Final Results
Summary by AI BETAClose X
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN EMERGING MARKETS INVESTMENT TRUST PLC
FINAL RESULTS FOR THE YEAR ENDED 30TH JUNE 2025
Legal Entity Identifier: 5493001VPQDYH1SSSR77
Information disclosed in accordance with the DTR 4.1.3
HIGHLIGHTS
JPMorgan Emerging Markets Investment Trust plc (JMG or the 'Company') announces its full year results for the 12-months ended 30th June 2025.
· JMG achieved a share price total return of +9.8%, reflecting a significant narrowing of the discount. The NAV total return was +4.9% compared with +6.3% for the MSCI Emerging Markets Index (the 'Benchmark').
· For the ten years ended 30th June 2025, the share price total return was +128.0%. The NAV total return was +115.9%. Both significantly outperformed the Benchmark return of +83.7%.
· Final dividend of 1.45p per share, taking the total dividend to 2.10p, an increase of 10.5% on last year.
· The discount to NAV narrowed from 12.0% as at 30th June 2024 to 8.2% at year end.
· During the year, JMG repurchased 97,671,880 shares (8.8% of shares in issue at the start of the year) at an average discount of 12.2%, increasing NAV per share by 1.4p (1.1%).
· JMG's ongoing charges ratio remains highly competitive at 0.79%, unchanged from the prior year and among the lowest in its peer group.
New enhanced dividend policy
· To enhance JMG's position as an attractive investment to both new and existing shareholders, the Board has proposed adopting a new dividend policy. The new policy aims to pay annual dividends equal to 4% of the Company's Net Asset Value (NAV) at the end of the preceding financial year, distributed in four equal quarterly instalments.
· The enhanced dividend policy will not alter JMG's investment mandate or strategy.
· The new policy will take effect from 7th November 2025, subject to shareholder approval at the AGM, and the Company will be renamed JPMorgan Emerging Markets Growth & Income plc (JMGI). This combination of high-quality growth and income will further differentiate the Company from other emerging market offerings.
· The first three quarterly payments (1% each) will be made in November 2025, February 2026, and May 2026, based on the NAV as at 30th June 2025. Thereafter, quarterly payments will be based on the NAV as at 30th June of each year with the first payment made in August.
Aidan Lisser, the Chair of JMG, commented:
"I'm pleased to report that JMG grew by 9.8% in terms of share price total return - materially ahead of our benchmark index which returned 6.3% over the same period. This was due to narrowing of the share price discount, particularly in the latter part of the year. JMG also delivered a positive total return on net assets of 4.9%, but it is disappointing that our full year result underperformed the index, especially after a solid first half year of outperformance."
'To enhance JMG's appeal to new as well as existing shareholders, the Board is proposing a new dividend policy which we believe to be in the best interests of all shareholders. The Board reviewed the investment trust market and the relative attractiveness of alternative offerings, and we believe that whilst size and scale remain important, it is also necessary to be distinctive and to utilise the advantages offered by the closed-end structure.'
'We recognise that many investors increasingly seek both reliable income and capital growth from their investments. This need is particularly strong among retail investors and they represent significant potential demand for investment trusts. The Board has concluded that attracting their investment can help improve the demand for JMG shares and reduce the discount over time.'
'Despite ongoing global uncertainty, there are several reasons why we believe JMG continues to be an attractive prospect for investors. The environment for emerging markets remains positive with higher GDP rates vs developed economies, younger populations and cheaper valuations than the rest of the world.'
Portfolio Managers, Austin Forey and John Citron, commented:
'A weaker dollar, the continued rise of Chinese manufacturing, the realignment of global trade patterns: these developments continue to influence emerging markets, and go some way to explaining the better returns, seen from the asset class this year. That more positive backdrop helps, while our efforts as managers of your portfolio remain entirely focused on producing the best outcomes possible in exchange for the risks we take. We continue to believe that a thorough approach, consistently applied, can help achieve that goal in the future, as it has in the past.'
CHAIR'S STATEMENT
Dear Shareholders,
I am pleased to report on the performance and activities of the Company for the financial year ended 30th June 2025. As always, I look forward to further discussion at our Annual General Meeting ('AGM') in November, arrangements for which are included below.
Performance overview and final dividend
If there is a single word to aptly describe the year under review, then 'uncertainty' would be a strong contender. Policy changes related to tariffs and import taxes in the US, following the presidential election in November, created volatility across markets. The Bloomberg Trade Policy Uncertainty Index remains higher than at any time in the last ten years. This environment impacted foreign exchange markets and from the perspective of emerging markets, we have seen a welcome weakening of the US dollar. Emerging markets have also begun to benefit from improved investor sentiment, as a result of allocations away from the US.
JMG grew by 9.8% in terms of share price total return - materially ahead of our Benchmark index which returned +6.3% over the same period. This was due to narrowing of the share price discount, particularly in the latter part of the year, which I discuss further below.
JMG also delivered a positive total return on net assets of 4.9%, but it is disappointing that our full year result underperformed the index, especially after a solid first half year of outperformance. Two primary factors explain this: the portfolio's above index exposure to export-oriented businesses (eg Globant and Tata Consultancy Services) which were impacted by the onset of tariff concerns in the second half of the year; and our significant underweight to Korea, where the government's shareholder value optimisation programme and the presidential election result in June led to a very sharp rally with the market rising by more than 30% in a matter of weeks.
In other areas the portfolio performed well, with highlights including MercadoLibre, a Latin American e-commerce platform, BBVA a Spanish bank with an extensive emerging markets business and the Hong Kong Exchanges & Clearing. In addition, several exciting new names have been added to the portfolio.
The Portfolio Managers provide commentary on all these topics and more in their illuminating report beginning on page 14 of the 2025 Annual Report. I do encourage you to read it in detail.
For the financial year ended 30th June 2025, the Board will propose a final dividend of 1.45 pence per share which, when added to the interim dividend of 0.65 pence paid in April 2025, amounts to a total dividend of 2.10 pence per share for the full year. This represents a 10.5% increase on the total dividend of 1.90 pence paid in respect of the 2024 financial year. Subject to approval by shareholders at the forthcoming AGM, the final dividend will be paid on 14th November 2025 to shareholders on the register at the close of business on 10th October 2025 (with ex dividend date of 9th October 2025).
Strategic priorities
It is the job of the Board to navigate the Company, on behalf of shareholders, through whatever conditions may prevail. To do this effectively, during the year the Board reaffirmed three strategic priorities:
1. Strengthen investment performance
The Board is resolved to continue to scrutinise investment performance closely. In addition to detailed portfolio reporting and analysis, we engage in rigorous reviews with the Portfolio Managers on a quarterly basis. Following the deep dive review undertaken last year, we are encouraged to see the measures put in place are starting to have an impact, including enhanced research resources in the key markets of China and India.
Despite the disappointing return on net assets outlined above, we remain satisfied that the reasons for this underperformance are well understood. While recent years have been difficult for active managers with a focus on duration and growth and a quality bias in terms of portfolio companies, we are confident that JMG's fundamental investment process remains robust and that J.P. Morgan's experience of investing in emerging market equities, combined with the extensive resources it has devoted to it, will deliver long-term outperformance for shareholders.
As shareholders, you can be assured that our Portfolio Managers will continue to focus on quality companies and remain true to the investment philosophy, as previously stated - 'to take a long-term view, find great businesses, not overpay and hold them for as long as possible'.
2. Proactive discount management
During the year, the Board focused considerable time and effort to manage the discount to net asset value (NAV). This involved discussion with our brokers and other advisors and with a number of shareholders to ensure we have a range of opinions and inputs. Following our strategy review in the second half of the financial year, we authorised a substantial increase in the use of share buybacks. This was due to our dissatisfaction with the discount level earlier in the year, despite consistent buying back of shares at that time.
I am happy to report that this action, alongside improved sentiment for emerging markets, did lead to a reduced discount. JMG began the financial year on a discount of 12.0% and ended the year at 8.2%. At the time of writing this statement the discount was 9.8%. The Board believes that the use of share buybacks remains an effective tool to manage the absolute level and volatility of the share price discount. It will continue to authorise meaningful purchases when required, as long as it judges this to be in the best interests of all shareholders.
During the financial year, the Company bought back 97,671,880 shares into Treasury for a total cost of £107,026,000 at an average discount of 12.2%. It did not issue any shares. These purchases were value accretive for shareholders, increasing the NAV per share by 1.4 pence or 1.1% over the year, and underscoring your Board's strong belief that the shares offer intrinsic value at current levels.
As stated in our market update in June, buybacks are one of several mechanisms used to manage the discount. A continuation vote will take place at the AGM in 2026, as it does every three years. In addition, a conditional tender offer exists for 25% of the shares, based on performance against the Benchmark over the five-year period to 30th June 2029, subject to shareholder approval of the tender offer at the relevant time. Shareholders can therefore be confident that there are several measures in place to protect their interests.
3. Differentiation including proposed new dividend policy
During the year, in order to enhance JMG's position as an attractive investment to new as well as existing shareholders, the Board has systematically reviewed the investment trust market and the relative attractiveness of alternative product offerings. It believes that whilst size and scale remain important, it is also necessary to be distinctive and to utilise the advantages offered by the investment trust's closed-end structure. It also believes that the continued development of a significant and sustained cohort of retail investors is important to JMG's future success.
As part of this assessment the Board evaluated the various options available for the investment trust structure. It recognises that many investors increasingly seek both reliable income and capital growth from their investments. This need is particularly strong among retail investors and they represent significant potential demand for investment trusts. The Board has concluded that attracting their investment can help improve the demand for JMG shares and reduce the discount over time.
The Board is therefore proposing a new enhanced dividend policy with effect from 7th November 2025, immediately after the Annual General Meeting and believes this change to be in the best interests of all shareholders.
Under the proposed enhanced dividend policy, annual dividends will be paid at 4% of Net Asset Value (NAV) as at the end of the preceding financial year, payable in four equal quarterly instalments. To transition to this approach, the first three quarterly payments of 1% each will be made in November 2025, February 2026 and May 2026, based on the NAV as at 30th June 2025 (i.e. 1.261 pence per share each). Thereafter, 4% of 30th June 2026 NAV will be paid as dividends via equal quarterly instalments in August 2026, November 2026, February 2027 and May 2027.
If required, any shortfall on the dividend income received from the portfolio's underlying investments will be paid out of realised capital reserves. At the forthcoming AGM the Board will propose a special resolution to amend the Company's Articles of Association in order to enable JMG to distribute capital as income to allow for the long-term implementation of the new dividend policy.
These changes are further detailed on page 59 and the in Appendix on page 112 of the 2025 Annual Report.
It is important to emphasise that this enhanced dividend policy will not alter JMG's investment mandate or strategy.
In line with this new dividend policy, the Company will change its name and ticker and will in future be called JPMorgan Emerging Markets Growth & Income plc (JMGI). Conditional on shareholder approval of the AGM resolution to amend the Company's Articles of Association as explained above, the Directors will effect the name and ticker change shortly thereafter. This combination of high-quality growth and income will further differentiate JMG from other emerging market offerings.
Other board and governance matters
Board governance
As previously reported, Andrew Page retired from the Board at the conclusion of the 2024 AGM and Helena Coles succeeded him as Senior Independent Director ('SID') and Chair of the Remuneration Committee.
The Board regularly assesses its composition and succession plans, considering the need to refresh its membership while ensuring continuity of experience. To maintain an appropriate balance of skills, experience and knowledge, the Board, guided by the Nomination Committee, undertook a formal recruitment process for a new Non-executive Director towards the end of 2024, leading to the appointment of Dean Buckley with effect from 2nd January 2025. Dean is a highly experienced investment professional who has held senior positions in several asset management firms. Dean is currently Non-executive Chair of two investment trusts, Alliance Witan plc and Fidelity Special Values plc.
Recognising the importance of diversity in the boardroom, the Board continues to meet the FCA Listing Rule targets for diversity and inclusion. More information can be found on page 40 of the 2025 Annual Report.
The Board endorses the annual re-election of all Directors, as recommended by the Association of Investment Companies (AIC) Code of Corporate Governance. Consequently, all Directors will stand for re-election/election at the upcoming AGM.
During the year, the Nomination Committee conducted a comprehensive formal evaluation of the Board and Chair's performance, facilitated by Lintstock, an independent firm. I am pleased to report that the evaluation results highlighted improvements in a number of areas since the last evaluation, while also emphasising the importance of maintaining a strong focus on investment performance. Further details are available on pages 60 and 61 of the 2025 Annual Report.
Promoting JMG and engaging with shareholders
The Board remains committed to engaging with current shareholders and attracting new investors, including individual investors. Our online advertising campaigns, along with participation in relevant podcasts and video interviews are part of this initiative, and throughout the year, the Company has featured in various articles in both mainstream and specialist media. We have supported the AIC's call for changes to improve voting access for retail shareholders and are pleased to see the government's commitment to implementing a Bill of Shareholder Rights.
JMG actively engages in investor relations and marketing efforts targeting wealth managers, institutions, and other professional investors. During the year, the Manager held meetings and regular calls with shareholders, including webinars, and provided portfolio and market updates on JMG's website.
Our website, www.jpmemergingmarkets.co.uk, offers valuable information, including videos and sponsored research. We encourage both existing and potential shareholders to subscribe to our regular email updates for topical news, insights, and the latest performance information. You can subscribe via the website at https://tinyurl.com/JMG-Sign-Up or by scanning the QR code on page 2 of the 2025 Annual Report.
Shareholders wishing to communicate directly with the Board can do so by contacting the Company Secretary at jpmam.investment.trusts@jpmorgan.com.
Costs, notice periods and Manager
The Board continues to closely monitor JMG's cost base. The Company's Ongoing Charges Ratio ('OCR') for the year under review was 0.79%. JMG remains one of the most competitively priced actively managed emerging markets funds available to UK investors in closed-ended form.
With effect from 1st July 2025 we have negotiated a reduction in the Manager's notice period under the Investment Management Agreement, from one year to six months for both sides, in line with good governance.
Under the remit of the Management Engagement Committee, the Board has evaluated the Manager's performance and fee arrangements. Considering the long-term performance record and all other relevant factors, including additional services provided to JMG and its shareholders, the Board remains confident that JPMorgan Funds Limited (JPMF) should continue as Manager, in alignment with the best interests of shareholders.
Contracts for Difference (CFDs)
At the forthcoming AGM, the Board is proposing an update to the investment policy to amend the current investment restriction, so that CFDs (see glossary of terms on page 115 of the 2025 Annual Report), a form of trading instrument, can be used by the Portfolio Managers. This will provide increased flexibility to more efficiently construct JMG's portfolio and facilitate better cash management. CFDs may also be used for potential gearing in the future, subject to limits, should the Portfolio Managers consider it appropriate. The proposed changes are set out in full in the Appendix to the Notice of AGM on page 112 of the 2025 Annual Report, with the amendments highlighted for ease of reference. The revised investment restrictions, if approved by shareholders at the AGM, will come into effect from 7th November 2025.
AGM and required resolutions
JMG's 34th AGM will be held at 60 Victoria Embankment, London EC4Y 0JP on 7th November 2025 at 2.30 p.m.
Portfolio Managers Austin Forey and John Citron will give a presentation to shareholders on recent performance, portfolio changes and their views on the outlook for emerging markets. The meeting will be followed by afternoon tea, which will provide shareholders with an opportunity to meet the Directors and the Portfolio Managers. Shareholders wishing to follow the AGM remotely will be able to view it live and ask questions (but not vote) via a weblink. Further details about the AGM are provided on page 117 of the 2025 Annual Report.
Outlook
Despite ongoing global uncertainty, there are several reasons why we believe JMG continues to be an attractive prospect for investors. First, emerging markets technology companies are underwriting the global AI revolution, and the technology sector is the largest in JMG's portfolio, accounting for 32.7%. Second, our overweight exposure to financials and consumer stocks should enable the portfolio to take advantage of a weaker dollar, enabling lower interest rates in emerging economies and a boost to consumer spending on goods and services. Last but not least, the portfolio is now as attractively valued, in terms of the price earnings multiple against the Benchmark, as it has been at any point in the last decade and that itself bodes well for the future.
Meanwhile the environment for emerging markets remains positive with higher GDP rates vs developed economies, younger populations and cheaper valuations than the rest of the world. To quote a recent Financial Times article - 'for the first time in years the scales look set to tip towards emerging markets…'
In closing, the Board would like to thank you for your continued support and will continue to ensure that shareholders' interests are central to the Company's culture and strategy.
Aidan Lisser
Chair 29th September 2025
PORTFOLIO MANAGERS' REPORT
"Among the many things that have mattered in emerging markets over the last year we could list American trade policy and tariffs, the weakening of the US dollar, the growing prominence of artificial intelligence and emerging markets' key position in the supply chain for this, China's real estate woes combined with rising export competitiveness, and the Korean government's move to emulate Japan and improve shareholder value in the corporate sector. The last of these was the biggest detractor as far as our investment performance over the year was concerned, while technology hardware, especially in Taiwan, was the biggest single positive."
Purpose and approach
JMG's purpose remains simple, and unchanged: it is to achieve good investment outcomes for its shareholders. The manner in which we, as the Company's investment managers, pursue this objective should also be clearly consistent over time, while constantly adapting to the changing investment landscape in which we operate. The core of our approach remains the pursuit of those exceptional companies which compound their intrinsic value over many years, often thought of as a pursuit of high-quality businesses. It's important to stress that this focus on specific characteristics in the investments we seek is not an irrational bias or whim, it's the deliberate pursuit of the best possible investments, defined as those which produce the highest returns for the risks taken by those who own them. The power of compounding, when successfully achieved, produces outcomes that hugely outstrip all others, which is why we make it the central focus of our process.
It is also worth saying that while many equate the activity of investing with transacting, we put equal if not greater stress on ownership as an activity in its own right. Owning an equity, especially if embarked on with the intention of owning it for a long time, implies a process of engagement which is a two-way process: we do not simply want to hear from the companies in which your portfolio is invested, we also want to speak to them on your behalf, to give them our feedback and encourage them to act in all ways at all times with the interests of all shareholders in mind. More details on our engagement, and a wider assessment of sustainability issues, can be found in the separate section devoted to this subject.
Investment results
The year to 30th June 2025 saw reasonable positive returns from emerging markets as a whole, though the strength of sterling weighed somewhat on the outcome for UK-based investors. The total return from our Benchmark index for your Company's financial year was +6.3% in sterling terms, while the return from the Company's portfolio was +4.9%. The total return from JMG's share price, however, was +9.8%, ahead of the index return by a good margin. As managers of the investment portfolio, we can take no credit for the share price outcome; we are responsible for the value of the portfolio, but the share price is set by the market, and was undoubtedly helped over the last year by the Board's energetic efforts to narrow the discount to net asset value at which the Company's shares traded.
After many years of managing JMG's investment portfolio, we are keenly aware that the last few years have been one of the most challenging periods for investment results since the Company was established in 1991. We are not satisfied with recent results, and the Board rightly challenges us to explain what we are doing to improve them. We could write about changing market conditions, about the shift from 'growth' to 'value', about the rise of political risk as a factor in market outcomes, but this would be to excuse our mistakes. Getting things wrong is an unavoidable part of investing, but in the last few years our mistakes have dragged on performance more than usual, and so our focus as we look forwards must be to avoid that in the future. We will explain below why the portfolio's current characteristics make us more optimistic that this will be the case.
The year and the portfolio
Life is never dull in emerging markets, but the last year has been unusual for the amount of politically-driven volatility in markets. On top of that, currencies have played a larger than usual role in overall market returns, reflective perhaps of a potential turning point in some long cycles that have driven the world's capital markets for many years. Among the many things that have mattered in emerging markets over the last year we could list American trade policy and tariffs, the weakening of the US dollar, the growing prominence of artificial intelligence and emerging markets' key position in the supply chain for this, China's real estate woes combined with rising export competitiveness, and the Korean government's move to emulate Japan and improve shareholder value in the corporate sector. The last of these was the biggest detractor as far as our investment performance over the year was concerned, while technology hardware, especially in Taiwan, was the biggest single positive. Rather than comment market by market, this report will take some of the most important themes and try to connect them to actions taken in the portfolio, before reflecting on what the portfolio looks like today, and what that might imply for the future.
Politics
Where to begin? The arrival of a new administration in the USA has upended much of the received wisdom about how the world economy works. For several decades the liberalisation of emerging economies, and the globalisation of industries driven by the quest for efficiency, led the US to run persistent trade deficits, while trade surpluses from those exporting to the US were recycled into US government bonds. Thus America has been able to borrow to consume, while others, especially in Asia, save to finance this. It's easy to see why one might want to change this status quo, though perhaps less obvious when you consider that the biggest beneficiary of this economic model has been the US consumer; China's over-investment and excess savings are simply the other side of the coin to America's over-consumption. Tariffs and an apparent desire to eliminate trade imbalances are producing several effects, among them increased costs for businesses (and thus ultimately more inflation), but whether they achieve their stated goals is a different matter. The fall in equity markets provoked by the first version of American tariffs in March this year was severe enough to provoke some revision of the policy, but the more lasting effect has been increased uncertainty for companies around the world; equity markets' bullishness in the face of that seems a little surprising.
The dollar
Emerging market investors often get more optimistic when the US dollar weakens. Why? If we start from the premise that the US is the centre of the global capital markets, then when the dollar is strong, emerging markets have to cope with two headwinds. First, capital flows to the centre of the system and away from the periphery, which raises the cost of capital for emerging markets and lowers it for the USA; and second, growth is boosted in the US and constrained elsewhere. When the dollar weakens, both these trends can reverse, leading investors to move capital away from the US, and thus help finance stronger growth elsewhere. Over the last decade and a half, in fact since the financial crisis of 2008-9, the dollar has been the currency of choice, and the US equity market has been the essential place to be invested. This has been the case for so long that many cannot remember that there are other possible scenarios. Yet since the beginning of the year, European and some Latin American currencies are up by 10-15% against the dollar, while Asian export-driven economies like Korea and Taiwan are also seeing appreciating currencies in spite of a policy approach which in the past has tried to keep currencies competitive. This is a more encouraging environment than we have seen for some years, and has led to emerging market equities beginning to deliver better returns.
China
In the portfolio we have more exposure to China in a relative sense than for many years. As the growth of the economy slows in China, the ability of companies to grow market share becomes an ever more important consideration. It's no surprise, then, that our holdings in China are dominated by companies which we think can take a larger slice of the relevant pie, some with digital business models that are disrupting traditional structures in industries like travel and tourism, retail, advertising and music distribution.
In addition to digitally-based business models, where China has produced some very large and innovative companies, the other area in which we see globally competitive businesses is manufacturing. While some of China's industrial success stories are well known and visible in areas like electric vehicles, others are perhaps lower profile but not necessarily any less impressive. Chinese companies are diversifying and expanding internationally, often bringing a combination of product quality and low cost which presents a formidably competitive proposition. We continue to look for opportunity in well-managed manufacturing businesses in China, notwithstanding the uncertainty that American tariffs have introduced this year.
But while some things in China look appealing, there is another side to the story. Distorted pricing for capital has produced an economy addicted to investment, with overcapacity in many industries the inevitable result. This in turn creates deflationary pressures and explains why Chinese interest rates keep falling. The term 'involution' has been used to describe the resultant cut-throat competition and price-cutting that plagues many industries, leading inevitably to a recent 'anti-involution' initiative from the government. Yet involution is another way of describing market forces; anti-involution implies the obstruction of market forces. But if the imbalances in the Chinese economy have been created largely because market forces played too small a role in the economy in the first place, one could be forgiven for a certain scepticism when the solution involves further impeding of those same forces.
Technology
The portfolio has a meaningful exposure to both hardware producers and IT service companies. If there is one area that has stood out in global equity markets in the last couple of years, it is the excitement around artificial intelligence and the possibility that technology is embarking on a third world-changing transition to rival those produced by the computer and the internet. Ordinarily such excitement would give us some reason for caution, especially if combined with high valuations. However, in the world of hardware, leading emerging market businesses - TSMC, SK Hynix, Samsung Electronics - do not trade at particularly high valuations; yet they are indispensable parts of the production chain, and without them there can be no artificial intelligence; we continue to hold large positions in the portfolio in these and other manufacturers.
For IT service companies, the picture is more complex. Some argue that they will be victims of the development of AI, though in the near term the uncertainty introduced by US policy is probably a more important factor; for this sector the USA is the most important end market, and faced with higher uncertainty US companies are more likely to tighten their belts when it comes to spending with external vendors. This has led to some share price weakness this year; we have reduced some of the portfolio 's exposure here, but still need to stay alert to the possibility that this industry is maturing and slowing even apart from the current cycle.
Finally, one area which may prove a surprising beneficiary of some of the current geopolitical trends is China's own technology industry, which continues to make rapid advancements. As the US attempts to limit China's access to cutting edge technology in semiconductors, China is working fast to become self-sufficient in this critical area, and as the Deepseek moment showed earlier this year, it may be a mistake to assume that China cannot emulate Western developments in technology. That has the potential to create some large companies; determining the winners well in advance will be the hardest challenge.
Capital allocation: a new era?
When economies grow rapidly companies have many opportunities to reinvest capital and grow; but when overall growth rates slow, often the capital generated inside a company cannot all be reinvested profitably, especially not with the same risk/reward as before. At that stage, managements face a choice - distribute excess capital to shareholders or keep it in the business even though there may not be an immediate reason to do so. In general, we like managements which place a high value on organically generated capital, because it makes them careful about what they do with it. If they keep it in the bank and never use it, they are almost certainly failing to justify keeping it in the business; if it burns a hole in their pockets and they make an over-priced acquisition, that's even worse; why not just give the money to the shareholders - after all, it's their money in the first place.
As companies start to produce cash in excess of what they need in the business, the question of what they do with it becomes critical. If capital is allocated well, value is optimised; if it is under-utilised or wasted, value is destroyed. Yet how many chief executives have training in capital allocation? This is an ever more important issue in emerging markets because overall economic growth rates, though still above developed markets, are mostly significantly lower than a couple of decades earlier; as a result, skill in capital allocation is becoming a bigger differentiator of corporate performance as far as share prices are concerned.
While this is a relevant issue in many countries, perhaps the starkest example can be found in South Korea. Korean companies, for all their success in operational terms, have too often seemed determined to offset that with capital allocation policies that left international investors deeply frustrated. Sitting on large piles of cash, making cross investments within complex group structures in a way that benefitted inside shareholders, spending money on apparently pointless diversifications - all these led investors to apply low valuations to Korean stocks because the underlying value being created by companies seemed to be so reliably diminished by poor allocation of capital. It is to the government's credit that, spurred by the success of similar initiatives in Japan, it has increased pressure on Korean companies to focus on optimising shareholder value in a financial sense, which often means distributing more cash to shareholders instead of squandering it in the business. We were, frankly, pretty sceptical about how successful this government initiative would be; it was obvious that many companies did not want to go down this path, and that some institutional obstacles, in particular some tax policies, would need to be changed. Resistance was highest among family-controlled groups which have always prioritised family control over value maximisation for all shareholders. So far, the extent of real change has been modest, but the effect on share prices has been bigger, and we failed to capture much of this in the portfolio. Nevertheless, Korea serves as a reminder of just how important capital allocation can be. While some countries, for example Taiwan, Brazil or Mexico have already reached a mature stage in paying out surplus capital, in other markets this moment is just arriving. Nowhere will it be more important in determining equity returns than in China, where it has implications not only in a direct way (how much dividend will investors receive?), but also in a wider sense (will less investment produce more pricing power for companies? can involution turn to profit maximisation at an industry level?) It's not difficult to argue that more than macroeconomics, more even than tariffs and political decisions, capital allocation is going to be critical for the future returns from equities around the developing world.
New investments
A long-term approach to investing always needs to balance new opportunities against existing holdings. Often, turnover in your portfolio has been low because we have preferred the stocks already owned to most of the new possibilities we looked at. But turnover this year has risen as we have found a number of interesting new names around the world. The new stocks purchased have little in common with each other, though several of them are digitally-based businesses which are disrupting traditional industry structures in a variety of countries and sectors: Tencent Music Entertainment (music streaming), Trip.com (online travel booking), PB Fintech (insurance). We also bought SK Hynix, now the leading-edge producer of advanced memory chips, and Coforge, a smaller Indian IT services company. Finally, for the first time since JMG was established, we bought a shipping business (SITC International) and, since the year end, we invested in a Korean bank for only the second time ever (JB Financial). If these investments have a common thread at all, it is that in all cases the management and their ability to do something different and original is an important part of the investment case; we bought SITC International, which is a regional shipping business in Asia, precisely because it is not like other shipping companies, and JB Financial because it is not like other Korean banks.
If we were to expand this last point a little further to explain what we look for in a management team, we like to find as many of the following characteristics as possible:
- we like management teams who think from first principles and reject received wisdom (don't outsource the thinking)
- we like managers who really understand what creates intrinsic value, and who understand the economics of the business, especially its ability to generate cash
- we like management who understand the trade-off that exists in all businesses between duration and returns, and who opt for duration and resilience rather than seeking to make a fast buck
- and we like managers who work for all the shareholders and try to maximise value over the long term - something you might assume should be universal, but is not.
The portfolio today
Investing always looks easy in hindsight. Looking back over the last few years it is clear that the performance generated by your portfolio in 2019-21 was aided by an element of valuation expansion, especially in the months following the outbreak of the Covid pandemic. It is also painfully obvious that we failed to do enough about this quickly enough; this was partly because it seemed inconceivable then that global interest rates could rise significantly given how much additional debt governments were taking on. Yet rates did rise and financial systems did not collapse; and although we did not run the portfolio starting from macroeconomics, many of our assumptions four years ago about valuations were wrong. Deflating that excess valuation has required changes to the portfolio; broadly speaking the stocks we have bought in the last few years have been at lower valuations than the existing portfolio; but as often happens, the market has also corrected excess valuations by derating share prices even where underlying business performance has been strong, and that has cost performance as stocks have derated.
Tencent Holdings, one of the larger investments in the portfolio, is a prime example of this: at its peak in January 2021 the market value of Tencent reached USD 950 billion; three years later it had fallen to USD 320 billion, even though profits in 2024 were close to double those achieved in 2021; as we write, the market value has recovered to USD 700 billion, while the company's profits continue to grow well. We use this example for two reasons - first, to give an example of a poor decision (not selling in 2021) which cost a lot of performance in the subsequent three years. But also, importantly, to show that once the problem like this has happened and performance has been lost, it is in the past and the very worst thing to do is to change the portfolio in response to the underperformance. Underneath all this, Tencent has continued to grow its profits well in spite of the slowing economy in China, and a year ago valuations, having corrected significantly, were no longer a source of downside risk but of upside opportunity.
This single stock example encapsulates both why we have struggled with performance, but also why we feel more constructive now. When we look at the overall portfolio, it has much in common with Tencent a year ago; the valuation of the whole portfolio has come down, but the underlying quality of the businesses owned has not. The portfolio now trades at a price/earnings ratio of about 15x, a modest premium to the index, which is priced about 13x; its dividend yield is 2.5% compared to 2.7% for the Benchmark. These numbers are very typical of most of the last decade or more, and leave us thinking that the risk of losing returns because of further de-rating must be low.
If the portfolio is now much cheaper than it was four years ago, has that come at the expense of the underlying quality, or capability to create intrinsic value? We hope not, and can point to the persistent difference in return on equity (RoE) between the companies owned in your portfolio and that of the index as a whole; the portfolio RoE is just under 19%, compared to the Benchmark at slightly less than 13%: so for every pound of shareholders' funds deployed in the business, our companies generate 46% more profit than the average across the asset class; this can be paid out as dividends or reinvested to grow the business. Moreover, this RoE is achieved, for our non-financial companies, with balance sheets that have net cash, while across the asset class as a whole, companies need to carry debt to finance their business and leverage their returns. If we can find and own companies which make financial returns in their business which are well above the average, priced at valuations which are close to the average, then we should feel more confident about the prospect for their share prices, and hence for the relative performance of the portfolio in the future.
What next?
Sometimes as investors we see a good number of things that interest us in the market; at other times we see fewer. But in reality, there is always opportunity somewhere. We can be confident that the process of creative destruction which has always been essential to markets and capital returns will continue. If anything the spread of AI seems likely to extend the disruptive environment for companies which was triggered almost two decades ago by digitalisation and the invention of the smartphone. That innovation redefined the nature of competition and radically reshaped industries not just in the technology sector, but everywhere, even in the most unexpected corners (as a recent BBC article pointed out, the demise of the TV cookery programme, long a staple of the schedules, is directly attributable to YouTube, which has disintermediated broadcasters by allowing content creators to produce and distribute their own content to a large audience). Such creative destruction should be welcomed by active investors, because it brings opportunity: enormous value creation is possible for the winners, while the opposite is true for those that find themselves on the wrong side of competition. So as we look ahead, we must keep asking ourselves the same questions about the nature of competitive advantage, about the effects that innovations have on different industries, about the permanence or ephemerality of customer needs and choices. And we should not forget that even in a world increasingly determined by technological change, the human factor remains essential; much of what differentiates companies in the long run is management, and the choices that people make.
If constant change in the corporate world is a persistent state, other things go in cycles, and some of these make us more constructive when we look forward to the future. A weaker dollar, the continued rise of Chinese manufacturing, the realignment of global trade patterns: these developments continue to influence emerging markets, and go some way to explaining the better returns, seen from the asset class this year. While that more positive backdrop helps, our efforts as managers of your portfolio remain entirely focused on producing the best outcomes possible in exchange for the risks we take. We continue to believe that a thorough approach, consistently applied, can help achieve that goal in the future as it has in the past.
Austin Forey
John Citron
Portfolio Managers 29th September 2025
Performance Attribution - Contributions to Total Returns
Contributions to total returns as at 30th June 2025
|
|
12 months to 30th June 2025 |
|
|
|
||
|
|
% |
% |
|
Benchmark Total return |
|
6.3 |
|
Asset allocation |
0.9 |
|
|
Stock selection |
(2.9) |
|
|
Currency effect |
0.3 |
|
|
Gearing/Cash effect1,APM |
0.0 |
|
|
Manager contribution |
|
(1.7) |
|
Portfolio total return |
|
4.6 |
|
Management fees and other expenses |
(0.8) |
|
|
Share repurchases |
1.1 |
|
|
Other effects |
|
0.3 |
|
Return on net assetsAPM |
|
4.9 |
|
Return on share priceAPM |
|
9.8 |
Source: Morningstar/J.P.Morgan All figures are on a total return basis.
Performance attribution analyses how the Company achieved its recorded performance relative to its Benchmark.
1 The Company does not have any borrowings. Gearing/Cash effect has had a negligible effect relative to the Benchmark.
APM Alternative Performance Measure ('APM').
A list of APMs, with explanations and calculations, and a glossary of terms are provided on pages 113 to 115 of the 2025 Annual Report.
PRINCIPAL AND EMERGING RISKS
The Board has overall responsibility for reviewing the effectiveness of the system of risk management and internal control which is operated by the Manager and the Company's third-party service providers. Through delegation to the Audit Committee, the Company's ongoing risk management process is designed to identify, evaluate and mitigate the significant risks that the Company faces.
In order to monitor and manage risks facing the Company, with the assistance of the Manager, the Audit Committee maintains a risk matrix, which, as part of the risk management and internal controls process, details the principal and emerging risks that have been identified to face the Company at any given time, together with measures put in place to monitor, manage or mitigate against them as far as practicable. The Audit Committee considers the Company's risk matrix at each meeting, and furthermore holds a third meeting each year dedicated to a thorough review of the risk matrix.
The Directors, through the Audit Committee, confirm that they have carried out a robust assessment of the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity.
The principal and emerging risks facing the Company, how they have changed during the year, and how the Board aims to manage or mitigate these risks are set out below.
|
Principal risk |
Description |
Mitigating activities |
Movement from prior year |
|
Political and Economic |
Geopolitical volatility, including tensions, sanctions, and regulatory changes impacting economic growth, the stock market outlook, investors reducing/being forced to divest from a market (e.g. China, as a result of a breakdown in US/China relations) or being unable to divest at discretion due to an invasion/the imposition of sanctions (e.g. Russia, a possible invasion of Taiwan by China). Economic issues, including recession globally or in emerging market economies and its impact on the world economy, and the attractiveness and returns of the emerging market regions. UK political or structural changes such as change in financial or tax legislation that may affect onshore and offshore businesses. |
The Manager's 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 actively monitors the political, economic and regulatory environment. Although it cannot fully mitigate the associated risks, the Company and its Manager has the ability to reduce stock, sector and market exposure. The Board reviews appropriate industry literature (AIC, broker notes, financial press) and seeks advice from relevant advisers. The Board also regularly invites external experts to present their views on geopolitical and economic issues particularly relevant to the Company. |
The risk is high and increasing. There is little direct control of this risk possible. The Company addresses these global developments in regular questioning of the Manager and with external expertise and continues to monitor these issues, should they develop. |
|
Investment Underperformance |
Performance of the Company's investment portfolio is fundamental to the success of the company. Prolonged and substantial underperformance of emerging markets as an asset class or of the Company resulting from various risks, including restrictions on the free movement of capital, sanctions or restrictions imposed by the UK or other governments on overseas investments, exchange controls, taxation issues, or geopolitical tensions causing disruptions. |
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 maintains proactive engagement and clear communication with shareholders in relation to performance issues, actions and expectations. |
The risk is high and remains stable. The Company underperformed the Benchmark. Further discussion on this is in both the Chair's Statement and Portfolio Managers' Report |
|
Strategy and Business Management |
The Company's current business or investment strategy may become outdated or no longer appropriate. Although it may outperform the Benchmark, increasing competition and the promotion of other competing J.P.Morgan or third-party products, such as Model Portfolios, and other collective investment schemes could lead to diminished investor demand for the Company's shares. Competition can also come from other investment trusts in the form of mergers & acquisitions and consolidation unfavourable to the Company. Poor implementation of the investment strategy, for example as to thematic exposure, sector allocation, stock selection, undue concentration of holdings, 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. 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. A sudden departure of one or more of the Portfolio Managers could result in deterioration of investment performance. |
The Board considers at regular intervals if the rationale for the Company remains appropriate along with the position of competitors and feedback from major shareholders. The Board regularly reviews and monitors the Company's objective and investment policy and strategy, the investment portfolio and its performance. The Board monitors the implementation and results of the investment process with the Portfolio Managers, 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 Board monitors the Company's premium/discount at which the share price trades to NAV on both an absolute level and relative to its peers and the wider investment trust sector. The Board reviews sector relative performance and sales and marketing activity to enhance the Company's appeal. Board regularly meets additional members of the management team. The Manager has a strong bench of portfolio managers and is active in raising the whole team's profile with investors. The Board notes the emphasis placed in marketing and communications about the well-established, repeatable investment process and the breadth/depth of resources supporting the Portfolio Managers. The team-based process and approach would mitigate the impact of any individual personnel changes or departures. |
This is a broader Principal Risk incorporating both Business Management (including Discount Management) and Strategy. The risk is high and increasing. The Board can, with shareholder approval, look to amend the investment policy and objectives of the Company to avoid exposure to, or mitigate, these risks. The Board continually monitors, with assistance from the Manager and its brokers, 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 at an enhanced pace versus the prior year. In an initiative to broaden the Company's investor base and appeal, the Board is proposing to implement a new enhanced dividend policy. |
|
Operational and Counterparty and Legal |
Disruption to, or failure of, the Manager's accounting, dealing or payments systems or the custodian's or depositary's records could prevent accurate reporting and monitoring of the Company's financial position. The threat of cyber attack, in all its guises such as hacking, malware, phishing (social engineering), disrupted-denial-of-service attacks, etc., is regarded as at least as important as more traditional physical threats to reputation, business continuity and security. The Manager has received and reviewed the cyber security policies for its key third party service providers and JPMF has assured the Directors that the Company benefits directly or indirectly from all elements of J.P. Morgan Chase & Co's comprehensive Cyber Security programme. |
The Board keeps the services of the Manager and third-party service providers under continuous review, and the Management Engagement Committee undertake a formal evaluation of their performance on an annual basis. The information technology controls around the physical security of the Manager's data centres, security of its networks and security of its trading applications are tested by independent reporting accountants and reported every six months against the AAF Standard. The Manager has procedures in place to maintain the best practices in the fight against cybercrime. The Manager ensures all third party providers have appropriate cyber protection in place. |
The risk is medium and remains unchanged from the prior year. The Board receives updates from JPMF's information security manager. To date the Manager's cyber security arrangements have proven robust and the Company has not been impacted by any cyber attacks threatening its operations. The Audit Committee receives and reviews a summary of the findings from the independently audited reports on the Manager's and other key third party service providers' internal controls and any actions taken by the service providers in response to those findings. |
|
Corporate Governance and Shareholder Relations |
Concentration of the share register, and inability to affect its composition, i.e., diversification and the balance between institutional and retail holders, may impact market liquidity, the discount, and voting, including failure to pass continuation vote. This is further complicated by activist shareholder(s) requisitioning the Company, diverting attention from normal business. |
The Board monitors the share register via receipt of formal disclosures of significant transactions. The Manager regularly undertakes discussions with the Broker. The Board monitors the Manager's Sales, Marketing and PR efforts and their effectiveness and it challenges the Manager where it feels it is appropriate. The Board allocates a budget for such activities. The Manager has a 'play book' on handling any approach from an activist investor. |
The risk is medium and remains unchanged from the prior year. |
EMERGING RISKS
The Board has considered and kept under review emerging risks, including but not limited to the impact of higher long-term interest rates, climate change & ESG compliance, artificial intelligence, technological advances in asset management and a new world order. The key emerging risks identified are as follows:
Higher long-term interest rates and Tariffs
A long-term reduction in returns available from investments as a result of recession, stagnation, inflation or other prolonged exogenous factors as well as a higher interest rate environment which may render the Company's investment objectives and policies unattractive or unachievable.
Global trade dislocation continues to stem from President Trump's 'Liberation Day' tariff announcement, with China, the EU, and India responding with retaliatory measures. Most recently, a US appeals court ruled that the majority of these tariffs are illegal; however, they remain in place pending further legal review. The ongoing uncertainty is contributing to a reduction in global trade and economic growth, resulting in lowered earnings forecasts for companies worldwide.
Climate change & ESG compliance
At the portfolio level, climate change may disrupt business models and profitability of investee companies, affecting operations of the Company and its service providers. Additionally, non-compliance with ESG best practice could impact demand for the Company's shares and the Manager's reputation regarding adherence to climate change best practices. Furthermore, a major rollback of climate efforts increases the likelihood of climate and humanitarian catastrophes, exacerbating these risks.
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 to business processes and whole companies, leading to added uncertainty in corporate valuations.
Technological advances in asset management
Challenges in adapting to technological advancements, including blockchain integration and digital asset management, potentially affecting operational efficiency and investor engagement. Increased competition from tech-savvy firms may lead to pressure on traditional investment companies, impacting market share, regulatory compliance, and the ability to attract younger, tech-oriented investors.
New world order
Political leadership and foreign policy changes in the US and the developing relationships between China, Russia and other countries, leading to a deterioration in international relationships, a rise in protectionist policies and a pullback in global trade which has a disproportionate impact on emerging markets.
TRANSACTIONS WITH THE MANAGER
Details of the management contract are set out in the Directors' Report on page 57 of the 2025 Annual Report. The management fee payable to the Manager for the year was £8,920,000 (2024: £8,866,000) of which £nil (2024: £nil) was outstanding at the year end.
Safe custody fees amounting to £547,000 (2024: £484,000) payable during the year to JPMorgan Chase Bank, N.A. of which £138,000 (2024: £160,000) 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 (2024: £nil) of which £nil (2024: £nil) was outstanding at the year end.
Handling charges on dealing transactions amounting to £17,000 (2024: £36,000) were payable to JPMorgan Chase Bank, N.A. during the year of which £12,000 (2024: £16,000) was outstanding at the year end.
The Company invests in the JPMorgan USD Liquidity Fund, which is managed by JPMorgan Asset Management (Europe) S.à r.l. At the year end this was valued at £14,070,000 (2024: £4,844,000). Interest amounting to £228,000 (2024: £1,078,000) was received during the year of which £nil (2024: £nil) was outstanding at the year end.
At the year end, total cash of £4,349,000 (2024: £679,000) was held with JPMorgan Chase Bank, N.A. A net amount of interest of £36,000 (2024: £30,000) was receivable by the Company during the year of which £nil (2024: £nil) was outstanding at the year end.
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. They 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 accounts are published on the Company's website: www.jpmemergingmarkets.co.uk, which is maintained by the Company's Manager. The maintenance and integrity of the website maintained by the Manager is, so far as it relates to the Company, the responsibility of the Manager. The Directors are responsible for the maintenance and integrity of the corporate and financial information on 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 that it faces.
The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.
For and on behalf of the Board
Aidan Lisser
Chair
29th September 2025
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30th June
|
|
Year ended 30th June 2025 |
Year ended 30th June 2024 |
||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Gains on investments held at fair value through |
|
|
|
|
|
|
|
profit or loss |
- |
34,763 |
34,763 |
- |
72,311 |
72,311 |
|
Net foreign currency exchange (losses)/gains |
- |
(668) |
(668) |
- |
1,316 |
1,316 |
|
Income from investments |
30,747 |
125 |
30,872 |
29,861 |
95 |
29,956 |
|
Interest receivable |
264 |
- |
264 |
1,108 |
- |
1,108 |
|
Gross return |
31,011 |
34,220 |
65,231 |
30,969 |
73,722 |
104,691 |
|
Management fee |
(2,676) |
(6,244) |
(8,920) |
(2,660) |
(6,206) |
(8,866) |
|
Other administrative expenses |
(1,541) |
- |
(1,541) |
(1,563) |
- |
(1,563) |
|
Net return before finance costs and taxation |
26,794 |
27,976 |
54,770 |
26,746 |
67,516 |
94,262 |
|
Finance costs |
(6) |
(15) |
(21) |
(1) |
- |
(1) |
|
Net return before taxation |
26,788 |
27,961 |
54,749 |
26,745 |
67,516 |
94,261 |
|
Taxation |
(2,254) |
(3,016) |
(5,270) |
(2,708) |
(6,586) |
(9,294) |
|
Net return after taxation |
24,534 |
24,945 |
49,479 |
24,037 |
60,930 |
84,967 |
|
Return per share (note 3) |
2.30p |
2.33p |
4.63p |
2.12p |
5.37p |
7.49p |
A final dividend of 1.45p (2024: 1.30p) per Ordinary share has been proposed in respect of the year ended 30th June 2025, totalling £14.7 million (2024: £14.4 million). Further details are given in note 10 on page 92 of the 2025 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.
Net return/(loss) after taxation represents the profit/(loss) for the year and also total comprehensive income.
STATEMENT OF CHANGES IN EQUITY
For the year ended 30th June
|
|
Called up |
|
Capital |
|
|
|
|
|
|
share |
Share |
redemption |
Other |
Capital |
Revenue |
|
|
|
capital |
premium |
reserve |
reserve |
reserves |
reserve1 |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
At 30th June 2023 |
33,091 |
173,631 |
1,665 |
69,939 |
1,027,276 |
24,220 |
1,329,822 |
|
Repurchase of shares into Treasury |
- |
- |
- |
- |
(43,014) |
- |
(43,014) |
|
Proceeds from share forfeiture2 |
- |
- |
- |
- |
1,119 |
- |
1,119 |
|
Net return |
- |
- |
- |
- |
60,930 |
24,037 |
84,967 |
|
Dividends paid in the year (note 12) |
- |
- |
- |
- |
- |
(19,024) |
(19,024) |
|
Forfeiture of unclaimed dividends2 (note 12) |
- |
- |
- |
- |
- |
159 |
159 |
|
At 30th June 2024 |
33,091 |
173,631 |
1,665 |
69,939 |
1,046,311 |
29,392 |
1,354,029 |
|
Repurchase of shares into Treasury |
- |
- |
- |
(69,939) |
(37,087) |
- |
(107,026) |
|
Net return |
- |
- |
- |
- |
24,945 |
24,534 |
49,479 |
|
Dividends paid in the year (note 12) |
- |
- |
- |
- |
- |
(21,059) |
(21,059) |
|
At 30th June 2025 |
33,091 |
173,631 |
1,665 |
- |
1,034,169 |
32,867 |
1,275,423 |
1 This reserve forms the distributable reserves of the Company and is used to fund distributions to shareholders by way of dividends.
2 During the year ended 30th June 2024, the Company undertook an Asset Reunification Program to reunite inactive shareholders with their shares and unclaimed dividends. In accordance with the Company's Articles of Association, the Company exercised its right to forfeit the shares belonging to untraced shareholders for a period of 12 years or more. These shares were sold in the open market and the net proceeds returned to the Company. In addition, any unclaimed dividends older than 12 years from the date of payment of such dividend were forfeited and returned to the Company.
STATEMENT OF FINANCIAL POSITION
At 30th June
|
|
30th June 2025 |
30th June 20241 |
|
|
£'000 |
£'000 |
|
Fixed assets |
|
|
|
Investments held at fair value through profit or loss |
1,283,313 |
1,356,705 |
|
Current assets |
|
|
|
Debtors |
6,843 |
5,337 |
|
Current assets investments1 |
14,070 |
4,844 |
|
Cash at bank1 |
4,349 |
679 |
|
|
25,262 |
10,860 |
|
Current liabilities |
|
|
|
Creditors: amounts falling due within one year |
(20,776) |
(1,004) |
|
Net current assets |
4,486 |
9,856 |
|
Total assets less current liabilities |
1,287,799 |
1,366,561 |
|
Provision for liabilities |
(12,376) |
(12,532) |
|
Net assets |
1,275,423 |
1,354,029 |
|
Capital and reserves |
|
|
|
Called up share capital |
33,091 |
33,091 |
|
Share premium account |
173,631 |
173,631 |
|
Capital redemption reserve |
1,665 |
1,665 |
|
Other reserve |
- |
69,939 |
|
Capital reserves |
1,034,169 |
1,046,311 |
|
Revenue reserve |
32,867 |
29,392 |
|
Total shareholders' funds |
1,275,423 |
1,354,029 |
|
Net asset value per share (note 4) |
126.1p |
122.1p |
1 Prior year comparatives have been restated as explained further in note 1(a).
STATEMENT OF CASH FLOWS
For the year ended 30th June
|
|
Year ended |
Year ended |
|
|
30th June 2025 |
30th June 2024 |
|
|
£'000 |
£'000 |
|
Cash flows from operating activities |
|
|
|
Net return before finance costs and taxation |
54,770 |
94,261 |
|
Adjustment for: |
|
|
|
Net gains on investments held at fair value through profit or loss |
(34,763) |
(72,311) |
|
Net foreign currency losses/(gains) |
668 |
(1,316) |
|
Dividend income |
(30,851) |
(29,878) |
|
Interest income |
(264) |
(1,108) |
|
Scrip dividends received as income |
(21) |
(78) |
|
Realised losses on foreign exchange transactions |
(503) |
(180) |
|
Realised foreign currency exchange (losses)/gains on JPMorgan USD |
|
|
|
Liquidity Fund |
(152) |
1,055 |
|
(Increase)/decrease in accrued income and other debtors |
(41) |
22 |
|
Decrease in accrued expenses |
(20) |
(218) |
|
Net cash outflow from operating activities before dividends, interest |
|
|
|
and taxation |
(11,177) |
(9,751) |
|
Dividends received |
28,869 |
26,535 |
|
Interest received |
264 |
1,108 |
|
Overseas withholding tax recovered |
1,080 |
351 |
|
Capital gains tax paid |
(3,172) |
(4,182) |
|
Net cash inflow from operating activities |
15,864 |
14,061 |
|
Purchases of investments |
(293,754) |
(161,350) |
|
Sales of investments |
418,823 |
188,054 |
|
Net cash inflow from investing activities |
125,069 |
26,704 |
|
Equity dividends paid |
(21,059) |
(19,024) |
|
Refund of unclaimed dividends |
- |
159 |
|
Repurchase of Ordinary shares into Treasury |
(106,944) |
(42,802) |
|
Proceeds from share forfeiture |
- |
1,119 |
|
Interest paid |
(21) |
(1) |
|
Net cash outflow from financing activities |
(128,024) |
(60,549) |
|
Increase/(decrease) in cash and cash equivalents1 |
12,909 |
(19,784) |
|
Cash and cash equivalents at start of year1 |
5,523 |
24,866 |
|
Foreign currency exchange movements |
(13) |
441 |
|
Cash and cash equivalents at end of year1 |
18,419 |
5,523 |
|
Cash and cash equivalents consist of:1 |
|
|
|
Cash at bank |
4,349 |
679 |
|
Current assets investments in JPMorgan USD Liquidity Fund |
14,070 |
4,844 |
|
Total |
18,419 |
5,523 |
1 The term 'cash and cash equivalents' is used for the purposes of the Statement of Cash Flows, and represents Cash at bank and funds held in the J.P.Morgan USD Liquidity Fund (shown as Current assets investments in the Statement of Financial Position).
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30th June 2025
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 Directors believe that having considered the Company's investment objective (see page 38 of the 2025 Annual Report), risk management policies (see pages 97 to 102 of the 2025 Annual Report), capital management policies and procedures (see page 102 of the 2025 Annual Report), the nature of the portfolio and expenditure projections, the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future. For these reasons, they consider that there is reasonable evidence to continue to adopt the going concern basis in preparing the financial statements. They have not identified any material uncertainties to the Company's ability to continue to do so over a period of at least 12 months from the date of these financial statements.
In accordance with the statutory format required by the Companies Act 2006, as at 30th June 2024, the 'Cash and cash equivalents' line item in the Statement of Financial Position has been revised to 'Cash at bank' and 'Current assets investments'. This revision separately reports the £4,844,000 investment in the JPMorgan USD Liquidity Fund as 'Current assets investments' and £679,000 as 'Cash at bank'. This adjustment does not affect any other line items in the Statement of Financial Position or the total current assets.
The policies applied in these financial statements are consistent with those applied in the preceding year.
2 Dividends
(a) Dividends paid and proposed
|
|
2025 |
2024 |
||
|
|
Pence |
£'000 |
Pence |
£'000 |
|
Dividend paid |
|
|
|
|
|
Final dividend in respect of prior year |
1.30 |
14,249 |
1.07 |
12,265 |
|
Interim dividend |
0.65 |
6,810 |
0.60 |
6,759 |
|
Total dividends paid in the year |
1.95 |
21,059 |
1.67 |
19,024 |
|
Forfeiture of unclaimed dividends over |
|
|
|
|
|
12 years old1 |
- |
- |
- |
(159) |
|
Net dividends |
1.95 |
21,059 |
1.67 |
18,865 |
|
Dividend proposed |
|
|
|
|
|
Final dividend proposed |
1.45 |
14,668 |
1.30 |
14,420 |
1 As a result of the Asset Reunification Program to reunite inactive shareholders with their shares and unclaimed dividends, any unclaimed dividends older than 12 years from the date of payment of such dividend were forfeited and returned to the Company.
All final dividends paid and proposed in the year have been funded from the revenue reserve.
The final dividend proposed in respect of the year ended 30th June 2025 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 financial statements for the year ending 30th June 2026. The amount payable will be subject to change based on the number of Ordinary shares outstanding on the record date, taking into account any Ordinary shares repurchased after the year end.
(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 dividends declared in respect of the financial year, shown below.
|
|
2025 |
2024 |
||
|
|
Pence |
£'000 |
Pence |
£'000 |
|
Interim dividend |
0.65 |
6,810 |
0.60 |
6,759 |
|
Final dividend proposed |
1.45 |
14,668 |
1.30 |
14,420 |
|
Total |
2.10 |
21,478 |
1.90 |
21,179 |
The revenue available for distribution by way of dividend for the year is £24,534,000 (2024: £24,037,000). The revenue reserve after payment of the final dividend will amount to £18,199,000 (2024: £14,972,000).
3 Return per share
|
|
2025 |
2024 |
|
|
£'000 |
£'000 |
|
Revenue return |
24,534 |
24,037 |
|
Capital return |
24,945 |
60,930 |
|
Total return |
49,479 |
84,967 |
|
Weighted average number of Ordinary shares in issue during the year |
1,068,231,058 |
1,133,870,299 |
|
Revenue return per share |
2.30p |
2.12p |
|
Capital return per share |
2.33p |
5.37p |
|
Total return per share |
4.63p |
7.49p |
4. Net asset value per share
|
|
2025 |
2024 |
|
Net assets (£'000) |
1,275,423 |
1,354,029 |
|
Number of Ordinary shares in issue |
1,011,554,630 |
1,109,226,510 |
|
Net asset value per share |
126.1p |
122.1p |
5. Analysis of change in net cash
|
As at 30th June 2024 £'000 |
Cash flows £'000 |
Foreign Currency Exchange Movements £'000 |
As at 30th June 2025 £'000 |
|
|
Cash and cash equivalents |
|
|
|
|
|
Cash at bank |
679 |
3,648 |
22 |
4,349 |
|
Current assets investments1 |
4,844 |
9,261 |
(35) |
14,070 |
|
Net cash |
5,523 |
12,909 |
(13) |
18,419 |
1 JPMorgan USD Liquidity Fund, a AAA rated money market fund which seeks to achieve a return in line with prevailing money market rates whilst aiming to preserve capital consistent with such rates and to maintain a high degree of liquidity.
Status of results announcement
2025 Financial Information
The figures and financial information for 2025 are extracted from the Annual Report and Accounts for the year ended 30th June 2025 and do not constitute the statutory accounts for the year. The 2025 Annual Report and Accounts include the Report of the Independent Auditor, 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.
2024 Financial Information
The figures and financial information for 2024 are extracted from the published Annual Report and Accounts for the year ended 30th June 2024 and do not constitute the statutory accounts for that year. The Annual Report and Accounts has been delivered to the Registrar of Companies and includes the Report of the Independent Auditor, which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.
JPMORGAN FUNDS LIMITED
29th September 2025
For further information, please contact:
Divya Amin
For and on behalf of
JPMorgan Funds Limited
Telephone: 0800 20 40 20 or +44 1268 44 44 70
E-mail: jpmam.investment.trusts@jpmorgan.com
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.
ENDS
A copy of the 2025 Annual Report will be submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The 2025 Annual Report will also shortly be available on the Company's website at www.jpmemergingmarkets.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.
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