Final Results

RNS Number : 1468K

JPMorgan Asian Investment Tst PLC

11 December 2018

 

 LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN ASIAN INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 30TH SEPTEMBER 2018

Legal Entity Identifier: 5493006R74BNJSJKCB17

Information disclosed in accordance with the DTR 4.1.3

The Directors of JPMorgan Asian Investment Trust plc announce the Company's results for the year ended 30th September 2018.

CHAIRMAN'S STATEMENT

Performance

I am pleased to report that in the year to 30th September 2018 the Company's return on net assets was +7.3%, representing an outperformance of 2.9 percentage points over the benchmark, the MSCI AC Asia ex Japan Index, which returned +4.4% in sterling terms. This represents the fourth year in succession in which your Company's NAV has beaten the benchmark index. This turnaround in performance has been acknowledged within the industry, with the Company recently being awarded best Asia Pacific Equities Investment Trust at the 20th Investment Week Investment Company Awards 2018.

The return to shareholders was a more modest +2.9%, reflecting the effect of a widening of the discount over the year from 8.0% to 12.1%.

The vast majority of the NAV outperformance in the year was attributable to stock selection with notable contributions from holdings in China and Korea. The Investment Managers' report below gives more detail on the positioning of the portfolio, the stocks we own, actions taken during the year, together with their views on the outlook for the region.

Investment Management Team

On 1st August 2018, the Board announced the appointment of Robert Lloyd, as an investment manager of the Company, alongside Ayaz Ebrahim and Richard Titherington. Robert, an experienced investment manager within JPMAM's Emerging Markets and Asia Pacific ('EMAP') equities team, is based in Hong Kong. Before being formally appointed, Robert had worked alongside Mr Ebrahim on stock selection ideas for the Company for a number of years, and Directors have been impressed with his stock knowledge and overall contribution to the performance of the Company.

Discount Management

The Company's new dividend policy is, I believe, now well established and understood by investors. This policy aims to pay, in the absence of unforeseen circumstances, a regular quarterly dividend equivalent to 1% of the Company's NAV on the last business day of each financial quarter, being the end of December, March, June and September. These dividends are paid from a combination of net revenue and capital reserves. The policy is not accompanied by a change in the investment policy of the Company. The Board taking the view that any demand placed on the investment managers to seek a higher income yield from the portfolio may come at the expense of the total returns available to shareholders. Shareholders are further reminded that the dividend payments are based upon a percentage of net assets, so the actual amount of the dividends paid to shareholders will reflect the quantum of the Company's net assets at the particular quarter end; the quantum being subject to market fluctuations.

Since its introduction, I have been pleased to see some tightening of the discount driven by new demand, not in the form of the artificial and often short-lived demand created by share buy-backs, but rather from a new constituency of investors. These investors include a large number of smaller shareholders, often investing through on-line investment platforms and I welcome them as owners of the Company.

The new dividend policy combined with improved and more resilient performance from the investment managers make an investment in the Company an appealing way of gaining exposure to the exciting growth prospects to be found in Asia, in what is a crowded market place for investment funds. However appealing yield and performance attributes cannot insulate the Company's shares from broader market volatility.

As the investment managers make clear in their report, the latter part of our financial year saw increasing volatility and market weakness in Asia. At the same time, and closer to home, UK equity markets, including the market for investment trust companies, have been more challenging and the discount to NAV at which the Company's and many of its peers shares trade has increased.

Your Board will continue to monitor the Company's discount, both its absolute level and volatility, and will review all aspects of the Company's offering to shareholders to include the marketing of the Company's shares in an effort to maintain and enhance investor interest in the Company's shares.

Gearing

The Company has had a multi-currency loan facility in place with Scotiabank since December 2016 for £40 million, with the option of further increasing the facility to £60 million. This facility was intended to provide the Manager with the ability to gear the portfolio in periods when they believe this leverage will enhance shareholder returns.

Following a long period in which the Company was not geared, it has become clear that while the Manager may look to gear in the future, the extent of any gearing and the frequency with which it may be deployed suggested that it would be prudent to reduce the size of the Company's loan facility. The facility, which was reduced to £10 million in May 2018, allows the Manager to apply modest gearing when conditions warrant such a move but with lower commitment fee payments when the facility is unused. The Company was not geared at the end of the reporting period.

Regulation

The Company became subject to considerable new regulation from the EU this year, to include the Packaged Retail and Insurance-based Investment Products ('PRIIPS') and the Markets in Financial Instruments Directive II ('MiFID II') regulations, which came into force on 1st January and 3rd January 2018, respectively. Further regulation effective from 25th May 2018 brought data protection legislation in line across Europe.

The PRIIPS regulation requires managers, who are deemed to be the manufacturer of investment products (which includes investment trusts), to prepare a Key Information Document ('KID') in respect of their products. The Company's KID can be located on its website. The Company is not responsible for the information contained in the KID and investors should note that the procedures for calculating the risks, costs and potential returns are tightly prescribed by regulation. The figures in the KID may not reflect future returns for the Company and anticipated performance returns cannot be guaranteed. It is recommended that the KID is not considered in isolation but is read in conjunction with other documents published by the Company and its Manager.

The original MiFID EU regulation came into force in 2007. Its original focus has been extended through the introduction of MiFID II, which aims to supplement the existing regulation covering trading and reporting requirements. MiFID II has improved the transparency around research costs that had been paid by clients. I am pleased to report that such costs are now absorbed by JPMAM.

Board of Directors

Following many years of service to the Company, Ronald Gould will retire as a Director and as Chairman of the Audit Committee at the conclusion of the forthcoming Annual General Meeting. Ronald has been a director since 2005 during which time his good judgement and advice has been of benefit to his fellow Directors and ultimately to shareholders in the Company. Dean Buckley will succeed Ronald in the role of Audit Committee Chairman and Senior Independent Director.

On 26th July 2018 the Company appointed Mrs June Aitken and Sir Richard Stagg to the Board. Mrs Aitken brings many years of experience in Asian equity markets to the Board, having previously held senior investment banking roles at HSBC and UBS. Sir Richard has vast experience of the region in which the Company invests. He is currently the Chairman of Rothschild in India and was previously ambassador to Afghanistan and High Commissioner to India.

All Directors, bar Mr Gould, will retire at the Company's forthcoming Annual General Meeting and, being eligible, will offer themselves for reappointment. The Nomination Committee, having considered their qualifications, performance and contribution to the Board and its committees, confirms that each Director continues to be effective and demonstrates commitment to the role and the Board recommends to shareholders that they be reappointed.

Annual General Meeting

The Company's forthcoming Annual General Meeting will be held at 60 Victoria Embankment, London EC4Y 0JP on Tuesday, 5th February 2019 at 12.00 noon. In addition to the formal proceedings, shareholders will have the opportunity to meet with the investment management team, who will be presenting and will be available to respond to questions on the Company's portfolio, the investment team's strategy and the outlook for Asian markets. Following the Meeting there will be an opportunity for shareholders to meet the Board, investment management personnel and other Company advisers informally and I look forward to seeing as many of you as possible.

Outlook

There are a number of headwinds that may indicate a more muted environment for Asian equity markets over the forthcoming year, including concerns over tightening US monetary policy and fears of continued escalation of the US/China trade war.  It is therefore prudent to expect a continuation of the volatility we have seen in markets in recent months. Despite these uncertainties, our investment managers believe Asian markets offer attractive valuations using both historic and relative measures and remain confident in their abilities to find quality companies in which to invest.

Bronwyn Curtis OBE

Chairman                                                                                                                                   

11th December 2018

INVESTMENT MANAGERS' REPORT

The year to 30th September 2018 was dominated by multiple geopolitical factors that unsettled global stock markets and gave rise to heightened macro-economic uncertainty, a slowdown in economic momentum and volatility. Despite the relative resilience of the economies that make up the region, Asia was not immune to these issues. Notably, however, with good stock selection it was still possible to achieve positive investment returns from the region over the year.

Against a demanding and unpredictable investment backdrop, we are pleased to have outperformed the Company's benchmark index: during the year under review, the Company's return on net assets was +7.3%, outperforming the MSCI AC Asia ex Japan Index, which delivered a +4.4% return in sterling terms. This is the fourth consecutive year in which we have outperformed Asian stock markets (as measured by the benchmark index), an achievement that stems primarily from our stock picking.

In this report, we discuss the market backdrop in broad terms as well as the impact made by specific markets, sectors and stocks. We also consider what could lie ahead for Asian equities in 2019.

Politics, personalities and policy - the year in context

Asian equities had ended 2017 in fine fettle, with markets reaching all-time highs. Global economies were growing, the US dollar was relatively weak, and China was flexing its muscles as a global economic superpower. Policy reforms were contributing towards positive sentiment and buoyant markets: initiatives such as India's landmark structural economic reforms, China's focus on deleveraging and its regulatory crackdown on non-banks, plus the US tax reform under the Trump administration all contributed.

The region started 2018 in similar fashion, only to see a sharp correction in February as rising inflation expectations triggered concerns that the US Federal Reserve would taper its quantitative easing programme more aggressively. The early months of 2018 also saw simmering global trade tensions escalate, resulting from President Trump's wide-ranging reforms. There was particular emphasis on the trading relationship between the US and China, which weighed on Asian equities and Chinese markets in particular. Demand for Chinese goods has fallen and, at the time of writing, this dispute is yet to be resolved. Fears remain that an all-out US-China trade war could ensue, which would be damaging for company earnings across the Asia region.

Over the course of 2018, the US economy continued to perform strongly but global markets become less synchronised. Asian equities resumed their weakening trend relative to US equities. Political instability in certain countries contributed to this, as did rising US interest rates and oil prices that spiraled-up to a four-year high in late September. A rising US dollar was also significant - as the premier global currency in which most international trade is conducted, a strong US dollar is frequently a headwind to Asian equities' performance, especially for those countries running current account deficits.

How have specific regions and stocks fared over the year?

In this section, we review how the countries where the Company invests most of its assets fared this year, highlighting specific stock stories within each. The portfolio's outperformance this year was largely on the back of positive stock selection, with picks in China and Korea amongst the standout contributors.

China

China underperformed the region over the year, finishing the review period flat. Beijing policy reforms endeavoured to minimise the impact of external challenges as well as the risks of higher inflation and slower global growth, with measures focused on domestic demand and a consumer-led recovery.

Despite flat performance from Chinese equities overall, we achieved positive relative performance from a wide range of sectors, driven primarily by stock selection. Four of the five best performing stocks in the portfolio were Chinese stocks. Sino Biopharmaceutical, a leading drug manufacturer, was a notable performer on the back of a positive pipeline outlook. We sold the company in the summer to take profits, which proved to be a well-timed decision. The healthcare sector subsequently suffered following the announcement of plans for a centralised pharmaceutical procurement policy and the possibility of greater industry regulation; both factors raised fears of potential downward pricing pressures. This also affected biopharmaceuticals manufacturer, 3SBio which we continue to hold, and which made a negative contribution to performance.

Relative to our benchmark index, we have an overweight holding in Shenzhou International, a high-quality textile manufacturer, with strong and visible earnings growth momentum and a competitive edge in both pricing and delivery lead time. It was one of the very best performers for us over the year. Our holding in China's largest insurer Ping An Insurance was another top contributor, as it continued to deliver solid earnings, while CNOOC, an upstream energy company, benefitted from the strong oil price.

Chinese internet giants Alibaba and Tencent remain top ten holdings in the portfolio, but their market values fell over the year, following sharp corrections amidst a well-documented tech downturn. Our positive view on the long-term prospects for both stocks remains intact.

Korea

The Korean market performed in line with the region overall, but our stock selection delivered some of the portfolio's best returns over the year. Daewoo Shipbuilding benefitted from improving sentiment on the back of new tanker orders while new-build prices started to rebound. Samsung Engineering also rose following a new order announcement from an existing Middle East client.

Taiwan

In North Asia, Taiwanese equities outperformed. The market was supported by relatively high dividend yields and the resilience of the New Taiwan Dollar. These factors were enough to overcome the poor performance from the technology and machinery stocks that comprise much of the local equity market. Taiwan Semiconductor Manufacturing is the largest holding in our portfolio and the world's largest semiconductor foundry. In spite of sector headwinds, it performed well over the year and made a positive contribution to performance. On the contrary, our positions in GlobalWafers and Largan Precision detracted from performance. GlobalWafers, fell on concerns of rising supply combined with a softer demand outlook, while Largan Precision, which supplies camera lens modules, fell on weak iPhone XS sales momentum. GlobalWafers was sold before the year end.

India

The Indian market had been one of the more robust Asian markets over the year until a sharp correction occurred in September, resulting in a flat year overall. The correction was triggered by more negative news flow from India's financial sector with IL&FS (a large unlisted infrastructure finance company) defaulting on some of its obligations. The sector had earlier been hit by February's revelation of a fraud involving Punjab National Bank (PNB), amongst the largest state-owned banks in India.

Our stock selection in India was disappointing. Our holding in Maruti Suzuki, which sells 50% of cars sold in India disappointed, following a slowdown in sales towards the end of the period. Not owning two top performers Reliance Industries and Infosys was painful. Although its core businesses are in the energy industry, Reliance Industries' success was driven by its telecoms arm JIO which gained market share above expectations. We should note that our reason for avoiding Reliance is based on concerns about its governance. Meanwhile, information technology stock Infosys benefited from the weaker rupee as information technology is one of India's few export-driven sectors.

Other markets

Looking at other markets where we invest, Thailand was the top performing market over the year, boosted by optimism ahead of the election early next year and the resilience of the Thai baht, reflecting its strong current account position. Malaysia also fared better, despite the shock election victory of the opposition coalition party led by 92-year-old Mahathir Mohamad. Both markets benefitted from a stronger oil price.

We are modestly overweight in Indonesia and believe valuations and economic momentum remain relatively favourable. However, it underperformed over the year, as did the Philippines, with rising inflation a concern as well as worries that the central bank could be sluggish in raising interest rates. Both markets suffered on the back of local currency depreciation (reflecting their current account deficits), as well as weak corporate results, particularly from the banking sector.

Performance was buoyed by the Company's off-benchmark position in Vietnam, achieved through investing into a JP Morgan Vietnam unit trust.

PERFORMANCE ATTRIBUTION

FOR THE YEAR ENDED 30TH SEPTEMBER 2018

	%	%
Contributions to total returns
Benchmark return		4.4
Stock selection	3.7
Currency effect	0.1
Gearing/(net cash)	0.0
Investment Manager contribution		3.8
Dividends/Residual	-0.1
Portfolio return		8.1
Management fee/Other expenses	-0.8
Structural effects
Share Buy-back/Issuance	0.0
Return on net assets		7.3
Effect of movement in discount over the year		-4.4
Return to shareholders		2.9

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.

A glossary of terms and alternative performance measures is provided within the Company's Annual Report & Financial Statements for the year ended 30th September 2018 ('2018 Annual Report').

Sector review

Information Technology remains a significant sector for us but we trimmed our exposure by selling several companies in smartphone supply chains, since we believe profitability is likely to remain under pressure. We are overweight in Financials, where we see a number of stocks with attractive valuations and positive earnings outlooks. An expanding middle class of consumers provides an excellent longer-term opportunity, particularly for wealth creation and insurance products. We have recently added to high quality businesses such as Hong Kong Exchanges & Clearing and private sector financial stocks in India.

Gearing

We have not employed any gearing during the year. Despite retaining a positive view on equities, our gearing is likely to remain at minimal levels unless valuations for Asian equities fall to more compelling levels.

Outlook: challenges ahead but growth trends remain compelling

In the near term, the direction of travel for Asian markets is uncertain and political risk will continue to feature. We are more cautious than we were a year ago and we acknowledge that the period immediately ahead could be a bumpy one. But we are patient and discerning investors, confident that the long-term story for Asian equities remains robust.

While expectations of improved growth have shifted towards the US of late, we see the beginning of a cyclical recovery in selected Asian countries and we have begun to see signs of revival in Indonesia, where we are overweight. In India there are also positive signs, but we are maintaining an underweight position as valuations still look rich, and the risk of further shocks and negative news flow from the financial sector continues. Should markets fall further, we will be in a good position to add to holdings at more attractive levels.

Short-term, the status of trade relationships between China and the US is unsettling. Concerns linger about potentially stagnant consumer spending, even though the Chinese government's attempt to offset deleveraging and trade concerns through targeted stimulus should stimulate consumption growth. We would expect this growth to feed through to improvements in Asia inter-regional trade.

Across the region, domestic consumption is contributing much more to economic growth than it was 15 to 20 years ago; without understating the importance of Asian exports, the ability of the region's economies to withstand prolonged trade tensions resulting from protectionist US policy may be stronger than feared.

We will continue seeking to generate capital growth, as well as a predictable quarterly income. We believe there will always be opportunities to buy quality companies at reasonable prices and that we gain a considerable advantage from having people 'on the ground' across the region. Achieving our aims depends on choosing the right stocks and our local presence (and active engagement with investee companies plus those we have highlighted for future consideration) facilitates this. We are confident that the long-term case for Asian equities remains robust and that our proven stock picking ability will continue delivering shareholder value, as it has done over time.

Ayaz Ebrahim

Robert Lloyd

Richard Titherington

Investment Managers                                                                                                            

11th December 2018

PRINCIPAL RISKS

The Directors confirm that they have carried out a thorough assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. Three key risks have been identified and the ways in which they are managed or mitigated are summarised as follows:

•        Investment and Strategy

An inappropriate investment decision, in areas such as asset allocation or the level of gearing, may lead to underperformance against the Company's benchmark index and peer companies, and may result in the Company's shares trading on a wider discount. The Board seeks to mitigate these risks by diversification of investments 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 analysis, revenue estimates and shareholder analysis. The Board monitors the implementation and results of the investment process with the investment managers, who attend all Board meetings, and reviews data which show statistical measures of the Company's risk profile. The Manager employs the Company's gearing tactically, within a strategic range set by the Board. The Board holds a separate meeting devoted to strategy each year.

•        Political and Economic

Changes in financial or tax legislation, to include tariffs, may adversely affect the Company. The Manager makes recommendations to the Board on accounting, dividend and tax policies and the Board seeks external advice where appropriate. In addition, the Company is subject to political risks, such as the imposition of restrictions on the free movement of capital.

•        Operational Risk and Cybercrime

Disruption to, or failure of, the Manager's accounting, dealing or payments systems or the custodian's records could prevent accurate reporting and monitoring of the Company's financial position. Details of how the Board monitors the services provided by the Manager and its associates and the key elements designed to provide effective internal control are included with the Internal Control section of the Corporate Governance report on pages 29 and 30 of the 2018 Annual Report. 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 Company benefits directly or indirectly from all elements of JPMorgan's Cyber Security programme. The information technology controls around the physical security of JPMorgan's data centres, security of its networks and security of its trading applications are tested by PricewaterhouseCoopers LLP and reported every six months against the AAF Standard.

The following risks, although not viewed as critical, have also been identified as important in our risk matrix:

•        Change of Corporate Control of the Manager

The Board holds regular meetings with senior representatives of JPMF and JPMAM in order to obtain assurance that the Manager continues to demonstrate a high degree of commitment to its investment trusts business through the provision of significant resources.

•        Market

Market risk arises from uncertainty about the future prices of the Company's investments. It represents the potential loss that the Company might suffer through holding investments in the face of negative market movements. The Board considers asset allocation, 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 monitors the implementation and results of the investment process with the Manager.

•        Loss of Investment Team

A sudden departure of several members of the investment management team could result in a 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.

•        Financial

The financial risks faced by the Company include market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk, credit risk and the failure of any counterparty. Further details are disclosed in note 21 in the 2018 Annual Report.

•        Share Price Relative to Net Asset Value ('NAV') per Share:

If the share price of an investment trust is lower than the NAV per share, the shares are said to be trading at a discount.

Throughout 2018, the Company's shares traded at a discount. The Board monitors the Company's premium/discount level and, although the rating largely depends upon the relative attractiveness of the trust, the Board will seek, where deemed prudent, to address imbalances in the supply and demand of the Company's shares through share buybacks.

TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES

Details of the management contract are set out in the Directors' Report on page 25. The management fee payable to the Manager for the year was £1,972,000 (2017: £1,639,000) of which £nil (2017: £nil) was outstanding at the year end.

During the year £82,000 (2017: £36,000), including VAT, was payable to the Manager for the marketing and administration of savings scheme products, of which £11,000 (2017: £23,000) was outstanding at the year end.

Safe custody fees amounting to £164,000 (2017: £161,000) were payable to JPMorgan Chase Bank N.A. during the year of which £29,000 (2017: £43,000) was outstanding at the year end.

The Manager may carry out some of its dealing transactions through group subsidiaries. These transactions are carried out at arm's length. The commission payable to JPMorgan Securities Limited for the year was £nil (2017: £9,000) of which £nil (2017: £nil) was outstanding at the year end.

Handling charges on dealing transactions amounting to £34,000 (2017: £36,000) were payable to JPMorgan Chase Bank N.A. during the year of which £4,000 (2017: £8,000) 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 £nil (2017: £2,236,000). Interest amounting to £32,000 (2017: £6,000) was receivable during the year of which £2,000 (2017: £2,000) was outstanding at the year end.

Stock lending income amounting to £51,000 (2017: £nil) were receivable by the Company during the year. JPMAM commissions in respect of such transactions amounted to £9,000 (2017: £nil).

At the year end, total cash of £1,337,000 (2017: £2,451,000) was held with JPMorgan Chase Bank N.A. A net amount of interest of £1,000 (2017: £1,000) was receivable by the Company during the year of which £nil (2017 £nil) was outstanding at the year end.

Full details of Directors' remuneration and shareholdings can be found in the 2018 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

11th December 2018

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30TH SEPTEMBER 2018

	2018			2017
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair value
through profit or loss	-	21,033	21,033	-	60,256	60,256
Net foreign currency losses	-	(159)	(159)	-	(839)	(839)
Income from investments	8,708	-	8,708	6,509	-	6,509
Interest receivable and similar income	84	-	84	7	-	7
Gross return	8,792	20,874	29,666	6,516	59,417	65,933
Management fee	(1,972)	-	(1,972)	(1,639)	-	(1,639)
Other administrative expenses	(820)	-	(820)	(754)	-	(754)
Net return on ordinary activities
before finance costs and taxation	6,000	20,874	26,874	4,123	59,417	63,540
Finance costs	(138)	-	(138)	(224)	-	(224)
Net return on ordinary activities
before taxation	5,862	20,874	26,736	3,899	59,417	63,316
Taxation	(711)	(210)	(921)	(181)	-	(181)
Net return on ordinary activities
after taxation	5,151	20,664	25,815	3,718	59,417	63,135
Return per share	5.48p	21.96p	27.44p	3.93p	62.87p	66.80p

A fourth quarterly dividend of 3.9p (2017 final: 3.8p) per share has been proposed in respect of the year ended 30th September 2018, totalling £3,669,000 (2017: £3,575,000).

Details of dividends paid and proposed are given in note 3 below.

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 on ordinary activities 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 2018

	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 2016	23,762	31,646	977	25,121	218,124	5,683	305,313
Repurchase of shares into Treasury	-	-	-	-	(2,892)	-	(2,892)
Net return on ordinary activities	-	-	-	-	59,417	3,718	63,135
Dividends paid in the year (note 3)	-	-	-	-	(2,988)	(9,401)	(12,389)
At 30th September 2017	23,762	31,646	977	25,121	271,661	-	353,167
Net return on ordinary activities	-	-	-	-	20,664	5,151	25,815
Dividends paid in the year (note 3)	-	-	-	-	(9,525)	(5,151)	(14,676)
At 30th September 2018	23,762	31,646	977	25,121	282,800	-	364,306

¹ These reserves form the distributable reserves of the Company and may be used to fund distribution of profits to investors via dividend payments.

STATEMENT OF FINANCIAL POSITION

AT 30TH SEPTEMBER 2018

	2018	2017
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	363,154	349,053
Current assets
Debtors	787	526
Cash and cash equivalents	1,337	4,687
	2,124	5,213
Current liabilities
Creditors: amounts falling due within one year	(972)	(1,099)
Net current assets	1,152	4,114
Total assets less current liabilities	364,306	353,167
Net assets	364,306	353,167
Capital and reserves
Called up share capital	23,762	23,762
Share premium	31,646	31,646
Exercised warrant reserve	977	977
Capital redemption reserve	25,121	25,121
Capital reserves	282,800	271,661
Revenue reserve	-	-
Total shareholders' funds	364,306	353,167
Net asset value per share	387.2p	375.4p

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30TH SEPTEMBER 2018

	2018	2017
	£'000	£'000
Net cash outflow from operations before dividends and interest	(2,778)	(2,721)
Dividends received	7,522	5,654
Interest received	33	5
Overseas tax recovered	-	473
Interest paid	(187)	(203)
Net cash inflow from operating activities	4,590	3,208
Purchases of investments	(244,896)	(161,805)
Sales of investments	251,805	193,140
Settlement of forward foreign currency contracts	(179)	8
Net cash inflow from investing activities	6,730	31,343
Repurchase of shares into Treasury	-	(2,892)
Dividends paid	(14,676)	(12,389)
Repayment of bank loans	-	(15,602)
Net cash outflow from financing activities	(14,676)	(30,883)
(Decrease)/increase in cash and cash equivalents	(3,356)	3,668
Cash and cash equivalents at start of year	4,687	1,065
Exchange movements	6	(46)
Cash and cash equivalents at end of year	1,337	4,687
(Decrease)/Increase in cash and cash equivalents	(3,356)	3,668
Cash and cash equivalents consist of:
Cash and short term deposits	1,337	2,451
Cash held in JPMorgan US Dollar Liquidity Fund	-	2,236
Total	1,337	4,687

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30TH SEPTEMBER 2018

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 November 2014 and updated in February 2018.

All of the Company's operations are of a continuing nature.

The financial statements have been prepared on a going concern basis. The disclosures on going concern on page 31 of the Directors' Report in the 2018 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 per share

	2018	2017
	£'000	£'000
Revenue return	5,151	3,718
Capital return	20,664	59,417
Total return	25,815	63,135
Weighted average number of shares in issue during the year	94,081,493	94,511,001
Revenue return per share	5.48p	3.93p
Capital return per share	21.96p	62.87p
Total return per share	27.44p	66.80p

3.       Dividends

(a)     Dividends paid and declared

	2018	2017
	£'000	£'000
Dividends paid
2017 final dividend of 3.8p (2016: 3.0p)	3,575	2,851
First quarterly dividend of 4.0p (2017: 3.1p)	3,763	2,947
Second quarterly dividend of 3.9p (2017: 3.4p)	3,669	3,204
Third quarterly dividend of 3.9p (2017: 3.6p)	3,669	3,387
Total dividends paid in the period	14,676	12,389
Dividend declared
Fourth quarterly dividend declared of 3.9p (2017 final: 3.8p) per share	3,669	3,575

A fourth quarterly dividend of 3.9p has been declared and was paid on 7th November 2018 for the financial year ended 30th September 2018. In accordance with the accounting policy of the Company, this dividend will be reflected in the financial statements for the year ending 30th September 2019.

(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 £220,437,000 (2017: £181,803,000).

	2018	2017
	£'000	£'000
First quarterly dividend of 4.0p (2017: 3.1p)	3,763	2,947
Second quarterly dividend of 3.9p (2017: 3.4p)	3,669	3,204
Third quarterly dividend of 3.9p (2017: 3.6p)	3,669	3,387
Fourth quarterly dividend of 3.9p (2017 final: 3.8p)	3,669	3,575
	14,770	13,113

The aggregate of the distributable reserves after the payment of the final dividend will amount to £279,121,000 (2017: £268,086,000).

4.       Net asset value per share

	2018	2017
Net assets (£'000)	364,306	353,167
Number of shares in issue	94,081,493	94,081,493
Net asset value per share	387.2p	375.4p

5.       Status of results announcement

2017 Financial Information

The figures and financial information for 2017 are extracted from the Annual Report and Accounts for the year ended 30th September 2017 and do not constitute the statutory accounts for the year. The Annual Report and Accounts 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 Accounts will be delivered to the Register of Companies in due course.

2018 Financial Information

The figures and financial information for 2018 are extracted from the published Annual Report and      Accounts for the year ended 30th September 2018 and do not constitute the statutory accounts for that year. The Annual Report and Accounts 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.

11th December 2018

For further information:

Alison Vincent

JPMorgan Funds Limited            

020 7742 4000

ENDS

A copy of the annual report will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM

The annual report will shortly be available on the Company's website at www.jpmasian.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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