Ordinary
shares
Year to 31 December 2011
6,250,000 Ordinary Shares of no par value issued for cash
at a premium to the prevailing NAV. 16 May 2011
14,793,009 Warrants exercised resulting in the issue of
14,793,009 new Ordinary shares. 5 October 2011 5,800
Warrants exercised resulting in the issue of 5,800 new
Ordinary shares
Year to 31 December 2012
9,517,388 Ordinary Shares of no par value issued for cash
at a premium to the prevailing NAV. 24 May 2012.
1,766,974 Warrants exercised resulting in the issue of
1,766,974 new Ordinary shares. 15 October 2012 814,113
Warrants exercised resulting in the issue of 814,113 new
Ordinary shares. 16 November 2012 60,000,000 C shares
issued by way of a Placing and Offer for Subscription
Year to 31 December 2013
8,425,000 Ordinary Shares of no par value issued for cash
at a premium to the prevailing NAV. 4 February 2013
60,000,000 C shares converted into 30,552,000 new
Ordinary Shares. 17 May 2013 3,574,043 Warrants
exercised resulting in the issue of 3,574,043 new Ordinary
Shares. Following the exercise no Warrants remain
Year to 31 December 2014
800,000 Ordinary Shares of no par value issued for cash at
a premium to the prevailing NAV
Year to 31 December 2015
500,000 Ordinary Shares of no par value issued for cash at
a premium to the prevailing NAV. 1,907,000 Ordinary
Shares of no par value purchased in the market at a
discount to the prevailing NAV (of which 1,807,000 were
held in treasury and 100,000 were cancelled)
Year to 31 December 2016
6,158,000 Ordinary Shares of no par value purchased in
the market at a discount to the prevailing NAV for treasury
Year to 31 December 2017
3,686,168 Ordinary Shares of no par value purchased in
the market at a discount to the prevailing NAV for treasury
Year to 31 December 2018
4,651,533 Ordinary Shares of no par value purchased in
the market at a discount to the prevailing NAV for treasury
Year to 31 December 2019
1,038,713 Ordinary Shares of no par value purchased in
the market at a discount to the prevailing NAV for treasury
Year to 31 December 2020
1,767,492 Ordinary Shares of no par value purchased in
the market at a discount to the prevailing NAV for treasury
Year to 31 December 2021
4,265,587 Ordinary Shares of no par value purchased in
the market at a discount to the prevailing NAV for treasury
Your Company’s Share Capital History
abrdn Asian Income Fund Limited 117
The Manager and the Company are required to make certain disclosures available to investors in accordance with the
Alternative Investment Fund Managers Directive ('AIFMD').
Those disclosures that are required to be made pre-investment are included within a pre-investment disclosure
document ('PIDD') which can be found on the Company’s website asian-income.co.uk. There have been no material
changes to the disclosures contained within the PIDD since the last publication in May 2020.
The periodic disclosures as required under the AIFMD to investors are made below:
· Information on the investment strategy, geographic and sector investment focus and principal stock exposures are
included in the Strategic Report.
· None of the Company’s assets are subject to special arrangements arising from their illiquid nature.
· The Strategic Report, note 18 to the Financial Statements and the PIDD together set out the risk profile and risk
management systems in place. There have been no changes to the risk management systems in place in the period
under review and no breaches of any of the risk limits set, with no breach expected.
· There are no new arrangements for managing the liquidity of the Company or any material changes to the liquidity
management systems and procedures employed by ACIL.
· In accordance with the requirements of the AIFMD, the Manager’s remuneration policy is available from the Company
Secretaries, abrdn Capital International Limited on request (see contact details on page 125) and the remuneration
disclosures in respect of the ACIL reporting period for the year ended 31 December 2021 are available on the
Company’s website.
The above information has been approved for the purposes of Section 21 of the Financial Services and Markets Act 2000
(as amended by the Financial Services Act 2012) by Aberdeen Standard Fund Managers Limited which is authorised and
regulated by the Financial Conduct Authority
AIFMD Disclosures
(
Unaudited
)
118 abrdn Asian Income Fund Limited
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.
2021 2020
NAV per Ordinary share (p) a 262.76 245.40
Share price (p) b 231.00 228.50
Discount (b-a)/a –12.1% –6.9%
Dividend cover
Dividend cover measures the revenue return per share divided by total dividends per share, expressed as a ratio.
2021 2020
Revenue return per share a 8.95p 7.41p
Dividends per share b 9.50p 9.30p
Dividend cover a/b 0.94 0.80
Dividend yield
The annual dividend per Ordinary share divided by the share price, expressed as a percentage.
2021 2020
Annual dividend per Ordinary share (p) a 9.50p 9.30p
Share price (p) b 231.00p 228.50p
Dividend yield (b-a)/a 4.1% 4.1%
Alternative Performance Measures
abrdn Asian Income Fund Limited 119
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.
2021 2020
Borrowings (£’000) a 46,753 35,734
Cash (£’000) b 3,268 6,177
Amounts due to brokers (£’000) c – –
Amounts due from brokers (£’000) d – –
Shareholders’ funds (£’000) e 450,790 431,476
Net gearing (a-b+c-d)/e 9.6% 6.9%
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.
2021 2020
Investment management fees (£’000)
3,527 3,120
Administrative expenses (£’000)
862 792
Less: non-recurring charges
A
(£’000)
(76) –
Ongoing charges (£’000)
4,313 3,912
Average net assets (£’000)
446,994 378,122
Ongoing charges ratio (excluding look-through costs)
0.96% 1.03%
Look-through costs
B
0.05% 0.07%
Ongoing charges ratio (including look-through costs)
1.01% 1.10%
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.
120 abrdn Asian Income Fund Limited
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 2021 NAV Price
Opening at 1 January 2021 a 245.40p 228.50p
Closing at 31 December 2021 b 262.76p 231.00p
Price movements c=(b/a)-1 7.1% 1.1%
Dividend reinvestment
A
d 3.9% 4.1%
Total return c+d +11.0% +5.2%
Share
Year ended 31 December 2020
NAV Price
Opening at 1 January 2020 a 227.15p 214.00p
Closing at 31 December 2020 b 245.40p 228.50p
Price movements c=(b/a)-1 8.0% 6.8%
Dividend reinvestment
A
d 4.9% 5.3%
Total return c+d +12.9% +12.1%
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.
Alternative Performance Measures
Continued
abrdn Asian Income Fund Limited 121
General
The AGM will be held at 10:00 a.m. on 11 May 2022 at Bow Bells House,
1 Bread Street, London EC4M 9HH
122 abrdn Asian Income Fund Limited
Notice is hereby given that the sixteenth Annual General Meeting of abrdn Asian Income Fund Limited will be held at Bow
Bells House, 1 Bread Street, London EC4M 9HH at 10.00 a.m. on 11 May 2022 for the following purposes:
Ordinary Business
As ordinary business to consider and, if thought fit, pass the following resolutions as Ordinary Resolutions:
1. To receive the Directors’ Report and financial statements for the year ended 31 December 2021, together with the
Auditor’s report thereon.
2. To receive and adopt the Directors’ Remuneration Report for the year ended 31 December 2021 (other than the
Directors’ Remuneration Policy).
3. THAT shareholders approve the Company’s Dividend Policy to continue to pay four interim dividends per year.
4. To re-elect Mr H Young as a Director.
5. To re-elect Ms K Nowak as a Director.
6. To re-elect Ms N McCabe as a Director.
7. To re-elect Mr I Cadby as a Director.
8. To re-elect Mr M Florance as a Director.
9. To elect Mr R Kirkby as a Director.
10. To re-appoint KPMG Channel Islands Limited as independent Auditor and to authorise the Audit Committee to
agree their remuneration.
Special Business
To consider and, if thought fit, pass resolutions 11 and 12 which will both be proposed as Special Resolutions:
11. THAT, the Company be and is hereby generally and unconditionally authorised in accordance with the Articles of
Association to make market purchases on a stock exchange of and to cancel or hold in treasury Ordinary Shares of
no par value in the capital of the Company (“Ordinary Shares”), provided that:
a) the maximum number of Ordinary Shares hereby authorised to be purchased is 14.99% of the issued share
capital of the Company as at the date of the passing of this resolution;
b) the maximum price which may be paid for an Ordinary Share shall not be more than the higher of (i) an amount
equal to 105% of the average of the middle market quotations for an Ordinary Share taken from the Official List
for the five business days immediately preceding the day on which the Ordinary Share is purchased; and (ii) the
higher of the last independent trade and the current highest independent bid on the trading venue where the
purchase is carried out;
c) the minimum price which may be paid for an Ordinary Share is 1 pence;
d) the Company be authorised to purchase Ordinary Shares out of its unrealised capital or revenue profits less its
capital or revenue losses, whether realised or unrealised; and,
e) the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company in
2023 or, if earlier, on the expiry of 18 months from the passing of this resolution, unless such authority is renewed
prior to such time.
Notice of Annual General Meetin
g
abrdn Asian Income Fund Limited 123
12. THAT, the Directors be empowered to allot Ordinary Shares for cash (or sell Ordinary Shares held as treasury
shares) up to a maximum amount of 17,079,550 Ordinary Shares (or 10% of the total number of Ordinary Shares in
issue as at the date of the passing of this resolution) as if Article 10 of the Company’s Articles of Association did not
apply, provided that such disapplication shall expire (unless and to the extent previously revoked, varied or renewed
by the Company in general meeting by Special Resolution) at the earlier of the conclusion of the Annual General
Meeting of the Company to be held in 2023 or 18 months from the date of the passing of this resolution but so that
this power shall enable the Company to make offers or agreements before such expiry which would or might
require Ordinary Shares to be issued after such expiry and the Directors of the Company may issue Ordinary Shares
in pursuance of any such offer or agreement as if such expiry had not occurred.
By order of the Board
abrdn Capital International Limited
Secretaries
25 March 2022
Registered Office
1st Floor, Sir Walter Raleigh House
48 – 50 Esplanade, St Helier, Jersey JE2 3QB
Notes
1. A member entitled to attend and vote is entitled to appoint a proxy or proxies to attend and, on a poll, to vote instead
of him. A proxy need not be a member of the Company. A form of proxy is enclosed. (Shareholders’ attention is
drawn to note 13 below.)
2. Instruments of proxy and the power of attorney or other authority, if any, under which they are signed or a notarially
certified copy of that power of attorney or authority should be sent to The Registrars, abrdn Asian Income Fund
Limited, Link Group, 10th Floor Central Square, 29 Wellington Street, Leeds LS1 4DL so as to arrive not less than forty
eight hours before the time fixed for the meeting. (Shareholders’ attention is drawn to note 13 below.)
3. In accordance with Article 40 of the Companies (Uncertificated Securities) (Jersey) Order 1999, to have the right to
attend and vote at the meeting referred to above a member must first have his or her name entered in the
Company’s register of members by not later than forty eight hours before the time fixed for the meeting (or, in the
event that the meeting be adjourned, on the register of members forty eight hours before the time of the adjourned
meeting). Changes to entries on that register after that time (or, in the event that the meeting is adjourned, on the
register of members less than forty eight hours before the time of any adjourned meeting) shall be disregarded in
determining the rights of any member to attend and vote at the meeting referred to above.
4. Notes on CREST Voting.
CREST Members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service
may do so by utilising the procedures described in the CREST Manual, which is available to download from the
Euroclear website (www.euroclear.com/CREST). CREST personal members or other CREST sponsored members,
and those CREST members who have appointed voting service provider(s) should contact their CREST sponsor or
voting service provider(s) who will be able to take the appropriate action on their behalf.
5. In order for a proxy appointment or instruction made using the CREST system to be valid, the appropriate CREST
message (a "CREST proxy instruction") must be properly authenticated in accordance with Euroclear's
specifications and must contain the information required for such instructions, as described in the CREST Manual. To
appoint a proxy or to give or amend an instruction to a previously appointed proxy via the CREST system, the CREST
message must be received by the issuer's agent RA10 by 10.00 a.m. on 9 May 2022. For this purpose, the time of
receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST
applications Host) from which the issuer's agent is able to retrieve the message.
124 abrdn Asian Income Fund Limited
6. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear
does not make available special procedures in CREST for any particular messages. Normal systems timings and
limitations will therefore apply in relation to the input of CREST proxy instructions. It is the responsibility of the CREST
member concerned to take (or, if the CREST member is a CREST personal member or CREST sponsored member or
has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) takes(s))
such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by a
particular time. For further information on CREST procedures, limitations and system timings please refer to the
CREST Manual.
7. The Company may treat as invalid a proxy appointment sent by CREST in the circumstances set out in Regulation
35(5)(a) of the Uncertificated Securities Regulations 2001. In any case, a proxy form must be received by the
Company's registrars no later than 10.00 a.m. on 9 May 2022.
8. Shareholders are advised that unless otherwise provided, the telephone numbers and website addresses which may
be set out in this Notice or the Form of Proxy/Letter of Direction are not to be used for the purpose of serving
information or documents on the Company including the service of information or documents relating to
proceedings at the Company’s Annual General Meeting. If the Chairman, as a result of any proxy appointments, is
given discretion as to how the votes the subject of those proxies are cast and the voting rights in respect of those
discretionary proxies, when added to the interests in the Company’s Ordinary Shares already held by the Chairman,
result in the Chairman holding such number of voting rights that he has a notifiable obligation under the Disclosure
and Transparency Rules, the Chairman will make the necessary notifications to the Company and the Financial
Services Authority. As a result any person holding 3% or more of the voting rights in the Company who grants the
Chairman a discretionary proxy in respect of some or all of those voting rights and so would otherwise have a
notification obligation under the Disclosure and Transparency Rules, need not make a separate notification to the
Company and the Financial Services Authority.
9. No Director has a service contract with the Company.
10. The Register of Directors’ interests is kept by the Company and available for inspection.
11. As at 25 March 2022 (being the last business day prior to the publication of this notice) the Company’s issued
Ordinary Share capital comprised 170,795,505 Ordinary Shares of no par value and 24,137,884 Treasury shares.
Each Ordinary Share carries the right to one vote at a general meeting of the Company and, therefore, the total
number of voting rights in the Company as at 25 March 2022 was 170,795,505.
12. There are special arrangements for holders of Ordinary Shares through the abrdn Share Plan and ISA. These are
explained in the ‘Letter of Direction’ which such holders will have received with this report.
13.
The Board is hopeful that the 2022 AGM will be an in-person meeting. However, given the evolving nature of the
Covid-19 pandemic, should circumstances change significantly before the time of the AGM, the Company will notify
shareholders of any changes to the AGM arrangements by updating the Company’s website at murray-intl.co.uk
and through an RIS announcement, where appropriate, as early as is possible before the date of the meeting.
Shareholders should note that if law or Government guidance so requires at the time of the meeting, the Chairman
of the Meeting will limit, in his sole discretion, the number of individuals in attendance at the meeting and may be
required to impose entry restrictions on certain persons wishing to attend the meeting in order to ensure the safety
of those attending the meeting and to satisfy any requirements mandated by the venue managers.
Continued
Notice of Annual General Meetin
g
abrdn Asian Income Fund Limited 125
Directors
Ian Cadby,
Chairman
Krystyna Nowak,
Senior Independent Director
Mark Florance,
Audit Committee Chairman
Robert Kirkby (
appointed 1 November 2021
)
Nicky McCabe
Hugh Young
Manager, Secretary & Registered Office
abrdn Capital International Limited
1st Floor, Sir Walter Raleigh House
48 – 50 Esplanade
St Helier
Jersey JE2 3QB
Tel: 01534 758 847
CEF.CoSec@abrdn.com
Registered in Jersey with Number 91671
Investment Manager
abrdn Asia Limited
21 Church Street
#01-01 Capital Square Two
Singapore 049480
Registrars
Link Market Services (Jersey) Limited
PO Box 532
St Helier
Jersey JE4 5UW
Transfer Agents
Link Group,
10th Floor Central Square,
29 Wellington Street,
Leeds LS1 4DL
Tel: 0371 664 0300
(lines are open 9.00am-5.30pm Mon-Fri)
Tel International: (+44 208 639 3399)
enquiries@linkgroup.co.uk
signalshares.com
Bankers
The Bank of Nova Scotia, London
201 Bishopsgate, 6th Floor
London EC2M 3NS
Solicitors
Dickson Minto
16 Charlotte Square
Edinburgh EH2 4DF
Jersey Lawyers
Mourant Ozannes (Jersey) Limited
22 Grenville Street
St Helier
Jersey JE4 8PX
Stockbrokers
Stifel Nicolaus Europe Limited
150 Cheapside
London EC2V 6ET
Independent Auditor
KPMG Channel Islands Limited
37 Esplanade, St Helier
Jersey, JE4 8WQ
Custodian
BNP Security Services S.A Jersey Branch
United States Internal Revenue Service FATCA
Registration Number (GIIN)
MIXWGC.99999.SL.832
Legal Entity Identifier (LEI)
549300U76MLZF5F8MN87
Website
asian-income.co.uk
Corporate Information
For more information visit:
asian-income.co.uk