TIDMJPE TIDMJPEI TIDMJPEC
RNS Number : 3615L
JPMorgan Elect PLC
13 May 2022
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN ELECT PLC
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS
ED 28th FEBRUARY 2022
Legal Entity Identifier: 549300FIUYKKL39ILD07
Information disclosed in accordance with DTR 4.2.2
CHAIRMAN'S STATEMENT
I present to you the report of the Company for the half-year
ended 28th February 2022.
It was only four days before the end of the half year that
Russia invaded Ukraine. While this was the most important
geo-political event of the period, markets also had to digest
higher and seemingly more durable inflation, with Central Banks,
led by the UK and US, indicating a path to monetary tightening. The
subsequent decline in bond markets provides a headwind for equity
markets. In the meantime, the implications of sanctions and other
consequences of the invasion are likely to lead to much slower
economic activity in the second half of this year. In the period
since the end of February, markets have been volatile and have
recently begun to discount the deterioration in the economic
outlook .
Managed Growth
The objective of the Managed Growth share class is long-term
capital growth. In the six month period, the portfolio
underperformed its benchmark and delivered a total return on net
assets of -6.8%, compared with the portfolio's benchmark which
returned -0.1%. The main drivers of this negative return over this
half year were the underperformance of the growth style and the
technology exposure in a number of the underlying holdings. More
detail is given in the Manager's review, which follows. The share
price total return was -9.3%. The long-term performance of the
Managed Growth share class however continues to be strong, with
annualised outperformance against the benchmark index over 5 years
of 1.3%.
For the half year ended 28th February 2022, the Board has
declared and paid two interim dividends totalling 9.75p per Managed
Growth share compared to 8.55p for the half year ended 28th
February 2021. The Board declared a third interim dividend of 3.00p
per share on 5th May 2022. This share class is a growth vehicle,
any income generated during the period is generally distributed in
that period and investment decisions are not made with the
objective of maintaining or growing income.
Managed Income
The objective of the Managed Income share class is a growing
income return with potential for long term capital growth. Over the
six months to 28th February 2022, the Managed Income portfolio
delivered a total return on net assets of -2.5%, against the
portfolio's benchmark which returned +2.4%. The share price total
return was -3.6%. Underperformance of this share class was
attributed to poor performance of some underlying holdings, mostly
because of supply chain issues as the economy emerges from COVID. A
further analysis of performance is set out in the Investment
Managers' Report below.
As expected, for the half year ended 28th February 2022 the
Board declared and paid two quarterly dividends totalling 2.2p per
Managed Income share, as it did in the half year ended 28th
February 2021. The Board declared a third interim dividend of 1.10p
per share on 5th May 2022, consistent with the previous two
quarters. The level of the fourth interim dividend will be
determined by the Board towards the end of the Company's financial
year and will depend on the level of dividends received and
anticipated by the Company, and the level of reserves at this
time.
Managed Cash
The objective and policy of the Managed Cash share class is to
achieve a return in excess of sterling money markets by investing
primarily in GBP denominated short-term debt securities through
investment in JPMorgan Funds - Sterling Managed Reserves Fund
(JSMRF). The Managed Cash portfolio delivered a total return of
-0.2% over the period under review. The share price changed from
102.50p to 101.75p during the period. The Board considers this
class to be an asset allocation tool which continues to benefit
shareholders of the Company's other share classes, offering the
opportunity to switch into a lower risk share class in times of
market volatility.
During the period under review, the Board declared an interim
dividend of 0.30 pence per Managed Cash share. No further dividends
are expected to be paid on this share class for the financial year
ending 31st August 2022. As previously announced, in future years,
it is expected that any dividend for this Share Class will be
declared in the first quarter of the Company's financial year,
which begins on 1st September.
Gearing
The Board's policy is to not utilise borrowings to increase the
funds available for investment for the Managed Growth share class.
The Board monitors closely the level of indirect gearing through
the underlying investments. The Managed Income share class has the
ability to use short term borrowings to increase potential returns
to shareholders. Its policy is to operate within a range of 85% to
112.5% invested. The Company has available a GBP15 million one year
multicurrency revolving credit facility with Scotiabank.
Discussions are well advanced to renew this facility which expires
in June 2022. At the half year end GBP7 million was drawn and the
Managed Income portfolio was 5.5% geared.
Costs
The Company has always complied with the methodology for
computing ongoing costs following guidance from the Association of
Investment Companies (AIC). It is now recommended that those
Companies which invest a substantial part of their assets in other
pooled structures incorporate the pro-rata share of underlying
costs in reporting total ongoing charges. In the case of the
Managed Growth share class, this amounts to 0.66%, which needs to
be added to the direct costs of the Company to give a true picture
of total costs. On that basis, this share class has a total
annualised cost ratio of 1.22%. The calculation is set out on page
46 of this report. The other share classes are unaffected by this
change.
Board
As announced in April this year, Rupert Dickinson, a
non-executive director of the Company, has stepped down from the
Board for health reasons. Rupert has been a diligent and highly
effective member and I would like to record my thanks for his
contribution and express real regret that he is at present unable
to continue in the role. The Board does not envisage seeking a
replacement for Rupert in the near term with the remaining five
non-executive directors having sufficient knowledge and experience
to meet the needs of the Company. However, the Board will continue
to evaluate and monitor the Company's governance structure and will
consider further Board appointments where appropriate, in
particular, with regards to succession planning. The Board will
consider the re-appointment of Rupert once he has made a full
recovery.
There were no other changes to the Board during the period under
review.
Outlook
The last six months have been quite traumatic for global
markets. The easy money policies which have persisted since the
financial crisis in 2008 (with only minor interruptions) have come
to a decisive end. This reflected Central Bank views that economies
were robust as they emerged from the shadow of the pandemic and
inflation was more of a problem than had been foreseen as supply
chains were in disarray. When these tighter policies began to roll
off the production line, the crisis in Ukraine was only
theoretical. Its arrival in the land of the real has exacerbated
the inflation problem and threatened the rosy view of economic
activity which predated it. For now, monetary tightening remains
the order of the day and although outright recessionary conditions
may be avoided in some countries, the risks of economic stagnation
have risen sharply. The Managers are navigating the choppy waters
and have options to take more defensive positions. Nevertheless,
conditions over the next several months are uncertain. Longer term,
even with tighter monetary conditions, real rates will remain
negative and equities are likely to offer shelter.
Steve Bates
Chairman 12 May 2022
INVESTMENT MANAGERS' REPORT - MANAGED GROWTH
Performance Review
This was a disappointing period for performance and the Managed
Growth portfolio underperformed its benchmark, returning -6.8% on
an NAV basis, versus the benchmark return of -0.1% over the period.
The total return to shareholders was -9.3%.
3 years 5 years 10 years
Managed Growth 6 months 1 year annualised annualised annualised
---------------------------- --------- ------- ------------ ----------- -----------
NAV return (%) -6.8 7.8 10.6 8.9 11.1
Return to shareholders (%) -9.3 5.2 9.6 8.3 10.8
Benchmark return (%) -0.1 15.2 10.0 7.6 9.7
FTSE All-Share Index (%) 2.4 16.0 5.7 4.6 6.5
FTSE World ex UK (%) -2.6 14.3 14.2 10.4 12.5
---------------------------- --------- ------- ------------ ----------- -----------
The main driver of our underperformance over this half year was
the underperformance of the growth style and technology exposures
in a number of our underlying holdings. The valuations of these
holdings declined as government bond yields rose. This move in
government bonds occurred as central banks became less
accommodative in response to the persistent inflationary pressures.
The table below shows the magnitude of the returns achieved by the
outperformers when compared to the underperformers.
Against a challenging backdrop of persistent inflation and
rising interest rates, a resurgence in COVID, ongoing supply chain
issues, geopolitical tensions and the resultant Russian invasion of
Ukraine, most of our underlying holdings generated negative
absolute returns, with many of them also lagging their own
benchmarks. On a regional basis, Japanese and Asia Pacific
strategies were among the weakest performers while most US and
European strategies fared better.
From a regional perspective, we added to our US exposure over
this period. We added to the JPM US Select Equity Fund, funded
through a reduction in our UK exposure. We trimmed our positions in
Murray Income Trust, Finsbury Growth & Income Trust, JPM
Claverhouse Investment Trust and Lowland Investment Company. By the
end of November, the US was our biggest regional overweight. This
change in positioning was driven by our conviction that solid
economic and corporate fundamentals would continue to support the
region, combined with increased demand for large cap quality stocks
as we move through the economic cycle. The US remained our favoured
region relative to the benchmark through the period.
Discounts have been volatile over the period and ended the
review period on average wider than at the Company's year-end, with
some sectors suffering a significant widening following the Ukraine
invasion. Some of the biggest moves were seen in JPM UK Smaller
Companies Investment Trust where the discount widened by
approximately 14%, Baillie Gifford US Growth which widened by 8%
and Baillie Gifford UK Growth which widened by 6%. In contrast,
Temple Bar Investment Trust saw its discount narrow by 8% during
the period. We estimate that discount widening contributed
approximately -0.8% to the portfolio return.
6 Months to
Top 5 by absolute performance (%) 28th February 2022
------------------------------------------- -------------------
Temple Bar Investment Trust 4.7
City of London Investment Trust 3.8
BlackRock Frontiers Investment Trust 3.6
JPM American Investment Trust 2.0
JPM US Select Equity Fund -0.1
------------------------------------------- -------------------
6 Months to
Bottom 5 by absolute performance (%) 28th February 2022
------------------------------------------- -------------------
Baillie Gifford US Growth Trust -27.5
JPM Japan Small Cap Growth & Income -25.8
JPM China Growth & Income Trust -24.6
JPM Japanese Investment Trust -23.4
JPM UK Smaller Companies Investment Trust -19.4
------------------------------------------- -------------------
ESG/Engagement
We incorporate Environmental, Social and Governance factors
(ESG) in our regular manager/strategy review process where we raise
topical considerations, review ESG outliers from a third-party
score perspective, and conduct periodic deep-dive ESG reviews to
cover enhancements with regards to integration and the sustainable
investing process.
Internally managed strategies:
From a Multi-Asset Solutions (MAS) perspective, we leverage our
manager research team to engage with underlying investment teams in
order to understand how ESG is considered. The team will
periodically review the ESG integration processes of underlying
managers in order to determine their adherence to their stated
process and monitor ongoing enhancements to such processes, the
evolution of portfolio scores, engagement of underlying desks with
the companies they invest in and reconciliation of outliers within
the context of stated integration processes.
Third-party investment trusts:
We look to understand the ESG characteristics of existing and
potential third-party holdings and regularly meet with investment
trusts in order to understand the governance and stewardship of
those underlying managers. We engage with managers to understand
how ESG is integrated into their investment process and assess the
materiality and extent of ESG risks as well as opportunities which
may arise as we look to be long-term holders of the trusts in which
we invest. In the past 6 months, we have met/engaged with a total
of nine third-party investment trusts.
Outlook
We have seen a multitude of shocks facing the global economy
over recent months and considerable uncertainty surrounds the
medium-term outlook for inflation and its implications for monetary
policy, especially in the U.S. Nonetheless, we believe that the
very solid positions of household, corporate, and bank balance
sheets will provide sufficient buffers to allow the global economy
to dodge a serious downturn in the short run and see encouraging
prospects for productivity growth. As such, we do not believe that
we face an imminent recession, and while market volatility may
remain more elevated for some time, we believe that equities should
still be able to deliver positive returns in this environment
driven by earnings growth over the coming months.
Katy Thorneycroft
Simin Li
Peter Malone
Investment Managers 12 May 2022
INVESTMENT MANAGERS' REPORT - MANAGED INCOME
Dividend Review
During 2021, the UK stock market registered an underlying
dividend increase of 22%. This compares to the 38.1% decrease
delivered in 2020. Including special dividends, headline dividend
growth was 46%. The dividends of companies comprising the FTSE 100
index rose by 20% while the dividends of mid cap companies (those
in the FTSE 250) rose by 40%. The difference between the two
reflects the fact that mid cap companies' earnings benefited more
from the economic recovery whereas a greater proportion of
companies in the FTSE 100 are involved in business activities such
as pharmaceuticals, food production and telecoms that deliver
steadier earnings and dividend streams both in good times and
bad.
The largest dividend payments came from mining companies such as
Rio Tinto and BHP. The sector delivered underlying dividend growth
of 96% but when special dividends are included the growth rate
increases to 160%. Their earnings benefited greatly from
extraordinary strength in iron ore prices. In recent years they
have shown shareholder friendly capital discipline choosing to
distribute most 'excess' profits as special dividends. It's
important to remember that this sector is very cyclical and that
their pay outs are a ratio of earnings and not progressive so will
be subject to fluctuations. Banks also made a significant
contribution to dividend growth. When the pandemic took hold in
2020 the regulator instructed banks to suspend dividend payments to
ensure financial stability. As the economy began to recover and the
banks reported strong capital positions the regulator rescinded
that instruction and allowed banks to reinstate dividends. On the
other hand, oil companies detracted from dividend growth. BP and
Shell cut their pay-outs in 2020 the full impact of which fed
through in 2021 leading to a 25% fall in sector dividends.
Special dividends of note were from Berkeley Group and most
recently from Next which continues to navigate the choppy and
e-commerce disrupted retail environment very successfully.
The robust rate of growth in 2021 dividends is not expected to
be repeated. We expect the UK market dividends to grow by 5%. This
is due to the impact of the reduced dividend from GlaxoSmithKline
following the separation of its consumer and pharmaceutical
businesses and the delisting of BHP as it unifies its current dual
listed status and adopts a primary listing in Australia.
Consequently, dividends from the Pharmaceutical and Mining sectors
are set to fall 14% & 25% respectively offsetting high single
digit growth from the rest of the market. Overall, we believe that
assuming dividend growth of 5% in 2022, the underlying dividend
pay-out would be still 18% below 2019 levels.
Performance Review
During the Company's financial half year ended 28th February
2022 the Managed Income portfolio delivered a total return of
-2.5%, in comparison to the benchmark's return of +2.4%.
Games Workshop, Luceco and Future were the largest detractors
from performance. The shares of each fell in a gradual manner over
the course of the half year. This was a partial reversal of the
very strong share price momentum from the start of the calendar
year. Whilst corporate reports from each were in line with
expectations investors have come to expect outlook statements with
higher full year guidance. Given supply chain headwinds and cost
pressures management adopted a cautious approach to profit
guidance. The absence of earnings upgrades led to profit taking
given the strong price runs. We have retained our holdings in each
name as we believe the medium-term prospects still offer upside as
demand remains strong and supply chain disruptions should be
temporary.
Positive contributors to performance included Shell, BAE and
Serica Energy. The Russian invasion of Ukraine was the biggest
driver of each of these companies' shares. The jump in oil and gas
prices at the start of the war led to a strong rise in the shares
of Shell and Serica Energy. BAE's shares rose as the war is likely
to lead to an increase in many countries' defence expenditure.
Portfolio Review
During the period under review, we made use of the company's
borrowing facility. As at 28th February 2022, the equity exposure
of the Managed Income portfolio was 105.5% with the level of
gearing primarily influenced by individual stock opportunities.
We assess individual investment opportunities on whether
earnings estimates are being revised up, whether the valuation is
attractive and whether the balance sheet and forecast cash flows
allow for dividend growth. As such, portfolio construction is
determined by bottom-up stock selection with a focus on potential
and sustainable dividend growth.
The largest sector exposures in the portfolio are Oil & Gas,
Financial Services and Home Construction. Higher oil and gas prices
both before and after the Russian invasion of Ukraine have led to a
much improved earnings and cash flow outlook for Shell and BP. This
gives us confidence that both companies have more than adequate
resources to support their respective dividend yields of 3.8% &
4.5%. Within Financial Services we own Polar Capital and M&G.
Polar Capital has an attractive suite of differentiated funds which
have proved popular with investors and the stock yields 6.7%.
M&G's fund flows have turned positive after a period of
weakness while the stock has an attractive dividend yield of 8.8%.
Home Construction has been and remains one of our long-term
overweight positions. The supply of new homes is lower than demand
leading to persistent house price rises which are more than
offsetting the rising cost of construction. Earnings are strong,
balance sheets remain robust and dividend yields are very
attractive. Persimmon which is one of our key holdings is yielding
over 10%.
ESG/Engagement
ESG is integrated into our investment process and so we take
environmental, social and governance factors into consideration
when we are analyzing potential investment opportunities. In terms
of our holdings in BP & Shell, both companies have set out
detailed and comprehensive targets to reduce absolute carbon
emissions from their operations and are investing significantly in
renewable energy projects. Our holdings in the Mining sector are
essential to the transition to clean energy. Many new energy items
from turbine blades to electric vehicle charging infrastructure
require greater volumes of minerals than their old energy
equivalents. For instance, a typical electrical car needs six times
the mineral inputs of a conventional car. Rio Tinto, Glencore and
Anglo American are significant producers of 'electrification'
metals such as copper, cobalt, nickel and lithium. Each company has
also set out targets to reduce the carbon intensity of their
operations through the use of renewable energy and improving the
energy efficiency of their plant and machinery.
Transactions
We bought holdings in Provident Financial and Glencore and
participated in the IPO of Petershill Partners. Sub-prime lender
Provident Financial was added as loan losses have been lower than
expected driving upgrades whilst the launch of new products is
widening the breadth of the company's offering. The stock has a
prospective yield of 4.7% and dividend growth of 6%. We bought
Glencore to diversify our mining exposure away from a large bias
towards iron ore. Glencore produces thermal coal, copper and zinc
the prices of which have been strong. Management have committed to
returning excess profits to shareholders resulting in a yield of
nearly 10%. Petershill Partners is a permanent capital vehicle with
minority stakes in 19 alternative managers, mainly in private
assets. The company represents a good opportunity to gain exposure
to the structural growth and profit of the industry through a
diverse portfolio of partner firms. The dividend yield of the stock
is 4% and we expect the dividend to grow by 20% in 2023.
We sold our holdings in MJ Gleeson and NatWest. MJ Gleeson is a
house builder focused on low-cost homes in the North of England. It
also has a division devoted to supporting land through the planning
process to approval before selling it to other builders. While
trading has been in line with expectations the company warned that
staff shortages in local authority planning offices could cause
lower earnings growth. We also sold BHP to fund the purchase of
Glencore. We sold NatWest on valuation grounds following a rise in
the shares.
Outlook
The Russian invasion of Ukraine has reduced short-term growth
forecasts and added further inflationary pressure through higher
commodity prices. Geopolitical events, even those involving major
energy producers, have not typically had a lasting impact on
markets. However, this time may be different. Countries will be
looking to decrease their reliance on imports which may have long
lasting impacts on global relationships and spark a multi-year
investment cycle to facilitate this on-shoring.
The start of the war between Russia and Ukraine and the
resulting commodity supply shock has posed a dilemma for the Bank
of England (BoE), which has now been forced to choose between
trying to tame inflation or support growth. However, the recent
monetary policy responses suggest that they view inflation as the
more pressing problem to tackle unless the growth outlook
materially deteriorates. For now, the BoE expects the inflation
rate to peak in the coming few months before normalizing to the
bank's target rate of 2% over the next two years.
Despite having widespread supply chain issues, earnings growth
was strong across the UK in 2021 as companies were able to pass on
the cost increases to consumers. However, going forward, growth
could slow as profit margins come under pressure from higher wages,
elevated commodity prices and increasing corporate taxes. The risk
is that higher commodity prices could impact consumer spending and
corporate profits, and in turn, the post-pandemic recovery.
However, consumers still have some pent-up savings accumulated
during the pandemic and corporate and bank balance sheets are
strong. This should cushion some of the hit from higher energy
prices.
Currently, we view the UK equity market to be undervalued
compared to other developed world markets, with UK companies now
trading at their widest discount since the 1970s. This is largely
due to lower levels of international investment and political
upheaval post Brexit. However, recent M&A activity and the
presence of activist investors in many FTSE 100 names shows us that
conviction in the valuation opportunity the UK stock market
presents is growing. Overall, UK equities should do well in an
environment of modestly rising inflation. While we would not be
surprised to see a few occasional bouts of volatility, we believe
the UK market presents an attractive valuation opportunity.
John Baker
Katen Patel
Investment Managers 12 May 2022
INVESTMENT MANAGERS' REPORT - MANAGED CASH
Review and Performance
The Managed Cash share class returned -0.2% over the six month
period to 28th February 2022. The Managed Cash class invests its
assets in the Sterling Managed Reserves Fund which has an objective
to invest in a blend of money market securities and short term
bonds.
At the end of February 2022, the fund's duration stood at 3
months, significantly below the maximum 1 year duration permitted
by the investment guidelines.
Outlook
Inflation has been the dominant theme in recent months, and as a
result the yields on securities within our investment space have
risen aggressively, with several hikes now being priced in for the
Bank of England in 2022. In this environment, we have been running
the portfolio with very low levels of duration. However, concerns
for the UK's GDP growth have the potential to create downward
pressure on Sterling yields, therefore we expect to increase the
portfolio's duration over the next few months, most likely focused
on securities that have 12 - 18 month maturity dates.
JPMorgan Asset Management
Investment Manager 12 May 2022
INTERIM MANAGEMENT REPORT
The Company is required to make the following disclosures in its
half-yearly financial report.
Principal and Emerging Risks and Uncertainties
The principal and emerging risks faced by the Company fall into
the following broad categories: investment underperformance against
benchmark, fraud and cyber crime, dividends, accounting, legal and
regulatory, business strategy, board loses confidence in Investment
Manager, global pandemic, climate change and inflation. The AIC
Code of Corporate Governance requires the Audit Committee to put in
place procedures to identify emerging risks. The Committee has
looked at this area and has conducted horizon scanning and believes
that recession is an emerging risk for the Company. Information on
the principal risks of the Company is given in the Business Review
section within the 2021 Annual Report and Financial Statements.
Related Party Transactions
During the half year to 28th February 2022, no new agreements
were entered into with related parties 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 operational 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 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' 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 28th February 2022, as required by the UK Listing Authority
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 (important events that have occurred
since inception, their impact on these financial statements and a
description of the principal risks facing the Company) and 4.2.8R
(related party transactions since inception that have materially
affected the financial position or performance of the Company) of
the UK Listing Authority 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 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
Steve Bates
Chairman 12 May 2022
STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 28TH FEBRUARY 2022
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
28th February 2022 28th February 2021 31st August 2021
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
----------------------- -------- ---------- ---------- -------- -------- -------- -------- -------- ---------
(Losses)/gains on
investments
held at fair value
through
profit or loss - (26,187) (26,187) - 44,057 44,057 - 95,722 95,722
Net foreign currency
gains - - - - 6 6 - 7 7
Income from
investments 4,489 - 4,489 3,866 - 3,866 9,026 - 9,026
Interest receivable
and
similar income 10 - 10 16 - 16 28 - 28
----------------------- -------- ---------- ---------- -------- -------- -------- -------- -------- ---------
Gross return/(loss) 4,499 (26,187) (21,688) 3,882 44,063 47,945 9,054 95,729 104,783
Management fee (285) (591) (876) (248) (514) (762) (527) (1,092) (1,619)
Other administrative
expenses (307) - (307) (289) - (289) (524) - (524)
----------------------- -------- ---------- ---------- -------- -------- -------- -------- -------- ---------
Net return/(loss)
before
finance costs and
taxation 3,907 (26,778) (22,871) 3,345 43,549 46,894 8,003 94,637 102,640
Finance costs (24) (24) (48) (36) (37) (73) (67) (82) (149)
----------------------- -------- ---------- ---------- -------- -------- -------- -------- -------- ---------
Net return/(loss)
before
taxation 3,883 (26,802) (22,919) 3,309 43,512 46,821 7,936 94,555 102,491
Taxation charge (1) - (1) (9) - (9) (18) - (18)
----------------------- -------- ---------- ---------- -------- -------- -------- -------- -------- ---------
Net return/(loss)
after
taxation 3,882 (26,802) (22,920) 3,300 43,512 46,812 7,918 94,555 102,473
----------------------- -------- ---------- ---------- -------- -------- -------- -------- -------- ---------
Return/(loss) per
share (note 3):
Managed Growth 10.02p (85.76)p (75.74)p 8.17p 122.44p 130.61p 15.56p 266.15p 281.71p
Managed Income 1.47p (4.21)p (2.74)p 1.12p 9.99p 11.11p 4.44p 23.99p 28.43p
Managed Cash 0.34p (0.53)p (0.19)p 0.59p (0.55)p 0.04p 0.55p (0.44)p 0.11p
STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 28TH FEBRUARY 2022
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 28th February
2022
(Unaudited)
At 31st August 2021 16 178,178 8 218,784 6,018 403,004
Repurchase and cancellation
of the
Company's own shares - - - (89) - (89)
Repurchase of shares into
Treasury - - - (5,952) - (5,952)
Share conversions during
the period - 1,537 - (1,537) - -
Net (loss)/return - - - (26,802) 3,882 (22,920)
Dividends paid in the period
(note 4) - - - - (4,189) (4,189)
-------------------------------- -------- --------- ----------- ------------ ----------- ----------
At 28th February 2022 16 179,715 - 184,404 5,711 369,854
-------------------------------- -------- --------- ----------- ------------ ----------- ----------
Six months ended 28th February
2021
(Unaudited)
At 31st August 2020 16 173,580 8 148,929 6,573 329,106
Repurchase and cancellation
of the
Company's own shares - - - (207) - (207)
Repurchase of shares into
Treasury - - - (11,878) - (11,878)
Share conversions during
the period - 3,323 - (3,323) - -
Project costs in relation
to shares as
a result of Company rollover - (10) - - - (10)
Net return - - - 43,512 3,300 46,812
Dividends paid in the period
(note 4) - - - - (4,342) (4,342)
-------------------------------- -------- --------- ----------- ------------ ----------- ----------
At 28th February 2021 16 176,893 8 177,033 5,531 359,481
-------------------------------- -------- --------- ----------- ------------ ----------- ----------
Year ended 31st August 2020
(Audited)
At 31st August 2020 16 173,580 8 148,929 6,573 329,106
Repurchase and cancellation
of the
Company's own shares - - - (605) - (605)
Repurchase of shares into
Treasury - - - (19,487) - (19,487)
Share conversions during
the year - 4,608 - (4,608) - -
Project costs in relation
to shares as a result of
Company rollover - (10) - - - (10)
Net return - - - 94,555 7,918 102,473
Dividends paid in the year
(note 4) - - - - (8,473) (8,473)
-------------------------------- -------- --------- ----------- ------------ ----------- ----------
At 31st August 2021 16 178,178 8 218,784 6,018 403,004
-------------------------------- -------- --------- ----------- ------------ ----------- ----------
(1) These reserves form the distributable reserves of the
Company and may be used to fund distributions to investors.
STATEMENT OF FINANCIAL POSITION
AT 28TH FEBRUARY 2022
(Unaudited) (Unaudited) (Audited)
28th February 2022 28th February 31st
August
Managed Managed Managed 2021 2021
Growth Income Cash Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ---------- --------- ---------- --------- -------------- ----------
Fixed assets
Investments held at
fair value through
profit or loss 273,387 83,606 7,764 364,757 354,563 399,995
---------------------------------- ---------- --------- ---------- --------- -------------- ----------
Current assets
Debtors 841 589 - 1,430 12,147 1,851
Derivative financial
assets 307 - - 307 - 77
Cash and cash equivalents 8,464 2,299 27 10,790 3,082 8,609
---------------------------------- ---------- --------- ---------- --------- -------------- ----------
9,612 2,888 27 12,527 15,229 10,537
Current liabilities
Creditors: amounts falling
due within
one year (65) (7,262) (3) (7,330) (10,252) (7,434)
Derivative financial
liabilities (100) - - (100) (59) (94)
---------------------------------- ---------- --------- ---------- --------- -------------- ----------
Net current assets/(liabilities) 9,447 (4,374) 24 5,097 4,918 3,009
---------------------------------- ---------- --------- ---------- --------- -------------- ----------
Total assets less current
liabilities 282,834 79,232 7,788 369,854 359,481 403,004
---------------------------------- ---------- --------- ---------- --------- -------------- ----------
Net assets 282,834 79,232 7,788 369,854 359,481 403,004
---------------------------------- ---------- --------- ---------- --------- -------------- ----------
Capital and reserves
Called up share capital 15 1 - 16 16 16
Share premium 52,224 94,267 33,224 179,715 176,893 178,178
Capital redemption reserve 3 3 2 8 8 8
Other reserve 25,819 (5,572) (20,247) - - -
Capital reserves 202,273 (12,583) (5,286) 184,404 177,033 218,784
Revenue reserve 2,500 3,116 95 5,711 5,531 6,018
---------------------------------- ---------- --------- ---------- --------- -------------- ----------
Total shareholders'
funds 282,834 79,232 7,788 369,854 359,481 403,004
---------------------------------- ---------- --------- ---------- --------- -------------- ----------
28th February 28th February 31st August 2021
2022 2021
Net asset Net Net asset Net Net asset Net
value Assets value Assets value Assets
(pence) GBP'000 (pence) GBP'000 (pence) GBP'000
---------------------------------- ---------- --------- ---------- --------- -------------- ----------
Net asset value per
share (note 5)
Managed Growth 1,035.1 282,834 975.5 277,542 1,119.1 310,647
Managed Income 106.4 79,232 96.4 74,140 111.6 84,476
Managed Cash 103.0 7,788 103.5 7,799 103.2 7,881
---------------------------------- ---------- --------- ---------- --------- -------------- ----------
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 28TH FEBRUARY 2022
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
28th February 28th February 31st August
2022 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------------------------- -------------- -------------- ------------
Net cash outflow from operations before
dividends
and interest (1,254) (1,050) (2,147)
Dividends received 4,902 4,196 8,670
Interest received 33 47 50
Interest paid (52) (76) (162)
Overseas tax charged (1) (1) -
------------------------------------------------- -------------- -------------- ------------
Net cash inflow from operating activities 3,628 3,116 6,411
------------------------------------------------- -------------- -------------- ------------
Purchases of investments and derivatives (12,789) (24,819) (62,307)
Sales of investments and derivatives 21,204 29,482 81,417
Settlement of futures contracts 212 397 1,158
Settlement of foreign currency contracts (2) (2) (4)
------------------------------------------------- -------------- -------------- ------------
Net cash inflow from investing activities 8,625 5,058 20,264
------------------------------------------------- -------------- -------------- ------------
Dividends paid (4,189) (4,342) (8,473)
Repurchase of shares into Treasury (5,795) (11,056) (19,486)
Repurchase and cancellation of the Company's
own shares (89) (349) (763)
Drawdown of bank loan - 2,000 2,000
Utilisation of bank overdraft - (739) (739)
Project costs in relation to shares as
a result of Company rollover - (10) (10)
------------------------------------------------- -------------- -------------- ------------
Net cash outflow from financing activities (10,073) (14,496) (27,471)
------------------------------------------------- -------------- -------------- ------------
Increase/(decrease) in cash and cash
equivalents 2,180 (6,322) (796)
------------------------------------------------- -------------- -------------- ------------
Cash and cash equivalents at start of
period/year 8,609 9,404 9,404
Exchange movements 1 - 1
Cash and cash equivalents at end of period/year 10,790 3,082 8,609
------------------------------------------------- -------------- -------------- ------------
Increase/(decrease) in cash and cash
equivalents 2,180 (6,322) (796)
------------------------------------------------- -------------- -------------- ------------
Cash and cash equivalents consist of:
Cash and short term deposits 1,324 163 6,906
Cash held in JPMorgan Sterling Liquidity
Fund 9,466 2,919 1,703
------------------------------------------------- -------------- -------------- ------------
Total 10,790 3,082 8,609
------------------------------------------------- -------------- -------------- ------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 28TH FEBRUARY 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 auditors.
The figures and financial information for the year ended 31st
August 2021 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 includes 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 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 April
2021.
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 28th February 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 31st August 2021.
3. Return/(loss) per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months Year ended
ended
28th February 28th February 31st August
2022 2021 2021
Managed Growth GBP'000 GBP'000 GBP'000
----------------------------- ----------------- -------------- ------------
(Loss)/return per Managed
Growth share is based on
the following:
Revenue return 2,758 2,381 4,446
Capital (loss)/return (23,610) 35,700 76,039
----------------------------- ----------------- -------------- ------------
Total (loss)/return (20,852) 38,081 80,485
----------------------------- ----------------- -------------- ------------
Weighted average number of
shares in issue 27,531,805 29,156,400 28,570,509
Revenue return per share 10.02p 8.17p 15.56p
Capital (loss)/return per
share (85.76)p 122.44p 266.15p
----------------------------- ----------------- -------------- ------------
Total (loss)/return per
share (75.74)p 130.61p 281.71p
----------------------------- ----------------- -------------- ------------
(Unaudited) (Unaudited) (Audited)
Six months ended Six months Year ended
ended
28th February 28th February 31st August
2022 2021 2021
Managed Income GBP'000 GBP'000 GBP'000
----------------------------- ----------------- -------------- ------------
(Loss)/return per Managed
Income share is based on
the following:
Revenue return 1,099 878 3,432
Capital (loss)/return (3,152) 7,849 18,548
----------------------------- ----------------- -------------- ------------
Total (loss)/return per
share (2,053) 8,727 21,980
----------------------------- ----------------- -------------- ------------
Weighted average number of
shares in issue 74,844,561 78,608,175 77,305,109
Revenue return per share 1.47p 1.12p 4.44p
Capital (loss)/return per
share (4.21)p 9.99p 23.99p
----------------------------- ----------------- -------------- ------------
Total (loss)/return per
share (2.74)p 11.11p 28.43p
----------------------------- ----------------- -------------- ------------
(Unaudited) (Unaudited) (Audited)
Six months ended Six months Year ended
ended
28th February 28th February 31st August
2022 2021 2021
Managed Cash GBP'000 GBP'000 GBP'000
----------------------------- ----------------- -------------- ------------
(Loss)/Return per Managed
Cash share is based on the
following:
Revenue return 25 41 40
Capital loss (40) (37) (32)
----------------------------- ----------------- -------------- ------------
Total (loss)/return per
share (15) 4 8
----------------------------- ----------------- -------------- ------------
Weighted average number of
shares in issue 7,599,892 6,774,924 7,163,795
Revenue return per share 0.34p 0.59p 0.55p
Capital (loss)/return per
share (0.53)p (0.55)p (0.44)p
----------------------------- ----------------- -------------- ------------
Total (loss)/return per
share (0.19)p 0.04p 0.11p
----------------------------- ----------------- -------------- ------------
4. Dividends
(Unaudited) (Unaudited) (Audited)
Six months ended Six months Year ended
ended
28th February 28th February 31st August
2022 2021 2021
GBP'000 GBP'000 GBP'000
--------------------------------- ----------------- -------------- ------------
Dividends paid
Managed Growth 2021 2nd interim
dividend of 5.45p - - 1,569
Managed Growth 2021 3rd interim
dividend of 3.00p - - 841
Managed Growth 2021 4th interim
dividend of 4.45p (2020:
4.75p) 1,238 1,409 1,409
Managed Growth 2022 1st interim
dividend of 3.75p (2021:
3.10p) 1,035 908 908
Managed Income 2021 2nd interim
dividend of 1.10p - - 856
Managed Income 2021 3rd interim
dividend of 1.10p - - 835
Managed Income 2021 4th interim
dividend of 1.45p (2020:
1.40p) 1,100 1,138 1,138
Managed Income 2022 1st interim
dividend of 1.10p (2021:
1.10p) 816 866 866
Managed Cash 2021 interim
dividend of
0.30p (2020: 0.40p) - 21 21
Managed Cash 2021 2nd interim
dividend paid of 0.40p - - 30
--------------------------------- ----------------- -------------- ------------
Total dividends paid in the
period(1) 4,189 4,342 8,473
--------------------------------- ----------------- -------------- ------------
Dividends proposed
Managed Growth 2021 4th interim
dividend of 4.45p - - 1,238
Managed Growth 2022 2nd interim
dividend of 6.00p (2021:
5.45p) 1,641 1,551 -
Managed Income 2021 4th interim
dividend of 1.45p - - 1,099
Managed Income 2022 2nd interim
dividend of 1.10p (2021:
1.10p) 821 856 -
Managed Cash 2022 interim 23 - -
dividend of 0.30p
--------------------------------- ----------------- -------------- ------------
Total dividends proposed(2) 2,485 2,407 2,337
--------------------------------- ----------------- -------------- ------------
1 All the dividends paid and declared in the period have been
funded from the Revenue Reserve.
2 In accordance with the accounting policy of the Company, these
dividends will be reflected in the financial statements of the
following period.
5. Net asset value per share
The net asset values per share are calculated as follows:
(Unaudited)
28th February 2022
---------------------------- -----------------------------------------------
Managed Growth Managed Income Managed Cash
Net assets (GBP'000) 282,834 79,232 7,788
---------------------------- --------------- --------------- -------------
Number of shares in issue,
(excluding shares
held in Treasury) 27,323,127 74,441,307 7,562,343
---------------------------- --------------- --------------- -------------
Net asset value per share
(pence) 1,035.1 106.4 103.0
---------------------------- --------------- --------------- -------------
(Unaudited)
28th February 2021
Managed Growth Managed Income Managed Cash
---------------------------- --------------- --------------- -------------
Net assets (GBP'000) 277,542 74,140 7,799
---------------------------- --------------- --------------- -------------
Number of shares in issue,
(excluding shares
---------------------------- --------------- --------------- -------------
held in Treasury) 28,450,033 76,940,312 7,534,909
---------------------------- --------------- --------------- -------------
Net asset value per share
(pence) 975.5 96.4 103.5
---------------------------- --------------- --------------- -------------
(Audited)
31st August 2021
Managed Growth Managed Income Managed Cash
---------------------------- --------------- --------------- -------------
Net assets (GBP'000) 310,647 84,476 7,881
---------------------------- --------------- --------------- -------------
Number of shares in issue,
(excluding shares
held in Treasury) 27,759,882 75,682,487 7,637,858
---------------------------- --------------- --------------- -------------
Net asset value per share
(pence) 1,119.1 111.6 103.2
---------------------------- --------------- --------------- -------------
JPMORGAN FUNDS LIMITED
12 May 2022
For further information, please contact:
Priyanka Vijay Anand
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 report will be submitted to the National
Storage Mechanism and will be available shortly for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The half year report will also be available shortly on the
Company's website at www.jpmelect.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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END
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