TIDMJPE TIDMJPEI TIDMJPEC
RNS Number : 8977S
JPMorgan Elect PLC
19 November 2021
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN ELECT PLC
ANNUAL RESULTS FOR THE YEARED 31ST AUGUST 2021
Legal Entity Identifier: 549300FIUYKKL39ILD07
Information disclosed in accordance with DTR 4.1.3
CHAIRMAN'S STATEMENT
The past year has seen global equity markets rise sharply. The
FTSE World index returned 26.3%, with all regions contributing
positively. On balance, markets in the developed world fared better
than their emerging brethren, but even here, returns topped 18%. In
the first nine months of the Company's fiscal year, conditions for
good equity markets could hardly have been more propitious. A
successful vaccine rollout in the major economies set the scene for
a robust recovery while interest rates held close to zero.
Corporate earnings and dividends bounced strongly.
More recently, two factors have checked the optimism. First, the
spread of the delta variant has been an unwelcome reminder that
Covid is still with us and that large parts of the global
population do not yet have access to vaccines. Second, the
disruption to supply chains caused by the pandemic has caused a
shortage of goods and rising prices. This reflects the strongest
economic recovery on record running headlong into the largest
supply interruption since the Second World War. While these are
troubling developments, markets have only paused for breath,
believing that rising inflation is transitory and will abate as
supply chains and labour markets normalise.
I am delighted to report that the portfolios of both Managed
Growth and Managed Income benefited fully from market conditions,
comfortably outpacing their respective benchmarks.
Managed Growth
The Managed Growth portfolio has delivered a total return on net
assets of +33.7%, compared with the portfolio's benchmark which
returned +26.8%. Over the medium and longer term, performance
remains well ahead of benchmark.
The objective of this share class is long-term capital growth
delivered by investing in a range of investment trusts and
open-ended funds managed principally by JPMorgan Asset Management.
At the year-end, 34% of the portfolio was invested in non-JPMorgan
funds.
For the year ended 31st August 2021, the Board declared
dividends of 16.0p per Managed Growth share compared to 16.7p for
the year ended 31st August 2020. Shareholders are reminded that
this share class is a growth vehicle. Any net income generated
during the year is generally distributed to shareholders but
investment decisions are not made with the objective of maintaining
or growing income.
Managed Income
It was encouraging to see the performance of the portfolio as it
delivered a total return on net assets of +33.9% in comparison to
the benchmark return of +26.9%.
Dividends for the year ended 31st August 2021 totalled 4.75p per
share (2020: 4.70p per share). In determining the level of the
fourth interim dividend payable by the Managed Income Class the
Board took into account the level of dividends received and to be
received by the Company, the anticipated dividends for the coming
financial year and the commitment made in the 2020 Annual Report.
Dividend growth of 1.1% is below the level of inflation and
therefore inconsistent with our aim to increase the total dividends
by at least inflation. The Board took the decision to increase the
dividend by less than the inflation rate for two principal reasons.
First, dividend payouts, which fell sharply during the pandemic,
have not yet fully recovered and it is unclear whether previous
levels will be restored quickly. Second, inflation rates in the UK
have been higher than forecast because of supply chain issues
resulting from the pandemic. At this point, the Investment Manager
and the Board believe that these pressures are temporary and will
abate in the year ahead.
Given these uncertainties, we felt that paying a modest increase
would provide some breathing room to see how the situation settles.
It is perhaps not surprising, therefore, that the fourth interim
dividend was not fully covered by the income earned in the
financial year leading the Company to utilise the Managed Income
Class revenue reserves which have built up over previous years to
support this dividend. Following payment of this fourth interim
dividend, the Managed Income Class revenue reserve will equate to
approximately three quarters of the full year dividend.
In the absence of unforeseen circumstances, the Board intends to
declare the first three interim dividends for the year ending 31st
August 2022 at 1.1p per share. The level of the fourth interim
dividend will be determined by the Board towards the end of the
Company's 2021/22 financial year and will depend on the level of
dividends received and expected by the Company, as well as on the
path of inflation, as discussed.
Managed Cash
The portfolio's objective and policy is to achieve a return in
excess of sterling money markets by investing primarily in GBP
denominated short-term debt securities through investment in
JPMorgan Funds - Sterling Managed Reserves Fund (JSMRF). The
Managed Cash share class returned +0.2% on net assets and an
interim dividend of 0.4p per share was paid for the year ended 31st
August 2021.
Historically, the Managed Cash share class has paid one dividend
each financial year, in the fourth quarter. However, since the
investment objective and policy of the Class was changed and the
assets of the Class invested in the Sterling Managed Reserves Fund,
the Company receives an annual dividend from that fund, in
September. Therefore, to better align the date of receipt of the
dividend from the Sterling Managed Reserves Fund with the
shareholders on the Managed Cash register at that time, it was
proposed that the declaration and payment date for the annual
dividend be brought forward to earlier in the financial year.
As announced previously, the Board therefore decided to pay an
interim dividend of 0.4p per Managed Cash share, for the second
quarter of the year ending 31st August 2021 and no further
dividends were paid on this share class for the remainder of the
financial year ending 31st August 2021. In future years, it is
expected that any dividend for this Class will be declared in the
first quarter of the Company's financial year, which begins on 1st
September.
The Board considers this class to be an asset allocation tool
which continues to benefit shareholders of the Company's other
share classes, offering the opportunity to switch into a safer
share class in times of market volatility.
The Investment Managers' reports in our Annual Report provide
more detail on the positioning and performance of the three
separate share class portfolios.
Conversions and Redemptions
During the year, shareholders took the opportunity to convert
between share classes. This resulted in a decrease in the Managed
Growth share class shares in issue of 188,282, a decrease in the
Managed Income share class shares in issue of 652,997 and an
increase in the Managed Cash share class shares in issue of
2,275,607. In addition, 584,507 Managed Cash shares were
redeemed.
Gearing
The Board's policy is not to utilise borrowings to increase the
funds available for investment for the Managed Growth share class.
The Board monitors closely the level of indirect gearing (currently
around 5%) through the underlying investments. The Managed Income
share class has the ability to use short-term borrowings to
increase potential returns to shareholders. Its policy is to
operate within a range of 85% to 112.5% invested.
During the year, the Company renewed its multicurrency revolving
credit facility with Scotiabank, and now has in place a GBP15
million facility extending its maturity date to June 2022. At the
year-end, GBP7 million was drawn and the Managed Income portfolio
was 4.6% geared.
Environmental, Social and Corporate Governance ('ESG')
As detailed in the Investment Managers' report, Environmental,
Social and Governance ('ESG') considerations form an important part
of the Investment Managers' investment process. The Board shares
the Investment Managers' view of the importance of ESG factors when
making investments for the long term and of the necessity of
continued engagement with investee companies throughout the
duration of the investment. Further information on the Manager's
ESG process and engagement is set out in the ESG Report section
within the 2021 Annual Report.
The Board
Notwithstanding that James Robinson will have served as a
director for almost ten years at the date of the 2022 AGM, the
Board agrees that he continues to remain independent. Accordingly,
due to his significantly positive contribution to the Board, in
particular leading the Audit Committee and his knowledge of the
industry, the Board agrees that it would be in the Company's best
interests if James Robinson's appointment as a director and Audit
Committee Chairman continued. The succession plan for the Audit
Committee is well advanced and an announcement will be made when
the process is complete.
The Board supports the annual re-election for all Directors, as
recommended by the UK Corporate Governance Code, and therefore all
Directors will stand for re-election at the forthcoming AGM.
Further, during the year, the Board carried out its customary
evaluation of the Directors, the Chairman, the Committees and the
working of the Board as a whole. It was concluded that the Board
and its procedures were operating effectively.
Covid-19 and the Company's Key Service Providers
The Board is pleased to report that, since the on-set of the
pandemic in spring 2020 and throughout, the Manager and the
Company's other service providers have been able to adjust their
business models to continue to accommodate working from home
requirements. The Board has been closely monitoring all service
arrangements and has received assurances that the Company's
operations, to include the management of the portfolio, have
continued as normal with no reduction in the level of service
provided nor any issues being identified.
Annual General Meeting
Regrettably Covid-19 restrictions prevented the holding of the
Company's AGM earlier this year in the usual format. The Directors
were disappointed not to be able to have the usual interaction with
shareholders at this forum. Current indications are that a more
familiar format for the AGM may be permissible in January 2022 and,
to that end, the AGM is scheduled to be held at 12.30 p.m. on 26th
January 2022 at 60 Victoria Embankment, London EC4Y 0JP.
We do of course strongly advise all shareholders to consider
their own personal circumstances before attending the AGM in
person. 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, can be found on the Company's website:
www.jpmelect.co.uk, or by contacting the Company Secretary at
invtrusts.cosec@jpmorgan.com.
As is normal practice, all voting on the resolutions will be
conducted on a poll. Due to technological reasons, 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
form of proxy.
Shareholders are encouraged to send any questions ahead of the
AGM to the Board via the Company Secretary at the email address
above. We will endeavour to answer relevant questions at the
meeting or via the website depending on arrangements in place at
the time.
Outlook
We have never before experienced economic conditions anything
like as dramatic as those which have characterised the last 18
months. Conventional forecasting uses historical models to project
what will happen in the future. These models are now broken, so
wise counsel would be to take all forecasts with a pinch of salt.
Nevertheless, the convention in these statements is to
prognosticate about the future, so here goes.
Liquidity conditions are likely to remain benign. This means
that interest rates will stay low, even as Central Banks try to
engineer a return to normal monetary policy. This is partly because
the world is now so indebted that a rise in rates would hobble the
global economy, but also because policymakers believe that the
current rises in inflation are temporary. Even if they are wrong,
it would likely take several years before we know whether higher
rates of inflation have become embedded in the economy.
Rising prices and supply disruption will affect corporate
margins. The squeeze hasn't started yet, but profit expectations
are high and the risk of disappointment is real. On the other side
of this coin sits the increasing use of technology in business - so
called digitisation. This is a long term trend which should boost
productivity across many sectors and thereby offset margin
pressure.
This mix of influences is broadly positive for global equity
markets, although the very high returns of the past year will prove
a hard act to follow.
Steve Bates
Chairman 18th November 2021
INVESTMENT MANAGERS' REPORT - MANAGED GROWTH
Performance Review
The Managed Growth portfolio outperformed its benchmark for the
year ended 31st August 2021, returning +33.7% on an NAV basis,
versus the benchmark return of +26.8%. The total return to
shareholders was +39.6%, narrowing the discount at which the
company's shares trade relative to its NAV.
Managed Growth (%) 1 Year 3 Years p.a. 5 Years p.a. 10 Years
p.a.
------------------------------ ------- ------------- ------------- ---------
NAV return 33.7% 10.4% 12.9% 12.8%
Total return to shareholders 39.6% 10.2% 12.8% 12.8%
Benchmark total return 26.8% 8.3% 9.9% 10.8%
FTSE All-Share Index 26.9% 3.6% 5.9% 7.7%
FTSE World ex UK 26.6% 13.0% 13.9% 13.9%
------------------------------ ------- ------------- ------------- ---------
Stock selection was the key driver of the portfolio's
outperformance over the last 12 months. Performance was positive
across each underlying holding in absolute terms, with our UK and
North American strategies delivering the strongest returns. Our
Japanese, Asian and emerging markets holdings also enhanced
absolute returns, although in some cases, performance was more
muted.
Relative performance was mostly positive across the period, with
27 strategies outperforming, although seven strategies marginally
underperformed their benchmarks.
31st August 2020 to
Top 5 Holdings By Absolute Performance 31st August 2021
---------------------------------------- --------------------
BlackRock Smaller Companies Investment
Trust +78.2%
Fidelity Special Values Investment
Trust +73.8%
Lowland Investment Company +58.4%
Mercantile Investment Trust +53.9%
Temple Bar Investment Trust +53.1%
---------------------------------------- --------------------
31st August 2020 to
Bottom 5 by Absolute Performance 31st August 2021
---------------------------------------- --------------------
JPM China Growth & Income +10.2%
Finsbury Growth & Income Trust +11.0%
Templeton Emerging Markets Investment
Trust +15.9%
Polar Capital Technology Trust +17.7%
JPM Japanese Investment Trust +21.9%
---------------------------------------- --------------------
These tables reflect performance for those holdings that have
been held throughout the 12 month period.
PERFORMANCE ATTRIBUTION
CONTRIBUTIONS TO NAV RETURN AS AT 31ST AUGUST 2021
12 months to 31st August
2021
--------------------------------- ---------------------------
% %
--------------------------------- ------------- ------------
Benchmark Return 26.8
--------------------------------- ------------- ------------
Country Allocation -1.3
--------------------------------- ------------- ------------
Stock Selection 8.4
--------------------------------- ------------- ------------
Investment Manager Contribution 7.1
--------------------------------- ------------- ------------
Portfolio Return 33.9
--------------------------------- ------------- ------------
Management Fees/Other Expenses -0.5
--------------------------------- ------------- ------------
Share Buy-Back/Issuance 0.3
--------------------------------- ------------- ------------
Other Effects -0.2
--------------------------------- ------------- ------------
NAV Return 33.7
--------------------------------- ------------- ------------
Share Price Return 39.6
--------------------------------- ------------- ------------
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.
The company's share price discount to NAV narrowed over the last
12 months, to 3.0% from 7.3% at the end of the previous year,
although there was some volatility during the period. The company's
average discount fluctuated in a range between 2.2% and 7.3%,
averaging 4.0% across the period (Bloomberg). The main drivers of
this discount narrowing over the year were the improvement in the
macro economic backdrop and associated strong earnings growth,
which were supported by accommodative fiscal and monetary policy
and the re-opening of economies.
Portfolio Activity
At the end of August 2021, 40% of the portfolio was invested in
JPMorgan managed investment trusts, 26% in JPMorgan managed
open-ended funds, and 34% in investment trusts managed by third
party managers.
During the first six months of the financial year ended August
2021, the portfolio was underweight the UK and Japan and overweight
European and Asia ex-Japan Pacific regions. We entered the
financial year with a significant underweight to the UK and
gradually increased our exposure over the period. We added to the
Temple Bar and Lowland Investment Trusts in November 2020, to
increase the portfolio's value tilt and take advantage of
attractive valuations in this market. We also added Aberforth
Smaller Companies Trust in the first quarter of 2021, increasing
our UK Small Cap exposure, to participate more fully in the
cyclical recovery. We reduced our Finsbury Income & Growth
Trust position given its growth bias, and invested some of the
proceeds in the Fidelity Special Values Trust, to further increase
the value tilt in the portfolio.
Across other regions, we reduced our exposure to emerging
markets in September 2020, taking some profits following a strong
run in these markets. We also trimmed our exposure to the Baillie
Gifford US Growth Trust following a period of exceptional
performance.
We added further to our UK exposure from March onwards, and
closed our underweight to Japan on the view that the broadening
global recovery would benefit Japan's many cyclical, export-driven
companies. We added to the portfolio's Japanese exposure via a new
position in the Baillie Gifford Japan Trust. These changes were
funded by the sale of Worldwide Healthcare Trust and a reduction in
our overweight positions in Asia and emerging markets, which we
viewed as exposed to potential headwinds from the US dollar.
In the US, we reduced our position in the JPM US Select Equity
and JPM US Smaller Companies Funds, to fund a new position in the
JPM US Value Fund, based on our ongoing conviction that value
strategies would outperform as the global economy continued to
recover and earnings were revised upwards. We started adding
exposure to the US in June, as the resilience of earnings continued
to support the region. At the same time, we scaled back our
overweight to Europe.
Outlook
Although global growth momentum probably peaked in Q2 2021,
strong economic data, aggressive fiscal and monetary policy support
and successful vaccine rollouts continue to drive fundamentals. The
renewed surge in Covid cases in the UK and some other countries may
slow the pace of recovery, especially during the winter, but the
economic re-opening is unlikely to be reversed, and we expect the
major developed economies to experience a broadening recovery over
the remainder of the year. Solid demand, which is being accompanied
by a surge in productivity, will continue to bolster profits and
ensure strong earnings growth over the year.
However, the bright economic outlook has raised some concerns in
equity markets about how central banks will react if growth
continues to surprise on the upside. Rising energy and commodity
prices, demand/supply imbalances and emergent labour market
pressures have already fuelled fears of higher interest rates and
generated intermittent bouts of market volatility. However, central
banks seem confident these inflation pressures will prove
temporary, and the International Monetary Fund (IMF) expects
inflation to return to pre-pandemic ranges in most countries in
2022. This expectation is reinforced by the impact of structural
forces, especially the rapid advance of technology into many areas
of the global economy, and associated productivity gains, which are
likely to dampen inflation pressures in 2022 and beyond.
Global equities should do well in an environment of robust
growth and modestly rising inflation. Profit margins may come under
some pressure from rising commodity prices, higher wages and
increasing corporate taxes. However, higher input prices can be
passed onto customers when demand is strong. So, in summary, as the
world emerges from its most recent, profound crisis, we expect
earnings growth in coming years to be substantial, and
front-loaded, in much the same manner as it was during the rebound
from the global financial crisis. This should support market
performance. We are confident of the company's ability to capture
this performance and to continue delivering long term capital
growth to shareholders.
Katy Thorneycroft
Simin Li
Peter Malone
Investment Managers 18th November 2021
INVESTMENT MANAGERS' REPORT - MANAGED INCOME
Dividend Review
Dividend payments by the end of August 2021 were approximately
50% higher than for the same period last year. This figure includes
special dividends which will not necessarily be repeated, but
underlying growth of approximately 40% was still very impressive.
Most sectors increased their dividends as confidence in the
recovery grew. Growth was particularly notable in sectors such as
hospitality and travel, which were hardest hit by the pandemic.
This is clearly seen in the difference in dividend growth between
FTSE 250 companies and those in the FTSE 100. Dividends paid by
companies in the FTSE 250, which includes more economically
sensitive stocks than the FTSE 100, increased by 156% this year,
while the dividends of FTSE 100 companies rose by 44%. However,
despite this recovery, dividends paid in the period were still 33%
lower than for the same period in 2019.
The most significant recent development for dividend payments
was the Bank of England's (BoE) decision to allow banks to resume
dividend payments if their boards deemed this appropriate. This
ruling should result in a dividend yield across UK banks of around
2-3% for 2021. We believe that the banks we own have the capacity
to pay dividends while also maintaining sufficient capital to meet
regulatory requirements. In fact, three of our four bank holdings
declared higher than expected dividends this year.
The market also welcomed Royal Dutch Shell's (RDS) surprise
announcement of a 50% year-on-year dividend increase. Higher oil
prices combined with lower capital expenditure led to very strong
cash generation, making this payment easily affordable. RDS's
management also reiterated their commitment to the company's
progressive dividend policy, which aims to grow the dividend by 4%
each year. BP's dividend increased by a more modest 4%, but the
company also committed to 4% annual dividend growth out to 2025,
provided the oil price stays above $60 per barrel.
We have significant exposure to housebuilders, so it was
encouraging to see this sector restore dividends, as strong demand
for homes led to higher profits and cash flow. Dunelm, the home
furnishings company, also reinstated their dividend, as they
successfully navigated the various lockdowns by developing their
on-line business. In the mining sector, soaring commodity prices
and cost controls saw cash flow surge. Both Rio Tinto and BHP, our
main holdings in the sector, have a clear commitment to shareholder
value and chose to distribute excess cash flow.
The outlook for dividend growth has become more certain over the
course of 2021 as vaccination roll outs have allowed developed
economies to re-open. We expect the FTSE All Share to register
underlying dividend growth of 13% in 2021, and we have a high
degree of confidence that the dividend forecasts for the companies
we own are robust, as long as the economy avoids further widespread
lockdowns.
Performance Review
We are pleased to report that the Managed Income portfolio
delivered a NAV total return of +33.9% during the Company's
financial year ended 31st August 2021, outpacing the benchmark
return of +26.9%. The discount narrowed from 6.4% to 3.7% over the
year with the result that the total return to shareholders was
significantly higher at +37.7%.
PERFORMANCE ATTRIBUTION
FOR THE YEARED 31ST AUGUST 2021
12 months to 31st August
2021
--------------------------------- ---------------------------
% %
--------------------------------- ------------- ------------
Benchmark Return 26.9
--------------------------------- ------------- ------------
Equity Returns 5.5
--------------------------------- ------------- ------------
Sector Effect - Equities 0.8
--------------------------------- ------------- ------------
Stock Selection - Equities 4.7
--------------------------------- ------------- ------------
Gearing/cash 2.0
--------------------------------- ------------- ------------
Investment Manager Contribution 7.5
--------------------------------- ------------- ------------
Portfolio Return 34.4
--------------------------------- ------------- ------------
Management Fees/Other Expenses -0.8
--------------------------------- ------------- ------------
Share Buy-Back/Issuance 0.3
--------------------------------- ------------- ------------
Other Effects -0.5
--------------------------------- ------------- ------------
NAV Return 33.9
--------------------------------- ------------- ------------
Share Price Return 37.7
--------------------------------- ------------- ------------
Source: PAT, 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.
Our stock selection contributed more to returns over the year
and our holdings in Reach, Future and OSB were amongst the best
performers. Reach is a newspaper publisher whose titles include the
Daily Mirror and Daily Express. Readers are increasingly migrating
on-line and the company's progress in securing digital advertising
revenues has been the impetus for a significant share price rise
over the past year. Future is also a publishing company, focused on
specialist magazines. As in the newspaper business, the circulation
of printed magazines is declining, while on-line readership is
growing rapidly, leading to higher digital advertising revenues.
OSB is a bank specialising in commercial buy-to-let mortgages and
asset finance. Both these areas are experiencing high growth and
cash flow generation is strong, raising the possibility of future
increases in dividend payments.
Positive performance contributions by these and other positions
were only partially offset by the adverse impact of other holdings.
Detractors from returns included the house furnishings retailer
Dunelm and Polymetal, a precious metals miner. As mentioned above,
Dunelm was a stand-out retailer during lockdown, thanks to the
expansion of its on-line business, and its shares performed very
well. However, when lockdowns lifted, investors' attention turned
to retailers with greater exposure to a reopening bounce, and
Dunelm's shares lagged, although since the end of our reporting
period, Dunelm's share price has recovered and is presently trading
near its all-time highs. Polymetal's earnings and share price
performance were hurt by a decline in the gold price and lower gold
shipments to China, which declined following the re-imposition of
Covid restrictions.
Portfolio Activity
During the financial year, we made use of the company's
borrowing facility. As at 31st August 2021, the equity exposure of
the Managed Income portfolio was 104.6%, with the level of gearing
primarily influenced by individual stock opportunities.
Portfolio construction is determined by bottom-up stock
selection, with a focus on potential and sustainable dividend
growth. When assessing investment opportunities, we consider the
company's earnings outlook, the attractiveness of its valuation and
whether its balance sheet and forecast cash flows are capable of
supporting dividend growth over the long term.
We did not make any large changes to the portfolio's sector
exposures during the review period. The largest sector positions
are in Banks, General Retail and Home Construction. The earnings
outlook for these sectors is favourable, as the economy recovers
from lockdown restrictions, while valuations remain attractive. The
financial results of our holdings across these sectors have
exceeded expectations. Higher profits and cash flows have led to
generally higher than expected dividend payments. Amongst our bank
holdings, Barclays, Lloyds and NatWest paid dividends approximately
10% higher than forecast. In the Retail sector, Dunelm and Next, a
clothing retailer, paid supplementary special dividends, while the
dividend paid by Halfords, which specialises in motoring and
cycling products, was double expectations. Home Construction
companies are generating high levels of free cash flow, thanks to
the demand for new homes, and dividend yields in this sector are
averaging 5%, with Persimmon paying 8%.
Transactions
During the review period we opened several new positions,
including exposures to Lloyds and Natwest. Earnings growth in both
companies is exceeding expectations. Housing market strength is
underpinning mortgage demand and higher consumer expenditure should
bolster higher margin credit card lending. We expect capital
returns in this sector to continue to rise following the BoE's
decision to lift its prohibition on bank dividend payments. We also
bought Royal Mail. This company's earnings are being persistently
upgraded due to rapid growth in parcel volumes and productivity
improvements following an agreement with the postal workers' union,
Unite. Free cash flow is healthy, the balance sheet is robust and
the company has committed to a progressive dividend policy from
2022, representing a yield of 4%.
These purchases were funded by the sale of Tesco, Vodafone,
Reckitt Benckiser and National Grid.
Outlook
As vaccine rollouts continue and the global economy takes
progressive steps towards normality, pent-up demand is being
unleashed and the outlook for UK equities looks particularly
promising. Dividend yields are strong, valuations are attractive
and there is scope for profit margin expansion. Although every
crisis is different, looking out over the next five years, we
expect earnings growth to be substantial, front-loaded, and similar
in many ways to the rebound which followed the global financial
crisis. Cyclically geared markets, sectors and companies, which
were particularly hit by the Covid crisis, are likely to
benefit.
Many market participants would argue that expectations of a
rebound in cyclical stocks is already fully discounted, but our
assessment of the market outlook is more positive. Historical
experience shows that the potential for growth in a rebounding
economy has often been underestimated. We believe the company's
portfolio is well-positioned to take full advantage of the recovery
as it gathers momentum.
John Baker
Katen Patel
Investment Managers 18th November 2021
INVESTMENT MANAGERS' REPORT - MANAGED CASH
Performance Review
The Managed Cash share class returned +0.2% over the 12 month
period to 31st August 2021. The Managed Cash class invests its
assets in the JPMorgan Sterling Managed Reserves Fund which has an
objective to invest in a blend of money market securities and short
term bonds.
During this 12 month period, the Bank of England's (BoE)
Monetary Policy Committee (MPC) held the deposit rate at 0.10%.
During the year, the BoE increased the pace of its asset purchases,
from a target amount of GBP745 billion at the start of the previous
reporting period to GBP895 billion in Q4 2020, where it remains
today. The BoE have also added Negative Interest Rate Policy (NIRP)
to their toolkit, however given the resurgence in both growth and
inflation, this is not expected to be utilised in the foreseeable
future.
In the latter part of 2020, two topics dominated headlines in
the UK, Covid-19 and Brexit. Meanwhile, the US election posed a
third risk that we were mindful of when positioning our
portfolio.
Starting with Brexit, Prime Minister Johnson set a deadline of
15th October 2020 for a deal to be struck between the UK and the
EU; however commentators were doubtful as to whether a deal could
be struck in this time, and if so, whether such a deal would be
constructive or not. Nonetheless, markets seemingly shrugged off
these concerns and short-dated Sterling investment grade credit
rallied during the summer months. The 15th October deadline passed
without any resolution, however on Christmas Eve a trade agreement
was agreed, which allows for tariff and quota free trade in goods,
but does not cover the services industry, which accounts for 80% of
the UK economy.
On the Covid-19 front, infections soared in the UK in the latter
part of 2020 as a new variant emerged which proved to be far more
infectious than the dominant one that preceded it. In late
December, the UK entered a full lockdown as a result. Nonetheless,
Pfizer's 9th November announcement that its Covid-19 vaccine
provides effective protection buoyed markets, and the sentiment was
reinforced later in the month by similar news from Moderna and
AstraZeneca.
The UK began its vaccination programme in early 2021 and markets
reacted positively on the prospects for a strong recovery given a
combination of loose monetary conditions, supportive fiscal
policies and record household savings. In this environment,
short-term interest rates moved higher, from record lows at the
start of the year, and the yield curve steepened, reflecting a rise
in reflation expectations. Economic data releases corroborated the
expectations for recovery. Q4 2020 GDP rose 1.3%
quarter-over-quarter, as businesses and households adapted better
to the latest pandemic restrictions.
This positivity continued into Q2 2021, as successful vaccine
rollout, diminishing Covid-19 cases and a government guide-path to
lift all restrictions before the end of June 2021 fuelled growing
optimism in the UK recovery. Loose monetary conditions and
supportive fiscal policies, combined with record household savings
rates, boosted confidence and spending so that as lockdowns eased,
the economy generally delivered on this positive outlook. An
improving employment picture contributed to inflation: weekly
earnings (ex-bonus) were the highest on record over the three
months to April, while the unemployment rate was the lowest since
mid-2020 at 4.7%.
Since then, however, inflation has become more of a concern as
supply bottlenecks, continued monetary support and Brexit-related
factors have all contributed to rising inflation. At the end of
August 2021, the BoE was forecasting inflation of 4.0%, for the
first six months of 2022.
Portfolio Commentary
With the above growth story in mind, the overarching theme in
bond markets this year has been one of rising yields and steeper
curves. With this in mind, we are strategically running with a
reduced duration exposure, as well as a reduced exposure to
longer-dated instruments which are most likely to be at risk of
further curve steepening. Nonetheless, we remain positive on credit
fundamentals and will look to selectively add credit risk later in
the final part of the year as short-term yields rise, with curves
steepening as markets fully price hikes by the BoE.
At the end of August 2021, the fund's duration stood at 0.42
years. This is a similar level to where we stood at the end of
August 2020, but still below the maximum permitted by our
investment guidelines which is one year. We still see opportunities
in securitised debt as well as non-GBP denominated assets.
Outlook
Given the fact that inflation is proving to be more persistent
than previously forecast, our expectation is that the Bank of
England will make its first interest rate increase by the end of
2021, with a second increase happening in early 2022. As this
starts to get fully priced in by the market, we expect the yield
curve to steepen. With this in mind, we remain invested in short
dated assets but will look to add risk in the coming months as we
see more attractive opportunities.
We remain strategically positive on credit and will
opportunistically add longer-dated assets to the portfolio amid
continuing technical support from the Bank of England and positive
market sentiment following the success of the UK vaccination
programme. Our active management approach and diligent bottom-up
credit process nonetheless remain key to generating positive
returns through this period and our diversified approach should
help reduce the impact of any repricing events. Moreover, we are
participating in steeper credit curves and looking to take
advantage of new issue premiums where possible.
Spreads are at or close to historically tight levels, as is the
case with most high quality risk assets. Nonetheless, given
improving fundamentals where we see opportunities we will look to
add select AAA-rated asset backed securities which should add some
additional yield and diversification. Investing in non-Sterling
securities whilst hedging currency risk presents a diversified way
of generating returns too.
JPMorgan Asset Management
Investment Manager 18th November 2021
PRINCIPAL AND EMERGING RISKS
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 the Manager, the
Audit Committee has drawn up a risk matrix, which identifies the
key risks to the Company. These are reviewed and noted by the
Board. 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 Committee to put in place procedures to identify emerging
risks. The Committee has looked at this area and has conducted
horizon scanning. It does not believe that currently there are any
emerging risks facing the Company.
Principal Risk Description Mitigating Activities
Investment An inappropriate investment The Board monitors the implementation
underperformance strategy or poor performance and results of the investment process
against benchmark may lead to underperformance with the Investment Managers, who
against the relevant benchmark attend all board meetings. In addition,
index and peer companies, to ensure the investment strategy
resulting in the Company's remains relevant the Board regularly
shares trading on a wider reviews whether the rationale for
discount. each share class is still appropriate.
---------------------------------------- ------------------------------------------
Fraud and Cybercrime The threat of cyber-attack, The Manager is committed to combatting
in all its guises, is regarded fraud and financial crime and devotes
as at least as important significant resources to its cyber
as more traditional physical and fraud protection systems. It
threats to business continuity performs ongoing internal monitoring
and security. of processes and controls, including
daily reconciliations and monthly
compliance reporting. The Board
has received the cyber security
policies for its key third party
service providers and the Company
benefits directly or indirectly
from all elements of JPMorgan's
cyber security programme.
---------------------------------------- ------------------------------------------
Dividends Insufficient income may be The Board regularly reviews the
generated by the Managed income generated by the Managed
Income portfolio to enable Income portfolio and discusses the
the Company to meet the Managed appropriate dividend policy at least
Income class's objective annually.
of achieving a growing income
return.
---------------------------------------- ------------------------------------------
Accounting, Political or regulatory considerations, The Board receives regular briefings
Legal and Regulatory for example changes in financial from the Manager on any changes
or tax legislation, may reduce which could impact the Company's
the attractiveness or marketability ability to implement its strategy
of the Company. and adopts revised policies, where
required.
---------------------------------------- ------------------------------------------
Business Strategy A share class may fall beneath The Manager monitors the fund sizes,
a viable size, resulting providing detailed financial information
in limited liquidity for to the Board and advising the Board,
the shares or a high ongoing as appropriate.
charges ratio.
---------------------------------------- ------------------------------------------
Board loses The Board may lose confidence The Board meets with the Investment
confidence in the Investment Manager's Managers at each board meeting to
in Investment ability to generate returns understand the reasons for performance
Manager following ongoing underperformance and monitors performance against
in any of the classes. the Company's objectives and its
peers. The Board will discuss any
performance concerns with senior
representatives of the Manager.
---------------------------------------- ------------------------------------------
Global Pandemic Covid-19 has highlighted The Board receives reports on the
the speed and extent of economic business continuity plans of the
damage that can arise from Manager and other key service providers.
a pandemic. While current The effectiveness of these measures
vaccination programme results has been assessed throughout the
are hopeful, the risk remains course of the Covid-19 pandemic
that new variants may not and the Board will continue to monitor
respond to existing vaccines, developments as they occur and seek
may be more lethal and may to learn lessons which may be of
spread as global travel opens use in the event of future pandemics.
up again.
---------------------------------------- ------------------------------------------
Climate Change Climate change, which barely The Manager has an integrated approach
registered with investors to ESG and is continuing to develop
a decade ago, has today become a process to measure and present
one of the most critical the environmental effects of portfolio
issues confronting asset investing. Compliance with the UN's
managers and their investors. Principles of Responsible Investing
Changes in climate and increased is reported to the Board. The Manager
risk of extreme weather events questions the exposure of portfolio
threatens the reputation companies to climate change risk
and viability of portfolio and there is also a programme of
companies. This includes engagement with portfolio companies
the impact on natural resources which includes moves to mitigate
and increased pollution. climate change risks.
---------------------------------------- ------------------------------------------
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
Details of the management contract is set out in the Directors'
Report on page 50. The total amount payable to the Manager for the
year in respect of these contracts was GBP1,619,000 (2020:
GBP1,418,000) net of rebates, of which GBPnil (2020: GBPnil) was
outstanding at the year end.
Included in other administration expenses in note 6 on page 84
are safe custody fees amounting to GBP4,000 (2020: GBP4,000)
payable to JPMorgan Chase of which GBP3,000 (2020: GBP1,000) 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 GBP4,000 (2020: GBP21,000)
was payable to JPMorgan Securities Limited for the year of which
GBPnil (2020: GBPnil) was outstanding at the year end.
The Company holds investments in funds managed by JPMAM. At 31st
August 2021 these were valued at GBP208.9 million (2020: GBP167.2
million) and represented 52.2% (2020: 51.5%) of the Company's
investment portfolio. During the year the Company made GBP11.8
million purchases of such investments (2020: GBP6.4 million) and
sales with a total value of GBP25.3 million (2020: GBP28.6
million). Income amounting to GBP2.8 million (2020: GBP3.7 million)
was receivable from these investments during the year of which
GBP460,000 (2020: GBP564,000) was outstanding at the year end.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and 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
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards), including FRS 102, the Financial
Reporting Standard applicable in the UK and Republic of Ireland,
and applicable law. Under company law, the Directors must not
approve the financial statements unless they are satisfied that,
taken as a whole, the annual report and accounts 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 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 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 accounts are published on the www.jpmelect.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. The accounts 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,
Statement of Corporate Governance and Directors' Remuneration
Report that comply with that law and those regulations.
Each of the Directors, whose names and functions are listed in
the Annual Reprt, confirms that, to the best of their
knowledge:
-- the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards) and applicable law,
give a true and fair view of the assets, liabilities, financial
position and return of the Company; and
-- 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 risks and uncertainties that it faces.
The Board confirms that it is satisfied that the Annual Report
and Financial Statements taken as a whole are fair, balanced and
understandable and provide the information necessary for
shareholders to assess the strategy and business model of the
Company.
For and on behalf of the Board
Steve Bates
Chairman
18th November 2021
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31ST AUGUST 2021
2021 2020
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- --------- --------- -------- ---------- ------------
Gains/(losses) on investments
held at
fair value through profit or
loss - 95,722 95,722 - (16,083) (16,083)
Net foreign currency gains - 7 7 - 48 48
Income from investments 9,026 - 9,026 9,127 - 9,127
Interest receivable and similar
income 28 - 28 42 - 42
----------------------------------- -------- --------- --------- -------- ---------- ------------
Gross return/(loss) 9,054 95,729 104,783 9,169 (16,035) (6,866)
Management fee (527) (1,092) (1,619) (480) (938) (1,418)
Other administrative expenses (524) - (524) (612) (251) (863)
----------------------------------- -------- --------- --------- -------- ---------- ------------
Net return/(loss) before finance
costs
and taxation 8,003 94,637 102,640 8,077 (17,224) (9,147)
Finance costs (67) (82) (149) (84) (87) (171)
----------------------------------- -------- --------- --------- -------- ---------- ------------
Net return/(loss) before taxation 7,936 94,555 102,491 7,993 (17,311) (9,318)
Taxation (charge)/credit (18) - (18) (14) 3 (11)
----------------------------------- -------- --------- --------- -------- ---------- ------------
Net return/(loss) after taxation 7,918 94,555 102,473 7,979 (17,308) (9,329)
----------------------------------- -------- --------- --------- -------- ---------- ------------
Return/(loss) per share:
Managed Growth 15.56p 266.15p 281.71p 16.56p (14.35)p 2.21p
Managed Income 4.44p 23.99p 28.43p 3.53p (15.50)p (11.97)p
Managed Cash 0.55p (0.44)p 0.11p 0.40p 0.29p 0.69p
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31ST AUGUST 2021
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 31st August 2019 16 166,765 8 188,252 7,269 362,310
Repurchase and cancellation
of the
Company's own shares - - - (949) - (949)
Repurchase of shares into
Treasury - - - (13,878) - (13,878)
Share conversions during
the year - 7,188 - (7,188) - -
Project costs in relation
to shares as a result
of Company rollover - (373) - - - (373)
Net (loss)/return - - - (17,308) 7,979 (9,329)
Dividends paid in the year
(note 3) - - - - (8,675) (8,675)
----------------------------- -------- --------- ----------- ------------ ----------- ----------
At 31st August 2020 16 173,580 8 148,929 6,573 329,106
Repurchase and cancellation
of the
Company's own shares - - - (605) - (605)
Repurchase of shares into
Treasury - - - (19,487) - (19,487)
Share conversions during
the year - 4,608 - (4,608) - -
Project costs in relation
to shares as a result
of Company rollover - (10) - - - (10)
Net return - - - 94,555 7,918 102,473
Dividends paid in the year
(note 3) - - - - (8,473) (8,473)
----------------------------- -------- --------- ----------- ------------ ----------- ----------
At 31st August 2021 16 178,178 8 218,784 6,018 403,004
----------------------------- -------- --------- ----------- ------------ ----------- ----------
(1) These reserves form the distributable reserves of the
Company and may be used to fund distributions to investors.
STATEMENT OF FINANCIAL POSITION
AT 31ST AUGUST 2021
2021
Managed Managed Managed
Growth Income Cash
Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- --------- --------- ---------- -------------
Fixed assets
Investments held at fair value through
profit or loss 303,829 88,368 7,798 399,995
---------------------------------------- --------- --------- ---------- -------------
Current assets
Derivative financial assets 77 - - 77
Debtors 625 1,092 134 1,851
Cash and cash equivalents 6,475 2,132 2 8,609
---------------------------------------- --------- --------- ---------- -------------
7,177 3,224 136 10,537
Current liabilities
Creditors: amounts falling due within
one year (265) (7,116) (53) (7,434)
Derivative financial liabilities (94) - - (94)
---------------------------------------- --------- --------- ---------- -------------
Net current assets/(liabilities) 6,818 (3,892) 83 3,009
---------------------------------------- --------- --------- ---------- -------------
Total assets less current liabilities 310,647 84,476 7,881 403,004
---------------------------------------- --------- --------- ---------- -------------
Net assets 310,647 84,476 7,881 403,004
---------------------------------------- --------- --------- ---------- -------------
Capital and reserves
Called up share capital 15 1 - 16
Share premium 51,849 93,147 33,182 178,178
Capital redemption reserve 3 3 2 8
Other reserve 25,819 (5,572) (20,247) -
Capital reserves 230,946 (7,036) (5,126) 218,784
Revenue reserve 2,015 3,933 70 6,018
---------------------------------------- --------- --------- ---------- -------------
Total shareholders' funds 310,647 84,476 7,881 403,004
---------------------------------------- --------- --------- ---------- -------------
31st August 2021
Net asset Net assets
value
per share attributable
(pence) GBP'000
-------------------------------------------------------------- ---------- -------------
Managed Growth 1,119.1 310,647
Managed Income 111.6 84,476
Managed Cash 103.2 7,881
AT 31ST AUGUST 2020
2020
Managed Managed Managed
Growth Income Cash
Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- --------- ---------- ---------- -------------
Fixed assets
Investments held at fair value through
profit or loss 244,721 74,463 5,484 324,668
---------------------------------------- --------- ---------- ---------- -------------
Current assets
Derivative financial assets 71 - - 71
Debtors 4,478 669 - 5,147
Cash and cash equivalents 7,489 1,026 889 9,404
---------------------------------------- --------- ---------- ---------- -------------
12,038 1,695 889 14,622
Current liabilities
Creditors: amounts falling due within
one year (3,916) (5,834) (201) (9,951)
Derivative financial liabilities (233) - - (233)
---------------------------------------- --------- ---------- ---------- -------------
Net current assets/(liabilities) 7,889 (4,139) 688 4,438
---------------------------------------- --------- ---------- ---------- -------------
Total assets less current liabilities 252,610 70,324 6,172 329,106
---------------------------------------- --------- ---------- ---------- -------------
Net assets 252,610 70,324 6,172 329,106
---------------------------------------- --------- ---------- ---------- -------------
Capital and reserves
Called up share capital 15 1 - 16
Share premium 50,681 92,519 30,380 173,580
Capital redemption reserve 3 3 2 8
Other reserve 25,819 (5,572) (20,247) -
Capital reserves 173,796 (20,823) (4,044) 148,929
Revenue reserve 2,296 4,196 81 6,573
---------------------------------------- --------- ---------- ---------- -------------
Total shareholders' funds 252,610 70,324 6,172 329,106
---------------------------------------- --------- ---------- ---------- -------------
31st August 2020
Net asset Net assets
value
per share attributable
(pence) GBP'000
--------------------------------------------------------------- ---------- -------------
Managed Growth 851.9 252,610
Managed Income 87.6 70,324
Managed Cash 103.8 6,172
STATEMENT OF CASH FLOWS
FOR THE YEARED 31ST AUGUST 2021
2021 2020
GBP'000 GBP'000
--------------------------------------------------------- ---------- ----------
Net cash outflow from operations before dividends and
interest (2,147) (2,190)
Dividends received 8,670 9,674
Interest received 50 64
Interest paid (162) (166)
--------------------------------------------------------- ---------- ----------
Net cash inflow from operating activities 6,411 7,382
--------------------------------------------------------- ---------- ----------
Purchases of investments and derivatives (62,307) (47,244)
Sales of investments and derivatives 81,417 66,163
Settlement of futures contracts 1,158 761
Settlement of forward currency contracts (4) 20
--------------------------------------------------------- ---------- ----------
Net cash inflow from investing activities 20,264 19,700
--------------------------------------------------------- ---------- ----------
Dividends paid (8,473) (8,675)
Repurchase of shares into Treasury (19,486) (13,977)
Repurchase and cancellation of the Company's own shares (763) (2,343)
Drawdown of bank loan 2,000 5,000
Repayment of bank loan - (5,000)
Utilisation of bank overdraft (739) 648
Project costs in relation to shares issued as a result
of Company rollover (10) (373)
--------------------------------------------------------- ---------- ----------
Net cash outflow from financing activities (27,471) (24,720)
--------------------------------------------------------- ---------- ----------
(Decrease)/increase in cash and cash equivalents (796) 2,362
--------------------------------------------------------- ---------- ----------
Cash and cash equivalents at start of year 9,404 7,061
Exchange movements 1 (19)
Cash and cash equivalents at end of year 8,609 9,404
--------------------------------------------------------- ---------- ----------
(Decrease)/increase in cash and cash equivalents (796) 2,362
--------------------------------------------------------- ---------- ----------
Cash and cash equivalents consist of:
--------------------------------------------------------- ---------- ----------
Cash held in JPMorgan Sterling Liquidity Fund 6,906 1,192
Cash and short term deposits 1,703 8,212
--------------------------------------------------------- ---------- ----------
Total 8,609 9,404
--------------------------------------------------------- ---------- ----------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 31ST AUGUST 2021
1. Accounting policies
Basis of accounting
The financial statements are prepared under the historical cost
convention, modified to include fixed asset investments 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 October 2019.
All of the Company's operations are of a continuing nature.
The financial statements for the Company comprise the Statement
of Comprehensive Income, the Statement of Changes in Equity, the
'Total' column of the Statement of Financial Position, the
Statement of Cash Flows, and the 'Total' column within the Notes to
the financial statements.
The Managed Growth, Managed Income and Managed Cash Statement of
Financial Position, together with the notes to those statements are
not required under UK GAAP, and have not been audited but have been
disclosed to assist shareholders' understanding of the net assets
and liabilities, and income and expenses of the different share
classes.
The financial statements have been prepared on a going concern
basis following an assessment of the appropriateness of the going
concern basis up to 30th November 2022. In forming this opinion,
the directors have considered any potential impact of the 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
and the liquidity of the investment portfolio in making their
assessment.
The policies applied in these financial statements are
consistent with those applied in the preceding year,
2. Return/(loss) per share
2021 2020
GBP'000 GBP'000
---------------------------------------------------------- ----------- -----------
Managed Growth
Return per Managed Growth share is based on the
following:
Revenue return 4,446 5,002
Capital return/(loss) 76,039 (4,337)
---------------------------------------------------------- ----------- -----------
Total return 80,485 665
---------------------------------------------------------- ----------- -----------
Weighted average number of shares in issue during
the year 28,570,509 30,220,043
Revenue return per share 15.56p 16.56p
Capital return/(loss) per share 266.15p (14.35)p
---------------------------------------------------------- ----------- -----------
Total return per share 281.71p 2.21p
---------------------------------------------------------- ----------- -----------
2021 2020
GBP'000 GBP'000
---------------------------------------------------------- ----------- -----------
Managed Income
Return/(loss) per Managed Income share is based
on the following:
Revenue return 3,432 2,956
Capital return/(loss) 18,548 (12,986)
---------------------------------------------------------- ----------- -----------
Total return/(loss) 21,980 (10,030)
---------------------------------------------------------- ----------- -----------
Weighted average number of shares in issue during
the year 77,305,109 83,811,388
Revenue return per share 4.44p 3.53p
Capital return/(loss) per share 23.99p (15.50)p
---------------------------------------------------------- ----------- -----------
Total return/(loss) per share 28.43p (11.97)p
---------------------------------------------------------- ----------- -----------
2021 2020
GBP'000 GBP'000
---------------------------------------------------------- ----------- -----------
Managed Cash
Return per Managed Cash share is based on the following:
Revenue return 40 21
Capital (loss)/return (32) 15
---------------------------------------------------------- ----------- -----------
Total return 8 36
---------------------------------------------------------- ----------- -----------
Weighted average number of shares in issue during
the year 7,163,795 5,231,111
Revenue return per share 0.55p 0.40p
Capital (loss)/return per share (0.44)p 0.29p
---------------------------------------------------------- ----------- -----------
Total return per share 0.11p 0.69p
---------------------------------------------------------- ----------- -----------
3. Dividends
(a) Dividends paid
2021 2020
GBP'000 GBP'000
------------------------------------------------------- -------- --------
Managed Growth shares 2020 4th interim dividend paid
of 4.75p (2019: 3.49p) 1,409 1,080
Managed Growth shares 2021 1st interim dividend paid
of 3.10p (2020: 3.50p) 908 1,069
Managed Growth shares 2021 2nd interim dividend paid
of 5.45p (2020: 5.45p) 1,569 1,652
Managed Growth shares 2021 3rd interim dividend paid
of 3.00p (2020: 3.00p) 841 900
Managed Income shares 2020 4th interim dividend paid
of 1.40p (2019: 1.35p) 1,138 1,167
Managed Income shares 2021 1st interim dividend paid
of 1.10p (2020: 1.10p) 866 946
Managed Income shares 2021 2nd interim dividend paid
of 1.10p (2020: 1.10p) 856 924
Managed Income shares 2021 3rd interim dividend paid
of 1.10p (2020: 1.10p) 835 909
Managed Cash shares 2020 4th interim dividend paid of
0.40p (2019: 0.40p) 21 28
Managed Cash shares 2021 2nd interim dividend paid of 30 -
0.40p (2020: nil)
------------------------------------------------------- -------- --------
Total dividends paid in the year 8,473 8,675
------------------------------------------------------- -------- --------
In respect of dividends paid during the year ended 31st August
2021:
The 2020 4th interim dividends were paid on 21st September 2020
to shareholders on the register as at the close of business on 14th
August 2020.
The 1st interim dividends were paid on 23rd December 2020 to
shareholders on the register as at the close of business on 20th
November 2020.
The 2nd interim dividends were paid on 19th March 2021 to
shareholders on the register as at the close of business on 12th
February 2021.
The 3rd interim dividends were paid on 18th June 2021 to
shareholders on the register as at the close of business on 14th
May 2021.
(b) Dividends declared
2021 2020
GBP'000 GBP'000
--------------------------------------------------------- -------- --------
Managed Growth shares 2021 4th interim dividend of
4.45p (2020: 4.75p) 1,238 1,409
Managed Income shares 2021 4th interim dividend of
1.45p (2020: 1.40p) 1,099 1,138
Managed Cash shares 2021 interim dividend of nil (2020:
0.40p) - 21
--------------------------------------------------------- -------- --------
Total dividends declared 2,337 2,568
--------------------------------------------------------- -------- --------
In respect of the dividends declared, but not paid, during the
year ended 31st August 2021, the dividends were paid on 20th
September 2021 to shareholders on the register as at the close of
business on 13th August 2021.
All dividends in the year have been funded from the revenue
reserve.
(c) Dividends 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 paid and declared in respect of the financial year, as
follows:
2021 2020
GBP'000 GBP'000
---------------------------------------------------------- -------- --------
Managed Growth shares 2021 1st interim dividend paid
of 3.10p (2020: 3.50p) 908 1,069
Managed Growth shares 2021 2nd interim dividend paid
of 5.45p (2020: 5.45p) 1,569 1,652
Managed Growth shares 2021 3rd interim dividend paid
of 3.00p (2020: 3.00p) 841 900
Managed Growth shares 2021 4th interim dividend declared
of 4.45p (2020: 4.75p) 1,238 1,409
Managed Income shares 2021 1st interim dividend paid
of 1.10p (2020: 1.10p) 866 946
Managed Income shares 2021 2nd interim dividend paid
of 1.10p (2020: 1.10p) 856 924
Managed Income shares 2021 3rd interim dividend paid
of 1.10p (2020: 1.10p) 835 909
Managed Income shares 2021 4th interim dividend declared
of 1.45p (2020: 1.40p) 1,099 1,138
Managed Cash shares 2021 2nd interim dividend paid
of 0.40p (2020: nil) 30 21
---------------------------------------------------------- -------- --------
Total dividends for Section 1158 purposes 8,242 8,968
---------------------------------------------------------- -------- --------
The revenue available for distribution by way of dividend for
the year is GBP7,918,000 (2020: GBP7,979,000). The revenue reserve
after payment of the 4th interim dividends will amount to
GBP3,681,000 (2020: GBP4,005,000).
4. Net asset value per share
The net asset values per share are calculated as follows:
2021 2020
Managed Managed Managed Managed Managed Managed
Growth Income Cash Growth Income Cash
-------------------------- ----------- ----------- ---------- ----------- ----------- ----------
Net assets (GBP'000) 310,647 84,476 7,881 252,610 70,324 6,172
Number of shares in
issue (excluding shares
held in Treasury) 27,759,882 75,682,487 7,637,858 29,653,205 80,253,693 5,946,758
-------------------------- ----------- ----------- ---------- ----------- ----------- ----------
Net asset value per
share 1,119.1p 111.6p 103.2p 851.9p 87.6p 103.8p
-------------------------- ----------- ----------- ---------- ----------- ----------- ----------
Status of announcement
2020 Financial Information
The figures and financial information for 2020 are extracted
from the Annual Report and Financial Statements for the year ended
31st August 2020 and do not constitute the statutory accounts for
that year. The Annual Report and Financial Statements has 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.
2021 Financial Information
The figures and financial information for 2021 are extracted
from the Annual Report and Financial Statements for the year ended
31st August 2021 and do not constitute the statutory accounts for
that year. The Annual Report and Financial Statements includes 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 Financial
Statements will be delivered to the Registrar of Companies in due
course.
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.
18th November 2021
For further information:
Priyanka Vijay Anand,
JPMorgan Funds Limited
ENDS
A copy of the 2021 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 also shortly be available on the
Company's website at www.jpmelect.co.uk where up to date
information on the Company, including daily NAV and share prices,
factsheets and portfolio information can also be found.
JPMORGAN FUNDS LIMITED
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END
FR UWORRASUAAUA
(END) Dow Jones Newswires
November 19, 2021 03:00 ET (08:00 GMT)
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