REG - JPMorgan China G&I - Half-year Report
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RNS Number : 0491L JPMorgan China Growth & Income PLC 02 June 2025
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN CHINA GROWTH & INCOME PLC
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS
ENDED 31ST MARCH 2025
Legal Entity Identifier: 549300S8M91P5FYONY25
Information disclosed in accordance with the DTR 4.2.2
Highlights
· NAV total return of +4.2% in sterling terms compared with +10.4%
for the MSCI China Index) (the 'Benchmark'). Share price return of +9.4%, with
the discount narrowing from the previous year end of -13.1% to -9.1%.
· For ten years cumulative ended 31st March 2025, NAV total return
of +60.9% outperforming the Benchmark return of +53.4%. Share price return
of +67.9%.
· It is the intention to declare the fourth interim dividend of
2.73p on 1st July 2025 bringing the annual dividend for the year ending 30th
September 2025 to 10.92p.
· The Company did not repurchase or issue any shares during the
period. Since the period end, 93,699 shares have been bought back into
Treasury at an average discount of 11.3%.
· The Board announced the appointment of Mr. Nick Bannerman to the
Board effective 24th January 2025.
The Chairman of JCGI, Alexandra Mackesy, commented:
"While the short-term performance is certainly disappointing when compared
with the Company's benchmark, it should be noted that much of the rise of the
MSCI China Index during the period was again driven by value stocks,
particularly state controlled financial companies."
"The Company's disciplined Portfolio Managers focus on the long-term prospects
of quality growth companies, which lagged behind. We note that, over the
longer term, our Company has made positive absolute returns, outperforming the
benchmark over ten years."
"While short-term volatility may persist, given the current geopolitical
uncertainties, the Board shares the Portfolio Managers' optimism about the
long-term prospects for the Chinese stock markets and the opportunities that
will benefit the patient investor, and continues to work closely with them to
ensure that the Company maintains its long track record of absolute gains and
long-term outperformance."
Portfolio Managers Rebecca Jiang, Howard Wang and Li Tan, commented:
"The geopolitical developments that have unfolded over the past six months,
especially the new US administration's aggressive tariff policies, have
fuelled a major escalation in tensions between China and the US."
"However, despite this unhelpful backdrop, we still see reasons for cautious
optimism about the outlook for Chinese economy, Chinese equities and for our
portfolio, over the remainder of this year and well beyond."
"We have adapted the portfolio to reflect new realities and are comfortable
that our holdings are either concentrated in domestically focused businesses
with immunity from tariffs, or in exporters that have strong pricing power and
well-diversified supply chains and are thus well-positioned to weather the
challenges presented by higher tariffs."
"In addition, the portfolio is positioned to benefit from China's evolving
regulatory landscape, which now prioritises a pro-entrepreneurs and
pro-equities stance…. The long-term outlook is bolstered by resilient
entrepreneurial innovation, particularly in technology-driven sectors….
Combined with policy makers' renewed balance between fostering growth and
modifying excess capacity, these dynamics support a constructive trajectory
for growth-oriented equities."
Enquiries:
JPMorgan China Growth & Income plc
Investor Relations
Alexandra Ellaby, JPMorgan Funds Limited
E-mail: alexandra.ellaby@jpmchase.com
Telephone: 0800 20 40 20 or or +44 1268 44 44 70
CHAIRMAN'S STATEMENT
Performance
During the six months ended 31st March 2025, volatility yet again buffeted
Greater China stock markets. With volumes remaining thin and investors hugging
the sidelines, trading was lacklustre in the final quarter of 2024, despite
the central government's announcements of additional fiscal and monetary
measures designed to stimulate the Chinese economy. Confidence improved at the
start of Chinese New Year, amidst excitement about the implications of Chinese
artificial intelligence platform DeepSeek's unexpected model launch, President
Xi's meeting with major Chinese entrepreneurs, and indications of a
stabilising domestic economy. The Company benefitted from renewed interest in
Chinese markets, with its share price climbing 27% to 284 pence in mid-March
from the end of 2024. But this was not to last. As US President Trump's
confused and often contradictory comments, particularly about import tariffs,
shook global markets, the Company, together with Chinese markets, lost
significant ground in the final days of March. As a result, over the six
months ended 31st March 2025, the Company's total return on net assets (with
net dividends reinvested) rose a modest +4.2%, trailing the MSCI China Index,
which increased +10.4%. Over the same period, the Company's total return on
share price was +9.4%, with its discount to net asset value ('NAV') narrowing
from -13.1% at the previous financial year end to -9.1% at the half year end.
While the short-term performance is certainly disappointing when compared with
the Company's benchmark, it should be noted that much of the rise of the MSCI
China Index during the period was again driven by value stocks, particularly
state controlled financial companies. The Company's disciplined Portfolio
Managers focus on the long-term prospects of quality growth companies, which
lagged behind. We note that, over the longer term, our Company has made
positive absolute returns, outperforming the benchmark over ten years.
The relative underperformance to the benchmark index is explained in detail in
the Investment Manager's Report in this Half Year Report. This section of the
report provides a detailed commentary on the portfolio positioning, the
investment strategy and the outlook for investing in China.
Loan Facility and Gearing
The Board has given the Portfolio Managers the flexibility to manage gearing
tactically within a range set at 10% net cash to 20% geared. During the
period, the Company's gearing ranged from 2.4% to 11.7%, reflecting the
Portfolio Managers' increased confidence in the Chinese markets, ending the
half year at 10.7%. The Portfolio Managers took advantage of lower cost
Contracts for Difference (CFDs), in addition to the Company's loan facility
with Industrial and Commercial Bank of China Limited, London Branch (ICBC).
There is currently £3.9 million drawn down on the existing £30.0 million
loan facility with ICBC, which expires in July 2025. The Board is currently in
the process of reviewing various loan renewal options.
Our Dividend Policy
In the absence of unforeseen developments, the Company's dividend policy aims
to pay regular, quarterly dividends, equivalent in total to 4% of the
Company's NAV on the last business day of the preceding financial year, in
order to provide clarity to shareholders over the income stream they can
expect during the following 12 months. This is paid by way of four equal
interim dividends on the first business day in December, March, June and
September.
On 1st October 2024, the Company announced that the cum income Net Asset Value
at the close of business on 30th September 2024 (the Company's year-end) was
273.29 pence per share. In line with the Company's distribution policy, the
Directors declared the first quarterly interim dividend of 2.73 pence per
share. Since then, two further dividend declarations have been made on
3rd January 2025 and 1st April 2025, both of 2.73 pence per share. With the
planned declaration of the final quarterly dividend of 2.73 pence per share on
1st July 2025, in the absence of unforeseen circumstances, the annual dividend
for the year ending 30th September 2025 will be 10.92 pence per share (2024:
11.04 pence).
Share Capital
At the time of writing, the Company's issued share capital consists of
83,202,465 Ordinary shares, including shares held in Treasury. During the
six month reporting period, the Company did not repurchase or issue any
shares. Since the period end, 93,699 shares have been bought back into
Treasury, at an average discount of 11.30%.
Board of Directors
As part of the Board's long-term succession programme, I am delighted to
announce that Mr Nick Bannerman has been appointed to the Board with effect
from 24th January 2025. A qualified accountant, Mr Bannerman is an experienced
corporate executive who has held senior positions in several companies with
exposure to China during his lengthy career. He has also served on the boards
of two investment trusts over the past 21 years, as a non-executive Director,
Audit Chair and Chair. Mr Bannerman's knowledge and expertise will further
strengthen the Board and he has already proved to be a valuable addition.
Stay Informed
The Company delivers email updates with regular news and views, as well as the
latest performance. If you have not already signed up to receive these
communications and you wish to do so, you can opt in via
https://tinyurl.com/JCGI-Sign-Up or by scanning the QR code in the front of
the Half Year Report.
Outlook
Despite the uncertain and fluid global macro environment, the future outlook
for Chinese equities and for our portfolio appears to be improving. Chinese
companies are beginning to reap the benefit of the Chinese government's
commitment to developing world leading capabilities in innovative technology.
After DeepSeek's AI technology breakthrough and President Xi's meeting with
major Chinese entrepreneurs, confidence levels amongst Chinese corporates have
risen. While the National People's Congress concluded with few surprises, the
Chinese government focused on the Rmb2 trillion (£213 billion as at 31st
March 2025) fiscal expansion relating to local government debt restructuring,
equipment replacement programmes, and consumption support. Recent macro data
releases confirm a recovery in domestic retail sales and travel, an
improvement in secondary property sales in Tier 1 cities, and an acceleration
in fixed asset investment. At the same time, President Trump's cancellation of
USAID and his continued confusing pronouncements have given China the
opportunity to enhance its position globally, particularly in the Developing
World.
It seems likely for the foreseeable future that relations between the US and
China will remain tense, particularly in relation to trade issues. The lack of
clarity regarding the scope of US import tariffs only adds another challenge
that our Portfolio Managers will have to tackle. Chinese companies had already
responded to the introduction of tariffs during President Trump's first term
of office by diversifying their markets away from the US and establishing
production facilities outside China. The significant size and scope of the
initial proposed US tariffs, however, caught exporters by surprise, and will
inevitably impact their operations. That said, our Portfolio Managers are
invested in nimble Chinese exporters with strong balance sheets, which should
be well positioned to weather any future trade wars and the pro-business
Chinese government may well provide additional stimulus to the domestic
economy, given the challenges Chinese exporters are likely to face.
Drawing on expanded and enhanced research capabilities, our Portfolio Managers
are adapting the portfolio to reflect the new realities that face them and the
attractive opportunities offered by China's rapidly evolving corporate sector.
While short-term volatility may persist, given the current geopolitical
uncertainties, the Board shares the Portfolio Managers' optimism about the
long-term prospects for the Chinese stock markets and the opportunities that
will benefit the patient investor, and continues to work closely with them to
ensure that the Company maintains its long track record of absolute gains and
long-term outperformance.
Alexandra Mackesy
Chairman
2nd June 2025
INVESTMENT MANAGER'S REPORT
Introduction
During the six months ended 31st March 2025, the Company's net assets returned
4.2% (in sterling terms). This compares with the return of 10.4% by its
benchmark, the MSCI China Index. However, the Company's long-term track record
of outright gains and outperformance remains intact.
Setting the scene
The market upturn which began towards the end of the last financial year ended
30th September 2024 (FY24) gained momentum during the six months to end March
2025, although the ride was not entirely smooth. Two factors drove market
gains over the period. The first was the ongoing positive impact of the very
notable pivot in Chinese domestic policy implemented in September last year,
when the authorities, including the Central Bank, the People's Bank of China
(PBOC), the National Reform and Development Committee (the central
government's economic planning committee), the Ministry of Housing and
Urban-Rural Development, and the Ministry of Finance, announced a series of
pro-growth stimulus policies. These measures demonstrated a level of
coordination which was lacking in previous stimulus efforts. They included a
more accommodative monetary stance and direct fiscal transfers from the
central government to local governments and to consumers, to encourage
spending on vehicles and consumer electronics and to support low-income
earners.
The second catalyst for market gains over the review period came in late
January 2025 when DeepSeek released its open-source large language model at
superior cost-performance. The launch was a dramatic wake-up call to both
Chinese investors and western developers of artificial intelligence (AI)
tools, as it demonstrated China's unexpectedly rapid progress in this field,
to the point that DeepSeek's products represent a significant challenge to
OpenAI and its western rivals. DeepSeek's announcement also demonstrated the
country's ability to make major technological advances without reliance on
western know-how or components. As such, the launch of DeepSeek helped assuage
some of the concerns around the US administration's expanded restrictions on
the export of advanced semiconductor technologies to China and its intention
to curb China's technological advancement and self sufficiency.
China's property market remained in a downturn during 2024, marked by
declining construction and sales activity, as well as falling property prices.
This slump weighed on GDP growth, squeezed local government fiscal revenue
(which relies heavily on land sales), and dampened consumer confidence, as
households grew cautious amid falling asset values. However, some
stabilisation emerged after September, driven by meaningful policy loosening,
including mortgage rate cuts and relaxed purchase restrictions. Separately,
the banking sector faced stagnant profit growth during this period, pressured
by narrowing net interest margins and higher provisions for bad debt linked to
the property sector. Despite these challenges, the financial system showed no
signs of acute distress, with systemic stability preserved through regulatory
safeguards and ample liquidity.
Performance commentary
Gearing and sector allocation contributed positively, but was more than offset
by stock selection, which resulted in the Company's underperformance compared
with the MSCI China Index over the six months to end March 2025.
Not surprisingly given the buzz generated by DeepSeek, a couple of technology
names were the main contributors to performance at the stock level. Kingdee is
a software business whose AI-applications will be a beneficiary of DeepSeek's
progress in this field, as will Alibaba, an internet retailer and provider of
related cloud-based technological infrastructure and marketing services. Full
Truck, a technology platform helping the trucking and logistics industry to
operate more efficiently, has demonstrated its ability to add value for its
customers and this is allowing it to monetise its platform. Chinese
semiconductor businesses such as portfolio holdings Montage and Beijing
Huafeng are benefitting from underlying growth in industrial demand. They are
also increasing their market share thanks to import substitution efforts by
their clients.
Within the consumer sector, we have been focusing our investments in companies
capturing new consumer trends, that are, in our view, capable of doing well
despite the economic environment. Some of these investments were key
contributors to returns over the review period. For example, Guming runs
retail outlets offering bubble tea and other beverages, while Bloks designs,
makes and sells brick-based toys. We acquired positions in both these
companies in their recent initial public offerings (IPOs). Both have
demonstrated healthy growth and good share price performance since their
flotations.
The favourable impact of the performance of these holdings was more than
offset by several adverse influences on returns. Two of the most significant
detractors were electric vehicle (EV) makers Xiaomi and BYD. We did not hold
either of these names at the beginning of the review period, but both did well
due to strong demand for EVs, good execution and the price competitiveness of
their products. Xiaomi has also benefitted from a 'halo' effect, as the
success of its EVs has generated great demand for its other product lines,
including smartphones and household appliances. We missed the initial rally in
Xiaomi in late 2024, as we underestimated the company's execution capability
in its EV business, but we acquired a position early in 2025. We did not,
however, add any exposure to BYD, as we remain concerned about fierce pricing
competition in the mass market segment in which BYD competes.
Other detractors included Foxconn Industrial Internet, which manufactures
communication network and cloud computing equipment, Zhongji Innolight,
another tech company specialising in optical equipment, and a position in
Taiwan Semiconductor Manufacturing Company (TSMC). All three companies are
exposed to US data centres and broader US demand for tech components. The
stocks all came under pressure due to concerns of a slowdown in US cloud capex
especially after DeepSeek's announcement as well as challenges posted by US
tariffs and general geopolitical concerns. Finally, our position in China
Resources Gas, which connects gas to new residential properties, was hurt by
the ongoing weakness in the Chinese housing market.
Performance attribution
For the six months ended 31st March 2025
% %
Contributions to total returns
Benchmark Return 10.4
Sector allocation 0.6
Stock allocation (6.9)
Currency effect 0.0
Gearing/cash 1.0
Investment manager contribution (5.3)
Dividends/residual (0.3)
Portfolio return 4.8
Management fee/other expenses (0.6)
Return on net assets(A) 4.2
Impact of change in discount 5.2
Return on share price(A) 9.4
Source: FactSet, JPMAM and Morningstar.
Performance attribution analyses how the Company achieved its recorded
performance relative to its benchmark index.
(A) Alternative Performance Measure ('APM').
A glossary of terms and APMs is provided on pages 29 to 32 of the Half Year
Report.
Transactions and sector allocation
We maintained our growth tilt over the review period, with recent acquisitions
motivated by two main themes. Firstly, DeepSeek's launch has created many
opportunities fuelled by the rapid penetration of AI into production processes
and business practices, and we have added exposure accordingly. In addition to
our exposure to Alibaba, we also purchased Kingsoft, an office software, cloud
computing and electronic gaming company, and Kuaishou Technology, a live
streaming and online market business. The other driver of recent acquisitions
has been our ongoing interest in idiosyncratic growth opportunities,
especially amongst consumer products. In addition to buying positions in
Xiaomi, Gumings and Bloks, all mentioned above, we also acquired an exposure
to Haidilao, a hotpot restaurant chain.
Of the disposals during the past six months, some were intended to protect the
portfolio from the impact of US tariffs, by reducing exposure to
Nvidia-related names. For example, we trimmed our holding in Foxconn and sold
Zhongji Innolight. Elsewhere, we also sold our position in China Resources
Sanjiu, a drug manufacturer, as its recent acquisitions had changed the
investment thesis.
At the sectoral level, the Company's two most noteworthy overweight sectors at
the end of the review period were IT and Industrials, unchanged from the end
of FY24. We are also slightly overweight Consumer Discretionary, and our
search for unique growth opportunities in this sector continues. The
portfolio's largest underweights at end March 2025 were to Financials,
Communications Services and Energy - positioning unchanged from end FY24. As
previously discussed, our underweight position in Financials is mainly due to
not owning the big five State-owned enterprise (SOE) banks, as we see few
structural growth opportunities there. The underweight position in
Communication Services primarily reflects the outperformance of Tencent which
led to a +16% weighting in the benchmark, while our portfolio weighting is
capped at 12.5% by risk guidelines. We had no holdings in Energy at the end of
the period, as the sector remains dominated by carbon-intensive SOEs in the
oil and coal industries, the governance of which is not very transparent and
where we have little edge in making forecasts.
Gearing
Since 2024, we have an alternative, low cost way of increasing leverage when
we need it in the form of CFDs. As market sentiment improved during the period
under review, we used CFDs to increase our gearing levels. While the average
gearing level during the six months ending 31st March 2025 was 6.5%, broadly
in line with 6.7% during FY24, it ranged from 2.4% to 11.7%, ending the half
year at 10.7%.
Outlook
The geopolitical developments that have unfolded over the past six months,
especially the new US administration's aggressive tariff policies, have
fuelled a major escalation in tensions between China and the US. Trade
negotiations between the two countries have commenced but the situation
remains fluid. The uncertainty generated by the lack of clarity regarding the
scope of possible future tariffs, however, has already undermined consumer and
business confidence in the US and other developed economies, and a slowdown in
growth appears inevitable, while tariff increases, if imposed, will drive
inflation higher.
However, despite this unhelpful backdrop, we still see reasons for cautious
optimism about the outlook for Chinese economy, Chinese equities and for our
portfolio, over the remainder of this year and well beyond. For one, the
escalation of trade tensions between China and the US was not unexpected. The
experience of the first Trump administration (2017-2020) were a dress
rehearsal for his second term, and Chinese companies have been preparing
themselves over the intervening years by diversifying their end markets and
supply chains away from reliance on the US. Chinese companies are therefore
already relatively well positioned to weather a full-blown trade war, should
one come to pass.
We draw further reassurance from the recent, more pro-growth stance of the
Chinese government, which suggests that it will backstop Chinese domestic
consumption with further stimulus if tariffs do have an adverse impact on
activity. The regulatory environment has also become more pro-business
following a meeting between President Xi and private entrepreneurs in January
this year, which resulted in some positive signals regarding private
enterprise and innovation.
It is important to stress the significance of DeepSeek's recent AI
breakthrough, which will support the Chinese economy for many years to come.
Business confidence, especially in tech sectors and other companies set to
benefit from the wider application of AI, has already been buoyed by high
expectations about the productivity gains and cost savings this technology
will deliver.
China will also benefit from other structural changes playing out across the
economy. One of the potentially most meaningful change for equity investors is
corporate reform. As we discussed in the FY24 Annual Report, the government
and regulators are encouraging businesses to improve their capital allocation
and shareholder returns via higher dividends and share buybacks. These efforts
have been greatly welcomed by domestic and international investors, as they
view dividends to be a more predictable source of return. Corporate reform is
likely to remain a strong positive for the market as companies adopt better
governance practices.
Recent months have seen headwinds from the property market ease significantly.
Excess inventory levels have declined, supported by targeted government
measures such as direct funding to clear unsold homes, further reductions in
mortgage rates, and relaxed purchase rules in key cities. These interventions
are expected to mitigate the drag on consumer sentiment and support a gradual
recovery in housing demand. While banks continue to manage non-performing
loans tied to the property sector, systemic risks remain contained, with no
major capital shortfalls observed. The Ministry of Finance's recent
recapitalisation plan for state-owned banks further strengthens their capacity
to absorb losses, reinforcing financial stability. Together, these
developments underscore Beijing's commitment to addressing structural risks in
the property sector while fostering a more balanced, consumption-driven
economic recovery.
The portfolio is positioned to benefit from China's evolving regulatory
landscape, which now prioritises a pro-entrepreneur and pro-equities stance
following strategic interventions to stabilise markets and restore confidence
in the tech sector. While short-term volatility may persist, especially under
the current geopolitical uncertainties, the long-term outlook is bolstered by
resilient entrepreneurial innovation, particularly in technology-driven
sectors like semiconductors, software, EVs and robotics. Combined with
policymakers' renewed balance between fostering growth and modulating excess
capacity, these dynamics support a constructive trajectory for growth-oriented
equities in the foreseeable future.
We acknowledge past missteps in stock selection, particularly during periods
of heightened market volatility and regulatory shifts, which led to
disappointing performance. These missteps have underscored the importance of
dynamic risk assessment and deeper fundamental analysis. In response to
recent underperformance, we have strengthened and expanded our research
capabilities by recruiting additional experienced analysts and have refined
our investment framework and processes. We have been adapting the portfolio to
reflect new realities and gain exposure to unique growth opportunities,
particularly companies that will be beneficiaries of technological innovation,
carbon neutrality and consumption demand. We are comfortable that our holdings
are either concentrated in domestically focussed businesses with immunity from
tariffs, or in exporters that have strong pricing power and well-diversified
supply chains and are thus well-positioned to weather the challenges presented
by higher tariffs. We will continue to seek out interesting, attractively
valued growth opportunities as they evolve, to ensure that your Company
maintains its long track record of outright gains and outperformance over the
long term.
We thank you for your ongoing support.
Rebecca Jiang
Howard Wang
Li Tan
Investment Team
2nd June 2025
INTERIM MANAGEMENT REPORT
The Company is required to make the following disclosures in its half year
report:
Principal and Emerging Risks and Uncertainties
Supported by a detailed risk matrix, the Board has identified the principal
risks and uncertainties which face the Company. These risks fall into the
following broad categories: geopolitical; investment underperformance;
investment strategy; loss of Investment Team or Investment Manager; share
price discount; corporate governance; shareholder relations; financial;
cybercrime; fraud/other operating failures or weaknesses; inability to use
gearing; use of CFDs; legal and regulatory; risk of misrepresentation of ESG
credentials; global disruption including pandemics; ESG risk; and climate
change. While these categories have not changed from those reported in the
Strategic Report within the Annual Report and Financial Statements for the
year ended 30th September 2024, the Board considers that some uncertainties
within these categories have increased in risk since the year end and are
monitoring them carefully. These include the continuing conflicts between
Russia and the Ukraine and in the Middle East, heightened tensions between the
US and China, and between India and Pakistan, the introduction of
trade-related sanctions by both the US and China, and fragile consumer demand
in China. Last year, the Board also identified the following emerging risks:
social unrest within China; and impact of reshoring and tariffs.
Related Parties Transactions
During the first six months of the current 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 period.
Going Concern
Having considered the Company's investment objectives, risk management
policies, capital management policies and procedures, nature of the portfolio
and expenditure projections, the Directors believe that the Company has
adequate resources, an appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the foreseeable
future and, more specifically, that there are no material uncertainties
pertaining to the Company that would prevent its ability to continue in such
operational existence for at least 12 months from the date of the approval of
this half yearly financial report. In reaching that view, the Directors have
considered the impact of economic conditions in China, risks relating to the
Chinese property market, the financial stability of provincial governments and
continuing geopolitical tensions between China and the US on the Company's
financial, operational position and market conditions. They have
also considered the wider implications of the continuing conflicts between
Russia and the Ukraine and in the Middle East, and heightened tensions between
the US and China, and between India and Pakistan. For these reasons, they
consider there is reasonable evidence to continue to adopt the going concern
basis in preparing the accounts.
Directors' Responsibilities
The Board of Directors confirms that, to the best of its knowledge:
(i) the condensed set of Financial Statements contained within the half yearly
financial report has been prepared in accordance with FRS 104 'Interim
Financial Reporting' and gives a true and fair view of the state of affairs of
the Company and of the assets, liabilities, financial position and net return
of the Company, as at 31st March 2025, as required by the UK Listing Authority
Disclosure and Transparency Rule ('DTR') 4.2.4R; and
(ii) the interim management report includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R of the UK Listing Authority Disclosure
and Transparency Rules.
In order to provide these confirmations, and in preparing these financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and
prudent;
• state whether applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; 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.
For and on behalf of the Board
Alexandra Mackesy
Chairman
2nd June 2025
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 2025 31st March 2024 30th September 2024
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments
held at fair value through
profit or loss - 9,652 9,652 - (30,253) (30,253) - 4,194 4,194
Gains on derivative financial
instruments - 990 990 - - - - - -
Net foreign currency
(losses)/gains - (643) (643) - 923 923 - 1,308 1,308
Income from investments 707 - 707 615 - 615 4,346 106 4,452
Income from derivative financial
instruments(1) 9 - 9 - - - - - -
Interest receivable and similar
income(2) 78 - 78 33 - 33 96 - 96
Gross return/(loss) 794 9,999 10,793 648 (29,330) (28,682) 4,442 5,608 10,050
Management fee (221) (663) (884) (231) (692) (923) (429) (1,286) (1,715)
Other administrative expenses (292) - (292) (324) - (324) (647) - (647)
Net return/(loss) before
finance costs and taxation 281 9,336 9,617 93 (30,022) (29,929) 3,366 4,322 7,688
Finance costs (113) (338) (451) (161) (482) (643) (276) (829) (1,105)
Net return/(loss) before
taxation 168 8,998 9,166 (68) (30,504) (30,572) 3,090 3,493 6,583
Taxation (50) - (50) (18) - (18) (267) - (267)
Net return/(loss) after taxation 118 8,998 9,116 (86) (30,504) (30,590) 2,823 3,493 6,316
Return/(loss) per share (note 3) 0.14p 10.82p 10.96p (0.10)p (36.66)p (36.76)p 3.39p 4.20p 7.59p
( )
(1) Income from derivative financial instruments is in respect of long
CFDs.
(2) Includes income from securities lending.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the period.
The 'Total' column of this statement is the profit and loss account of the
Company and the 'Revenue' and 'Capital' columns represent supplementary
information prepared under guidance issued by the Association of Investment
Companies.
The net return/(loss) after taxation represents the return/(loss) for the
period and also the total comprehensive income.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Called up Exercised Capital
share Share warrant redemption Other Capital Revenue
capital premium reserve reserve reserve(1) reserves(2) reserve(2) Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Six months ended 31st March 2025 (Unaudited)
At 30th September 2024 20,803 80,951 3 581 37,392 87,666 - 227,396
Net return after taxation - - - - - 8,998 118 9,116
Dividends paid in the period (note 4) - - - - - (4,425) (118) (4,543)
At 31st March 2025 20,803 80,951 3 581 37,392 92,239 - 231,969
Six months ended 31st March 2024 (Unaudited)
At 30th September 2023 20,803 80,951 3 581 37,392 90,042 - 229,772
Proceeds from share forfeiture(3) - - - - - 323 - 323
Net loss after taxation - - - - - (30,504) (86) (30,590)
Dividends paid in the period (note 4) - - - - - (4,593) - (4,593)
Refund of unclaimed dividends(3) (note 4) - - - - - 161 - 161
At 31st March 2024 20,803 80,951 3 581 37,392 55,429 (86) 195,073
Year ended 30th September 2024
(Audited)
At 30th September 2023 20,803 80,951 3 581 37,392 90,042 - 229,772
Proceeds from share forfeiture(3) - - - - - 333 - 333
Net return after taxation - - - - - 3,493 2,823 6,316
Dividends paid in the year (note 4) - - - - - (6,202) (2,984) (9,186)
Refund of unclaimed dividends(3) (note 4) - - - - - - 161 161
At 30th September 2024 20,803 80,951 3 581 37,392 87,666 - 227,396
(1) Created during the year ended 30th September 1999, following a
cancellation of the share premium account.
(2) These reserves form the distributable reserves of the Company and
may be used to fund distribution to investors.
(3) The Company undertook an Asset Reunification Program to reunite
inactive shareholders with their shares and unclaimed dividends. Pursuant to
the Company's Articles of Association, the Company has exercised its right to
reclaim the shares of shareholders whom the Company, through its previous
Registrar, has been unable to locate for a period of 12 years or more. These
forfeited shares were sold in the open market by the Registrar and the
proceeds, net of costs, were returned to the Company. In addition, any
unclaimed dividends older than 12 years from the date of payment of such
dividends were also forfeited and returned to the Company.
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
At At At
31st March 31st March 30th September
2025 2024 2024
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 212,707 195,734 224,328
Investments on loan 16,068 7,712 11,069
Total investments held at fair value through profit or loss 228,775 203,446 235,397
Current assets
Derivative financial assets(1) 59 - -
Debtors 1,293 74 630
Current asset investments 5,240 1,033 347
Cash at bank 4,739 481 2,291
11,331 1,588 3,268
Current liabilities
Creditors: amounts falling due within one year(2) (5,335) (724) (11,269)
Derivative financial liabilities(1) (2,802) - -
Net current assets/(liabilities) 3,194 864 (8,001)
Total assets less current liabilities 231,969 204,310 227,396
Non current liabilities
Creditors: amounts falling due after more than one year(2) - (9,237) -
Net assets 231,969 195,073 227,396
Capital and reserves
Called up share capital 20,803 20,803 20,803
Share premium 80,951 80,951 80,951
Exercised warrant reserve 3 3 3
Capital redemption reserve 581 581 581
Other reserve 37,392 37,392 37,392
Capital reserves 92,239 55,429 87,666
Revenue reserve - (86) -
Total shareholders' funds 231,969 195,073 227,396
Net asset value per share (note 5) 278.8p 234.5p 273.3p
( )
(1) Derivative financial assets and liabilities represent the
unrealised gains and losses on the market exposure to Contracts for
Differences (CFDs).
(2) As at 31st March 2025, £3.9m (31st March 2024: £9.2m; 30th
September 2024: £nil) was drawn down from the loan facility.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 31st March 30th September
2025 2024 2024
£'000 £'000 £'000
Cash flows from operating activities
Net profit/(loss) before finance costs and taxation 9,617 (29,929) 7,688
Adjustment for:
Net (gains)/losses on investments held at fair value through
profit or loss (9,652) 30,253 (4,194)
Net gains on derivative financial instruments (990) - -
Net foreign currency losses/(gains) 643 (923) (1,308)
Dividend income (707) (615) (4,452)
Derivative income (9) - -
Interest income (48) (13) (48)
Realised gains/(losses) on foreign exchange transactions 13 (29) (298)
Realised exchange losses on the JPMorgan USD Liquidity Fund (59) - (155)
(Increase)/decrease in accrued income and other debtors (18) - 16
Decrease in accrued expenses (76) (79) (20)
Net cash outflow from operations before dividends and interest (1,286) (1,335) (2,771)
Dividends received 742 680 4,157
Interest received 48 13 48
Derivative income received 6 - -
Net cash (outflow)/inflow from operating activities (490) (642) 1,434
Purchases of investments and derivative financial instruments (49,830) (19,801) (51,159)
Sales of investments and derivative financial instruments 64,399 48,604 83,750
Settlement of derivative financial instruments 3,733 - -
Net cash inflow from investing activities 18,302 28,803 32,591
Equity dividends paid (4,543) (4,593) (9,186)
Refund of unclaimed dividends (note 4) - 161 161
Repayment of bank loan (5,421) (21,618) (21,618)
Proceeds from share forfeiture - 323 333
Interest paid (388) (1,007) (1,434)
CFD interest paid (118) - -
Net cash outflow from financing activities (10,470) (26,734) (31,744)
Increase in cash and cash equivalents 7,342 1,427 2,281
Cash and cash equivalents at start of period/year 2,638 87 87
Exchange movements (1) - 270
Cash and cash equivalents at end of period/year 9,979 1,514 2,638
Cash and cash equivalents consist of:
Cash at bank 4,739 481 2,291
JPMorgan USD Liquidity Fund 5,240 1,033 347
Total 9,979 1,514 2,638
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1. Financial Statements
The information contained within the condensed financial statements in this
half year report has not been audited or reviewed by the Company's auditors.
The figures and financial information for the year ended 30th September 2024
are extracted from the latest published financial statements of the Company
and do not constitute statutory accounts for that year. Those financial
statements have been delivered to the Registrar of Companies and included the
report of the auditors which was unqualified and did not contain a statement
under either section 498(2) or 498(3) of the Companies Act 2006.
2. Accounting policies
The financial statements are prepared 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.
FRS 104, 'Interim Financial Reporting', issued by the Financial Reporting
Council ('FRC') in March 2015 has been applied in preparing this condensed set
of financial statements for the six months ended 31st March 2025.
All of the Company's operations are of a continuing nature.
During the period ended 31st March 2025, the Company used Contracts for
Difference (CFDs) as part of its derivative transactions. Under FRS 102, these
derivatives are measured at fair value both initially and subsequently. The
fair value of CFDs is determined by the difference between the strike price
and the value of the underlying shares, as per the investment accounting
policy.
Income from CFDs is recognised as derivative income in the revenue column of
the Statement of Comprehensive Income, while interest paid on CFDs is
recognised as a finance cost, in accordance with the allocation policy of the
Company. Gains and losses from CFDs are recognised in the capital column of
the Statement of Comprehensive Income. Open CFD positions at the period-end
are shown at fair value in the Statement of Financial Position under current
assets or liabilities
The accounting policies applied to this condensed set of financial statements
are consistent with those applied in the financial statements for the year
ended 30th September 2024.
3. Return/(loss) per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 2025 31st March 2024 30th September 2024
£'000 £'000 £'000
Return/(loss) per share is based on the following:
Revenue return/(loss) 118 (86) 2,823
Capital return/(loss) 8,998 (30,504) 3,493
Total return/(loss) 9,116 (30,590) 6,316
Weighted average number of shares in issue 83,202,465 83,202,465 83,202,465
Revenue return/(loss) per share 0.14p (0.10)p 3.39p
Capital return/(loss) per share 10.82p (36.66)p 4.20p
Total return/(loss) per share 10.96p (36.76)p 7.59p
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 2025 31st March 2024 30th September 2024
Pence £'000 Pence £'000 Pence £'000
Dividend paid
First quarterly interim dividend 2.73 2,271 2.76 2,296 2.76 2,296
Second quarterly interim dividend 2.73 2,272 2.76 2,297 2.76 2,297
Third quarterly interim dividend - - - - 2.76 2,297
Fourth quarterly interim dividend - - - - 2.76 2,296
Total dividends paid 5.46 4,543 5.52 4,593 11.04 9,186
Refund of unclaimed dividends over 12 years old - (161) (161)
Net dividends 5.46 4,543 5.52 4,432 11.04 9,025
A third quarterly dividend of 2.73p has been declared for payment on 3rd June
2025 for the financial year ending 30th September 2025.
Dividend payments in excess of the revenue amount will be paid out of the
Company's distributable capital reserves.
5. Net asset value per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 2025 31st March 2024 30th September 2024
Net assets (£'000) 231,969 195,073 227,396
Number of shares in issue 83,202,465 83,202,465 83,202,465
Net asset value per share 278.8p 234.5p 273.3p
6. Fair valuation of investments
The fair value hierarchy disclosures required by FRS 102 are given below:
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 2025 31st March 2024 30th September 2024
Assets Liabilities Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000 £'000 £'000
Level 1 228,775 - 200,116 - 235,397 -
Level 2 59(1) (2,802)(1) 3,330(2) - - -
Total 228,834 (2,802) 203,446 - 235,397 -
( )
(1) Comprises the fair value of derivative financial instruments (long
CFDs).
(2) Participatory Notes. 31st March 2024: (Shanghai Liangxin
Electrical, Qingdao Haier Biomedical, Amoy Diagnostics).
7. Analysis of changes in net (debt)/cash
As at Other As at
30th September non-cash 31st March
2024 Cash flows charges 2025
£'000 £'000 £'000 £'000
Cash and cash equivalents
Cash at bank 2,291 2,379 69 4,739
Current asset investments(1) 347 4,963 (70) 5,240
2,638 7,342 (1) 9,979
Borrowings
Debt due after one year (8,699) 5,421 (596) (3,874)
Loan Interest (142) 372 (275) (45)
(8,841) 5,793 (871) (3,919)
Net (debt)/cash (6,203) 13,135 (872) 6,060
( )
(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.
JPMORGAN FUNDS LIMITED
2nd June 2025
For further information, please contact:
Lucy Dina
For and on behalf of
JPMorgan Funds Limited
Telephone: 0800 20 40 20 or or +44 1268 44 44 70
email: jpmam.investment.trusts@jpmorgan.com
(mailto: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 Half Year Report will be submitted to the National Storage
Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
The 2025 Half Year Report will also shortly be available on the Company's
website at www.jpmchinagrowthandincome.co.uk
(http://www.jpmchinagrowthandincome.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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