Aberdeen Asian Income Fund Limited

Legal Entity Identifier: 549300U76MLZF5F8MN87

UNAUDITED HALF YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2025

Performance Highlights

·    Dividend yield of 6.8%.

·    Share price total return of 6.3%.

·    Three and five year outperformance of the Index (NAV and share price total return).

·    Enhanced annual dividend policy introduced from the start of the 2025 financial year.

For further information please contact:

Ben Heatley

Head of Closed End Fund Sales

Aberdeen Group plc

07796 564 562

Chairman's Statement

Building on our strengths: enhanced team, attractive yield and strong results driving shareholder value

This has been an exciting period for our Company. We strengthened our investment team with the appointment of an additional highly experienced lead portfolio manager, bringing fresh insight to complement our existing expertise. Our enhanced dividend policy - delivering one of the most compelling yields in the sector - is already attracting more income seeking investors. Together with a robust share price performance, these developments further reinforce our long term track record and investment appeal.  

Investment Management Team

During the period, we were pleased to welcome Isaac Thong as our lead manager, working alongside Eric Chan. Isaac has joined Aberdeen's Asia Pacific Equities team as Senior Investment Director, based in Singapore, and is responsible for the day-to-day portfolio management of the Company. He also leads the Asian Income portfolio construction group within Aberdeen which includes responsibility for the Company's portfolio.

With over 15 years' experience investing in Asian equities, Isaac brings a wealth of knowledge and expertise that will enable the investment team to continue finding companies that will deliver sustainable growth, consistent income and attractive returns for our shareholders.

Performance

It is pleasing to report a share price total return of 6.3% for the six months to 30 June 2025 and a narrowing of the discount of the share price to the net asset value ("NAV") per share from 12.5% to 9.3%. 

The NAV total return for the period was 2.2%, compared to a total return of 4.5% from the MSCI AC Asia Pacific ex Japan Index (the "Index").  

The NAV underperformance for the period under review was due primarily to the portfolio's underweight exposure to Chinese internet stocks. Historically, the Company has had little or no China internet exposure because these companies did not pay a dividend, which worked well previously but has had an impact on performance this year.

Encouragingly, the Company continues to outperform the Index over three and five years in both NAV and share price total return terms. These long-term absolute and positive returns for investors have been achieved without compromising on quality, reflecting the Investment Manager's disciplined investment approach. The Investment Manager has recently implemented a refined strategy of balancing income and growth across key Asian markets. This has resulted in a rise in the portfolio's weighted average return on equity, profit margins and yield.

Portfolio Activity

The refinements to the investment strategy also aim to capture Asia's growth through a balanced approach across a spectrum of yields. This total return approach combines yield and earnings growth, while maintaining a quality income focus. As a result, the Investment Manager has initiated positions in companies that are strong dividend franchises at various stages of their life cycles. Some of these companies could be lower yielding, but based on their high-quality business models, dividend policies, and growth potential, are strong dividend payers.

During the period, such initiations included NetEase and Alibaba, which offer a balance between capital return and dividend growth, making them suitable for the portfolio. Both companies have strengthened their dividend policies since 2022.

Other notable new holdings include Samsung Fire & Marine Insurance, South Korea's strongest insurer. It has the highest solvency ratios compared to peers, which support steady dividend growth with surplus capital, providing room for capital returns to shareholders. It is also viewed as a beneficiary of the 'Value Up' theme (a government led initiative aimed at enhancing corporate value and improving shareholder returns).

In India, a new position was added in HDFC Bank, which is known to have the best retail banking franchise in the country. It has a high-quality wholesale portfolio, solid underwriting standards, and a progressive digital stance further strengthening its competitive edge.

Among the exits from the portfolio, the Investment Manager sold the holding in Singapore Technologies Engineering, where the yield had become too low following strong performance as its investment thesis played out.

Revenue and Dividends

It is pleasing to report that revenue earnings per share were 8.75p for the six month period ended 30 June 2025, which compares to 5.73p per share for the first six months of the previous year. The Company has continued to benefit from the Investment Manager's focus on high-yielding companies with strong fundamentals, where it believes there is room for significant increases in dividend receipts.

The Company has already declared first and second interim dividends of 3.65p per share and 3.84p per share in respect of the year ending 31 December 2025, with the second interim dividend payable on 22 August 2025 to shareholders on the register on 25 July 2025.

Enhanced Dividend Policy and Introduction of Continuation Vote

In January, as part of efforts to broaden the appeal of the Company's shares to a wider range of investors and to reflect the sustained investor appetite for yield in the current interest rate environment, the Board introduced an enhanced dividend policy such that the Company's dividend is now set at 1.5625% per quarter of the NAV, equating to approximately 6.25% of NAV per annum. The dividend is calculated using the Company's NAV on the last business day of the preceding financial quarter (i.e. the end of March, June, September and December).

Based on a share price of 223p on 30 June 2025, and taking into account the first and second interim dividends already declared, this equates to an annualised dividend yield of 6.8%.

Alongside the enhanced dividend policy, to further align with shareholder interests, the Board also announced the introduction of a continuation vote so that shareholders can decide whether they wish the Company to continue in its current form at regular intervals. A continuation vote will first be tabled at the Company's Annual General Meeting in 2028, and every three years thereafter. Shareholders will be asked by simple majority vote if they wish the Company to continue in its current form. In the event that the vote should fail, further proposals will be brought to shareholders regarding the future of the Company.

Share Capital Management

The Company bought back £12.5 million worth of shares during the period to be held in treasury, representing 3.8% of the shares in issue at the start of the period, at an average discount of 10.5% and providing an estimated enhancement of 0.4% to the NAV per share. Subsequent to the period end, the Company has bought back a further £0.8 million worth of shares.

The Company will continue to selectively buy back shares in the market, in normal market conditions and at the discretion of the Board.

Gearing

The Company has a £50 million revolving credit facility which matures in February 2026. At the period end, £31.1 million of the facility was drawn down, resulting in gearing (net of cash) of 6.4%, compared to 7.2% at the beginning of the period.

Online Shareholder Presentation

Our previous online shareholder presentations have been popular events and we are pleased to hold another online presentation on Monday 6 October 2025 at 11.00am. The event will centre on a conversation between the Chairman and lead portfolio manager and will be followed by a live question and answer session. Full details on how to register for the event can be found on the Company's website at: asian-income.co.uk.

Should you be unable to attend the online event, a recording will be available on the Company's website shortly afterwards. For those wishing to submit questions in advance, you can do so using the following email address: [email protected].

Outlook

Asia continues to offer fertile ground for income investors. Quality companies of the type sought after by the Investment Manager have robust financials, capable management teams and globally competitive businesses that have enabled them to weather past shocks well. Many are now recognising the strategic value of dividends - not merely as shareholder appeasement, but as a signal of confidence and financial strength.

This mindset shift is evident in China, where state-owned enterprises and internet giants are embracing dividend policies. In addition, South Korea's 'Value Up' reforms are moving companies toward greater transparency and shareholder return discipline.

Despite prevailing macro risks, including the impact of US trade tariffs, the Company's portfolio remains invested in high-quality companies with resilient earnings and robust dividends. The Investment Manager continues to view market volatility as a way to selectively buy into companies with attractive yields and sustainable fundamentals.

Looking ahead, we remain cautiously optimistic. Dividend cuts appear unlikely given the earnings stability of holdings in the portfolio, and the potential for US Dollar weakness and monetary easing by the Federal Reserve could further support flows into Asia.

In this environment, the discipline of dividend investing built on the Investment Manager's rigorous bottom-up fundamental investing expertise offers not just income but also clarity at a time when uncertainty appears the norm.

Ian Cadby

Chairman

13 August 2025

Investment Portfolio

As at 30 June 2025 

Condensed Statement of Comprehensive Income

Condensed Statement of Comprehensive Income (cont'd)

Condensed Balance Sheet

Condensed Statement of Changes in Equity

Condensed Statement of Cash Flows

Notes to the Financial Statements

For the year ended 30 June 2025

Alternative Performance Measures

Interim Board Report - Disclosures

Principal Risk Factors

The principal risks and uncertainties affecting the Company are set out below and in detail on pages 21 to 23 of the Annual Report for the year ended 31 December 2024 and are not expected to change materially for the remaining six months of the Company's financial year.

The risks outlined below are those risks that the Directors considered at the date of this Half Yearly Report to be material but are not the only risks relating to the Company or its shares. If any of the adverse events described below actually occur, the Company's financial condition, performance and prospects and the price of its shares could be materially adversely affected and shareholders may lose all or part of their investment. Additional risks which were not known to the Directors at the date of this Half Yearly Report, or that the Directors considered at the date of this Report to be immaterial, may also have an effect on the Company's financial condition, performance and prospects and the price of the shares.

If shareholders are in any doubt as to the consequences of their acquiring, holding or disposing of shares in the Company or whether an investment in the Company is suitable for them, they should consult their stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Securities and Markets Act 2000 (as amended by the Financial Services Act 2012) or, in the case of prospective investors outside the United Kingdom, another appropriately authorised independent financial adviser.

The risks can be summarised under the following headings:

·      Investment strategy & objectives

·      Investment portfolio & investment management

·      Marketing & shareholder communication

·      Discount management

·      Regulatory

·      Cyber

·      Operational

·      Geo-political

In addition to these risks, the Board is conscious of the ongoing impacts of the conflicts in Ukraine and the Middle East, as well as continuing tensions between the US and China. The Board is also conscious of the impact of higher-than-forecast inflation in the UK and its potential impact on interest rate expectations, and also the potential impact on economic growth globally of US trade tariffs. The Board considers that these are risks that could have further implications for financial markets.

An explanation of other risks relating to the Company's investment activities, specifically market, liquidity and credit risk, and a note of how these risks are managed, are contained in note 18 on pages 76 to 84 of the Annual Report for the year ended 31 December 2024.

Going Concern

The Directors have undertaken a robust review of the Company's ability to continue as a going concern. The Company's assets consist primarily of a diverse portfolio of listed equity shares which in most circumstances are realisable within a very short timescale.

The Directors have reviewed forecasts detailing revenue and liabilities, have set limits for borrowing and reviewed compliance with banking covenants, including the headroom available.

The Company has a £50 million revolving credit facility which matures in February 2026. In the event that it is not possible to renew the loan, the Board considers that there is sufficient portfolio liquidity to enable it to be repaid.

Having taken these factors into account, the Directors believe that the Company has adequate financial resources to continue in operational existence for the foreseeable future and at least 12 months from the date of this Half Yearly Report. Accordingly, the Directors continue to adopt the going concern basis in preparing these financial statements.

Directors' Responsibility Statement

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

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

·      the Half-Yearly Board Report includes a fair review of the information required by rule 4.2.7R of the Disclosure Guidance and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the financial year); and

·      the Half-Yearly Board Report includes a fair review of the information required by 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so).

On behalf of the Board

Ian Cadby

Chairman

13 August 2025

The Half Year Report will be posted to shareholders in August 2025 and copies will be available on the Company's website (www.asian-income.co.uk*).

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