JPMorgan Asia Growth & Income PLC Annual Financial Report

RNS Number : 9415P

JPMorgan Asia Growth & Income PLC

13 December 2024

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

 

JPMORGAN ASIA GROWTH & INCOME PLC

 

FINAL RESULTS FOR THE YEAR ENDED 30TH SEPTEMBER 2024

Legal Entity Identifier: 5493006R7BNJSKCB17

Information disclosed in accordance with the DTR 4.1.3

 

 JPMorgan Asia Growth & Income plc ('JAGI' or the 'Company') has today announced its annual financial results for the year ending 30th September 2024.

Highlights:

·    NAV total return of +14.8% compared with +17.3% for the MSCI AC Asia ex Japan Index (the 'Benchmark'). Share price return of +12.7%.

·    In the ten years ended 30th September 2024, NAV total return +145.3% compared with +104.2% for the Benchmark and +152.5% on a share price basis. The Company has outperformed the benchmark in seven of the last ten calendar years.

·    The Board is recommending an increase in the Company's enhanced dividend from 1.0% to 1.5% per quarter, i.e. a notional yield of 6% per annum, in order to differentiate JAGI further from its peers and lead to additional demand for its shares.

 

The Chairman of JAGI, Sir Richard Stagg, commented:

"The global landscape is unpredictable and uncertain. However, the prospects for Asian economies remain positive - particularly when compared to the relatively lacklustre growth projections of developed markets. Several key structural and social changes will continue to support Asian growth, and equity markets, over the longer term. These include urbanisation, education and the rapid development of artificial intelligence. In addition, a range of shorter term factors should contribute to economic growth; monetary easing, China's stimulus packages and corporate governance reform in a number of Asian economies.

"All these factors suggest that Asian markets remain attractive in both absolute and relative terms. The Board shares the Portfolio Managers' excitement about the many opportunities, this rapidly expanding region is generating to invest in innovative, often world-leading businesses. While the geopolitical environment is more unstable than usual, the Portfolio Managers' track record of outright gains and outperformance over the long term are testament to their abilities and their strategy's effectiveness, regardless of the challenges presented by the investment environment."

JAGI's Portfolio Managers commented:

"The long-term outlook for Asia remains highly favourable. The region's ongoing structural transformations, including urbanisation, infrastructure development, and the rise of the middle class, will continue to drive economic growth. Additionally, Asia's leadership in innovative industries such as technology, renewable energy, and healthcare will provide significant investment opportunities. In this promising environment, we are well-positioned to capitalise on the opportunities presented by Asia's dynamic markets. Our deep expertise, local market presence, and rigorous stock selection process will enable us to identify and invest in high-quality companies with strong growth potential."

 

Enquiries:

JPMorgan Asia Growth & Income plc

Investor Relations - Alexandra Ellaby, JPMorgan Funds Limited

E-mail: [e-mail]

Telephone: [phone] or [phone]

 

CHAIRMAN'S STATEMENT

Performance and Market Background

I am pleased to present the Company's annual results for the year ended 30th September 2024. Your Company achieved a strong positive return on net assets of +14.8%, and a total return to shareholders of +12.7% over the review period. However, the Company underperformed its benchmark index, the MSCI AC Asia ex Japan Index, which returned +17.3% over the period. The Portfolio Managers' report provides more detail.

The Company's relative performance is disappointing, but the Portfolio Managers invest for the long term, so it is more appropriate to consider this year's performance on the same basis. The Company has outperformed its benchmark in most years over the past decade, delivering a ten year cumulative NAV total return of +145.3%, compared with the benchmark's cumulative total return of +104.2% over the same period. In share price terms, the Company's cumulative total return was +152.5% over the past ten years. These returns have been achieved in a variety of challenging market conditions and attest to the effectiveness and robustness of the Portfolio Managers' investment strategy and process.

The Portfolio Managers' Report which follows includes a market review and details of performance and portfolio positioning, together with an assessment of the outlook for Asian equity markets.

Dividend Policy

Since 2016 the Company's dividend policy has been to pay a regular, quarterly 'enhanced dividend', i.e. one funded from a combination of revenue and capital reserves, and this is one of the advantages of the investment trust structure. Historically, this has been equivalent to 1% of the Company's NAV, based on the NAV on the last business day of each financial quarter, being the end of December, March, June and September. This policy was designed to increase the appeal of the Company to investors who have an income requirement, while avoiding placing any constraints on our Portfolio Managers in their pursuit of companies that offer compelling, long-term growth prospects. For the year ended 30th September 2024, dividends paid totalled 16.0 pence (2023: 15.7 pence).

The Board is conscious that this policy was established at a time when interest rates were low and that a notional dividend yield of 4% per annum is not necessarily as attractive today as it was eight years ago. Following a review with its advisers, the Board is recommending an increase in the enhanced dividend to 1.5% per quarter, i.e. a notional yield of 6%. The view is that this will further differentiate the Company from its peers and lead to additional demand for its shares. Over time, this should lead to a narrower discount and therefore reduce the number of shares that are bought back in order to meet the discount target.

The Company's shareholders will be able to vote on the level of the dividend at the Annual General Meeting on Wednesday, 19th February 2025, assuming that support is forthcoming and the new level of dividend is approved, it will be effective from 31st March 2025 and the dividend will be set at 1.5% of the Company's NAV for subsequent quarters, in the absence of unforeseen developments. In the Board's view, calculating the dividend quantum each quarter is a prudent way of delivering an income which tracks performance and does not put the Company under strain.

Shareholders are reminded that 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. Dividends will therefore be subject to market and performance fluctuations and will vary from quarter to quarter, in line with underlying earnings, currency movements and changes in the portfolio.

Premium/Discount and Share Capital Management

The discount at which the Company's shares trade has widened during the review period, to 11.2% at 30th September 2024, from 9.2% at the end of the previous financial year. This discount is broadly in line with the discounts of the Company's immediate peers. The Board believes it is in shareholders' best interests to limit the share price discount under normal market conditions and has therefore used the Company's buy-back power over the year. The Company repurchased a total of 12,156,156 shares (representing 13.4% of share capital at the start of the year) and holds them in Treasury. Since the end of the financial year, the Company has repurchased a further 3,596,249 shares. It is important to note that such share buybacks are accretive to the NAV per share of remaining shares in issue and added 5.1p per share to the NAV in the financial year in question.

The Board is conscious that pursuing its existing discount policy through an active buyback programme risks materially shrinking the size of the Company, with implications for its ongoing costs and liquidity of its shares in the secondary market. It believes that the proposed change to the level of dividend will help to mitigate this risk.

As set out in the circular to shareholders dated 1st November, the Board and the Investment Manager anticipated that, in the light of recent buy-back activity, the Company's authority to repurchase Ordinary Shares granted at the 2024 Annual General Meeting would likely be fully utilised before it could be refreshed at the Company's Annual General Meeting in 2025. In order to ensure that the Company could continue to operate its discount management policy, on 18th November 2024 shareholders approved the early renewal of the Company's authority to effectively repurchase up to 14.99% of its issued share capital (such authority to expire at the conclusion of the 2025 Annual General Meeting). Subsequent to this renewal, the Company has continued to use this buy-back authority to ensure that, as far as possible, the Ordinary Shares trade at a discount no wider than 8% to 10% relative to the underlying cum-income net asset value per Ordinary Share.

Gearing

The Company currently has no loan facility in place. Its multi-currency loan facility with ScotiaBank was retired in December 2023, as reported in the Company's Half Year report. Considering the high levels of market volatility, especially over recent months, the decision to avoid gearing the portfolio has been appropriate. However, the Board continues to review actively the Company's debt arrangements which includes the potential use of contracts for difference (CFDs) for gearing. The Board regularly discusses gearing with the Portfolio Managers, as it has the potential to enhance performance.

Environmental, Social and Governance (ESG) issues

The Company has not sought any sustainability label under the new Sustainability Directive Regime. However, the Board has continued to engage with the Investment Manager on the integration of ESG factors into its investment process. The Board shares the Manager's view of the importance of financially material ESG factors when making investments for the long term and, in particular, the necessity of continued engagement with investee companies throughout the duration of the investment. The Portfolio Managers' ESG report, (see page 25 of the of the Company's Annual Report and Financial Statements for the year ended 30th September 2024 -'2024 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.

Earlier this year, the Investment Manager published a document containing its latest Investment Stewardship Priorities, which may be of interest to shareholders. This can be found at: https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/sustainable-investing/investment-stewardship-report.pdf

Board Succession

The Board plans for succession to ensure it retains an appropriate balance of skills, knowledge and diverse perspectives. As reported in the Half Year Report, following Dean Buckley's retirement at the February 2024 Annual General Meeting, June Aitken became the Chair of the Audit Committee, and Peter Moon the Senior Independent Director.

The Board can confirm that its current composition is compliant with all applicable diversity targets for UK companies listed on the London Stock Exchange. It is the Board's intention that this will continue to be the case.

The Manager and Costs

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.

Furthermore, the Board notes that, with a management fee equivalent to 0.6% of the Company's market capitalisation and an ongoing charge of 0.78%, the Company has one of the most competitive fee structures in the Asian Pacific Equity Income sector.

Portfolio Management team

On 3rd December 2024 the Board announced that, after eight years as a Portfolio Manager, Ayaz Ebrahim would be stepping down with immediate effect. This followed his appointment as CEO for Singapore and South East Asia for JPMorgan Asset Management earlier this year. The Board would like to thank Ayaz for his significant contribution to the Company over the past eight years and wish him every success in his future endeavours.

The Board is pleased to note that that the Company's portfolio will continue to be managed by Robert Lloyd and Pauline Ng. Robert, who is based in Hong Kong, has been the co-manager of the Company's portfolio for the last six years. Pauline, who is based in Singapore, is a highly experienced investor, with 23 years' industry experience and she has an excellent record of investing in ASEAN equities. She was appointed as a Portfolio Manager to the Company in August this year. The two portfolio managers have worked within the same team for over 15 years.

The Board has been impressed with the nascent partnership between Robert and Pauline and see it as hugely complementary given their locations and experience. The Board believes that JPMorgan's extensive presence across the region represents a significant advantage in the process of identifying attractive investment opportunities in Asia.

Enhancements to the Investment Approach

The Board recognises the importance of the Company's core approach, which has consistently outperformed its benchmark over five and ten years. That said, the Board is conscious of the advantages of optimising the investment trust structure as well as the flexibility the closed-end vehicle provides to amplify returns over the longer term. As a result, the Board has encouraged the Portfolio Managers to increase the active share on the portfolio and be prepared to invest in off-benchmark positions and mid or small cap opportunities. The Portfolio Managers are focused on generating outperformance through consistent, positive stock selection rather than taking significant over or underweight positions, by country or sector, compared with the benchmark.

The Board has also approved amendments to the investment restriction guidelines. These changes are not considered to be material and are made in the best interests of the Company, enabling the Portfolio Managers maximum permitted active exposure to each country of 15% above or below the benchmark index weighting. Additionally, the Company will not invest materially more than 10% of its gross assets or materially exceed a 3% active weight over the benchmark (whichever is larger) in any one individual stock. The revised Investment Policy is set out in full on page 29 of the 2024 Annual Report..

Stay Informed

The Company is committed to engaging with its shareholders and in particular those with smaller holdings who invest via platforms. To support this goal, the Company delivers email updates on the Company's progress with regular news and views, as well as the latest performance data. If you have not already signed up to receive these communications and you wish to do so, you can opt in via https://tinyurl.com/JAGI-Sign-Up  or by scanning the QR code on page 14 of the 2024 Annual Report.  

Annual General Meeting

The Company's Annual General Meeting (AGM) will be held on Wednesday, 19th February 2025 at 11.00 a.m. at 60 Victoria Embankment, London EC4Y 0JP. The Investment Managers will give a presentation to shareholders, reviewing the past year and commenting on the outlook for the current year. The AGM will provide an opportunity to introduce Pauline Ng, the new member of the portfolio management team.

We look forward to seeing as many shareholders as possible at the AGM. For shareholders wishing to follow the AGM proceedings, but choosing not to attend, we will be able to welcome you through conferencing software. Details on how to register, together with access details, will be available on the Company's website: www.jpmasiagrowthandincome.co.uk, or by contacting the Company Secretary at [e-mail].

As is normal practice, all voting on the resolutions will be conducted by a poll. Shareholders viewing the meeting via conferencing software will not be able to vote on the poll. We therefore strongly encourage all shareholders, and particularly those who cannot physically attend, to exercise their votes in advance of the meeting by completing and submitting their form of proxy.

If you have any detailed or technical questions, it would be helpful if you could raise them in advance with the Company Secretary at 60 Victoria Embankment, London EC4Y 0JP or via the 'Ask a Question' link on the Company's website.

Outlook

The global landscape is currently marked by significant unpredictability. A growing number of political leaders are moving away from the Bretton Woods consensus and the belief that free trade is a key driver of global economic growth. The President-elect of the United States has indicated plans to implement a series of tariffs on imports, with a particular emphasis on China. Meanwhile, the conflict in Ukraine persists and uncertainty in the Near East has been further exacerbated by recent events in Syria (however potentially welcome) , while recent developments in Korea caught markets unaware. Additionally, President Xi's public declarations suggest a steadfast commitment to the reunification of China and Taiwan, by any means deemed necessary.

Nonetheless, I believe the prospects for Asian economies remain positive - more so when compared to the relatively lacklustre growth projections of developed markets. The Chinese government's autumn stimulus packages suggest that it is becoming more serious about boosting consumer spending and supporting the still ailing property sector. If these measures are effective, they have the potential to provide fresh impetus to growth across the region. So too does monetary easing by Asian central banks, which appears imminent. The US Federal Reserve cut rates by more than expected in September, and further cuts can be expected this year and in 2025. This would open the way for Asian central banks to follow suit.

Elsewhere on the policy front, Korea's corporate governance reforms, which are aimed at improving capital efficiency, are already lifting shareholder returns via increased dividends and share buybacks albeit the recent political turbulence there requires careful watching. The Chinese authorities have also increased their focus on shareholder returns. If Japan's experience is any indication, the favourable ramifications of these reforms for shareholder returns will continue for years. Indeed, the early success of Korea's reforms, and the Japanese market's impressive, dividend driven rebound over the past year, are inspiring other Asian countries to focus on improving shareholder returns in their markets. Several other key structural and social changes will also continue to support Asian growth, and equity markets, over the longer term. These include the rapid development of artificial intelligence and the more general trend towards digitalisation, urbanisation, infrastructure development and the expansion of the middle class.

All these factors suggest that Asian markets remain extremely attractive in both absolute and relative terms. The Board shares the Portfolio Managers' excitement about the many opportunities, this rapidly expanding region is generating to invest in innovative, often world-leading businesses. While the geopolitical environment is more unstable than usual, as evidenced by the recent news from South Korea, the Portfolio Managers' track record of outright gains and outperformance over the long term are testament to their abilities and the strategy's effectiveness, regardless of the challenges presented by the investment environment. My fellow Board members and I are therefore confident in the Company's ability to continue delivering capital gains and an attractive income to shareholders over the long term.

On behalf of the Board, I would like to thank you for your continuing support.

 

Sir Richard Stagg

Chairman                                                                                                                                12th December 2024

 

PORTFOLIO MANAGERS' REPORT

The Market Environment in 2024

Market returns were strong for the fiscal year, with the Company's benchmark index returning +17.3%. However, there was a considerable dispersion in the performance by country, with four regions seeing gains of more than 20% (Taiwan, India, Malaysia and Singapore), while Indonesia and Korea were the only two markets that finished in negative territory for the year.

China remained a focal point for Asian markets throughout 2024. The previous year's economic challenges persisted, with the ongoing property crisis, lower exports, and fresh geopolitical concerns continuing to weigh on market sentiment. Despite these headwinds, there were signs of stabilisation in the latter half of the year as government stimulus measures began to take effect. The MSCI China Index rose by 12.7%, however Hong Kong's market performance remained subdued, reflecting broader uncertainties in the region.

Indonesia's market faced mixed fortunes in 2024. While GDP growth continued at a robust pace of around 5%, the Rupiah's depreciation slowed to approximately 8%, providing some relief to the market. The Indonesian stock market managed to post a slight gain, buoyed by strong domestic consumption and infrastructure investments.

The continued evolution and integration of artificial intelligence (AI) technologies, spearheaded by advances in Microsoft's ChatGPT and other AI tools, sustained investor interest. The potential for AI to revolutionise various sectors kept tech stocks in the spotlight. The Taiwan market continued to perform well, driven by strong demand in the semiconductor sector, despite ongoing challenges in the consumer electronics market.

Returns in Korea were also mixed, with a strong start to similar trends as Taiwan and the government's initiative to improve governance in the corporate sector. However, Samsung Electronics, in particular, faced temporary challenges in their memory business where they have missed out on some of the positive trends driven by AI.

Malaysia saw broad based growth in manufacturing and construction, driving GDP upgrades through 2024. Increased foreign direct investment (FDI) for data centres and plans for a special economic zone in Johor, jointly with Singapore, also spurred a return of foreign investors to Malaysian equities.

Singapore's strong performance was mainly driven by the recovery in Sea Limited's share price, which more than doubled in US dollar terms on the back of improving competitiveness, while index heavyweights like Singtel and DBS also delivered better than expected capital returns to shareholders.

India's market experienced a robust year, with economic growth remaining strong and investor confidence bolstered by positive reforms and infrastructure projects.

Performance

The Company underperformed its benchmark over the period, returning +14.8% on a net asset value ('NAV') total return basis (in Sterling terms), compared with a return for the benchmark of +17.3%. The Company has outperformed the benchmark in all but three of the last ten calendar years, a long span of time over which market conditions have fluctuated widely. In the ten years ended 30th September 2024, the Company has delivered a cumulative total return of +145.3% in NAV terms and +152.5% on a share price basis, well above the benchmark's cumulative total return of +104.2%. On an annualised returns basis, these equate to +9.4% in NAV terms, 9.7% on share price and +7.4% for the benchmark.

Performance attribution

30th September 2024

	%	%
Contributions to total returns
Benchmark return		17.3
Stock selection	-2.2
Currency effect	0.1
Gearing/(net cash)	-0.3
Investment Manager contribution		-2.4
Portfolio return		14.9
Management fee and other expenses	-0.8
Impact of the provision for Indian capital gains tax	-0.7
Share buyback	1.4
Return on net assetsAPM		14.8
Effect of movement in discount over the year		2.1
Return to shareholdersAPM		12.7

         

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  Alternative Performance Measure ('APM').

A glossary of terms and APMs is provided on pages 103 to 105 of the 2024 Annual Report.

Attribution

The largest detractor to the fund's performance over the fiscal year was Meituan, China's leading food delivery platform. Increased scrutiny and regulatory actions from the Chinese authorities impacted the company's operations and investor confidence. This included tighter regulations on data privacy, antitrust measures, and labour practices affecting gig economy workers. Additionally, the broader economic slowdown in China affected consumer spending and overall market sentiment. This had a direct impact on Meituan's core businesses, such as food delivery and travel services. Other detractors included HDFC Bank, India's largest private bank. The company's post-merger operations have suffered slow deposit growth and tight system liquidity, resulting in very little earnings growth during the year.

Positive contributors included overweights in the technology sector such as SK Hynix, a Korean semiconductor manufacturer, which outperformed on the back of their leadership in high bandwidth memory chips used in AI servers. Sales of these chips accounted for roughly 15% of total dynamic random-access memory (DRAM) chip sales in the first half of the calendar year. Demand for AI-powered processes also supported Foxconn Industrial, a Chinese company that benefitted from rising orders for data centre assembly.

Portfolio Activity

Significant transactions for the Company over the fiscal year included the purchase and overweighting of Alibaba from a zero weight. Alibaba is a leading Chinese multinational conglomerate specialising in e-commerce, retail, internet, and technology. It operates various platforms, including Taobao and Tmall, which connect consumers and businesses for online shopping. Additionally, Alibaba provides cloud computing services, digital media, and entertainment, expanding its influence across multiple sectors globally. The fund also purchased an off benchmark position in Telstra, Australia's largest telecommunications company, providing a wide range of services including mobile, internet, and pay television. It also offers network services and solutions for businesses, leveraging its extensive infrastructure and technology expertise.

Outright sales included two names in China. Firstly, Baidu, which is a leading Chinese technology company specialising in internet-related services and products, including its popular search engine, artificial intelligence, and cloud computing. The outlook for the company to monetise its internal large language model (LLM) model, which is called ErnieBot, deteriorated as competition led management to reduce pricing. Despite having excess cash on the balance sheet, management have not outlined plans to pay this out to minority shareholders. Secondly, was the sale of Foxconn International, which specialises in designing, developing, and assembling a wide range of electronic products, including smartphones and other consumer electronics for major global brands. Foxconn is a subsidiary of Hon Hai Precision Industry Co. Ltd., a leading electronics manufacturing services provider. The shares performed well during the fiscal period, primarily due to increased orders for AI server assembly.

Outlook for 2025

Western economies may begin to stabilise as tighter monetary policies take effect and inflationary pressures ease. Growth in developed markets is expected to remain modest, with projections around 1.5% to 2%. Structural challenges, such as ageing population and high debt levels, may continue to constrain more robust growth.

In contrast, Asia is poised to maintain its growth trajectory. The Chinese economy is expected to stabilise, with growth rates of around 4% to 4.5%, supported by ongoing government initiatives to boost domestic consumption and investment in key sectors. India is likely to continue its strong performance, with growth rates above 6%, driven by structural reforms, digitalisation, and a young, dynamic workforce. The broader Asian region is projected to grow at around 5%, benefiting from increased intra-regional trade, technological advancements, and rising consumer demand.

The long-term outlook for Asia remains highly favourable. The region's ongoing structural transformations, including urbanisation, infrastructure development, and the rise of the middle class, will continue to drive economic growth. Additionally, Asia's leadership in innovative industries such as technology, renewable energy, and healthcare will provide significant investment opportunities. The MSCI AC Asia ex Japan Index is expected to reflect these positive trends, with valuations potentially rising as investor confidence grows.

In this promising environment, we are well-positioned to capitalise on the opportunities presented by Asia's dynamic markets. Our deep expertise, local market presence, and rigorous stock selection process will enable us to identify and invest in high-quality companies with strong growth potential. We remain committed to delivering attractive returns and long-term outperformance for our investors by leveraging our insights and experience in the region.

 

Robert Lloyd

Pauline Ng

Ayaz Ebrahim

Portfolio Managers                                                                                                                 12th December 2024

 

PRINCIPAL & EMERGING RISKS AND UNCERTAINTIES

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. The risks identified and the ways in which they are managed or mitigated are summarised below. With the assistance of JPMF, the Audit Committee has drawn up a risk matrix, which identifies the principal risks to the Company. These are reviewed and discussed on a regular basis by the Board. The identified risks, their categories, and the strategies for managing or mitigating them are summarised below. The AIC Code of Corporate Governance requires the Board, via the Audit Committee, to put in place procedures to identify and manage emerging risks. Emerging risks, which are not deemed to represent an immediate threat, are considered by Audit Committee as they come into view and are incorporated into the existing review of the Company's risk register. However, since emerging risks are likely to be more dynamic in nature, they are considered on a more frequent basis, through the remit of Board when the Audit Committee does not meet. The key principal and emerging risks identified are summarised below.

Principal risk	Description	Mitigating activities	Movement from prior year
Investment Strategy and Process	An inappropriate investment strategy, or one that is poorly implemented, may lead to underperformance against the Company's benchmark index and peer companies, resulting in the Company's shares trading on a wider discount. Prolonged and substantial underperformance of significant markets such as China and India may result from various risks including restrictions on the free movement of capital, sanctions or other restrictions imposed by the UK or other governments.	The Board mitigates this risk through its investment policy and guidelines, which are monitored and reported on regularly by the Manager. The Board monitors the implementation and results of the investment process with the Portfolio Managers and reviews data which details the portfolio's holdings and risk profile. The Board holds a meeting specifically on strategy annually.	The risk remains high but unchanged from 2023.
Geopolitical and Economic	Geopolitical risk is the potential for political, socio-economic and cultural events and developments to have an adverse effect on the value of the Company's assets. There appears to be an increasing risk to market stability and investment opportunities from the increasing number of worldwide geopolitical conflicts. The Company and its assets may be impacted by geopolitical instability, in particular concerns over global economic growth, rising political turbulence and in particular the heightened threat of tariffs on exported goods.	There is little direct control of the risks from the interconnected nature of political, economic, and social factors that can impact the investment environment. However, it can be managed to some extent by diversification of investments, active monitoring, flexible investment strategies and robust due diligence on investee companies. This is aided by regular communication with the Investment Manager about in-house research, matters of investment strategy and portfolio construction, which will directly or indirectly include an assessment of these risks to navigate the complexities of the global landscape, position the Company for long-term success and protect shareholder value.	The risk remains high. There is little direct control of risk possible. The Company addresses these global developments in regular questioning of the Manager and with external expertise and continues to monitor these issues, should they develop.
Investing in China	Investing in China exposes the Company to idiosyncratic country risk and actions taken by the Chinese government, such as changes to regulation, or international tensions which may lead investors to reduce or completely withdraw their investments in China. In addition, the introduction of new policies and regulations could result in increased oversight and restrictions over the free movement of assets, including American Depositary Receipts (ADRs), Variable Interest Entity Structures (VIEs), and A-Shares.	The Board has access to a range of expert resources and strategists both within JPMAM and externally, who can provide long term insight and guidance on geopolitical developments likely to impact investments in China. In addition, unlike its passive competitors, as an actively managed fund the Portfolio Managers can adapt the portfolio to a changing regulatory environment. The Manager regularly provides updates on regulatory and political developments as necessary.	The risk remains high. There is little direct control of risk possible. The Board specifically discusses the risks associated with investing in China at each Board meeting and monitors the position. The Manager regularly provides updates on regulatory and political developments as necessary. The Portfolio Managers incorporate market data, economic insights, and pertinent political analysis in their quarterly reports to the Board.
Investment Team	The departure of or a failure to replace adequately a portfolio manager or several members of the investment management team could result in a deterioration in investment performance.	The Manager has a depth of experienced investment resources and takes steps to reduce the consequences of such an event by ensuring appropriate succession planning and the adoption of a team-based approach.	The risk remains medium. The Board is comfortable with the process around changes to the investment team.
Operational Resilience and Security	The Company is dependent on third parties for the provision of all of its services and systems, especially those of the Manager, the Administrator, the Depositary and the Registrar. Improper access, disruption to, failure of or inadequate service levels of these parties' accounting, dealing or payments systems or the custodian's, depositary's or registrar's records could prevent accurate reporting and monitoring of the Company's financial position or loss of confidential data.	The Board will regularly review the Business Continuity Plans ('BCP') for the Manager, Depositary and Registrar. The Managers' BCP is designed to accommodate potential threats and are regularly updated, tested, monitored and reported to the Board. The Manager has assured the Board that the Company benefits directly or indirectly from all elements of JPMorgan's Cyber Security programme.	The risk remains high. The Board receives updates from JPMF's information security manager. To date the Manager's cyber security arrangements have proven robust and the Company has not been impacted by any cyber attacks threatening its operations.
Share Price Relative to Net Asset Value	The shares trading at an excessive discount or premium to Net Asset Value can negatively impact shareholders, while fluctuations in the rating can lead to volatile returns for shareholders.	The Board monitors the Company's premium/discount level and is committed to defend a share price discount to NAV of between 8% and 10% in normal market circumstances through the use of buybacks.	The risk remains high. The Board regularly reviews and monitors the Company's objective and investment policy and strategy, the investment portfolio and its performance, the level of discount/premium to net asset value at which the shares trade and movements in the share register. During the year the Company continued to conduct share buybacks.
Accounting, Legal and Regulatory	A breach of regulatory rules or a failure to maintain accurate accounting records could result in loss of investment trust status, reputational damage, financial penalties, suspension of the Company's listing or a qualified audit report.	Accounting, legal and regulatory compliance are continually monitored by the Manager and the Auditors and the results reported to the Board. In addition, the Board, the Manager and its professional advisers monitor changes in legislation which may have an impact on the Company.	The risk remains medium. Changes to the regulatory landscape are inevitable.
Viability of Company in terms of size	As a result of the existing discount target, pursued through buybacks, and market moves, the size of the Company falls below a level that is deemed viable, with a reduction in liquidity of its shares and an increasing cost base. This would reduce the attractiveness of the Company to investors, particularly the largest wealth managers who require greater liquidity.	The Manager and Broker provide regular updates on how the Company is perceived by investors, while the Directors consider the viability of the Company over a five-year period annually as part of the going concern review. In addition, the discount target and buyback policy is reviewed annually.	This risk has increased as a result of the level of share buybacks over the last year.
Maintaining Effective and Appropriate Controls	The Company has no employees and is therefore dependent on the services of third-party providers. Failure to maintain effective and appropriate controls could result in reputational damage, interruption to operations or financial loss.	The Company operates through contractual agreements with its service providers, which the Manager is also party to. The Board receives regular internal controls reports and monitors and evaluates the performance of the Company's service providers, with the assistance of the Manager, and ensures that any material non-compliance or weaknesses in the controls are reported to the Board.	The risk remained stable during the year.
Widespread Social and Economic Disruption	Recent examples such as the Global Financial Crisis or the Covid-19 pandemic may have ended or abated, but disruption may reoccur for several reasons.	The Board will monitor the resilience of service providers' Business Continuity Plans. The Board also reviews reports on the Company's 'Going Concern' status in stress test scenarios.	The risk remains medium.
Climate Change	Climate change could present a material risk to the value of investee companies and the operations of the Company and its service providers.	The Manager's investment process integrates considerations of environmental, social and governance ("ESG") risk factors, including climate change, into its approach to assess the potential impact on investee companies. The Manager and other third-party providers incorporate consideration of the impacts of climate change into their Business Continuity Plans ('BCP's').	The risk remained stable during the year.

 

EMERGING RISKS

The Board has considered and kept under review emerging risks, including but not limited to the impact of climate change, geopolitical conflict, inflationary pressures, social dislocation and conflict and technological advances. The key emerging risks identified are as follows:

State-backed Cyber Security Attack

A State-backed cyber security attack could result in widespread disruption to the financial system and markets leading to financial loss, loss of confidential data, or disruption to the Company's operations and its service providers.

Artificial Intelligence ('AI')

Advances in computing power mean that AI has become a powerful tool that will impact a wide range of applications with potential to disrupt the Company's operations and investments. The Board will monitor developments in this area carefully both in conjunction with the Manager and other external experts when appropriate and consider how this risk might threaten the Company's activities.

 

 

 

TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES

Details of the management contract are set out in the Directors' Report on pages 46 and 47 of the 2024 Annual Report.. The management fee payable to the Manager for the year was £1,736,000 (2023: £2,039,000) of which £nil (2023: £nil) was outstanding at the year end.

Safe custody fees amounting to £152,000 (2023: £159,000) were payable to JPMorgan Chase Bank N.A. during the year of which £39,000 (2023: £67,000) 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 £nil (2023: £2,000) of which £nil (2023: £nil) was outstanding at the year end.

Handling charges on dealing transactions amounting to £36,000 (2023: £28,000) were payable to JPMorgan Chase Bank N.A. during the year of which £10,000 (2023: £12,000) was outstanding at the year end.

During the year the Company held cash in the JPMorgan USD Liquidity Fund, which is managed by JPMorgan. At the year end this was valued at £1,171,000 (2023: £8,000). Interest amounting to £92,000 (2023: £50,000) was receivable during the year of which £nil (2023: £nil) was outstanding at the year end.

Stock lending income amounting to £28,000 (2023: £46,000) were receivable by the Company during the year. The Manager's commissions in respect of such transactions amounted to £3,000 (2023: £5,000).

At the year end, the Company held cash of £2,350,000 (2023: cash of £199,000 and an overdraft of £1,058,000) with JPMorgan Chase Bank N.A. A net amount of interest of £6,000 (2023: £4,000) was receivable by the Company during the year of which £nil (2023: £nil) was outstanding at the year end.

Full details of Directors' remuneration and shareholdings can be found on pages 59 to 61 and in note 6 on page 80 of the 2024 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 Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2013.

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 the 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 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 Board confirms that it is satisfied that the Annual Report & 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

Sir Richard Stagg

Chairman

12th December 2024

 

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30th September 2024

	2024			2023
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair value through
profit or loss	-	39,462	39,462	-	16,289	16,289
Net foreign currency (losses)/gains	-	(415)	(415)	-	114	114
Income from investments	7,000	-	7,000	8,304	-	8,304
Interest receivable and similar income	126	-	126	100	-	100
Gross return	7,126	39,047	46,173	8,404	16,403	24,807
Management fee	(1,736)	-	(1,736)	(2,039)	-	(2,039)
Other administrative expenses	(821)	-	(821)	(827)	-	(827)
Net return before finance costs and taxation	4,569	39,047	43,616	5,538	16,403	21,941
Finance costs	(20)	-	(20)	(52)	-	(52)
Net return before taxation	4,549	39,047	43,596	5,486	16,403	21,889
Taxation	(692)	(2,507)	(3,199)	(846)	(219)	(1,065)
Net return after taxation	3,857	36,540	40,397	4,640	16,184	20,824
Return per share	4.51p	42.75p	47.26p	4.94p	17.22p	22.16p

 

STATEMENT OF CHANGES IN EQUITY

For the year ended 30th September 2024

	Called up		Exercised	Capital
	share	Share	warrant	redemption	Capital	Revenue
	capital	premium	reserve	reserve	reserves1	reserve1	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2022	24,449	46,705	977	25,121	261,308	-	358,560
Repurchase of shares into Treasury	-	-	-	-	(19,801)	-	(19,801)
Net return	-	-	-	-	16,184	4,640	20,824
Dividends paid in the year (note 10)	-	-	-	-	(10,114)	(4,640)	(14,754)
At 30th September 2023	24,449	46,705	977	25,121	247,577	-	344,829
Repurchase of shares into Treasury	-	-	-	-	(42,765)	-	(42,765)
Proceeds from share forfeiture2	-	-	-	-	426	-	426
Net return	-	-	-	-	36,540	3,857	40,397
Dividends paid in the year (note 10)	-	-	-	-	(9,403)	(4,067)	(13,470)
Forfeiture of unclaimed dividends (note 10)2	-	-	-	-	-	210	210
At 30th September 2024	24,449	46,705	977	25,121	232,375	-	329,627

 

¹     These reserves form the distributable reserves of the Company and may be used to fund distributions to investors.

²     During the period, the Company undertook an Asset Reunification Program to reunite inactive shareholders with their shares and unclaimed dividends. Pursuant to the Company's Articles of Association, the Company has exercised its right to reclaim the shares of shareholders whom the Company, through its previous Registrar, has been unable to locate for a period of 12 years or more. These forfeited shares were sold in the open market by the Registrar and the proceeds, net of costs, were returned to the Company. In addition, any unclaimed dividends older than 12 years from the date of payment of such dividends were also forfeited and returned to the Company.

 

STATEMENT OF FINANCIAL POSITION

At 30th September 2024

	2024	2023
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	332,252	342,829
Current assets
Debtors	2,948	3,680
Cash and cash equivalents	3,521	207
	6,469	3,887
Current liabilities
Creditors: amounts falling due within one year	(6,613)	(1,641)
Net current (liabilities)/assets	(144)	2,246
Total assets less current liabilities	332,108	345,075
Provision: Indian capital gains tax	(2,481)	(246)
Net assets	329,627	344,829
Capital and reserves
Called up share capital	24,449	24,449
Share premium	46,705	46,705
Exercised warrant reserve	977	977
Capital redemption reserve	25,121	25,121
Capital reserves	232,375	247,577
Total equity shareholders' funds	329,627	344,829
Net asset value per share	417.9p	378.8p

 

STATEMENT OF CASH FLOWS

For the year ended 30th September 2024

	2024	2023
	£'000	£'000
Cash flows from operating activities
Net return before finance costs and taxation	43,616	21,941
Adjustment for:
Net gains on investments held at fair value through profit or loss	(39,462)	(16,289)
Net foreign currency losses/(gains)	415	(114)
Dividend income	(6,852)	(8,289)
Interest income	(98)	(54)
Scrip dividends received as income	(148)	(15)
Realised (gains)/losses on foreign exchange transactions	(195)	232
Realised exchange (losses)/gains on USD Liquidity Fund	(178)	125
Increase in accrued income and other debtors	(11)	(7)
(Decrease)/increase in accrued expenses	(17)	68
Net cash outflow from operations before dividends, interest and taxation	(2,930)	(2,402)
Dividends received	6,182	7,444
Interest received	98	54
Overseas withholding tax recovered	21	-
Indian capital gains tax (paid)/recovered	(272)	27
Net cash inflow from operating activities	3,099	5,123
Purchases of investments	(216,601)	(178,025)
Sales of investments	273,018	206,375
Net cash inflow from investing activities	56,417	28,350
Dividends paid	(13,470)	(14,754)
Repurchase of shares into Treasury	(42,245)	(19,731)
Proceeds from share forfeiture	426	-
Forfeiture of unclaimed dividends	210	-
Interest paid	(23)	(52)
Net cash outflow from financing activities	(55,102)	(34,537)
Increase/(decrease) in cash and cash equivalents	4,414	(1,064)
Cash and cash equivalents at start of year	(851)	454
Exchange movements	(42)	(241)
Cash and cash equivalents at end of year	3,521	(851)
Cash and cash equivalents consist of:
Cash and short term deposits	2,350	199
Money market fund - JPMorgan USD Liquidity Fund	1,171	8
Cash and cash equivalents per the Statement of Financial Position	3,521	207
Bank overdraft (included as part of current liabilities)	-	(1,058)
Total cash, cash equivalents and bank overdraft per the Statement of Cash Flows	3,521	(851)

NOTES TO THE FINANCIAL STATEMENTS

1.  Accounting policies

(a)     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 July 2022.

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 the impact of continued market volatility and economic uncertainty resulting from ongoing geopolitical tensions and conflicts, including the war in Ukraine, ongoing tensions between China and the US and escalating conflict in the Middle East, and in particular the impact of these geopolitical risks, as well as climate change, on the going concern and viability of the Company. In making their assessment, the Directors have reviewed income and expense projections and the liquidity of the investment portfolio, and considered the mitigation measures which key service providers, including the Manager, have in place to maintain operational resilience. The Directors have also reviewed the compliance with debt covenants in assessing the going concern and viability of the Company. The Directors have also reviewed income and expense projections and the liquidity of the investment portfolio in making their assessment. The Company passed its continuation vote at the Company's 2024 Annual General Meeting and the next continuation vote will be considered at the Annual General Meeting in 2026. The disclosures on going concern on page 55 of the Directors' Report in the 2024 Annual Report form part of these financial statements. The Directors consider that the Company has adequate financial resources to enable it to continue in operational existence for at least 12 months.

The policies applied in these financial statements are consistent with those applied in the preceding year.

2.  Dividends

(a)     Dividends paid and declared

	2024		2023
	Pence	£'000	Pence	£'000
Dividends paid
Fourth quarterly dividend in respect of prior year	3.8	3,450	3.7	3,569
First quarterly dividend	3.7	3,270	4.0	3,789
Second quarterly dividend	3.9	3,312	4.0	3,771
Third quarterly dividend	4.2	3,438	3.9	3,625
Total dividends paid in the year	15.6	13,470	15.6	14,754
Forfeiture of unclaimed dividends over
12 years old1	-	(210)	-	-
Net dividends paid	15.6	13,260	15.6	14,754
Dividends declared
Fourth quarterly dividend declared	4.2	3,288	3.8	3,447

¹     The unclaimed dividends were forfeited following an extensive exercise which attempted to reunite the dividends with owners.

The fourth interim dividend proposed in respect of the year ended 30th September 2023 amounted to £3,447,000. However, the amount paid amounted to £3,450,000 due to ordinary shares repurchased after the balance sheet date but prior to the record date.

A fourth quarterly dividend of 4.2p has been declared and was paid on 22nd November 2024 for the financial year ended 30th September 2024.

In accordance with the accounting policy of the Company, this dividend will be reflected in the financial statements for the year ending 30th September 2025.

(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 £163,613,000 (2023: £206,474,000).

	2024		2023
	Pence	£'000	Pence	£'000
First quarterly dividend paid	3.7	3,270	4.0	3,789
Second quarterly dividend paid	3.9	3,312	4.0	3,771
Third quarterly dividend paid	4.2	3,438	3.9	3,625
Fourth quarterly dividend paid	4.2	3,288	3.8	3,447
Total dividends for Section 1158 purposes	16.0	13,308	15.7	14,632

 

The aggregate of the distributable reserves after the payment of the final dividend will amount to £160,325,000 (2023: £203,027,000).

3.  Return per share^A

The Revenue, Capital and Total return shown below, is the Net return after taxation in the Statement of Comprehensive Income on page 81 of the 2024 Annual Report.

	2024	2023
	£'000	£'000
Revenue return	3,857	4,640
Capital return	36,540	16,184
Total return	40,397	20,824
Weighted average number of shares in issue during the year	85,475,668	93,970,338
Revenue return per shareA	4.51p	4.94p
Capital return per shareA	42.75p	17.22p
Total return per share	47.26p	22.16p

 

^A     Alternative Performance Measure (APM).

4.       Net asset value per share

	2024	2023
Net assets (£'000)	329,627	344,829
Number of shares in issue	78,868,615	91,024,771
Net asset value per share	417.9p	378.8p

 

JPMORGAN FUNDS LIMITED

 12th December 2024

For further information, please contact:

 

Anmol Dhillon

For and on behalf of

JPMorgan Funds Limited

Telephone: [phone] or or [phone]

 

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.

ENDS

 

A copy of the 2024 Annual Report will be submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

The 2024 Annual Report  will also 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.

 

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