TIDMJGC
RNS Number : 8507F
Jupiter Green Investment Trust Plc
13 July 2023
Jupiter Green Investment Trust plc ('the company')
Legal Entity Identifier: 549300MFRCR13CT1L845
Annual Financial Results for the year ended 31 March 2023
Financial Highlights for the year ended 31 March 2023
Capital Performance As at As at
31 March 31 March
2023 2022
Total assets less current liabilities (GBP'000) 54,578 55,390
Ordinary Share Performance As at As at
31 March 31 March % change
2023 2022
Mid-market price (p) 224.00 210.00 +6.7
Undiluted net asset value per ordinary
share 258.58 258.43 +0.0
Diluted net asset value per ordinary share 259.86 259.18 +0.3
MSCI World Small Cap Index*** 390.67 412.12 -5.2
Discount to net asset value (%) 13.37 18.74
Ongoing charges ratio (%) excluding finance
costs (Note 6) 1.72 1.57
Performance (excluding dividend income) Since Launch
Year-
on-year
Net asset change in Year-
Total assets value Dividends Net Asset on-year
less per declared Value per change in
per
current ordinary ordinary ordinary benchmark
Year ended 31 March liabilities share share share index***
GBP'000 p p % %
8 June 2006 (launch) 24,297 97.07 - - -
2007 31,679 118.07 - +22.3* -
2008 52,734 114.14 - -3.9** -
2009 33,809 76.86 - -32.7 -36.5
2010 43,590 106.65 - +38.8 +41.6
2011 41,085 120.49 0.40 +13.0 +11.0
2012 36,181 108.49 0.60 -10.0 -23.8
2013 37,571 124.42 1.20 +14.7 +10.3
2014 38,142 145.00 1.10 +16.5 +28.6
2015 38,545 152.35 0.55 +5.1 +10.6
2016 33,418 150.79 0.65 -1.0 -3.3
2017 38,509 184.33 1.20 +22.2 +28.4
2018 40,147 191.31 1.30 +3.8 +3.7
2019 35,934 188.70 2.20 -1.4 +6.0
2020 32,581 173.31 2.40 -8.2 +3.4
2021 53,304 266.73^ 0.64 +53.9 +61.0
2022 55,390 258.43 0.00 -3.1 +2.6
2023 54,578 258.58^ 0.00 0.0 -5.2
* In September 2006, new ordinary shares totalling 1,058,859
were issued and in November 2006, new ordinary shares totalling
600,000 were issued. Investment performance adjusted for the new
issues of Ordinary shares.
** In April, July and August 2007, new ordinary shares totalling
20,249,074 were issued and a total of 737,963 ordinary shares were
cancelled in March 2008. Investment performance adjusted for the
new issues and the subsequent cancellation of shares.
*** With effect from 2 September 2020 the Company
retrospectively changed its benchmark from the FTSE ET100 Total
Return Index to the MSCI World Small Cap Index, both expressed in
sterling terms.
^ Being the exercise price for the purposes of the 2023 subscription rights.
No final dividend will be paid.
Strategic Report
Chairman's Statement
Performance
Against the backdrop of a tumultuous year in 2022 in which the
Russian invasion of Ukraine led to sharply rising fossil fuel
prices and the inflationary pressures that ensued continued to
dominate market sentiment, we are pleased to present the Annual
Report and Accounts for your Company for the twelve months to 31
March 2023.
The Company's Net Asset Value total return delivered -0.4%,
outperforming the wider Global small Cap index, -3.1%. The
Company's share price however delivered a +6.7% return over the
same period.
It is encouraging that the absolute return of the portfolio over
the 12-month period was positive, although this should be viewed in
the context of a volatile year for equity markets, in particular
environmental solutions companies, in the face of significant macro
and geopolitical headwinds, and one in which the NAV of the Company
sharply recovered from the lows in 2022.
The Company's 12-month financial reporting period covers the
entire timeframe since Russia's invasion of Ukraine in February
2022, which catalysed an inflationary crisis in the global economy
and an orchestrated effort by central banks to tame inflation with
tighter monetary policy, making for an extremely challenging
environment for all investors, particularly those focused on
smaller companies in the early stages of their growth.
Energy has undoubtedly been the area of greatest disruption
feeding inflationary pressures into all sectors which rely on
fossil fuels. This fossil fuel energy shock highlights how critical
energy systems are to everyday life and living standards.
Furthermore, that environmental solutions - on both the demand and
supply-side of the energy equation - are pivotal to urgently
shaping sustainable and resilient energy systems.
Last summer, new legislation providing the greatest support for
environmental solutions in the history of the United States passed
into law. Yet you would hardly have known it from the name. The
Inflation Reduction Act of 2022 (IRA), signed into law by President
Joe Biden on 16 August 2022, was originally billed as the 'Build
Back Better Act', but neither name reflects the true intentions
behind the law - combatting climate change and reinvigorating US
industrial and strategic policy in the process.
Not only does the IRA give the US a meaningful chance of meeting
its greenhouse gas reduction targets of 40% below 2005 levels by
2030, but it also presents an unprecedented catalyst for companies
in the environmental solutions space. The IRA provides $369 billion
of spending over ten years, including $158bn on clean energy, $13bn
on electric vehicle incentives, $14bn in home energy efficiency
upgrades, and $22bn in home energy supply improvements. Moreover,
there is upwards of $37bn for simple, effective advanced
manufacturing incentives that have already begun to shift the
corporate investment landscape.
In response, the EU's Net-Zero Industry Act and European
Critical Raw Materials Act, both part of a Green Deal Industrial
Plan and dubbed the 'EU IRA', are designed to prevent the bloc
falling further behind. The proposed legislation sets a headline
benchmark of ensuring that at least 40% of low-carbon technology
needs are met by manufacturing within the EU by 2030.
The pace and scope of this investment, and the regulatory change
that accompanies, provides a welcome boost to the universe of
environmental solutions businesses. Naturally, there will be both
winners and losers from any process of change. Ultimately, thematic
investment is an acceptance of, and appetite for, the future to be
different to the past. By capturing structural growth opportunities
through economic cycles, the Company's investment managers seek to
provide investors with above-market returns over the long term.
While the structural growth opportunity is accelerating, so too is
its complexity, placing specialist active managers at an
advantage.
Discount management
The Board remains committed to its stated policy of using share
buy-backs with the intention of ensuring that, in normal market
conditions, the market price of the company's shares will track
their underlying net asset value.
The discount at which the ordinary shares trade was 13.4% as at
the 31 March. During the year the Company's shares traded at a
discount to its NAV ranging between -6.5% to -25%. The Board
continues to monitor the level at which the Company's shares trade
and may seek to limit any future volatility through the prudent use
of share buybacks, as the circumstances require. The company bought
back a total of 328,726 shares for cancellation at an average
discount of 14.4%, adding 0.3% to NAV.
Subscription issue
Each year shareholders are entitled to subscribe for new
ordinary shares on the basis of one new ordinary share for every
ten held. This year, the subscription price was 258.43 (being the
audited undiluted net asset value of the ordinary shares as at 31
March 2022). The prevailing market price on the subscription date
was 224p. As such a small number of subscription requests received
resulting in the issue of 13,639 ordinary shares from treasury.
Board succession
We were delighted to welcome Baroness Bryony Worthington to join
the Board as non-executive director in September 2022. Bryony has a
wealth of experience in the environmental campaigning and policy,
with time spent at Friends of the Earth the Department for
Environment, Food and Rural Affairs working as the lead author in
the team which drafted the UK's 2008 Climate Change Act. Bryony
launched Sandbag in 2008 to raise public awareness of and improve
the European Union's Emissions Trading Scheme (ETS).
Life of the company
The company does not have a fixed life, however, the Board
considers it desirable that shareholders should have the
opportunity to review the future of the company every three years.
Accordingly, the directors will propose Resolution 10 of the notice
of the meeting, as an ordinary resolution for the continuation of
the company in its current form at the AGM of the company to be
held on 14 September 2023. The Directors have no indication that
the vote will not pass and will all be voting in favour of
continuation, and we encourage shareholders to do the same.
Outlook
The Jupiter Environmental Solutions team has a long-established
record of investing in emerging and established Green technologies,
and it is their long-held conviction that solving environmental
challenges will be critical to continued global development.
Addressing both the causes and effects of these climate
challenges will become inevitable, and as such Environmental
Solutions as an asset class are no longer deemed peripheral. The
development of technologies through innovation are key to
combatting the world's climate and environmental crisis. These
solutions are now setting the pace for policy and regulation - a
welcome reversal to the previous relationship. The scale of change
required to reverse global warming is creating significant
opportunities for investors to support environmental solutions
companies, which provide products and services which are critical
to achieving sustainability targets. It is becoming ever more
evident that these solutions will spread widely and to as-yet
unpenetrated sectors of the global economy.
Governments are likely to continue to play a major role, in
terms to encouraging the development of environmental solutions as
part of the path to achieving net zero by 2050, and through the
regulation of all companies to improve transparency around climate
and biodiversity impact.
As attitudes toward addressing climate solutions shift, there is
a broadening of the value chain beyond the conventional lens. The
opportunities throughout the market that this creates will be
plentiful and we firmly believe the Jupiter Green Investment Trust
remains well-positioned to identify them.
Michael Naylor
Chairman
12 July 2023
Investment Adviser's Review
Market review
The first several months of the period under review were
characterised by a continued slump in global stock and bond markets
as concerns grew around persistent inflation, moderating economic
growth and hawkish central bank policy. In Europe, energy prices
surged as Russia cut supplies in retaliation for sanctions related
to the war in Ukraine. In China, the economy was constrained by a
faltering property market and lockdowns intended to control
COVID-19.
Markets began to pick up in the second half of 2022 and into the
first quarter of 2023, latterly due to investor optimism from
China's reopening. European stocks benefited in-part from being one
of their largest trading partners and the market continued to
rebound in the region on falling natural gas prices and improving
investor sentiment from depressed levels. In the US, gradually
moderating inflation and signals of economic resilience led the
market to view the Federal Reserve's slowing pace of interest rate
rises as a signal that a deep recession can be averted.
In July, a largely unexpected breakthrough in Washington led to
the Inflation Reduction Act (IRA), which was subsequently passed by
Congress in August. The Act represents the largest government
investment in addressing climate change in US history and provides
$370bn over 10 years for climate solutions.
In response to the US Inflation Reduction Act (IRA) published
last year, the European Commission published two important
components of its Green Deal Industrial Plan in March: (1) the
Net-Zero Industry Act, to scale up manufacturing and attract
investment for strategic net-zero technologies in the EU; and (2)
the Critical Raw Materials Act to ensure the EU's access to
resilient and sustainable supply of critical raw materials.
Policy review
The Company's approach to investing in sustainable solutions
remains focussed on six environmental solutions themes:
* Circular economy: solutions for sustainable materials
and resource stewardship
* Clean energy: generation, storage and distribution
* Sustainable Oceans & Freshwater Systems: conservation
and management
* Green Mobility: technologies and services for
sustainable movement
* Green Buildings & Industry: enabling a low carbon
transition
* Sustainable Agriculture & Land Ecosystems: solutions
protecting natural resources and well-being
Within those themes, the Company is focused on companies - many
of them on the smaller end of the market capitalisation spectrum -
that are at the forefront of innovating technological solutions to
environmental challenges with a large potential market
('innovators'), as well as companies that are already rapidly
delivering proven solutions in their markets ('accelerators'). We
believe this approach should deliver attractive capital growth to
shareholders over the long term.
Despite the economic turbulence and volatility across investment
markets, the period under review offered continued evidence that
the Company's focus on global environmental solutions can deliver
attractive investment returns. In the wake of passage of the US IRA
(which we believe will in time present a multi-year catalyst for
environmental solutions), the Clean Energy theme, which includes
companies such as First Solar, was particularly buoyant.
Infineon and Monolithic Power also both performed well. We added
to these two names in Q4 following a sell-off across much of the
semiconductor sector, which overlooked the structural growth
opportunity and leadership both companies have in energy-efficient
power solutions.
Another key contributor to performance was Ansys (which was
bought during the period). Ansys is the world's leading engineering
simulation software provider with diversified end-market exposure
and a strong financial profile. Sitting in our Circular Economy
theme, Ansys provides solutions to reduce customers' resource and
material use by reducing physical prototypes in the R&D and
testing phase of product development. Ansys released a strong set
of full year results and guidance in February, which led to share
price outperformance versus its peers.
The Sustainable Agriculture and Land theme was a notable
detractor on a thematic basis, with European materials stocks such
as DSM and Borregaard among the bottom of the portfolio
contributors. A Eurocentric client base combined with energy cost
pressures in Europe have presented a challenging near-term
environment for such businesses. Another notable detractor was
Advanced Drainage (Circular Economy), which issued a profits
warning. In one of its divisions there was a destocking of
inventories, which was more severe than management had anticipated
and dampened expectations significantly.
Outlook
We have a long-held conviction that environmental challenges are
central to global development in the long term. Addressing both the
causes and effects of these challenges is in our view becoming
inevitable, with environmental solutions currently crossing a
watershed moment where they are no longer deemed peripheral, but
instead integral to future pathways and markets.
The great energy shock of the last 18 months - and the critical
role that "clean" solutions are playing in responding to the
long-term challenges of energy security, affordability and climate
change - serve to highlight the crucial importance of environmental
solutions in solving these unavoidable and era-defining issues.
We expect the volatility in equity markets to continue into the
near term, presenting opportunities for long-term active investors
focussing on structural trends such as energy transition and more
widely across our six environmental solution investment themes.
Jon Wallace
Fund Manager
Jupiter Asset Management Limited
Investment Adviser
12 July 2023
Top five contributors and detractors
Detail
Total Returns Contribution to Return
(%) (%)
Contributors
FIRST SOLAR INC 176.65 2.27
VALMONT INDUSTRIES 53.42 1.08
INFINEON TECHNOLOGIES AG 27.68 0.87
PRYSMIAN SPA 32.45 0.83
WATTS WATER TECHNOLOGIES-
A 29.48 0.64
Detail
Total Returns Contribution to Return
(%) (%)
Detractors
ORSTED O/S -25.91 -0.68
CERES POWER HOLDINGS PLC -47.02 -0.72
HANNON ARMSTRONG SUSTAINABLE -32.05 -0.98
BEFESA SA -37.79 -1.01
KONINKLIJKE DSM NV -29.11 -1.03
Investment Portfolio as at 31 March 2023
31 March 31 March
2023 2022
Market Market
value Percentage value Percentage
Company Country of Listing GBP'000 of Portfolio GBP'000 of Portfolio
Veolia Environnement France 1,851 3.4 1,824 3.4
Infineon Technologies Germany 1,845 3.3 1,474 2.7
Evoqua Water Technologies United States of America 1,785 3.2 2,176 4.0
Prysmian Italy 1,728 3.1 1,329 2.5
Schneider Electric France 1,707 3.1 1,684 3.1
Monolithic Power Systems United States of America 1575 2.9 1,537 2.9
Vestas Wind Systems Denmark 1,575 2.9 1,530 2.8
Stantec Canada 1,551 2.8 1,042 1.9
Daikin Industries Japan 1,508 2.7 1,331 2.5
ANSYS United States of America 1,494 2.7 - -
Watts Water Technologies United States of America 1,447 2.6 1,077 2.0
Waste Connections Canada 1,415 2.6 - -
Clean Harbors United States of America 1,402 2.5 869 1.6
Acuity Brands United States of America 1,371 2.5 931 1.7
SolarEdge Technologies United States of America 1,319 2.4 1,316 2.5
Trimble United States of America 1,301 2.4 - -
NextEra Energy Partners United States of America 1,287 2.3 1,657 3.1
Borregaard Norway 1,277 2.3 1,248 2.3
Koninklijke DSM Netherlands 1,272 2.3 1,830 3.4
First Solar United States of America 1,263 2.3 1,125 2.1
Renewi United Kingdom 1,225 2.2 1,336 2.5
Xylem United States of America 1,186 2.2 776 1.5
Republic Services United States of America 1,163 2.1 - -
TOMRA Systems Norway 1,145 2.1 1,176 2.2
Eurofins Scientific Luxembourg 1,113 2.0 - -
Orsted Denmark 1,099 2.0 1,396 2.6
Alfa Laval Sweden 1,045 1.9 - -
Advanced Drainage
Systems United States of America 1,044 1.9 1,216 2.3
Aptiv Jersey 1,021 1.9 1,023 1.9
Hannon Armstrong Sustainable
Infrastructure Capital,
REIT United States of America 972 1.8 1,513 2.8
Novozymes Denmark 971 1.8 769 1.4
Littelfuse United States of America 960 1.7 - -
Shimano Japan 944 1.7 881 1.6
Horiba Japan 941 1.7 821 1.5
Daiseki Japan 917 1.7 909 1.7
Ormat Technologies United States of America 908 1.7 - -
Befesa Luxembourg 837 1.5 1,370 2.6
Flat Glass Group China 830 1.5 852 1.6
Sensirion Holding Switzerland 754 1.4 1,672 3.1
Re:NewCell Sweden 745 1.4 810 1.5
Azbil Japan 701 1.3 707 1.3
Ceres Power Holdings United Kingdom 686 1.2 726 1.4
Atlas Copco Sweden 617 1.1 600 1.1
Brambles Australia 585 1.1 455 0.8
Innergex Renewable
Energy Canada 581 1.1 800 1.5
Corbion Netherlands 579 1.0 573 1.1
Greencoat Renewables Ireland 530 1.0 531 1.0
Sensata Technologies
Holding United Kingdom 529 1.0 900 1.7
Hoffmann Green Cement
Technologies France 208 0.4 544 1.0
Agronomics Isle of Man 193 0.3 339 0.6
Agronomics Warrant
11/12/2023 Isle of Man - - - -
Total Investments 55,002 100.0
The holdings listed above are all equity shares unless otherwise
stated
Cross Holdings in other Investment Companies
As at 31 March 2023, 1.0% of the Company's total assets was
invested in Greencoat Renewables, an Irish listed investment
Company.
Whilst the requirements of the UK Listing Authority permit the
Company to invest up to 10% of the value of the total assets of the
Company (before deducting borrowed money) in other investment
companies (including investment trusts) listed on the Main Market
of the London Stock Exchange, it is the directors' current
intention that the Company invests not more than 5% in other
investment companies.
Analysis of Investments by Investment Theme, Stage of
Development, Geography and Economic Sector
Analysis of Investments by Investment Theme and Stage of
Development
As at 31 March 2023 (ex-cash)
Environmental theme
Sustainable Sustainable
Green agriculture Ocean &
Buildings
Circular Clean & Green and Land Freshwater
economy Energy Industry Mobility ecosystems Systems Total
Stage of Development % % % % % % %
Innovators* 3.92 3.54 0.39 0.00 0.35 0.00 8.20
Accelerators* 10.64 17.92 20.74 3.60 11.85 7.29 72.04
Leaders* 9.72 0.00 3.02 4.39 0.00 2.63 19.76
Total 2023 24.28 21.46 24.15 7.99 12.20 9.92 100.00
* Innovators are companies that are innovating technological
change to environmental challenges. Accelerators are companies that
already have a proven solution to environmental challenges and are
set to continue rapid growth within their addressable market.
Established leaders are larger companies which have developed a
commanding presence in their chosen markets.
Analysis of Investments by Geography and Economic Sector
As at 31 March 2023 (ex-cash)
United
States of United
America Japan France Kingdom Denmark Others Total
Sectors % % % % % % %
Basic Materials - - - - - 3.7 3.7
Consumer Discretionary - 1.7 - - - 1.9 3.6
Consumer Staples - - - - - 3.3 3.3
Energy 4.7 - - 1.2 2.9 - 8.8
Health Care - - - - 1.8 2.3 4.1
Industrials 13.3 5.7 3.5 1.0 - 15.0 38.5
Real Estate 1.8 - - - - - 1.8
Technology 5.6 - - - - 3.3 8.9
Utilities 11.8 1.7 3.4 2.2 2.0 6.2 27.3
Total 2023 37.2 9.1 6.9 4.4 6.7 35.7 100.0
Strategic Review
The Strategic Report has been prepared in accordance with the
Companies Act 2006 (Strategic Report and Directors' Report)
Regulations 2013.
The Strategic Report seeks to provide shareholders with the
relevant information to enable them to assess the performance of
the Directors of the Company during the period under review.
Business and Status
During the year the Company carried on business as an investment
trust with its principal activity being portfolio investment. The
Company has been approved by HM Revenue & Customs ('HMRC') as
an investment trust subject to the Company continuing to meet the
eligibility conditions of sections 1158 and 1159 of the Corporation
Taxes Act 2010 and the ongoing requirements for approved companies
as detailed in Chapter 3 of Part 2 of the Investment Trust
(Approved Company) (Tax) Regulations 2011. In the opinion of the
Directors, the Company has conducted its affairs in the appropriate
manner to retain its status as an investment trust.
The Company is a public limited Company and is an investment
Company within the meaning of section 833 of the Companies Act
2006. It is also an Alternative Investment Fund (AIF) for the
purposes of the EU Alternative Investment Fund Managers
Directive.
The Company has a fixed share capital although it may issue or
purchase its own shares subject to shareholder approval, usually
sought annually.
The Company is not a close Company within the meaning of the
provisions of the Corporation Tax Act 2010 and has no
employees.
The Company was incorporated in England & Wales on 12 April
2006 and started trading on 8 June 2006, immediately following the
Company's launch.
Reviews of the Company's activities are included in the
Chairman's Statement and Investment Adviser's Review.
There has been no significant change in the activities of the
Company during the year to 31 March 2023 and the Directors
anticipate that the Company will continue to operate in the same
manner during the current financial year.
Investment Objective
The investment objective of the Company is to achieve capital
growth and income, both over the long term, through investment in a
diverse portfolio of companies providing environmental
solutions.
Investment Strategy
The Investment Adviser has adopted a bottom-up approach. The
Investment Adviser, supported by Jupiter's Governance and
Sustainability team, researches companies, ensuring that each
potential investment falls within the Company's stated investment
policy. Consideration is also given to a potential investment's
risk/return profile and growth prospects before an investment is
made. Once companies operating within the appropriate theme have
been identified and due diligence has been carried out, the
Investment Adviser will decide whether a particular investment
would be appropriate.
Investment Policy
From the year ended 31 March 2021, the Company's investment
focus was adjusted towards a greater emphasis on Companies which
are innovating technological solutions to sustainability challenges
('innovators') and companies that are already rapidly delivering
proven sustainable solutions in their markets ('accelerators'). A
by-product of these changes is a greater focus on smaller companies
which are at the forefront of the innovation driving sustainable
solutions.
The following investment restrictions are observed:
* no more than 5% of the Company's total assets (at the
time of such investment) may be invested in unlisted
securities;
* no more than 15% of the total assets of the Company
(before deducting borrowed money) is lent to or
invested in any one Company or group at the time the
investment or loan is made. For this purpose any
existing holding in the Company or group concerned is
aggregated with the proposed investment;
* distributable income is principally derived from
investments;
* not more than 10%, in aggregate, of the value of the
total assets of the Company (before deducting
borrowed money) is invested in other UK listed
investment companies (including investment trusts)
listed on the Official List. Whilst the requirements
of the UK Listing Authority permit the Company to
invest up to this 10% limit, it is the Directors'
current intention that the Company invests not more
than 5%, in aggregate, of the value of the total
assets of the Company (before deducting borrowed
money) in such other investment companies; and
* the Company at all times invests and manages its
assets in a way which is consistent with its
objective of spreading investment risk.
In accordance with the requirements of the UK Listing Authority,
any material changes in the principal investment policies and
restrictions of the Company would only be made with the approval of
shareholders by ordinary resolution.
Future Developments
It is the Board's ambition to continue to grow the asset base of
the Company through a combination of organic growth of net asset
value and issuance of new shares with a view to achieving the
critical mass necessary to attract broader demand from large
national discretionary wealth managers, and other long-term
institutional buyers of investment trust shares.
Benchmark Index
The Company's benchmark is the MSCI World Small Cap Index.
Management
The Company has no employees and most of its day to day
responsibilities are delegated to Jupiter Asset Management Limited
('JAM'), who act as the Company's Investment Adviser and Company
secretary. Further details of the Company's arrangement with JAM
and the Alternative Investment Fund Manager ('AIFM'), Jupiter Unit
Trust Managers Limited, can be found in Note 22 to the accounts.
Both JAM and JUTM are part of the Jupiter Group which comprises
Jupiter Fund Management PLC and all of its subsidiaries
('Jupiter').
J.P. Morgan Europe Limited ('JPMEL') acts as the Company's
depository. The Company has also entered into an outsourcing
arrangement with J.P. Morgan Chase Bank N.A. ('JPMCB') for the
provision of accounting and administration services.
Although JAM is named as the company secretary, JPMEL provides
administrative support to the Company secretary as part of its
formal mandate to provide broader fund administration services to
the Company.
Viability Statement
In accordance with Provision 36 of the Code of Corporate
Governance as issued by the Association of Investment Companies in
February 2019 (the 'AIC Code'), the Board has assessed the
prospects of the Company over a longer period than the twelve
months required by the 'Going Concern' provision, reviewing in line
with the three year cycle of the continuation vote. In doing so the
Board believes that there will be no issue in the next continuation
vote being passed. The Company's investment objective is to achieve
capital growth and income, both over the long term and the Board
regards the Company as a long-term investment.
The Board has considered the Company's business model including
its investment objective and investment policy as well as the
principal and emerging risks and uncertainties that may affect the
Company.
In addition, the Board has considered the reporting produced by
the Jupiter Investment Risk Team concerning a number of potential
future scenarios resulting from ongoing market volatility. The
Board continues to monitor income and expense forecasts for the
Company.
The Board has noted that:
* The Company holds a highly liquid portfolio invested
predominantly in listed equities.
* The investment management fee is the most significant
expense of the Company. It is charged as a percentage
of the portfolio value and so would reduce if the
market value of the portfolio were to fall. The
remaining expenses are more modest in value and are
predicable in nature. No significant increase to
ongoing charges or operational expenses is
anticipated.
* Green and sociably responsible investing is now high
on the agenda of many retail investors and that the
Company is well placed to attract these retail
investors through targeted marketing.
* Climate change is a key issue for asset managers and
their investors. ESG issues are integrated into the
Company's investment processes and these are
continually monitored to ensure that the investment
objectives are followed to mitigate any risk of the
perception of greenwashing and any related
litigation.
* The Board is satisfied that Jupiter and the Company's
other key third-party suppliers maintain suitable
processes and controls to ensure that they can
continue to provide their services to the Company.
The Board has therefore concluded that there is a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the next three
years.
As part of its assessment, the Board has noted that shareholders
will be required to vote on the continuation of the Company at the
2023 AGM.
Further information regarding the planned life of the Company
can be found within the Report and Accounts.
Gearing
Gearing is defined as the ratio of a Company's debt less cash
held compared to its equity capital, expressed as a percentage. The
effect of gearing is that in rising markets the Company tends to
benefit from any growth of the Company's investment portfolio above
the cost of payment of the prior ranking entitlements of any
lenders and other creditors. Conversely, in falling markets the
Company suffers more if the Company's investment portfolio
underperforms the cost of those prior entitlements.
The Company may utilise gearing at the director's discretion for
the purpose of financing the Company's portfolio and enhancing
shareholder returns. In particular, the Company may be geared by
bank borrowings which will rank in priority to the ordinary shares
for repayment on a winding up or other return of capital.
The Articles provide that, without the sanction of the Company
in a general meeting, the Company may not incur borrowings above a
limit of 25% of the Company's total assets at the time of drawdown
of the relevant borrowings.
Loan facility
The Company has a revolving loan facility agreement with Royal
Bank of Scotland International Limited of GBP5 million which the
Investment Adviser has been authorised by the Board to draw down
for investment purposes. The facility to gear the Company's
investment portfolio is deployed tactically by the Investment
Adviser with a view to enhancing shareholder returns. The Directors
have determined that the maximum level of gearing will be 25% of
the Company's total assets at the time of
drawdown. The finance costs shown in the Statement of
Comprehensive Income are in respect of interest charges on the
utilised balance along with the costs incurred for non-utilisation
of the facility during the year to the end of the loan term.
Use of Derivatives
The Company may invest in derivative financial instruments
comprising options, futures and contracts for difference for
investment, hedging and efficient portfolio management, as more
fully described in the investment policy. There is a risk that the
use of such instruments will not achieve the goals desired. Also,
the use of swaps, contracts for difference and other derivative
contracts entered into by private agreements may create a
counterparty risk for the Company. This risk is mitigated by the
fact that the counterparties must be institutions subject to
prudential supervision and that the counterparty risk on a single
entity must be limited in accordance with the individual
restrictions. There were no open derivatives at year end.
Currency Hedging
The Company's accounts are maintained in sterling while
investments and revenues are likely to be denominated and quoted in
currencies other than sterling. Although it is not the Company's
present intention to do so, the Company may, where appropriate and
economic to do so, employ a policy of hedging against fluctuations
in the rate of exchange between sterling and other currencies in
which its investments are denominated.
Key Performance Indicators
At their quarterly Board meetings the Directors consider a
number of performance indicators to help assess
the Company's success in achieving its objectives. The key
performance indicators used to measure the
performance of the Company over time are as follows:
* Net asset value changes over time;
* Ordinary share price movement;
* A comparison of ordinary share price and net asset
value to benchmark;
* Discount and premium to net asset value; and
* Growth in assets under management.
Information on some of the above key performance indicators and
how the Company has performed against them can be found within the
Report and Accounts.
In addition, a history of the net asset values, the price of the
ordinary shares and the benchmark index are shown on the monthly
factsheets which can be viewed on the Investment Adviser's website
www.jupiteram.com/JGC and which are available on request from the
company secretary.
Discount to Net Asset Value
The Directors review the level of the discount or premium
between the middle market price of the Company's ordinary shares
and their net asset value on a regular basis.
The Directors have powers granted to them at the last AGM to
purchase ordinary shares and either cancel or hold them in treasury
as a method of controlling the discount to net asset value and
enhancing shareholder value.
The Company repurchased 328,726 ordinary shares for holding in
treasury during the year under review at a discount of 14.40%.
Under the Listing Rules, the maximum price that may currently be
paid by the Company on the repurchase of any ordinary shares is
105% of the average of the middle market quotations for the
ordinary shares for the five business days immediately preceding
the date of repurchase. The minimum price will be the nominal value
of the ordinary shares. The Board is proposing that its authority
to repurchase up to approximately 14.99% of its issued share
capital should be renewed at the AGM. The new authority to
repurchase will last until the conclusion of the AGM of the Company
in 2023 (unless renewed earlier). Any repurchase made will be at
the discretion of the Board in light of prevailing market
conditions and within guidelines set from time to time by the
Board, the Companies Act, the Listing Rules and Model Code.
Treasury Shares
In accordance with the Companies (Acquisition of Own Shares)
(Treasury Shares) Regulations 2003 (the 'Regulations') which came
into force on 1 December 2003 any ordinary shares repurchased,
pursuant to the above authority, may be held in treasury. These
ordinary shares may subsequently be cancelled or sold for cash.
This would give the Company the ability to reissue shares quickly
and cost effectively and provide the Company with additional
flexibility in the management of its capital. The Company issued
2,567 ordinary shares from treasury during the year under
review.
Principal and Emerging Risks and Uncertainties
The Directors confirm that they have carried out a robust
assessment of the emerging and principal risks facing the Company,
including those that would threaten its business model, future
performance, solvency or liquidity. Most of these risks are market
related and are similar to those of other investment trusts
investing primarily in listed markets. The Audit Committee reviews
the Company's risk control summary at each meeting, and as part of
this process, gives consideration to identifying emerging risks.
Any emerging risks that are identified, that are considered to be
of significance will be recorded on the Company's Risk Control
Summary with any mitigations. In carrying out this assessment,
consideration is being given to the current market conditions which
may impact the Company. No emerging risks have been identified.
Investment policy and process - Inappropriate investment
policies and processes may result in under performance against the
prescribed benchmark index and the Company's peer group.
The Board manages these risks by ensuring a diversification of
investments and regularly reviewing the portfolio asset allocation
and investment process. In addition, certain investment
restrictions have been set and these are monitored as
appropriate.
Investment Strategy and Share Price Movements -The Company is
exposed to the effect of variations in the price of its
investments. A fall in the value of its portfolio will have an
adverse effect on shareholders' funds. It is not the aim of the
Board to eliminate entirely the risk of capital loss, rather it is
its aim to seek capital growth. The Board reviews the Company's
investment strategy and the risk of adverse share price movements
at its quarterly Board meetings taking into account the economic
climate, market conditions and other factors that may have an
effect on the sectors in which the Company invests. There can be no
assurances that appreciation in the value of the Company's
investments will occur but the Board seeks to reduce this risk.
Liquidity Risk - The Company may invest in securities that have
a very limited market which will affect the ability of the
Investment Adviser to dispose of securities when it is no longer
felt that they offer the potential for future returns. Likewise the
Company's shares may experience liquidity problems when
shareholders are unable to realise their investment in the Company
because there is a lack of demand for the Company's shares. At its
quarterly meetings the Board considers the current liquidity in the
Company's investments and the level of liabilities when setting
restrictions on the Company's exposure. The Board also reviews, on
a quarterly basis, the Company's buy-back programme and in doing so
is mindful of the liquidity in the Company's shares.
Gearing Risk - The Company's gearing can impact the Company's
performance by accelerating the decline in value of the Company's
net assets at a time when the Company's portfolio is declining.
Conversely gearing can have the effect of accelerating the increase
in the value of the Company's net assets at a time when the
Company's portfolio is rising. The Company's level of gearing is
under constant review by the Board who take into account the
economic environment and market conditions when reviewing the
level.
Regulatory Risk - The Company operates in a complex regulatory
environment and faces a number of regulatory risks. A breach of
section 1158 of the Corporation Tax Act 2010 could result in the
Company being subject to capital gains tax on portfolio movements.
Breaches of other regulations such as the UKLA Listing rules, could
lead to a number of detrimental outcomes and reputational damage.
Breaches of controls by service providers such as the Investment
Adviser could also lead to reputational damage or loss. The Board
monitors regulatory risks at its quarterly Board meetings and
relies on the services of its Company secretary, JAM, and its
professional advisers to ensure compliance with, amongst other
regulations, the Companies Act 2006, the UKLA Listing Rules, the
FCA's Disclosure Guidance and Transparency Rules and the
Alternative Investment Fund Managers' Directive. In order to ensure
that the Company remains compliant, the Board directly and via the
Audit Committee/ Management Engagement Committee receives regular
updates from the Investment Adviser and the Company's other key
service providers. The Investment Adviser is contractually obliged
to ensure that its conduct of business conforms to applicable laws
and regulations.
Credit and Counterparty Risk - The failure of the counterparty
to a transaction to discharge its obligations under that
transaction could result in the Company suffering a loss. Further
details of the management of this risk can be found in Note 13 to
the accounts of the Annual Report.
Loss of Key Personnel - The day-to-day management of the Company
has been delegated to the Investment Adviser. Loss of the
Investment Adviser's key staff members could affect investment
return. The Board is aware that JAM recognises the importance of
its employees to the success of its business. Its remuneration
policy is designed to be market competitive in order to motivate
and retain staff and succession planning is regularly reviewed. The
Board also believes that suitable alternative experienced personnel
could be employed to manage the Company's portfolio in the event of
an emergency.
Operational - Failure of the core accounting systems, or a
disastrous disruption to the Investment Adviser's business or that
of the administration provider JPMCB, could lead to an inability to
provide accurate reporting and monitoring.
Financial - Inadequate financial controls could result in
misappropriation of assets, loss of income and debtor receipts and
inaccurate reporting of net asset value per share. The Board
annually reviews the Investment Adviser's report on its internal
controls and procedures.
Details of how the Board monitors the operational services and
financial controls of Jupiter and J.P. Morgan are included within
the Internal Control section of the Report of the Directors.
Enterprise risk is reviewed twice a year, taking into its remit
emerging risks as they become immediate, whist still maintaining a
long-term perspective where they are evolving at a fast rate.
Climate change and its potential impacts is under scrutiny at every
meeting, this being the very purpose of the Company.
Climate Change - the impact of climate change risk has been
considered and it is concluded that it does not have a material
impact on the Company's investments. In line with IFRS investments
are valued at fair value, which for the Company are quoted bid
prices for investments in active markets at the Statement of
Financial Position date and therefore reflect market participants
view of climate change. Given the nature of the Company all
investments are monitored to ensure that they are in line with the
investment objective to mitigate any risk of
the perception of greenwashing and any related litigation.
Geopolitical - There is increasing risk to market stability and
investment opportunities from geopolitical conflicts such as
between Russia and Ukraine.
The Company has no exposure to Russian Stocks.
Capital Gains Tax Information
The closing price of the ordinary shares on the first date of
dealing for capital gain tax purposes was 99p.
Directors
Details of the Directors of the Company and their biographies
are set out within the Report and Accounts.
The Company's policy on Board diversity is included in the
Corporate Governance section of the Report of the Directors.
As at 31 March 2023, the Board comprises of one female and three
male Directors.
Employees, Environmental, Social and Human Rights issues
The Company has no employees as the Board has delegated the day
to day management and administration functions to JUTM, JAM and
other third-party suppliers. There are therefore no disclosures to
be made in respect of employees.
Integration of Environmental, Social and Governance ('ESG')
considerations into the Investment Adviser's Investment Process
JAM has a 30 year record of integrating ESG factors into the
investment process. Its Governance and Sustainability team
leverages its relationships with partner organisations such as the
UN Principles for Responsible Investment ("UN PRI"), the Investor
Forum and Institutional Investors Group on Climate Change ("IIGCC")
and regularly engages with these and other industry bodies to
ensure it remains at the forefront of ESG integration. Where
relevant, lessons learned are disseminated across JAM's wider
investment team via its Stewardship Committee. JAM considers
stewardship to be an integral component of its investment process.
Typically, JAM does not seek to exclude companies based on headline
risk factors, disclosures or practices, instead believing that
engagement aimed at enhancing long-term outcomes for investors
requires a more rigorous and nuanced approach. Moreover, the
Investment Adviser is of the view that compelling opportunities can
arise in companies where there is evidence of positive change in
the areas of environmental and social risk mitigation and
governance practices, but where the market may be yet to reflect
this in investee Company share prices.
Modern Slavery Act
The Modern Slavery Act 2015 requires certain companies to
prepare a slavery and human trafficking statement. As the Company
has no employees and does not supply goods and services, it is not
required to make such a statement.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from its
operations as the day to day management and administration
functions have been outsourced to third-parties and it neither owns
physical assets, property nor has employees of its own. It
therefore does not have responsibility for any other emissions
producing sources under the Companies Act 2006 (Strategic Report on
Directors' Reports) Regulations 2013.
Section 172 Statement
Under section 172 of the Companies Act 2006, the directors have
a duty to act in good faith and to promote the success of the
Company for the benefit of its shareholders as a whole. This
includes taking into consideration the likely consequences of their
decisions on the long term and on the Company's stakeholders such
as its shareholders, employees and suppliers, while acting fairly
between stakeholders. The Directors must also consider the impact
of the Company's decisions on the environment, the community and
its reputation for maintaining high standards of business
conduct.
The Company ensures that the Directors are able to discharge
this duty by, amongst other things, providing them with relevant
information and training on their duties. The Company also ensures
that information pertaining to it is provided, as required, to the
Directors as part of the information presented in regular Board
meetings in order that stakeholder considerations can be factored
into the Board's decision-making. The Directors' responsibilities
are also set out in the schedule of matters reserved for the Board
and the terms of reference of its committees, both of which are
reviewed regularly by the Board. At all times the Directors can
access as a Board, or individually, advice from its professional
advisers including the company secretary and independent external
advisers.
The Company's investment objective, to achieve capital and
income growth over the long term, supports the Directors' statutory
obligations to consider the long-term consequences of the Company's
decisions. How the long-term focus of the Company is achieved, is
set out in more detail in the Annual Report and above where the
Investment Adviser's approach to environmental, social and
governance issues is explained in the section entitled Integration
of ESG considerations into the Investment Adviser's investment
process. This approach is fundamental to the Company achieving
long-term success for the benefit of all of its stakeholders.
The Company's corporate purpose is to generate a total return by
investing in companies which are developing and implementing
solutions for the world's environmental challenges. The Company is
also aware of its own potential impact on the environment and has a
number of practical policies in place to reduce that impact.
Examples include the use and sharing of electronic documents by the
Board rather than printing documentation and the provision of
electronic copies of the annual report and accounts which are
available to shareholders and others on the Company website. Where
physical copies of the annual and half yearly financial reports are
made, they use materials and processes designed to both minimise
the environmental impact and to maximise the recycling potential as
described in more detail on the inside back cover of this document.
The proxy voting form previously printed in the annual report and
accounts and posted back to the registrars has been removed and
shareholders are invited to vote via the registrar's secure portal.
The Board will continue to review its travel arrangements and will
seek to minimise physical meetings. The Directors as a matter of
course continue to seek new opportunities and to make use of new
technologies and processes that will further enhance environmental
operation of the Company.
Engagement with stakeholders and the effect on principal
decisions
The Shareholders - The shareholders of the Company are both
institutional and retail in nature and details of those with
substantial shareholdings are detailed within the Report and
Accounts.
The Board believe that shareholders have a vital role in
encouraging a higher level of corporate performance and is
committed to listening to the views of its shareholders and giving
useful and timely information by providing open and accessible
channels of communication including those listed below.
The AGM - The Company encourages participation from shareholders
at its AGMs where they can communicate directly with the Directors
and investment adviser. Given the environmental ethos of the
Company shareholders are encouraged to submit their votes by proxy
ahead of the meeting, or attend the meeting remotely, rather than
attending in person. Further details of how the AGM will be held
can be found within the Report and Accounts. The Board and
investment adviser welcome your questions which may be submitted to
Nick.Black@jupiteram.com. Subject to confidentiality, we will
respond to any questions submitted either directly or by publishing
our response on the company's website. All views of the
shareholders will be taken into consideration and action taken
where appropriate.
Online Information - The Company's website
(www.jupiteram.com/JGC) contains the Annual and Half Yearly
Financial Report along with monthly factsheets and commentaries and
video updates from the investment adviser. The daily NAV per share,
monthly top ten portfolio listings, dividend announcements and
various regulatory announcements can be found on the regulatory
news service of the London Stock Exchange. Jupiter Green Investment
Trust PLC JGC Stock | London Stock Exchange.
Shareholder Communications
Shareholders can raise issues or concerns at any time by writing
to the Chairman or the Senior Independent Director at the
registered office.
Further details about how the Board incorporates the views of
the company's shareholders in its decision-making process can be
found in the UK Stewardship Code and the Exercise of Voting Powers
section. Further information about how the Board ensures that each
director develops an understanding of the views of the Company's
shareholders and can be found in the section entitled Shareholder
Relations.
The Investment Adviser
The investment management function is critical to the long-term
success of the Company. The Board and the investment adviser
maintain an open and constructive relationship, with meetings
taking place a minimum of four times per annum with monthly updates
and additional meetings as circumstances require. The Audit
Committee meets at least twice a year and as part of its role
considers the internal controls put in place by the investment
adviser.
The 'Management of the Company' section in the report details
the Board's consideration of the investment adviser's performance,
its terms of appointment and their annual assessment of its
continued stewardship of the portfolio and its oversight of the
administrative functions. The day to day responsibilities of the
Company are delegated to the investment adviser who is the key
service provider and supplies investment management, administration
and Company secretarial services. The investment adviser oversees
the activities of the Company's other third-party suppliers on
behalf of the Company and maintains open and collaborative
relationships to maintain quality, efficiency and cost control
through regular communication with dedicated members of the
investment adviser's operational teams. The Board regularly reviews
reports from its investment
adviser, the AIFM, the depositary, the Company broker, the
investor relations research provider and the auditors. These
provide vital information concerning changes in market practice or
regulation which affect the Company and assist the Board in its
decision-making process. Representatives from these providers
attend Company Board meetings and give presentations on a regular
basis enabling in depth discussions concerning both their findings
and their performance.
The Board reviews the culture and values of the investment
adviser as part of its ongoing assessment of its performance to
ensure these are aligned to those of the Board. Further information
on the investment adviser's culture and values can be found in the
'Integration of ESG considerations into the investment adviser's
investment process' section of the Annual Report.
Other Third-Party Suppliers
As an externally managed investment Company with no employees or
physical assets, the principal stakeholders of the Company are its
shareholders, investment adviser, AIFM, depositary, custodian,
administrator and registrar.
The Investment Adviser works with the key service providers to
ensure the adequacy of the services provided to the Company. On
occasion, representatives of the key service providers are invited
to attend to present to the Board in addition to the regular
updates provided by the Investment Adviser.
Principal Decisions
The Directors take into account the s172 considerations in all
material decisions of the Company ensuring in Board discussions
that appropriate attention is given to the short and long-term
benefits for stakeholders. Examples of significant Board
discussions and decisions made in the period are set out below:
* Discount Management: Following discussion at the
Board and with the Company's broker, the Board
decided to use the share buy-back programme within
agreed parameters. This resulted in a decision to
buyback 328,726 ordinary shares of the Company during
the year.
* Board Evaluation: The independent non-executive
directors undertake on, an annual basis, an appraisal
in relation to their oversight and monitoring of the
performance of the investment adviser and other key
service providers. In addition the directors
undertake, on an annual basis, a written assessment
of the effectiveness of the Board as a whole by
completion of a formal evaluation questionnaire. The
SID also leads a formal evaluation of the performance
of the Chairman.
* Board Succession: In 2022, the Board decided that
Michael Naylor should continue as Chairman of the
Company for another 5 years. Although this exceeds
the usual time that a director is appointed to an
Investment Trust he remains independent of mind and
given his skills, experience and knowledge of the
Company the directors unanimously opined that he
still had more to offer.
Simon Baker was appointed to the Board on 31 July 2015. The Annual
General Meeting in September 2023 represents the eighth anniversary
of his appointment. The Nomination Committee met on 4 July 2023
and concluded that although exceeding the usual tenure for a Director
to be appointed to an investment trust his passion and dedication
to the Company would be a benefit over the next 3 years. Furthermore,
the Directors noted that Simon Baker remained independent of mind
and able to provide the appropriate level of challenge to portfolio
managers.
* Loan: A revolving loan facility agreement with Royal
Bank of Scotland International Limited of GBP5
million was approved by the Board, and the Investment
Adviser has been authorised by the Board to draw down
for investment purposes. The Loan facility has been
drawn down to GBP3 million of the GBP5 million
facility.
* Annual General Meeting: As a result of the additional
cost and the level of take-up at the hybrid AGM, the
Board decided that shareholders would be offered an
opportunity to attend the AGM in person and ask
questions.
* Third-Party Suppliers: The Board decided to make no
changes to its principal third party suppliers in the
period.
* Geopolitical Considerations: The Board has discussed
the investment risks and risks in respect of third
parties and has noted that the fund had no exposure
to Russian stocks. The Board considers that the
levels of risk within the Company are acceptable and
in line with its investment objective.
In Summary
The structure of the Board and its various committees and the
decisions it makes are underpinned by the duties of the Directors
under s172 on all matters. The Board firmly believes that the
sustainable long-term success of the Company depends upon taking
into account the interests of all the Company's key
stakeholders.
Michael Naylor
Chairman
12 July 2023
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and financial statements in accordance with UK adopted
International Accounting standards.
Under Company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the return or
loss of the Company for that period.
In preparing those financial statements, the Directors are
required to:
a) select suitable accounting policies in accordance with UK adopted
International Accounting standards 8 Accounting Policies, Changes
in Accounting Estimates and Errors and then apply them consistently;
b) present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information
c) provide additional disclosures when compliance with the specific
requirements in UK adopted International Accounting standards is
insufficient to enable users to understand the impact of particular
transactions, other events and conditions on the entity's financial
position and financial performance
d) state that the Company has complied with UK adopted International
Accounting standards subject to any material departures disclosed
and explained in the financial statements; and
e) make judgements and estimates that are reasonable and prudent.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website www.jupiteram.com/JGC. The work carried out by
the auditors does not include consideration of the maintenance and
integrity of the website and accordingly the auditors accept no
responsibility for any changes that have occurred to the financial
statements when they are presented on the website.
The financial statements are published on www.jupiteram.com/JGC,
which is a website maintained by Jupiter Asset Management
Limited.
Visitors to the website need to be aware that legislation in the
United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors' Report,
Directors' Remuneration Report and Statement of Corporate
Governance that comply with that law and those regulations.
Each of the Directors, who are listed the report, confirm to the
best of their knowledge that:
a) the financial statements, prepared in accordance with UK adopted
International Accounting standards, give a true and fair view of
the assets, liabilities, financial position and profit or loss of
the Company;
b) the report includes a fair view of the development and performance
of the business and the position of the Company together with a
description of the principal and emerging risks and uncertainties
that the Company faces; and
c) in their opinion, the Annual Report and Accounts taken as a whole,
is fair, balanced and understandable and it provides the information
necessary to assess the Company's performance, business model and
strategy
So far as each Director is aware at the time the report is
approved:
a) there is no relevant audit information of which the Company's
Auditors are unaware; and
b) the Directors have taken all steps required of a Company director
to make themselves aware of any relevant audit information and to
establish that the Company's Auditors are aware of that information.
By order of the Board
Michael Naylor
Chairman
12 July 2023
Statement of Comprehensive Income
for the year ended 31 March 2023
Year ended 31 March Year ended 31 March
2023 2022
Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss on investments at
fair value through
profit or loss 10 - (265) (265) - (356) (356)
Foreign exchange gain - 465 465 - 155 155
Income 3 759 - 759 692 - 692
Total income/(loss) 759 200 959 692 (201) 491
Investment management fee 4 (92) (277) (369) (102) (307) (409)
Other expenses 5 (539) - (539) (500) - (500)
Total expenses (631) (277) (908) (602) (307) (909)
Net return/(loss) before
finance costs and tax 128 (77) 51 90 (508) (418)
Finance costs 7 (27) (82) (109) (10) (29) (39)
Return/(loss) on ordinary
activities
before taxation 101 (159) (58) 80 (537) (457)
Taxation 8 (91) - (91) (86) - (86)
Net loss after taxation 10 (159) (149) (6) (537) (543)
Loss per ordinary share 9 0.05p (0.75)p (0.70)p (0.03)p (2.51)p (2.54)p
Diluted Loss per ordinary
share 9 0.05p (0.75)p (0.70)p (0.03)p (2.51)p (2.54)p
* There is no other comprehensive income and therefore the 'Net
loss after taxation' is the total comprehensive expense for the
year.
The total column of this statement is the income statement of
the Company, prepared in accordance with UK adopted international
accounting standards. The supplementary revenue return and capital
return columns are both prepared under guidance produced by the
Association of Investment Companies (AIC). All items in the above
statement derive from continuing operations.
Statement of Financial Position as at 31 March 2023
2023 2022
Note GBP'000 GBP'000
Non current assets
Investments held at fair value through profit
or loss 10 55,002 53,776
Current assets
Prepayments and accrued income 11 1,459 181
Cash and cash equivalents 2,954 4,614
4,413 4,795
Total assets 59,415 58,571
Current liabilities
Other payables 12 (4,837) (3,181)
Total assets less current liabilities 54,578 55,390
Capital and reserves
Called up share capital 15 34 34
Share premium 16 2,468 2,465
Redemption reserve* 17 239 239
Retained earnings* 18 51,837 52,652
Total equity shareholders' funds 54,578 55,390
Net Asset Value per ordinary share 19 258.58p 258.43p
Diluted Net Asset Value per ordinary share 19 259.86p 259.18p
* Under the company's Articles of Association, dividends may be
paid out of any distributable reserve of the company.
Approved by the Board of directors and authorised for issue on
12 July 2023 and signed on its behalf by:
Michael Naylor
Chairman
Company Registration Number 05780006
Statement of Changes in Equity for the year ended 31 March
2023
Share Share Redemption Retained
Capital Premium Reserve Earnings Total
For the year ended 31
March 2023 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 March 2022 34 2,465 239 52,652 55,390
Net loss for the year - - - (149) (149)
Ordinary shares reissued
from treasury - 3 - 3 6
Ordinary shares repurchased - - - (669) (669)
Balance at 31 March 2023 34 2,468 239 51,837 54,578
Share Share Redemption Retained
Capital Premium Reserve Earnings Total
For the year ended 31
March 2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 March 2021 34 1,563 239 51,468 53,304
Net loss for the year - - - (543) (543)
Dividend paid - - - (137) (137)
Ordinary shares reissued
from treasury - 902 - 2,052 2,954
Ordinary shares repurchased - - - (188) (188)
Balance at 31 March 2022 34 2,465 239 52,652 55,390
Dividends paid during the period were paid out of revenue
reserves.
Cash Flow Statement for the year ended 31 March 2023
2023 2022
Note GBP'000 GBP'000
Cash flows from operating activities
Investment income received (gross) 712 693
Deposit interest received 27 1
Investment management fee paid (338) (438)
Other cash expenses (475) (455)
Interest paid (109) (39)
Net cash outflow from operating activities
before taxation (183) (238)
Taxation (91) (86)
Net cash outflow from operating activities 20 (274) (324)
Net cash flows from investing activities
Purchases of investments (12,177) (14,268)
Sale of investments 10,989 11,161
Net cash outflow from investing activities (1,188) (3,107)
Cash flows from financing activities
Shares repurchased (669) (188)
Shares reissued from treasury 6 2,954
Drawdown of short-term bank loan - 2,100
Equity dividends paid - (137)
Net cash (outflow)/inflow from financing
activities 21 (663) 4,729
(Decrease)/increase in cash (2,125) 1,298
Change in cash and cash equivalents
Cash and cash equivalents at start
of year 4,614 3,161
Realised gain on foreign currency 465 155
Cash and cash equivalents at end of
year 2,954 4,614
Notes to the accounts
1. Accounting policies
The Accounts comprise the financial results of the Company for
the year to 31 March 2023. The Accounts are presented in pounds
sterling, as this is the functional currency of the Company. The
Accounts were authorised for issue in accordance with a resolution
of the directors on 12 July 2023. All values are rounded to the
nearest thousand pounds (GBP'000) except where indicated.
The accounts have been prepared in accordance with UK adopted
International Accounting Standards.
Where presentational guidance set out in the Statement of
Recommended Practice (SORP) for Investment Trusts issued by the
Association of Investment Companies (AIC) in April 2021 is
consistent with the requirements of UK adopted International
Accounting Standards, the directors have sought to prepare the
financial statements on a basis compliant with the recommendations
of the SORP.
Basis of preparation
In preparing these financial statements the Directors have
considered the impact of climate change risk as a principal risk,
and have concluded that it does not have a material impact on the
Company's investments. In line with IFRS investments are valued at
fair value, which for the Company are quoted prices for the
investments in active markets at the Balance Sheet date and
therefore reflect market participants view of climate change
risk.
The financial statements have been prepared on a going concern
basis. In considering this, the directors took into account the
Company's investment objective, risk management policies and
capital management policies, the diversified portfolio of readily
realisable securities which can be used to meet short-term funding
commitments and the ability of the Company to meet all of its
liabilities and ongoing expenses as for the period to 31 July 2024,
which is a period of at least 12 months from the date the financial
statements were authorised for issue. The directors have also
considered the continuation vote, due to be proposed at the
upcoming AGM, and have no reason to believe that this resolution
will not pass.
(a) Income recognition
Income includes dividends from investments quoted ex-dividend on
or before the date of the Statement of Financial Position.
Dividends receivable from equity shares are taken to the revenue
return column of the Statement of Comprehensive Income.
Special dividends are treated as repayment of capital or as
revenue depending on the facts of each particular case.
(b) Presentation of Statement of Comprehensive Income
In order to better reflect the activities of an investment trust
company and in accordance with guidance issued by the Association
of Investment Companies (AIC), supplementary information which
analyses the Statement of
Comprehensive Income between items of a revenue and capital
nature has been presented alongside the statement.
An analysis of retained earnings broken down into revenue
(distributable) items and capital (distributable) items is given in
Note 19. Investment Management fees and finance costs are charged
75 per cent. to capital and 25 per cent. to revenue (2022: 75 per
cent. to capital and 25 per cent. to revenue). All other
operational costs (including administration expenses to capital)
are charged to revenue.
(c) Basis of valuation of investments
Investments are recognised and derecognised on a trade date
where a purchase and sale of an investment is under contract whose
terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at
cost, being the consideration given.
All investments are classified as held at fair value through
profit or loss. All investments are measured at fair value with
changes in their fair value recognised in the Statement of
Comprehensive Income in the period in which they arise. The fair
value of listed investments is based on their quoted bid price at
the reporting date without any deduction for estimated future
selling costs.
Foreign exchange gains and losses on fair value through profit
and loss investments are included within the changes in the fair
value of the investments.
For investments that are not actively traded and/or where active
stock exchange quoted bid prices are not available, fair value is
determined by reference to a variety of valuation techniques. These
techniques may draw, without limitation, on one or more of: the
latest arm's length traded prices for the instrument concerned;
financial modelling based on other observable market data;
independent broker research; or the published accounts relating to
the issuer of the investment concerned.
(d) Cash and cash equivalents
Cash comprises cash in hand and demand deposits. Cash
equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and that are subject
to insignificant risks of changes in value.
(e) Foreign currencies
Transactions in currencies other than pounds sterling are
recorded at the rates of exchange prevailing on the dates of the
transactions. At the date of each Statement of Financial Position,
monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates prevailing on that
date.
Non-monetary assets and liabilities carried at fair value that
are denominated in foreign currencies are translated at the rates
prevailing at the date when the fair value was determined. Gains
and losses arising on retranslation are included in the Statement
of Comprehensive Income within the revenue or capital column
depending on the nature of the underlying item.
(f) Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
Statement of Comprehensive Income because it excludes items of
income or expense that are taxable or deductible in other periods
and it further excludes items that are never taxable or deductible.
The Company's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the date
of the Statement of Financial Position.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profit will be available against which
deductible temporary differences can be utilised.
Investment trusts which have approval under Section 1158 of the
Corporation Tax Act 2010 are not liable for taxation of capital
gains.
(g) Accounting developments
At the date of authorisation of the financial statements, the
following amendment to the UK adopted International Accounting
Standards and Interpretations was assessed to be relevant and is
effective for annual periods beginning on or after 1 January
2023:
IAS 1: Effective for annual reporting periods beginning on or
after 1 January 2023 Classification of Liabilities as Current or
Non-current - Amendments to UK adopted International Accounting
Standards 1. Effective for annual reporting periods beginning on or
after 1 January 2024.
Definition of Accounting Estimates - Amendments to UK adopted
International Accounting Standards IAS 8. Effective for annual
reporting periods beginning on or after 1 January 2024.
Disclosure of Accounting Policies - Amendments to UK adopted
International Accounting Standards IAS 1 and IFRS Practice
Statement 2. Effective for annual reporting periods beginning on or
after 1 January 2024.
Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - Amendments to UK adopted International
Accounting Standards 12. Effective for annual reporting periods
beginning on or after 1 January 2024.
The directors expect that the adoption of the standards listed
above will have either no impact or that any impact will not be
material on the financial statements of the Company in future
periods.
2. Significant accounting judgements, estimates and
assumptions
Management have not applied any significant accounting
judgements to this set of Financial Statements or those of the
prior period other than the allocation of special dividends
received between revenue and capital.
The allocation is dependent upon the underlying reason for the
payment. Examples of capital events which would result in the
dividend being allocated to capital is a return of capital to
shareholders or proceeds from the disposal of assets. Examples of
revenue events which would result in the dividend being allocated
to revenue are the distribution of excess or exceptional profits in
the year. The circumstances are reviewed by the manager making
recommendations to the Board who determine the appropriate
allocation.
The management make no other significant accounting
estimates.
3. Income
Year ended Year ended
31 March 2023 31 March 2022
GBP'000 GBP'000
Income from investments
Dividends from UK companies - 21
Dividends from overseas companies 732 670
Deposit interest 27 1
Total income 759 692
Special dividends received in the year amounted to GBP0.02m
(2022: GBP0.06m) allocated to revenue and GBPnil (2022: GBPnil)
allocated to capital.
4. Investment management fee
Year ended 31 March
Year ended 31 March 2023 2022
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment management
fee 92 277 369 102 307 409
75% (2022: 75%) of the investment management fee is treated as a
capital expense. Details of the investment management contract are
given in Note 22.
5. Other expenses
Year ended 31 March Year ended 31 March
2023 2022
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Directors' remuneration 107 - 107 107 - 107
Auditors' remuneration including
VAT - audit 62 - 62 44 - 44
Fund accounting 56 - 56 58 - 58
Broker fees 45 - 45 36 - 36
Registrar services 22 - 22 51 - 51
Professional and legal fees 49 - 49 30 - 30
Public Relations Fee 36 - 36 47 - 47
Other 162 - 162 127 - 127
539 - 539 500 - 500
6. Ongoing charges
Year ended Year ended
31 March 2023 31 March 2022
GBP'000 GBP'000
Investment management fees 369 409
Other expenses 539 500
Total expenses (excluding finance
costs) 908 909
Average net assets 52,866 58,063
Ongoing charges % 1.72 1.57
7. Finance costs
Year ended 31 March 2023 Year ended 31 March 2022
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-utilisation fee 2 5 7 3 9 12
Short-term loan interest 24 73 97 7 20 27
Bank overdraft interest 1 4 5 - - -
27 82 109 10 29 39
Finance costs are in respect of the costs incurred for
non-utilisation and short-term loan interest during the year of the
bank loan facility.
As at 31 March 2023, GBP3.0 million (2022: GBP3.0 million) was
drawdown of the loan facility.
8. Taxation
Year ended 31 March
Year ended 31 March 2023 2022
Revenue Capital Total Revenue Capital Total
Tax on ordinary activities GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Overseas tax 91 - 91 86 - 86
The tax assessed for the year equates to that resulting from
applying the standard rate of corporation tax in the UK of 19%
(2022: 19%).
The calculation is explained below:
Year ended Year ended
31 March 2023 31 March 2022
GBP'000 GBP'000
Loss on ordinary activities before taxation (58) (457)
Corporation tax at 19% (2022: 19%) (11) (87)
Effects of
Exempt dividend income (120) (113)
Unrelieved tax losses and other deductions
arising in the period 174 165
Capital expenses deductible for tax purposes (68) (64)
Foreign tax suffered 91 86
Tax free capital gain/(loss) in investments (38) 38
Income taxed in different years (3) -
Double tax relief received (2) (3)
Current tax charge for the year 91 86
There are unrelieved management expenses at 31 March 2023 of
GBP10,292,000 (2022: GBP9,374,000) but the related deferred tax
asset at 25% (2022: 25%) has not been recognised. This is because
the Company is not expected to generate taxable income in a future
period in excess of the deductible expenses of that future period
and, accordingly, it is unlikely that the Company will be able to
reduce future tax liabilities through the use of existing
unrelieved expenses.
9. Earnings per ordinary share
The earnings per ordinary share figure is based on the net loss
for the year of GBP170,000 (2022: net loss GBP543,000) and on
21,300,543 (2022: 21,416,147) ordinary shares, being the weighted
average number of ordinary shares in issue during the year.
The earnings per ordinary share figure detailed above can be
further analysed between revenue and capital, as below.
Year ended Year ended
31 March
2023 31 March 2022
GBP'000 GBP'000
Net revenue gain/loss 10 (6)
Net capital loss (159) (537)
Net total loss (149) (543)
Weighted average number of ordinary shares
in issue during the year used for the
purposes of the undiluted calculation 21,300,543 21,416,147
Weighted average number of ordinary shares
in issue during the year used for the
purposes of the diluted calculation 21,300,543 21,416,147
Undiluted
Revenue gain per ordinary share 0.05p (0.03)p
Capital losses per ordinary share (0.75)p (2.51)p
Total losses per ordinary share (0.70)p (2.54)p
Diluted
Revenue gain per ordinary share 0.05p (0.03)p
Capital losses per ordinary share (0.75)p (2.51)p
Total losses per ordinary share (0.70)p (2.54)p
Any ordinary shares to be issued under the ordinary subscription
rules were dilutive for the year ended 31 March 2023 and 31 March
2022.
10. Non current assets
Year ended Year ended
31 March 2023 31 March 2022
GBP'000 GBP'000
Market value of investments at beginning
of year 53,776 51,025
Net unrealised losses at beginning of
year (18,919) (22,322)
Cost of investments at beginning of year 34,857 28,703
Purchases at cost during year 13,748 14,268
Sales at cost during year (6,742) (8,114)
Cost of investments at end of year 41,863 34,857
Net unrealised gain at the year end 13,139 18,919
Market value of investments at end of
year 55,002 53,776
Year ended Year ended
31 March 2023 31 March 2022
GBP'000 GBP'000
Listed on UK stock exchange 2,633 3,909
Listed on overseas stock exchanges 52,369 49,867
Market value of investments at end of
year 55,002 53,776
Gain/losses on investments
2023 2022
GBP'000 GBP'000
Net gains on sale of investments 5,515 3,047
Movement in unrealised losses (5,780) (3,403)
Loss on investments (265) (356)
Transaction costs
The following transaction costs were incurred during the
year:
Year ended Year ended
31 March 31 March 2022
2023 GBP'000
GBP'000
Purchases 6 15
Sales 6 6
12 21
11. Other Receivables
2023 2022
GBP'000 GBP'000
Sales for future settlement 1,268 -
Prepayments and accrued income 191 181
1,459 181
12. Other payables
2023 2022
GBP'000 GBP'000
Interest payable 13 2
Non-utilisation fee - 1
Short-term bank loan 3,000 3,000
Other creditors 253 178
Purchases awaiting settlement 1,571 -
4,837 3,181
From 1 January 2022, the interest rate on the short-term bank
loan changed from LIBOR to SONIA. This change had no material
impact to the cost of the loan.
Bank loan
The Company's revolving bank loan is with RBS, with a loan
facility available up to a maximum of GBP5 million (2022:
same).
During the year the Company used the loan facility as
follows:
Date Amount Borrowed Date Renewed
10 March 2022 GBP0.9 million 10 June 2022
13 March 2022 GBP2.1 million 14 June 2022
10 June 2022 GBP0.9 million 24 August 2022
14 June 2022 GBP2.1 million 24 August 2022
24 August 2022 GBP3.0 million 24 November 2022
24 November 2022 GBP3.0 million 24 February 2023
24 February 2023 GBP3.0 million 24 May 2023
As at 31 March 2023, the outstanding loan balance of GBP3.0
million was renewed on 24 February 2023. This was further renewed
on 24 May 2023.
The Non-utilisation fee (Note 7) relate to the fee payable on
the unutilised portion of the loan facility.
13. Derivatives and other financial instruments
Background
The Company's financial instruments comprise securities and
other investments, cash balances and debtors and creditors that
arise directly from its operations, for example, in respect of
sales and purchases awaiting settlement and debtors for accrued
income. The numerical disclosures below exclude short-term debtors
and creditors.
During the year under review, the Company had little exposure to
credit, cash flow and interest rate risks.
The principal risks the Company faces in its portfolio
management activities are:
-- foreign currency risk
-- market price risks i.e. movements in the value of investment
holdings caused by factors other than interest rate or currency
movement
The investment adviser's policies for managing these risks are
summarised below and have been applied throughout the year.
Foreign Currency Risk
A proportion of the company's portfolio is invested in overseas
securities and their sterling value can be significantly affected
by movements in foreign exchange rates. The Company does not
normally hedge against foreign currency movements affecting the
value of the investment portfolio, but takes account of this risk
when making investment decisions.
Foreign currency sensitivity
The following table illustrates the sensitivity of the return
after tax for the year to exchange rates for the Pound Sterling
against the US Dollar, Euro, Japanese Yen, Norwegian Krone,
Canadian Dollar, Danish Krone, Swedish Krona, Swiss Franc, Hong
Kong Dollar and Australian Dollar. It assumes the following changes
in exchange rates:
GBP/US Dollar +/-10% GBP/Norwegian Krone
(2022 +/-5%) +/-5% GBP/Australian Dollar +/-5%
(2022: +/-5%) (2022: +/-5%)
GBP/Japanese Yen +/-5% GBP/Euro +/-5% (2022:
(2022: +/-5%) +/-5%) GBP/Swedish Krona +/-5%
(2022: +/-5%)
GBP/Danish Krone +/-5% GBP/Canadian Dollar GBP/Hong Kong Dollar +/-10%
(2022: +/-5%) +/-10% (2022:
(2022: +/-5%) +/-5%)
GBP/Swiss Franc +/-10%
(2022: +/-5%)
These percentages have been determined based on market
volatility in exchange rates over the previous twelve months. The
sensitivity analysis is based on the Company's foreign currency
financial instruments held at the date of each Statement of
Financial Position.
If sterling had weakened against the currencies below this would
have the following effect:
2023 2022
Impact Impact
Impact on Impact on on on
revenue capital revenue capital
return return Total return return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
US Dollar (5) 2,608 2,603 (2) 1,228 1,226
Euro (1) 580 579 (1) 678 677
Japanese Yen - 249 249 - 231 231
Norwegian Krone - 120 120 - 121 121
Canadian Dollar - 212 212 - 92 92
Danish Krone - 181 181 - 184 184
Swedish Krona - 120 120 - 70 70
Swiss Franc - 75 75 - 83 83
Hong Kong Dollar - 83 83 - 42 42
Australian Dollar - 29 29 - 23 23
(6) 4,257 4,251 (3) 2,752 2,749
13. Derivatives and other financial instruments (continued)
If sterling had strengthened against the currencies below this
would have the following effect:
2023 2022
Impact on Impact on Impact on Impact on
revenue capital revenue capital
return return Total return return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
US Dollar 5 (2,608) (2,603) 2 (1,228) (1,226)
Euro 1 (580) (579) 1 (678) (677)
Japanese Yen - (249) (249) - (231) (231)
Norwegian Krone - (120) (120) - (121) (121)
Canadian Dollar - (212) (212) - (92) (92)
Danish Krone - (181) (181) - (184) (184)
Swedish Krona - (120) (120) - (70) (70)
Swiss Franc - (75) (75) - (83) (83)
Hong Kong Dollar - (83) (83) - (42) (42)
Australian Dollar - (29) (29) - (23) (23)
6 (4,257) (4,251) 3 (2,752) (2,749)
(b) Market Price Risk
By the very nature of its activities, the Company's investments
are exposed to market price fluctuations. Further information on
the investment portfolio and investment policy is set out in the
Investment Adviser's Review.
A portion of the financial assets of the Company are denominated
in currencies other than sterling with the result that the
Statement of Financial Position and total return can be
significantly affected by currency movements.
Other price risk sensitivity
The following illustrates the sensitivity of the return after
taxation for the year and the equity to an increase or decrease of
20% in the fair value of the Company's equities. This level of
change is considered to be reasonably possible based on observation
of market conditions during the year. The sensitivity analysis is
based on the Company's equities at each financial position
statement date, adjusted for the management fee paid in the
year.
The impact of a 20 per cent. increase in the value of
investments on the revenue return as at 31 March 2023 is a decrease
of GBP19,000 (2022: GBP19,000) and on the capital return is an
increase of GBP10,943,000 (2022: GBP10,699,000).
The impact of a 20 per cent. fall in the value of investments on
the revenue return as at 31 March 2023 is an increase of GBP19,000
(2022: GBP19,000) and on the capital return is a decrease of
GBP10,943,000 (2022: GBP10,699,000).
(c) Interest rate risk
Interest rate movements may affect:
* the fair value of investments of any fixed interest
securities;
* the level of income receivable from any floating
interest-bearing securities, cash at bank and on
deposit; and
* the interest payable on the Company's floating
interest term loans.
The financial assets (excluding short-term debtors and
creditors) consist of:
2023 2022
Non-interest Non-interest
Floating Floating
rate bearing Total rate bearing Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Sterling 54 2,104 2,158 53 3,008 3,061
US Dollar 2,154 23,441 25,595 4,558 20,138 24,696
Euro - 11,671 11,671 - 13,631 13,631
Japanese Yen 453 5,010 5,463 3 4,649 4,652
Norwegian Krone 124 2,422 2,546 - 2,424 2,424
Danish Krone 105 3,644 3,749 - 3,695 3,695
Hong Kong Dollar - 830 830 - 852 852
Swedish Krona - 2,408 2,408 - 1,410 1,410
Canadian Dollar 64 2,133 2,197 - 1,842 1,842
Swiss Franc - 754 754 - 1,672 1,672
Australian
Dollar - 585 585 - 455 455
2,954 55,002 57,956 4,614 53,776 58,390
The floating rate assets consist of cash deposits at call.
Sterling cash deposits at call earn interest at floating rates
based on daily Sterling Overnight Index Average (SONIA) rates.
The non-interest bearing assets represent the equity element of
the investment portfolio at 31 March 2023.
The financial liabilities consist of:
2023 2022
Non-interest Non-interest
Floating
Floating rate bearing Total rate bearing Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Sterling - 3,000 3,000 - 3,000 3,000
- 3,000 3,000 - 3,000 3,000
The liability consists of a bank loan (see Note 12).
(d) Interest rate sensitivity
As interest rates for any short-term loans are fixed at the
commencement of the loan, only cash at call are subject to interest
rate movement.
All such deposits at call earn interest at a daily rate.
Therefore, if a sensitivity analysis was performed by increasing or
decreasing the interest rates applicable to the Company's cash
balances held at each reporting date, with all other variables held
constant, there would be no material change to the profit after
taxation or net assets for the year.
(e) Credit and Counterparty Risk
Credit Risk is the exposure to loss from the failure of a
counterparty to deliver securities or cash for acquisitions or to
repay deposits. The Company manages credit risk by using brokers
from a database of approved brokers who have undergone rigorous due
diligence tests by the Investment Adviser's Risk
Management Team and by dealing through JAM with banks approved
by the Financial Conduct Authority. Any derivative positions are
marked to market and exposure to counterparties is monitored on a
daily basis by the fund manager; the Board of directors reviews it
on a quarterly basis. The maximum exposure to credit risk as at 31
March 2023 was GBP4,428,000 (2022: GBP4,795,000) consisting of
short-term debtors, cash and cash equivalents.
Impairment of financial instruments
The Company holds only trade receivables with no financing
component and which have maturities of less than 12 months at
amortised cost and, as such, has chosen to apply an approach
similar to the simplified approach for expected credit losses (ECL)
under IFRS 9 to all its trade receivables. Therefore, the Company
does not track changes in credit risk, but instead, recognises a
loss allowance based on lifetime ECLs at each reporting date.
The Company's approach to ECLs reflects a probability-weighted
outcome, the time value of money and reasonable and supportable
information that is available without undue cost or effort at the
reporting date about past events, current conditions and forecasts
of future economic conditions.
In the investment advisors' opinion, due to the low level of
expected future losses on cash and receivables, no provision has
been made for ECLs.
(f) Liquidity Risk
Liquidity risk is not considered significant. All liabilities
are payable within three months. The Company's assets comprise
mainly readily realisable securities which can be sold to meet
funding requirements if necessary. Short-term flexibility is
achieved through the use of short -- term borrowings.
(g) Fair Value hierarchy
IFRS 13 'Fair Value Measurement' requires an entity to classify
fair value measurements using fair value hierarchy that reflects
the significance of the inputs used in making the measurements. The
fair value hierarchy shall have the following levels:
Level 1 reflects financial instruments quoted in an active
market.
Level 2 reflects financial instruments whose fair value is
evidenced by comparison with other observable current market
transactions in the same instrument or based on a valuation
technique whose variables includes only data from observable
markets.
Level 3 reflects financial instruments whose fair value is
determined in whole or in part using a valuation technique based on
assumptions that are not supported by prices from observable market
transactions in the instrument and not based on available
observable market data.
The financial assets measured at fair value in the Statement of
Financial Position are grouped into the fair value hierarchy as
follows:
2023 2022
Level Level Level Level Level
1 2 3 Total 1 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Equity Investments 55,002 - - 55,002 53,776 - - 53,776
55,002 - - 55,002 53,776 - - 53,776
14. Capital management policies and procedures
The Company's capital comprises the equity share capital, share
premium and reserves as shown in the Statement of Financial
Position.
The Board, with the assistance of the investment adviser,
monitors and reviews the broad structure of the Company's capital
on an ongoing basis. This review includes:
* The need to buy back equity shares, either for
cancellation or to hold in treasury, which takes
account of the difference between the net asset value
per share and the share price (i.e. the level of
share price discount or premium); and
* The extent to which revenue in excess of that which
is required to be distributed should be retained.
During the period, the Company complied with the
externally imposed capital requirements:
* As a public Company, the Company has a minimum share
capital of GBP50,000; and
* In order to be able to pay dividends out of profits
available for distribution, the Company has to be
able to meet one of the two capital restriction tests
imposed on investment companies by Company law.
15. Called-up share capital
2023 2022
Number GBP Number GBP
Allotted, issued and fully
paid
Ordinary shares of 0.1p
each 33,724,958 33,725 33,724,958 33,725
2,567 new ordinary shares were issued from treasury on 13 April
2022. 1,524,328 new ordinary shares were issued from treasury
between 6 April 2021 and 12 May 2021.
Between 23 June 2022 and 17 February 2023, 328,726 (0.97%)
ordinary shares were repurchased into treasury. On 8 July 2021,
75,000 (0.22%) ordinary shares were repurchased into treasury.
12,617,803 ordinary shares were held in treasury at 31 March
2023 (31 March 2022: 12,291,644).
16. Share Premium
2023 2022
GBP'000 GBP'000
At beginning of year 2,465 1,563
Premium on reissue of shares from treasury
during the year 3 902
At end of year 2,468 2,465
2,567 shares were re-issued from treasury at a discount to NAV
of 8.01% from the 2022 subscription price.
No shares were re-issued from treasury.
17. Redemption reserve
2023 2022
GBP'000 GBP'000
At beginning of year 239 239
At end of year 239 239
18. Retained earnings
The table below shows the movement in the retained earnings
analysed between revenue and capital items.
2023 2022
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At beginning of year - 52,652 52,652 143 51,325 51,468
Net loss for the year 10 (159) (149) (6) (537) (543)
Dividends paid nil (2022:
0.64p) - - - (137) - (137)
Ordinary shares reissued
from treasury - 3 3 - 2,052 2,052
Ordinary shares repurchased - (669) (669) - (188) (188)
At end of year 10 51,827 51,837 - 52,652 52,652
There were no dividends paid during the year. All dividends are
paid from the revenue reserve.
19. Net asset value per ordinary share
The net asset value per ordinary share is based on the net
assets attributable to the equity shareholders of GBP54,578,000
(2022: GBP55,390,000) and on 21,107,155 (2022: 21,433,314) ordinary
shares, being the number of ordinary shares in issue at the year
end, excluding treasury shares.
2023 2022
Undiluted
Ordinary shareholders' funds (GBP'000) 54,578 55,390
Number of ordinary shares in issue 21,107,155 21,433,314
Net asset value per ordinary share (pence) 258.58 258.43
Diluted
Ordinary shareholders' funds assuming exercise
of Subscription shares (GBP'000) 60,333 61,106
Number of potential ordinary shares in issue 23,217,871 23,576,645
Net asset value per ordinary share (pence) 259.86p 259.18
The diluted net asset value per ordinary share assumes that all
outstanding dilutive subscription rights (2023: 2,110,716, 2022:
2,143,331) were converted into ordinary shares at the year end and
is calculated using the net asset value per ordinary share at the
prior year end. Any shares to be issued under the subscription
rules were anti-dilutive for the year ended 31 March 2023. This is
an annual opportunity for shareholders to subscribe for 1 new share
for every 10 held and the price will be equal to the audited
undiluted NAV per share from the previous year.
20. Reconciliation of net cash outflow from operating activities
2023 2022
GBP'000 GBP'000
Net loss after taxation (149) (543)
Loss on investments at fair value through
profit or loss 265 356
Increase in prepayments and accrued income (10) (24)
Increase in accruals and other creditors 85 42
Foreign exchange gain (465) (155)
Net cash outflow from operating activities (274) (324)
21. Reconciliation of financial liabilities
At At
1 April Transactions 31 March
In the
2022 year Cashflow 2023
GBP'000 GBP'000 GBP'000 GBP'000
Short-term bank loan 3,000 - - 3,000
Sales of ordinary shares from treasury - (6) 6 -
Shares repurchased - 669 (669) -
Cash flows from financing activities 3,000 663 (663) 3,000
At At
April Transactions 31 March
In the
2021 year Cashflow 2022
GBP'000 GBP'000 GBP'000 GBP'000
Short-term bank loan 900 - 2,100 3,000
Equity dividends paid - 137 (137) -
Sales of ordinary shares from treasury - (2,954) 2,954 -
Shares repurchased - 188 (188) -
Cash flows from financing activities 900 (2,629) (4,729) 3,000
22. Related parties
Jupiter Unit Trust Managers Limited ('JUTM'), the Alternative
Investment Fund Manager, is a Company within the same group as
Jupiter Asset Management Limited ('JAM'), the investment adviser.
JUTM receives an investment management fee as set out below.
JUTM is contracted to provide investment management services to
the Company subject to termination by not less than twelve months'
notice by either party. The basis for calculation of the management
fee charged to the Company to 0.70% of net assets up to GBP150
million, reducing to 0.60% for net assets over GBP150 million and
up to GBP250 million, and reducing further to 0.50% for net assets
in excess of GBP250 million after deduction of the value of any
Jupiter managed investments.
The management fee payable to JUTM for the period 1 April 2022
to 31 March 2023 was GBP369,162 (year to 31 March 2022: GBP409,172)
with GBP64,344 (31 March 2022: GBP33,296) outstanding at period
end.
There are no transactions with the Directors other than
aggregated remuneration for services as Directors as disclosed in
the Directors' Remuneration Report and as set out in Note 5 to the
Accounts and the beneficial interests of the Directors in the
Ordinary shares of the Company.
The Company has invested from time to time in funds managed by
Jupiter Fund Management PLC or its subsidiaries. There were no such
investments at the year end (31 March 2022: Nil). No investment
management fee is payable by the Company to Jupiter Asset
Management Limited in respect of the Company's holdings in
investment trusts, open-ended funds and investment companies in
respect of which Jupiter Investment Management Group Limited, or
any subsidiary undertaking of Jupiter Investment Management Group
Limited, receives fees as investment manager or investment
adviser.
All transactions with related parties were carried out on an
arm's length basis.
23. Contingent liabilities and capital commitments
There were no contingent liabilities or capital commitments at
31 March 2023 (2022: Nil).
24. Post balance sheet events
Since the year end (1 April to 30 June) 439,300 ordinary shares
were repurchased to be held in treasury and 13,639 ordinary shares
were re-issued from treasury.
For further information, please contact:
Nick Black
Director- Investment Trusts
Jupiter Asset Management Limited, Company Secretary
investmentcompanies@jupiteram.co m
020 3817 1000
12 July 2023
[END]
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July 13, 2023 02:00 ET (06:00 GMT)
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