Final Results

RNS Number : 4971U

JPMorgan Chinese Inv Tst PLC

02 December 2013

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN CHINESE INVESTMENT TRUST PLC

ANNOUNCEMENT OF FINAL RESULTS

The Directors of JPMorgan Chinese Investment Trust plc announce the Company's results for the year ended 30th September 2013.

Chairman's Statement

Performance

During the reporting period, the Company's return to Ordinary shareholders, which includes the final dividend of 1.6 pence paid in January 2013, increased by 16.5%, which was a further improvement on last year's increase of 7.9%. The Company's total return on net assets, which comprises the change in net asset value ('NAV') with the dividend reinvested, increased by 17.8%, therefore outperforming the Company's benchmark, the MSCI Golden Dragon Index, which increased by 10.7% over the same period.

Strategy

For the first time included in this year's Annual Report and Accounts you will find a detailed Strategic Report designed to inform and assess the Company's approach. The Board wishes to emphasise in addition to what is contained in the Report its belief in the range of excellent investment opportunities in the greater China region, its confidence in the distinctive JP Morgan China investment management group based in the key centres of Hong Kong, Taiwan and Shanghai, their perceptive bottom-up stock picking ability deploying gearing when desirable and the in-depth strength of their Hong Kong based risk-management, analytical and administrative back-up teams.

Outlook

The deliberations of the recent third Plenum of the Central Committee of the ruling party are over and details of the proposed reforms are beginning to emerge. Evoking the spirit of Deng Xiao Ping in 1978 China is to follow a policy of transformational growth with far reaching economic and systemic reforms forthcoming. While the state-owned sector will remain important, market forces and private capital will play a more decisive role in the allocation of resources. Improved government efficiency, the promotion of judicial independence, rationalisation of the tax system and the protection of farmers' land rights easing the sale of rural land should, in time, add considerably to the size of the consumer market in China. Although the overall Chinese economy can be expected to continue to slow down, a number of sectors especially those related to domestic consumption and environmental protection such as automobile, e-commerce, on-line entertainment, health care, logistics and clean energy remain promising for investors. Hong Kong, to include Macau, will benefit from some of these themes despite a slow down in its traditional property sector. Taiwan should continue to benefit from a recovery of the US economy as well as from further enhancement of cross-straits economic relations.

Revenue and Dividends

The revenue for the year, after taxation, was £1,241,000 (2012: £ 1,313,000). The revenue return per share, calculated on the average number of shares in issue, was 1.63 pence (2012: 1.69 pence).

The Board is recommending a dividend of 1.60 pence (2012: 1.60 pence) per share in respect of the financial year ended 30th September 2013 given the Company's return on its Revenue Account. Subject to shareholders' approval at the Annual General Meeting, this dividend will be paid on 3rd February 2014 to shareholders on the register at the close of business on 13th December 2013.

As previously stated, shareholders should note that the Company's objective remains that of long term capital growth and dividends will vary from year to year accordingly.

Gearing

In January 2013 the Company renewed its £20 million facility with Scotiabank for a further 364 day period on the same terms and pricing. The facility matures on 23rd January 2014 at which point the Board will consider another gearing facility.

During the year the Company's gearing ranged from 10% to 11% geared and, at the time of writing, was 11%. The current facility allows the Investment Managers the flexibility to manage the gearing tactically within a range set by the Board of 10% net cash to 15% geared.

Subscription Shares

The Subscription share rights lapsed at close of business on 29th May 2013 and, in accordance with the shareholder resolutions passed on 22nd January 2013, all outstanding Subscription shares were redesignated immediately into deferred shares and subsequently repurchased by the Company and cancelled. The UK Listing Authority suspended the listing of the Subscription shares from 7.30 a.m. on 16th May 2013 and the Financial Conduct Authority cancelled the Subscription shares from the Official List on 28th June 2013.

Share Issues and Repurchases

The Directors have authority to issue new Ordinary shares for cash and to repurchase shares in the market for cancellation or to hold in Treasury.

During the year, the Company has issued 46,107 new Ordinary shares following the exercise of Subscription shares for a total consideration of approximately £78,000.

The Company repurchased 1,158,201 shares during the year at prices below the prevailing net asset value per share and holds them in Treasury in accordance with the Board's policy. The Company will re-issue shares held in Treasury only at a premium to NAV.

The Board believes that its policy of share issuance and repurchases has helped to reduce discount volatility and recommends that the authorities be kept in place. Accordingly, it is seeking approval from shareholders to renew the share issue and repurchase authorities at the forthcoming Annual General Meeting.

Review of services provided by the Manager

During the year the Board carried out a thorough review of the investment management, secretarial and marketing services provided to the Company by the Manager, JPMorgan Asset Management (UK) Limited ('JPMAM'). Following this review, the Board has concluded that the continued appointment of the Manager on the terms agreed is in the interests of the shareholders as a whole.

The fees payable to the Manager comprise a fixed basic annual management fee of 1% of total assets per annum and a performance related fee of 15% of any outperformance of the NAV total return over the benchmark. The amount of the latter fee actually payable to the Manager is capped at 1% of the net asset value in any one year, with any excess being carried forward and either paid out (subject to the 1% cap) or absorbed by any underperformance in subsequent years.

The Company outperformed its benchmark in the financial year ended 30th September 2013 which gave rise to a positive performance fee of £1,612,000 earned by the Manager.

The Company's Ongoing Charges for the financial year, as a percentage of the average of the daily net assets during the year, were 1.46% before accounting for the performance fee payable and 2.42% after doing so.

Board of Directors

In July 2013, the Board through its Nomination and Remuneration Committee carried out the annual evaluation of the Directors, the Chairman, the Board itself and its committees. The evaluation was comprehensive and covered a range of topics including size and composition of the Board, Board information and processes, shareholder engagement and training and accountability, as well as the effectiveness of the Audit Committee, the Nomination and Remuneration Committee, the Chairman and the Directors. The report confirmed the efficacy of the Board.

As part of the evaluation process, the Board has considered succession planning. Although the Board agrees that the existing Board functions well, it is mindful of the fact that the Board will soon have three Directors with over nine years service on the Board. The Board has taken into account the ongoing requirements of the UK Corporate Governance Code, including the need to refresh its Board and Committees. As a result it has discussed a planned phased exit for the relevant Directors, ahead of the Company's next continuation vote in 2018, to allow an infusion of new blood at appropriate intervals.

In accordance with best practice under the UK Corporate Governance Code, all Directors will stand for reappointment at the forthcoming Annual General Meeting.

Alternative Investment Fund Managers Directive ('AIFMD' or the 'Directive')

The final regulations for the AIFMD have now been published and as we move towards compliance the Board has agreed in principle to appoint the Company's Manager, JPMAM, as the Alternative Investment Fund Manager, at no additional cost. The process of appointing a Depositary, a new requirement by the Directive, is also underway. The depositary will be responsible for overseeing the Company's custody and cash management operations. Further announcements will be made in due course.

Revised Reporting Requirements

Shareholders will note that there have been a number of changes in reporting requirements for companies with years beginning on or after 1st October 2012. In particular, there has been the addition of a Strategic Report and changes to the structure and voting in respect of the Directors' Remuneration Report.

The Strategic Report is designed to replace and enhance reporting previously included in the Business Review section of the Directors' Report. Its purpose is to inform members and help them assess how the Directors have performed their duty to promote the success of the Company during the year under review. There have also been consequential changes in the contents of the remainder of the Report.

Annual General Meeting

This year's Annual General Meeting will be held at Holborn Bars, 138-142 Holborn, London EC1N 2NQ on Monday, 27th January 2014 at 11.00 a.m. In addition to the formal proceedings, there will be a presentation by a representative of the investment management team, who will also be available to respond to questions on the Company's portfolio and investment strategy. I look forward to seeing as many of you as possible at the meeting. If you have any detailed questions, you may wish to raise these in advance with the Company Secretary. Shareholders who are unable to attend the Annual General Meeting in person are encouraged to use their proxy votes. Shareholders who hold their shares through CREST are able to lodge their proxy votes electronically.

William Knight

Chairman                                                                                                                                     2nd December 2013

Investment Managers' Report

Over the 12 month period ended 30th September 2013, the Company achieved a total return on net assets of +17.8%, outperforming the benchmark return of +10.7% by 7.1%. In aggregate, stock selection across all three markets was the major positive contributor, though country allocation also added to positive returns. The Company's performance was primarily driven by the holding in secular Chinese consumer names such as gaming stocks in Macau, as well as internet services and autos which were also among the top positive contributors. Stock selection in Taiwan technology was also favourable. The allocation to A-shares as well as the average gearing of 10.5% further added to returns over the year.

The new Chinese government has consistently reaffirmed this year their resolve to reform the economy in the face of a slowdown, which bodes well for the medium term but negatively in the near term for traditional, fixed asset investment-dependent industries. We remain underweight in the cyclical sectors such as energy and materials as China's growth profile shifts towards a focus on 'quality and sustainability' of growth, such as consumption. Meanwhile, we expect the Chinese consumer to stay resilient and remain overweight in consumption proxies, as well as having added to environmental and clean energy themes as China begins to address pollution issues.

China Review

Chinese equities rose in the fourth quarter of 2012 as risk premium came down on better than expected data as well as greater hopes for reforms that would spur on sustainable economic growth after the successful conclusion of the National People's Congress of China held in mid November 2012. The A-share market reacted slower, and the rally in A-shares only began in earnest in December.

However, post the euphoria in the fourth quarter of 2012, Chinese equities corrected in the first quarter 2013 after the strong rally, on concerns of incremental policy tightening in China and rising sovereign debt risks in Europe. Offshore-listed Chinese market (MSCI China) dropped 4.4% while domestic A-shares (CSI 300) dropped 1.1%. Most notably, an anticorruption campaign by the new leadership negatively affected consumption, resulting in weaker than expected retail sales in the first quarter 2013.

Chinese equities continued to fall over the following months, especially in June 2013, when global markets began to price in the possibility of a reduction in the pace of Federal Reserve quantitative easing at the same time that China both purposely engineered a credit crunch in the interbank funding markets and reported weak economic data. Offshore-listed Chinese market (MSCI China) and domestic A-shares (CSI 300) both dropped in tandem. Cyclicals such as financials, energy, commodities and industrials led the fall, while information technology and the more defensive sectors performed better. On the macro front, Industrial Production ('IP') in April and May remained weak, similar to first quarter levels, and Fixed Asset Investment ('FAI') followed a similar pattern.

Finally in the third quarter of 2013 Chinese equities - both offshore and A-shares - staged an impressive rebound underpinned by the government stimulus package post the June interbank liquidity squeeze, as well as the unexpected Fed announcement of a delay in tapering in September. Cyclicals such as financials, energy and commodities led, while defensives lagged. The Internet/technology sector continued to do well due to the sector's more sustainable growth outlook. The easing in monetary policy plus selected fiscal spending increases in infrastructure (to maintain minimum 7.5% GDP growth floor stated by PM Li Keqiang) have driven the rebound.

China Outlook

We expect macro growth to moderate after the third quarter's upside surprise and the government achieving its goal of maintaining minimum growth target. We do not expect a further sharp growth acceleration, due to structural hurdles such as still increasing Local Government Financing Vehicles ('LGFV') debts and corporate leverage. Rising property prices and recent series of land auctions further limit the potential for the government to cut interest rates. However, on the structural reform front, we expect the positive momentum to continue. So far the series of reform initiatives have re-rated the market and the recently launched Shanghai Free Trade Zone ('SHFTZ') is an important milestone and an experiment for further structural reforms.

Hong Kong Review

Like China, Hong Kong equities continued to move up in the fourth quarter of 2012 owing to continued loose liquidity conditions and improving economic momentum, although it no longer outperformed the region partially due to unprecedented property tightening measures. Macau shares continued their recent rally as growth figures continued to strengthen during the quarter, and the market initially shrugged off broader concerns about potential anti-corruption measures in China affecting high-roller volumes.

2013 also began with a continuation of the year-end rally in Hong Kong, but most of those gains were eroded due to the renewed concerns over the Euro-zone crisis and concerns over both monetary and property tightening, coupled with anti-corruption efforts which weighed on the market in China. Macau shares proved to be volatile but March gaming data came in at record levels with strong year-over-year growth.

Going into the summer months we saw a continuation of the market rally as macro and geopolitical concerns dissipated. However, the US Federal Reserve's comment over tapering of quantitative easing resulted in a global sell-off in risk assets. Hong Kong equities were not spared. The property sector in particular remained under pressure due to concerns over the negative price impact of rising rates and the continued policy overhang as the government intimated further measures if Hong Kong property prices were to go up.

Finally in the third quarter of 2013, Hong Kong equities enjoyed a relief rally from the delay in 'tapering' of quantitative easing by the US Federal Reserve. Higher beta names performed the best. Macau gaming stocks again staged a strong quarter on the back of continued solid revenue growth and expectations for strong earnings growth. The property sector enjoyed a brief respite due to the delay in tapering but price pressures remain as primary launches are only able to generate volumes by lowering the premium to secondary units.

Hong Kong Outlook

Given the rate sensitivity and open nature of Hong Kong equities, we expect substantial volatility due to continued US political dramas and forthcoming tapering decisions. On the property front, healthier primary sales have been achieved on the back of reasonable pricing of small units requiring smaller lump sums. As property developers run out of small unit inventories, they will be testing the market with larger units that could prove more difficult to sell given government restrictions and market sentiment. Growth momentum in Macau remains strong, although the base of comparison does get more difficult by the end of the year. Given the re-rating of the shares, the market will be focusing on the ability for the companies to sustain growth into next year with no room for increase in the number of gaming tables (as mandated by the Macau government).

Taiwan Review

Unlike Hong Kong and China in the last three months of 2012, the TWSE Index edged down slightly finishing the quarter down 0.2% in TWD. The Taiwanese market fell initially driven by disappointment in sales outlook for both Apple and Windows 8 related products, and only managed to claw back some gains later in the quarter.

The Taiex remained largely flat in USD terms in the first quarter of 2013. However, with an improving demand/supply situation, commodity technology sectors like DRAM, TFT and LED performed well. Stocks within the low-end smart+phone supply chain also continued to perform, though concerns over China's cooling measures have weakened stocks in the steel, machinery, cement and property sectors over the quarter.

Despite the possibility of the Fed tapering its quantitative easing programme and the credit crunch in China, the TWSE closed up over the second quarter in 2013. Taiwan's parliament finally revised its capital gains tax, buoying market sentiment. Taiwan and mainland China concluded a cross-Strait Trade in Services Agreement on 21st June in Shanghai, introducing a new era in bilateral business ties and strengthening Taiwan's bid for greater economic integration in the region. The pact is expected to fast track discussions on other follow-up issues, including agreements on commodity trade, dispute settlement and double taxation.

In the last quarter of the reporting period the Taiwan stock market posted positive returns, but underperformed both Hong Kong and China. Manufacturing activity improved as exports rebounded driven by demand from developed markets. However, there were quite a few policy announcements, including a rise in electricity prices and minimum wage as well as domestic political turmoil, which capped the index upside.

Taiwan Outlook

The Taiwan market could experience some near term volatility caused by market noise such as domestic political in-fighting within the ruling KMT party and the pending Fed QE tapering. The sell-off of ultra high definition ('UHD') TV and low-price smartphones will be crucial to various Taiwan technology subsectors. Hardware and component stocks may regain traction, post the good sell through in iPhone 5S/5C and the street is widely anticipating strong revenue momentum into the fourth quarter backed by iPad and iPad mini shipment ramp. Overall, fundamentals remain strong, valuations are still modest and there is ample liquidity. Any stabilisation of China's economic growth will benefit the Taiwanese equities market given the high exposure of Taiwan non-tech to China.

Greater China Outlook

With China's economic indicators signalling a continued stabilisation in the economy and a continued benign liquidity outlook globally (albeit one critically reliant on central banks' quantitative easing), we expect markets to continue to stay supported going into the year-end. Valuations are generally undemanding, and we believe the Chinese government's determination to maintain stable growth will pave the way for further structural reforms over the medium to long-term which should support a relatively healthy outlook.

Howard Wang

Emerson Yip

Shumin Huang

William Tong

Investment Managers                                                                                                              2nd December 2013

Principal Risks

Investors should note that there can be significant economic and political risks inherent in investing in emerging economies. As such, the Greater China markets can exhibit more volatility than developed markets and this should be taken into consideration when evaluating the suitability of the Company as a potential investment.

The Board has drawn up a risk matrix, which identifies the key risks to the Company. These key risks fall broadly under the following categories:

•   Investment Underperformance: An inappropriate investment decision may lead to underperformance against 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 through its investment restrictions and guidelines which are monitored and reported on by the Manager. JPMAM provides the Directors with timely and accurate management information, including performance data and attribution analyses, revenue estimates, transaction reports and shareholder analyses. The Board monitors the implementation and results of the investment process with the investment manager, who attends all Board meetings, and review data which show statistical measures of the Company's risk profile. The investment managers employ the Company's gearing within a strategic range set by the Board. The Board holds an annual strategy meeting in addition to at least four Board meetings.

•   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.

•   Discount: A disproportionate widening of the discount relative to the Company's peers could result in a loss of value for Shareholders. In order to manage the Company's discount, which can be volatile, the Company operates a share repurchase programme.

•   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 JPMAM. The Board monitors the implementation and results of the investment process with the Manager.

•   Political and Economic: Changes in financial or tax legislation, including in the European Union, 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 administrative risks, such as the imposition of restrictions on the free movement of capital. These risks are discussed by the Board on a regular basis.

•   Accounting, Legal and Regulatory: In order to qualify as an investment trust, the Company must comply with Section 1158 of the Corporation Tax Act 2010 ('Section 1158'). Details of the Company's approval are given under "Structure of the Company" in the Strategic Report of the Annual Report and Accounts. Were the Company to breach Section 1158, it may lose investment trust status and, as a consequence, gains within the Company's portfolio would be subject to Capital Gains Tax. The Section 1158 qualification criteria are continually monitored by JPMAM and the results reported to the Board each month. The Company must also comply with the provisions of the Companies Act 2006 and, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules and Disclosure and Transparency Rules ('DTRs'). A breach of the Companies Act 2006 could result in the Company and/or the Directors being fined or the subject of criminal proceedings. Breach of the UKLA Listing Rules or DTRs could result in the Company's shares being suspended from listing which in turn would breach Section 1158. The Board relies on the services of its Company Secretary, JPMAM, and its professional advisers to ensure compliance with the Companies Act 2006, the UKLA Listing Rules and DTRs.

•   Corporate Governance and Shareholder Relations: Details of the Company's compliance with Corporate Governance best practice, including information on relations with shareholders, are set out in the Corporate Governance statement of the Annual Report and Accounts.

•   Operational: Disruption to, or failure of, JPMAM'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 JPMAM and its associates and the key elements designed to provide effective internal control are included with the Risk Management and Internal Control section of the Corporate Governance statement.

•   Going concern: Pursuant to the Sharman Report, Boards are now advised to consider going concern as a potential risk, whether or not there is an apparent issue arising in relation thereto. Going concern is considered rigorously on an ongoing basis and the Board's statement on going concern is detailed in the Annual Report and Accounts.

•   Financial: The financial risks faced by the Company include market risk, liquidity risk and credit risk. Further details are disclosed in note 22 of the Annual Report and Accounts.

Related Parties Transactions

During the financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company during the year.

Directors' Responsibilities

The Directors each confirm to the best of their knowledge that:

a)         the financial statements, which have been prepared in accordance with applicable United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and net return or loss of the Company; and

b)         the Annual Report, to be published shortly, 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 they face.

For and on behalf of the Board

William Knight
Chairman                                                                                                                                     2nd December 2013

Income Statement

for the year ended 30th September 2013

		2013			2012
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair value
through profit or loss		-	19,697	19,697	-	12,133	12,133
Net foreign currency gains		-	65	65	-	244	244
Income from investments		3,620	-	3,620	3,431	-	3,431
Gross return		3,620	19,762	23,382	3,431	12,377	15,808
Management fee		(1,334)	-	(1,334)	(1,095)	-	(1,095)
Performance fee		-	(1,467)	(1,467)	-	-	-
Other administrative expenses		(516)	-	(516)	(451)	-	(451)
Net return on ordinary activities
before  finance costs and taxation		1,770	18,295	20,065	1,885	12,377	14,262
Finance costs		(223)	-	(223)	(214)	-	(214)
Net return on ordinary activities
before  taxation		1,547	18,295	19,842	1,671	12,377	14,048
Taxation		(306)	-	(306)	(358)	-	(358)
Net return on ordinary activities
after taxation		1,241	18,295	19,536	1,313	12,377	13,690
Return per Ordinary share (Note 3)
- Undiluted		1.63p	23.99p	25.62p	1.69p	15.90p	17.59p
- Diluted		1.63p	23.99p	25.62p	1.69p	15.90p	17.59p

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. The Total column represents all the information that is required to be disclosed in a Statement of Total Recognised Gains and Losses ('STRGL'). For this reason a STRGL has not been presented.

Reconciliation of Movements in Shareholders' Funds

	Called up		Exercised	Capital
	share	Share	warrant	redemption	Other	Capital	Revenue
	capital	premium	reserve	reserve	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2011	19,594	13,123	3	581	37,392	28,867	1,510	101,070
Issue of Ordinary shares on exercise
of Subscription shares	1	6	-	-	-	-	-	7
Repurchase of Ordinary shares into
Treasury	-	-	-	-	-	(1,535)	-	(1,535)
Net return from ordinary activities	-	-	-	-	-	12,377	1,313	13,690
Dividends appropriated in the year	-	-	-	-	-	-	(1,012)	(1,012)
At 30th September 2012	19,595	13,129	3	581	37,392	39,709	1,811	112,220
Issue of Ordinary shares on exercise
of Subscription shares	12	66	-	-	-	-	-	78
Repurchase of Ordinary shares into
Treasury	-	-	-	-	-	(1,691)	-	(1,691)
Cancellation of Subscription shares	(126)	126	-	-	-	-	-	-
Net return from ordinary activities	-	-	-	-	-	18,295	1,241	19,536
Dividends appropriated in the year	-	-	-	-	-	-	(1,225)	(1,225)
At 30th September 2013	19,481	13,321	3	581	37,392	56,313	1,827	128,918

Balance Sheet

at 30th September 2013

		2013	2012
		£'000	£'000
Fixed assets
Investments held at fair value through profit or loss		144,280	125,194
Current assets
Debtors		1,086	138
Cash and short term deposits		2,603	691
		3,689	829
Creditors: amounts falling due within one year		(18,796)	(13,803)
Net current liabilities		(15,107)	(12,974)
Total assets less current liabilities		129,173	112,220
Provision for liabilities and charges
Performance fee		(255)	-
Net assets		128,918	112,220
Capital and reserves
Called up share capital		19,481	19,595
Share premium		13,321	13,129
Exercised warrant reserve		3	3
Capital redemption reserve		581	581
Other reserve		37,392	37,392
Capital reserves		56,313	39,709
Revenue reserve		1,827	1,811
Total equity shareholders' funds		128,918	112,220
Net asset value per Ordinary share (Note 4)
- Undiluted		170.7p	146.4p
- Diluted		170.7p	146.4p

Company registration number: 02853893.

Cash Flow Statement

for the year ended 30th September 2013

		2013	2012
		£'000	£'000
Net cash inflow from operating activities		1,100	1,256
Returns on investments and servicing of finance
Interest paid		(219)	(215)
Net cash outflow from returns on investments and servicing of finance		(219)	(215)
Taxation
Taxation recovered		67	-
Capital expenditure and financial investment
Purchases of investments		(109,126)	(110,901)
Sales of investments		109,532	105,834
Other capital charges		(59)	(96)
Net cash inflow/(outflow) from capital expenditure and
financial investment		347	(5,163)
Dividend paid		(1,225)	(1,012)
Net cash inflow/(outflow) before financing		70	(5,134)
Financing
Net drawdown of short term loan		4,916	3,239
Repurchase of Ordinary shares into Treasury		(3,146)	(80)
Issue of Ordinary shares on exercise of Subscription shares		78	7
Net cash inflow from financing		1,848	3,166
Net increase/(decrease) in cash for the year		1,918	(1,968)

Notes to the Accounts

for the year ended 30th September 2013

1.  Accounting policies

     Basis of accounting

     The accounts are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the AIC in January 2009.

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

     The accounts have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of investments at fair value through profit or loss.

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

2.  Dividends

(a)     Dividends paid and proposed

	2013	2012
	£'000	£'000
2012 Final dividend paid of 1.6p (2011: 1.3p)	1,225	1,012
Final dividend proposed of 1.6p (2012: 1.6p)1	1,209	1,226

     ¹Based on Ordinary shares in issue of 75,531,426 (2012: 76,643,520).

     The final dividend proposed in respect of the year ended 30th September 2012 amounted to £1,226,000. However, the actual payment amounted to £1,225,000 due to share repurchases into Treasury after the Balance Sheet date, but prior to the share register Record date.

     The final dividend proposed in respect of the year ended 30th September 2013 is subject to shareholder approval at the forthcoming Annual General Meeting. In accordance with the accounting policy of the Company, this dividend will be reflected in the accounts for the year ending 30th September 2014.

(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, as follows:

	2013	2012
	£'000	£'000
Final dividend proposed of 1.6p (2012: 1.6p)	1,209	1,226

     The revenue available for distribution by way of dividend for the year is £1,241,000 (2012: £1,313,000).

3.  Return per Ordinary share

     Undiluted

     The revenue return per share is based on the revenue return attributable to the Ordinary shares of £1,241,000 (2012: £1,313,000) and on the weighted average number of shares in issue during the year of 76,255,930 (2012: 77,848,220) excluding shares held in Treasury.

     The capital gain per share is based on the capital gain attributable to the Ordinary shares of £18,295,000 (2012: £12,377,000) and on the weighted average number of shares in issue during the year of 76,255,930 (2012: 77,848,220) excluding shares held in Treasury.

     The total gain per share is based on the total gain attributable to the Ordinary shares of £19,536,000 (2012: £13,690,000) and on the weighted average number of shares in issue during the year of 76,255,930 (2012: 77,848,220) excluding shares held in Treasury.

Diluted

     The diluted return per Ordinary share represents the return on ordinary activities after taxation, divided by the weighted average number of Ordinary shares in issue during the period in accordance with the requirement of Financial Reporting Standards 22 'Earnings per share'.

     To the extent not exercised by the holders of Subscription shares, the Subscription share rights for 12,683,443 shares lapsed at close of business on 29th May 2013 and, in accordance with the shareholder resolutions passed on 22nd January 2013, these Subscription shares got converted immediately into deferred shares and were automatically repurchased by the Company for a nominal amount and cancelled. There was no dilution of the return per Ordinary share in respect of the exercise rights attaching to the Subscription shares (year ended 30th September 2012: no dilution).

4.  Net asset value per Ordinary share

     The net asset value per share is based on the net assets attributable to the Ordinary shareholders of £128,918,000 (2012: £112,220,000) and on the 75,531,426 (2012: 76,643,520) Ordinary shares in issue at the year end excluding 2,383,539 (2012: 1,225,338) shares held in Treasury.

5. Status of results announcement

2012 Financial Information

The figures and financial information for 2012 are extracted from the published Annual Report and Accounts for the year ended 30th September 2012 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.

2013 Financial Information

The figures and financial information for 2013 are extracted from the Annual Report and Accounts for the year ended 30th September 2013 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.

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.

JPMORGAN ASSET MANAGEMENT (UK) LIMITED

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.jpmchinese.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 ASSET MANAGEMENT (UK) LIMITED

 

END

 

 

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