TIDMJAM
RNS Number : 8599I
JPMorgan American IT PLC
10 August 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN AMERICAN INVESTMENT TRUST PLC
UNAUDITED HALF YEAR RESULTS
FOR THE SIX MONTHSED 30TH JUNE 2023
Legal Entity Identifier: 549300QNAI4XRPEB4G65
Information disclosed in accordance with the DTR 4.2.2
CHAIR'S STATEMENT
Performance
The first six months of 2023 has been a positive period for the
US stock market, despite continuing economic uncertainty and
further rate hiking by the US Federal Reserve. The total return on
net assets per share in sterling terms over the period was 14.8%.
The return to Ordinary shareholders per share in sterling terms was
12.1%, reflecting a small widening of the Company's discount to net
asset value per share ('NAV') at which the shares traded over the
period. The total return from the Company's benchmark, the S&P
500 Index in sterling terms, with net dividends reinvested,
expressed in sterling terms was 10.5%, resulting in an
outperformance of 4.3% in net asset terms.
Since the Company changed its investment approach on 1st June
2019, it has outperformed the benchmark index by 10.0% in the
subsequent 49 months through to the end of June 2023, providing a
NAV total return to shareholders of 79.9% compared with a benchmark
return of 69.9%. This is an annualised outperformance of 1.6% since
the change in investment approach.
Share price and Discount Management
The Company's shares have traded at a discount to NAV throughout
the period under review and the Company has continued to buy back
its shares in line with the Board's longstanding position of buying
shares back when they stand at anything more than a small discount
to NAV. The Company bought into Treasury a total of 6,181,802
shares, or 3.4% of the Company's issued share capital as at end of
June 2023 excluding shares held in Treasury (30th June 2022: 1.2%).
These shares were purchased at an average discount to NAV of 3.8%,
producing a modest accretion to the NAV for continuing
shareholders.
Dividend
The Company is declaring a unchanged dividend of 2.5 pence per
share (2022: 2.5 pence) for the first six months of this year,
which will be payable on 6th October 2023 to shareholders on the
register on 1st September 2023.
In the absence of unforeseen circumstances, the Board is aiming
to at least maintain the total dividend of 7.25 pence per share for
the current financial year.
Gearing
The Board has set the current tactical level of gearing at 5%,
with a permitted range around this level of plus or minus 5%,
meaning that currently gearing can vary between 0% and 10%. This
tactical level of gearing remained unchanged throughout the period.
The Company began the year with gearing of 5.9% and ended the
period with gearing of 5.1%.
The Board believes it is prudent for its gearing capacity to be
funded from a mix of sources including short and longer term tenors
and fixed and floating rate borrowings. The Company has a GBP80
million revolving credit facility (with an additional GBP20 million
accordion) with Mizuho Bank Ltd. The Company also has in issue a
combined US$100 million of unsecured loan notes issued via private
placements, US$65 million of which are repayable in February 2031
and carry a fixed interest rate of 2.55% per annum and US$35
million of which mature in October 2032 and carry a fixed interest
rate of 2.32%.
TCFD
As a regulatory requirement, JPMorgan Asset Management (JPMAM)
published its first UK Task Force on Climate-related Financial
Disclosures ('TCFD') Report for the Company in respect of the year
ended 31st December 2022 on 30th June 2023. The report discloses
estimates of the Company's portfolio climate-related risks and
opportunities according to the Financial Conduct Authority (FCA)
Environmental, Social and Governance (ESG) Sourcebook and the Task
Force on Climate-related Disclosures (TCFD). The report is
available on the Company's website under the ESG documents section:
https://am.jpmorgan.com/content/dam/jpm-am-aem/emea/regional/en/regulatory/esg-
information/jpmorgan-american-investment-trust-plc-tcfd-report.pdf
The Board is aware that best practice reporting under TCFD is
still evolving in regard to metrics and input data quality, as well
as the interpretation and implications of the outputs produced, and
will continue to monitor developments as they occur.
Board
As mentioned in the Company's 2023 Annual Report, Ms. Pui Kei
Yuen joined the Board from 1st January 2023 and Sir Alan Collins,
the previous Senior Independent Director and Chair of the Risk and
Remuneration Committees, retired from the Board at the conclusion
of the May 2023 AGM. Ms Nadia Manzoor became the Senior Independent
Director and Chair of the Remuneration Committee, and Mr Robert
Talbut assumed the Chair of the Risk Committee on Alan's
retirement.
As previously communicated, after 10 years on the Board, I
intend to retire at the AGM in 2024. Further information about
Chair succession will be provided in due course.
Outlook
The pace and level of interest rate increases executed by the
Federal Reserve since March 2022 appears, so far, to have delivered
the favourable outcome of significantly reduced inflation while
avoiding a recession for the economy. The stock market has duly
reflected this positive environment during the period. In light of
the strong returns achieved in the first half of 2023, it would
seem prudent to consider the upward progress in the market may
pause for a period as the full implications of the Federal
Reserve's rate rises over the past 17 months fully work through the
economy and have their impact on company earnings. Our portfolio
managers have shown considerable skill in navigating the last four
years since the Company's investment policy was changed, and
shareholders should take confidence in the focused and long term
investment approach they follow with the Company's portfolio.
Dr Kevin Carter
Chair 9th August 2023
INVESTMENT MANAGER'S REPORT
Market Review
After a fairly challenging 2022, the first six months of 2023
took many by surprise, as the S&P 500 advanced 17% in US dollar
terms and 11% in sterling terms. In 2022, the market was forced to
process an extremely aggressive monetary policy tightening by the
Federal Reserve, as it fought to contain the inflationary cats that
escaped from the bag during the pandemic and following Russia's
invasion of Ukraine. The magnitude and pace of Fed Funds rate
increases was unparalleled since the late 1970s, instilling a fear
of recession and creating strong headwinds for longer duration
assets such as equities, and higher growth equities in particular.
As 2022 came to a close, the market started to conclude that the
Fed's actions were sufficient, and that even if rates did not come
down for a while, they were probably close to their peak.
Economic data has been broadly supportive of the market's
intuition that things might stop getting worse. The Consumer Price
Index (CPI) has fallen steadily from a peak of 9% in June 2022, to
3% exactly one year later. This easing in the pace of inflation
occurred despite a strongly lagging impact from the largest single
CPI component, the cost of housing, which is just starting to
register in the data now. Almost all other areas of inflation have
moderated, and we have seen outright deflation in many areas,
including many commodities, and in transportation and logistics, as
supply chains have reopened and inventory stockpiles have been run
down. China's unexpectedly lacklustre rebound since its reopening
has further compounded these deflationary effects.
One confounding aspect of this cycle has been the corporate
sector's reluctance to cut jobs in response to tougher trading
conditions. In fact, the economy continues to suffer labour
shortages, particularly in areas that are still experiencing
pent-up consumer demand, such as travel and leisure, and auto
production. However, anecdotal evidence does suggest that many
firms are now being more cautious in their hiring, and layoff
announcements have certainly picked up recently. Wage inflation
remains somewhat above the historic 'normal', but the year-on-year
increase in average hourly earnings was only 4.4% in the June
labour report.
The sharp move in interest rates over the past 12 months created
considerable challenges for the regional banking sector and
triggered the dramatic failure of three banks - SVB, First Republic
and Signature Bank - in the early part of this year. Monetary
tightening phases such as this one have a history of triggering
high profile failures, from Long Term Capital Management in 1998,
to Lehman Brothers, Bear Stearns and Washington Mutual in 2008.
Banks are significantly better capitalised and regulated than 15
years ago during the 2008 global financial crisis, but periods like
this clearly favour the largest players. Bank lending surveys
highlight that corporate lending standards have tightened
considerably and that small bank lending, particularly loans linked
to potential losses on commercial real estate, needs to be
monitored closely.
Within equity markets, the megacap tech stocks, which slipped
out of favour last year, bounced back strongly this year, and have
accounted for a significant share of the S&P 500's performance
year-to-date. The resurgence was partly triggered by the launch of
ChatGPT, which showcased recent breakthroughs in generative
artificial intelligence (AI). For the first time, individuals have
direct access to the underlying large language model that is
capable of answering complex questions and solving problems. In our
view, the widespread availability of this technology is likely to
prove very significant, as it has the potential to deliver
productivity improvements in many white collar roles, including the
writing of software code itself, that have previously only been
experienced in manufacturing. Companies are already investing
aggressively in this area, both as an offensive weapon, and to try
to defend their existing businesses.
The best performing sectors for the S&P 500 so far this year
have been the tech-heavy ones, with information technology,
communication services and consumer discretionary rallying between
33% to 43% over the review period. Energy, which was the best
performing sector in 2022, was one of the worst performers
year-to-date, registering a 6% decline due to the drop in oil
prices and fears of an economic slowdown. Defensive stocks did not
fare well either, with utilities (-6%) and healthcare (-1%)
suffering declines. Surprisingly, given the turmoil in the banking
sector, financials finished the period down by only 0.5%.
Large cap stocks, as represented by the S&P 500 Index,
returned 17% (in US dollar terms), as mentioned above,
outperforming the small cap Russell 2000 Index, which returned 8%.
In contrast to 2022, growth dominated value, as the Russell 3000
Growth Index rallied 28%, while the Russell 3000 Value Index
returned 5%.
Performance attribution
For the six months ended 30th June 2023
% %
-------------------------------------------- ----- -----
Net asset value (fair value) total return
(in sterling terms)(APM) 14.8
-------------------------------------------- ----- -----
Benchmark total return (in sterling terms) 10.5
-------------------------------------------- ----- -----
Excess return 4.3
-------------------------------------------- ----- -----
Contributions to total returns
-------------------------------------------- ----- -----
Large cap Portfolio 4.3
-------------------------------------------- ----- -----
Allocation effect -0.4
-------------------------------------------- ----- -----
Selection effect 4.7
-------------------------------------------- ----- -----
Small cap Portfolio -0.2
-------------------------------------------- ----- -----
Allocation and selection effect -0.2
-------------------------------------------- ----- -----
Gearing(1) 0.8
-------------------------------------------- ----- -----
Share buybacks 0.1
-------------------------------------------- ----- -----
Management fee and expenses -0.2
-------------------------------------------- ----- -----
Impact of fair value valuation(2) -0.2
-------------------------------------------- ----- -----
Technical differences(3) -0.3
-------------------------------------------- ----- -----
Total 4.3
-------------------------------------------- ----- -----
1 Cost of gearing plus the impact of holding cash and liquidity
stocks compared to the benchmark. Includes impact of FX movement on
debt.
2 The impact of fair valuation includes the effect of valuing
the combined $100 million private placement at fair value. It is
the sum of the impact on the closing NAV of the fair value
adjustment and its impact on the calculation of total returns
arising from the reinvestment of dividends paid in the period into
the Company's NAV.
3 Arises primarily where there is a divergence in the total
return calculations. This is due to different methodologies being
used to calculate the total return set out in the attribution
calculations. The Company's NAV total return is calculated by
Morningstar and includes reinvestment of dividends paid by the
Company. The JPMorgan Asset Management in-house attribution system
calculates the return at a portfolio level and includes dividends
receivable by the Company from the underlying stocks held in the
portfolio during the period, on an ex-dividend basis.
Source: JPMAM and Morningstar. All figures are on a total return
basis.
Performance attribution analyses how the Company achieved its
recorded performance relative to its benchmark index.
APM Alternative Performance Measure ('APM').
A glossary of terms and APMs is provided on pages 31 to 33 of
the full Half Year Report.
Performance and overall asset allocation
The Company's net asset value increased by 14.8% on a total
return (in GBP) basis over the first six months of 2023,
outperforming its benchmark, the S&P 500, which returned 10.5%
(in GBP). The large cap portfolio was the main contributor to the
Company's outperformance of its benchmark. Gearing also added some
value. While the small cap growth allocation, which averaged 7%
over the period, participated in the market rally, it failed to
match the return of the S&P 500 and therefore detracted
slightly from relative performance. The Company's longer term
performance track record remains positive. It has delivered strong
outright gains and outperformance over three, five and ten year
periods, its average annualised return over the three years ended
30th June 2023 was 16.9% in NAV terms, versus a benchmark return of
13.3%.
Large Cap Portfolio
Over the past six months, the Company's large cap portfolio
benefited from stock selection in the industrials and information
technology sectors, as our holdings in these sectors outperformed
their benchmark peer groups.
Overweight positions in Quanta Services and Hubbell proved
beneficial in the industrials sector. Both companies offer exposure
to the accelerating trend of electrification of the entire economy,
which we see as inevitable and urgent. This will be a multi-decade
process. Quanta is the largest engineering and construction company
serving the utility sector, with electric utilities being its
largest segment. The company benefits directly from the upgrading
and strengthening of transmission lines, the interconnection of new
solar and wind generation assets, and the construction of solar
generation assets themselves. The massive (and confusingly named)
Inflation Reduction Act allocates hundreds of billions of dollars
of Federal support to the types of projects that Quanta undertakes.
Hubbell is a long-established provider of electrical components
deployed within the grid, especially those related to last-mile
distribution. As more and more households purchase electric
vehicles, the burden on the local grid will become extreme,
requiring significant upgrades and a lot more built-in
intelligence.
In information technology, our overweight positions in NVIDIA,
Palo Alto Networks and Advanced Micro Devices were the largest
contributors to relative performance over the period. The share
price of NVIDIA, which provides graphics and network solutions for
gaming companies, suppliers of virtual reality kit and other
digital service providers, rallied significantly as the company
posted strong quarterly results and issued guidance which was a
long way ahead of consensus expectations. This surge reflected the
broad-based demand for NVIDIA's graphic processing unit (GPU) chips
which remain almost the only game in town for very large computing
workloads, such as the training of AI models. Another producer of
GPUs and microprocessors, Advanced Micro Devices (AMD), continues
to take market share from its struggling rival, Intel, in the key
data centre central processing unit (CPU) area. Furthermore, AMD,
along with NVIDIA's, are the only independent players of scale in
the GPU space, although AMD's software ecosystem lacks the
capabilities of NVIDIA in the high-performance computing and AI
markets. Shares of Palo Alto Networks, a provider of cybersecurity
software, rallied on the back of strong earnings results and upbeat
guidance. Total billings maintained their strong growth as
cybersecurity budgets remain very resilient, and Palo Alto
continues to strengthen its position as a leading player in the
space. We believe corporate spending on cyber security will remain
strong in the face of increasingly sophisticated cybersecurity
threats, and the continued transition to cloud computing.
At the sector level, relative performance was hindered most by
our stock selection in communication services and our overweight
position in financials. While the communication services sector did
generate a positive return for the period, our holdings lagged
their benchmark peers. In particular, an overweight position in
Charter Communications, a broadband and cable operator, detracted
from performance. While the shares appreciated over the six months,
the gain was modest compared with the returns posted by Alphabet
(parent of Google) and Meta Platforms (formerly Facebook), where we
re-established a position in March. There have been concerns about
slowing broadband subscriber growth, particularly at a time when
existing home sales are depressed. However, we remain comfortable
with our position as Charter Communications continues to pursue a
strategy of leveraging mobile and rural builds to restore
subscriber growth.
In financials, while our names outperformed their benchmark
peers, our overweight positioning detracted, as it was one of the
worst performing sectors in the index over the past six months.
Specifically, our holdings of Bank of America, M&T Bank and
Loews were the largest detractors on a relative basis. Bank of
America and M&T Bank came under pressure as investors reacted
negatively to the collapse of Silicon Valley Bank, causing a ripple
effect on banking stocks in general. We remain comfortable with our
positions in both names given their diversified loan books,
attractive core deposit franchises, and superior credit quality.
While Loews, which operates insurance, energy and hotel businesses,
posted strong earnings, its share price lagged in a market fuelled
by stronger growth names.
Portfolio Activity
During the first six months of the year, we added four new names
and exited the same number. One new acquisition was Meta Platforms,
a name we have owned previously. We realised early in the first
quarter of the year that the market was not recognising the
positive changes the company has implemented. We also expect the
company to benefit from many favourable shifts in market dynamics.
It had pivoted very quickly to rein in capital expenditure and
operating expenses in 2022. Meta also faced numerous headwinds
including increasing competition from TikTok, the negative impact
of privacy changes to Apple's Identifier for Advertisers (IDFA)
user, a weaker than expected advertising backdrop, and concerns
over its ambitions in virtual reality and the 'metaverse'.
However, we re-opened a position in Meta in early March on the
view that the company, with over 2 billion users, is effectively
addressing many of these challenges. We also believed that Meta's
use of AI will improve monetisation in a more user-friendly way, as
well as upgrade and streamline content monitoring and consumer
protection. The company was trading at an attractive valuation of
approximately 14 times our forward earnings estimates, generates a
lot of free cash flow and has a balance sheet with net cash of over
$30 billion. Since this acquisition, Meta has reported very strong
results. As we anticipated, its investment in AI has boosted
engagement and enhanced monetisation, thereby supporting revenue
growth. The company has also seen an increase in daily active
users, and the time spent per user. Our purchase of Meta was funded
by an exit from Zoom Video Communications. The post-pandemic
headwinds faced by its consumer business are by now very well
understood, and the core enterprise side remains healthy, but the
stock's valuation remains trapped by the threat of competition from
Microsoft Teams, and now also perhaps by an AI-boosted alternative,
thanks to Microsoft's large investment in OpenAI, the creator of
ChatGPT.
Another name added during this period was Intuit, a business and
financial management solutions company. It owns dominant finance
and accounting software brands like QuickBooks, TurboTax, Credit
Karma and Mailchimp. The majority of Intuit's clients are small
businesses with strong cash reserves, and we believe it has a
significant opportunity to cross-sell to existing clients.
Furthermore, in our view, the durability of QuickBooks's double
digit revenue growth over the next few years is underestimated by
the market, and the company is well-positioned to benefit from
strong tailwinds driving small and medium-sized businesses,
including the shift to software solutions, rising omni/online
channel spend, and the rise in digital banking solutions. We view
Intuit as a high-quality company with a relatively defensive
business model, whose P/E valuation has corrected back to 2018
levels. Yet it offers largely idiosyncratic 10%+ revenue growth,
and very healthy margins. We funded this name by exiting Ingersoll
Rand. This company is a leader in a wide range of mainly
compression-based industrial technologies, including products that
offer much greater energy-efficiency. To date, the company has
executed flawlessly, but we do worry that a weaker general economy
could impact them adversely.
These recent acquisitions and disposals have not had a
significant impact on the portfolio's structure. Financials and
information technology remain the largest sectoral allocations,
which together represent approximately 42% of the overall large cap
allocation, an increase of 4% compared with the start of the year.
Financials remain the largest overweight in the portfolio relative
to the benchmark, although the allocation is slightly lower than at
the start of the year, as we have been trimming modestly to manage
position sizes given increased risks. Conversely, we remain
underweight information technology, but have been adding to our
allocation based on our view that this sector is still attractive.
The portfolio also remains underweight consumer staples,
industrials and healthcare, as we continue to find names with
better risk/reward profiles in other sectors.
The large cap portfolio is divided between value and growth
stocks, with the allocation allowed to vary between 60:40 and
40:60. At the end of the review period, value stocks comprised some
44% of the large cap portfolio, much lower than the 51% value
allocation at the start of the year. The allocation to growth
stocks has increased accordingly.
The table below shows that the large cap portfolio is trading at
a 20% discount to the market on a free cash flow basis, which
confirms that we are not paying a premium for good cash flow.
Additionally, the portfolio is expected to deliver earnings growth
of around 11% for the next 12 months, which is similar to the
market. While earnings may come under pressure over the next year,
and may not deliver the forecast double digit growth, it is
comforting to have the valuation cushion provided by our holdings,
relative to the market.
Characteristics Large Cap Portfolio S&P 500
-------------------------------------- -------------------- ------------
Weighted Average Market Cap USD 621.9bn USD 643.6bn
Price/Earnings, 12-month forward1 18.9x 18.2x
Price/Free Cash Flow, last 12-months 15.2x 19.0x
EPS Growth, 12-month forward 10.60% 10.30%
Return on Equity, last 12-months 19.60% 23.40%
Predicted Beta 1.08 -
Predicted Tracking Error 3.03 -
Active Share 64% -
Number of holdings 40 501
-------------------------------------- -------------------- ------------
Source: FactSet, Barra, J.P. Morgan Asset Management. Data as of
30th June 2023.
1 Including negatives.
Small cap portfolio
The small cap portfolio is allocated solely to growth stocks. It
returned 7.3% over the period, supported by the updraft from the
rally in larger cap growth stocks, but underperformed the S&P
500, which meant it had a slight negative impact on relative
returns over this period. The overall allocation to the small cap
portfolio was maintained at approximately 7% during the first six
months of the year, broadly unchanged from the start of the
year.
Outlook
While the US economy has so far held up, perhaps better than
expected, the outlook is for slower growth across demand, profits,
jobs and inflation. The tightening in credit conditions has so far
been modest, but we would expect it to drag on economic activity,
hiring and inflation in coming quarters. Meanwhile, the Fed has
remained steadfast in its determination to keep monetary policy
restrictive for longer than previously anticipated, and it has kept
the door open for additional tightening if necessary. However,
while the risks for the economy are mainly focused on slower
demand, slower job gains and slower profit growth, recession is
still not a foregone conclusion.
It is worth bearing in mind that, similar to the situation in
the late 1980s/early 1990s, the economy has been experiencing
something of a rolling recession: existing home sales have been
extremely weak, due to the adverse impact of higher mortgage rates,
and the pull-forward of demand during the pandemic; auto production
is still recovering from the intense supply chain challenges and
the car fleet has aged significantly, which should support demand
over the next couple of years at least; while transportation
companies have been through a harsh recession as inventories have
corrected across multiple industries.
Meanwhile, much of the speculative excess experienced in the
stock market during the period of extremely cheap money and massive
government largesse during Covid-19 has been flushed out.
Unprofitable growth stocks, cryptocurrency, the SPAC phenomenon,
and Cathie Wood's ARK fund have all come back down to earth. So now
the market is back to climbing its 'wall of worry' as caution
prevails, and heavy cash balances wait for the 'All Clear'.
In our view, the best strategy is to look through these
short-term fears and uncertainties and take the long view. We
believe it is equally important to remain focused on the highest
quality companies; be mindful of valuations but be willing to pay
for truly sustainable growth. This approach has served the Company
and its shareholders well in the past, ensuring it has delivered
strong outright gains and outperformance over the short and long
term, and we are confident it will continue to do so going
forward.
Timothy Parton
Jonathan Simon
Felise Agranoff
Portfolio Managers 9th August 2023
INTERIM MANAGEMENT REPORT
The Company is required to make the following disclosures in its
half year report.
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Company fall
into the following broad categories: Investment and Strategy;
Market; Operational and Cyber Crime; Loss of Investment Team or
Investment Managers; Share Price Relative to Net Asset Value
('NAV') per Share ; Accounting, Legal and Regulatory; Political and
Economic; Global Pandemics and Climate Change. The US and China
Technology competition, ESG Requirements from investors,
Geopolitical and Artificial Intelligence risks have been identified
as emerging risks. Information on each of these areas is given in
the Strategic Report within the Annual Report and Accounts for the
year ended 31st December 2022.
Related Parties Transactions
During the first six months of the current financial year, no
transactions with related parties have taken place which have
materially affected the financial position or the performance of
the Company.
Going Concern
In accordance with The Financial Reporting Council's guidance on
going concern and liquidity risk, the Directors have undertaken a
rigorous review of the Company's ability to continue as a going
concern. The Board has, in particular, considered the impact of
market volatility since the Covid-19 outbreak, the ongoing conflict
between Ukraine and Russia, and does not believe the Company's
going concern status is affected. The Company's assets, the vast
majority of which are investments in quoted securities which are
readily realisable, exceed its liabilities significantly under all
stress test scenarios reviewed by the Board. Gearing levels and
compliance with borrowing covenants are reviewed by the Board on a
regular basis. Furthermore, the Directors are satisfied that the
Company's key third party service providers have in place
appropriate business continuity plans.
Accordingly, having assessed the principal and emerging risks
and other matters, the Directors believe that there are no material
uncertainties pertaining to the Company that would prevent its
ability to continue in such operational existence for at least 12
months from the date of the approval of this half yearly financial
report.
Directors' Responsibilities
The Board of Directors confirms that, to the best of its
knowledge:
(i) the condensed set of financial statements contained within
the half year financial report has been prepared in accordance with
FRS 104 'Interim Financial Reporting' and gives a true and fair
view of the state of affairs of the Company, and of the assets,
liabilities, financial position and net return of the Company as at
30th June 2023 as required by the UK Listing Authority Disclosure
Guidance and Transparency Rules 4.2.4R; and
(ii) the interim management report includes a fair review of the
information required by Rules 4.2.7R and 4.2.8R of the UK Listing
Authority Disclosure Guidance and Transparency Rules.
In order to provide these confirmations, and in preparing these
financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business;
and the Directors confirm that they have done so.
For and on behalf of the Board
Kevin Carter
Chair 9th August 2023
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30th June 2023
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 2023 30th June 2022 31st December 2022
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- --------- --------- -------- ----------- ----------- -------- ----------- -----------
Gains/(losses)
on investments
held at fair
value through
profit or loss - 181,081 181,081 - (133,134) (133,134) - (144,183) (144,183)
Net foreign
currency
gains/(losses) - 3,908 3,908 - (9,126) (9,126) - (8,319) (8,319)
Income from
investments 7,867 2,516 10,383 10,000 - 10,000 18,883 1,063 19,946
Interest
receivable 672 - 672 86 - 86 612 - 612
---------------- -------- --------- --------- -------- ----------- ----------- -------- ----------- -----------
Gross
return/(loss) 8,539 187,505 196,044 10,086 (142,260) (132,174) 19,495 (151,439) (131,944)
Management
fee (412) (1,649) (2,061) (439) (1,755) (2,194) (866) (3,463) (4,329)
Other
administrative
expenses (554) - (554) (365) 48 (317) (835) 48 (787)
---------------- -------- --------- --------- -------- ----------- ----------- -------- ----------- -----------
Net
return/(loss)
before finance
costs and
taxation 7,573 185,856 193,429 9,282 (143,967) (134,685) 17,794 (154,854) (137,060)
Finance costs (371) (1,482) (1,853) (300) (1,201) (1,501) (651) (2,607) (3,258)
---------------- -------- --------- --------- -------- ----------- ----------- -------- ----------- -----------
Net
return/(loss)
before
taxation 7,202 184,374 191,576 8,982 (145,168) (136,186) 17,143 (157,461) (140,318)
Taxation (468) (528) (996) (1,553) - (1,553) (2,943) (326) (3,269)
---------------- -------- --------- --------- -------- ----------- ----------- -------- ----------- -----------
Net
return/(loss)
after taxation 6,734 183,846 190,580 7,429 (145,168) (137,739) 14,200 (157,787) (143,587)
---------------- -------- --------- --------- -------- ----------- ----------- -------- ----------- -----------
Return/(loss)
per share
(note
3) 3.64p 99.31p 102.95p 3.85p (75.32)p (71.47)p 7.42p (82.45)p (75.03)p
---------------- -------- --------- --------- -------- ----------- ----------- -------- ----------- -----------
CONDENSED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30th June 2023
Called Capital
up
share Share redemption Capital Revenue
capital premium reserve reserves(1) reserve(1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- --------- ----------- ------------ ----------- -----------
Six months ended 30th
June 2023 (Unaudited)
At 31st December 2022 14,082 151,850 8,151 1,099,333 30,667 1,304,083
Repurchase of shares
into Treasury - - - (44,079) - (44,079)
Net return - - - 183,846 6,734 190,580
Dividends paid in the
period (note 4) - - - - (8,727) (8,727)
-------------------------- -------- --------- ----------- ------------ ----------- -----------
At 30th June 2023 14,082 151,850 8,151 1,239,100 28,674 1,441,857
-------------------------- -------- --------- ----------- ------------ ----------- -----------
Six months ended 30th
June 2022 (Unaudited)
At 31st December 2021 14,082 151,850 8,151 1,292,152 29,885 1,496,120
Repurchase of shares
into Treasury - - - (15,593) - (15,593)
Net (loss)/return - - - (145,168) 7,429 (137,739)
Dividends paid in the
period (note 4) - - - - (8,646) (8,646)
-------------------------- -------- --------- ----------- ------------ ----------- -----------
At 30th June 2022 14,082 151,850 8,151 1,131,391 28,668 1,334,142
-------------------------- -------- --------- ----------- ------------ ----------- -----------
Year ended 31st December
2022 (Audited)
At 31st December 2021 14,082 151,850 8,151 1,292,152 29,885 1,496,120
Repurchase of shares
into Treasury - - - (35,032) - (35,032)
Net (loss)/return - - - (157,787) 14,200 (143,587)
Dividends paid in the
year (note 4) - - - - (13,418) (13,418)
-------------------------- -------- --------- ----------- ------------ ----------- -----------
At 31st December 2022 14,082 151,850 8,151 1,099,333 30,667 1,304,083
-------------------------- -------- --------- ----------- ------------ ----------- -----------
1 This reserve forms the distributable reserve of the Company
and may be used to fund distributions to investors.
CONDENSED STATEMENT OF FINANCIAL POSITION
At 30th June 2023
(Unaudited) (Unaudited) (Audited)
At At At
30th June 30th June 31st December
2023 2022 2022
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------ --------------
Fixed assets
Investments held at fair value
through profit or loss 1,515,890 1,403,898 1,381,109
--------------------------------------- ------------ ------------ --------------
Current assets
Debtors 729 1,369 938
Cash and cash equivalents 34,025 37,982 34,884
--------------------------------------- ------------ ------------ --------------
34,754 39,351 35,822
Current liabilities
Creditors: Amounts falling due
within one year (30,458) (27,147) (30,083)
--------------------------------------- ------------ ------------ --------------
Net current assets 4,296 12,204 5,739
--------------------------------------- ------------ ------------ --------------
Total assets less current liabilities 1,520,186 1,416,102 1,386,848
--------------------------------------- ------------ ------------ --------------
Creditors: amounts falling due
after more than one year (78,329) (81,960) (82,765)
--------------------------------------- ------------ ------------ --------------
Net assets 1,441,857 1,334,142 1,304,083
--------------------------------------- ------------ ------------ --------------
Capital and reserves
Called up share capital 14,082 14,082 14,082
Share premium 151,850 151,850 151,850
Capital redemption reserve 8,151 8,151 8,151
Capital reserves 1,239,100 1,131,391 1,099,333
Revenue reserve 28,674 28,668 30,667
--------------------------------------- ------------ ------------ --------------
Total shareholders' funds 1,441,857 1,334,142 1,304,083
--------------------------------------- ------------ ------------ --------------
Net asset value per share (note
5) 789.0p 696.3p 690.3p
--------------------------------------- ------------ ------------ --------------
CONDENSED STATEMENT OF CASH FLOWS
For the six months ended 30th June 2023
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30th June 30th June 31st December
2023 20221 20221
GBP'000 GBP'000 GBP'000
------------------------------------------ ------------ ------------ --------------
Cash flows from operating activities
Net return/(loss) before finance
costs and taxation 193,429 (134,685) (137,060)
Adjustment for:
Net (gains)/losses on investments
held at fair value through
profit or loss (181,081) 133,134 144,183
Net foreign currency (gains)/losses (3,908) 9,126 8,319
Dividend income (10,383) (10,000) (19,946)
Interest income (672) (86) (612)
Amortisation of private placement
issue costs 21 19 40
Realised gains on foreign exchange
transactions (915) (14) (1,022)
Realised exchange (gains)/losses
on liquidity fund (718) 1,702 3,739
Increase in accrued income and other
debtors (5) (15) (29)
Increase/(decrease) in accrued expenses 170 (71) (56)
------------------------------------------ ------------ ------------ --------------
Net cash used in operating activities (4,062) (890) (2,444)
------------------------------------------ ------------ ------------ --------------
Dividends received 8,288 7,708 16,413
Interest received 803 86 481
Overseas tax recovered 1,183 143 167
------------------------------------------ ------------ ------------ --------------
Net cash inflow from operating
activities 6,212 7,047 14,617
------------------------------------------ ------------ ------------ --------------
Purchases of investments (244,076) (221,315) (496,876)
Sales of investments 290,856 253,475 540,264
Settlement of foreign currency contracts 4 (32) -
------------------------------------------ ------------ ------------ --------------
Net cash inflow from investing
activities 46,784 32,128 43,388
------------------------------------------ ------------ ------------ --------------
Dividends paid (8,727) (8,646) (13,418)
Repurchase of shares into Treasury (42,788) (14,715) (35,036)
Repayment of bank loan - (28,478) (78,558)
Draw down of bank loan - 22,181 78,596
Loan interest paid (753) (284) (906)
Private placement interest paid (1,100) (950) (2,035)
------------------------------------------ ------------ ------------ --------------
Net cash outflow from financing
activities (53,368) (30,892) (51,357)
------------------------------------------ ------------ ------------ --------------
(Decrease)/increase in cash and
cash equivalents (372) 8,283 6,648
------------------------------------------ ------------ ------------ --------------
Cash and cash equivalents at start
of period/year 34,884 28,355 28,355
Unrealised (loss)/gain on foreign
currency cash and
cash equivalents (487) 1,344 (119)
------------------------------------------ ------------ ------------ --------------
Cash and cash equivalents at end
of period/year 34,025 37,982 34,884
------------------------------------------ ------------ ------------ --------------
Cash and cash equivalents consist
of:
------------------------------------------ ------------ ------------ --------------
Cash and short term deposits 168 46 1,079
Cash held in JPMorgan US Dollar
Liquidity Fund 33,857 37,936 33,805
------------------------------------------ ------------ ------------ --------------
Total 34,025 37,982 34,884
------------------------------------------ ------------ ------------ --------------
1 The presentation of the Cash Flow Statement, as permitted
under FRS 102, has been changed so as to present the reconciliation
of 'net return/(loss) before finance costs and taxation' to 'net
cash used in operating activities' on the face of the Cash Flow
Statement. Previously, this was shown by way of note. Other than
consequential changes in presentation of the certain cash flow
items, there is no change to the cash flows as presented in
previous periods.
RECONCILIATION OF NET DEBT
As at Other As at
31st December Cash flows non-cash 30th June
2022 charges 2023
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------------- ----------- --------- ----------
Cash and cash equivalents
Cash 1,079 (911) - 168
Cash equivalents 33,805 539 (487) 33,857
--------------------------- -------------- ----------- --------- ----------
34,884 (372) (487) 34,025
--------------------------- -------------- ----------- --------- ----------
Borrowings
Debt due within one year (29,096) - 1,566 (27,530)
Debt due after one year (82,765) - 4,436 (78,329)
--------------------------- -------------- ----------- --------- ----------
(111,861) - 6,002 (105,859)
--------------------------- -------------- ----------- --------- ----------
Net debt (76,977) (372) 5,515 (71,834)
--------------------------- -------------- ----------- --------- ----------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
For the six months ended 30th June 2023
1. Financial statements
The information contained within the condensed financial
statements in this half year report has not been audited or
reviewed by the Company's auditors.
The figures and financial information for the year ended 31st
December 2022 are extracted from the latest published financial
statements of the Company and do not constitute statutory accounts
for that year. Those financial statements have been delivered to
the Registrar of Companies, including the report of the auditors
which was unqualified and did not contain a statement under either
section 498(2) or 498(3) of the Companies Act 2006.
2. Accounting policies
The condensed financial statements have been prepared in
accordance with the Companies Act 2006, FRS 102 'The Financial
Reporting Standard applicable in the UK and Republic of Ireland' of
the United Kingdom Generally Accepted Accounting Practice ('UK
GAAP') and with the Statement of Recommended Practice 'Financial
Statements of Investment Trust Companies and Venture Capital
Trusts' (the revised 'SORP') issued by the Association of
Investment Companies in July 2022.
FRS 104, 'Interim Financial Reporting', issued by the Financial
Reporting Council ('FRC') in March 2015 has been applied in
preparing this condensed set of financial statements for the six
months ended 30th June 2023.
All of the Company's operations are of a continuing nature.
The accounting policies applied to this condensed set of
financial statements are consistent with those applied in the
financial statements for the year ended 31st December 2022.
3. (Loss)/return per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months Year ended
ended
30th June 2023 30th June 2022 31st December
2022
GBP'000 GBP'000 GBP'000
------------------------------- ----------------- --------------- --------------
Return/(loss) per share is
based on the following:
Revenue return 6,734 7,429 14,200
Capital return/(loss) 183,846 (145,168) (157,787)
------------------------------- ----------------- --------------- --------------
Total return/(loss) 190,580 (137,739) (143,587)
------------------------------- ----------------- --------------- --------------
Weighted average number of
shares in issue 185,119,371 192,725,229 191,374,674
Revenue return per share 3.64p 3.85p 7.42p
Capital return/(loss) per
share 99.31p (75.32)p (82.45)p
------------------------------- ----------------- --------------- --------------
Total return/(loss) per share 102.95p (71.47)p (75.03)p
------------------------------- ----------------- --------------- --------------
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
30th June 2023 30th June 2022 31st December
2022
GBP'000 GBP'000 GBP'000
----------------------------- --------------- --------------- --------------
Final dividend in respect
of the year ended
31st December 2022 of 4.75p
(2021: 4.50p) 8,727 8,646 8,646
Interim dividend in respect
of the six months ended
30th June 2022 of 2.5p - - 4,772
----------------------------- --------------- --------------- --------------
Total dividends paid in the
period/year 8,727 8,646 13,418
----------------------------- --------------- --------------- --------------
All the dividends paid in the period/year have been funded from
the Revenue Reserve.
5. Net asset value per share
The net asset value per Ordinary share and the net asset value
attributable to the Ordinary shares at the year end are shown
below. These were calculated using 182,736,008 (June 2022:
191,600,405, December 2022: 188,917,810) Ordinary shares in issue
at the period/year end (excluding Treasury shares).
(Unaudited) (Unaudited) (Audited)
Six months Six months ended Year ended
ended
30th June 2023 30th June 2022 31st December
2022
Net asset value Net asset value Net asset value
attributable attributable attributable
GBP'000 pence GBP'000 pence GBP'000 pence
------------------------------ ---------- ------- ---------- ------- ---------- -------
Net asset value - debt at
par 1,441,857 789.0 1,334,142 696.3 1,304,083 690.3
Add: amortised cost of US$65
million 2.55%
Private Placement February
2031 50,848 27.8 53,194 27.8 53,723 28.4
Less: Fair value of US$65
million 2.55%
Private Placement February
2031 (43,844) (24.0) (46,764) (24.4) (45,913) (24.3)
Add: amortised cost of US$35
million 2.32%
Private Placement October
2032 27,481 15.0 28,766 15.0 29,042 15.4
Less: Fair value of US$35
million 2.32%
Private Placement October
2032 (22,466) (12.3) (23,934) (12.5) (23,522) (12.5)
------------------------------ ---------- ------- ---------- ------- ---------- -------
Net asset value - debt at
fair value 1,453,876 795.5 1,345,404 702.2 1,317,413 697.3
------------------------------ ---------- ------- ---------- ------- ---------- -------
For further information, please contact:
Priyanka Vijay Anand
For and on behalf of
JPMorgan Funds Limited, Company Secretary
020 7742 4000
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014. Upon the
publication of this announcement via Regulatory Information Service
this inside information is now considered to be in the public
domain.
ENDS
A copy of the Half Year Report has been submitted to the
National Storage Mechanism and will shortly be available for
inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The Half Year Report will also shortly be available on the
Company's website at www.jpmamerican.co.uk where up to date
information on the Company, including daily NAV and share prices,
factsheets and portfolio information can also be found.
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END
IR BIGDIIBGDGXC
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