TIDMJGGI
RNS Number : 0830B
JPMorgan Global Growth & Income PLC
29 September 2022
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN GLOBAL GROWTH & INCOME PLC
ANNOUNCEMENT OF FINAL RESULTS FOR THE YEARED 30TH JUNE 2022
Legal Entity Identifier: 5493007C3I0O5PJKR078
Information disclosed in accordance with DTR 4.2.2
JPMorgan Global Growth & Income plc (the 'Company')
announces its results for the year ended 30th June 2022.
CHAIRMAN'S STATEMENT
First, I would like to extend a warm welcome to all shareholders
in the Company. Many of you have been long-term investors in the
Company and I very much welcome those of you who previously held
shares in The Scottish Investment Trust PLC ('SCIN').
Combination with SCIN
The combination with SCIN, effected by way of a scheme of
reconstruction of SCIN, was completed on 1st September 2022,
following shareholders of both companies voting in favour of the
combination. This combination brings together two investment trust
companies with similar objectives that have both been in existence
since 1887. We look forward to providing our shareholders with the
benefits of economies of scale from the enlarged asset base, in
particular, an enhanced profile, greater liquidity in the Company's
shares and cost efficiencies.
On behalf of the Board, I would like to extend our thanks to our
Manager and our advisors for their support and diligence in
completing the Company's combination with SCIN.
Further details about the combination can be found in note 25 on
page 87 of the full 2022 Annual Report, which details the post
balance sheet date events. The financial information in this annual
report is as at 30th June 2022 and excludes the combination with
SCIN.
At the time of writing (at 26th September 2022), the net asset
value of your enlarged Company is GBP1,300,840,375.
FTSE 250 Index
The Board was pleased to note the Company's admittance into the
FTSE 250 Index in August 2022. This promotion marks another
milestone in our growth and recognises our sustained
performance.
Management and Performance Fees
In addition to the above combination, the Board agreed revised
management fee arrangements with JPMorgan, replacing the existing
management fee and performance fee structure with a tiered
management fee on the following basis:
-- 0.55% on net assets up to GBP750 million;
-- 0.40% on net assets between GBP750 million and GBP1.5 billion; and
-- 0.30% on net assets in excess of GBP1.5 billion.
The revised fee structure was implemented with effect from 1st
January 2022 and any performance fees accrued to that date have
been paid in full. No further performance fee is payable after 1st
January 2022.
Performance
During the year under review, the Company's total return on net
assets was -3.4% compared with the return on our benchmark, the
MSCI AC World Index (in sterling terms) of -4.2%, while the share
price produced a total return of -4.8%, reflecting the widening of
the share price discount from 1.1% premium to 2.4% discount over
the year. After delivering good performance during the first half
of the financial year, the second half presented a challenging
environment for equity investments. While this near-term
contraction in value is disappointing, it is to be expected given
the deterioration in global equity markets amid tightening
financial conditions, rising risks of recession and growing
inflation. The markets' reaction to Russia's invasion of Ukraine at
the beginning of the year, with significant increases in commodity
and energy prices has led to a steep rise in inflation. Our
Company's returns have also been impacted by these factors.
The performance attribution below analyses how the Company
achieved its performance relative to its Benchmark. The Investment
Managers' report that follows provides a detailed commentary on
these figures and discusses activity, performance and the market
outlook.
Dividend Policy
The Company's dividend policy has now been in place for over six
years. As a reminder, the dividend policy aims to pay, in the
absence of unforeseen circumstances, dividends totalling at least
4% of the NAV of the Company as at the end of the preceding
financial year. Where, in the view of the Board, the target
dividend is likely to result in a dividend yield that is materially
out of line with the wider market, the Board may choose to set the
target dividend at a different level that is more in-line with the
wider market and other global income trusts and funds. The Company
has the ability to pay dividends out of capital and does currently
pay its dividends, in part, out of its realised capital
profits.
The Board announced on 1st July 2022 that, in relation to the
year commencing 1st July 2022, the Company intends to pay dividends
totalling 17.00 pence per share (4.25 pence per share per quarter),
which represents a small increase from the last financial year's
total dividend of 16.96 pence per share. It is expected that the
dividends will be paid by way of four equal distributions. The
first interim dividend for the financial year ending 30th June 2023
of 4.25 pence per share (for the period to 30th September 2022),
was declared on 1st July 2022 and will be paid on 7th October 2022
to shareholders on the register at the close of business on 2nd
September 2022. The ex-dividend date was 1st September 2022.
Performance attribution
Year ended 30th June 2022
% %
---------------------------------------------------- ----- -----
Contributions to total returns
---------------------------------------------------- ----- -----
Benchmark Total Return -4.2
---------------------------------------------------- ----- -----
Asset allocation 0.0
---------------------------------------------------- ----- -----
Stock selection 2.0
---------------------------------------------------- ----- -----
Currency effect 0.2
---------------------------------------------------- ----- -----
Gearing/cash -0.9
---------------------------------------------------- ----- -----
Investment Manager contribution 1.3
---------------------------------------------------- ----- -----
Portfolio total return -2.9
---------------------------------------------------- ----- -----
Management fees/other expenses -0.6
---------------------------------------------------- ----- -----
Performance fee*
---------------------------------------------------- ----- -----
Net asset value total return - prior to structural
effects -3.5
---------------------------------------------------- ----- -----
Structural effects
---------------------------------------------------- ----- -----
Share buy-back/issuance 0.1
---------------------------------------------------- ----- -----
Net Asset Value Total Return - Debt at Par -3.4
---------------------------------------------------- ----- -----
Impact of Fair Value Valuation of Debt 1.9
---------------------------------------------------- ----- -----
Net Asset Value Total Return - Debt at Fair -1.5
---------------------------------------------------- ----- -----
Return to Shareholders -4.8
---------------------------------------------------- ----- -----
Source: JPMAM and MorningStar. All figures are on a total return
basis.
Performance attribution analyses how the Company achieved its
recorded performance relative to its benchmark index.
* Until 31st December 2021, a performance fee was payable by the Company to the Manager.
With effect from 1st January 2022, no performance fee accrues or
is payable to the Manager with respect to any period from 1st
January 2022.
Share Issuance and Repurchases
The Company's shares continued to trade close to, or at a small
premium to NAV during the year and we were able to reissue from
Treasury the remaining 3,776,215 shares for a total consideration
of GBP16,694,193. A block listing on the main market of 15 million
Ordinary shares of the Company was secured in August last year. The
Company further issued 11,180,785 new Ordinary shares for a total
consideration of GBP50,194,157 up to 30th June 2022. Since then,
our shares continued to trade at a premium to NAV over a period of
time, allowing us to issue 2,473,000 new Ordinary shares for a
total consideration of GBP10,867,549.
As part of the combination with SCIN, 133,919,647 new Ordinary
shares were also issued and admitted to listing on 1st September
2022. Following this, the total number of Ordinary shares in issue
is 302,478,932 at the time of writing.
As resolutions renewing the Director's authorities to issue new
Ordinary shares and Ordinary shares from Treasury, in both cases at
a premium to NAV, and to disapply pre-emption rights over such
issues, were passed at the Company's General Meeting held on 30th
August 2022, the Company is not seeking renewal of these
authorities at the forthcoming Annual General Meeting ('AGM').
A resolution to renew the authority to permit the Company to
repurchase its own shares will be proposed at the Company's
forthcoming AGM on 3rd November 2022.
Since the year end, the Company has made applications to the
Financial Conduct Authority and the London Stock Exchange for a new
block listing on the main market of 15 million Ordinary shares of
the Company. The block listing is expected to become effective at
8:00a.m. on 3rd October 2022.
Debt and Gearing
The Company's policy on borrowing is set by the Board and
remains unchanged following the combination with SCIN.
Gearing is regularly discussed between the Board and the
Investment Managers. In 2018, the Company issued GBP30 million
fixed rate 30 year unsecured notes at an annual coupon of 2.93%. On
12th March 2021, the Company issued a further GBP20 million of
fixed rate 15 year unsecured notes at an annualised coupon of
2.36%. After the issuance of these notes, the Company's total notes
amounted to GBP50 million as at 30th June 2022.
There has been no change in the permitted gearing range, as
previously set by the Board, which limits gearing within the range
of 5% net cash to 20% geared in normal market conditions.
At the start of the reporting period, the gearing level was 0.2%
and increased to 1.1% at the end of the year under review. During
the year, gearing varied between 3.1% geared and 2.5% cash.
As part of the combination with SCIN, the Company has been
substituted as issuer and sole debtor of the SCIN Bonds of which
GBP82,827,000 in aggregate principal amount remain outstanding.
Following the substitution, the SCIN Bonds remain listed and traded
on the London Stock Exchange.
At the time of writing (at 26th September 2022), the gearing
level stands at 2.6%.
Purchase of GBP200,000 secured 4.5% Perpetual Debenture
As announced on 8th March 2022, the Company purchased GBP196,708
of its indenture stock from a large institutional investor
representing 98.35% of the issue. This was conducted at a price of
154.81 pence compared to the par value of 100 pence. The Board
decided it would be prudent given the combination with SCIN to
redeem the debenture as an effort to simplify the Company's balance
sheet going into the transaction. This redemption was achieved at a
level that was accretive to the Company and so was viewed as a
further benefit to the Company and its shareholders.
Following this purchase, there remains 1.65% of the issue
outstanding across two minority investors, both of whom have been
offered the same terms for redemption.
Currency Hedging
The Company continues its passive currency hedging strategy
(implemented in late 2009) that aims to make stock selection the
predominant driver of overall portfolio performance relative to the
Benchmark. This is a risk reduction measure, designed to eliminate
most of the differences between the portfolio's currency exposure
and that of the Company's Benchmark. As a result the returns
derived from, and the portfolio's exposure to currencies may differ
materially from, that of the Company's competitors, who generally
do not undertake such a strategy.
The Board
The Board composition has expanded following the combination
with SCIN to consist currently of eight members. I am pleased to
welcome James Will, Jane Lewis, Mick Brewis and Neil Rogan, who
were each appointed to the Board on 1st September 2022. This
expansion ensures that both sets of shareholders are fully
represented during the initial stages of the combination. It is our
intention to continue this approach to provide continuity. However,
to manage the size of the Board, James Will and Gay Collins will
both subsequently retire from the Board at the conclusion of the
Company's Annual General Meeting to be held on 3rd November 2022.
Gay has also exceeded her nine-year tenure on the Board and will
therefore not be seeking re-election to the Board.
Sarah Whitney will continue as Chair of the Audit &
Management Engagement Committee and as Chair of the Remuneration
Committee. It is intended that Jane Lewis will take over the
responsibilities as Senior Independent Director upon Gay's
retirement. I remain as Chairman of the Nomination Committee.
The Board is conscious of the increased focus on diversity and
recognises the value and importance of diversity in the boardroom.
No Directors are from a minority ethnic background. The appointment
of Jane Lewis maintains the female representation on the Board
following Gay's retirement from the Board at the conclusion of the
forthcoming AGM of the Company on 3rd November 2022.
The Board supports the overall recommendations of the FTSE Women
Leaders Review, which continues the work of the Hampton-Alexander
and Davies Reviews that came before it and the Parker Report.
However, with the enlarged composition, and for continuity over the
coming years following the SCIN combination, it is not seen to be
in the best interests of the Company and its shareholders to set
prescriptive diversity targets for the Board at this point. As we
refresh the Board in the future, as well as ensuring that we have a
diverse range of individuals with the necessary skills and
knowledge, we will aim to achieve a more ethnically diverse Board
and with female representation to meet the recommendations of the
FTSE Women Leaders Review.
All directors, with the exception of Gay Collins and James Will
are subject to election or re-election at the forthcoming Annual
General Meeting on 3rd November 2022.
I would like to take this opportunity to thank Gay for her
valuable contributions and wise counsel during her tenure as a
Director and also to James for his invaluable support during the
Company's combination with SCIN and subsequent period on the Board
assisting with the integration of the companies.
Annual General Meeting
The Company's one hundred and thirty-fifth AGM will be held at
60 Victoria Embankment, London EC4Y 0JP London at 2.30 p.m. on 3rd
November 2022.
We are delighted that this year we will once again be able to
invite shareholders to join us in person for the Company's AGM, to
hear from the Investment Managers. Their presentation will be
followed by a question and answer session. For shareholders wishing
to follow the AGM proceedings but choosing not to attend, we will
be able to welcome you through conferencing software. Details on
how to register, together with access details, will be available on
the Company's website: www.jpmglobalgrowthandincome.co.uk or by
contacting the Company Secretary at
invtrusts.cosec@jpmorgan.com.
As is best practice, all voting on the resolutions will be
conducted on a poll. Please note that shareholders viewing the
meeting via conferencing software will not be able to vote on the
poll and we therefore encourage all shareholders, and particularly
those who cannot attend physically, to exercise their votes in
advance of the meeting by completing and submitting their
proxy.
Your Board encourages all shareholders to support the
resolutions proposed.
If there are any changes to the above AGM arrangements, the
Company will update shareholders through the Company's website and
an announcement on the London Stock Exchange.
Outlook
Let me say in conclusion that after a strong 2021, 2022 has been
a difficult year to date for equity markets with rising concerns
about elevated inflation, central bank tightening and the terrible
devastation of Russia's invasion of Ukraine, causing significant
volatility.
Concerns over rising inflation have led to increased bond yields
and a severe de-rating in the valuation of growth companies,
despite often strong underlying operational and financial
performance. The direction of monetary policy is invariably a key
determinant of the outlook for markets.
Central banks continue to deliver further interest rate rises,
as anticipated given inflationary pressures. Global equity and
fixed income markets rebounded in July as weaker activity data
tempered expectations for further central bank tightening and Q2
earnings releases were better than feared. This said, the going is
likely to get tougher for companies, faced with rising costs on the
one hand and the removal of government support measures on the
other, and hence we expect profit warnings and corporate failures
to increase in the next 12 months.
In the shorter term we could well see increasing market
volatility in a deteriorating global growth backdrop, with elevated
inflation and risks to energy supply in Europe. However, we are
inclined to view this prospect as a period of turbulence likely to
provide attractive opportunities for our type of fundamental,
longer term investment approach.
The Board is confident that the Investment Managers are well
positioned to identify appropriate investment opportunities around
the world and remain flexible to adjust the portfolio composition
as they navigate market volatility, which is expected to remain
high given investor sensitivity to inflation and the impact of
tightening financial conditions against a weakening demand
backdrop.
We believe that the Company's portfolio is well placed to
deliver good performance over the longer term. The team has an
excellent track record and we are optimistic that their disciplined
approach will continue to generate good value for shareholders.
Tristan Hillgarth
Chairman 28th September 2022
INVESTMENT MANAGERS' REPORT
Over the past financial year ended 30th June 2022, your
Company's net asset value outperformed its Benchmark, the MSCI All
Country World Index. While the Benchmark was down 4.2%, our
portfolio declined by 3.4%. While this near-term contraction in
value is disappointing, we invest for the long term and on this
basis, the Company has delivered strongly positive absolute and
relative returns, outperforming its Benchmark over three years and
beyond. Over the past three years, the Company has made average
annualised returns of 10.7%, 2.8 percentage points above the
average annualised Benchmark return of 7.9%, while over ten years,
average annualised returns were 12.9%, compared to a Benchmark
return of 11.6%.
In this report we discuss the drivers of recent performance, the
market outlook for the coming year and the ways in which we have
positioned the portfolio to continue benefiting from long-term
structural trends, while withstanding the risks posed by the many
prevailing uncertainties.
A Period of Consolidation
The past two years have been exceptional in many ways. For
financial markets, perhaps the most unexpected development was the
strong equity market rebound following the initial days of the
pandemic. This rally was driven in no small part by extraordinarily
generous stimulus from central banks and governments. Not
surprisingly, we are now dealing with the repercussions of this
largesse, which has added to upward pressures on inflation and
interest rates. After such a strong rally, a period of
consolidation is to be expected, although this does not preclude
intermittent volatility and periods of equity market weakness, as
we have seen in recent months. The valuations of higher growth
companies have been under particular pressure.
Performance Review and Spotlight on Stocks
However, we always view any such volatility as an opportunity to
buy companies with compelling long term growth prospects, at more
attractive prices. In this instance, we chose to concentrate on
higher growth companies with large addressable markets and multiple
growth channels, that are already generating significant free cash
flow. We avoided the more speculative parts of the market. For
example, we added to positions in companies such as Amazon, on
weakness, but steered clear of all companies within the software
sector, with the exception of Microsoft. We also maintained or
increased our positions in cyclical names that we felt showed the
most potential for earnings growth, thanks to their exposure to the
reopening of economies after the pandemic subsided. We found
opportunities in companies in several sectors, including
restaurants (McDonalds), and travel-related businesses (Booking and
Marriott). As pandemic-related hospitalisations declined, hospitals
were able to resume elective surgeries, re-igniting demand for
products such as hip and knee replacements. We added to our
position in Zimmer Biomet accordingly.
Our careful attention to valuations, and the opportunities
generated by a return to more normal life, ensured that stock
selection continued to be the primary driver of your Company's
outperformance over the past year. The top contributor to returns
was Novo Nordisk, a Danish pharmaceutical company whose
ground-breaking obesity treatment, Wegovy, has received widespread
acclaim. In our view, the market opportunity for this drug is
valued in tens of billions of dollars. In addition, Novo Nordisk's
core diabetes business continues to go from strength to strength.
It has only one competitor in this field, Eli Lilly, and we expect
this fast-growing market to be a profitable duopoly for many years
to come. Novo Nordisk's strong share price performance led us to
trim the position size, but we continue to own the name, which we
favour over Eli Lily given our belief in their opportunities in
this market.
Novo Nordisk was not the only healthcare company to contribute
to performance over the review period. In fact, the Pharma/MedTech
sector added the most value over the past year, thanks in further
part to significant contributions from our positions in US drug
manufacturers Bristol-Myers and AbbVie. Both these companies are
subject to some controversy, and investors have doubts around the
durability of their core franchises and competition positions once
existing patents expire. We acknowledge that these companies face
some risks, but in our view, the market does not fully appreciate
either their capacity for cash flow generation over the next few
years, or the potential value of their product pipelines. In the
case of Bristol-Myers, the 2019 acquisition of Celgene, a US
pharmaceutical company specialising in cancer and immunology drugs,
added a number of exciting pipeline assets, not just in oncology,
where Bristol has historically been strong, but also in new
therapeutic areas like hematology (the treatment of blood
disorders). We continue to own both Bristol-Myers and AbbVie.
The software sector was the second highest contributor to
returns at the sector level over the past year, thanks entirely to
our exposure to Microsoft, which was the third largest contributor
to performance at the stock level. We continue to like this
company, which has two powerful growth drivers. Firstly, its Office
business has one of the stickiest user bases of any product, and we
believe its revenue base will continue to grow, reaching $100
billion by the end of the decade. The second source of future
growth is Microsoft's public cloud business, Azure, which, along
with Amazon Web Services and Google Cloud, is poised to see
exceptional expansion in the coming decade. Data consumption is
only going to accelerate, and all three of these businesses will
see significant growth in demand for both infrastructure and
additional services. As noted above, we added to our position in
Amazon over the review period, currently preferring it to Google as
we control our exposure in advertising-related names.
At the stock level, the fast food operator McDonalds was another
strong positive contributor. As we anticipated, this company
benefited from the economic reopening, as consumers returned to
casual dining away from home. An additional attractive feature of
the stock is that McDonalds is largely a franchised business. This
insulates the company from inflationary pressures, because revenue
is driven by the franchise fee, rather than the proceeds of owning
and operating the restaurants directly. The company continues to
execute well, and we see this as an excellent asset to own in a
period of higher inflation.
Of course, not every portfolio holding will always contribute
positively to performance, and over the past financial year, the
largest detractor from performance at the stock level was Lyft, the
US ride sharing company. This company has seen a reversal of
fortunes over the past year. This time last year, it was the
largest contributor to performance for the financial year ended
30th June 2021 (FY21) and we wrote of our confidence in Lyft's
prospects. As part of a duopoly with Uber in the US ridesharing
market, we felt Lyft was uniquely positioned to generate excellent
margins in coming years. However, our expectations have been
disappointed and the company's contribution to performance during
FY21 was more than offset by losses in the past year. There were
several reasons behind Lyft's share price decline. It has only
recently reached profitability, so it was punished by the market in
the past year's selloff of unprofitable companies. Downward
pressure on the share price was compounded by execution issues -
while Uber invested in driver supply early in the economic
re-opening, in anticipation of a recovery in demand for rides, Lyft
failed to do so, and as a result, its recovery lagged. This
triggered concerns that Lyft's market share would undershoot
previous forecasts. So, while we are very positive in the outlook
for the rideshare market, our concerns over execution led us to
exit Lyft, and purchase Uber instead. We like Uber's more
consistent delivery, and we believe it has more potential routes to
profitability, including the food delivery and freight
businesses.
Adidas, the German sportwear retailer, also detracted from
performance over the review period. As with Lyft, our confidence in
this company deteriorated to such an extent that we felt it no
longer belonged in a best ideas portfolio. Adidas has faced
particular challenges in China, where consumers are moving towards
local brands. We grew increasingly concerned that the company was
underinvesting in products that would appeal to Chinese consumers.
The scale of the potential opportunity in China was an important
pillar of our initial investment case for Adidas, but with question
marks over that, we felt it was prudent to redirect capital
elsewhere, so we closed our position.
Our decision not to own either Apple or Tesla also detracted
from returns over the past year, as these two names have
particularly large weightings in the Benchmark, and both performed
well over the last 12 months. However in both instances, we believe
that there are better opportunities elsewhere over the longer-term.
Apple is an exceptional company, and demand for iPhones increased
during the pandemic, as people sought to improve their
connectivity. However, this brought forward future demand, at least
to some extent, suggesting new iPhone sales will weaken in the near
term. In addition, we believe Apple cannot maintain the recent pace
of price increases of its iPhone range. Given the potential for
sales growth to turn negative in coming quarters, and with no new
products on the horizon to stimulate fresh demand, we prefer to own
other companies within the Technology sector.
In the case of Tesla, the company has done a fantastic job of
executing in the past few years, but we believe its current
valuation is excessive given the various challenges it faces.
Indeed, the company will have to open between two and three new
manufacturing plants every year for the next decade to reach a
market share that justifies the current valuation, and we think
this is unlikely, despite its execution capabilities. With
increasing competition in the electric vehicle space, we prefer to
own other auto manufacturers such as Honda, where valuations are
much more attractive.
At the sector level, not owning Apple was the primary reason why
the Semiconductor/Hardware sector had the greatest adverse impact
on returns over the year. However, our exposure to other
Semiconductor names also detracted, as concerns over economic
growth, as well as concerns over a pending build-up of inventory,
meant a number of our holdings saw a significant pullback. Despite
these near-term issues, companies like the Netherland's NXP
Semiconductors have strong structural tailwinds, thanks to the
anticipated increase in the semiconductor content in vehicles over
the next decade, so we are comfortable using this share price
weakness as an opportunity to add to our positions.
Portfolio Positioning and Outlook
The macroeconomic outlook is always a key consideration for us
as we seek to build a portfolio that we believe will generate
strong performance. At present, economic and political uncertainty
is probably greater than at any other time during our careers.
Persistent, historically high inflation is being compounded by the
war in Ukraine. Central banks are responding with unusually
aggressive interest rate increases, which risk driving major
economies into recession. Investors are also increasingly nervous
about escalating tensions between China and the west, over China's
ambitions to reclaim Taiwan.
At times like these, it is important to remember lessons from
previous crises, while at the same time understanding the
limitations of historical comparisons. As Mark Twain said, "History
never repeats itself, but it does often rhyme". The similarities
thus far between the current situation and previous episodes of
extreme economic and financial market uncertainty appear to include
the elevated valuations of 'defensive' companies, that can maintain
earnings and dividends in challenging times, combined with a
pullback in more economically sensitive cyclical companies.
However, unlike in previous periods, we have not yet seen any
easing in current, historically tight labour markets. Nor have we
seen the negative earnings revisions we would typically expect
given the current climate.
Time will tell just how much this period will rhyme with the
past, but in the meantime we believe it is prudent for us to focus
on our strengths. As proven by our most recent, and longer-term
performance, our expertise lies in the bottom-up selection of
stocks with positive future prospects, and we maintain our search
for such companies regardless of near-term market conditions. We
are supported in this process by our research team, whose detailed
knowledge of companies and industries provides the insights that
underpin our investment decisions.
In such uncertain times, it is equally important to ensure that
the portfolio is not overly reliant on any individual macroeconomic
outcome. 'Balance' is the word that we have used most often
recently to describe the 'shape' of the portfolio, and in practice
that means identifying the best opportunities across a range of
sectors - some defensive, some more cyclical - but all capable, in
our view, of generating strong performance regardless of the
trajectory of the economy over the next 12 months.
One example of our efforts to balance the portfolio is the
recent change to our positioning in Japan. In the past few years we
have struggled to find many compelling Japanese investments, and
this meant that the portfolio was usually about 4% underweight to
Japan. More recently though, we have moved to a neutral weighting.
This decision was motivated in part by the fact that the valuations
of high-quality Japanese cyclicals reached attractive levels,
compared to their global peers. Historically, higher quality
Japanese stocks have tended to trade at a significant premium to
their foreign counterparts and competitors, but this premium almost
completely eroded in the first months of 2022. The yen's recent
weakness has also increased the appeal of Japanese equities. The
yen has depreciated by around 30% from its pre-pandemic levels, but
we expect this weakness to be a short-term phenomenon. If we are
correct, the yen's revaluation will generate a sizeable tailwind
for UK investors in coming years. Japanese names that we purchased
include Bridgestone, a premium tyre manufacturer, Keyence, an
industrial company that manufactures sensors and measuring
instruments, and Tokyo Electron, a producer of semiconductor
manufacturing machines.
As discussed above, recent market volatility has also provided
us with opportunities to add other new names (as well as top up
existing positions) that we feel have been punished excessively in
the market selloff, despite their favourable longer term prospects.
We have focused on companies that have a history of executing well,
but have some shorter-term issues that we expect to be resolved
with time. One such new acquisition was Uber (mentioned above),
whose guidance of $5 billion of EBITDA in 2024 is likely to prove
conservative. We also opened a new position in Deere, the US
agricultural equipment manufacturer. Deere has invested a
significant amount in developing their 'Precision Agriculture'
solution, which aims to give farmers higher crop yields at lower
cost. By connecting their entire farms to the cloud, this product
offering allows farmers to utilise data in innovative ways that
facilitate more efficient seed placement and fertiliser
distribution. We believe this will prove to be a powerful driver of
growth for Deere in the coming decade.
To fund these purchases, we have reduced or closed positions
where fundamentals are deteriorating or valuations are no longer
attractive. The Consumer Staples sector displayed both of these
characteristics, and as a result we sold Coca Cola and Procter
& Gamble, the US household and personal products supplier.
While both companies are very well run, we think they will be
forced to raise prices to cover rising costs, and this will erode
demand and margins. Both companies also have stretched valuations,
so we have chosen to prioritise other names. Deteriorating
fundamentals were also the motivation for the disposal of Lyft and
Adidas, as discussed above.
We have kept gearing relatively tightly controlled, edging it up
only slightly to around 2%. We believe this to be an appropriate
level as we weigh significant macroeconomic uncertainty against the
interesting investment opportunities we see at the stock level.
Valuation spreads, which measure the gap between the cheapest and
most expensive names in the market, are currently wide relative to
history, which typically signals buying opportunities. However any
decision to alter the level of gearing will be depend on the
macroeconomic data released over coming months.
This year brought news of the combination with the Scottish
Investment Trust, which completed on 31st August 2022. There will
be no change to our investment process as a result of this
transaction. However, we are excited about the benefits it brings
for both our existing and new shareholders, namely a reduction in
fees and increased liquidity, and we look forward to a partnership
with our new shareholders that is as fruitful as the one we
currently enjoy with existing shareholders.
As always, we appreciate your continued support. Current
uncertainties are likely to persist over the coming year, but we
invest for the long term, and we believe our portfolio is now
well-positioned to weather any further volatility, so we urge you
to stay invested through any future difficult periods, in order to
realise the returns and outperformance we are confident our
portfolio will deliver over time.
Helge Skibeli
Rajesh Tanna
Tim Woodhouse
Investment Managers 28th September 2022
PRINCIPAL AND EMERGING RISKS
The Directors confirm that they have carried out a robust
assessment of the principal and emerging risks facing the Company,
including those that would threaten its business model, future
performance, solvency or liquidity.
With the assistance of the Manager, the Audit & Management
Engagement Committee maintains a risk matrix which identifies the
principal risks to which the Company is exposed and methods of
mitigating against them as far as practicable. The 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 &
Management Engagement Committee to put in place procedures to
identify emerging risks. At each meeting, the Board considers
emerging risks which it defines as potential trends, sudden events
or changing risks which are characterised by a high degree of
uncertainty in terms of occurrence probability and possible effects
on the Company. As the impact of emerging risks is understood, they
may be entered on the Company's risk matrix and mitigating actions
considered as necessary. During the year, the directors agreed that
the changing macroeconomic environment, exacerbated by the Russian
invasion of Ukraine, and global inflation and the impact on markets
were identified as emerging risks to the Company. These emerging
risks and the impact to the Company were evaluated and subsequently
considered to be principal risks facing the Company.
Movement
in risk
status in
year to
Principal Description Mitigation/Control 30th June
risk 2022
-------------------------------------- ---------------------------------------- ----------
Investment Poor implementation of the The Board reviews investment ->
and Strategy investment strategy, for example strategy. The Board manages
as to thematic exposure, sector these risks by diversification
allocation, stock selection, of investments through its
undue concentration of holdings, investment restrictions and
factor risk exposure or the guidelines which are monitored
degree of total portfolio and reported by the Manager.
risk, may lead to underperformance The Manager provides the Directors
against the Company's Benchmark with timely and accurate management
index and peer companies, information, including performance
resulting in the Company's data and attribution analyses,
shares trading on a wider revenue estimates, liquidity
discount to NAV per share. reports and shareholder analyses.
The Board monitors the implementation
and results of the investment
process with the Investment
Managers, who attend all Board
meetings, and reviews data
which show statistical measures
of the Company's risk profile.
The Investment Managers employ
the Company's gearing within
a strategic range set by the
Board. The Board may hold
a separate meeting devoted
to strategy each year.
-------------------------------------- ---------------------------------------- ----------
Market The investments of the Company This risk is managed to some
and their pricing are subject extent by diversification
to the risk of changes in of investments and by regular
market prices and/or macroeconomic communication with the Manager
factors, including those factors on matters of investment strategy
arising as a result of the and portfolio construction
current conflict in Ukraine which will directly or indirectly
which, in addition to its include an assessment of these
impact on human lives and risks. The Board receives
livelihoods, is beginning regular reports from the Manager
to have an impact on the global regarding market outlook and
economy, ranging from decreases gives the Investment Mangers
to supply (and/or increases discretion regarding acceptable
to the costs) of goods to levels of gearing and/or cash.
increases (and increased volatility) The Board monitors the implementation
in oil and gas prices and and results of the investment
inflation. In addition, the process with the Manager.
Company's investments are
subject to risks arising from
inflation driven by the knock-on
effects of ongoing COVID related
disruptions to global supply
chains, central bank stimulus
and/or underinvestment in
critical industries and services.
These risks represent the
potential loss the Company
might suffer through holding
investments in the face of
negative market movements.
-------------------------------------- ---------------------------------------- ----------
Accounting, In order to qualify as an The Section 1158 qualification ->
Legal investment trust, the Company criteria are continually monitored
and Regulatory must comply with Section 1158 by the Manager and the results
of the Corporation Tax Act reported to the Board each
2010 ('Section 1158'). Details month. The Company must also
of the Company's approval comply with the provisions
are given under 'Structure of the Companies Act 2006
of the Company' within the and, since its shares are
Business Review section above. listed on the London Stock
Were the Company to breach Exchange, the FCA Listing
Section 1158, it might lose Rules and Disclosure, Guidance
investment trust status and, and Transparency Rules ('DTRs').
as a consequence, gains within A breach of the Companies
the Company's portfolio could Act 2006 could result in the
be subject to Capital Gains Company and/or the Directors
Tax. being fined or the subject
of criminal proceedings. Breach
of the FCA Listing Rules or
DTRs could result in the Company's
shares being suspended from
listing, which in turn would
breach Section 1158. The Board
relies on the services of
its Company Secretary to ensure
compliance with the Companies
Acts and the FCA Listing Rules
and DTRs.
-------------------------------------- ---------------------------------------- ----------
Operational Loss of key staff by the Manager, The Manager takes steps to ->
and Cyber their expertise and ability reduce the likelihood of such
Crime to source and advise appropriately an event by ensuring appropriate
on investments, could affect succession planning and the
the performance of the Company. adoption of a team based approach,
Disruption to, or failure as well as ensuring the team
of, the Manager's accounting, are appropriately remunerated
dealing or payments systems and incentivised in this role.
or the depositary's or custodian's On 1st July 2014, the Company
records could prevent accurate appointed the Bank of New
reporting and monitoring of York Mellon (International)
the Company's financial position. Limited to act as the depositary,
The threat of cyber attack responsible for overseeing
is regarded as at least as the operations of the custodian,
important as more traditional JPMorgan Chase Bank, N.A.,
physical threats to business and the Company's cash flows.
continuity and security. Details of how the Board monitors
In addition to threatening the services provided by the
the Company's operations, Manager and its associates
such an attack is likely to and the key elements designed
raise reputational issues to provide effective internal
which may damage the Company's control are included with
share price and reduce demand the Risk Management and Internal
for its shares. Control section of the Corporate
Governance report. The threat
of cyber attack, in all its
guises, is regarded as at
least as important as more
traditional physical threats
to business continuity and
security.
The Company benefits directly
and/or indirectly from all
elements of JPMorgan's Cyber
Security programme. The information
technology controls around
the physical security of JPMorgan's
data centres, security of
its networks and security
of its trading applications
are tested by independent
auditors and reported every
six months against the AAF
Standard.
-------------------------------------- ---------------------------------------- ----------
Going Pursuant to the Sharman Report, Going concern is considered ->
concern Boards are now advised to rigorously on an ongoing basis
consider going concern as and the Board's statement
a potential risk, whether on going concern is detailed
or not there is an apparent on page 51 of the Annual Report.
issue arising in relation
thereto.
-------------------------------------- ---------------------------------------- ----------
Financial The financial risks faced Further details are disclosed ->
by the Company include market in note 23 on pages 84 to
price risk, interest rate 86 of the Annual Report.
risk, liability risk and credit
risk.
-------------------------------------- ---------------------------------------- ----------
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 other
that can arise from a pandemic. key service providers.
There is the risk that emergent The effectiveness of these
strains may not respond to measures has been assessed
current vaccines and maybe throughout the course of the
more lethal and that they COVID-19 pandemic and the
may spread as global travel Board will continue to monitor
increases. developments as they occur
and seek to learn lessons
which may be of use in the
event of future pandemics.
To date the portfolio's holdings
have not exhibited a material
long-term impact and have
recovered as the containment
measures eased, although the
pandemic has yet to run its
course.
-------------------------------------- ---------------------------------------- ----------
Climate Climate change is one of the The Manager's investment process
Change most critical issues confronting integrates consideration of
asset managers and their investors. environmental, social and
Climate change may have a governance factors into decisions
disruptive effect on the business on which stocks to buy, hold
models and profitability of or sell. This includes the
individual investee companies, approach investee companies
and indeed, whole sectors. take to recognising and mitigating
The Board is also considering climate change risks. In the
the threat posed by the direct Company's and Manager's view,
impact of climate change on companies that successfully
the operations of the Manager manage climate change risks
and other major service providers. will perform better in the
long-term. Consideration of
climate change risks and opportunities
is an integral part of the
investment process. The Manager
aims to influence the management
of climate related risks through
engagement and voting and
is a participant of Climate
Action 100+ and a signatory
of the United Nations Principles
for Responsible Investment.
-------------------------------------- ---------------------------------------- ----------
Inflation Rising levels of inflation There is little direct control
in the medium term (with a of risk possible. The Manager
domino effect on valuations seeks to diversify the global
and/or growth) could lead equity portfolio with appropriate
to depressed levels of demand asset allocation and the application
and market volatility. of relevant policies on gearing
and liquidity.
-------------------------------------- ---------------------------------------- ----------
Geopolitical Geopolitical Risk is the potential There is little direct control
Risk for political, socio-economic of risk possible. However,
and cultural events and developments it can be managed to some
to have an adverse effect extent by diversification
on the value of the Company's of investments and by regular
assets. communication with the Manager
The Company and its assets on matters of investment strategy
may be impacted by geopolitical and portfolio construction
instability, in particular which will directly or indirectly
concerns over global economic include an assessment of these
growth. The crisis in Ukraine risks.
has already affected energy The Board can, with shareholder
and commodity markets and approval, amend the investment
may cause further damage to policy and objectives of the
the global economy. Company to gain exposure to
The ongoing conflict between or mitigate the risks arising
Russia and Ukraine has heightened from geopolitical instability
the possibility that tensions although this is limited if
will spill over and intensify it is truly global.
geo-political unrest between
other countries sharing a
common border.
-------------------------------------- ---------------------------------------- ----------
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
Details of the management contract are set out in the Directors'
Report on page 42 of the Annual Report. The management fee payable
to the Manager for the year was GBP3,299,000 (2021: GBP2,308,000)
of which GBPnil (2021: GBPnil) was outstanding at the year end.
A performance fee charge of GBPnil (2021: GBP5,967,000) is
applicable for the year and GBPnil (2021: GBP1,618,000) is
immediately payable. An amount of GBPnil (2021: GBP4,728,000) is
carried forward.
During the year GBP14,000 (2021: GBPnil) was payable to the
Manager for administration of savings scheme products, of which
GBPnil (2021: GBPnil) was outstanding at the year end.
Included in administration expenses in note 6 on page 73 of the
Annual Report are safe custody fees amounting to GBP32,000 (2021:
GBP29,000) payable to JPMorgan Chase Bank N.A. of which GBP4,000
(2021: GBP18,000) was outstanding at the year end.
The Manager may carry out some of its dealing transactions
through group subsidiaries. These transactions are carried out at
arm's length. Commission amounting to GBPnil (2021: GBPnil) was
payable to JPMorgan Securities Limited for the year of which GBPnil
(2021: GBPnil) was outstanding at the year end.
Handling charges on dealing transactions amounting to GBP21,000
(2021: GBP19,000) were payable to JPMorgan Chase Bank, N.A. of
which GBP5,000 (2021: GBP11,000) was outstanding at the year
end.
The Company holds cash in the JPMorgan Sterling Liquidity Fund,
which is managed by JPMF. At the year end this was valued at
GBP34.0 million (2021: GBP47.6 million). Interest amounting to
GBP146,000 (2021: GBP21,000) was receivable during the year of
which GBPnil (2021: GBPnil) was outstanding at the year end.
Fees amounting to GBP13,000 (2021: GBP28,000) were receivable
from securities lending transactions during the year. JPMorgan
Chase Bank, N.A. commissions in respect of such transactions
amounted to GBP1,000 (2021: GBP3,000).
At the year end, total cash of GBP7,942,000 (2021: GBP8,350,000)
was held with JPMorgan Chase Bank, N.A. A net amount of interest of
GBP1,000 (2021: GBPnil) was receivable by the Company during the
year of which GBPnil (2021: GBPnil) was outstanding at the year
end.
Full details of Directors' remuneration and shareholdings can be
found on page 59 of the Annual Report and in note 6 on page 73 of
the Annual Report.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
have elected to prepare the financial statements in accordance with
applicable law and United Kingdom Accounting Standards, comprising
Financial Reporting Standard 102 the 'Financial Reporting Standard
Applicable in the UK and Republic of Ireland' (FRS 102). Under
Company law the Directors must not approve the financial statements
unless they are satisfied that, taken as a whole, the annual report
and financial statements are fair, balanced and understandable,
provide the information necessary for shareholders to assess the
Company's 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 estimates that are reasonable and prudent;
-- state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
and the Directors confirm that they have done so.
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 Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The financial statements are published on the
www.jpmglobalgrowthandincome.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 financial
statements since they were initially presented on the website. The
financial statements are prepared in accordance with UK
legislation, which may differ from legislation in other
jurisdictions.
Under applicable law and regulations the Directors are also
responsible for preparing a Directors' Report, Strategic Report and
Directors' Remuneration Report that comply with that law and those
regulations.
Each of the Directors, whose names and functions are listed on
pages 40 and 41 of the Annual Report confirm that, to the best of
their knowledge:
-- the financial statements, which have been prepared in
accordance with applicable law and United Kingdom Accounting
Standards, comprising Financial Reporting Standard 102 the
'Financial Reporting Standard Applicable in the UK and Republic of
Ireland' (FRS 102), 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 risks and
uncertainties that it faces.
The Board confirms that it is satisfied that the annual report
and financial statements taken as a whole is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Company's position and performance,
business model and strategy.
For and on behalf of the Board
Tristan Hillgarth
Chairman
28th September 2022
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30TH JUNE 2022
2022 2021
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- ---------- ---------- --------- --------- ---------
(Losses)/gains on investments
held at fair value
through profit or loss - (36,835) (36,835) - 153,997 153,997
Net foreign currency gains - 3,386 3,386 - 1,764 1,764
Income from investments 14,520 - 14,520 10,633 - 10,633
Interest receivable and similar
income 160 - 160 49 - 49
---------------------------------- --------- ---------- ---------- --------- --------- ---------
Gross return/(loss) 14,680 (33,449) (18,769) 10,682 155,761 166,443
Management fee (825) (2,474) (3,299) (577) (1,731) (2,308)
Performance fee charge - - - - (5,967) (5,967)
Other administrative expenses (591) - (591) (612) - (612)
---------------------------------- --------- ---------- ---------- --------- --------- ---------
Net return/(loss) before
finance costs and taxation 13,264 (35,923) (22,659) 9,493 148,063 157,556
Finance costs (374) (1,122) (1,496) (259) (779) (1,038)
---------------------------------- --------- ---------- ---------- --------- --------- ---------
Net return/(loss) before
taxation 12,890 (37,045) (24,155) 9,234 147,284 156,518
Taxation (1,408) - (1,408) (1,276) - (1,276)
---------------------------------- --------- ---------- ---------- --------- --------- ---------
Net return/(loss) after taxation 11,482 (37,045) (25,563) 7,958 147,284 155,242
---------------------------------- --------- ---------- ---------- --------- --------- ---------
Return/(loss) per share 7.24p (23.37)p (16.13)p 5.46p 101.00p 106.46p
---------------------------------- --------- ---------- ---------- --------- --------- ---------
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
in the year.
The 'Total' column of this statement is the profit and loss
account of the Company and the 'Revenue' and 'Capital' columns
represent supplementary information prepared under guidance issued
by the Association of Investment Companies. Net return/(loss) after
taxation represents the profit/(loss) for the year and also Total
Comprehensive Income.
STATEMENT OF CHANGES IN EQUITY
Called Capital
up
share Share redemption Capital Revenue
capital premium reserve reserves(1) reserve(1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- --------- ----------- ------------ ----------- ----------
At 30th June 2020 7,746 71,672 27,401 372,018 - 478,837
Issue of shares from Treasury - 20,347 - 17,832 - 38,179
Net return - - - 147,284 7,958 155,242
Dividends paid in the year
(note 2) - - - (10,926) (7,958) (18,884)
------------------------------- -------- --------- ----------- ------------ ----------- ----------
At 30th June 2021 7,746 92,019 27,401 526,208 - 653,374
Issue of shares 559 49,636 - - - 50,195
Issue of shares from Treasury - 9,836 - 6,858 - 16,694
Project costs - in relation
to shares - (270) - - - (270)
Blocklisting fees paid - - - (102) - (102)
Net (loss)/return - - - (37,045) 11,482 (25,563)
Dividends paid in the year
(note 2) - - - (13,433) (11,482) (24,915)
------------------------------- -------- --------- ----------- ------------ ----------- ----------
At 30th June 2022 8,305 151,221 27,401 482,486 - 669,413
------------------------------- -------- --------- ----------- ------------ ----------- ----------
(1) These reserves form the distributable reserves of the
Company and may be used to fund distributions to investors.
STATEMENT OF FINANCIAL POSITION
AT 30TH JUNE 2022
2022 2021
GBP'000 GBP'000
------------------------------------------------------- ---------- ---------
Fixed assets
Investments held at fair value through profit or loss 676,778 654,694
------------------------------------------------------- ---------- ---------
Current assets
Derivative financial assets 4,637 2,567
Debtors 3,270 7,153
Cash and cash equivalents 41,963 55,933
------------------------------------------------------- ---------- ---------
49,870 65,653
------------------------------------------------------- ---------- ---------
Current liabilities
------------------------------------------------------- ---------- ---------
Creditors: amounts falling due within one year (2,417) (11,041)
Derivative financial liabilities (5,072) (1,271)
------------------------------------------------------- ---------- ---------
Net current assets 42,381 53,341
------------------------------------------------------- ---------- ---------
Total assets less current liabilities 719,159 708,035
------------------------------------------------------- ---------- ---------
Creditors: amounts falling due after more than one
year (49,746) (49,932)
Provision for liabilities and charges
Performance fee payable - (4,729)
------------------------------------------------------- ---------- ---------
Net assets 669,413 653,374
------------------------------------------------------- ---------- ---------
Capital and reserves
Called up share capital 8,305 7,746
Share premium 151,221 92,019
Capital redemption reserve 27,401 27,401
Capital reserves 482,486 526,208
Revenue reserve - -
------------------------------------------------------- ---------- ---------
Total shareholders' funds 669,413 653,374
------------------------------------------------------- ---------- ---------
Net asset value per share 403.1p 432.3p
------------------------------------------------------- ---------- ---------
STATEMENT OF CASH FLOWS
FOR THE YEARED 30TH JUNE 2022
2022 2021
GBP'000 GBP'000
--------------------------------------------------------------- ----------- -----------
Net cash outflow from operations before dividends and
interest (9,945) (3,212)
Dividends received 12,531 8,535
Interest received 147 21
Overseas tax recovered 37 162
Interest paid (1,475) (893)
--------------------------------------------------------------- ----------- -----------
Net cash inflow from operating activities 1,295 4,613
--------------------------------------------------------------- ----------- -----------
Purchases of investments (554,563) (460,877)
Sales of investments 493,049 435,206
Settlement of forward currency contracts 4,843 811
--------------------------------------------------------------- ----------- -----------
Net cash outflow from investing activities (56,671) (24,860)
--------------------------------------------------------------- ----------- -----------
Dividends paid (24,915) (18,884)
Issue of shares 50,195 -
Issue of shares from Treasury 16,694 38,179
Issue of secured bond loan (net of costs) - 19,894
Repayment of bank loans (199) -
Project costs (270) -
Block listing fees (102) -
--------------------------------------------------------------- ----------- -----------
Net cash inflow from financing activities 41,403 39,189
--------------------------------------------------------------- ----------- -----------
(Decrease)/increase in cash and cash equivalents (13,973) 18,942
--------------------------------------------------------------- ----------- -----------
Cash and cash equivalents at start of year 55,933 36,972
Unrealised gain on foreign currency cash and cash equivalents 3 19
Cash and cash equivalents at end of year 41,963 55,933
--------------------------------------------------------------- ----------- -----------
Cash and cash equivalents consist of:
Cash and short term deposits 7,942 8,350
Cash held in JPMorgan Sterling Liquidity Fund 34,021 47,583
--------------------------------------------------------------- ----------- -----------
Total 41,963 55,933
--------------------------------------------------------------- ----------- -----------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30TH JUNE 2022
1. Accounting policies
(a) Basis of accounting
The financial statements are prepared under the historical cost
convention, modified to include fixed asset investments and
derivatives at fair value, and in accordance with the Companies Act
2006, United Kingdom Generally Accepted Accounting Practice ('UK
GAAP'), including FRS 102 'The Financial Reporting Standard
applicable in the UK and Republic of Ireland' and with the
Statement of Recommended Practice 'Financial Statements of
Investment Trust Companies and Venture Capital Trusts' (the 'SORP')
issued by the Association of Investment Companies in April 2021. In
preparing these financial statements the Directors have considered
the impact of climate change risk as a principal risk as set out on
page 34 of the Annual Report, and have concluded that it does not
have a material impact on the Company's investments. In line with
FRS 102 investments are valued at fair value, which for the Company
are quoted bid prices for investments in active markets at the 30th
June 2022 and therefore reflect market participants view of climate
change risk.
All of the Company's operations are of a continuing nature.
The financial statements have been prepared on a going concern
basis. In forming this opinion, the Directors have considered any
potential impact of the ongoing COVID-19 pandemic on the going
concern and viability of the Company. They have considered the
potential impact of COVID-19 and the mitigation measures which key
service providers, including the Manager, have in place to maintain
operational resilience particularly in light of COVID-19. The
Directors have reviewed the compliance with debt covenants in
assessing the going concern and viability of the Company. The
Directors have reviewed income and expense projections to 30th
September 2023 and the liquidity of the investment portfolio in
making their assessment. Further details of Directors'
considerations regarding this are given in the Chairman's
Statement, Investment Managers' report, Going Concern Statement,
Viability Statement and Principal Risks section of this Annual
Report.
The policies applied in these financial statements are
consistent with those applied in the preceding year.
2. Dividends
(a) Dividends paid and declared
2022 2021
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Dividends paid
2021 fourth interim dividend of 3.29p (2020 fourth
interim: 3.26p) 4,963 4,599
2022 first interim dividend of 4.24p (2021: 3.29p) 6,535 4,673
2022 second interim dividend of 4.24p (2021: 3.29p) 6,638 4,768
2022 third interim dividend of 4.24p (2021: 3.29p) 6,779 4,844
----------------------------------------------------- -------- --------
Total dividends paid in the year 24,915 18,884
----------------------------------------------------- -------- --------
Dividend declared
2022 fourth interim dividend of 4.24p (2021: 3.29p) 7,023 4,972
----------------------------------------------------- -------- --------
The fourth interim dividend of 4.24p has been declared and was
paid on 1st July 2022 for the financial year ending 30th June 2022.
In accordance with the accounting policy of the Company, this
dividend will be reflected in the financial statements for the year
ending 30th June 2023.
(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010 ('Section 1158')
The requirements of Section 1158 are considered on the basis of
dividends declared in respect of the financial year, shown below.
The revenue available for distribution by way of dividend for the
year is GBP11,482,000 (2021: GBP7,958,000). The revenue reserve
during payment of the first interim dividend (2021: first interim)
reduced to GBPnil (2021: GBPnil) and the remaining amount has been
drawn from the capital reserve.
2022 2021
GBP'000 GBP'000
----------------------------------------------------- -------- --------
2022 first interim dividend of 4.24p (2021: 3.29p) 6,535 4,673
2022 second interim dividend of 4.24p (2021: 3.29p) 6,638 4,768
2022 third interim dividend of 4.24p (2021: 3.29p) 6,779 4,844
2022 fourth interim dividend of 4.24p (2021: 3.29p) 7,023 4,972
----------------------------------------------------- -------- --------
26,975 19,257
----------------------------------------------------- -------- --------
The fourth interim dividend proposed at the year end will be
funded from the capital reserves.
3. (Loss)/return per share
2022 2021
GBP'000 GBP'000
-------------------------------------------- ------------- ------------
Revenue return 11,482 7,958
Capital (loss)/return (37,045) 147,284
-------------------------------------------- ------------- ------------
Total (loss)/return (25,563) 155,242
Weighted average number of shares in issue 158,538,647 145,827,704
Revenue return per share 7.24p 5.46p
Capital (loss)/return per share (23.37)p 101.00p
-------------------------------------------- ------------- ------------
Total (loss)/return per share (16.13)p 106.46p
-------------------------------------------- ------------- ------------
4. Net asset value per share
2022 2021
------------------------------------ ------------- ------------
Net assets (GBP'000) 669,413 653,374
Number of ordinary shares in issue 166,086,285 151,129,285
------------------------------------ ------------- ------------
Net asset value per share 403.1p 432.3p
------------------------------------ ------------- ------------
5. Status of results announcement
2022 Financial Information
The figures and financial information for 2022 are extracted
from the Annual Report and Financial Statements for the year ended
30 June 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 and does not
contain a statement under either section 498(2) or section 498(3)
of the Companies Act 2006. The Annual Report and Accounts will be
delivered to the Register of Companies in due course.
2021 Financial Information
The figures and financial information for 2021 are extracted
from the published Annual Report and Financial Statements for the
year ended 30 June 2021 and do not constitute the statutory
accounts for the year. The Annual Report and Financial Statements
have been delivered to the Registrar of Companies and included the
Report of the Independent Auditors which was unqualified and did
not contain a statement under either section 498(2) or section
498(3) of the Companies Act 2006.
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.
28th September 2022
For further information:
Divya Amin,
JPMorgan Funds Limited
020 7742 4000
ENDS
A copy of the 2022 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 2022 Annual Report will shortly be available on the
Company's website at http://www.jpmglobalgrowthandincome.co.uk/
where up-to-date information on the Company, including daily NAV
and share prices, factsheets and portfolio in formation can also be
found.
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JPMORGAN FUNDS LIMITED
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END
FR DBGDCRUDDGDI
(END) Dow Jones Newswires
September 29, 2022 03:00 ET (07:00 GMT)
Jpmorgan Global Growth &... (LSE:JPGI)
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