TIDMJARA TIDMJARU TIDMJARE

RNS Number : 1102R

JPMorgan Global Core Real Assets Ld

04 July 2022

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN GLOBAL CORE REAL ASSETS LIMITED

FINAL RESULTS FOR THE YEARED 28TH FEBRUARY 2022

Legal Entity Identifier: 549300D8JHZTH6GI8F97

Information disclosed in accordance with the DTR 4.1.3

CHAIRMAN'S STATEMENT

I am pleased to present the Annual Report & Financial Statements for JPMorgan Global Core Real Assets Limited (the 'Company' or 'JARA') for the year ended 28th February 2022 ('2022 Annual Report').

Performance

The net asset value total return over the period, measured in pounds sterling, was +12.9% inclusive of a total dividend of 4 pence per share paid to shareholders in the year. This is a strong result and the Board is delighted that the Company's strategy is now generating attractive returns for investors, while being disappointed that JARA's share price total return did not keep pace with the net asset value ('NAV'), ending the year down 8.9%, reflecting a discount to underlying NAV at which the shares were trading on 28th February 2022. Since that date, the Company's share price has rerated and is now at a premium to NAV; at close of business on 29th June 2022 (the latest practicable date ahead of publication), the share price was 107.0 pence per share (a 26.3% increase compared to 84.7 pence per share at the end of February 2022).

It is pleasing to note that the private strategies in which the Company was invested, as well as the liquid strategies, all posted positive returns over the year in their local currencies - in what has been a very testing year for many asset classes across the globe, this is an endorsement of the resilience of our underlying strategies. The Company has been fully invested only for the last six months of the reporting period, so such performance is especially encouraging.

Since most of the Company's assets are denominated in U.S. dollars, or in currencies which tend to be closely correlated with the U.S. dollar, JARA's returns were assisted by sterling's 4% decline against the U.S. currency over the past year. Shareholders will be aware that, following the year end, sterling has weakened further against the U.S. dollar, which has proved to be a helpful tailwind for the Company. One of JARA's attributes is that it offers shareholders access to real assets globally and with this comes a global currency exposure. Whilst this currency impact has benefitted the Company over the last year and post the year end, experience of recent years might suggest that currency movements have a habit of reversing themselves and should represent a neutral impact for shareholder returns in the long run.

The Investment Managers' Report reviews the Company's performance and gives a detailed commentary on the investment strategy and portfolio construction, and an outlook for the strategies.

Objective and features

The Company's objective is to provide shareholders with both stable income and capital appreciation through exposure to a globally diversified portfolio of 'core real assets', by which we mean physical and financial assets that offer reliable, highly forecastable, long term cash flows. These are focused on unlisted assets held in private funds investing in the global infrastructure, real estate and transportation sectors, alongside a more liquid element of the portfolio investing directly in listed real assets. Through these private funds and accounts managed by J.P. Morgan Asset Management, the Company provides diversified access to over 250 private investments which themselves have exposure to over 1,000 underlying private real assets.

The Company aims to provide investors with a long-term NAV return of 7% to 9% per annum, inclusive of a dividend yield (based on the initial issue price of 100p per share) of 4% to 6% per annum.

For more detail on why shareholders stand to benefit from the diversifying role that JARA is designed to fulfil in their portfolios, please refer to the appendix at the end of this document.

Keeping investors informed

The Company currently releases NAVs to the market four times a year, being at the end of May, August, November and February, via the London Stock Exchange's Regulatory News Service. With effect from the end of June 2022, the Company will release NAVs on a monthly basis. These monthly NAVs will contain the latest pricing for the liquid strategy and exchange rates, with the private strategies being priced on a quarterly basis.

Capital deployment

By August 2021, the portfolio had achieved full investment and, as can be seen from the Investment Managers' Report, the Company is now well diversified across a range of different sectors throughout the Real Asset spectrum. An important aspect of JARA is its diversification, which aims to ensure no over-exposure to any one sector, asset or counterparty. JARA benefits from the active management at both the portfolio and underlying strategy level to drive returns for investors. One exciting example is JARA's allocation to some of the newest and most efficient Liquid Natural Gas ('LNG') carriers which have come to market at a particularly opportune moment. Ordered in 2019, these assets are now operationally active at a time when they find themselves some of the most sought-after transportation investments globally, with the Ukraine conflict driving much of the world to switch its LNG purchases from fixed pipelines to a seaborne supply chain.

Since the year end the Company has added a further level of diversification through investment in a US Real Estate Mezzanine Debt (the 'Mezzanine') strategy. This investment provides JARA with exposure to a portfolio of 15 existing loans, with a bias towards multifamily housing and office loans. As a result of this transaction the Company has increased its sensitivity to rising interest rates, given that the Mezzanine strategy has approximately 80% of its exposure to floating rate loans. This allocation, now fully drawn, also helps to increase JARA's portfolio income as the underlying Mezzanine strategy has generated an income of 7.4% over one year and an annualised return of 6.9% since inception (5th December 2019). The target total return for the Mezzanine strategy is 6%-8% net per annum (net of management fees); this return is primarily income orientated.

Revenue and dividends

Over the course of the year, the Company grew its share capital by 4% through the issue of 8,600,000 new shares at a premium to their prevailing NAV and, as at 28th February 2022, the Company had 217,407,952 shares in issue and net assets of GBP206.6 million.

The Company has weathered a number of headwinds over the last year regarding the portfolio income, some caused by the disruption caused by COVID-19, but also on account of sterling strength in the first quarter of the Company's financial year. Nonetheless, the Board is pleased to note that this has not prevented JARA from achieving its target dividend rate. The Board declared total dividends of 4 pence per share in respect of the Company's year ended 28th February 2022, comprising four dividends of 1 penny each.

The Directors intend to maintain at least the current level of dividend and to review the level of dividend cover in the coming quarters. They have declared a first dividend for the 2022/23 financial year of 1 penny per share, which was paid to shareholders on 31st May 2022. Your Board believes that, over the longer term, the success of the underlying businesses into which JARA invests will facilitate a steadily growing level of dividends.

Share issuance

Since IPO, the Company has taken advantage of the premium to NAV at which its shares have traded to issue an additional 67,838,128 shares, and over the past financial year 8,600,000 new shares were issued pursuant to the placing programme, raising gross proceeds of GBP8.0 million. These proceeds were invested in line with the Company's investment policies across the underlying investment strategies. Share issuance is always executed at a premium to the prevailing cum-income NAV per share and so is accretive to the returns of existing shareholders. If conditions are appropriate, the Company will continue to issue new shares which, as well as assisting with premium management, will also enhance liquidity and continue to underpin the Company as an attractive investment. The Board also assesses the need for buybacks when the shares are trading at a discount to NAV and will aim to balance factors such as changes on the shareholder register and whether buybacks would be more accretive to NAV when compared to any foregone opportunity for potential investment opportunities.

Corporate governance

The Board is committed to maintaining and demonstrating high standards of corporate governance, which is essential to foster the long-term, strategic thinking that will create and protect value for all stakeholders. The Board has considered the principles and provisions of the 2019 Association of Investment Companies Code of Corporate Governance (the 'AIC Code'). The AIC Code addresses all the principles and provisions set out in the UK Corporate Governance Code, as well as setting out additional principles and provisions on issues that are of specific relevance to investment companies. The Board considers that reporting in accordance with the principles and provisions of the AIC Code provides relevant and comprehensive information to shareholders.

I am pleased to report that throughout the year ended 28th February 2022 the Company complied with the recommendations of the AIC Code.

The Board

In accordance with the Company's Articles of Incorporation and corporate governance best practice, all Directors will be retiring and seeking re-election by shareholders at the Company's Annual General Meeting ('AGM'). The Board's knowledge and experience is detailed on page 39 of the 2022 Annual Report.

Annual general meeting

The Company's third AGM will be held on 5th August 2022 at 12 noon at Les Echelons Court, Les Echelons, South Esplanade, St Peter Port, Guernsey GY1 1AR. I would encourage all shareholders to vote.

If shareholders are unable to attend the AGM, they are welcome to raise any questions in advance of the meeting with the Company Secretary at the Company's registered address, or via the 'Ask Us a Question' link which can be found in the 'Contact Us' section on the Company's website, or by writing to the Company Secretary at the address on page 91 of the 2022 Annual Report or via email to invtrusts.cosec@jpmorgan.com.

Outlook

This report covers the year from March 2021 to February 2022, JARA's second full year of operations; the 2020/21 year was greatly affected by the onset of the global pandemic and while the year just past has seen a remarkable recovery in the world economy, it was far from plain sailing for investors. The world has largely learnt to live with COVID-19 and its many variants, resulting in an improvement in your Company's prospects and a vindication of its investment strategies. However, shareholders will be aware that, only four days before the end of our financial year, Russia took the fateful decision to invade its neighbour Ukraine and while the resulting war will undoubtedly cause great disruption and hardship for months and possibly years to come, your Board's assessment of the strategies into which JARA invests suggests that they are proving to be remarkably resilient. Some of these, such as the LNG carriers mentioned above, stand to benefit significantly from the switch away from Russian fossil fuels.

Meanwhile, the Company has developed significantly from when I wrote to shareholders last year. It is now fully invested, it has achieved its initial dividend targets and its assets have seen no material disruption or lasting impact from the COVID-19 pandemic. The diversification across geographies, asset classes and macro drivers means that JARA is well placed to continue to meet both its income and capital returns, even in the challenging times in which we live. Specific themes, such as the focus on energy transition, have become more relevant and the infrastructure and transport strategies are well positioned for today's world.

With JARA's shares once again trading at a premium, the Board and Manager will monitor the demand for the Company's shares and assess this in the context of the long term goal of growing the Company and delivering strong returns for investors against the volatile market backdrop. In summary, therefore, following a launch which took longer and proved to be more problematic that any of us could have imagined back in September 2019, I believe that JARA offers its shareholders access to an investment framework which provides steady income with capital preservation in real terms, while being exposed to a high quality and professionally managed asset base.

John Scott

Chairman

1st July 2022

INVESTMENT MANAGERS' REPORT

Portfolio review

During the financial year JARA's portfolio of investments achieved its full weighted allocation and this, coupled with the positive returns in each and every one of the underlying strategies, resulted in an NAV total return in GBP of +12.9%. Over the reporting period, local currency performance was +11.7%. The difference between the GBP return and the local currency return was caused by currency movements which were accretive to JARA's GBP NAV. As a reminder, the Company's portfolio is unhedged and therefore, when allocating overseas, foreign exchange risk is present. Following the year end the US dollar strengthened against sterling creating a tailwind for JARA as it starts its new financial year. Please refer to the table in the 2022 Annual Report for a breakdown of the contributors to JARA's performance calculated using each strategy's investment performance and its average weighting within the portfolio throughout the year.

During the year JARA invested $44 million into underlying strategies, with a significant portion of this going towards private transport and private Asia-Pacific real estate assets. At the year end JARA was fully invested across a range of different sectors throughout the real asset universe. This positioning aligns with both our strategic asset allocation and also areas of high conviction in the medium term. For example, industrial/logistics remain our favoured sector within real estate owing to continued tenant demand with 'last mile' assets (asset located close to urban areas) especially in demand. Similarly, utilities and renewable energy are our preferred areas within infrastructure owing to structural trends and inherent inflation mitigation built within the contracts in these sectors. 'Direction of travel', which is indicative of our areas of focus and known/expected pipelines, is also focused on these areas.

A central tenet of JARA's investment proposition is to provide shareholders with a diversified portfolio of real asset exposures both by asset class, end user counterparty and by geography. JPMAM believes this aim has been achieved with JARA now having a truly global real asset portfolio. This global diversification proved crucial as, over the reporting period, economies reopened and recovered from the pandemic in different ways and on varying trajectories. The U.S. exposure, for example, proved very beneficial in the second half of the financial year and there are further details on this later in this report.

With inflation running high, and central banks trying to thread the needle to achieve a 'soft landing', combined with geopolitical events in Europe, this highlights the need to build a resilient portfolio through diversification. The benefits of a global portfolio have never been more important, especially in real assets where risk and return is often linked to the local market e.g. demographics, regulations etc. As such JPMAM believes that JARA's portfolio is well positioned with its North America and Asia-Pacific exposure complementing many investor's allocations closer to home.

Review of underlying strategies

Global Private Real Estate

-- High quality real estate, across the U.S. and Asia-Pacific regions. Focused on core property sectors - logistics, residential, office and retail - in major growth markets and the most dynamic gateway cities, which are important hubs for economic growth.

-- 261 assets globally equating to $48 billion in asset value (includes leverage). Average level across real estate of 31%.

-- Focus has been on increasing industrial/logistics and residential exposure. These sectors provided the majority of JARA's return over the financial year.

JARA's private real estate allocation provided a significant contribution to returns with JPMAM's platform having one of its strongest years on record. The majority of the return came from the private U.S. real estate exposure which significantly outperformed all other strategies with double digit returns and added 2.9% to JARA's total return. In addition, private Asia-Pacific real estate added 1.7%. A key driver in the U.S. real estate outperformance was the 'great reopening' of the U.S. economy following 18 months of intermittent restrictions. The U.S. real estate allocation was increased in the middle of the year, adding to positions where cash flow allowed and this allocation was not adjusted as performance materalised. As a consequence, the overweight resulted in amplified outperformance from this allocation.

Globally, returns were driven by extraordinary tenant demand, especially in the industrial/logistics sector, which contributed over 60% of our real estate appreciation last year. Supply constrained locations in the U.S. and Asia-Pacific markets close to population centres and port traffic demonstrated the greatest rent growth; a trend persisting throughout 2021, we expect this to continue in to 2022. Beyond logistics, the residential sector was the second highest conviction area with a focus on suburban residential in the U.S. and multi-family sectors in Japan.

In addition to strong performance, the year was very busy in terms of active asset management activity within the underlying strategies. From an acquisitions standpoint, in Asia alone we closed or contracted on nearly USD1 billion of equity investment - primarily in Logistics in New Zealand, Japan, Singapore, Australia and Hong Kong. As well as these acquisitions the real estate strategies disposed of more than USD3 billion of assets (c. 7% of real estate asset value), 80% of which were in office and retail assets which no longer met ongoing expectations for growth objectives. Assets were generally sold at or above holding values and on average retail disposals achieved values that exceeded their carrying value by 9%.

It is pleasing to report that both JPMAM's real estate strategies were ranked #1 in their respective peer groups within GRESB(1) , receiving an average score of 90/100 and both strategies were awarded five out of five stars. These results are representative of JARA's approach to ESG across its entire portfolio, as detailed within the ESG section of the 2022 Annual Report. These results also compare well with rankings within the wider investment company universe.

Global Private Infrastructure & Transportation

-- Core/core+ infrastructure and transportation. Focused on platform ownership allowing for long term value creation and backbone transport assets with, on average, investment grade counterparties.

-- Income profile of this part of the portfolio in the 7%-10% range with the significant majority of return coming from income.

-- 88 assets (747 if look-through assets included) equating to $44 billion in asset value (includes leverage). Average leverage of 48%.

-- Broad sector exposure in core space with ongoing focus expected to be on renewables, utilities and energy logistics.

JARA's private infrastructure also had a strong year and contributed +1.5% to total return; the significant majority of which was derived from income. Looking at performance by sub-sector, the regulated assets generally performed inline with or above expectations, while airports remained impacted by the pandemic. In contracted power (within which we include renewables) valuations were generally positive owing to market demand, whilst operating performance was slightly below expectations due to adverse weather conditions seen in different regions.

It is worth reminding investors that within infrastructure there is quite a differentiated approach to investing as the strategy actually owns operating businesses, many of which are 'platform investments' where smaller assets can be added over time via acquisitions, developments and build outs to increase the size of the existing platforms in a more cost effective manner compared to engaging in large transactions. We now employ this approach across both infrastructure (they now represent 80-90% of the infrastructure AUM) and transport with roughly two thirds of the capital deployed in the last five years being via platform companies. These two strategies hold 14 such assets at the Company's year end. There is significant opportunity to do this in the utility, renewables and maritime space, both as a result of favourable market conditions but also due to the often-fragmented nature of the marketplace. With this in mind, the strategy is expected to increase its exposure to the utility and renewals sector and reduce its exposure to fixed transportation assets such as airports and sea ports which currently represent 2% of JARA's portfolio. This is deemed to be a well-timed shift considering the more explicit inflation linkage and less economically sensitive demand these sectors generally see.

Transport contributed +1.7% to JARA's total return; this strategy focuses on leasing out large backbone assets critical to the functioning of global trade, leased to some of the largest corporates in the world. The significant majority of this return was also income orientated and performance was in line with expectations. Throughout the year global supply chains were extremely strained, with throughput hindered by virus containment measures and labour and equipment shortages. These conditions led to significant disruption and shipment delays, absorbing free capacity, and thereby elevating charter rates and creating a tailwind for many of our operators. Whilst supply chain pressures should ease over time this has not yet happened and will likely not fully resolve itself whilst China continues to aggressively contain outbreaks of COVID-19.

Throughout the year over 20 new private assets were added within the transport strategy, all of which were in the maritime and energy logistics space. The strategy continues to avoid adding aviation assets as the future, especially around business travel, remains uncertain and better returns are to be found elsewhere; however, the existing assets now represent only 3% of JARA's overall exposure and counterparties continue to be some of the more resilient in the sector. For existing assets, contract terms are primarily fixed, hence the ability to consistently add new assets in the portfolio is favourable in allowing the strategy to capture some of the higher lease rates that are on offer in the current market environment. A number of additions this year were new build assets where having more fuel efficient and technologically advanced assets will provide a competitive advantage. This is especially the case when contracting with large well-run corporates that have a high focus on ESG elements in their operations and this extends to the assets they lease. One area of particular focus in the newbuild space has been with liquid natural gas ('LNG') carriers; an area of high conviction for the strategy over the last two years and the current macro backdrop has only enhanced this view. This is discussed further in the outlook section. The average age of the fleet is around 4.5 years and this will reduce as new build assets are delivered.

Liquid Real Assets

   --      Listed exposure across real estate, infrastructure and transportation securities. 

-- Listed real estate includes 'all-tranche' REIT investing whereby the team has the flexibility to invest in the common equity of REITs as well as their debt securities in order to provide a lower volatility more income orientated return.

The liquid real assets component of the portfolio was increased in mid-to-late 2020 when public market values were still depressed, taking advantage of a number of mispricing and dislocations in the sub sectors. Since that point the listed exposure has rebounded strongly, albeit with some volatility towards year end; in total this sleeve contributed +4.3% over the year. From its peak, the listed real assets allocation has been steadily reduced and recycled into private assets. As a reminder, the listed real asset allocation is made up of two distinct strategies; U.S. all-tranche REITs and an allocation more broadly across a variety of other listed real assets. The portfolio is currently equally weighted between these. The benefit of having an allocation to listed real assets within the portfolio is both as a source of liquidity - giving more flexibility around asset allocation - and as a further diversifier in returns and sectoral exposure.

Real asset market outlook

As highlighted in appendix at the end of the document, active asset allocation is fundamental to investing in the core real asset market given the wide variety of possible outcomes. This dispersion was evident last year with a near 20% dispersion between the highest performing component and the lowest performing asset classes within JARA's portfolio. To take advantage of this potential dispersion, JARA looks to actively allocate across different asset classes, whilst being mindful of the constraints which exist when investing in illiquid asset classes. This active asset allocation will be informed by JPMAM's relative view of both income and total return achievable by each asset class within the medium to long term. Please see below for JPMAM's outlook on each of the asset classes that JARA invests across, as well as a view on how inflation may impact the asset class.

Real Estate outlook

Pandemic-related impacts are now becoming visible. For example, the shift to hybrid home-and-office working patterns means that the link between aggregate market vacancy and the availability of grade A rental space has been weakened. In some markets, we expect to see high vacancy rates associated with surprisingly robust rental growth - and in these instances, maintaining a focus on quality is essential.

We expect that many asset owners with high quality assets will have the flexibility to increase rents at or above the inflation rate in real estate sectors characterised by moderate supply and robust fundamentals. Conversely, sectors with high vacancy rates and excess supply pipelines (or even negative demand patterns) may see revenues fall below the inflation rate. This sector dispersion is at an all-time high and therefore we feel that a quality portfolio of assets, which is well positioned, should see above trend returns in 2022 and beyond.

We also see opportunity in the real estate mezzanine debt space, particularly in the US. The mezzanine market no longer reflects the pre-global financial crisis marketplace where leverage was high and capital structures were complex. Senior lenders continue to be conservative, allowing for subordinated loans to play a crucial role in bridging the financing gap required whilst offering an attractive risk adjusted investment opportunity, with a healthy income orientated return and downside protection in the form of substantial levels of subordinated equity. Many of the loans are also floating rate allowing for protection from rising rates.

Core real estate can offer some inflation protection, on both and implicit and explicit basis. The positive correlation is in many cases through the explicit protection built into leases whereby lease rates are increased automatically every year or reviewed and adjusted in line with an inflation benchmark. This helps the income stream retain its real value. There is however some regional variation of how leases are structured to protect against inflation. Capital values may also benefit in a more explicit way if replacement values increase and thereby support capital values. There is no historical evidence that higher inflation hurts return, even when inflation leads to central bank rates hikes as we are currently seeing.

Infrastructure outlook

We expect core infrastructure assets to continue to serve as a lower risk, more forecastable source of diversification and steady income (mostly from cash distributions) through their regulated frameworks, often correlated to inflation, government concessions; and long-term contractual revenues with investment grade counterparties.

Looking at both the regulatory and inflationary environment, utilities and renewables will likely be areas we focus on. Regulated utilities typically exist within regulatory frameworks that allow for relatively explicit inflation protection via passing through costs and expenses to customers. Furthermore, given the long-term nature of ownership and the capital required to backup resiliency and decarbonisation plans, there are relatively few operators who can successfully invest in this space.

Renewables will continue to be an area of opportunity. The conflict in Ukraine has put energy independence at the heart of European political agendas and the acceleration towards renewables is key to this. Many governments have now pledged and/or increased their commitments to transitioning to a lower carbon world. For investors such as ourselves, when making long-term investments in communities' essential services, sustainability is the top priority. Investors have an obligation to a broad set of stakeholders to be a positive force in the current energy transition.

Core infrastructure investments can offer a considerable degree of inflation protection. Explicit inflation protection is the simplest to quantify and occurs when regulatory frameworks, concession agreements, and long-term contracts automatically adjust using inflation-indexing mechanisms, allowing underlying price increases to be passed on to customers and counterparties. An example of this would be for a contracted power generation company, such as a producer of renewable energy where inflation indexing in energy contracts results in higher prices achieved as the price for power increases, providing upside. Implicit inflation protection exists for many infrastructure assets, even when there is no direct linkage through contracts and regulation. These assets are often well-positioned to pass on rising costs, maybe due to monopolistic positions making it feasible to pass through higher costs, thereby protecting revenue streams while costs rise.

Transport outlook

Backlogs and disruption in global supply chains, exacerbated by continued lockdowns in China, are likely to be positive for market sentiment given their beneficial impact on profits. Furthermore, we see ongoing growth in e-commerce continuing and strong consumer demands. Inflation does, however, pose some risk to this demand if consumers are required to focus more on essential spending.

In aviation, we expect domestic passenger volumes to continue improving, although questions remain about long-term trends in international and business travel. Amid concerns created by new variants of the coronavirus and dynamic border control requirements, the recovery time for international aviation remains uncertain. The market share vacated by 70-plus airline bankruptcies is being filled by fewer, larger, more stable and well-capitalised companies.

Supporting the ongoing energy transition from fossil fuels to renewables is one of the biggest opportunities we see. Transport assets can support this transition to a less carbon intensive future by increasing energy-efficiency and actively supporting certain industries. Demand for LNG is also now likely to accelerate as the UK and Europe reduce dependency on Russian hydrocarbons and look to alternative sources - with new sources of LNG likely to be key; we therefore expect LNG carriers to be in high demand.

When it comes to inflation, transportation, as an asset class, probably has the least explicit protection for investors as contract prices are often fixed throughout their life. That said, over the long-term lease rates have been correlated to inflation when they come for renewal and asset values are also well correlated owing to replacement values going up when inflation is high. As such, we see transportation as having the ability to provide some inflation protection over the medium to long term.

(1) Global Real Estate Sustainability Benchmark.

Investment Manager

J.P. Morgan Asset Management, Inc.

Security Capital Research & Management Inc. and J.P. Morgan Alternative Asset Management Inc.

1st July 2022

PRINCIPAL AND EMERGING RISKS

The Directors confirm that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. With the assistance of JPMF, the Audit Committee and Market Risk Committee, chaired by Helen Green and Simon Holden, respectively, have drawn up a risk matrix, which identifies the key risks to the Company. These are reviewed and noted by the Board. The principal and emerging risks identified and the broad categories in which they fall, and the ways in which they are managed or mitigated are summarised below. The AIC Code of Corporate Governance requires the Audit Committee to put in place procedures to identify emerging risks and also provide an explanation of how these are managed or mitigated.

 
 Principal risk          Description                              Mitigating activities 
----------------------  ---------------------------------------  ------------------------------------- 
 Investment Management 
 and Performance 
----------------------  ---------------------------------------  ------------------------------------- 
 Discount Control        Investment company shares                The Board monitors the level 
  Risk                    often trade at discounts                 of both the absolute and 
                          to their underlying NAVs,                sector relative premium/discount 
                          although they can also trade             at which the shares trade. 
                          at a premium. Discounts and              The Board reviews both sales 
                          premiums can fluctuate considerably      and marketing activity and 
                          leading to volatile returns              sector relative performance, 
                          for shareholders.                        which it believes are the 
                                                                   primary drivers of the relative 
                                                                   premium/discount level. In 
                                                                   addition, the Company has 
                                                                   authority, when it deems 
                                                                   appropriate, to buy back 
                                                                   its existing shares to enhance 
                                                                   the NAV per share for remaining 
                                                                   shareholders and to reduce 
                                                                   the absolute level of discount 
                                                                   and discount volatility. 
----------------------  ---------------------------------------  ------------------------------------- 
 Foreign Exchange        There is a risk that material            A decision was taken at launch 
  Risk to Income          sterling strength or volatility          not to hedge the capital 
                          will result in a diminution              value of the portfolio into 
                          of the value of income received          sterling, nor to hedge the 
                          when converted into sterling.            income generated by the portfolio 
                                                                   into sterling. One of JARA's 
                                                                   attributes is that it offers 
                                                                   shareholders access to real 
                                                                   assets globally and with 
                                                                   this comes a global currency 
                                                                   exposure. Whilst this currency 
                                                                   impact has benefited the 
                                                                   Company over the last year 
                                                                   and post the year end, experience 
                                                                   of recent years suggests 
                                                                   that currency movements have 
                                                                   a habit of reversing themselves 
                                                                   and should represent a neutral 
                                                                   impact for shareholder returns 
                                                                   in the long run. The Board 
                                                                   keeps the decision on whether 
                                                                   to hedge the capital value 
                                                                   or income generation under 
                                                                   review. 
----------------------  ---------------------------------------  ------------------------------------- 
 Foreign Exchange        There is a risk that material 
  Risk to NAV/Share       sterling strength or volatility 
  Price Volatility        will result in a volatile 
                          NAV/share price since most 
                          the Company's assets are 
                          denominated in US dollars, 
                          or in currencies which tend 
                          to be closely correlated 
                          with the dollar. 
----------------------  ---------------------------------------  ------------------------------------- 
 Income Generation       There is a risk that the                 The Board reviews quarterly 
  Risk                    Company fails to generate                detailed estimates of revenue 
                          sufficient income from its               income and expenditure prepared 
                          investment portfolio to meet             by the Manager and, if required, 
                          the Company's target annual              challenges the Manager as 
                          dividend yield of 4 to 6%,               to the underlying assumptions 
                          based on the initial issue               made in earnings from the 
                          price of 100.0p per share.               underlying strategies and 
                                                                   the Company's expenditure. 
                                                                   Under Guernsey company law, 
                                                                   the Company is permitted 
                                                                   to pay dividends despite 
                                                                   losses provided solvency 
                                                                   tests are performed and passed 
                                                                   ahead of dividend declaration. 
----------------------  ---------------------------------------  ------------------------------------- 
 Underperformance        Poor implementation of the               The Board manages these risks 
                          investment strategy, for                 by diversification of investments 
                          example as to thematic exposure,         and through its investment 
                          sector allocation, undue                 restrictions and guidelines, 
                          concentration of holdings,               which are monitored and reported 
                          factor risk exposure or the              on by the Manager. The Manager 
                          degree of total portfolio                provides the Directors with 
                          risk, may lead to the Company            timely and accurate management 
                          not achieving its investment             information, including performance 
                          objective of providing a                 data, revenue estimates, 
                          stable income and capital                liquidity reports and shareholder 
                          appreciation, and/or underperformance    analyses. 
                          against the Company's peer 
                          companies. 
----------------------  ---------------------------------------  ------------------------------------- 
 Operational Risks 
----------------------  ---------------------------------------  ------------------------------------- 
 Corporate Strategy      The corporate strategy, including        The Manager has a dedicated 
  and shareholder         the investment objectives                investment company sales 
  demand                  and policies, may not be                 team that engages with both 
                          of sufficient interest to                existing and prospective 
                          current or prospective shareholders.     shareholders of the Company. 
                          Certain buyers within the                This engagement includes 
                          sector will only consider                the education/description 
                          investing into an investment             of how JARA's portfolio is 
                          trust where its AUM is over              invested and the exposures 
                          a certain level; the Company's           that this generates. The 
                          AUM currently stands below               Board regularly reviews its 
                          these levels.                            strategy, and assesses, with 
                                                                   its broker and Manager, shareholder 
                                                                   demand. 
----------------------  ---------------------------------------  ------------------------------------- 
 Cyber Crime             The threat of cyber attack,              The Company benefits directly 
                          in all guises, is regarded               or indirectly from all elements 
                          as at least as important                 of JPMorgan's Cyber Security 
                          as more traditional physical             programme. The information 
                          threats to business continuity           technology controls around 
                          and security.                            physical security of JPMorgan's 
                          In addition to threatening               data centres, security of 
                          the Company's operations,                its networks and security 
                          such an attack is likely                 of its trading applications, 
                          to raise reputational issues             are tested by independent 
                          which may damage the Company's           auditors and reported every 
                          share price and reduce demand            six months against the AAF 
                          for its shares.                          Standard. 
----------------------  ---------------------------------------  ------------------------------------- 
 Counterparty Risk       The nature of the contractual            The Board is able to seek 
                          frameworks that underpin                 information from the Manager 
                          many of the real assets within           in relation to counterparty 
                          the underlying strategies                concentration and correlation 
                          necessitate close partnerships           of providers. As counterparty 
                          with a range of counterparties.          quality is key to maintaining 
                          In addition to the financial             predictable income streams, 
                          risks arising from exposure              the Manager seeks regular 
                          to customers, client and                 contact with key counterparties 
                          lenders, there are a large               throughout the supply chain 
                          number of operational counterparties     and with revenue-providing 
                          including construction and               counterparties, while also 
                          maintenance subcontractors.              actively monitoring the financial 
                          Such counterparties to which             strength and stability of 
                          the Company is ultimately                all these entities. 
                          exposed will increase as 
                          the Company's assets continue 
                          to be deployed. Counterparty 
                          risk would primarily manifest 
                          itself as either counterparty 
                          failure or underperformance 
                          of contractors. 
----------------------  ---------------------------------------  ------------------------------------- 
 Investment Delay        Investment into underlying               The Manager monitors and 
                          strategies could be delayed              reports to the Board on 'queue' 
                          resulting in loss of expected            length and the underlying 
                          income and capital growth                pattern of deployment in 
                          opportunity.                             the underlying strategies. 
                                                                   Any slowing of deployment 
                                                                   patterns is reported to Board 
                                                                   and the income impact is 
                                                                   modelled. 
----------------------  ---------------------------------------  ------------------------------------- 
 Outsourcing             Disruption to, or failure                Details of how the Board 
                          of, the Manager's accounting,            monitors the services provided 
                          dealing or payments systems              by JPM and its associates 
                          or the Depositary or Custodian's         and the key elements designed 
                          records may prevent accurate             to provide effective risk 
                          reporting and monitoring                 management and internal control 
                          of the Company's financial               are included within the Risk 
                          position or a misappropriation           Management and Internal Controls 
                          of assets.                               section of the Corporate 
                                                                   Governance Statement on pages 
                                                                   42 to 45 of the 2022 Annual 
                                                                   Report. 
                                                                   The Manager has a comprehensive 
                                                                   business continuity plan 
                                                                   which facilitates continued 
                                                                   operation of the business 
                                                                   in the event of a service 
                                                                   disruption (including and 
                                                                   disruption resulting from 
                                                                   the COVID-19 pathogen). Since 
                                                                   the introduction of the COVID-19 
                                                                   restrictions, Directors have 
                                                                   received assurances that 
                                                                   the Manager and its key third 
                                                                   party service providers have 
                                                                   all been able to maintain 
                                                                   service levels. 
----------------------  ---------------------------------------  ------------------------------------- 
 Regulatory Risks 
----------------------  ---------------------------------------  ------------------------------------- 
 Regulatory Change       Various legal and regulatory             The Manager and its advisers 
                          changes may adversely impact             continually monitor any potential 
                          the Company and its underlying           or actual changes to regulations 
                          investments. This could take             to ensure its assets and 
                          the form of legislation impacting        service providers remain 
                          the supply chain or contractual          compliant. Most social and 
                          costs or obligations to which            transportation infrastructure 
                          the underlying strategies                concessions provide a degree 
                          are exposed. Certain investments         of protection, through their 
                          in the underlying strategies             contractual structures, in 
                          are subject to regulatory                relation to changes in legislation 
                          oversight. Regular price                 which affect either the asset 
                          control reviews by regulators            or the way the services are 
                          determine levels of investment           provided. Regulators seek 
                          and service that the portfolio           to balance protecting customer 
                          company must deliver and                 interests with making sure 
                          revenue that may be generated.           that investments have enough 
                          Particularly severe reviews              money to finance their functions. 
                          may result in poor financial 
                          performance of the affected 
                          investment. 
                          The Company invests in real 
                          assets via a series of private 
                          funds. The operation of these 
                          entities including their 
                          ability to be bought, held 
                          or sold by investors across 
                          a number of jurisdictions 
                          and the taxation suffered 
                          within the funds and by investors 
                          into the funds depend on 
                          a complex mix of regulatory 
                          and tax laws and regulations 
                          across a wide range of countries. 
                          These may be subject to change 
                          that may threaten the Company's 
                          access to and returns earned 
                          from the private funds. 
----------------------  ---------------------------------------  ------------------------------------- 
 Emerging risk           Description                              Mitigating Factor 
----------------------  ---------------------------------------  ------------------------------------- 
 Environmental Risks 
----------------------  ---------------------------------------  ------------------------------------- 
 Climate Change          Climate change is one of                 In the Company's and Manager's 
                          the most critical emerging               view, investments that successfully 
                          issues confronting asset                 manage climate change risks 
                          managers and their investors.            will perform better in the 
                          Climate change may have a                long-term. Consideration 
                          disruptive effect on the                 of climate change risks and 
                          business models and profitability        opportunities is an integral 
                          of individual investments,               part of the investment process. 
                          and indeed, whole sectors.               The Manager aims to influence 
                          The Board is also considering            the management of climate 
                          the threat posed by the direct           related risks through engagement 
                          impact of climate change                 and voting with respect to 
                          on the operations of the                 the equity portion of the 
                          Manager and other major service          portfolio, and is a participant 
                          providers.                               of Climate Action 100+ and 
                          Although mitigated to some               a signatory of the United 
                          extent by contracted lease               Nations Principles for Responsible 
                          commitments, the Company                 Investment. 
                          may be exposed to substantial            Generally, the Manager (or, 
                          risk of loss from environmental          in the case of an investment 
                          claims arising in respect                made by a JPMAM product, 
                          of its underlying real assets            the relevant manager) performs 
                          that have environmental problems,        market practice environmental 
                          and the loss may exceed the              due diligence of all of the 
                          value of such underlying                 investments to identify potential 
                          assets. Furthermore, changes             sources of pollution, contamination 
                          in environmental laws and                or other environmental hazard 
                          regulations or in the environmental      for which such investment 
                          condition of investments                 may be responsible and to 
                          may create liabilities that              assess the status of environmental 
                          did not exist at the time                regulatory compliance. 
                          of acquisition of an underlying 
                          asset and that could not 
                          have been foreseen. It is 
                          also possible that certain 
                          underlying assets to which 
                          the Company will be exposed 
                          could be subject to risks 
                          associated with natural disasters 
                          (including wildfire, storms, 
                          hurricanes, cyclones, typhoons, 
                          hail storms, blizzards and 
                          floods) or non climate related 
                          manmade disasters (including 
                          terrorist activities, acts 
                          of war or incidents caused 
                          by human error). 
----------------------  ---------------------------------------  ------------------------------------- 
 Global Risks 
----------------------  ---------------------------------------  ------------------------------------- 
 Geopolitical Risk       The Company's investments                This risk is managed to some 
                          are exposed to various geopolitical      extent by diversification 
                          and macro-economic risks                 of investments and by regular 
                          incidental to investing.                 communication with the Manager 
                          Political, economic, military            on matters of investment 
                          and other events around the              strategy and portfolio construction 
                          world (including trade disputes)         which will directly or indirectly 
                          may impact the economic conditions       include an assessment of 
                          in which the Company operates,           these risks. The Board can, 
                          by, for example, causing                 with shareholder approval, 
                          exchange rate fluctuations,              look to amend the investment 
                          interest rate changes, heightened        policy and objectives of 
                          or lessened competition,                 the Company to gain exposure 
                          tax advantages or disadvantages,         to or mitigate the risks 
                          inflation, reduced economic              arising from geopolitical 
                          growth or recession, and                 instability although this 
                          so on. Such events are not               is limited if it is truly 
                          in the control of the Company            global. 
                          and may impact the Company's 
                          performance. 
                          The crisis in Ukraine has 
                          already affected energy and 
                          commodity markets and may 
                          cause further damage to the 
                          global economy. The ongoing 
                          conflict between Russia and 
                          Ukraine has heightened the 
                          possibility that tensions 
                          will spill over and intensify 
                          geo-political unrest between 
                          other countries sharing a 
                          common border. 
----------------------  ---------------------------------------  ------------------------------------- 
 Technological and       The returns generated from               The Board manages these risks 
  Behavioural Change      the underlying investment                through maintaining a diversified 
                          strategies in which the Company          portfolio of investments, 
                          is invested may be materially            ensuring the underlying investment 
                          affected by new or emerging              team consider these threats 
                          changes in technology which              in portfolio construction 
                          change the behaviour of individuals      and investment plans and 
                          or corporations, or may require          are aware of the investment 
                          substantial investment in                opportunities as well as 
                          new or replacement technologies.         the threats presented by 
                          Such changes may include                 these shifts in the sectors 
                          the decline in demand for                in which they invest. 
                          office space as remote working 
                          technologies become widespread, 
                          material changes in transport 
                          technologies and new technologies 
                          for the generation and transmission 
                          of energy. 
----------------------  ---------------------------------------  ------------------------------------- 
 Pandemic Risks 
----------------------  ---------------------------------------  ------------------------------------- 
 Pandemics               The emergence of COVID-19                The Board receives reports 
                          has highlighted the speed                on the business continuity 
                          and extent of economic damage            plans of the Manager and 
                          that can arise from a pandemic.          other key service providers. 
                          While current hopes that                 The effectiveness of these 
                          vaccination programmes will              measures have been assessed 
                          control the virus appear                 throughout the course of 
                          well-placed, there is the                the COVID-19 pandemic and 
                          risk that emergent strains               the Board will continue to 
                          may not respond to current               monitor developments as they 
                          vaccines and may be more                 occur and seek to learn lessons 
                          lethal and that they may                 which may be of use in the 
                          spread as global travel opens            event of future pandemics. 
                          up again. 
----------------------  ---------------------------------------  ------------------------------------- 
 

TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES

Details of the management contract are set out in the Directors' Report on page 40 of the 2022 Annual Report. The management fee payable to the Manager for the year was GBP1,628,000 (2021: GBP703,000) of which GBP67,000 (2021: GBP203,000) was outstanding at the year end.

The Company holds cash in JPMorgan Sterling Liquidity Fund, which is managed by JPMF. At the year end, this was valued at GBP0.01 million (2021: GBP0.3 million). Interest amounting to GBP4,000 (2021: GBP6,000) was receivable during the year of which GBPnil (2021: GBPnil) was outstanding at the year end.

The Company holds cash in JPMorgan US Dollar Liquidity Fund, which is managed by JPMF. At the year end, this was valued at GBP0.1 million (2021: GBP18.6 million). Interest amounting to GBP8,000 (2021: GBP559,000) was receivable during the year of which GBPnil (2021: GBP4,000) was outstanding at the year end.

Included in administrative expenses in note 7 on page 70 of the 2022 Annual Report are safe custody fees amounting to GBP2,000 (2021: GBP94,000) payable to JPMorgan Chase N.A. of which GBP1,000 (2021: GBP1,000) was outstanding at the year end.

Handling charges on dealing transactions amounting to GBP30,000 (2021: GBP21,000) were payable to JPMorgan Chase N.A. during the year of which GBP4,000 (2021: GBP2,000) was outstanding at the year end.

At the year end, a bank balance of GBP1,052,000 (2021: GBP976,000) was held with JPMorgan Chase N.A. A net amount of interest of GBP171,000 (2021: GBPnil) was receivable by the Company during the year from JPMorgan Chase N.A. of which GBPnil (2021: GBPnil) was outstanding at the year end.

Please see below for details of the Directors' remuneration.

Single total figure of remuneration(1)

The single total figure of remuneration for each Director is detailed below.

 
                     2022      2021 
                    Total     Total 
 Directors            GBP       GBP 
---------------  --------  -------- 
 John Scott        60,000    60,000 
 Helen Green       50,000    50,000 
 Simon Holden      54,000    54,000 
 Chris Russell     42,000    42,000 
---------------  --------  -------- 
 Total            206,000   206,000 
---------------  --------  -------- 
 

(1) Other subject headings for the single figure table are not included because there is nothing to disclose in relation thereto.

Whilst not required by the Company and not constituting part of the Directors' remuneration, the Directors own shares in the Company. The Directors' received a dividend from their shares over the reporting period commensurate with their shareholdings, which does not constitute part of their remuneration. There are no balances payable to the Directors at the year end.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report & Financial Statements in accordance with applicable law and regulations.

The Companies (Guernsey) Law, 2008 ('the law') requires the Directors to prepare the Financial Statements for each financial year. Under that law, the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards to meet the requirements of applicable law and regulations. Under Company law the Directors must not approve the Financial Statements unless they are satisfied that, taken as a whole, the Annual Report & Financial Statements are fair, balanced and understandable, provide the information necessary for shareholders to assess the Company's position, performance, business model and strategy and that they give a true and fair view of the state of affairs of the Company and of the total return or loss of the Company for that period. 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 International Financial Reporting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

-- prepare the financial statements on a 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.

The Directors are responsible for keeping proper 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 to enable them to ensure that the financial statements comply with the law. 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.

The accounts are published on the www.jpmrealassets.co.uk website, which is maintained by the Company's Manager. The maintenance and integrity of the website maintained by the Manager is, so far as it relates to the Company, the responsibility of the Manager. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and, accordingly, the Auditor accepts no responsibility for any changes that have occurred to the accounts since they were initially presented on the website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The accounts are prepared in accordance with International Financial Reporting Standards.

Under applicable law and regulations the Directors are also responsible for preparing a Directors' Report, Corporate Governance Statement and Directors' Remuneration Report that comply with that law and those regulations.

Each of the Directors, confirms that, to the best of their knowledge:

-- the financial statements, which have been prepared in accordance with International Financial Reporting Standards and applicable law, give a true and fair view of the assets, liabilities, financial position and return or loss of the Company; and

-- the Strategic Report includes a fair review 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 it faces.

The Board also confirms that it is satisfied that the Strategic Report and Directors' Report include a fair review 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.

For and on behalf of the Board

John Scott

Chairman

1st July 2022

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEARED 28TH FEBRUARY 2022

 
                                                        Year ended      Year ended 
                                                     28th February   28th February 
                                                              2022            2021 
                                                           GBP'000         GBP'000 
--------------------------------------------------  --------------  -------------- 
 Gains/(losses) on investments held at fair value 
  through profit or loss                                    15,896         (9,297) 
 Net foreign currency gains/(losses)                           905         (5,290) 
 Investment income                                           9,846           3,049 
 Interest receivable and similar income                        183             565 
--------------------------------------------------  --------------  -------------- 
 Total return/(loss)                                        26,830        (10,973) 
 Management fee                                            (1,628)           (703) 
 Other administrative expenses                             (1,023)           (642) 
--------------------------------------------------  --------------  -------------- 
 Return/(loss) before finance costs and taxation            24,179        (12,318) 
 Finance costs                                                 (1)               - 
--------------------------------------------------  --------------  -------------- 
 Return/(loss) before taxation                              24,178        (12,318) 
 Taxation                                                    (485)           (412) 
--------------------------------------------------  --------------  -------------- 
 Return/(loss) for the year                                 23,693        (12,730) 
--------------------------------------------------  --------------  -------------- 
 Return/(loss) per share                                    11.06p         (6.16)p 
 

The Company does not have any income or expense that is not included in the net profit for the year. Accordingly the 'Return for the year', is also the 'Total comprehensive income for the year, as defined in IAS1 (revised).

All Items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year.

STATEMENT OF CHANGES IN EQUITY

 
                                           Share    Retained 
                                         premium    earnings      Total 
                                         GBP'000     GBP'000    GBP'000 
-------------------------------------  ---------  ----------  --------- 
 Year ended 28th February 2021 
 At 29th February 2020                   200,574     (6,159)    194,415 
 Issue of ordinary shares                  8,679           -      8,679 
 Share issue costs                         (117)           -      (117) 
 Loss for the year                             -    (12,730)   (12,730) 
 Dividends paid in the year (note 4)           -     (6,730)    (6,730) 
-------------------------------------  ---------  ----------  --------- 
 At 28th February 2021                   209,136    (25,619)    183,517 
-------------------------------------  ---------  ----------  --------- 
 Year ended 28th February 2022 
 At 28th February 2021                   209,136    (25,619)    183,517 
 Issue of ordinary shares                  7,987           -      7,987 
 Return for the year                           -      23,693     23,693 
 Dividends paid in the year (note 4)           -     (8,608)    (8,608) 
-------------------------------------  ---------  ----------  --------- 
 At 28th February 2022                   217,123    (10,534)    206,589 
-------------------------------------  ---------  ----------  --------- 
 

STATEMENT OF FINANCIAL POSITION

AS AT 28TH FEBRUARY 2022

 
                                                         2022       2021 
                                                      GBP'000    GBP'000 
--------------------------------------------------  ---------  --------- 
 Assets 
 Non current assets 
 Investments held at fair value through profit or 
  loss                                                204,667    163,450 
--------------------------------------------------  ---------  --------- 
 Current assets 
 Other receivables                                      1,063        814 
 Cash and cash equivalents                              1,175     19,867 
--------------------------------------------------  ---------  --------- 
                                                        2,238     20,681 
 Liabilities 
 Current liabilities 
 Other payables                                         (316)      (614) 
--------------------------------------------------  ---------  --------- 
 Net current assets                                     1,922     20,067 
--------------------------------------------------  ---------  --------- 
 Total assets less current liabilities                206,589    183,517 
--------------------------------------------------  ---------  --------- 
 Net assets                                           206,589    183,517 
--------------------------------------------------  ---------  --------- 
 Amounts attributable to shareholders 
 Share premium                                        217,123    209,136 
 Retained earnings                                   (10,534)   (25,619) 
--------------------------------------------------  ---------  --------- 
 Total shareholders' funds                            206,589    183,517 
--------------------------------------------------  ---------  --------- 
 Net asset value per share                              95.0p      87.9p 
 

Incorporated in Guernsey with the company registration number: 66082.

STATEMENT OF CASH FLOWS

FOR THE YEARED 28TH FEBRUARY 2022

 
                                                           Year ended      Year ended 
                                                        28th February   28th February 
                                                                 2022            2021 
                                                              GBP'000         GBP'000 
-----------------------------------------------------  --------------  -------------- 
 Operating activities 
 Return/(loss) before taxation                                 24,179        (12,318) 
 Deduct dividend income                                       (9,730)         (2,972) 
 Deduct investment income - interest                            (116)            (77) 
 Deduct deposit and liquidity fund interest income              (183)           (565) 
 Less interest expense                                            (1)               - 
 Add indirect management fee                                      880               - 
 Deduct gains/add losses on investments held at 
  fair value through profit or loss                          (15,896)           9,297 
 Increase in prepayments and accrued income                      (14)            (16) 
 Decrease in other payables                                     (101)            (93) 
 Add exchange losses on cash and cash equivalents                 107           3,981 
 Taxation                                                       (484)           (414) 
-----------------------------------------------------  --------------  -------------- 
 Net cash outflow from operating activities before 
  interest and taxation                                       (1,359)         (3,177) 
-----------------------------------------------------  --------------  -------------- 
 Dividends received                                             9,413           2,318 
 Investment income - interest                                     150             124 
 Deposit and liquidity fund interest received                     183             737 
 Purchases of investments held at fair value through 
  profit or loss                                             (53,630)       (128,334) 
 Sales of investments held at fair value through 
  profit or loss                                               27,279          23,635 
-----------------------------------------------------  --------------  -------------- 
 Net cash outflow from operating activities                  (17,964)       (104,697) 
-----------------------------------------------------  --------------  -------------- 
 Financing activities 
 Issue of ordinary shares                                       7,987           8,679 
 Share issue costs                                                  -           (117) 
 Dividends paid                                               (8,608)         (6,730) 
-----------------------------------------------------  --------------  -------------- 
 Net cash (outflow)/inflow from financing activities            (621)           1,832 
-----------------------------------------------------  --------------  -------------- 
 Decrease in cash and cash equivalents                       (18,585)       (102,865) 
 Cash and cash equivalents at start of year                    19,867         126,713 
 Exchange movements                                             (107)         (3,981) 
-----------------------------------------------------  --------------  -------------- 
 Cash and cash equivalents at end of year(1)                    1,175          19,867 
-----------------------------------------------------  --------------  -------------- 
 
   (1)   Cash and cash equivalents includes liquidity funds . 

NOTES TO THE FINANCIAL STATEMENTS

   1.       General information 

The Company is a closed-ended investment company incorporated in accordance with the Companies (Guernsey) Law, 2008. The address of its registered office is at 1st Floor, Les Echelons Court, Les Echelons, South Esplanade, St Peter Port, Guernsey GY1 1AR.

The principal activity of the Company is investing in securities as set out in the Company's Objective and Investment Policies. The Company was incorporated on 22nd February 2019. The Company was admitted to the Main market of the London Stock Exchange and had its first day of trading was on 24th September 2019.

Investment objective

The Company will seek to provide Shareholders with stable income and capital appreciation from exposure to a globally diversified portfolio of core real assets.

Investment policy

The Company will pursue its investment objective through diversified investment in private funds or accounts managed or advised by entities within J.P. Morgan Asset Management (together referred to as 'JPMAM'), the asset management business of JPMorgan Chase & Co. These JPMAM Products will comprise 'Private Funds', being private collective investment vehicles, and 'Managed Accounts', which will typically take the form of a custody account the assets in which are managed by a discretionary manager.

2. Summary of significant accounting policies

   2.1     Basis of Preparation 
             (a)          Statement of compliance 

The Company's financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS'), which comprise standards and interpretations approved by the International Accounting Standards Board ('IASB'), the IFRS Interpretations Committee and interpretations approved by the International Accounting Standards Committee ('IASC') that remain in effect and The Companies (Guernsey) Law, 2008.

             (b)    Basis of accounting 

These financial statements have been prepared on a going concern basis in accordance with IAS 1, applying the historical cost convention, except for the measurement of financial assets including derivative financial instruments designated as held at fair value through profit or loss ('FVTPL') that have been measured at fair value.

All of the Company's operations are of a continuing nature.

   3.       Return/(loss) per share 
 
                                                      2022          2021 
                                                   GBP'000       GBP'000 
--------------------------------------------  ------------  ------------ 
 Total return/(loss)                                23,693      (12,730) 
 Weighted average number of shares in issue 
  during the year                              214,182,610   206,541,068 
--------------------------------------------  ------------  ------------ 
 Total return/(loss) per share                      11.06p       (6.16)p 
--------------------------------------------  ------------  ------------ 
 
   4.       Dividends 
 
                                                          2022      2021 
                                                       GBP'000   GBP'000 
----------------------------------------------------  --------  -------- 
 Dividends paid 
 2021/2022 First interim dividend of 1.00p (2021: 
  0.75p) per share                                       2,088     1,510 
 2021/2022 Second interim dividend of 1.00p (2021: 
  0.75p) per share                                       2,172     1,566 
 2021/2022 Third interim dividend of 1.00p (2021: 
  0.75p) per share                                       2,174     1,566 
 2021/2022 Fourth interim dividend of 1.00p (2021: 
  1.00p) per share                                       2,174     2,088 
----------------------------------------------------  --------  -------- 
 Total dividends paid in the year                        8,608     6,730 
----------------------------------------------------  --------  -------- 
 Dividend declared 
 2022/2023 First interim dividend declared of 1.00p 
  (2021: 1.00p)                                          2,174     2,088 
----------------------------------------------------  --------  -------- 
 
   5.       Net asset value per share 
 
                                        2022          2021 
------------------------------  ------------  ------------ 
 Shareholders funds (GBP'000)        206,589       183,517 
 Number of shares in issue       217,407,952   208,807,952 
------------------------------  ------------  ------------ 
 Net asset value per share             95.0p         87.9p 
------------------------------  ------------  ------------ 
 
   6.       Status of announcement 

2021 Financial Information

The figures and financial information for 2021 are extracted from the Annual Report and Financial Statements for the year ended 28th February 2021 and do not constitute the statutory accounts for the year. The Annual Report & Financial Statements includes the Report of the Independent Auditors which is unqualified.

2022 Financial Information

The figures and financial information for 2022 are extracted from the published Annual Report and Financial Statements for the year ended 28th February 2022 and do not constitute the statutory accounts for that year. The Annual Report and Financial Statements include the Report of the Independent Auditors which is unqualified.

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

1st July 2022

For further information:

Alison Vincent,

JPMorgan Funds Limited

020 7742 4000

S

A copy of the annual report will shortly be submitted to the FCA's National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

The annual report will shortly be available on the Company's website at www.jpmrealassets.co.uk where up-to-date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

JPMORGAN FUNDS LIMITED

APPIX

JARA - A cornerstone allocation to Global Core Real Assets

JARA seeks to provide shareholders with a cornerstone allocation to real assets through a portfolio which is diversified across real asset categories and geographies. JARA delivers this by accessing a number of JPMAM's institutional real asset strategies, focused on Infrastructure, Real Estate and Transport. These strategies are significant in scale with established, mature portfolios able to provide investors with predictable long term cashflows that are hard to access through the public markets. The scale and diversification of these strategies provides JARA's shareholders with access to geographies and investments not typically available to them in other real asset vehicles.

JARA predominantly allocates towards 'core' real assets, which have forecastable cash flows for long periods of time with a low margin of error. As such it is expected that a significant part of JARA's investment return will be derived from income and typically these cash flows are linked to high quality counterparties in developed, mostly OECD markets. This is in contrast with 'non-core' or value-add assets that tend to have a higher risk/higher return profile and a greater dispersion of returns.

As well as seeking to provide investors with a stable income, real assets can provide strong risk adjusted returns. Within the 2022 Annual Report is an analysis based on JPMAM's Long Term Capital Market Assumptions - an annual publication which provides a forward-looking view of asset class risk and returns over the next 10-15 years. The purple line shows the stock/bond efficient frontier and provides an illustration of the level of return and volatility which might be expected from a public markets' portfolio. The goal for investors is to maximise outcomes for a given level of volatility and, therefore, asset classes which sit above the efficient frontier are typically deemed to be accretive to investor portfolios as they offer a higher return for a given level of volatility. As detailed in the diagram in the 2022 Annual Report, real assets and, importantly, JARA sit above the stock/bond efficient frontier and therefore adding JARA into a portfolio should have an accretive impact on returns and efficiency.

It is also important to highlight how JARA compares to single real asset categories such as global infrastructure, global transport and region-specific real estate. Whilst JARA aims to deliver a similar total return to these asset classes its volatility is expected to be lower - making it a more efficient investment. This is driven by the uncorrelated nature of JARA's component investments. As such, JARA looks to benefit from a double layer of diversification as its dedicated real asset categories offer an uncorrelated return to public markets but also each other thereby reducing portfolio level volatility vs. any one single real asset category allocation. As noted in the next section, there is also significant opportunity for active asset allocation across the real asset market - something which JPMAM is well positioned to take advantage of for JARA's portfolio.

Benefits of active asset allocation

JPMAM has one of the world's leading alternatives platform with $215 billion+ in assets under management ('AUM') across the alternatives spectrum. Within this, real assets represent approximately $90 billion in AUM, the majority of which is focused on core, income producing assets (data as of 31st December 2021).

JARA's portfolio is managed by JPMAM's Alternatives Solutions Group ('ASG'); a team focused on designing, building and managing multi-alternatives solutions. The ASG team has over 25 years of experience in managing alternatives solutions and has the goal to bring 'more science and less art' to alternatives asset allocation and portfolio construction utilising top-down views and capital market assumptions with bottom-up market data from JPMAM's 300+ alternative investment professionals.

JARA therefore benefits from accessing these already scaled core strategies with a lower cost and lower exposure to any one geography, asset or regulatory risk. In addition, JARA has the ability to pivot exposures at the underlying strategy level - for example by underweighting or overweighting a certain sector or geography. It also benefits from ongoing active management from the ASG which looks to optimise returns by evolving the strategic asset allocation over time to take advantage of any new opportunities the market provides. Active asset allocation is fundamental to investing in the core real asset market given the wide variety of outcomes possible. To take advantage of this potential dispersion, the ASG look to actively allocate across different asset classes, whilst being mindful of the constraints which exist when investing in illiquid asset classes. This active asset allocation will be informed by our relative view of both income and total return achievable by each asset class within the medium to long term. The scale and global diversification of these strategies provides JARA's shareholders with access to deals they would be unable to access on their own.

Underlying strategies

 
 Infrastructure                                                  Transport                                                      Real Estate                                                     Listed Real Assets 
 
        *    Core/core+ infrastructure in OECD markets                 *    Yield-focused backbone transport assets with long          *    High quality real estate, across the U.S. and              *    Listed exposure across real estate, infrastructure 
                                                                            term leases with on average investment grade                    Asia-Pacific region                                             and transportation securities 
                                                                            counterparties 
                                                                -------------------------------------------------------------  --------------------------------------------------------------  ----------------------------------------------------------------- 
 
        *    Sectors focus on renewables, contracted power,            *    Providing income, uncorrelated returns and global         *    Core property sectors - logistics, residential,            *    Listed real estate includes all-tranche REIT approach 
             utilities and storage                                          exposure                                                       office and retail - in major growth markets with                whereby investment is also diversified into debt 
                                                                                                                                           attractive demographics targeting the most dynamic              securities 
                                                                                                                                           liquid gateway cities, which are important hubs fo 
                                                                                                                                     r 
                                                                                                                                           economic growth 
                                                                -------------------------------------------------------------  --------------------------------------------------------------  ----------------------------------------------------------------- 
 
       *    Platform investing approach allowing for long term         *    Maritime, energy logistics, aircraft, rail and fl          *    Exposed predominantly to industrial/logistics, 
            value creation                                            eet                                                                   multifamily and office 
                                                                            leasing 
                                                                -------------------------------------------------------------  --------------------------------------------------------------  ----------------------------------------------------------------- 
 

Exposure to global themes

Real assets are the building blocks of productive societies - offering places for people to work and shop; providing essential services such as electricity and water and helping transport people and goods around the globe. As such, they are fundamental to the way we live our lives and are linked to many of the global trends we experience in society every day.

Global trends within JARA's portfolio

 
                        Energy Transition                                             E-commerce Acceleration                                           Emerging Core Sectors                                              Awareness of Social 
                               10%                                                              24%                                                               6%                                                          Responsibility 
                                                                                                                                                                                                                                   100% 
 
        *    JARA has exposure to +6GW of renewable energy               *    JARA owns assets across the supply chain including         *    As the world evolves so will our definition of 'core'         *    All underlying strategies are fully ESG integrated 
                                                                              Logistics and Container ships                                   real assets 
                                                                  --------------------------------------------------------------  -----------------------------------------------------------------  -------------------------------------------------------------- 
 
       *    Exposure extends beyond just renewable energy assets          *    E-commerce trend magnified by COVID-19                     *    Examples include:                                             *    Strong GRESB ratings and UN SDG alignment 
            to other ancillary renewable sectors (e.g. wind farm 
            maintenance vessels) 
                                                                  --------------------------------------------------------------  -----------------------------------------------------------------  -------------------------------------------------------------- 
 

For illustrative purpose only. As of February 2022. Holdings and exposure may be subject to change from time to time. All investments might not be suitable for all investors. Provided for information only, not to be construed as offer, research or investment advice.

Similar to how the fallout from the global pandemic created and accelerated some of these themes, over time, JPMAM expects new, equally influential themes to become important to the real asset market. This may, for example, be in how real assets can help Europe increase its energy independence or help the digitisation of our lives.

In each case, JPMAM remains vigilant and excited to pursue new themes within the core real asset marketplace on behalf of JARA.

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July 04, 2022 02:00 ET (06:00 GMT)

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