TIDMJGGI
RNS Number : 2182R
JPMorgan Global Growth & Income PLC
28 February 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN GLOBAL GROWTH & INCOME PLC (the "Company')
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHSED
31ST DECEMBER 2022
Legal Entity Identifier: 5493007C3I0O5PJKR078
Information disclosed in accordance with DTR 4.2.2
CHAIRMAN'S STATEMENT
I would like to extend a warm welcome to all shareholders in the
Company, including those of you that previously held shares in
JPMorgan Elect plc ('Elect').
The six-months period to 31st December 2022 has been an
extraordinary period for the Company with the completion of the
merger with The Scottish Investment Trust plc in August 2022 and
with the completion of the merger with Elect in December 2022,
effected in both cases by way of schemes of reconstruction. The
Company issued new Ordinary Shares and new C Shares in the Company
following approval from the respective companies' shareholders in
favour of the combinations. The Board looks forward to providing
shareholders with the benefits of economies of scale from the
enlarged asset base and in particular, greater liquidity in the
Company's Ordinary Shares. I would like to extend our thanks on
behalf of the Board to our Manager and our advisors for their
support with this more recent merger.
The Board composition expanded following the Elect merger, and
it gives me pleasure to welcome Steve Bates, who was appointed as a
Director of the Company on 20th December 2022. This appointment
ensures that both sets of shareholders are fully represented during
the initial stages of the merger. However, the Board is cognisant
of its size and the benefits of smaller boards, and it further
recognises the value and importance of diversity in the boardroom.
As we refresh the Board in future, as well as ensuring that we have
a range of diverse individuals with the necessary skills and
knowledge, we will aim to achieve a more ethnically diverse board
and with female representation to meet the recommendation of the
FTSE Women Leaders Review.
As announced on 16th February 2023, the realignment of the C
Share portfolio, from that of the Elect Managed Growth shares to
match that of the Company's Ordinary Shares, is now complete. The C
Shares will be converted to Ordinary Shares on a NAV-for-NAV basis,
which will rank pari passu in all respects with the existing issued
Ordinary Shares, including the right to receive all future
dividends declared in respect of the Ordinary Shares*. The
timetable and further details of the conversion will be announced
in due course.
As announced on 18th January 2023, James Cook has joined the
portfolio management team to work alongside current portfolio
managers, Helge Skibeli and Tim Woodhouse in the management of the
Company's portfolio. The investment process and investment
objective of the Company and its strategy has not changed. Rajesh
Tanna, a co-portfolio manager since 2019, has transitioned off the
Company's portfolio to focus on other portfolio management
responsibilities within JPMorgan Asset Management. We are pleased
to welcome James to the team and wish Rajesh all the best with his
other responsibilities.
The period under review saw a challenging environment, dominated
by significant geo-political uncertainty, increased market
volatility, high inflation leading to fiscal tightening by central
banks and rises in interest rates. The Russia/Ukraine conflict
continued. Despite this backdrop, I am pleased to report that our
performance over the six months to 31st December 2022 reverted to
positive returns after last year's negative absolute returns and
was comfortably ahead of our benchmark, the MSCI AC World Index (in
sterling terms) (the 'Benchmark'). Over the six months, the total
return on the Company's net assets (with debt at par) was +8.6%
compared with the return on our Benchmark of +3.3%. The return to
shareholders over the same period was +9.7%. This is testament to
the Investment Managers' disciplined approach to stock selection
and management of the portfolio.
The table below sets out these figures in more detail and
highlights the success of stock selection over the period. The
Investment Managers' Report provides a detailed commentary on
market developments, portfolio activity and the outlook.
*For the avoidance of doubt, C Shareholders will not be entitled
to the third interim dividend payable on 11th April 2023 to
shareholders on the register as at the close of business on 3rd
March 2023.
Performance attribution
Six months ended 31st December 2022
% %
---------------------------------------------------- ----- -----
Contributions to total returns
---------------------------------------------------- ----- -----
Benchmark Total Return 3.3
---------------------------------------------------- ----- -----
Asset allocation 0.4
---------------------------------------------------- ----- -----
Stock selection 5.4
---------------------------------------------------- ----- -----
Currency effect -
---------------------------------------------------- ----- -----
Gearing/cash -0.2
---------------------------------------------------- ----- -----
Investment Manager contribution 5.6
---------------------------------------------------- ----- -----
Portfolio total return 8.9
---------------------------------------------------- ----- -----
Management fees/other expenses -0.3
---------------------------------------------------- ----- -----
Net asset value total return - prior to structural
effects 8.6
---------------------------------------------------- ----- -----
Structural effects
Share buy-back/issuance -
---------------------------------------------------- ----- -----
Cum inc net asset value total return - Debt
at Par 8.6
---------------------------------------------------- ----- -----
Impact of fair value valuation to net asset
value
total return 0.2
---------------------------------------------------- ----- -----
Cum inc net asset value total return - Debt
at Fair 8.8
---------------------------------------------------- ----- -----
Ordinary share price total return 9.7
---------------------------------------------------- ----- -----
Source: JPMAM and Morningstar.
All figures are on a total return basis.
During the period under review, the Company's share price was
not immune to the market volatility and ranged from a small premium
to net asset value ('NAV'), during which the Company reissued
2,743,000 shares from Treasury to a small discount when the Company
bought back 343,261 shares into Treasury. Since the end of the half
year period, the Company's share price has returned to a small
premium to NAV and the Company has re-issued the 343,261 shares
that were held in Treasury and has issued 115,000 new Ordinary
shares as at 24th February 2023. At the time of writing there are
no shares held in Treasury.
The Company delivers email updates on the Company's progress
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://web.gim.jpmorgan.com/emea_investment_trust_subscription/welcome
Writing my statement in the Annual Report six months ago, I
noted that there were challenges facing the global economy and
these continue. War, elevated global geopolitical tensions,
increasing inflation, rising interest rates and slowing economic
growth all point towards an uncertain outlook at least over the
next couple of years. Much of the world may be facing recession in
2023, if not already there. Notwithstanding these risks, the
positive start to 2023 continues with interest rate and inflation
optimism as central banks stuck to their previous guidance and
delivered the news investors were expecting. Global equity markets
have continued their ascent on hopes that there is light at the end
of the tunnel.
We note that current valuations of our portfolio stocks look
reasonably attractive from a long-term perspective and should
contribute to strong investment returns over time. We should not
forget that recessions create investment opportunities, and the
Board is confident that the Investment Manager is well positioned
to identify these global opportunities and continue to deliver good
performance over the longer term.
Tristan Hillgarth
Chairman 27th February 2023
INVESTMENT MANAGERS' REPORT
Over the six-month period to 31st December 2022, the portfolio
outperformed its benchmark, the MSCI All Countries World index. The
benchmark was up 3.3% over this time, with the portfolio up
8.6%.
In this report we will discuss the drivers of this strong
performance, our outlook for 2023, and how we're positioning the
portfolio to benefit from long-term trends, whilst remaining
disciplined on valuation.
Good active management has rarely been so important
Much is written on the subject of where equity markets go from
here, with 2022 seeing some retrenchment after two years of an
impressive bull market. That rally was in no small part driven by
government stimulus and low interest rates, and it is our opinion
that we are unlikely to see a repeat of those financial conditions.
As such, it seems prudent to assume that the days of this rising
tide lifting all ships are behind us. It is difficult to forecast
the direction of equity markets, particularly with so many
uncertainties facing investors, and so where we focus our energy is
on identifying the best investments around the world. It is our
belief that this strategy will leave our investors in a strong
position, regardless of the trajectory for stocks.
One important message to our investors is ingrained in the
stability that this trust brings, and of course the predictable
income stream. We look to generate steady, consistent investment
outperformance, with our returns rooted in detailed analysis, and
our risk profile one that seeks to preserve those gains. We do not
seek to take large speculative bets in companies where even the
best forecasters would have no clear idea of the end result. Does
that mean we risk missing a company that sees its share price rise
many times over? Perhaps. But we feel confident we will also avoid
speculating on companies that see their price decline to virtually
nothing.
Performance Review and Spotlight on Stocks
We were delighted to see continued good performance over the
past six months, from a diversified selection of companies around
the world. Our disciplined approach to stock selection, looking to
identify high quality companies at compelling valuations, meant
that we saw positive contributions from the majority of sectors
during this period. In a world where interest rates, and therefore
the cost of capital, are higher, there are many implications for
the valuation of financial assets - and we believe our investment
philosophy is well suited to this new regime.
The Automotive sector was one of our best contributing sectors
during this period, driven by a number of names. The first of these
was Volvo - the truck manufacturer - with the shares up 18% over
the past six months. The company published strong results during
this period, with truck orders ahead of expectations, a better
performance on deliveries, and strong profit margins leading to
earnings expectations rising. This was a particularly impressive
performance given the supply chain issues that they continue to
wrestle with, and it is a company we continue to see as well
positioned in the shift towards electric trucks.
Michelin has long held a leading position in the tyre market
and, is another name that we see as a beneficiary of the move to
electronic vehicles ('EV'). The increased technical demands as a
result of the heavier vehicles requires expertise that few
companies possess, and over the next decade we expect this to help
their pricing power. Even in a difficult operating environment over
the past few months, they were able to maintain their operating
profit guidance in the face of inflationary materials costs, and we
feel confident they can continue to operate at a high level. We had
added to the shares during the final months of 2022 and have been
pleased to see this strong contribution.
Finally, within this sector, our belief that Tesla shares were
overvalued meant that we avoided a name that saw very poor
performance. The shares fell over 60% during the final quarter of
the year, reflecting a more difficult pricing environment, and in
our view the realisation that Tesla is not immune to the wider
competitive challenges that exist in this market. As we see the
continued rollout of EVs from other manufacturers, we believe that
pricing will continue to face pressure - which in turn means that
high margin expectations are unlikely to be met. Of course, if
Tesla were to fall to a level that we felt was an attractive entry
point, we could change our position. For now, we see better
opportunities elsewhere.
Another strong contributor during this six-month period was Ross
Stores, a discount retailer based predominantly in the US. They
offer apparel and home goods from well-known brands at more
attractive prices, and the current inflationary environment has
meant that demand for more affordable - yet still fashionable -
options has rarely been more relevant. 2022 was a difficult year
for this sector, as the excess inventory that plagued much of the
retail landscape meant consumers were seeing more discounts than
ever before - but this provided the perfect buying environment for
Ross. We expect that as traffic to their stores continues to
improve, this will drive good earnings growth through 2023. After a
strong run for the shares, we have however remained disciplined on
position size, recently trimming the size of our holding.
The industrial cyclicals sector was the best performing sector,
and pleasingly this performance was also driven by a differentiated
group of names. One name that has consistently contributed in
recent quarters is Trane Technologies, a US heating, refrigeration,
and air conditioning company. We have seen continued strong results
from this company, as the move towards more efficient heating and
cooling of buildings has provided a long-term structural tailwind,
and at the same time they have demonstrated excellent shorter-term
pricing power. We are always cognisant of how large we let
positions in cyclical companies grow, and after a very strong
environment for both residential and non-residential construction,
we have continued to trim this back on continued
outperformance.
It is always important to assess where investments did not
succeed in the way we hoped, and to judge the best course of action
going forwards. In some instances, we believe that something in our
thesis is broken, and we choose to cut our losses. In others, we
believe that a position will prove with time to be a good
investment and, will hold onto our positions - or in some cases add
further. Lojas Renner, the Brazilian department store clothing
company, was the largest detractor from overall performance.
Inflation significantly impacted the purchasing power of the
Brazilian consumer, and with limited increases in salaries, this
led to a reduction in consumer spending in their department stores
versus our expectations. This pressure also extended to their
consumer finance division, as we began to see higher credit card
delinquency rates impact results - and this remains a concern
looking forwards. We should not overlook the political environment
and the impact on share prices either - the remarkable resurgence
of Lula da Silva has led to a very divided nation, and in Emerging
Markets in particular that can bring risk. Ultimately, we felt that
we had better investment opportunities elsewhere and chose to sell
our position post the end of the half year period.
Charter Communications was another large detractor over the past
six months, after subscriber growth at the US cable company fell
short of expectations. We believe this is in no small part a
function of the post-Covid churn environment - where the lower
levels of activity in the housing market have had a knock-on effect
on the telecoms companies that supply their broadband. However,
this pause in activity does nothing to change our belief that
Charter continues to have significant pricing power in the coming
years, as consumers pay for faster speeds, to satisfy our
ever-increasing consumption of data. As a result, we continue to
own the stock.
The media and internet sector was the most challenging over the
past six months, with two names in particular - Amazon and Meta -
proving particularly difficult investments over this period. Meta
in some ways demonstrated exactly why we had purchased the shares.
They generated excellent operating cash flow from their core
business, we saw users come in stronger than some in the market had
feared, and ultimately all the characteristics that we would expect
from one of the leading digital advertising platforms. However, the
investments the company announced it was continuing to make in
Reality Labs - their augmented reality/metaverse vision - were far
larger than we had expected. Operating expenses will rise by over
$10 billion in 2023, with capital expenditure also rising. Part of
our investment case had been that Meta would be disciplined on
spending here - particularly as there are not many other
competitors investing in this space. Unfortunately, we were
disappointed. However, we do still believe that the underlying cash
flow generated makes this business worth more than it is worth
today, and so we maintained a small position in the name.
Amazon is a name we continue to have very high conviction in,
and as such we have maintained it as the largest active position
versus the benchmark. The poor performance over the past six months
has been down to a combination of factors, all of which we believe
are temporary. First, the core Retail business has seen depressed
operating profit margins for some time. This was in no small part
due to the extra expenses associated with the pandemic. Amazon
added capacity in order to serve customers' increased demand as
best they could, but it meant that when the world began to reopen
and consumers pulled back on ecommerce spending, that additional
capacity was seeing poor capacity utilisation. Amazon has been
rationalising their spending for some time, but it will not be
until the middle of 2023 that the effects will be seen. This
disappointed the market, as there had been some hope that it would
occur sooner, but does not change our belief that the Retail
division will be a very profitable division in the future. The
second major part of Amazon's business is the public cloud
division, Amazon Web Services. This business also benefited from
increased spending on their services through the pandemic and, is
now seeing a period of decelerating growth. We see this as natural
evolution as the business becomes larger, and the case for
companies moving workloads
to the cloud is as compelling as ever. With these temporary
factors pressuring the shares, we continue to opportunistically add
to our position.
Portfolio Positioning and Outlook
These past few months have been a reminder that investing always
comes with some degree of uncertainty, yet despite this we can rely
on the tools we have used for many years to deliver the best
possible outcomes for our shareholders. We have spoken at length
about the pandemic, the conflict in Ukraine, and the risks that
come with inflationary pressures and central bank tightening. The
next couple of years might be equally uncertain - for instance that
tightening might well mean a recession towards the end of 2023, but
we don't allow this uncertainty to distract from the business of
finding the very best investments. As we think about the long-term,
we think about what opportunities might arise from this
uncertainty, and our fantastic team of research analysts work
tirelessly to bring those very best ideas to the portfolio.
Our only brief comment on the macroeconomic outlook this time
around will be to say that the transmission mechanism for monetary
policy works over years, not weeks or months. We should not expect
a clear answer to the question of a recession for some time, and we
would argue that even if one were to occur, it is more likely to be
a mild one. Banks are better capitalised than in the past, the
consumer has plenty of excess savings, the labour market is tight,
and ultimately all of those factors contribute to one conclusion -
there is just not that much leverage in the system. It is this
leverage that in the past has caused recessions to become crises,
and so whilst we continue to watch carefully, we don't believe
there is any cause for markets to panic, even if economic data does
weaken this year.
We have spent a significant amount of time parsing through data
to ensure that we are taking advantage of the very best valuation
opportunities. We have seen a rapidly evolving landscape in recent
months. Where a year ago we saw a sizeable growth bubble in the US,
we now see (some) more reasonable valuations. We have seen a
rebound in cyclicals more recently, yet there is still a real
opportunity in certain sectors to find good value in these
companies more sensitive to the overall economic environment. You
might ask why, if we see a risk of a recession, we would choose to
invest in these more cyclical names? The answer, of course, is
valuation. If we were to wait until there was no controversy around
these companies, we would miss the opportunity. We are fortunate to
have over 30 years of data that helps us contextualise when
companies are cheap versus their peers. It is that insight that has
driven the strong recent performance, and we will continue to
search out those most attractively valued names.
One such example of finding good value when there has been
controversy is Nike, which lost almost 20% of its value from July
1st through the end of September. This was the result of some
inventory mismanagement, which led to some in the market
questioning their strategy of focusing more on reaching the end
consumer themselves, rather than relying on wholesalers. We felt
this was an overreaction to an event that reflected more about the
challenges of supply chain disruptions than anything broken in
their strategy and, added to the name over the following weeks. To
fund this, we trimmed exposure in names that were no longer looking
as attractively valued, with one such example also in the Retail
sector being McDonalds. This is no reflection on the quality of
McDonalds as a business, but simply what is required to be nimble
in the portfolio.
A couple of new names in the portfolio to mention are UPS and
Astrazeneca. UPS is a company that we felt had very
underappreciated margin prospects, as improved pricing power in the
package delivery industry, combined with more discipline around
capital spending, driver higher returns. We see their revenue
benefiting from stronger business-to-business (B2B) spending, which
was depressed through the pandemic, and this too should help
profits remain resilient. Astrazeneca is a company that we decided
to initiate a position in after a pullback, given the
characteristics for which we have admired them for some time remain
intact. They have industry-leading topline growth, with recent
treatment launches primarily in oncology, but supplemented with
rare disease and biopharma therapies. This growth should lead to
rising operating profit margins, and longer-term, the innovation
for which they have always been known should drive one of the
strongest pipelines of new products versus peers.
One notable characteristic of the portfolio today is the
sizeable overweight to companies based in the United States. Whilst
we are finding many opportunities in names that might be considered
more cyclical, we do of course think carefully about the range of
outcomes for each company. Undeniably, the US has been a more
resilient economy than much of the rest of the world for some time,
as they are less susceptible to external shocks impacting economic
growth. Europe was facing a difficult time after the Russian
invasion of Ukraine, and even China now still faces an ageing
population despite reopening looking to boost the economy in the
short-term. Therefore, to ensure that balance exists in the
portfolio, and that no economic outcome can overly drive the
fortunes of our shareholders, we see it as prudent to have more of
the portfolio in US companies than has been the case for some time.
One other important driver of this is the more appealing valuations
of some US technology companies, after significant pullbacks in
their shares over the past year. The semiconductor sector is one
example where we have large positions in a number of US-listed
companies - NXP Semiconductor, Analog Devices, and Advanced Micro
Devices being examples of industry-leading technology companies
that we see very compelling investment cases for.
Gearing currently remains around 2%, which is driven by our
long-term framework, based on long-term valuations, the trajectory
for earnings, and the macroeconomic risks that exist. While we see
compelling stock opportunities, the market is no longer looking
under-valued relative to history and we see downside risks to
corporate earnings.
Finally, we would like to thank you all for your support. This
has been an exciting time for the Company, as we again announced a
merger with another investment trust, JPMorgan Elect plc. This once
more increases the size of your Company, bringing with it the
benefit of better visibility and liquidity, without changing the
consistent methodology with which we have run the trust for many
years. We look forward to partnering with you all for a successful
2023.
Helge Skibeli
Tim Woodhouse
James Cook
Portfolio Managers 27 February 2023
INTERIM MANAGEMENT REPORT
The Company is required to make the following disclosures in its
half year report:
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Company have
not changed and fall into the following broad categories:
investment and strategy; market; accounting, legal and regulatory;
operational and cyber crime; going concern; financial; pandemics;
climate change; inflation and, geopolitical risk. Information on
principal and emerging risks faced by the Company is given in the
Business Review section within the 2022 Annual Report and Financial
Statements.
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.
Going Concern
The Directors believe, having considered the Company's
investment objectives, risk management policies, capital management
policies and procedures, nature of the portfolio and expenditure
projections, 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 operation existence for at least 12
months from the date of the approval of this half yearly financial
report. For these reasons, they consider there is reasonable
evidence to continue to adopt the going concern basis in preparing
the financial statements.
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' 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 December 2022, as required by the Disclosure Guidance and
Transparency Rules 4.2.4R; and
(ii) the interim management report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the Disclosure
Guidance 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
Tristan Hillgarth
Chairman 27 February 2023
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st December 2022(1) 31st December 2021 30th June 2022
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- -------- --------- --------- -------- --------- --------- -------- ---------- ----------
Gains/(losses)
on investments
held at fair value
through
profit or loss - 17,614 17,614 - 47,699 47,699 - (36,835) (36,835)
Net foreign
currency
(losses)/gains - (1,914) (1,914) - 3,097 3,097 - 3,386 3,386
Income from
investments 9,306 - 9,306 5,228 - 5,228 14,520 - 14,520
Interest receivable
and similar
income 906 - 906 20 - 20 160 - 160
-------------------- -------- --------- --------- -------- --------- --------- -------- ---------- ----------
Gross return/(loss) 10,212 15,700 25,912 5,248 50,796 56,044 14,680 (33,449) (18,769)
Management fee (159) (478) (637) (366) (1,098) (1,464) (825) (2,474) (3,299)
Other
administrative
expenses (678) - (678) (279) - (279) (591) - (591)
-------------------- -------- --------- --------- -------- --------- --------- -------- ---------- ----------
Net return/(loss)
before finance
costs and taxation 9,375 15,222 24,597 4,603 49,698 54,301 13,264 (35,923) (22,659)
Finance costs (589) (1,768) (2,357) (174) (522) (696) (374) (1,122) (1,496)
-------------------- -------- --------- --------- -------- --------- --------- -------- ---------- ----------
Net return/(loss)
before taxation 8,786 13,454 22,240 4,429 49,176 53,605 12,890 (37,045) (24,155)
Taxation (1,065) (271) (1,336) (621) - (621) (1,408) - (1,408)
-------------------- -------- --------- --------- -------- --------- --------- -------- ---------- ----------
Net return/(loss)
after taxation 7,721 13,183 20,904 3,808 49,176 52,984 11,482 (37,045) (25,563)
-------------------- -------- --------- --------- -------- --------- --------- -------- ---------- ----------
Return/(loss)
per Ordinary
share (note 3) 2.90p 6.16p 9.06p 2.46p 31.71p 34.17p 7.24p (23.37)p (16.13)p
Return per C share
(note 3) 0.81p (10.48)p (9.67)p
-------------------- -------- --------- --------- -------- --------- --------- -------- ---------- ----------
(1) The figures for the six months to 31st December 2022 include
the returns and losses for both the Ordinary shares and the C
shares, which were created on 19th December 2022.
All revenue and capital items in the above statement derive from
continuing operations. During the period, the Company acquired the
assets of The Scottish Investment Trust plc and JPMorgan Elect plc
following schemes of reconstruction. No other 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) on ordinary activities after taxation
represents the profit/(loss) for the period and also the total
comprehensive income.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Called Capital
up
share Share redemption Capital Revenue
capital premium reserve reserves(1) reserve(1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- ---------- ----------- ------------ ----------- ----------
Six months ended 31st December
2022 (Unaudited)
At 30th June 2022 8,305 151,221 27,401 482,486 - 669,413
Ordinary shares issued 124 10,744 - - - 10,868
Ordinary shares issued as a
result of Merger of
Scottish Investment Trust
plc (SCIN)(note 7) 6,696 607,587 - - - 614,283
Ordinary shares issued as a
result of Merger of
JPMorgan Elect plc (JPE) (note
7) 928 79,708 - - - 80,636
C Shares issued in respect
of the Merger with
JPMorgan Elect plc(2) (JPE)
(note 7) 13,211 245,203 - - - 258,414
Repurchase of shares into Treasury - - - (1,400) - (1,400)
Costs in respect of shares
issued following the
merger with SCIN and JPE - (689) - - - (689)
Blocklisting fees paid - - - (129) - (129)
Net return - - - 13,183 7,721 20,904
Dividends paid on Ordinary
shares in the
period (note 4) - - - (12,371) (7,508) (19,879)
------------------------------------ -------- ---------- ----------- ------------ ----------- ----------
At 31st December 2022 29,264 1,093,774 27,401 481,769 213 1,632,421
------------------------------------ -------- ---------- ----------- ------------ ----------- ----------
Six months ended 31st December
2021 (Unaudited)
At 30th June 2021 7,746 92,019 27,401 526,208 - 653,374
Ordinary shares issued 153 13,640 - - - 13,793
Issue of shares from Treasury - 9,836 - 6,858 - 16,694
Blocklisting fees paid - - - (102) - (102)
Net return - - - 49,176 3,808 52,984
Dividends paid on Ordinary
shares in the year (note 4) - - - (7,690) (3,808) (11,498)
------------------------------------ -------- ---------- ----------- ------------ ----------- ----------
At 31st December 2021 7,899 115,495 27,401 574,450 - 725,245
------------------------------------ -------- ---------- ----------- ------------ ----------- ----------
Year ended 30th June 2022
(Audited)
At 30th June 2021 7,746 92,019 27,401 526,208 - 653,374
Ordinary shares issued 559 49,636 - - - 50,195
Issue of shares from Treasury - 9,836 - 6,858 - 16,694
Costs in respect of shares
issued - (270) - - - (270)
Blocklisting fees paid - - - (102) - (102)
Net (loss)/return - - - (37,045) 11,482 (25,563)
Dividends paid on Ordinary
shares in the year (note 4) - - - (13,433) (11,482) (24,915)
------------------------------------ -------- ---------- ----------- ------------ ----------- ----------
At 30th June 2022 8,305 151,221 27,401 482,486 - 669,413
------------------------------------ -------- ---------- ----------- ------------ ----------- ----------
(1) These reserves form the distributable reserves of the
Company and may be used to fund distributions to investors via
dividend payments.
(2) The C Share class was created on 19th December 2022
following the transfer of assets from the JPMorgan Elect plc
Managed Growth Portfolio in accordance with the scheme of
reconstruction as detailed in the Prospectus and Circular published
by the Company on 21st November 2022.
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
At 31st December 2022 At At
Ordinary C Share Company 31st December 30th
June
Share
Class Class(2) Total 2021 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ----------- ------------ ----------- -------------- ----------
Fixed assets
Investments held at fair value
through profit
or loss 1,384,185 250,592 1,634,777 718,013 676,778
--------------------------------------- ----------- ------------ ----------- -------------- ----------
Current assets
Derivative financial assets 5,932 1,573 7,505 2,671 4,637
Debtors 7,232 583 7,815 2,535 3,270
Cash and cash equivalents 121,034 3,140 124,174 62,745 41,963
--------------------------------------- ----------- ------------ ----------- -------------- ----------
134,198 5,296 139,494 67,951 49,870
Current liabilities
Creditors: amounts falling
due within one year (4,007) (6) (4,013) (9,589)(1) (2,417)
Derivative financial liabilities (5,635) (24) (5,659) (1,212) (5,072)
--------------------------------------- ----------- ------------ ----------- -------------- ----------
Net current assets 124,556 5,266 129,822 57,150 42,381
--------------------------------------- ----------- ------------ ----------- -------------- ----------
Total assets less current liabilities 1,508,741 255,858 1,764,599 775,163 719,159
--------------------------------------- ----------- ------------ ----------- -------------- ----------
Creditors: amounts falling
due after more
than one year (131,906) - (131,906) (49,918) (49,746)
Provisions for liabilities
and charges
Capital gains tax payable (272) - (272) - -
--------------------------------------- ----------- ------------ ----------- -------------- ----------
Net assets 1,376,563 255,858 1,632,421 725,245 669,413
--------------------------------------- ----------- ------------ ----------- -------------- ----------
Capital and reserves
Called up share capital 16,053 13,211 29,264 7,899 8,305
Share premium 848,571 245,203 1,093,774 115,495 151,221
Capital redemption reserve 27,401 - 27,401 27,401 27,401
Capital reserves 484,538 (2,769) 481,769 574,450 482,486
Revenue reserve - 213 213 - -
--------------------------------------- ----------- ------------ ----------- -------------- ----------
Total shareholders' funds 1,376,563 255,858 1,632,421 725,245 669,413
--------------------------------------- ----------- ------------ ----------- -------------- ----------
Net asset value per Ordinary
share (note 5) 429.2p - 429.2p 459.1p 403.1p
Net asset value per C share(2)
(note 5) - 968.3p 968.3p
--------------------------------------- ----------- ------------ ----------- -------------- ----------
(1) Includes GBP4,729,000 performance fee payable in respect of
accruals to 31st December 2021. No further performance fee has been
accrued since 1st January 2022 under the revised management fee
arrangements.
(2) The C Share class was created on 19th December 2022
following the transfer of assets from the JPMorgan Elect plc
Managed Growth Portfolio in accordance with the scheme of
reconstruction as detailed in the Prospectus and Circular published
by the Company on 21st November 2022.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
31st December 31st December 30th
June
2022 2021 2022
GBP'000 GBP'000 GBP'000
--------------------------------------------- -------------- -------------- -----------
Net cash outflow from operations before
dividend and
interest (note 6) (1,693) (3,399) (9,945)
Dividends received 5,583 4,857 12,531
Interest received 638 15 147
Overseas tax recovered 62 15 37
Interest paid (3,068) (691) (1,475)
Capital gains tax paid (1) - -
--------------------------------------------- -------------- -------------- -----------
Net cash inflow from operating activities 1,521 797 1,295
--------------------------------------------- -------------- -------------- -----------
Purchases of investments (533,811) (259,876) (554,563)
Sales of investments 532,728 244,354 493,049
Settlement of forward currency contracts (2,779) 2,931 4,843
--------------------------------------------- -------------- -------------- -----------
Net cash outflow from investing activities (3,862) (12,591) (56,671)
--------------------------------------------- -------------- -------------- -----------
Dividends paid (19,879) (11,498) (24,915)
Issue of Ordinary shares, excluding mergers 10,868 13,516 50,195
Net cash acquired following merger with 97,044 - -
SCIN and JPE (note 7)
Costs in respect of shares issued following
the merger with
SCIN and JPE (689) - (270)
Issue of shares from Treasury - 16,694 16,694
Repurchase of shares into Treasury (1,400) - -
Blocklisting fees (129) (102) (102)
Repayment of bank loans - - (199)
--------------------------------------------- -------------- -------------- -----------
Net cash inflow from financing activities 85,815 18,610 41,403
--------------------------------------------- -------------- -------------- -----------
Increase/(decrease) in cash and cash
equivalents 83,474 6,816 (13,973)
--------------------------------------------- -------------- -------------- -----------
Cash and cash equivalents at start of
period 41,963 55,933 55,933
Exchange movements (1,263) (4) 3
--------------------------------------------- -------------- -------------- -----------
Cash and cash equivalents at end of
period 124,174 62,745 41,963
--------------------------------------------- -------------- -------------- -----------
Cash and cash equivalents consist of:
Cash and short term deposits 22,995 9,454 7,942
Cash held in JPMorgan Sterling Liquidity
Fund 101,179 53,291 34,021
--------------------------------------------- -------------- -------------- -----------
Total 124,174 62,745 41,963
--------------------------------------------- -------------- -------------- -----------
RECONCILIATION OF NET DEBT
As at As at
30th June Other 31st December
non-cash
2022 Cash flows charges 2022
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- ----------- --------- --------------
Cash and cash equivalents
Cash 7,942 16,316 (1,263) 22,995
Cash equivalents 34,021 67,158 - 101,179
--------------------------- ---------- ----------- --------- --------------
41,963 83,474 (1,263) 124,174
--------------------------- ---------- ----------- --------- --------------
Borrowings
Debt due after one year (49,746) - (82,160) (131,906)
--------------------------- ---------- ----------- --------- --------------
(49,746) - (82,160) (131,906)
--------------------------- ---------- ----------- --------- --------------
Total (7,783) 83,474 (83,423) (7,732)
--------------------------- ---------- ----------- --------- --------------
Other non-cash charges includes the transfer of the bonds from
SCIN, amortisation adjustment and other foreign exchange gains and
losses.
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 31st December 2022.
1. Financial statements
The information contained within the financial statements in
this half year report has not been audited or reviewed by the
Company's auditor.
The figures and financial information for the year ended 30th
June 2022 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 auditor
which is 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 have been prepared in accordance with
the Companies Act 2006, FRS 102 'The Financial Reporting Standard
applicable in the UK and Republic of Ireland' of the United Kingdom
Generally Accepted Accounting Practice ('UK GAAP') and with the
Statement of Recommended Practice 'Financial Statements of
Investment Trust Companies and Venture Capital Trusts' (the 'SORP')
issued by the Association of Investment Companies in July 2022.
FRS 104, 'Interim Financial Reporting', issued by the Financial
Reporting Council ('FRC') in March 2015, and updated in March 2018
has been applied in preparing this condensed set of financial
statements for the six months ended 31st December 2022.
All of the Company's operations are of a continuing nature.
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 June 2022.
Issue of Shares Pursuant to a Scheme of Reconstruction of
Scottish Investment Trust (SCIN) and JPMorgan Elect plc (JPE)
('merger')
On 31st August 2022, the Company issued new ordinary shares to
shareholders of SCIN in consideration for the receipt by the
Company of assets pursuant to a scheme of reconstruction and
liquidation of SCIN. On 19th December 2022, the Company issued new
ordinary shares to shareholders of JPE in consideration for the
receipt by the Company of assets pursuant to a scheme of
reconstruction and liquidation of JPE.
The Directors have considered the substance of the assets and
activities of SCIN and JPE in determining whether these
acquisitions represent the acquisition of a business. In this case
the acquisition is not judged to be an acquisition of a business,
and therefore has not been treated as a business combination.
Rather, the cost to acquire the assets and liabilities of SCIN and
JPE has been allocated between the acquired identifiable assets and
liabilities based on their relative fair values on the acquisition
date without attributing any amount to goodwill or to deferred
taxes. Investments and cash were transferred from both SCIN and
JPE. In addition, 5.75% bonds were also transferred from SCIN.
Apart from the bonds, all assets were transferred at fair value,
with the liability associated with the bond recognised at amortised
cost. These assets have been recognised in share capital and share
premium, as shown in Statement of Changes in Equity. Direct costs
in respect of the shares issued have been recognised in share
premium, whereas other professional costs in relation to the merger
have been recognised as transaction costs included within
profit/(loss) on investments held at fair value.
Management fee and finance costs
Management fees and finance costs are allocated 25% to revenue
and 75% to capital in line with the Board's expected long-term
split of revenue and capital return from the Company's investment
portfolio.
The Manager has waived management fees in lieu of contribution
towards the costs associated with the merger of the Company with
SCIN and JPE ('Manager's Contribution'). The management fee has
been waived for a period of eight months from the admission date
following the respective mergers. Further details on the Manager's
Contribution can be found in the prospectuses issued by the Company
for each of the mergers with SCIN and JPE, dated 5th August 2022
and 21st November 2022 respectively.
Finance costs are payable on the GBP82.8 million 5.75% bonds
substituted from SCIN, GBP30 million 2.93% unsecured loan notes,
GBP20 million 2.36% secured bond and GBP1000 4.5% perpetual
debenture stock.
3. Return/(loss) per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st December 31st December 30th June
2022 2021 2022
--------------------------------- ----------------- ----------------- ------------
Ordinary Share Class GBP'000 GBP'000 GBP'000
Return per share is based
on the following:
Revenue return 7,508 3,808 11,482
Capital return/(loss) 15,952 49,176 (37,045)
--------------------------------- ----------------- ----------------- ------------
Total return/(loss) 23,460 52,984 (25,563)
--------------------------------- ----------------- ----------------- ------------
Weighted average number of
shares in issue 258,804,282 155,078,171 158,538,647
Revenue return per share 2.90p 2.46p 7.24p
Capital return per share/(loss) 6.16p 31.71p (23.37)p
--------------------------------- ----------------- ----------------- ------------
Total return/(loss) per share 9.06p 34.17p (16.13)p
--------------------------------- ----------------- ----------------- ------------
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st December 31st December 30th June
2022 2021 2022
C Share Class GBP'000 GBP'000 GBP'000
--------------------------------- ----------------- ----------------- ------------
Return per share is based
on the following:
Revenue return 213 - -
Capital return (2,769) - -
--------------------------------- ----------------- ----------------- ------------
Total return (2,556) - -
--------------------------------- ----------------- ----------------- ------------
Weighted average number of 26,422,789 - -
shares in issue
Revenue return per share 0.81p - -
Capital return per share (10.48)p - -
--------------------------------- ----------------- ----------------- ------------
Total return per share (9.67)p - -
--------------------------------- ----------------- ----------------- ------------
The C Share class was created on 19th December 2022 following
the transfer of assets from the JPMorgan Elect plc Managed Growth
Portfolio in accordance with the scheme of reconstruction as
detailed in the Prospectus and Circular published by the Company on
21st November 2022.
4. Dividends paid on Ordinary shares
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st December 31st December 30th June
2022 2021 2022
GBP'000 GBP'000 GBP'000
------------------------------ ----------------- ----------------- -----------
2022 fourth interim dividend
of 4.24p (2021: 3.29p) 7,023 4,963 4,963
2023 first interim dividend
of 4.25p (2022: 4.24p) 12,856 6,535 6,535
2022 second interim dividend
of 4.24p - - 6,638
2022 third interim dividend
of 4.24p - - 6,779
------------------------------ ----------------- ----------------- -----------
Total dividends paid in the
period/year 19,879 11,498 24,915
------------------------------ ----------------- ----------------- -----------
A second interim dividend of 4.25p has been paid on 6th January
2023 for the financial year ending 30th June 2023, costing
GBP12,841,000.
A third interim dividend of 4.25p per share has been declared
for payment on 11th April 2023 for the financial year ending 30th
June 2023.
5. Net asset value per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
Ordinary Share Class 31st December 31st December 30th June
2022 2021 2022
--------------------------- ----------------- ----------------- ------------
Net assets (GBP'000) 1,376,563 725,245 669,413
Number of shares in issue 320,702,087 157,974,285 166,086,285
--------------------------- ----------------- ----------------- ------------
Net asset value per share 429.2p 459.1p 403.1p
--------------------------- ----------------- ----------------- ------------
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
C Share Class 31st December 31st December 30th June
2022 2021 2022
--------------------------- ----------------- ----------------- ------------
Net assets (GBP'000) 255,858 - -
Number of shares in issue 26,422,789 - -
--------------------------- ----------------- ----------------- ------------
Net asset value per share 968.3p - -
--------------------------- ----------------- ----------------- ------------
The C Share class was created on 19th December 2022 following
the transfer of assets from the JPMorgan Elect plc Managed Growth
Portfolio in accordance with the scheme of reconstruction as
detailed in the Prospectus and Circular published by the Company on
21st November 2022. Further details on the status of the C Share
portfolio are provided in the Chairman's Statement in the full Half
Year Report.
6. Reconciliation of net return/(loss) before finance costs and
taxation to net cash outflow from
operations before dividends and interest
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st December 31st December 30th June 2022
2022 2021
GBP'000 GBP'000 GBP'000
---------------------------------- ----------------- ----------------- -----------------------------
Net return/(loss) before finance
costs and taxation 24,597 54,301 (22,659)
(Less capital return)/add
capital loss before finance
costs and taxation (15,222) (49,698) 35,923
(Increase)/decrease in accrued
income and other debtors (3,167) 625 194
Increase/(decrease) in accrued
expenses 168 (44) 37
Management fee charged to
capital (478) (1,098) (2,474)
Performance fees paid - (1,619) (6,347)
Overseas withholding tax (1,187) (994) (2,215)
Dividends received (5,583) (4,857) (12,531)
Interest received (638) (15) (147)
Realised (losses)/gains on
foreign exchange transactions (153) - 274
---------------------------------- ----------------- ----------------- -----------------------------
Net cash outflow from operations
before dividends and interest (1,693) (3,399) (9,945)
---------------------------------- ----------------- ----------------- -----------------------------
7. Net assets acquired following the mergers with Scottish
Investment Trust plc (SCIN) and
JPMorgan Elect plc (JPE)
Ordinary Shares C Shares
----------------------- ------------------------------------- ---------
JPE Managed
SCIN Income and
Managed JPE Managed
Cash Growth Total
Ordinary and C Shares GBP'000 GBP'000 GBP'000 GBP'000
Investments 638,083 61,537 240,520 940,140
Cash 60,051 19,099 17,894 97,044
5.75% Bonds (82,122) - - (82,122)
Interest accrued on
5.75% Bonds (1,729) - - (1,729)
----------------------- --------- ------------ ------------ ---------
Net assets 614,283 80,636 258,414 953,333
----------------------- --------- ------------ ------------ ---------
Transaction costs in relation to the mergers amounted to
GBP2,510,000, which have been recognised in profit and loss on
investments held at fair value. Direct share issue costs of
GBP689,000 have been recognised in share premium.
8. Fair valuation of instruments
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st December 2022 31st December 2021 30th June 2022
Assets Liabilities Assets Liabilities Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ---------- ------------ -------- ------------ -------- ------------
Level 1 1,634,777 - 718,013 - 676,778 -
Level 2(1) 7,505 (5,659) 2,671 (1,212) 4,637 (5,072)
------------ ---------- ------------ -------- ------------ -------- ------------
Total 1,642,282 (5,659) 720,684 (1,212) 681,415 (5,072)
------------ ---------- ------------ -------- ------------ -------- ------------
(1) Forward foreign currency contracts .
JPMORGAN FUNDS LIMITED
27 February 2023
For further information, please contact:
Divya Amin
For and on behalf of
JPMorgan Funds Limited
020 7742 4000
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 will be submitted to the National
Storage Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The half year will also shortly be available on the Company's
website at www.jpmglobalgrowthandincome.co.uk where up to date
information on the Company, including daily NAV and share prices,
factsheets and portfolio information can also be found.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
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