TIDMJAGI
RNS Number : 8298U
JPMorgan Asia Growth & Income PLC
07 December 2021
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN ASIA GROWTH & INCOME PLC
FINAL RESULTS FOR THE YEARED 30TH SEPTEMBER 2021
Legal Entity Identifier: 5493006R74BNJSJKCB17
Information disclosed in accordance with the DTR 4.1.3
The Directors of JPMorgan Asia Growth & Income plc announce
the Company's results for the year ended 30th September 2021.
CHAIRMAN'S STATEMENT
Performance
I am pleased to report that in the year to 30th September 2021
the Company's net asset value ('NAV') return was +13.7%, compared
with a return of +9.7% in sterling terms for the Company's
benchmark index, the MSCI All Countries Asia ex Japan Index. The
return to shareholders was +3.6% (all figures are on a total return
basis), reflecting a disappointing re-rating of the Company's
shares, as they moved from a small premium of 0.6%, to a discount
of 8.3% over the reporting period.
It was a year of two halves. Shareholders will recall I reported
returns of +17.8% and +19.9% for the NAV and share price
respectively for the six months ended 31st March 2021. However,
during the second half of the Company's reporting year, Chinese
growth stocks were particularly volatile, as a raft of regulatory
announcements weighed heavily on market sentiment. This resulted in
valuation multiples contracting across a range of key industries,
including ecommerce, healthcare, property development and
education. Consequently the NAV fell 3.5%.
More significantly though, jitters created by the speed of the
regulatory crackdown coupled with concerns about global inflation
and associated interest rate increases dampening investor
enthusiasm for the region and caused the Company's share price to
fall 13.6% in the second half.
Full detail of the Company's performance, together with a market
review and outlook for 2022, can be found in the Investment
Managers' Report below.
Dividend Policy
In the absence of unforeseen circumstances, the Company's
dividend policy aims to pay regular, quarterly dividends, each
equivalent to 1% of the Company's NAV. Payments are made on the
last business day of each financial quarter, being the end of
December, March, June and September, and are funded from a
combination of revenue and capital reserves. For the year ended
30th September 2021, dividends paid totalled 19.3 pence (2020: 15.8
pence). This is the highest level of dividend paid by the Company
since the introduction of its revised dividend policy, which took
effect from the beginning of the Company's financial year ended
30th September 2017. It is pleasing that shareholders have been
rewarded on both a capital and income basis.
In the Board's view, resetting the dividend quantum each quarter
is a prudent way of delivering an income that tracks performance.
Dividends are based on a percentage of net assets, so the dividend
paid to shareholders will reflect the Company's net assets at each
quarter end. Shareholders are reminded that dividends will
therefore be subject to market and performance fluctuations.
Premium/Discount and Share Capital Management
Throughout a significant part of the year under review, the
Company's shares traded at a premium to NAV, and to satisfy the
increased demand for the Company's shares, the Board took the
opportunity to issue 3,715,500 shares over the year (comprising the
selling of 965,500 shares from treasury stock and the issuance of
2,750,000 new shares under a block listing).
As detailed above, the Company's shares are now trading at a
discount and closed the year at 8.3%. Discount widening has been a
general theme for Asian focused mandates and for many equity
investment trusts in recent months, and in the period from the last
few days of September 2021 to date, the Board purchased a total of
102,796 shares. The Board monitors the discount closely and will
continue to take action should the Company's discount trend diverge
from that experienced by its peers. Pleasingly the discount has
narrowed since the end of the review period, and at the time of
writing the Company's shares are now trading at a discount of
0.3%.
Gearing
The Company has in place a multi-currency loan facility with
Scotiabank. The Investment Managers utilise drawdowns from this
loan facility to gear the portfolio during periods when they expect
gearing to enhance performance. Over the reporting year and at the
time of writing, the Company was not geared.
Environmental, Social and Governance ('ESG') Issues
As detailed in the ESG Report within the Company's Annual Report
& Financial Statements for the year ended 30th September 2021
('2021 Annual Report'), ESG considerations are integral to the
Manager's investment process and are core to its stock selection
decisions. Please refer to this Report for comprehensive
information on this integration.
Board of Directors
The results of this year's Board evaluation process confirmed
that all Directors possessed the experience and attributes to
support a recommendation to shareholders that they retire and seek
re-appointment at the Company's forthcoming Annual General
Meeting.
The Company's Articles of Association stipulate that aggregate
Directors' fees must not exceed GBP200,000 per annum. Any increase
in this maximum aggregate amount requires both Board and
shareholder approval. Although there is no increase in Directors'
fees this year, to aid the Board's succession planning, the
Directors propose that the aggregate maximum in the Company's
Articles be increased to GBP250,000 per annum. For full details
please refer to the Directors' Remuneration Report within the 2021
Annual Report.
Having served as a Director since September 2013, and chaired
the Board since 2017, I will be retiring from the Board at the
Company's Annual General Meeting to be held in February 2023.
Directors will therefore seek to appoint a new Director at some
point in 2022. I am delighted to confirm that Sir Richard Stagg, a
Director since July 2018, has been nominated as my successor.
The Manager
Through the remit of the Management Engagement Committee ('MEC')
the Board has reviewed the Manager's performance and its fee
arrangements with the Company. Based upon its performance record
and taking all factors into account, including other services
provided to the Company and its shareholders, the MEC and the Board
are satisfied that JPMF should continue as the Company's Manager
and that its ongoing appointment remains in the best interests of
shareholders.
Annual General Meeting ('AGM')
It was a source of regret to me personally, and to the members
of the Board, that COVID-19 restrictions prevented the Company's
2021 AGM from being held in the usual format. The Directors were
disappointed not to be able to have the usual interaction with
shareholders at this forum. However, current indications are that a
more familiar format for the AGM will be permissible next year and,
to that end, the AGM is scheduled to be held at 11.00 a.m. on
Wednesday, 9th February 2022, at 60 Victoria Embankment, London
EC4Y 0JP.
We do, of course, strongly advise all shareholders to consider
their own personal circumstances before attending the AGM in
person. For shareholders who wish to follow the AGM proceedings,
but choose not to attend, we will be able to offer you the chance
to participate via video conference. Details on how to register,
together with access details, can be found on the Company's
website: www.jpmasiagrowthandincome.co.uk, or by contacting the
Company Secretary at invtrusts.cosec@jpmorgan.com.
As is 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 in person, to exercise their
votes in advance of the meeting by completing and submitting their
form of proxy. Shareholders are encouraged to send any questions to
the Board, via the Company Secretary, at the email address above,
ahead of the AGM. We will endeavour to answer all relevant
questions at the meeting, or via the website, depending on
arrangements in place at the time.
Outlook
Nobody can predict with confidence either China's political and
social evolution over the next few years or the likely economic
impact of continuing tensions between the US and China. Judging
from the last 12 months, there are challenges ahead. The Board
firmly believes, however, that Asia continues to offer significant
opportunities for international investors. These flow in part from
long-term structural and social changes and in part from the
growing number of well managed companies, running dynamic
businesses in exciting areas from technology to healthcare.
JPMorgan Asia Growth & Income is an ideal, low-cost way to gain
diversified exposure to the best investment ideas, while
simultaneously providing shareholders with an attractive income
yield of approximately 4%.
Bronwyn Curtis OBE
Chairman
7th December 2021
INVESTMENT MANAGERS' REPORT
Introduction
In this report, we consider the Company's investment performance
for the year to 30th September 2021. We review the complex market
backdrop for the period and examine the key stock and sector
stories that impacted relative performance. Finally, we look at
what could lie ahead for Asian equities over the coming year.
What has the market environment been like over the year?
The fiscal year under review proved to be a volatile period, but
Asian equities ended the year higher. The Company's benchmark
index, the MSCI AC Asia, ex Japan Index, generated a +9.7% return
(in sterling terms). Economic conditions proved comparatively
resilient across Asia, and investor sentiment continued to improve,
spurred on by hopes that the recovery is gathering momentum. GDP
growth has recovered rapidly from 2020's pandemic-induced slowdown,
when most countries posted contractions in economic activity. China
was the notable exception, recording GDP growth of 2.3% during
2020.
China and Hong Kong were the centre of attention at the end of
calendar year 2020 and during the first quarter of 2021, where
domestic Chinese investors' demand for offshore, Hong Kong-listed H
shares drove the market to new highs. Onshore Chinese investors
purchased record amounts of Hong Kong Dollar issued names under the
Stock Connect scheme, a collaboration between the Shanghai,
Shenzhen and Hong Kong stock exchanges which facilitates trading
across these markets. For the nine months ending September 2021,
total stock connect revenue totalled 260mn USD, up 55% YoY and
Southbound average daily turnover was nearly 6 billion USD,
doubling from the previous year. The percentage of Southbound
turnover of the Hong Kong market reached a high of 13.5% in the
first quarter of the year compared to 9.3% in 2020.
From March onwards, volatility picked up markedly in response to
a series of concerns. As Asian economies began to open up and
recover from COVID-related restrictions, investors started to fret
about inflation and the associated risk of higher interest rates.
These worries were compounded by sharply rising commodity prices
and fears of a speculative bubble in China's over-leveraged real
estate market. Volatility was further heightened by a series of
severe regulatory restrictions imposed by the Chinese government,
including on ecommerce, video gaming companies and other activities
which the government views as adding little value to society. The
crackdown on private tutoring services was particularly harsh,
effectively preventing this sector from operating in China. These
companies aim to help children succeed in China's very competitive
education system. However, their services are only accessible to
wealthier families, and thus serve to compound China's very high
level of income inequality, which has worsened since the onset of
the pandemic. The government has presented the restrictions on this
and other industries as part of its push for 'common prosperity',
intended to ensure more equitable income distribution. However, the
measures have raised fears amongst investors that the government is
abandoning its support for growth and private sector activity, in
favour of greater social controls.
These concerns meant that after rising sharply in the first half
of the Company's financial year, to end March 2021, Asian markets
lost some of this ground in the following six months to end
September - the Company's benchmark rose by 14.1% in the first
half, but retreated by 3.9% in the second half in sterling terms.
However, despite this setback, Asian equities still made
substantial gains over the review period as a whole, led by the
strong performance of the region's best corporates, including
Chinese pharmaceutical companies and Taiwanese and South Korean
semiconductor manufacturers. In addition, the rapid spread of
digitalisation into many aspects of consumers' lives, such as
online shopping and banking, social media and entertainment, and a
variety of other remote services, is benefiting many businesses in
less developed economies such as Indonesia and India.
PERFORMANCE ATTRIBUTION
FOR THE YEARED 30TH SEPTEMBER 2021
% %
----------------------------------------- ----- ------
Contributions to total returns
----------------------------------------- ----- ------
Benchmark return 9.7
----------------------------------------- ----- ------
Stock selection 5.4
----------------------------------------- ----- ------
Currency effect -0.3
----------------------------------------- ----- ------
Gearing/(net cash) -0.1
----------------------------------------- ----- ------
Investment Manager contribution 5.0
----------------------------------------- ----- ------
Dividends/residual -0.3
----------------------------------------- ----- ------
Portfolio return 14.4
----------------------------------------- ----- ------
Management fee/Other expenses -0.8
----------------------------------------- ----- ------
Share buy-back/issuance 0.1
----------------------------------------- ----- ------
Return on net assets (APM) 13.7
----------------------------------------- ----- ------
Effect of movement in discount over the
year -10.1
----------------------------------------- ----- ------
Return to shareholders (APM) 3.6
----------------------------------------- ----- ------
Source: FactSet, JPMAM and Morningstar. All figures are on a
total return basis.
Performance attribution analyses how the Company achieved its
recorded performance relative to its benchmark index.
(APM) Alterative Performance Measure ('APM').
A glossary of terms and APMs is provided in the 2021 Annual
Report.
How has the Company's portfolio performed over the year under
review?
Against this highly volatile macro and market backdrop, the
Company's return on net assets for the year to 30th September 2021
was +13.7%, outpacing the benchmark return of +9.7%. As you will
recall from the half year report, the portfolio delivered stronger
performance during the first half of year, but this was partially
eroded by the adverse impact of market developments in the second
half of the year. Nonetheless, we are pleased that the portfolio
still outperformed its benchmark to a meaningful extent over the
year as a whole.
What have been the major contributors and detractors to
performance?
The Company's long-standing overweight in South Korea was the
largest driver of the performance for the year under review. The
top performing South Korean holding over the period, and the
portfolio's second highest contributor to returns, was Afreecatv Co
Ltd, an online streaming service. This company is benefitting from
the shift to on-demand TV and video streaming, as well as the huge
popularity of South Korean pop groups, especially in China and
Japan. This business is expanding its footprint, adopting
innovative forms of consumer engagement, improving its content
offerings and monetising content via advertising sales.
The Company's top contributor to performance was Sea Ltd, its
largest Singaporean position. Sea Ltd is an internet conglomerate
whose businesses are involved in ecommerce, consumer finance and
game development. Although its operations have been primarily
focused in South-East Asia, notably Indonesia, its ecommerce brand,
Shopee, has quickly gained traction in countries such as Brazil,
where it now has an impressive 20 million users, around half the
level of Brazil's leading player, MercardoLibre.
Several portfolio holdings that performed well in the first half
of the financial year continued to sustain positive momentum in the
second half, demonstrating their resilience to the generally
unfavourable market conditions. One such outperformer was Wuxi
Biologics, a leading Chinese biotech contract research
organisation. The pandemic significantly accelerated an existing
trend to outsource research and development to China, and this
company has been a major beneficiary. Not owning Chinese education
names such as TAL Education Group and New Oriental Education also
contributed to relative performance.
Unsurprisingly, the major detractors from returns were mostly
Chinese names which sold off on regulatory and governance concerns
following the imposition of tighter restrictions. Holdings affected
included Alibaba, China's largest internet retailer, Tencent, a
giant social media, gaming and fintech platform, and Ping An,
China's biggest insurance company. Additionally, not owning
Reliance Industries, detracted. This Indian company is known as an
oil and gas producer, but in addition it owns a variety of
businesses including entertainment and news platforms, digital
services, supermarkets, pharmacies and other retail outlets. The
stock, which is primarily not held in the portfolio for governance
reasons, witnessed a marked re-rating over the past year or so
following investments from leading global internet firms such as
Amazon, which bought a stake in Reliance's retail business.
Have there been any notable sales or purchases within the
portfolio over the last 12 months?
During the year under review, we purchased Foshan Haitian,
China's leading condiment maker, focused mainly on soy sauce. The
sell-off in the shares from early 2021, driven mainly by weak sales
in the food services segment and pricing pressure due to the
increasing popularity of group community purchasing, allowed us to
buy the shares at a lower valuation and despite the weaker
short-term fundamentals, the long-term outlook for growth and
pricing power for this company remains compelling. We also added a
position in United Overseas Bank, one of Singapore's top financial
institutions. Operating results have been strong driven by a
combination of fee income from the bank's wealth management
business, stable loan growth and generally lower credit costs and
loan provisions. The largest reduction during the period was that
of Alibaba where the company's growth outlook is increasingly
challenged, driven by rising competition in the e-commerce space
and regulations that could result in lower returns in new
businesses such as cloud services.
What should investors expect for the next 12 months?
Undoubtedly the biggest opportunities and risks in Asia at
present are located in China. Combined with Hong Kong, the country
accounts for around half of the regional index. The largest index
weights are no longer China's state-owned enterprises, but rather
private companies at the cutting edge of sectors such as ecommerce,
gaming, video streaming, drug discovery and electric vehicle
production, which are applying software and hardware technology in
innovative ways. Simultaneously, the Chinese economy is undergoing
significant shifts in consumption, due to the rapid expansion of
its middle class, and in manufacturing and investment patterns.
China's rapidly changing regulatory and policy landscape should
be considered in this context. Its leadership is looking to control
and influence the changes underway in China, and thus mould the
country's future, by incentivising investment in sectors which it
believes will deliver the most economic and social benefits, and
disincentivising less 'desirable' activity. But it is important to
note that while the new regulations have resulted in significant
challenges to the outlook for companies in various sectors,
including consumer finance, ride hailing, online recruitment,
ecommerce and private tutoring (mentioned above), over the short
term and beyond, other government initiatives are generating
investment opportunities in areas such as healthcare and factory
automation, which have previously been dominated by companies in
Japan, Taiwan, the US and Germany.
Across the broader Asian region, many of the positive changes we
are witnessing are occurring at the company level, rather than
across the whole economy, as is the case in China. As discussed in
the attribution section, companies such as Sea Ltd are rapidly
attracting new consumers in places such as Indonesia, and much
further afield. As a result, we expect other businesses to benefit
from associated increases in demand for credit and data usage and
storage requirements, and from widespread, fundamental changes in
consumer spending patterns. We are more cautious on the outlook for
the Indian market. Although the economy is recovering quickly from
a deep economic downturn, India's market levels and valuations have
run even faster, suggesting excessive optimism in some sectors.
Overall, we remain broadly optimistic on the long-term outlook
for Asian equities. However, recent developments, especially those
in China, means it is crucial that we exercise caution. The outlook
for the regional economy remains clouded by ongoing COVID-19
restrictions on travel and tourism, supply bottlenecks and
inflation pressures, as well as by regulatory risks, whilst the
gradual withdrawal of fiscal support programs could rob the
recovery of forward momentum. It is also important to highlight
that valuations are above averages in some countries and sectors,
and that it may become more challenging for companies to exceed
market expectations, given that the most obvious earnings upgrades
have already been factored into prices.
Our search for Asia's very best growth ideas continues. In the
current environment, and with the spread between growth and value
stocks at an all-time high, the quality of growth from companies
trading at rich multiples will become more important, and those
corporates that disappoint market expectations may see their heady
valuations come under pressure. In our view, the key to finding
higher quality names is to focus on companies' fundamental
characteristics. Our rigorous valuation framework is vital in this
respect, as it allows us to look beyond short-term trends, to
identify attractive long-term growth opportunities. We also believe
that our experienced analysts and longstanding presence in local
markets provide us with optimum access to the best ideas in Asia's
fast-growing markets, and we remain confident that the Company's
investment strategy will continue to reward patient investors over
the long-term.
Ayaz Ebrahim
Robert Lloyd
Investment Managers
7th December 2021
PRINCIPAL AND EMERGING RISKS
The Directors confirm that they have carried out a robust
assessment of the principal risks facing the Company, including
those that would threaten its business model, future performance,
solvency or liquidity. With the assistance of JPMF, the Audit
Committee has drawn up a risk matrix, which identifies the key
risks to the Company. 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. The key emerging risks identified are
also summarised below.
Principal Risk Description Mitigating Activities
----------------------- --------------------------------- ----------------------------------------------------
Investment Management
and Performance
----------------------- --------------------------------- ----------------------------------------------------
Underperformance Poor implementation The Board manages these risks by diversification
of the investment of investments and through its investment
strategy, for example restrictions and guidelines, which are
as to thematic exposure, monitored and reported on by the Manager.
sector allocation, The Manager provides the Directors with
stock selection, timely and accurate management information,
undue concentration including performance data and attribution
of holdings, factor analyses, revenue estimates, liquidity
risk exposure or reports and shareholder analyses. The
the degree of total Board monitors the implementation and
portfolio risk, may results of the investment process with
lead to underperformance the Investment Managers, at least one
against the Company's of whom attends all Board meetings, and
benchmark index and reviews data which show measures of the
peer companies. Company's risk profile. The Investment
Managers employ the Company's gearing
tactically, within a strategic range set
by the Board.
----------------------- --------------------------------- ----------------------------------------------------
Discount Control Investment trust The Board monitors the level of both the
Risk shares often trade absolute and sector relative premium/discount
at discounts to their at which the shares trade. The Board reviews
underlying NAVs, both sales and marketing activity and
although they can sector relative performance, which it
also trade at a premium. believes are the primary drivers of the
Discounts and premiums relative discount level. In addition,
can fluctuate considerably the Company has authority, when it deems
leading to volatile appropriate, to buy back its existing
returns for shareholders. shares to enhance the NAV per share for
remaining shareholders and to reduce the
absolute level of discount and discount
volatility.
----------------------- --------------------------------- ----------------------------------------------------
Market and Economic Market risk arises The Board believes that shareholders expect
Risk from uncertainty that the Company will and should be fairly
about the future fully invested in Asian equities at all
prices of the Company's times. The Board therefore would normally
investments, which only seek to mitigate market risk through
might result from guidelines on gearing given to the Manager.
economic, fiscal, The Board receives regular reports from
climate, regulatory, the Manager's strategists and Investment
etc change. It represents Managers regarding market outlook and
the potential loss gives the Investment Mangers discretion
the Company might regarding acceptable levels of gearing
suffer through holding and/or cash, currently the Company's gearing
investments in the policy is to operate within a range of
face of negative 10% net cash to 20% geared. In particular
market movements. ESG considerations are integrated into
The Board considers the investment decision-making.
thematic and factor
risks, stock selection
and levels of gearing
on a regular basis
and has set investment
restrictions and
guidelines which
are monitored and
reported on by the
Manager.
----------------------- --------------------------------- ----------------------------------------------------
Change of Corporate Change of corporate The Board holds regular meetings with
Control of the control of Manager senior representatives of the Manager
Manager or similar event in order to obtain assurance that the
that changes focus Manager continues to demonstrate a high
of JPMAM. degree of commitment to its asset management
and investment trust business.
----------------------- --------------------------------- ----------------------------------------------------
Loss of Investment A sudden departure The Board seeks assurance that the Manager
Team or Portfolio of a Portfolio Manager takes steps to reduce the risk arising
Manager or several members from such an event by ensuring appropriate
of the investment succession planning and the adoption of
management team could a team based approach, as well as special
result in a short efforts to retain key personnel. The Board
term deterioration engages with the senior management of
in investment performance. the Manager in order to mitigate this
risk.
----------------------- --------------------------------- ----------------------------------------------------
Operational Risks
----------------------- --------------------------------- ----------------------------------------------------
Cyber Crime The threat of cyber The Company benefits directly and/or indirectly
attack, in all guises, from all elements of JPMorgan's Cyber
is regarded as at Security programme. The information technology
least as important controls around physical security of JPMorgan's
as more traditional data centres, security of its networks
physical threats and security of its trading applications,
to business continuity are tested by independent auditors and
and security. reported every six months against the
AAF Standard.
----------------------- --------------------------------- ----------------------------------------------------
Regulatory Risk
----------------------- --------------------------------- ----------------------------------------------------
Regulatory Change The Company's business T he Board receives regular reports from
model could become its broker, depositary, registrar and
non-viable as a result Manager as well as its legal advisers
of new or revised and the Association of Investment Companies
rules or regulations on changes to regulations which could
arising from, for impact the Company and its industry. The
example, policy change Company monitors events and relies on
or financial monitoring the Manager and its other key third party
pressure. providers to manage this risk by preparing
for any changes.
----------------------- --------------------------------- ----------------------------------------------------
Economic and
Geopolitical
----------------------- --------------------------------- ----------------------------------------------------
Global Geopolitical There is significant The Board regularly discusses the global
Risk exposure to the economic geo-political issues and general economic
cycles and political conditions and developments with the Investment
movements of the Managers. Political tensions between and
markets in which changes within the US, China, Europe and
the underlying investments UK continue the uncertainty and volatility
are listed. in financial markets. The medium and longer
Political and economic term impacts of COVID-19 on this risk,
risk, political change for example the unprecedented levels of
or protectionism fiscal stimulus and travel restrictions
may have an adverse will continue to be assessed in light
effect on underlying of how they may affect the Company's portfolio
valuations, such and the economic and geopolitical environment
as a US-led trade in which the Company operates within overall.
war, North Korean The potential consequences of Brexit continue
conflict, and other to be monitored through existing control
political tensions systems. Since the portfolio has no investments
both in Asia and in the UK or Europe the Board does not
closer to home to believe that there is likely to be any
include tensions significant or direct impact on the operation
in the Eurozone and of the Company or the structure of the
Brexit risks. portfolio.
----------------------- --------------------------------- ----------------------------------------------------
Emerging Risk
----------------------- --------------------------------- ----------------------------------------------------
Environmental
----------------------- --------------------------------- ----------------------------------------------------
Policy and Regulatory Climate change, which Financial returns for long-term diversified
Risk arising barely registered investors should not be jeopardised given
from Climate with investors a the investment opportunities created by
Change decade ago, has today the world's transition to a low-carbon
become one of the economy. The Board is also considering
most critical issues the threat posed by the direct impact
confronting asset on climate change on the operations of
managers and their the Manager and other major service providers.
investors. Investors As extreme weather events become more
can no longer ignore common, the resiliency, business continuity
the impact that the planning and the location strategies of
world's changing the Company's services providers will
climate will have come under greater scrutiny. In particular
on their portfolios, also the Board receives ESG reports from
with the impact of the Manager on the portfolio and the way
climate change on ESG considerations are integrated into
returns now inevitable. the investment decision-making.
----------------------- --------------------------------- ----------------------------------------------------
Pandemic Risks
----------------------- --------------------------------- ----------------------------------------------------
Pandemics COVID-19 has highlighted The Board receives reports on the business
the speed and extent continuity plans of the Manager and other
of economic damage key service providers. The effectiveness
that can arise from of these measures have been assessed throughout
a pandemic. While the course of the COVID-19 pandemic and
current vaccination the Board will continue to monitor developments
programme results as they occur and seek to learn lessons
are hopeful, the which may be of use in the event of future
risk remains that pandemics.
new variants may
not respond to existing
vaccines, may be
more lethal and may
spread as global
travel opens up again.
----------------------- --------------------------------- ----------------------------------------------------
Global
----------------------- --------------------------------- ----------------------------------------------------
Social Dislocation Social dislocation/civil The Manager's market strategists are available
& Conflict unrest may threaten for the Board and can discuss market trends.
global economic growth External consultants and experts can be
and, consequently, accessed by the Board. The Board can,
companies in the with shareholder approval, look to amend
portfolio. the investment policy and objectives of
the Company to gain exposure to or mitigate
the risks arising from geopolitical instability
although this is limited if it is truly
global.
----------------------- --------------------------------- ----------------------------------------------------
Inappropriate Inappropriate Government/Central The Manager's market strategists are available
Monetary/Fiscal banks fiscal or monetary for the Board and can discuss market trends.
Policies responses to the External consultants and experts can be
Covid-19 pandemic accessed by the Board.
result in excessively The Board can, with shareholder approval
loose economic conditions look to amend the investment policy and
resulting in the objectives of the Company, if required,
medium term risk to enable investment in companies or assets
of significant levels which offer more appealing risk/return
of inflation or, characteristics in prevailing economic
alternatively, are conditions.
ineffective in stimulating
a recovery resulting
in deflation and
depression.
----------------------- --------------------------------- ----------------------------------------------------
Rising Competition China is emerging The Board has access to a range of expert
between China as a challenger to resources and strategists in the UK and
and Western Economies the western hegemony in the Asian region to provide long term
of recent decades. insight and guidance on geopolitical developments.
This brings with The Managers investment process incorporates
it increased competition non-financial measures and risks in the
in political and assessment of investee companies to allow
military affairs the portfolio to adapt to changing competitive
alongside the development and political landscapes.
of a major trading
bloc operating to
different cultural,
legal political and
technological norms
and standards. These
areas of conflict
may give rise to
geopolitical crises
that threaten the
markets in which
investee companies
operate and fragment
previously global
markets into more
isolated trading
blocs which may limit
the opportunity of
investee companies
to grow and thrive.
----------------------- --------------------------------- ----------------------------------------------------
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
Details of the management contract are set out in the Directors'
Report within the 2021 Annual Report. The management fee payable to
the Manager for the year was GBP2,727,000 (2020: GBP2,084,000) of
which GBPnil (2020: GBPnil) was outstanding at the year end.
During the year GBPnil (2020: GBPnil), was payable to the
Manager for the administration of savings scheme products, of which
GBPnil (2020: GBPnil) was outstanding at the year end.
Safe custody fees amounting to GBP181,000 (2020: GBP149,000)
were payable to JPMorgan Chase Bank N.A. during the year of which
GBP93,000 (2020: GBP25,000) 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 GBP1,000 (2020: GBP1,000) of which GBPnil (2020:
GBPnil) was outstanding at the year end.
Handling charges on dealing transactions amounting to GBP24,000
(2020: GBP22,000) were payable to JPMorgan Chase Bank N.A. during
the year of which GBP9,000 (2020: GBP5,000) was outstanding at the
year end.
During the year the Company held cash in the JPMorgan US Dollar
Liquidity Fund, which is managed by JPMorgan. At the year end this
was valued at GBP964,000 (2020: GBP1,160,000). Interest amounting
to GBP3,000 (2020: GBP6,000) was receivable during the year of
which GBPnil (2020: GBPnil) was outstanding at the year end.
Stock lending income amounting to GBP48,000 (2020: GBP17,000)
were receivable by the Company during the year.
JPMAM commissions in respect of such transactions amounted to
GBP5,000 (2020: GBP2,000).
At the year end, total cash of GBP532,000 (2020: GBP2,806,000)
was held with JPMorgan Chase Bank N.A. A net amount of interest of
GBPnil (2020: GBP3,000) was receivable by the Company during the
year of which GBPnil (2020 GBPnil) was outstanding at the year
end.
Full details of Directors' remuneration and shareholdings can be
found within the 2021 Annual Report.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 102 'The Financial Reporting
Standard applicable in the UK and Republic of Ireland' 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
the profit or loss of the Company for that period. In preparing the
financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- state whether applicable United Kingdom Accounting Standards,
comprising FRS 102, have been followed, subject to any material
departures disclosed and explained in the financial statements;
-- make judgements and accounting estimates that are reasonable and prudent; and
-- prepare the financial statements on the 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 and the Directors' Remuneration Report
comply with the Companies Act 2006.
The Directors 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 Directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
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 Directors' Remuneration Report that comply with the law and
those regulations.
Each of the Directors, whose names and functions are listed in
Directors' Report confirm that, to the best of their knowledge:
-- the Company's financial statements, which have been prepared
in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 102
'The Financial Reporting Standard applicable in the UK and Republic
of Ireland', and applicable law), give a true and fair view of the
assets, liabilities, financial position and profit of the Company;
and
-- the Directors' 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 & Financial
Statements, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the Company's performance, business model and strategy.
For and on behalf of the Board
Bronwyn Curtis OBE
Chairman
7th December 2021
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30TH SEPTEMBER 2021
2021 2020
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- --------- -------- --------- --------- -------- ---------
Gains on investments held
at fair value
through profit or loss - 50,965 50,965 - 29,604 29,604
Net foreign currency (losses)/gains - (151) (151) - 116 116
Income from investments 6,799 - 6,799 7,906 - 7,906
Interest receivable and
similar income 51 - 51 26 - 26
------------------------------------- --------- -------- --------- --------- -------- ---------
Gross return 6,850 50,814 57,664 7,932 29,720 37,652
Management fee (2,727) - (2,727) (2,084) - (2,084)
Other administrative expenses (697) (90) (787) (666) - (666)
------------------------------------- --------- -------- --------- --------- -------- ---------
Net return before finance
costs and
taxation 3,426 50,724 54,150 5,182 29,720 34,902
Finance costs (41) - (41) (111) - (111)
------------------------------------- --------- -------- --------- --------- -------- ---------
Net return before taxation 3,385 50,724 54,109 5,071 29,720 34,791
Taxation (670) (171) (841) (710) (90) (800)
------------------------------------- --------- -------- --------- --------- -------- ---------
Net return after taxation 2,715 50,553 53,268 4,361 29,630 33,991
------------------------------------- --------- -------- --------- --------- -------- ---------
Return per share (note
2) 2.84p 52.81p 55.65p 4.64p 31.49p 36.13p
A fourth quarterly dividend of 4.6p (2020: 4.2p) per share has
been declared in respect of the year ended 30th September 2021,
totalling GBP4,495,000 (2020: GBP3,951,000). Further details are
given in note 10 within the 2021 Annual Report.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
in the year.
The 'Total' column of this statement is the profit and loss
account of the Company and the 'Revenue' and 'Capital' columns
represent supplementary information prepared under guidance issued
by the Association of Investment Companies.
The net return after taxation represents the profit for the year
and also the total comprehensive income.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30TH SEPTEMBER 2021
Called Exercised Capital
up
share Share warrant redemption Capital Revenue
capital premium reserve reserve reserves(1) reserve(1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- -------- ---------- ----------- ------------ ----------- ----------
At 30th September
2019 23,762 31,646 977 25,121 295,820 - 377,326
Net return - - - - 29,630 4,361 33,991
Dividend paid in
the year (note 3) - - - - (10,316) (4,361) (14,677)
---------------------- -------- -------- ---------- ----------- ------------ ----------- ----------
At 30th September
2020 23,762 31,646 977 25,121 315,134 - 396,640
Issue of Ordinary
shares 687 12,980 - - - - 13,667
Issue of shares from
Treasury - 2,079 - - 2,892 - 4,971
Repurchase of shares
into Treasury - - - - (299) - (299)
Net return - - - - 50,553 2,715 53,268
Dividends paid in
the year (note 3) - - - - (15,332) (2,715) (18,047)
---------------------- -------- -------- ---------- ----------- ------------ ----------- ----------
At 30th September
2021 24,449 46,705 977 25,121 352,948 - 450,200
---------------------- -------- -------- ---------- ----------- ------------ ----------- ----------
(1) 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 2021
2021 2020
GBP'000 GBP'000
------------------------------------------------------- -------- ---------
Fixed assets
Investments held at fair value through profit or loss 448,721 394,141
------------------------------------------------------- -------- ---------
Current assets
Derivative financial assets - 5
Debtors 507 1,032
Cash and cash equivalents 1,496 3,966
------------------------------------------------------- -------- ---------
2,003 5,003
Current liabilities
Creditors: amounts falling due within one year (524) (2,504)
------------------------------------------------------- -------- ---------
Net current assets 1,479 2,499
------------------------------------------------------- -------- ---------
Total assets less current liabilities 450,200 396,640
------------------------------------------------------- -------- ---------
Net assets 450,200 396,640
------------------------------------------------------- -------- ---------
Capital and reserves
Called up share capital 24,449 23,762
Share premium 46,705 31,646
Exercised warrant reserve 977 977
Capital redemption reserve 25,121 25,121
Capital reserves 352,948 315,134
------------------------------------------------------- -------- ---------
Total equity shareholders' funds 450,200 396,640
------------------------------------------------------- -------- ---------
Net asset value per share 460.7p 421.6p
STATEMENT OF CASH FLOWS
FOR THE YEARED 30TH SEPTEMBER 2021
2021 2020
GBP'000 GBP'000
--------------------------------------------------------------- ---------- -----------
Net cash outflow from operations before dividends and
interest (3,346) (2,816)
Dividends received 6,327 6,878
Interest received 3 9
Taxation 23 -
Interest paid (40) (110)
--------------------------------------------------------------- ---------- -----------
Net cash inflow from operating activities 2,967 3,961
--------------------------------------------------------------- ---------- -----------
Purchases of investments (166,687) (161,482)
Sales of investments 160,862 171,566
Settlement of forward currency contracts (111) 72
--------------------------------------------------------------- ---------- -----------
Net cash (outflow)/inflow from investing activities (5,936) 10,156
--------------------------------------------------------------- ---------- -----------
Dividends paid (18,047) (14,677)
Ordinary Shares issued (including from Treasury) 18,638 -
Repayment of bank loans - (8,848)
Drawdown of bank loans - 9,114
--------------------------------------------------------------- ---------- -----------
Net cash inflow/(outflow) from financing activities 591 (14,411)
--------------------------------------------------------------- ---------- -----------
Decrease in cash and cash equivalents (2,378) (294)
--------------------------------------------------------------- ---------- -----------
Cash and cash equivalents at start of year 3,966 4,404
Unrealised loss on foreign currency cash and cash equivalents (92) (144)
Cash and cash equivalents at end of year 1,496 3,966
--------------------------------------------------------------- ---------- -----------
Decrease in cash and cash equivalents (2,378) (294)
--------------------------------------------------------------- ---------- -----------
Cash and cash equivalents consist of:
Cash and short term deposits 532 2,806
Cash held in JPMorgan US Dollar Liquidity Fund 964 1,160
--------------------------------------------------------------- ---------- -----------
Total 1,496 3,966
--------------------------------------------------------------- ---------- -----------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30TH SEPTEMBER 2021
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 October 2019.
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 the 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 the compliance with debt covenants in
assessing the going concern and viability of the Company. The
Directors have reviewed income and expense projections and the
liquidity of the investment portfolio in making their assessment.
The disclosures on going concern in the 2021 Annual Report of the
Directors' Report form part of these financial statements.
The policies applied in these financial statements are
consistent with those applied in the preceding year.
2. Return per share
2021 2020
GBP'000 GBP'000
--------------------------------------------------- ----------- ------------
Revenue return 2,715 4,361
Capital return 50,553 29,630
--------------------------------------------------- ----------- ------------
Total return 53,268 33,991
--------------------------------------------------- ----------- ------------
Weighted average number of shares in issue during
the year 95,724,531 94,081,493
Revenue return per share 2.84p 4.64p
Capital return per share 52.81p 31.49p
--------------------------------------------------- ----------- ------------
Total return per share 55.65p 36.13p
--------------------------------------------------- ----------- ------------
3. Dividends
(a) Dividends paid and declared
2021 2020
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Dividends paid
2020 fourth quarterly dividend of 4.2p (2019: 4.0p) 3,951 3,763
First quarterly dividend of 4.8p (2020: 4.1p) 4,537 3,858
Second quarterly dividend of 4.9p (2020: 3.5p) 4,690 3,293
Third quarterly dividend of 5.0p (2020: 4.0p) 4,869 3,763
----------------------------------------------------- -------- --------
Total dividends paid in the period 18,047 14,677
----------------------------------------------------- -------- --------
Dividend declared
Fourth quarterly dividend declared of 4.6p (2020:
4.2p) per share 4,495 3,951
----------------------------------------------------- -------- --------
A fourth quarterly dividend of 4.6p has been declared and was
paid on 16th November 2021 for the financial year ended 30th
September 2021. In accordance with the accounting policy of the
Company, this dividend will be reflected in the financial
statements for the year ending 30th September 2022.
(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 proposed in respect of the financial year, shown
below.
The aggregate of the distributable reserves is GBP237,228,000
(2020: GBP225,349,000).
2021 2020
GBP'000 GBP'000
--------------------------------------------------- -------- --------
First quarterly dividend of 4.8p (2020: 4.1p) 4,537 3,858
Second quarterly dividend of 4.9p (2020: 3.5p) 4,690 3,293
Third quarterly dividend of 5.0p (2020: 4.0p) 4,869 3,763
Fourth quarterly dividend declared of 4.6p (2020:
4.2p) 4,495 3,951
--------------------------------------------------- -------- --------
Total dividends for Section 1158 purposes 18,591 14,865
--------------------------------------------------- -------- --------
The aggregate of the distributable reserves after the payment of
the final dividend will amount to GBP232,733,000 (2020:
GBP221,398,000).
4. Net asset value per share
2021 2020
--------------------------- ----------- ------------
Net assets (GBP'000) 450,200 396,640
Number of shares in issue 97,725,197 94,081,493
--------------------------- ----------- ------------
Net asset value per share 460.7p 421.6p
--------------------------- ----------- ------------
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 the year. The Annual Report and Financial Statements for the
year ended 30th September 2021 include 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 for
the year ended 30th September 2021 will be delivered to the
Register of Companies in due course.
2020 Financial Information
The figures and financial information for 2020 are extracted
from the published Annual Report and Financial Statements for the
year ended 30th September 2020 and do not constitute the statutory
accounts for that year. The Annual Report and Financial Statements
for the year ended 30th September 2020 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.
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.
7th December 2021
For further information:
Alison Vincent
JPMorgan Funds Limited
020 7742 4000
S
A copy of the 2021 Annual Report 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 2021 Annual Report will shortly be available on the
Company's website at www.jpmasiagrowthandincome.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 FIFEAFSLDIIL
(END) Dow Jones Newswires
December 07, 2021 04:59 ET (09:59 GMT)
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