TIDMJCGI
RNS Number : 5900J
JPMorgan China Growth & Income PLC
13 December 2022
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN CHINA GROWTH & INCOME PLC
FINAL RESULTS FOR THE YEARED 30TH SEPTEMBER 2022
Legal Entity Identifier: 549300S8M91P5FYONY25
Information disclosed in accordance with DTR 4.2.2
The Directors announce the Company's results for the year ended
30th September 2022.
CHAIRMAN'S STATEMENT
Our Company has navigated several periods of extreme volatility
during the 28 years since its launch. Unfortunately, the year ended
30th September 2022 has proved to be one of the most challenging of
these periods, in terms of the Chinese economy, its stock markets
and our Company. Market sentiment had already been shaken by
concerns about China's slowing economic growth, its commitment to
its 'zero-COVID' policy and heightened tensions between China and
the US. It deteriorated further, amidst news of draconian localised
COVID lockdowns and China's interventionist policies. At the same
time, sentiment was buffeted by broader concerns about global
challenges in the aftermath of the COVID pandemic and the Russian
invasion of Ukraine, particularly in terms of inflation, interest
rates, and global supply chains, as well as more local concerns
about China's relationship with Taiwan. Against this backdrop,
growth stocks, which dominate our portfolio, fell sharply out of
favour.
Faced with these challenges, the Company's total return on net
assets fell -36.7% over the year, underperforming the MSCI China
Index, which declined 22.0% The Company delivered a return to
Ordinary shareholders of -38.5%, reflecting a widening in the
discount at which the shares traded over the 12 month period. While
this short-term performance is disappointing, we are encouraged
that over the longer term, our Company has made positive absolute
returns, comfortably outperforming the benchmark over three, five
and ten years. Our Company generated an annualised return of 10.7%
in terms of net asset value over the last ten years. UK based
shareholders may be interested to note that, over the same period,
the FTSE All-Share Index generated an annualised return of
6.0%.
Full details of investment performance, changes to the portfolio
and the outlook can be found in the Investment Managers' Report in
the Annual Report.
The Board was unable to visit Asia this year because of COVID
regulations, so once again we held a three day virtual China visit.
We had detailed discussions with economists and political
commentators, and with JP Morgan's analysts in Shanghai, Hong Kong
and Taiwan covering key sectors of our portfolio. The Board expects
to visit Asia in May 2023.
Environment, Social and Governance ('ESG') considerations
The Manager believes that sustainable companies are more
attractive investments, able to deliver superior returns over time,
so the consideration of ESG factors has long been a critical part
of the investment process. The Investment Managers' Report in the
Annual Report describes the developments in the ESG process that
have taken place during the year together with examples of how
these are implemented in practice. There is also a separate ESG
section in the Annual Report which explains JP Morgan's overall
approach to ESG. We provide a standalone, comprehensive report
covering ESG metrics in the Documents section on our website.
Dividend
In line with the Company's dividend policy, for the year ended
30th September 2022, four quarterly dividends of 5.70 pence were
paid to shareholders. For the year to 30th September 2023, in the
absence of unforeseen circumstances, a quarterly dividend of 3.42
pence per share will be paid. This represents an annual dividend of
4% of the Company's NAV as at 30th September 2022.
Gearing
In July 2021, the Company extended its GBP50 million loan
facility (with an option to increase to GBP60 million) with
Scotiabank for a further two years. In November 2021 the Board
decided to exercise the accordion facility, thereby increasing the
loan facility to GBP60 million. During the financial year the
Company had to repay some of the commitment to avoid breach of loan
covenants created by the decline in net assets, amidst periods of
extreme market volatility.
At the year-end the Company was 17.2% geared, having averaged
approximately 15.6% throughout the year and, at the time of
writing, was 14.0%. The Investment Managers have the flexibility to
manage the gearing facility within a range set by the Board of 10%
net cash to 20% geared, subject to daily market movements.
Share Issues and Repurchases
At last year's Annual General Meeting ('AGM'), shareholders
granted the Directors authority to allot new shares and to
repurchase the Company's shares for cancellation or to be held in
Treasury. During the year, the Company did not repurchase or allot
any shares. As in previous years, the Board's objective is to use
share repurchase and share issuance authorities to help reduce the
volatility in discounts and premiums by managing imbalances between
supply and demand. We are therefore seeking approval from
shareholders to renew the share issuance and repurchase authorities
at the AGM.
The Board
Following the retirement of John Misselbrook after the AGM in
January 2022, the size of the Board returned to five Directors, who
offer a diverse range of skills, experience, gender and ethnicity.
In July 2022, the Board, through its Nomination Committee, carried
out a comprehensive evaluation of the Board, its Committees, the
individual Directors and the Chairman. Topics evaluated included
the size and composition of the Board, Board information and
processes, shareholder engagement, training and accountability. The
evaluation confirmed the efficacy of the Board.
In accordance with good corporate governance, all Directors will
stand for reappointment at the forthcoming AGM.
Review of services provided by the Manager
During the year, the Board, through its Management Engagement
Committee, carried out a thorough review of the investment
management, secretarial and marketing services provided to the
Company by the Manager, as well as the Depositary and Registration
services provided to the Company by the outsourced service
providers. Following this review, the Board has concluded that the
continued appointment of the Manager and the outsourced service
providers on the terms agreed is in the interests of the
shareholders as a whole.
The Company's ongoing charges for the financial year, as a
percentage of the average of the daily net assets during the year,
were 1.09% (2021: 0.99%). This small increase reflected the decline
in net assets during the period, combined with the relatively high
proportion of fixed costs.
Shareholder Engagement
Over the last five years, our Company's shareholder base has
changed significantly, with retail investors now representing 84.0%
of our register. The Board understands that retail investors hold
their shares in different ways, direct, through wealth managers and
on investment platforms and not all of these make it easy to
participate through voting at the Annual General Meeting. We are
actively trying to find ways to improve this. I would urge you all
to ensure your voice is heard by ensuring your holding is voted at
the AGM.
Continuation of the Company
In accordance with the Company's Articles of Association, an
ordinary resolution will be put to shareholders at the forthcoming
AGM that the Company continues in existence as an investment trust
for a further five-year period.
While all investment styles will deliver returns that vary over
time, the Board believes that the Manager's approach remains
appropriate for the Company and that JPMorgan Asset Management has
the appropriate resources to continue to manage the Company
successfully. Over the last five years, the Company's total return
on net assets has increased +25.0%, significantly outperforming its
benchmark, the MSCI China Index, which declined -9.7% during the
same period. While short-term challenges remain, the Board believes
that continued investment in China offers attractive long-term
growth opportunities. The Investment Managers continue to find
attractively priced, quality companies that offer long-term growth,
consistent with the Company's investment strategy.
Accordingly, the Board believes that the continuation of the
Company is in the best interests of all shareholders and strongly
recommends that shareholders vote in favour of the resolution at
the AGM on 6th February 2023 as the Directors intend to do so in
respect of their own holdings. Given the importance of this
resolution, shareholders are encouraged to vote, either in person
at the AGM, or by completing a Form of Proxy/Voting Instruction
Form.
Following the continuation vote at the AGM in January 2018, to
confirm the Board's continuing commitment to its objective of
long-term capital growth by investment in 'Greater China'
companies, the Board agreed an obligation to put forward proposals
for a tender offer for up to 15% of the Company's issued share
capital at a price equal to the net asset value ('NAV') less costs,
if, over the five years (from 1st October 2017) the Company's NAV
underperforms its benchmark. As the Company's NAV outperformed its
benchmark significantly during this period, this tender offer has
not been triggered.
Annual General Meeting
We are delighted that this year we are able to invite
shareholders to join us in person for the Company's twenty-eighth
AGM to be held on Monday, 6th February 2023 at 11.30 a.m. at 60
Victoria Embankment, London EC4Y 0JP. The Board hopes to welcome as
many shareholders as possible.
As with previous years, you will have the opportunity to hear
from the Investment Managers. Their presentation will be followed
by a question and answer session. There will also be refreshments
afterwards, when shareholders will be able to meet members of the
Board. Shareholders wishing to follow the AGM proceedings but
choosing not to attend will be able to view them live and ask
questions through conferencing software. Details on how to register
together with access details can be found on the Company's website:
www.jpmchinagrowthandincome.co.uk, or by contacting the Company
Secretary at invtrusts.cosec@jpmorgan.com.
In accordance with normal practice, all voting on the
resolutions will be conducted on a poll. Due to technological
reasons, shareholders viewing the meeting via conferencing software
will not be able to vote on the poll and we therefore encourage all
shareholders, and particularly those who cannot attend physically,
to submit their proxy votes in advance of the meeting, so that they
are registered and recorded at the AGM. Proxy votes can be lodged
in advance of the AGM either by post or electronically: detailed
instructions are included in the Notes to the Notice of Annual
General Meeting in the Annual Report. In addition, shareholders are
encouraged to send any questions ahead of the AGM to the Board via
the Company Secretary at the email address above. We will endeavour
to answer relevant questions at the meeting or via the website
depending on arrangements in place at the time.
If there are any changes to the above AGM arrangements, the
Company will update shareholders through its website and, as
appropriate, through an announcement on the London Stock
Exchange.
Outlook
After hitting lows in October 2022, Chinese stock markets have
made up some lost ground, following President Xi's meeting with
President Biden at the G20 session, indications of a gradual
relaxation of China's 'zero-COVID' policy, and China's easing of
its monetary and fiscal policies. Since the year-end, as at 8th
December 2022, the Company's total return on net assets increased
+9.6% over the period, outperforming the MSCI China Index, which
rose +3.9%. In addition, the Company's return to Ordinary
shareholders increased +13.4%, reflecting a narrowing in the
discount at which the shares traded over since the year-end. As a
Board, we believe markets are likely to remain volatile, as long as
China's 'zero-COVID' policy is in place, and risks remain of
increased COVID cases once this policy ends. Other challenges,
ranging from the uncertainties in the Chinese property market and
the financial health of the nation's regional governments to global
supply chains and China's relations with Taiwan and the US, may
also impact short-term performance.
Nevertheless, we share our Investment Managers' optimism about
the long-term prospects for the Chinese economy, and the
opportunities that this will provide the patient investor, and we
believe our Company deserves a place within any fully diversified
global portfolio. Over the years, our disciplined Investment
Managers have demonstrated their skills in navigating turbulent
markets by focusing on investing in attractively priced, quality
companies that offer sustainable long-term growth. We remain
confident that our investment strategy, combined with the skills
and experience of our well resourced investment team, will enable
our Company to deliver superior returns over the longer term.
Alexandra Mackesy
Chairman 13th December 2022
INVESTMENT MANAGERS' REPORT
Introduction
During the financial year ended 30 September 2022, the Company's
net assets declined 36.7% (in sterling terms) compared to a
benchmark decline of 22.0%. This performance is a disappointment to
us, but we remind shareholders that it is not unusual for the
Company to experience volatility in performance over short periods.
In our view, it is more meaningful to assess performance over
longer timeframes. On this basis, the Company has made positive
absolute returns and outperformed the benchmark over three, five
and ten years. Over the ten years to end September 2022, it
generated an annualised return of 10.7%, in NAV terms, and 10.9% on
a share price basis, compared to a market return of 6.3%.
Setting the scene
The past year has been an especially challenging one for global
equity markets for several reasons. Inflation pressures kindled by
the COVID-19 pandemic, including supply shortages of electronic
components essential to the production of electric vehicles and a
wide range of consumer goods, were fuelled by Russia's invasion of
Ukraine, which drove up energy and other commodity prices. The
determination of the US Federal Reserve and other central banks to
quash inflation with a series of aggressive interest rate increases
and hawkish forward guidance raised the spectre of recession and
global equity markets fell sharply. The valuations of long-term
growth - so-called long duration - stocks in the technology and
related sectors were hit especially hard.
The Chinese markets were not immune to these developments, but
investor sentiment was further damaged by several other adverse
developments unique to China. Key amongst these was the sharp
deterioration in China's growth outlook. China's GDP is now
expected to rise by only 3% in 2022, less than half its growth rate
over the past few years, due partially to the government's pursuit
of its 'zero-COVID' policy. Unlike most countries, which have opted
to live with the virus now vaccines are widely available, China has
persevered with strict prevention measures, including lockdowns, to
eliminate outbreaks. These actions severely curtailed economic
activity in many regions, and it is uncertain when the government's
approach will relent. These actions severely curtailed economic
activity in many regions during the review period. More recently,
however, the government has relaxed its COVID policies, which
should lead to more normalisation in 2023.
The review period has also seen a significant correction in
China's residential property market, sparked by government
restrictions on borrowing by developers and home buyers. New home
sales have fallen 30% in the past year. This sector accounts for
about a quarter of China's economic output, so this sharp decline
is also weighing on near-term growth prospects.
Uncertainties about growth and the near-term prospects of the
property sector have been exacerbated by mounting geo-political
tensions between China and the West, and by questions about the
implications of the expected appointment of President Xi to an
unprecedented third term in office. As a result, even though
Chinese inflation pressures have been limited, and the authorities
are now easing both monetary and fiscal policy, China's stock
market sustained heavy losses over the review period.
Performance commentary
This sell-off hit portfolio performance. The Company had an
average gearing of 15.6% throughout the financial year and this
additional exposure to the declining market was the single largest
source of performance detraction, after stock selection.
The Company's large exposure to growth sectors and stocks,
particularly Health Care, Technology, and Communication companies,
was a key drag on performance, as was the structural underweight
position in low-growth sectors, in particular Energy and
Financials, as these sectors outperformed over the period.
Performance attribution
Year ended 30th September 2022
% %
Contributions to total returns
------ ------
Benchmark return -22.0
------ ------
Sector allocation 3.6
------ ------
Stock selection -10.9
------ ------
Currency -1.7
------ ------
Gearing/net cash -5.1
------ ------
Investment Manager contribution -14.1
------ ------
Dividend/residual 0.5
------ ------
Portfolio total return -35.6
------ ------
Management fee/Other expenses -1.1
------ ------
Net asset value total return -36.7
------ ------
Ordinary share price total return -38.5
------ ------
Source: Factset, JPMAM, Morningstar.
Performance attribution analyses how the Company achieved its
recorded performance relative to its benchmark.
By sector, the Company's overweight exposure to Health Care
detracted from performance. WuXi Biologics, a contract research
company, was negatively affected by supply chain disruption
resulting from increasing geopolitical headwinds. In addition,
Broncus Holding Corp and Venus Medtech, producers of medical
devices, were negatively affected by pricing pressure from the
Chinese government's procurement programme. We have trimmed our
positions in WuXi Biologics during the year, but it remains a top
10 holding given its continued competitiveness and the current
valuation.
Technology is another sector that hurt performance. Key
detractors over the period included Silergy Corp, a semiconductor
manufacturer, Sunny Optical Technology, a producer of optical
products and scientific instruments, and Kingdee International
Software Group, which provides business software. However, we have
largely maintained our positions in these names due to their
positive long-term prospects, which are supported by increasing
import substitution and market share gains.
Within Communication, the Company's position in Bilibili, a
gaming and multimedia company, was a key performance detractor. It
was hit by delays to approvals for new on-line games and by a
slower than expected advertising business ramp-up, due to weak
macro-economic conditions. We therefore reduced our exposure.
Although we remain underweight in Real Estate, an overweight
position in Country Garden Services, a property management company,
detracted from returns due to concerns about slower new property
sales and the solvency of its parent company, Country Garden.
Financials also detracted from performance. We have avoided
exposure to large state-owned banks such as China Construction Bank
Corporation and Bank of China because their long-term growth
prospects are not promising. However, these names tend to trade
more defensively than the overall market, given their undemanding
valuations and dividend support, and this helped their relative
performance over the review period.
Relative Stock return Impact
weight
Top 10 Detractors Company description (%) (%) (%)
----------------------- ------------------------------------------- --------- ------------- -------
Country Garden Residential property management
Services company 1.8 -77.2 -1.3
Video sharing platform
that is also involved in
mobile gaming,
Bilibili e-commerce and live broadcasting 1.9 -70.2 -1.3
Leading contract development
WuXi Biologics and manufacturing organisation
(Cayman) in the biologics space 2.5 -55.0 -0.9
Medical device company
that focuses on the development
of interventional pulmonology
Broncus Holding products 0.5 -85.1 -0.7
Leading enterprise software
provider specializing in
Kingdee International finance, accounting and
Software broader ERP solutions 2.1 -52.8 -0.6
China Construction One of the largest banks
Bank in China -2.9 4.6 -0.6
Leading medical device
maker involved in transcatheter
Venus Medtech structural heart valvular
(Hangzhou) therapies in China 0.8 -72.7 -0.6
Manufacturer of power management
Silergy integrated circuits 1.4 -56.3 -0.5
One of the largest China-based
contract development and
manufacturing companies
providing fully integrated
solutions in the chemical-pharmaceutical
Asymchem Laboratories and biologic sectors 0.9 -58.8 -0.5
One of the largest banks
Bank of China in China -1.3 20.5 -0.4
----------------------- ------------------------------------------- --------- ------------- -------
Positioning decisions that enhanced returns over the period
included our significant overweight positions in Renewable Energy.
Tongwei, a producer of polysilicon used in solar panels, and Suzhou
Maxwell, a solar cell manufacturing equipment maker, were amongst
key performance contributors thanks to strong demand and technology
innovation in the sector.
Two Consumer businesses, Pinduoduo, an ecommerce platform, and
Meituan, China's largest food delivery service provider, also
contributed positively thanks to their improved profitability,
despite the tough market environment.
The Company exited Alibaba on the view that the company is
unlikely to return to its previous high growth territory, due to
some tightening in the sector's regulatory environment. This
underweight position contributed to performance over the year.
Top 10 Positive Company description Relative Stock return Impact
Contributors weight (%) (%) (%)
Leading e-commerce company
that offers a comprehensive
digital infrastructure to
Alibaba empower digitalization -7.3 -28.9 0.7
Largest producer of polysilicon
and cells used in solar
Tongwei panels 2.4 2.3 0.6
Solar equipment manufacturer
Suzhou Maxwell with a focus on heterojunction
Technologies solar cell technology 0.7 52.4 0.4
Leader Harmonious Industrial robot equipment
Drive Systems manufacturer 0.5 83.9 0.4
Leading Chinese smartphone
maker offering various hardware
Xiaomi and software products -1.2 -49.7 0.4
Leading provider of self-developed
mobile and PC games along
NetEase with multimedia services 1.5 10.4 0.4
Niche analog IC design company
supplying high-speed server
Montage Technology DRAM modules 1.4 -3.5 0.3
One of the largest private
energy groups in China involved
in distribution of natural
ENN Energy gas 1.5 0.1 0.3
One of the largest process
Zhejiang Supcon automation control system
Technology providers in China 1.0 1.9 0.3
Engages in production of
Shenzhen Inovance electric control industrial
Technology automations 1.5 -0.3 0.2
-------------------- ------------------------------------ ------------ ------------- -------
Transactions and sector allocation
Despite the challenging macro environment and geopolitical
uncertainties, we continue to focus on identifying bottom-up stock
opportunities that can provide the Company's shareholders long-term
growth and return.
The most noteworthy increase in exposure over the past year has
been to Industrial names. The portfolio's overweight exposure to
this sector has almost doubled to around 13% as we expect it to
benefit from China's push to upgrade its manufacturing performance
and realise its ambitions to achieve carbon neutrality and
self-sufficiency. We initiated new positions in several industrial
companies, including Suzhou Maxwell, as mentioned previously,
ZhuZhou CRRC Times, a manufacturer of railway equipment, Beijing
Haufeng Test & Control, a semiconductor testing equipment
producer, and DBAPP Security, a supplier of cybersecurity software
and solutions.
The market volatility over the past year has not been entirely
bad news, as it has created opportunities for us to purchase other
companies across various sectors where we see structural growth
opportunities at particularly attractive levels. Examples include
e-commerce operator JD.com, which is now a top 10 holding, ZTO
Express, a freight and logistics company, and Trip.com, an
accommodation and travel services provider. We also took advantage
of low valuations to top up existing holdings in a number of
companies we favour, including software supplier Beijing Kingsoft
Office, Kanzhun Ltd, a staffing and employment services company,
Zhejiang Supcon Technology, which provides automation and IT
products, and Advanced Micro-Fabrication, a producer of
semiconductor equipment and materials.
In terms of sales, in addition to reducing the sizes of several
holdings mentioned above, we sold our entire positions in companies
that are likely to be adversely impacted by China's growth
slowdown. In addition to the entire sale of our stake in Alibaba,
other disposals included restaurant owner Jiumaojiu, auto
manufacturer Nio and toy maker Pop Mart International, all of which
are likely to feel the effects of weaker consumer spending.
However, the portfolio's overall underweight to the consumer
discretionary sector remained broadly unchanged over the year. The
challenging outlook for the real estate sector also prompted exits
from Xinyi Glass and Skshu Paint Co.
In addition, we sold the Company's holdings in IT infrastructure
company Sangfor Technologies, and electronic components
manufacturer BOE Technology Group. The Company also exited several
health care names, including Everest Medicines, a biotech company,
and Suzhou Basecare Medical, a medical devices company. The
portfolio's overweight positions in Information Technology and
Health Care remain, although they are less significant than
previously. We have maintained the portfolio's substantial
underweight to financials and its smaller underweight to
Communications Services.
The portfolio continues to have no exposure to traditional
Energy producers, reflecting both our concerns about ESG factors
and these companies' poor long-term growth prospects. However, we
increased our exposure to utilities modestly, in part via a new
position in hydropower company China Yangtze Power, because of its
stable operations and the expected asset injection that is earnings
accretive.
These portfolio adjustments have resulted in some changes to the
Company's top 10 holdings over the past year. Tencent remains our
largest holding, comprising 8.4% of our portfolio at 30th September
2022. This positioning is underpinned by our belief that the
company's core competitiveness in social media and gaming remains
unchanged despite regulatory and macroeconomic challenges. On-line
retailers Meituan and Pinduoduo, along with WuXi Biologics and
China Merchants Bank, also continue to feature amongst our largest
holdings, but there are several new names. In addition to JD.com
and Suzhou Maxwell, mentioned above, the Company's top 10 holdings
now include NetEase, a gaming and multimedia company, and Beijing
Kingsoft Office Software, a leading software and internet services
company.
Ten largest investments
As at 30th September
2022 2021
Valuation Valuation
Company Description of Activities GBP'000 %(1) GBP'000 %(1)
----------------- ------------------------------------------------------ -------- ----- -------- -------
Tencent is a Chinese technology company
focusing on internet services. It is the
world's largest video game vendor. It owns
WeChat, among the largest Chinese and therefore
global, social media apps as well as a
number of music, media and payment service
providers. Its venture capital arm has
holdings in over 600 companies with a focus
Tencent on technology start-ups across Asia. 28,091 8.4 46,411 8.9
Meituan is an e-commerce company that offers
services like food, dining and delivery
among others on its platform throughout
Meituan China. 20,417 6.1 20,561 4.0
Founded in 2015, it started as an online
fresh produce vendor before expanding into
a leading social commerce platform serving
close to 900 million users. Pinduoduo pioneered
'Team Purchase' and 'C2M' (consumer to
manufacturer) processes to aggregate user
demand and share the information with manufacturers
to tailor make products according to users'
Pinduoduo preferences. 13,325 4.0 17,451 3.4
JD.com is China's leading one-stop e-commerce
platform, providing 588.3 million active
customers with direct access to a wide
selection of products to tap into China's
fast-growing e-commerce market through
JD.com its mobile applications and websites. 11,940 3.6 - -
NetEase is a leading China-based technology
company involved in developing and operating
online games. Its online gaming services
cover both mobile and personal computer
NetEase games. 8,921 2.7 10,848 2.1
Founded in 2010, WuXi Biologics has become
a leading global Contract Research, Development
and Manufacturing Organization (CRDMO)
offering end-to-end solutions that enable
WuXi Biologics partners to discover, develop and manufacture
(Cayman) biologics from concept to commercialisation. 8,281 2.5 25,758 4.9
CMB is China's first joint-stock commercial
bank wholly owned by corporate legal entities
and the first pilot bank as China promoted
reform in the banking industry with endeavors
outside the government. Since its inception,
CMB has been leading the trends of China's
China Merchants banking industry through a series of pioneering
Bank efforts. 7,766 2.4 11,760 2.3
Shanghai Baosight Software provides information
technology services. Founded 40 years ago,
Baosight is now China's leading provider
of industrial solutions. So far, Baosight
has long been committed to the combination
of information and industrialisation, with
the purpose of assisting iron & steel enterprises
in achieving intelligent manufacturing.
The Company develops automation and information
Shanghai computer software for metallurgy, transportation,
Baosight electric power generation, banking, and
Software other industries. 7,485 2.3 12,262 2.30
Suzhou Maxwell Technologies is principally
engaged in the design, development, production
and sales of intelligent manufacturing
equipment. One of the Company's main products
are solar cell screen printing equipment.
Suzhou The Company distributes its products domestically
Maxwell and overseas. 6,976 2.1 - -
Kingsoft is a leading software and Internet
services company based in China and listed
in Hong Kong. Its two subsidiaries Seasun
and Kingsoft Office develop and distribute
office and anti virus software. With more
Beijing than 5,000 employees worldwide and R&D
Kingsoft centres in Beijing, Zhuhai, Wuhan, Chengdu,
Office Dalian and Hong Kong, the Company enjoys
Software a large market share in China. 6,241 1.8 - -
Ten Largest
Investments 119,443 35.9
------------------------------------------------------------------------- -------- ----- -------- -------
1 Based on total investments of GBP333.2m (30th September 2021:
GBP521.6m). Top ten investments at September 2021 comprised
GBP292.8m with 36.7% of total investments.
Gearing
In terms of gearing, attractive valuations and the opportunities
they represented in some sectors led us to increase portfolio
gearing to 17.2% at the end of the period, up from 10.2% a year
ago. The valuation of Chinese equities became more attractive over
the period, on both traditional valuation metrics such as
price-to-book (P/B) and Price Earnings (P/E), as well as our
internal valuation signal with an average five year expected return
surpassing 20%. We have taken the opportunities of distressed
valuation in some areas, such as Chinese internet, and used gearing
to increase positions in names including Meituan, Pinduoduo, and
JD.com. We have also used the gearing to increase positioning and
add new names in structural growth areas such as high-end
manufacturing, renewable energy, and national security.
ESG Engagement over the year
Our investment philosophy centres on identifying quality
companies with sustainable growth potential. We have a strong
conviction that Environmental, Social and Governance (ESG)
considerations (particularly Governance) should be the foundation
of any long-term investment process. In our view, corporate
policies at odds with such considerations are not sustainable over
time. We therefore believe that integrating ESG factors into the
investment process is critical to its success. To this end, we work
closely with JPMAM's dedicated Sustainable Investment (SI) team,
which pro-actively engages with existing portfolio names on ESG
matters.
Examples of how we have worked with the SI team over the past
year to address ESG issues in our portfolio companies and
information regarding how ESG matters are integrated into our
investment process are detailed in the ESG Report in the Annual
Report. This report includes case studies relating to our ESG
engagement with NetEase, China Merchants Bank and Meituan and our
engagement with NetEase, WuXi Biologics and ENN Energy about proxy
voting.
Outlook
We expect a lot of the macro headwinds discussed above, in
particular the property sector slowdown and the government's
'zero-COVID' policy, to linger in the short term. However, the
Chinese authorities are likely to continue loosening monetary and
fiscal policy in an effort to ease pressures on the property sector
and to counter the disruptions caused by their stringent COVID
policies. These measures will take time to feed through to the real
economy, as consumer and business confidence, and activity, will
not recover until the COVID restrictions are terminated and some
level of normality returns to daily life across the country.
Despite the negative developments over the past year, we remain
optimistic about the long-term prospects for the Chinese economy,
which will continue to be bolstered by the strong entrepreneurial
ethos of China's private businesses and by growing demand from the
country's burgeoning middle class. Furthermore, the government
remains determined to ensure the continued upgrade of Made in
China, a government initiative intended to make the manufacturing
industry more advanced. It will also continue its pursuit of carbon
neutrality and greater self-sufficiency, as mentioned above. These
efforts should underpin sustainable growth and productivity
improvements over the medium term. As such, in our view, Chinese
equities demand a meaningful allocation within any fully
diversified global portfolio.
Current depressed valuations suggest to us that the
deterioration in China's economic outlook and other potential risks
and uncertainties discussed above are now fully discounted by the
market. So now may be a particularly good time to invest in this
market in order to benefit from the country's still positive
long-term growth prospects. This view is supported by valuation
metrics. Our proprietary, five-year expected return model, as well
as familiar measures such as price-to-book (P/B) and Price Earnings
(P/E) ratios, have all reached historical lows, suggesting that a
sustained recovery in Chinese equity prices is likely soon.
We believe that the Company's long track record of outright
gains and outperformance of the market attests both to the
advantages of being on the ground here in China and to the
effectiveness of our bottom-up investment process. We are confident
that our approach will ensure we are in the vanguard of any
recovery in the Chinese equity market, seeking out the investment
opportunities best placed to benefit from China's secular trends
and continuing to deliver capital gains and reliable and rising
income to patient investors willing to ride out near-term
volatility.
Thank you for your ongoing support.
Rebecca Jiang
Howard Wang
Shumin Huang
Investment Managers 13th December 2022
PRINCIPAL AND EMERGING RISKS
Principal and Emerging Risks
The Directors confirm that they have carried out a robust
assessment of the principal and emerging risks facing the Company,
including those that would threaten its business model, future
performance, solvency or liquidity.
With the assistance of the Manager, the Audit Committee
maintains a risk matrix which identifies the principal risks to
which the Company is exposed and methods of mitigating against them
as far as practicable. The risks identified and the broad
categories in which they fall, and the ways in which they are
managed or mitigated are summarised below.
The AIC Code of Corporate Governance requires the Audit
Committee to put in place procedures to identify emerging risks. At
each meeting, the Board considers emerging risks which it defines
as potential trends, sudden events or changing risks which are
characterised by a high degree of uncertainty in terms of
occurrence probability and possible effects on the Company. As the
impact of emerging risks is understood, these risks may be entered
on the Company's risk matrix and mitigating actions considered as
necessary.
Principal risk Description Mitigating activities
Investment management and performance
Geopolitical Geopolitical risk can cause The Board meets advisers and
volatility in the markets gathers insights from both JP
in which the Company is invested; Morgan and independent sources
restrictions on the ability on a regular and ongoing basis
to invest and the free movement and takes advice from the Manager
of capital and also potentially and its professional advisers.
impact the ability of the
Manager and other service
providers to carry on business
as usual. Specifically in
China, we have seen instances
of the government interfering
in certain sectors of the
financial markets as well
as concerns arising from the
growing US-China trade tensions,
potential conflict involving
Taiwan and wider questions
about human rights in China.
These concerns have led to
international investors reducing
their investments in China,
and could risk damaging overseas
sentiment towards Chinese
equities further.
-------------------------------------- ------------------------------------------
Investment An inappropriate investment The Board manages this risk
Underperformance decision may lead to sustained by diversification of investments
underperformance against the through its investment restrictions
Company's benchmark index and guidelines which are monitored
and peer companies, resulting and reported on by the Manager.
in the Company's shares trading The Manager provides the Directors
on a wider discount. with timely and accurate management
information, including performance
data and attribution analyses,
revenue estimates and transaction
reports. The Board monitors
the implementation and results
of the investment process with
the investment managers, who
attend all Board meetings, and
reviews data which show statistical
measures of the Company's risk
profile.
-------------------------------------- ------------------------------------------
Strategy and An ill-advised corporate initiative, The Board discusses this on
Business Management for example an inappropriate a regular and ongoing basis
takeover of another company with the Manager and corporate
or an ill-timed issue of new advisers based on information
capital; misuse of the investment provided both at and between
trust structure, for example Board meetings (see above risk
inappropriate gearing; or regarding Investment Underperformance).
if the Company's business The Company states its strategy
strategy is no longer appropriate, clearly in its Half-Year and
may lead to a lack of investor Annual Reports and its website.
demand. The investment managers employ
the Company's gearing within
a strategic range set by the
Board.
-------------------------------------- ------------------------------------------
Loss of Investment A sudden departure of one The Board seeks assurance that
Team or Investment or more members of the investment the Manager takes steps to reduce
Manager management team could result the likelihood of such an event
in a deterioration in investment by ensuring appropriate succession
performance. planning and the adoption of
a team-based approach, as well
as special efforts to retain
key personnel. The Board engages
privately with the investment
managers on a regular basis.
-------------------------------------- ------------------------------------------
Share Price A disproportionate widening In order to manage the Company's
Discount of the discount relative to discount, which can be volatile,
the Company's peers could the Company operates a share
result in a loss of value repurchase programme. The Board
for shareholders. regularly discusses discount
policy and has set parameters
for the Manager and the Company's
broker to follow. The Board
receives regular reports and
is actively involved in the
discount management process.
-------------------------------------- ------------------------------------------
Corporate Governance Changes in financial, regulatory The Manager and the Auditor
or tax legislation may adversely make recommendations to the
affect the Company. Board on accounting, dividend
and tax policies and the Board
seeks external advice where
appropriate. The Board receives
regular reports from its broker,
depositary, registrar and Manager
as well as its legal advisers
and the Association of Investment
Companies on changes to governance
and regulations which could
impact the Company and its industry.
The Company monitors events
and relies on the Manager and
its other key third party providers
to manage this risk by preparing
for any changes. It also receives
updates from its advisors on
corporate governance issues
and reviews its related policies
regularly.
-------------------------------------- ------------------------------------------
Shareholder Details of the Company's compliance The Board receives regular reports
Relations with Corporate Governance from the Manager and the Company's
best practice, including information broker about shareholder communications,
on relations with shareholders, their views and their activity.
are set out in the Corporate In addition, the Board engages
Governance Statement in the directly with major shareholders
Annual Report. and encourages all shareholders
to engage with the Board and
Investment Managers at the AGM
and through the increased use
of webcasts and periodic meetings.
-------------------------------------- ------------------------------------------
Financial The financial risks faced Counterparties are subject to
by the Company include market daily credit analysis by the
price risk, interest rate Manager. In addition the Board
risk, currency risk, liquidity receives reports on the Manager's
risk and credit risk. monitoring and mitigation of
credit risks on share transactions
carried out by the Company.
Further details are disclosed
in notes 21 and 22 in the Annual
Report.
-------------------------------------- ------------------------------------------
Operational
risks
-------------------------------------- ------------------------------------------
Cyber crime Disruption to, or failure Details of how the Board monitors
of, the Manager's accounting, the services provided by the
dealing or payments systems Manager, its associates and
or the depositary's or custodian's depositary and the key elements
records may prevent accurate designed to provide effective
reporting and monitoring of internal control are included
the Company's financial position. within the Risk Management and
In addition to threatening Internal Control section of
the Company's operations, the Directors' Report in the
such an attack is likely to Annual Report. The threat of
raise reputational issues cyber attack, in all its guises,
which may damage the Company's is regarded as at least as important
share price and reduce demand as more traditional physical
for its shares. threats to business continuity
and security. The Company benefits
directly or indirectly from
all elements of JPMorgan's Cyber
Security programme. The information
technology controls around the
physical security of JPMorgan's
data centres, security of its
networks and security of its
trading applications are tested
independently.
-------------------------------------- ------------------------------------------
Fraud/other The risk of fraud or other The Audit Committee receives
operating failures control failures or weaknesses independently audited reports
or weaknesses within the Manager or other on the Manager's and other service
service providers could result providers' internal controls,
in losses to the Company. as well as a report from the
Manager's Compliance function.
The Company's management agreement
obliges the Manager to report
on the detection of fraud relating
to the Company's investments
and the Company is afforded
protection through its various
contracts with suppliers, of
which one of the key protections
is the Depositary's indemnification
for loss or misappropriation
of the Company's assets held
in custody.
-------------------------------------- ------------------------------------------
Regulatory
risk
-------------------------------------- ------------------------------------------
Legal and Regulatory In order to qualify as an The Section 1158 qualification
investment trust, the Company criteria are continually monitored
must comply with Section 1158 by the Manager and the results
of the Corporation Tax Act reported to the Board each month.
2010 ('Section 1158'). Details The Company must also comply
of the Company's approval with the provisions of the Companies
are given under 'Structure Act 2006 and, since its shares
of the Company' in the Annual are listed on the London Stock
Report. Were the Company to Exchange, the UKLA Listing Rules,
breach Section 1158, it may Disclosure Guidance and Transparency
lose investment trust status Rules ('DTRs') and, as an Investment
and, as a consequence, gains Trust, the Alternative Investment
within the Company's portfolio Fund Managers Directive ('AIFMD').
would be subject to Capital A breach of the Companies Act
Gains Tax. 2006 could result in the Company
and/or the Directors being fined
or the subject of criminal proceedings.
Breach of the UKLA Listing Rules
or DTRs could result in the
Company's shares being suspended
from listing which in turn would
breach Section 1158. The Board
relies on the services of its
Company Secretary, JPMorgan
Funds Limited and its professional
advisers to ensure compliance
with the Companies Act 2006,
the UKLA Listing Rules, DTRs
and AIFMD.
-------------------------------------- ------------------------------------------
Economic and
geopolitical
-------------------------------------- ------------------------------------------
Global pandemics COVID-19 has highlighted the The Board receives reports on
speed and extent of economic the business continuity plans
damage that can arise from of the Manager and other key
a pandemic. While current service providers. The effectiveness
vaccination programme results of these measures have been
are hopeful, the risk remains assessed throughout the course
that new variants may not of the COVID-19 pandemic and
respond to existing vaccines, the Board will continue to monitor
may be more lethal and may developments as they occur and
spread as global travel opens seek to learn lessons which
up again. may be of use in the event of
In China, the government's future pandemics.
'zero-COVID' policy and the The Board is actively engaged
subsequent disruptions caused in monitoring the situation
by their stringent COVID policies with regular updates from the
continue to negatively impact investment managers.
the economy. With the additional
risk of increased COVID cases
once this policy ends, it
is likely that the market
will remain volatile for a
while.
Should the virus become more
virulent than is currently
the case, it may present risks
to the operations of the Company
and its Manager.
-------------------------------------- ------------------------------------------
Climate change Climate change is one of the The Manager's investment process
most critical issues confronting integrates consideration of
asset managers and their investors. environmental, social and governance
Climate change may have a factors into decision son which
disruptive effect on individual stocks to buy, hold or sell
investee companies and the (see the ESG report in the Annual
operations of the Manager Report). This includes the approach
and other major service providers. investee companies take to recognising
and mitigating climate change
risks. The Manager aims to influence
the management of climate related
risks through engagement and
voting and is a participant
of Climate Action 100+ and a
signatory of the United Nations
Principles for Responsible Investment.
As extreme weather events become
more common, in particular with
the typhoons, flooding and droughts
experienced in China, the resiliency,
business continuity planning
and the location strategies
of our services providers will
come under greater scrutiny.
-------------------------------------- ------------------------------------------
Emerging risk Description Mitigating activities
-------------------------------------- ------------------------------------------
Social unrest There is a risk that recent The Board and the Managers understand
within China sporadic demonstrations in the inherent risks associated
China against the government's with investing in emerging markets
'zero-COVID' policies could such as China. While focusing
escalate into more disruptive on the long term, the Manager
social unrest at a local or is mindful of these risks when
national level. Such disorder considering investment strategy
could disrupt the companies and portfolio construction,
in which our Company invests, and keeps the Board regularly
and negatively impact both informed about any issues that
our manager's operations within might impact China and the portfolio.
China and international sentiment
towards Chinese equities.
-------------------------------------- ------------------------------------------
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
Details of the management contract are set out in the Directors'
Report in the Annual Report. The management fee payable to the
Manager for the year was GBP3,399,000 (2021: GBP4,572,000).
Safe custody fees amounting to GBP72,000 (2021: GBP81,000) were
payable to JPMorgan Chase Bank N.A. during the year of which
GBP17,000 (2021: GBP41,000) was outstanding at the year end.
The Manager may carry out some of its dealing transactions
through group subsidiaries. These transactions are carried out at
arm's length. The commission payable to JPMorgan Securities Limited
for the year was GBP26,000 (2021: GBP28,000).
Handling charges on dealing transactions amounting to GBP52,000
(2021: GBP42,000) were payable to JPMorgan Chase Bank N.A. during
the year of which GBP6,000 (2021: GBP20,000) was outstanding at the
year end.
The Company also held cash in the JPMorgan US Dollar Liquidity
Fund, which is managed by JPMorgan. At the year end this was valued
at GBP8,085,000 (2021: GBPnil). Interest amounting to GBP59,000
(2021: GBP8,000) was received during the year.
Fees amounting to GBP434,000 (2021: GBP638,000) were receivable
from stock lending transactions during the year. JPMorgan Investor
Services Limited's commissions in respect of such transactions
amounted to GBP48,000 (2021: GBP71,000).
At the year end, total cash of GBP2,865,000 (2021: GBP36,000)
was held with JPMorgan Chase Bank, N.A. in a non-interest bearing
current account.
Full details of Directors' remuneration and shareholdings can be
found in the Director's Remuneration Report in the Annual
Report.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and Financial Statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the Directors
have elected to prepare the Financial Statements in accordance with
applicable law and United Kingdom Accounting Standards, comprising
Financial Reporting Standard 102 'the Financial Reporting Standard
applicable in the UK and Republic of Ireland' (FRS 102). Under
company law the Directors must not approve the Financial Statements
unless they are satisfied that, taken as a whole, the Annual Report
and Financial Statements are fair, balanced and understandable,
provide the information necessary for shareholders to assess the
Company's performance, business model and strategy and that they
give a true and fair view of the state of affairs of the Company
and of the total return or loss of the Company for that period. In
preparing these Financial Statements, the Directors are required
to:
-- select suitable accounting policies and then apply them consistently;
-- state whether applicable UK Accounting Standards comprising
FRS 102, have been followed, subject to any material departures
disclosed and explained in the Financial Statements;
-- make judgments and accounting estimates that are reasonable and prudent; and
-- prepare the Financial Statements on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business
and the Directors confirm that they have done 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
the Financial Statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Financial Statements are published on the
www.jpmchinagrowthandincome.co.uk website, which is maintained by
the Company's Manager. The maintenance and integrity of the website
maintained by the Manager is, so far as it relates to the Company,
the responsibility of the Manager. The work carried out by the
Auditor does not involve consideration of the maintenance and
integrity of this website and, accordingly, the Auditor accepts no
responsibility for any changes that have occurred to the accounts
since they were initially presented on the website. The accounts
are prepared in accordance with UK legislation, which may differ
from legislation in other jurisdictions.
Under applicable law and regulations the Directors are also
responsible for preparing a Strategic Report, a Directors' Report
and a Directors' Remuneration Report that comply with that law and
those regulations.
Each of the Directors, whose names and functions are listed in
the Annual Report confirm that, to the best of their knowledge:
-- the Company's Financial Statements, which have been prepared
in accordance with applicable law and United Kingdom Accounting
Standards, comprising FRS102, give a true and fair view of the
assets, liabilities, financial position and profit of the Company;
and
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties that it faces.
The Directors consider that the Annual Report and Financial
Statements, taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders to assess
the Company's performance, business model and strategy.
For and on behalf of the Board
Alexandra Mackesy
Chairman
13th December 2022
FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30th September 2022
2022 2021
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- -------- ----------- ----------- --------- --------- ---------
Net (losses)/gains on investments
held at
fair value through profit
or loss - (158,974) (158,974) - 3,485 3,485
Net foreign currency (losses)/gains(1) - (10,027) (10,027) - 1,364 1,364
Income from investments 3,693 - 3,693 2,966 - 2,966
Other income 493 - 493 646 - 646
---------------------------------------- -------- ----------- ----------- --------- --------- ---------
Gross return/(loss) 4,186 (169,001) (164,815) 3,612 4,849 8,461
Management fee (850) (2,549) (3,399) (1,143) (3,429) (4,572)
Other administrative expenses (605) - (605) (540) - (540)
---------------------------------------- -------- ----------- ----------- --------- --------- ---------
Net return/(loss) before
finance costs and taxation 2,731 (171,550) (168,819) 1,929 1,420 3,349
Finance costs (281) (845) (1,126) (195) (580) (775)
---------------------------------------- -------- ----------- ----------- --------- --------- ---------
Net return/(loss) before
taxation 2,450 (172,395) (169,945) 1,734 840 2,574
Taxation charges (199) - (199) (171) - (171)
---------------------------------------- -------- ----------- ----------- --------- --------- ---------
Net return after taxation 2,251 (172,395) (170,144) 1,563 840 2,403
---------------------------------------- -------- ----------- ----------- --------- --------- ---------
Return per share (note 2) 2.71p (207.20)p (204.49)p 1.97p 1.06p 3.03p
---------------------------------------- -------- ----------- ----------- --------- --------- ---------
(1) GBP11,660,000 due to an exchange loss on the loan which is
denominated in US dollars. GBP1,633,000 due to net exchange gain on
cash and cash equivalents (2021: GBP2,057,000 due to an exchange
gain on the loan which is denominated in US dollars. GBP693,000 due
to net exchange losses on cash and cash equivalents).
STATEMENT OF CHANGES IN EQUITY
For the year ended 30th September 2022
Called Exercised Capital
up share Share warrant redemption Other Capital Revenue
capital premium reserve reserve reserve(1) reserves(2) reserve(2) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ----------- -------- ----------- ------------ ----------- ------------ ----------- -----------
At 30th
September
2020 19,481 13,321 3 581 37,392 340,185 - 410,963
Issue of
Ordinary
shares 1,322 39,111 - - - - - 40,433
Issue of
shares
from Treasury - 28,613 - - - 9,007 - 37,620
Project costs
-
in relation to
issue
of new shares - (94) - - - - - (94)
Net return - - - - - 840 1,563 2,403
Dividend paid
in
the year
(note 3) - - - - - (16,360) (1,563) (17,923)
--------------- ----------- -------- ----------- ------------ ----------- ------------ ----------- -----------
At 30th
September
2021 20,803 80,951 3 581 37,392 333,672 - 473,402
Net
(loss)/return - - - - - (172,395) 2,251 (170,144)
Dividend paid
in
the year
(note 3) - - - - - (16,721) (2,251) (18,972)
--------------- ----------- -------- ----------- ------------ ----------- ------------ ----------- -----------
At 30th
September
2022 20,803 80,951 3 581 37,392 144,556 - 284,286
--------------- ----------- -------- ----------- ------------ ----------- ------------ ----------- -----------
(1) Created during the year ended 30th September 1999, following
a cancellation of the share premium account.
(2) These reserves form the distributable reserves of the
Company and may be used to fund distributions to investors.
STATEMENT OF FINANCIAL POSITION
At 30th September 2022
2022 2021
GBP'000 GBP'000
------------------------------------------------------- ---------- ----------
Fixed assets
Investments held at fair value through profit or loss 333,206 521,634
------------------------------------------------------- ---------- ----------
Current assets
Debtors 1,997 4,264
Cash and cash equivalents 10,950 36
------------------------------------------------------- ---------- ----------
12,947 4,300
Current liabilities
Creditors: amounts falling due within one year (61,867) (4,206)
------------------------------------------------------- ---------- ----------
Net current (liabilities)/assets (48,920) 94
------------------------------------------------------- ---------- ----------
Total assets less current liabilities 284,286 521,728
Creditors: amounts falling due after one year - (48,326)
------------------------------------------------------- ---------- ----------
Net assets 284,286 473,402
------------------------------------------------------- ---------- ----------
Capital and reserves
Called up share capital 20,803 20,803
Share premium 80,951 80,951
Exercised warrant reserve 3 3
Capital redemption reserve 581 581
Other reserve 37,392 37,392
Capital reserves 144,556 333,672
------------------------------------------------------- ---------- ----------
Total shareholders' funds 284,286 473,402
------------------------------------------------------- ---------- ----------
Net asset value per share 341.7p 569.0p
------------------------------------------------------- ---------- ----------
STATEMENT OF CASH FLOWS
For the year ended 30th September 2022
2022 2021
GBP'000 GBP'000
-------------------------------------------------------- ----------- -----------
Net cash outflow from operations before dividends and
interest (3,268) (5,140)
Dividends received 3,412 2,966
Interest received 59 8
Interest paid (920) (801)
-------------------------------------------------------- ----------- -----------
Net cash outflow from operating activities (717) (2,967)
-------------------------------------------------------- ----------- -----------
Purchases of investments (233,601) (385,098)
Proceeds from sale of investments 265,482 320,797
Settlement of foreign currency contracts (129) 51
-------------------------------------------------------- ----------- -----------
Net cash inflow/(outflow) from investing activities 31,752 (64,250)
-------------------------------------------------------- ----------- -----------
Dividends paid (18,972) (17,923)
Issue of Ordinary shares - 40,433
Reissue of shares from Treasury - 37,620
Project costs - in relation to issue of new shares - (94)
Repayment of bank loans (12,470) -
Drawdown of bank loans 9,995 6,800
Utilisation of bank overdraft (124) 124
-------------------------------------------------------- ----------- -----------
Net cash (outflow)/inflow from financing activities (21,571) 66,960
-------------------------------------------------------- ----------- -----------
Increase/(decrease) in cash and cash equivalents 9,464 (257)
-------------------------------------------------------- ----------- -----------
Cash and cash equivalents at start of year 36 343
Unrealised gains/(losses) on foreign currency cash and
cash equivalents 1,450 (50)
-------------------------------------------------------- ----------- -----------
Cash and cash equivalents at end of year 10,950 36
-------------------------------------------------------- ----------- -----------
Cash and cash equivalents consist of:
Cash at bank 2,865 36
Cash held in JPMorgan US Dollar Liquidity Fund 8,085 -
-------------------------------------------------------- ----------- -----------
10,950 36
-------------------------------------------------------- ----------- -----------
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
Basis of accounting
The Financial Statements are prepared under the historical cost
convention, modified to include fixed asset investments at fair
value, and in accordance with the Companies Act 2006, United
Kingdom Generally Accepted Accounting Practice ('UK GAAP'),
including FRS 102 'The Financial Reporting Standard applicable in
the UK and Republic of Ireland' and with the Statement of
Recommended Practice 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' (the 'SORP') issued by the
Association of Investment Companies in April 2021.
All of the Company's operations are of a continuing nature.
The Financial Statements have been prepared on a going concern
basis. In forming this opinion, the Directors have considered any
potential impact of COVID-19 pandemic on the going concern and
viability of the Company. They have considered the potential impact
of COVID-19 and the mitigation measures which key service
providers, including the Manager, have in place to maintain
operational resilience particularly in light of COVID-19. The
Directors have reviewed income and expense projections and the
liquidity of the investment portfolio in making their assessment.
The Directors have also considered the forthcoming continuation
vote at the 2023 AGM and, having made enquiries through the
Company's advisers, have a reasonable belief that the continuation
vote will be supported by the majority of shareholders.
The policies applied in these Financial Statements are
consistent with those applied in the preceding year.
2. Return/(loss) per share
2022 2021
GBP'000 GBP'000
--------------------------------------------------- ------------ -----------
Revenue return 2,251 1,563
Capital return (172,395) 840
--------------------------------------------------- ------------ -----------
Total (loss)/return (170,144) 2,403
--------------------------------------------------- ------------ -----------
Weighted average number of shares in issue during
the year 83,202,465 79,481,601
Revenue return per share 2.71p 1.97p
Capital (loss)/return per share (207.20)p 1.06p
--------------------------------------------------- ------------ -----------
Total (loss)/return per share (204.49)p 3.03p
--------------------------------------------------- ------------ -----------
3. Dividends
(a) Dividends paid and declared
2022 2021
GBP'000 GBP'000
------------------------------------------------------ -------- --------
Dividends paid
2022 first quarterly interim dividend of 5.7p (2021:
5.7p) 4,743 4,144
2022 second quarterly interim dividend of 5.7p
(2021: 5.7p) 4,743 4,366
2022 third quarterly interim dividend of 5.7p (2021:
5.7p) 4,743 4,671
2022 fourth quarterly interim dividend of 5.7p
(2021: 5.7p) 4,743 4,742
------------------------------------------------------ -------- --------
Total dividends paid in the period 18,972 17,923
------------------------------------------------------ -------- --------
In respect of the year ending 30th September 2023, the first
quarterly interim dividend of 3.42p per share amounting to
GBP2,846,000 (2022: 5.7p per share amounting to GBP4,743,000) has
been declared and paid. In accordance with the accounting policy of
the Company, this dividend will be reflected in the Financial
Statements for the year ending 30th September 2023.
(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010 ('Section 1158')
The requirements of Section 1158 are considered on the basis of
the dividend paid and declared in respect of the financial year.
For the year ended 30 September 2022, the dividends declared were
paid during the year, as shown above.
The aggregate of the distributable reserves is GBP144,556,000
(2021: GBP333,672,000). Please note that at the Annual General
Meeting ('AGM') in February 2020, shareholders approved an
amendment to the Company's Articles of Association to allow the
Company to distribute capital as income to enable the
implementation of the Company's revised dividend policy. (Please
see the Annual Report for further details).
The aggregate of the distributable reserves after the payment of
the first quarterly dividend for 2023 will amount to GBP141,710,000
(2021: GBP328,929,000).
4. Net asset value per share
2022 2021
--------------------------- ------------ -----------
Net assets (GBP'000) 284,286 473,402
Number of shares in issue 83,202,465 83,202,465
--------------------------- ------------ -----------
Net asset value per share 341.7p 569.0p
--------------------------- ------------ -----------
5. Status of results announcement
2021 Financial Information
The figures and financial information for 2021 are extracted
from the Annual Report and Financial Statements for the year ended
30th September 2021 and do not constitute the statutory accounts
for that year. The Annual Report and Financial Statements has been
delivered to the Registrar of Companies and included the Report of
the Independent Auditors which was unqualified and did not contain
a statement under either section 498(2) or section 498(3) of the
Companies Act 2006.
2022 Financial Information
The figures and financial information for 2022 are extracted
from the Annual Report and Financial Statements for the year ended
30th September 2022 and do not constitute the statutory accounts
for that year. The Annual Report and Financial Statements includes
the Report of the Independent Auditors which is unqualified and
does not contain a statement under either section 498(2) or section
498(3) of the Companies Act 2006. The Annual Report and Financial
Statements will be delivered to the Registrar of Companies in due
course.
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of, this
announcement.
13th December 2022
For further information:
Lucy Dina,
JPMorgan Funds Limited
020 7742 4000
ENDS
A copy of the 2022 Annual Report and Financial Statements will
shortly be submitted to the FCA's National Storage Mechanism and
will be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The 2022 Annual Report and Financial Statements will also
shortly be available on the Company's website at
www.jpmchinagrowthandincome.co.uk where up-to-date information on
the Company, including daily NAV and share prices, factsheets and
portfolio information can also be found.
JPMORGAN FUNDS LIMITED
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END
FR UOONRUAUUAAA
(END) Dow Jones Newswires
December 13, 2022 11:33 ET (16:33 GMT)
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