Final Results - Year ended 30 September 2023

JPMorgan Asia Growth & Income PLC

14 December 2023

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN ASIA GROWTH & INCOME PLC

FINAL RESULTS FOR THE YEAR ENDED 30TH SEPTEMBER 2023

Legal Entity Identifier: 5493006R74BNJSJKCB17

Information disclosed in accordance with DTR 4.2.2

CHAIRMAN'S STATEMENT

Performance and market background

It has been a privilege to lead your Company in this, my first year as Chairman of the Board. I am very pleased to be able to report a good performance from the Company over this period, in both absolute terms and relative to the benchmark. The Company's return on net assets (NAV) over the 12 months ended 30th September 2023 was 6.4% (in GBP terms), while the return to Ordinary shareholders was 7.3%. This was significantly better than the benchmark MSCI Asia ex-Japan Index, which returned 1.4%, and extends the Company's long track record of outright gains and outperformance of the market.

Asian equity markets delivered mixed performances over the year. In China, initial excitement about the country's sudden re-opening faded in the second half of the year, as the rebound lost momentum and demand for Chinese exports declined. The resulting weakness in Chinese and Hong Kong stocks was more than offset by strong performances from other markets, notably Taiwan and South Korea, which benefited from the surge in demand for stocks with exposure to artificial intelligence ('AI'). The Company's outperformance of the market was the result of the Investment Managers' stock selections - the stocks they hold, those they are over or underweight, and those they avoid.

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

In the absence of unforeseen developments, the Company's dividend policy aims to pay regular, quarterly dividends, each 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. Dividends are funded from a combination of revenue and capital reserves. 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.

In the Board's view, resetting the dividend quantum each quarter is a prudent way of delivering an income which tracks performance and does not put the Company under strain. For the year ended 30th September 2023, dividends paid totalled 15.7 pence (2022: 16.5 pence).

Premium/discount and share capital management

The discount at which the Company's shares trade has narrowed slightly during the review period, to 9.2% at end September 2023, from 9.6% at the end of the previous financial year. Although this discount is broadly in line with the discounts of the Company's immediate peers, the Board decided to utilise the Company's buy back powers over the year, to manage the balance between supply and demand for its shares. The Company repurchased a total of 5,731,497 shares (representing 5.9% of share capital at the start of the year) and held them in Treasury. Since the end of the financial year, the Company has repurchased a further 1,755,002 shares.

Gearing

During the year the Company had in place a multi-currency loan facility with Scotiabank. Such facilities can be utilised by the Portfolio Managers to gear the portfolio during periods when they expect gearing to enhance performance. The facility was not utilised during the reporting period and was retired in early December 2023. When the timing is conducive the Board will look to establish a similar loan facility.

Stewardship

Effective investment stewardship can materially contribute to the construction of stronger portfolios over the long term, and therefore enhance returns. The Company's Investment Manager has a well-established approach to investment stewardship, designed both to understand how companies address issues related to Environmental, Social and Governance ('ESG') factors and to seek to influence their behaviour and encourage best practice. (See the ESG Report in the Company's Annual Report & Financial Statements for the year ended 30th September 2023 ('2023 Annual Report'). Regular engagement with investee companies by JPMAM's portfolio managers, research analysts and investment stewardship specialists is a vital component of JPMAM's active management. So too is its practice of exercising its voice as a long-term investor through proxy voting. The Board supports the Investment Manager's approach to investment stewardship and its commitment to its stewardship responsibilities.

As part of the evolving regulatory environment within which JPMAM operates, it has published its first Task Force on Climate-related Financial Disclosures ('TCFD') Report for the Company in respect of the 12 months ended 31st December 2022. The report discloses the portfolio's climate-related risks and opportunities according to the Financial Conduct Authority's ESG Sourcebook and the TCFD Recommendations. The report is available on the Company's website at www.jpmasiagrowthandincome.co.uk

This is the first report under the new guidelines and disclosure requirements, and the Board will continue to monitor the situation as these requirements evolve.

Board succession

The Board plans for succession to ensure it retains an appropriate balance of skills, knowledge and diverse perspectives. To this end, the Board appointed Diana Choyleva and Kathryn Matthews as Directors with effect from 1st March and 1st June 2023 respectively.

Diana is a leading expert on China's economy and politics and is Chief Economist at Enodo Economics, an independent macroeconomic and political forecasting company. She is also a non-resident Senior Fellow on the Chinese economy at the Asia Society Policy Institute's Center for China Analysis in New York. Previously she worked at Lombard Street Research, most recently as their Chief Economist and Head of Research.

Kathryn brings to the Board many years of experience in the investment company sector, including directorships of a broad range of other Asia focused investment companies. Previously, Kathryn worked for Fidelity International where she was Chief Investment Officer, Asia Pacific (ex-Japan).

Having served as a Director since 2014, and as Audit Chairman and SID, Dean Buckley will be retiring from the Board at the Company's forthcoming Annual General Meeting, to be held in February 2024. On behalf of the Board, I would like to thank Dean for the significant contribution he has made to the Company and the wise counsel that he provided to the Board and its Committees during his tenure. We wish him well for the future. June Aitken and Peter Moon will succeed Dean in the roles of Audit Committee Chair and SID respectively.

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.

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 in the 2023 Annual Report.

Annual general meeting

The Company's Annual General Meeting will be held on Thursday 15th February 2024 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.

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

Developed economies are likely to face further challenges over the coming year. Interest rates may now be at or near their peak in most countries and inflation pressures are subsiding. However, the monetary tightening already in place is yet to have its full effect on businesses and households. Recession may be avoided in most countries, but growth is likely to remain below trend in 2024.

The prospects for Asian economies seem brighter, both in the near and longer term. While Chinese economic growth is expected to slow from its rapid, pre-pandemic levels, GDP is still forecast to expand at a relatively strong pace over coming years. It is encouraging to see indications that Chinese government policy may be becoming more focused on growth at home and more open to collaboration with the west. Other Asian countries can look forward to years, if not decades, of strong growth and productivity increases thanks to the structural and social changes (including digitalisation, urbanisation and the expansion of the middle class) currently unfolding across the region.

The Board is conscious of the uncertain geopolitical environment in which Asian economies (like others) have to operate. We share, however, the Portfolio Managers' enthusiasm for the many opportunities which this rapidly expanding region is generating. The Company has the chance to invest in innovative, often world-leading businesses. With valuations across most of the region at long-term lows relative to both historic levels and to the US and Europe, now seems a particularly auspicious moment to be investing in Asia. We are therefore confident of the Company's capacity 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                                                                                                                                        

13th December 2023

PORTFOLIO MANAGERS' REPORT

Performance

Against a mixed and challenging backdrop, the Company outperformed its Index over the period, returning 6.4% on a net asset value ('NAV') total return basis (in GBP terms), and by 7.3% in share price terms. This extends the Company's long, consistently good performance track record. The Company has outperformed the benchmark in all but one 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 2023, it delivered an average annualised return of 8.5% in NAV terms and 9.0% on a share price basis, well above the benchmark's average return of 6.5%.

Performance attribution

30th September 2023

	%	%
Contributions to total returns
Benchmark return		1.4%
Stock selection	5.2%
Currency effect	0.0%
Gearing/(net cash)	0.2%
Investment Manager contribution		5.4%
Dividends/residual		-0.3%
Portfolio return		6.5%
Management fee/Other expenses	-0.7%
Share buy-back/issuance	0.6%
Return on net assetsAPM		6.4%
Effect of movement in discount over the year		0.9%
Return to shareholdersAPM		7.3%

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 in the 2023 Annual Report.

The market environment

China was the main focus of Asian markets over the past year. This time last year China's unexpected and sudden decision to abandon its stringent zero-Covid restrictions provided a significant boost to market sentiment across the region. Strong Chinese export demand gave further impetus to the market rebound. However, the rally lost momentum and returns lagged across both China and Hong Kong from early 2023 as the economic recovery faltered thanks to uncertain consumers, the ongoing property crisis, lower exports and fresh geo-political concerns. The MSCI China Index declined 3.9% over the year ended 30th September 2023. The Indonesian market also lagged. Indonesian GDP growth is expected to remain strong, growing at around 5%, but the Rupiah depreciated approximately 15% over the period, dragging the market in its wake.

Elsewhere in the region, developments were more positive. The launch of Microsoft's ChatGPT, a chatbot powered by artificial intelligence ('AI'), that uses natural language to conduct conversation and undertake simple research tasks, captured the imagination of investors around the globe. Speculation about the potential spread of AI tools into many facets of commercial activity triggered a surge in the share prices of many tech companies seen as beneficiaries of this new technology.

Both the Taiwanese and Korean markets performed strongly, despite a slowdown in demand from consumer electronic goods such as mobile phones and personal computers. The Indian market recovered sharply from March 2023 onwards as economic growth remained robust and concerns about the broader market impact of challenges faced by the Adani group of companies abated. Overall, the benchmark MSCI Asia ex Japan Index rose 1.4% (in GBP terms) over the review period.

In this report we review the Company's investment performance for the 12 months to 30th September 2023. We examine the market backdrop over this period, and the factors that impacted performance. Finally, we consider the outlook for Asian equities over the coming six months and beyond.

Major contributors and detractors to performance

The main contributors to relative performance at the stock level over the past year - both from stocks we held and those we avoided - were predominantly IT and consumer discretionary names, from a mix of countries. Our overweight to SK Hynix, a Korean semiconductor manufacturer, was rewarded as the stock 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 Wiwynn, a Taiwanese tech hardware company specialising in computer storage solutions and cloud infrastructure. It outperformed on the back of growth in original design manufacturer ('ODM') server orders. Overweights to India's Axis Bank and auto producer Maruti Suzuki also enhanced returns, as did our underweights to Chinese e-commerce names such as Meituan and JD.com. These names underperformed because of heightened competition and weak consumer demand.

The largest detractors from returns included our overweight to Foshan Haitian, a Chinese supplier of packaged foods. This stock underperformed due to the sluggish post-pandemic recovery in demand, as restaurant customers have been downtrading since the reopening. This position has now been sold. China's Xinyi Solar, which produces solar glass, hurt returns as excess supply has led to pricing pressure across the supply chain. Our underweight to Quanta Computer, a Taiwanese manufacturer of notebook computers and communications products, detracted as this company was an early mover into AI server ODM, focusing on large cloud service providers, and the stock rose sharply in the rush for AI exposure. Quanta's strong earnings were also supportive.

Portfolio activity and positioning

Over the period we took advantage of relatively low valuations to add several new names to the portfolio. These included Mahindra & Mahindra, an Indian conglomerate whose many businesses include a leading farm equipment maker with upside from better capital allocation, and a successful autos business focused on SUVs. We also opened a position in Hotel Shilla, Korea's leading duty-free player with a strong brand offering. This name has been a beneficiary of the resumption of Chinese outbound tourism to Korea. In addition, we topped up existing holdings in Trip.com, SK Hynix and Taiwan Semiconductor Manufacturing Company.

In terms of disposals, in addition to the sale of Foshan Haitian, we also closed our out-of-index position in Han's Laser Technology Industry Group, a Chinese producer of laser processing equipment. The company's growth businesses in electric vehicle ('EV') components has not been able to offset weakness in legacy segments such as industrial machinery and consumer electronics. We also sold Sea Limited, a Singaporean internet retailer. This business has faced increasing competition from private Chinese e-commerce companies, resulting in worsening returns in key markets such as Indonesia.

We also trimmed and took profits in China Resources Land, KB Financial and Bank Central Asia on the back of relative outperformance.

These transactions did not have a material impact on the structure of the portfolio.

At the sector level, we maintained our overweight allocations to:

•        Technology - with overweight allocations to market leaders in key sectors including logic, DRAM and components;

•        Financials - primarily thanks to an overweight in Indian and Indonesia banks, which we view as world class, and stock exchanges across the region. However, we do not hold any Chinese banks; and

•        Consumer discretionary - includes vertically integrated textile manufacturers in China, which we like because of their leadership in sustainability initiatives and strong economies of scale. Indian auto manufacturers set to benefit from continued growth in demand from India's rapidly expanding middle class, and Yum China, the owner of restaurant franchises including KFC and Pizza Hut.

Whilst the portfolio is underweight:

•        Consumer staples - via underweights to a selection of staples names in China and India, where we think valuations are expensive;

•        Real-estate - due to the poor near-term outlook for real estate developers across China and Hong Kong; and

•        Energy - thanks mainly to our underweight to India's oil and gas producer, Reliance, which we think is over-valued.

On a country basis, we are overweight Hong Kong, via positions in life insurer AIA and Hong Kong Exchange. Both businesses are primarily driven by China. However, our combined position in China and Hong Kong is more or less neutral. The portfolio is also overweight Indonesia, thanks to our holdings in the country's major quality banks. Excessive valuation are the motivation for our underweights in India and Taiwan. Taiwanese tech stocks and consumer staples are particularly expensive.

Outlook

Western economies have so far been surprisingly resilient to the high interest rates imposed by central banks trying to quash persistent inflation. However, financial conditions have changed around the world. Real incomes have been eroded by inflation and higher rates have raised the cost of borrowing for businesses and households. The full force of tighter monetary policy is expected to increasingly register with consumers and homeowners. Growth in the developed world is forecast to slow to around 1.5% and remain lacklustre in 2024.

Asia is set to fare better. The Chinese economy is expected to continue slowing, realising growth of around 4% next year, but this is still an enviable pace compared to western economies. And the Chinese government's more pro-growth stance may see further efforts to reinvigorate the property market and support household incomes. India looks set to maintain its current pace of growth above 6% pa, consistent with the government's long-term target, and the region as a whole, which accounts for 40% of the world's GDP, is projected to grow at around 5% both this year and next.

The region's longer-term outlook is also very positive. Asian nations are undergoing major structural and social changes such as rising incomes, urbanisation, infrastructure investment and digitalisation, which will ensure the region continues to grow rapidly, with domestic demand supported by the increasing prosperity of Asia's burgeoning middle class. Furthermore, Asia is home to many innovative and dynamic companies that are leading the world in a wide range of industries, including semiconductor manufacturing, healthcare, renewable energy, next generation automotive production and financials. This provides us with many attractive long-term investment opportunities.

Current low valuations represent a great chance for us to invest in such companies at compelling prices. The MSCI AC Asia ex Japan Index is trading at a price to book ratio of 1.5x, below its long term average. Looking more deeply into the Index's geographical constituents, valuations in China, Hong Kong and South Korea are also either close to or below their historical lows in price to book terms. India remains the sole market trading above its ten-year historical average valuation levels. Valuations at such compelling levels have already allowed us to add some new names to the portfolio at good prices, and to top up some existing holdings, as discussed above, but there are many other exciting opportunities still available to invest in companies well-placed to benefit from Asia's exciting long term growth story.

For us, this is a most encouraging environment, and we remain confident that our long experience, our presence on the ground in local markets and our focus on the fundamental analysis of specific stocks, will allow us to keep identifying the best investment opportunities on offer across the region, ensuring the Company's portfolio continues to provide our investors with attractive returns and outperformance over the long-term.

Ayaz Ebrahim

Robert Lloyd

Portfolio Managers                                                                                                                         

13th December 2023

PRINCIPAL & EMERGING RISKS AND UNCERTAINTIES

Principal risk	Description	Mitigating activities	Movement from prior year
Investment 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 failure to outperform the Company's benchmark index and peer companies, resulting in the Company's shares trading on a wider discount.	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 Manager, whose representatives attend all Board meetings, and reviews data which show statistical measures of the Company's risk profile. The Board holds a separate meeting devoted to strategy each year.	The risk remains high but unchanged from 2022, due to the continuation of unfavourable economic conditions (caused by factors such as the geopolitical crises between Russia and Ukraine and Israel and Gaza, high inflation and interest rates) faced by global equity markets, making investment decisions more challenging for the Portfolio Managers.
Geopolitical and Economic	Historically, emerging market companies (and investments in their shares) have shown greater volatility and may be subject to certain political, geopolitical and corporate governance risks which are not typically associated with more developed markets and economies. Sustained underperformance of emerging markets as an asset class may occur as a result of risks such as the imposition of restrictions on the free movement of capital or other government regulatory changes.	The 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. The Board regularly reviews and discusses with the Portfolio Managers the portfolio, the Company's investment performance and the execution of the investment policy against the long-term objectives of the Company. The Manager's independent risk team performs systematic risk analysis, including country specific risk monitoring, as well as stress testing of the portfolio's resilience.	The risk remains high but unchanged from 2022. The Board has increasingly turned its attentions to the heightened risks from investing in China specifically - see below.
Investing in China	China offers some unique investment opportunities and risks. On one hand, it has provided faster growth than many other markets in the last few decades, but in recent years it has been impacted by a decline in trade, a slowdown in consumer spending, a crackdown on the private sector by the Chinese government and US-led trade restrictions, together with growing concerns in relation to China's domestic property market. The country, together with Hong Kong, represents just over 40% of the Company's benchmark index and thus represents a significant proportion of the Company's portfolio. The Board and Manager are aware of the risks associated with investing in China but are cognisant that to not be invested in China would represent a significant investment call, which could damage investor returns.	Unlike its passive competitors, as an actively managed fund the Portfolio Managers can adapt the portfolio to a changing environment and reduce both regulatory risk from, for example export controls and reputational risk from, for example human rights transgressions. 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.	The risk remains high but unchanged from 2022. The Board specifically discusses the risks associated with investing in China at each Board meeting.
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 Manager takes steps to reduce the likelihood of 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 risk is medium and remains unchanged from 2022. The investment team is supported by significant resource.
Cyber Crime	The threat of cyber attack, in all its guises, is regarded as at least as important as more traditional physical threats to business continuity and security. The Board, via its Manager, has received the cyber security policies for its key third party service providers and JPMF has assured Directors that the Company benefits directly or indirectly from all elements of J.P. Morgan Chase & Co's Cyber Security programme.	The information technology controls around the physical security of J.P. Morgan Chase & Co's data centres, security of its networks and security of its trading applications are tested by an independent third party and reported every six months against the AAF Standard.	The risk remains high but unchanged from 2022. 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.
Discount Control	Investment trust shares often trade at discounts to their underlying NAVs; they can also trade at a premium. Discounts and premiums can fluctuate considerably leading to volatile returns for shareholders.	The Board monitors the premium/discount at which the Company's share price trades relative to NAV on both an absolute level and in comparison to its peers and the wider investment trust sector. The Board reviews sector relative performance and sales and marketing activity (considered the primary drivers of the relative discount level). The Company also has authority to repurchase its existing shares to enhance the NAV per share for remaining shareholders and to reduce the absolute level of discount and discount volatility.	The risk remains high but unchanged from 2022. 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.
Legal and 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.	The Board receives regular reports from its broker, depositary, registrar and Manager as well as its legal advisers and the Association of Investment Companies on changes to 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, adverse or otherwise.	The risk remains medium but unchanged from 2022. Changes to the regulatory landscape are inevitable.

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:

Climate change

Investors can no longer ignore the consequences that the world's changing climate will have on their portfolios, with the impact of climate change on returns now potentially significant. However, the transition to a low-carbon economy across the globe may also provide attractive investment opportunities. The Manager's investment process integrates consideration of environmental, social and governance factors into decisions on which stocks to buy, hold or sell. This includes the approach investee companies take to recognising and mitigating climate change risks.

In the Company's and Manager's view, companies that successfully manage climate change risks will perform better in the long-term. Consideration of climate change risks and opportunities is an integral part of the investment process.

Rising competition between China and western economies

Since the end of the Second World War, the world has enjoyed a technology and economic hegemony with the US at its core. With the development of China as a political, cultural, technological and economic rival, there is the risk that alongside the trade and technology tensions we have seen in recent years, there may develop a rival technology, economic and financial infrastructure separating western economies from China.

Economic contraction

A long term reduction in returns available from investments as a result of recession, stagnation, inflation or other extended exogenous factors which may render the Company's investment objectives and policies unattractive or unachievable.

Artificial intelligence ('AI')

While it might be deemed a great opportunity and force for good, there is an increasing risk to business and society more widely from AI. Advances in computing power means that AI has become a powerful tool that will impact a huge range of areas and with a wide range of applications that include the potential to disrupt and even to harm. In addition the use of AI could be a significant disrupter leading to added uncertainty in corporate valuations.

TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES

Details of the management contract are set out in the Directors' Report in the 2023 Annual Report. The management fee payable to the Manager for the year was £2,039,000 (2022: £2,155,000) of which £nil (2022: £nil) was outstanding at the year end.

Safe custody fees amounting to £159,000 (2022: £169,000) were payable to JPMorgan Chase Bank N.A. during the year of which £67,000 (2022: £42,000) 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 £2,000 (2022: £7,000) of which £nil (2022: £nil) was outstanding at the year end.

Handling charges on dealing transactions amounting to £28,000 (2022: £28,000) were payable to JPMorgan Chase Bank N.A. during the year of which £12,000 (2022: £7,000) 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 £8,000 (2022: £9,000). Interest amounting to £50,000 (2022: £10,000) was receivable during the year of which £nil (2022: £nil) was outstanding at the year end.

Stock lending income amounting to £46,000 (2022: £92,000) were receivable by the Company during the year. The Manager's commissions in respect of such transactions amounted to £5,000 (2022: £10,000).

At the year end, the Company held cash of £207,000 and an overdraft of £1,058,000, resulting in net overdrawn amount of £854,000 (2022: cash held of £445,000 and £nil overdraft) with JPMorgan Chase Bank N.A. A net amount of interest of £4,000 (2022: £nil) was receivable by the Company during the year of which £nil (2022 £nil) was outstanding at the year end.

Full details of Directors' remuneration and shareholdings can be found in the 2023 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 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 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, 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

13th December 2023

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30th September 2023

		2023		2022
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments held at fair value
through profit or loss	-	16,289	16,289	-	(75,909)	(75,909)
Net foreign currency gains	-	114	114	-	220	220
Income from investments	8,304	-	8,304	7,882	-	7,882
Interest receivable and similar income	100	-	100	102	-	102
Gross return/(loss)	8,404	16,403	24,807	7,984	(75,689)	(67,705)
Management fee	(2,039)	-	(2,039)	(2,155)	-	(2,155)
Other administrative expenses	(827)	-	(827)	(698)	-	(698)
Net return/(loss) before finance costs and taxation	5,538	16,403	21,941	5,131	(75,689)	(70,558)
Finance costs	(52)	-	(52)	(43)	-	(43)
Net return/(loss) before taxation	5,486	16,403	21,889	5,088	(75,689)	(70,601)
Taxation	(846)	(219)	(1,065)	(125)	(389)	(514)
Net return/(loss) after taxation	4,640	16,184	20,824	4,963	(76,078)	(71,115)
Return/(loss) per share	4.94p	17.22p	22.16p	5.09p	(77.95)p	(72.86)p

A fourth quarterly dividend of 3.8p (2022: 3.7p) per share has been declared in respect of the year ended 30th September 2023, totalling £3,447,000 (2022: £ 3,569,000). Further details are given in note 10 of the 2023 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/(loss) after taxation represents the profit/(loss) for the year and also the total comprehensive income.

STATEMENT OF CHANGES IN EQUITY

For the year ended 30th September 2023

	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 2021	24,449	46,705	977	25,121	352,948	-	450,200
Repurchase of shares into Treasury	-	-	-	-	(3,534)	-	(3,534)
Net (loss)/return	-	-	-	-	(76,078)	4,963	(71,115)
Dividends paid in the year (note 3)	-	-	-	-	(12,028)	(4,963)	(16,991)
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 3)	-	-	-	-	(10,114)	(4,640)	(14,754)
At 30th September 2023	24,449	46,705	977	25,121	247,577	-	344,829

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 2023

	2023	2022
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	342,829	358,303
Current assets
Derivative financial assets	-	2
Debtors	3,680	587
Cash and cash equivalents	207	454
	3,887	1,043
Current liabilities
Creditors: amounts falling due within one year	(1,641)	(786)
Net current assets	2,246	257
Total assets less current liabilities	345,075	358,560
Provision for capital gains tax	(246)	-
Net assets	344,829	358,560
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	247,577	261,308
Total equity shareholders' funds	344,829	358,560
Net asset value per share	378.8p	370.6p

STATEMENT OF CASH FLOWS

For the year ended 30th September 2023

	2023	20221
	£'000	£'000
Cash flows from operating activities
Net return/(loss) before finance costs and taxation	21,941	(70,558)
Adjustment for:
Net (gains)/losses on investments held at fair value through profit or loss	(16,289)	75,909
Net foreign currency gains	(114)	(220)
Dividend income	(8,289)	(7,882)
Interest income	(54)	(10)
Scrip dividends received as income	(15)	-
Realised (gain)/loss on foreign exchange transactions	232	(166)
Realised exchange gains on JPMorgan US Dollar Liquidity Fund	125	197
Increase in accrued income and other debtors	(7)	(5)
Increase/(decrease) in accrued expenses	68	(26)
Net cash outflow from operations before dividends and interest	(2,402)	(2,761)
Dividends received	7,444	7,007
Interest received	54	10
Overseas withholding tax recovered	-	272
Capital gains tax recovered	27	-
Net cash inflow from operating activities	5,123	4,528
Purchases of investments	(178,025)	(196,879)
Sales of investments	206,375	211,835
Settlement of foreign currency contracts	-	(4)
Net cash inflow from investing activities	28,350	14,952
Dividends paid	(14,754)	(16,991)
Repurchase of shares into Treasury	(19,731)	(3,679)
Interest paid	(52)	(43)
Net cash outflow from financing activities	(34,537)	(20,713)
Decrease in cash and cash equivalents	(1,064)	(1,233)
Cash and cash equivalents at start of year	454	1,496
Exchange movements	(241)	191
Cash and cash equivalents at end of year	(851)	454
Cash and cash equivalents consist of:
Cash and short term deposits	199	445
Money market fund - JPMorgan US Dollar Liquidity Fund	8	9
Cash and cash equivalents per the Statement of Financial Position	207	454
Bank overdraft (included as part of current liabilities in note 13 of the 2023 Annual Report)	(1,058)	-
Total cash, cash equivalents and bank overdraft per the Statement of Cash Flows	(851)	454

¹     The presentation of the Cash Flow Statement, as permitted under FRS 102, has been changed so as to present the reconciliation of 'net return/(loss) before finance costs and taxation' to 'net cash inflow from operating activities' on the face of the Statement of Cash Flows. Previously, this was shown by way of note. Interest paid has also been reclassified to financing activities, previously shown under operating activities, as this relates to bank overdraft. Other than consequential changes in presentation of the certain cash flow items, there is no change to the cash flows as presented in previous periods. Cash and cash equivalents include bank overdraft repayable on demand that form an integral part of an entity's cash management.

Analysis of change in net cash/(debt)

	As at		Other	As at
	30th September		non-cash	30th September
	2022	Cash flows	charges	2023
	£'000	£'000	£'000	£'000
Cash and cash equivalents
Cash	445	(5)	(241)	199
Money market fund - JPMorgan US Dollar Liquidity Fund	9	(1)	-	8
Bank overdraft	-	(1,058)	-	(1,058)
Net cash/(debt)	454	(1,064)	(241)	(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 current market and economic conditions, the direct and indirect consequences arising from the Russian invasion of Ukraine, the geopolitical uncertainty in China and more recently the conflict in Gaza on the going concern and viability of the Company. 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 at the Company's 2023 Annual General Meeting and the next continuation vote will be considered at the Annual General Meeting in 2026. The disclosures on going concern in the Directors' Report of the 2023 Annual 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/(loss) per share

	2023	2022
	£'000	£'000
Revenue return	4,640	4,963
Capital return/(loss)	16,184	(76,078)
Total return/(loss)	20,824	(71,115)
Weighted average number of shares in issue during the year	93,970,338	97,596,359
Revenue return per share	4.94p	5.09p
Capital return/(loss) per share	17.22p	(77.95)p
Total return/(loss) per share	22.16p	(72.86)p

3.  Dividends

(a)     Dividends paid and declared

	2023	2022
	£'000	£'000
Dividends paid
2022 fourth quarterly dividend of 3.7p (2021: 4.6p)	3,569	4,494
First quarterly dividend of 4.0p (2022: 4.5p)	3,789	4,396
Second quarterly dividend of 4.0p (2022: 4.2p)	3,771	4,103
Third quarterly dividend of 3.9p (2022: 4.1p)	3,625	3,998
Total dividends paid in the period	14,754	16,991
Dividend declared
Fourth quarterly dividend declared of 3.8p (2022: 3.7p) per share	3,447	3,569

A fourth quarterly dividend of 3.8p has been declared and was paid on 23rd November 2023 for the financial year ended 30th September 2023.

In accordance with the accounting policy of the Company, this dividend will be reflected in the financial statements for the year ending 30th September 2024.

(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 £206,474,000 (2022: £252,678,000).

	2023	2022
	£'000	£'000
First quarterly dividend of 4.0p (2022: 4.5p)	3,789	4,396
Second quarterly dividend of 4.0p (2022: 4.2p)	3,771	4,103
Third quarterly dividend of 3.9p (2022: 4.1p)	3,625	3,998
Fourth quarterly dividend declared of 3.8p (2022: 3.7p)	3,447	3,569
Total dividends for Section 1158 purposes	14,632	16,066

The aggregate of the distributable reserves after the payment of the final dividend will amount to £203,027,000 (2022: £249,110,000).

4.  Net asset value per share

	2023	2022
Net assets (£'000)	344,829	358,560
Number of shares in issue	91,024,771	96,756,268
Net asset value per share	378.8p	370.6p

5. Status of results announcement

2023 Financial Information

The figures and financial information for 2023 are extracted from the Annual Report and Financial Statements for the year ended 30th September 2022 and do not constitute the statutory accounts for the year. The Annual Report and Financial Statements for the year ended 30th September 2023 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 2023 will be delivered to the Register of Companies in due course.

2022 Financial Information

The figures and financial information for 2022 are extracted from the published Annual Report and      Financial Statements for the year ended 30th September 2022 and do not constitute the statutory accounts for that year. The Annual Report and Financial Statements for the year ended 30th September 2021 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.

13th December 2023

For further information:

Alison Vincent

JPMorgan Funds Limited            

0800 20 40 20

ENDS

A copy of the 2023 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 2023 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