Final Results for the Year Ended 30th Sept 2021

RNS Number : 8298U

JPMorgan Asia Growth & Income PLC

07 December 2021

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN ASIA GROWTH & INCOME PLC

FINAL RESULTS FOR THE YEAR ENDED 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 £200,000 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 £250,000 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 [e-mail].

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 YEAR ENDED 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 of the investment strategy, for example as to thematic exposure, sector allocation, stock selection, undue concentration of holdings, factor risk exposure or the degree of total portfolio risk, may lead to underperformance against the Company's benchmark index and peer companies.	The Board manages these risks by diversification of investments and through its investment restrictions and guidelines, which are monitored and reported on by the Manager. The Manager provides the Directors with timely and accurate management information, including performance data and attribution analyses, revenue estimates, liquidity reports and shareholder analyses. The Board monitors the implementation and results of the investment process with the Investment Managers, at least one of whom attends all Board meetings, and reviews data which show measures of the Company's risk profile. The Investment Managers employ the Company's gearing tactically, within a strategic range set by the Board.
Discount Control Risk	Investment trust shares often trade at discounts to their underlying NAVs, although they can also trade at a premium. Discounts and premiums can fluctuate considerably leading to volatile returns for shareholders.	The Board monitors the level of both the absolute and sector relative premium/discount at which the shares trade. The Board reviews both sales and marketing activity and sector relative performance, which it believes are the primary drivers of the relative discount level. In addition, the Company has authority, when it deems appropriate, to buy back its existing shares to enhance the NAV per share for remaining shareholders and to reduce the absolute level of discount and discount volatility.
Market and Economic Risk	Market risk arises from uncertainty about the future prices of the Company's investments, which might result from economic, fiscal, climate, regulatory, etc change. It represents the potential loss the Company might suffer through holding investments in the face of negative market movements. The Board considers 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.	The Board believes that shareholders expect that the Company will and should be fairly fully invested in Asian equities at all times. The Board therefore would normally only seek to mitigate market risk through guidelines on gearing given to the Manager. The Board receives regular reports from the Manager's strategists and Investment Managers regarding market outlook and gives the Investment Mangers discretion regarding acceptable levels of gearing and/or cash, currently the Company's gearing policy is to operate within a range of 10% net cash to 20% geared. In particular ESG considerations are integrated into the investment decision-making.
Change of Corporate Control of the Manager	Change of corporate control of Manager or similar event that changes focus of JPMAM.	The Board holds regular meetings with senior representatives of the Manager in order to obtain assurance that the Manager continues to demonstrate a high degree of commitment to its asset management and investment trust business.
Loss of Investment Team or Portfolio Manager	A sudden departure of a Portfolio Manager or several members of the investment management team could result in a short term deterioration in investment performance.	The Board seeks assurance that the Manager takes steps to reduce the risk arising from such an event by ensuring appropriate succession planning and the adoption of a team based approach, as well as special efforts to retain key personnel. The Board engages with the senior management of the Manager in order to mitigate this risk.
Operational Risks
Cyber Crime	The threat of cyber attack, in all guises, is regarded as at least as important as more traditional physical threats to business continuity and security.	The Company benefits directly and/or indirectly from all elements of JPMorgan's Cyber Security programme. The information technology controls around physical security of JPMorgan's data centres, security of its networks and security of its trading applications, are tested by independent auditors and reported every six months against the AAF Standard.
Regulatory Risk
Regulatory Change	The Company's business model could become non-viable as a result of new or revised rules or regulations arising from, for example, policy change or financial monitoring pressure.	T he Board receives regular reports from its broker, depositary, registrar and Manager as well as its legal advisers and the Association of Investment Companies on changes to regulations which could impact the Company and its industry. The Company monitors events and relies on the Manager and its other key third party providers to manage this risk by preparing for any changes.
Economic and Geopolitical
Global Geopolitical Risk	There is significant exposure to the economic cycles and political movements of the markets in which the underlying investments are listed. Political and economic risk, political change or protectionism may have an adverse effect on underlying valuations, such as a US-led trade war, North Korean conflict, and other political tensions both in Asia and closer to home to include tensions in the Eurozone and Brexit risks.	The Board regularly discusses the global geo-political issues and general economic conditions and developments with the Investment Managers. Political tensions between and changes within the US, China, Europe and UK continue the uncertainty and volatility in financial markets. The medium and longer term impacts of COVID-19 on this risk, for example the unprecedented levels of fiscal stimulus and travel restrictions will continue to be assessed in light of how they may affect the Company's portfolio and the economic and geopolitical environment in which the Company operates within overall. The potential consequences of Brexit continue to be monitored through existing control systems. Since the portfolio has no investments in the UK or Europe the Board does not believe that there is likely to be any significant or direct impact on the operation of the Company or the structure of the portfolio.
Emerging Risk
Environmental
Policy and Regulatory Risk arising from Climate Change	Climate change, which barely registered with investors a decade ago, has today become one of the most critical issues confronting asset managers and their investors. Investors can no longer ignore the impact that the world's changing climate will have on their portfolios, with the impact of climate change on returns now inevitable.	Financial returns for long-term diversified investors should not be jeopardised given the investment opportunities created by the world's transition to a low-carbon economy. The Board is also considering the threat posed by the direct impact on climate change on the operations of the Manager and other major service providers. As extreme weather events become more common, the resiliency, business continuity planning and the location strategies of the Company's services providers will come under greater scrutiny. In particular also the Board receives ESG reports from the Manager on the portfolio and the way ESG considerations are integrated into the investment decision-making.
Pandemic Risks
Pandemics	COVID-19 has highlighted the speed and extent of economic damage that can arise from a pandemic. While current vaccination programme results are hopeful, the risk remains that new variants may not respond to existing vaccines, may be more lethal and may spread as global travel opens up again.	The Board receives reports on the business continuity plans of the Manager and other key service providers. The effectiveness of these measures have been assessed throughout the course of the COVID-19 pandemic and the Board will continue to monitor developments as they occur and seek to learn lessons which may be of use in the event of future pandemics.
Global
Social Dislocation & Conflict	Social dislocation/civil unrest may threaten global economic growth and, consequently, companies in the portfolio.	The Manager's market strategists are available for the Board and can discuss market trends. External consultants and experts can be accessed by the Board. The Board can, with shareholder approval, look to amend 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 Monetary/Fiscal Policies	Inappropriate Government/Central banks fiscal or monetary responses to the Covid-19 pandemic result in excessively loose economic conditions resulting in the medium term risk of significant levels of inflation or, alternatively, are ineffective in stimulating a recovery resulting in deflation and depression.	The Manager's market strategists are available for the Board and can discuss market trends. External consultants and experts can be accessed by the Board. The Board can, with shareholder approval look to amend the investment policy and objectives of the Company, if required, to enable investment in companies or assets which offer more appealing risk/return characteristics in prevailing economic conditions.
Rising Competition between China and Western Economies	China is emerging as a challenger to the western hegemony of recent decades. This brings with it increased competition in political and military affairs alongside the development 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.	The Board has access to a range of expert resources and strategists in the UK and in the Asian region to provide long term insight and guidance on geopolitical developments. The Managers investment process incorporates non-financial measures and risks in the assessment of investee companies to allow the portfolio to adapt to changing competitive and political landscapes.

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 £2,727,000 (2020: £2,084,000) of which £nil (2020: £nil) was outstanding at the year end.

During the year £nil (2020: £nil), was payable to the Manager for the administration of savings scheme products, of which £nil (2020: £nil) was outstanding at the year end.

Safe custody fees amounting to £181,000 (2020: £149,000) were payable to JPMorgan Chase Bank N.A. during the year of which £93,000 (2020: £25,000) 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 £1,000 (2020: £1,000) of which £nil (2020: £nil) was outstanding at the year end.

Handling charges on dealing transactions amounting to £24,000 (2020: £22,000) were payable to JPMorgan Chase Bank N.A. during the year of which £9,000 (2020: £5,000) 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 £964,000 (2020: £1,160,000). Interest amounting to £3,000 (2020: £6,000) was receivable during the year of which £nil (2020: £nil) was outstanding at the year end.

Stock lending income amounting to £48,000 (2020: £17,000) were receivable by the Company during the year.

JPMAM commissions in respect of such transactions amounted to £5,000 (2020: £2,000).

At the year end, total cash of £532,000 (2020: £2,806,000) was held with JPMorgan Chase Bank N.A. A net amount of interest of £nil (2020: £3,000) was receivable by the Company during the year of which £nil (2020 £nil) 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 YEAR ENDED 30TH SEPTEMBER 2021

	2021			2020
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'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 £4,495,000 (2020: £3,951,000). 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 YEAR ENDED 30TH SEPTEMBER 2021

	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 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
	£'000	£'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 YEAR ENDED 30TH SEPTEMBER 2021

	2021	2020
	£'000	£'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 YEAR ENDED 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
	£'000	£'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
	£'000	£'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 £237,228,000 (2020: £225,349,000).

	2021	2020
	£'000	£'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 £232,733,000 (2020: £221,398,000).

4.  Net asset value per share

	2021	2020
Net assets (£'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

ENDS

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

 

END

 

 

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