Final Results to 30 June 2020

RNS Number : 0550A

JPMorgan Global Growth & Income PLC

24 September 2020

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN GLOBAL GROWTH & INCOME PLC

ANNOUNCEMENT OF FINAL RESULTS FOR THE YEAR ENDED 30TH JUNE 2020

Legal Entity Identifier: 5493007C3I0O5PJKR078

Information disclosed in accordance with DTR 4.2.2

CHAIRMAN'S STATEMENT

The financial year to 30th June 2020 started positively, albeit with financial markets remaining nervous about the consequences of US/China trade wars and Brexit. From January markets were completely dominated by the global COVID-19 health pandemic, which resulted in some very challenging months for the global economy. However governments and central banks responded to the crisis quickly and proactively with unprecedented levels of monetary and fiscal support.

After having reported positive results for the first half of the Company's financial year, the second half to 30th June 2020 was a period of extreme volatility. In the three months to the end of March, markets experienced a dramatic fall, while government intervention to stabilise economies led to an equally dramatic recovery from April to the end of June. Given this extraordinary economic background and the turmoil in financial markets, it is very encouraging to report that the Company recorded a total return on net asset value ('NAV') of +6.0% in the year, outperforming the benchmark - the MSCI AC World Index expressed in sterling terms - which returned +5.2%. This outperformance was a result of positive stock selection. The total return to shareholders was slightly lower at +4.8% reflecting a narrowing of the share price premium to NAV.

PERFORMANCE ATTRIBUTION

YEAR ENDED 30TH JUNE 2020

	%	%
Contributions to total returns
Benchmark return		5.2
Asset allocation	0.0
Stock selection	1.3
Currency effect	0.2
Gearing/cash	0.0
Investment Managers' contribution		1.5
Portfolio total return		6.7
Management fee/other expenses	-0.6
Performance fee	-0.1
Net asset value total return - prior
to structural effects		6.0
Structural effects
Share buy-backs/issuance	0.0
Net asset value total return - Debt at Par Value		6.0
Impact of Fair Valuation of Debt	-1.2
Net asset value total return - Debt at Fair Value		4.8
Return to Shareholders		4.8

Source: JPMAM and Morningstar.

All figures are on a total return basis.

The performance attribution set out above analyses how the Company achieved its performance relative to its benchmark index. The Investment Managers' report provides a detailed commentary on these figures and discusses activity, performance and the market outlook.

Distribution and Dividends Policy

The Company's revised dividend policy has now been in place for over four 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 Board announced on 1st July 2020 that, in relation to the year commencing 1st July 2020, the Company intends to pay dividends totalling 13.16p per share, which represents a yield of 4.0% of the unaudited NAV as at the 30th June 2020. It is expected that such dividends will be paid by way of four equal distributions, with the first distribution of 3.29p per share for the quarter to 30th September 2020 being paid on 2nd October 2020 to shareholders on the register on 28th August 2020. The ex-dividend date was 27th August 2020.

The intended dividend for the year commencing 1st July 2020 represents an increase of 0.9% over the total dividend of 13.04p per share payable for the prior financial year. It is encouraging that we have been able to announce a small increase in our dividend at a time when many companies are reducing or suspending their dividends.

Investment Restrictions and Guidelines

Effective 31st March 2020, the Board amended the Company's Investment Restrictions and Guidelines to allow the managers to hold up to 35% (from 30%) of total assets in the top 10 holdings; up to 55% (from 50%) of total assets in the top 20 holdings; and, an individual stock can now represent the higher of 5% of total assets or a 4% 'active' position relative to the Company's benchmark, each as measured at the time of acquisition. These changes were made in order to provide the managers with increased flexibility to manage the Company's portfolio.

London Stock Exchange Ticker

With effect from 26th February, 2020 the ticker of JPMorgan Global Growth & Income plc has changed from JPGI to JGGI. This change was to help investors more easily identify the shares on the London Stock Exchange and investment platforms, when they use the initials of the Company (JPMorgan Global Growth & Income). All other Company details remained the same, including the Company's name, ISIN, SEDOL and LEI.

Share Issuance and Repurchases

The Company has had a long standing policy of maintaining the discount at which our shares trade relative to NAV at close to or below 5%. Encouragingly, as has been the case for some time, our shares traded close to NAV during the year and indeed often traded at a premium. As a result the Company did not need to repurchase any shares during the year, and during periods when the shares traded at a premium, the Company was able to reissue 8,490,000 shares from Treasury for a total consideration of £28,136,000. In the four years to 30th June 2020 the Company has raised £57,057,000 by reissuing 17,650,000 shares from Treasury. Since the year-end, the Company has reissued a further 1,275,000 shares from Treasury for a total consideration of £4,416,000. At the year-end the share price premium to NAV stood at 1.4% and at the time of this report it stands at 5.0%.

A resolution to renew the authority to permit the Company to repurchase shares will be proposed at the Annual General Meeting ('AGM') in November 2020; resolutions renewing the authorities to issue shares from Treasury and to issue new shares, in both cases at a premium to NAV, and to disapply pre-emption rights over such issues, will also be proposed.

Ongoing Charges

The Board continues to believe that the Company's ongoing charges ratio (excluding performance fees) of 0.55% for the year ended 30th June 2020 (2019: 0.56%) is competitive when compared to other trusts and savings products such as open ended funds actively investing in global equities. There is a performance fee payable of £333,000 for the year ended 30th June 2020 (2019: nil) and the ongoing charges including the performance fee is 0.66% (2019: 0.56%). Performance fees are calculated and payable over a four year period. There is an accrual of £388,000 included in the financial statements in respect of performance fees that could become payable in future years. The Board continues actively to monitor the Company's management fee arrangements (including performance fees) to ensure they remain structured in the interests of shareholders.

Gearing

Gearing is regularly discussed between the Board and the Investment Managers. In 2018, the Board issued £30 million fixed rate 30 year unsecured notes at an annual coupon of 2.93%. The notes are unsecured, which gives the Company increased flexibility to manage its borrowings in the future. The Investment Managers decreased gearing levels during the year from 3.8% at the start of the period to -1.2% at 30th June 2020. Since the year end, the Investment Managers have increased gearing to 0.9% at the time of writing.

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, the MSCI World All Countries Index (in sterling terms). 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

As previously announced, and in anticipation of the retirement of Jonathan Carey at this year's AGM in November, the Board has, with effect from 1st January 2020, appointed as a director Sarah Whitney, a Chartered Accountant who has more than 30 years' experience in the corporate finance, investment and real estate sectors. She holds a number of senior non-executive appointments. It is the Board's intention that Sarah will assume the role of Chairman of the Audit and Management Engagement Committee and Tristan Hillgarth will assume the role of Chairman of the Remuneration Committee when Jonathan retires.

Furthermore, as part of the Board's ongoing succession planning, I myself will be retiring from the Board at the conclusion of next year's AGM in 2021 after having served on the Board from 2010 and as its Chairman since 2015. The Board plans on starting a recruitment process over the coming months with a view to appointing a new Director and to agree the next Board Chairman in early 2021.

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 election/re-election at the forthcoming AGM.

Operations of the Company's Key Service Providers under COVID-19

The Board is pleased to report that, since the on-set of the pandemic and throughout, the Manager and the Company's other service providers have been able to adjust their business models 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

We are holding the Company's Annual General Meeting ('AGM') at 60 Victoria Embankment, London EC4Y 0JP on 4th November 2020 at 2.30 p.m. Please note that in view of the current restrictions regarding the COVID-19 pandemic and the continuing imposition of social distancing measures and prohibitions on large public gatherings by the UK Government, only the formal business will be conducted at the AGM and the minimum legal requirements for an AGM will be followed. There will be no investor presentation in person by the investment team. Shareholders will not be allowed to attend the AGM and indeed entry will be refused in line with the prevailing protocol. In light of the changed format, the Board strongly encourages all shareholders to exercise their votes in respect of the meeting in advance, by completing and returning their proxy forms. This will ensure that the votes are registered in the event that attendance at the AGM is not possible. A presentation from the Investment Managers, which would have been delivered at the Annual General Meeting, will be available for shareholders to view on the Company's website approximately one week in advance of the Annual General Meeting.

In addition, shareholders are encouraged to raise any questions in advance of the AGM via the 'Ask the Question' link found under the 'Contact Us' section on the Company's website (www.jpmglobalgrowthandincome.co.uk) or by email at [e-mail] Any questions received will be replied to via the Company Secretary.

In the event that the situation changes the Company will update shareholders through an announcement to the London Stock Exchange and on the Company's website.

Outlook

As a result of COVID-19 we find ourselves in uniquely challenging times. Most economies suffered huge declines in Q1 2020 and while there have been recoveries of varying speeds in Q2, the global economy is reliant on an unprecedented level of official fiscal and monetary support. It seems clear that we will not see a return to anything approaching normality until one or more of the many vaccines being developed proves to be effective.

However, what constitutes normality may have changed permanently. The expanded use of technology in every aspect of life has accelerated changes in the patterns of people's behaviour, facilitating remote working and increased internet shopping amongst many other things.

The crisis has in my view emphasised the strength of the Company's investment proposition. Our Investment Managers have the freedom to invest globally in the best companies, irrespective of industry or yield. The team has used this freedom very effectively in recent months to pick those stocks most likely to benefit from the major strategic changes taking place in the global economy. While it seems right to be cautious until a vaccine for COVID-19 is in place, the Investment Managers' ability to invest on an unconstrained basis and the team's depth of investment research should continue to deliver attractive returns to shareholders.

Nigel Wightman

Chairman     24th September 2020

INVESTMENT MANAGERS' REPORT

Keep calm and carry on

As we review the Company's financial year for the 12 months to 30th June 2020, it seems important to look back at what we wrote this time last year. We spoke then about the volatility that we had come to live with, and the risks that exogenous factors like Brexit and a US-China trade war posed to the global economy. We also talked about the importance of staying invested, and the opportunities that volatility provides us. The event that has really come to dominate 2020 - COVID-19 - is very different from what we'd anticipated last year, but those principles have been reinforced. We have all had to adapt to our lives being governed by significant restrictions, yet it is worth noting that the benchmark to which we compare your Company, the MSCI All Country World Index, is now close to where it started the year.

By staying invested over the past year, the excess returns that have been generated, along with the dividends the Company has paid, has provided a respectable return for shareholders. However, an investor that sold in the middle of March might have lost nearly a third of the value of their shareholding since the start of the year. This speaks to the importance of staying invested. Timing the market is very hard, if not impossible. We seek to add value during times of volatility through buying stocks at attractive prices. There of course remains much that is unclear about what happens in the next 12 months, but the Company invests in businesses that we see as very compelling investments over the long run. Being able to buy into these companies at meaningful discounts to their intrinsic value gives us the opportunity to generate very strong returns for years to come. Many aspects of the world - although perhaps not all - will return to normal at some point, and taking this long term view will be worthwhile.

Portfolio Review and Spotlight on Stocks

We had been cautious for some time on a number of sectors that we felt were pricing too optimistic an economic outlook (even before we'd heard the term COVID-19). Cyclical consumer and commodity companies are good examples of where we chose to have virtually no positions. Even within banks, we were focussing on the high quality names in the US, rather than the more challenged Europeans. All of these positions worked in our favour over the 12 month review period, as these sectors meaningfully underperformed. In contrast, our sizeable positions in the retail and health services sectors were some of the strongest contributors.

As always, not all sectors can contribute positively. Our positions in aerospace and beverage names were severely punished when the pandemic hit. The absence of the consumer traveling or eating out created unprecedented challenges, and the companies we owned in these sectors were not immune.

Airbus and Safran are two examples of how painful the aerospace sector was for us. These stocks both fell by 65% in just over a month, as the market feared that airlines would go bankrupt, passengers would no longer travel as frequently, and ultimately these companies would be significantly impaired. We decided to consolidate our positions into Safran, as their large aftermarket business will continue to provide significant cash flow even in the event that air travel remains depressed for a number of years. Unfortunately Airbus was a name that we saw as carrying too much risk, and we felt we could find better investments elsewhere.

Another sector that has been through a torrid few months is the energy sector. Whilst we had limited our holdings in this sector, unfortunately the names that we owned performed very poorly. Diamondback Energy was the worst of them, as a perfect storm of a collapse in global demand for oil due to the virus, and a confrontation between Saudi Arabia and Russia on their OPEC+ agreement, led to Brent falling from $69 a barrel in January, to just $19 in April. With no levers to pull other than cutting production, Diamondback took a significant hit. We felt that these smaller companies operating in West Texas faced a real existential crisis, and as a result we chose to consolidate our holdings into the larger oil conglomerates, that will both benefit from an oil price recovery, but are also making significant investments in more sustainable energy sources.

One company it is important to mention is Apple. Apple is not a name we have owned for much of this year, and whilst that may appear to have been a flawed decision, it is important to frame the context. Within the Technology sector, we see companies that are significantly more attractive than Apple. That is not to say that we think Apple is a bad company - far from it. But when we are selecting the best names for the next 3-5 years, we simply see more opportunity elsewhere.

One such name is ASML. They have a virtual monopoly in cutting-edge lithography machines - machines that are used in the production of chips. Their Extreme Ultra-Violet (EUV) machines are vital for those chip manufacturers who operate at the leading-edge. Without ASML's technology, the pace of innovation in the electronics industry would simply not be possible. We have confidence in the outlook for ASML for at least the next 5 years, and even though the stock has been one of our best performers, we continue to own a large position.

The stock that contributed most to our outperformance in the past 12 months is Schneider Electric, which has truly been a reminder of how strong the investment case has become. The consistency strategy of positioning themselves in Energy Management and Industrial Automation is still in the early stages of bearing fruit. The business of providing solutions that allow factories to become more energy efficient and more automated is one that we believe will continue to grow for many years, with Schneider leading the way. The EU Green Deal should also allow them to further accelerate growth, particularly in Energy Management.

Morgan Stanley is a name that demonstrates how important selecting the right stocks is. In an environment where the Global Banks Index fell by 21% over the course of 12 months, Morgan Stanley rose 10%. Their strong performance in Wealth Management, despite very difficult markets, was impressive, and we continue to like the prospects here as they look to integrate E-Trade into the business. Their trading business was stellar, as they grew Fixed Income, Currencies & Commodities (FICC) trading by 168% in the most recent quarter, and their Investment Bank continued to excel. They continue to make progress towards their return targets, and we have confidence that management will continue to execute.

One final name to mention is Amazon, which of course is a major beneficiary of the pandemic. At the time of writing, the stock has nearly doubled from lows back in March, and it is undeniable that the last few months have led to yet another step change in their trajectory. Their AWS public cloud business is perhaps less well known than the Retail business, but it is a $40 billion revenue business growing at 33% - a truly amazing number for a business that size. With consumers stuck at home, online ordering became more vital, and Amazon will benefit long into the future from the increased number of people with Prime, and the forever-changed shopping habits in areas like Grocery. Given the fantastic performance, we have trimmed our position in this name, but it remains a core holding.

In similar fashion to the last financial year, we increased our weighting in both the US and in Continental Europe, ultimately driven by our stock selection, rather than any macroeconomic view. During the volatility in the early parts of 2020, we found ourselves looking for high quality businesses that were trading at meaningful discounts to what we felt they were worth, and the US has an abundance of quality companies. One such example is our purchase of American Express, which we consider very well positioned to continue to grow for many years, but was performing very poorly as the market worried about the short-term dynamics of consumer spending on travel. These types of opportunities will drive the geographical shape of the portfolio, rather than any kind of asset allocation.

Outlook and Portfolio Positioning

Towards the end of 2019, we took gearing down to zero, as we had real concerns about valuations, and the phase of the business cycle. That proved to be the right decision, albeit for reasons we couldn't have predicted. We have not yet meaningfully increased the gearing, but we have increased overall risk in the portfolio, starting in April, through the purchase of a number of more cyclical names. Our reasons for not yet utilising the gearing facility is rooted in the risks that we still see ahead. We do not yet know what the state of the world will be when enhanced unemployment schemes disappear, or when Central Banks are unwilling to provide a further backstop to markets. If markets were at cheap valuation with those uncertainties ahead, we might make a calculated decision about the risk we take, but with markets having rebounded strongly, we await a better opportunity to add gearing.

The biggest single uncertainty of course is the resurgence of COVID-19, and the timeline to delivering a vaccine. We are hopeful that the vast amounts of money currently focused on finding a vaccine will be successful, and in the meantime must rely on governments to support their citizens. The trajectory of job losses is hard to forecast, but we suspect that once furlough schemes end, we do see another step up in unemployment. However this crisis does not resemble the Global Financial Crisis - we do not see existential threats to the financial systems we rely on. Instead we have experienced a shock, and as a result we are at the beginning of a new business cycle. Be prepared for volatility in the next few months, but be confident in the outlook.

With that in mind, we have added to a number of cyclical names at very attractive prices. One such example is Taylor Wimpey, the UK homebuilder, who recently took advantage of weak land prices in the UK to improve their land bank at attractive levels. Housing demand in the UK will continue to grow, and this is a sensible strategic decision by management. With the shares trading at levels not seen since the aftermath of the Brexit vote, we have initiated a position in the stock. Another consumer cyclical that we purchased was Booking.com - the leading online travel agent. It will not surprise you to hear that the complete shutdown of travel had a devastating impact on hotel bookings, but thankfully Booking.com went into the crisis with a very strong balance sheet. We are confident that the structural forces in place before the crisis, namely the continuing move online of hotel bookings, will prove to be supportive, and we took advantage of the panic in markets to buy the stock. Having started the year with no exposure to consumer cyclicals, we envisage our exposure continuing to grow.

The same can be said of our exposure to other sectors and stocks that look cheap versus their intrinsic value. Medical device companies were hit hard as hospitals halted elective procedures, but those procedures will happen in time. Semiconductor stocks that are vital to the move to Electric Vehicles sold off early in the crisis, yet their strategic positioning has never been better. Chemical companies that saw demand collapse, but have now seen it bounce back. All of these were opportunities that we grasped with both hands over the last few months, and we think will prove to be well-timed purchases.

Regardless of our short-term view on markets, we feel confident that equities remain an attractive asset class over the long term and we remain focused on generating superior returns for shareholders in the Company from a portfolio of our global best stock ideas.

Helge Skibeli

Rajesh Tanna

Tim Woodhouse

Investment Managers   24th September 2020

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 Board has drawn up a risk -matrix, which identifies the key risks to the Company. In assessing the risks and how they can be mitigated, the Board has given particular attention to those risks that might threaten the viability of the Company.

These key risks fall broadly under the following categories:

• Investment and Strategy

An inappropriate investment strategy, for example asset allocation or the level of gearing, may lead to under-performance against the Company's benchmark index and peer companies, resulting in the Company's shares trading on a wider discount. The Board manages these risks by diversification of investments through its investment restrictions and guidelines which are monitored and reported by the Manager. The Manager provides the Directors with timely and accurate management information, including performance data and attribution analyses, revenue estimates, liquidity 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

Market risk arises from uncertainty about the future prices of the Company's investments. It represents the potential loss that the Company might suffer through holding investments in the face of negative market movements. The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines, which are monitored and reported on by the Manager. The Board monitors the implementation and results of the investment process with the Manager.

• Accounting, Legal and Regulatory

In order to qualify as an investment trust, the Company must comply with Section 1158 of the Corporation Tax Act 2010 ('Section 1158'). Details of the Company's approval are given under 'Structure of the Company' within the Business Review section above. Were the Company to breach Section 1158, it might lose investment trust status and, as a consequence, gains within the Company's portfolio could be subject to Capital Gains Tax. The Section 1158 qualification criteria are continually monitored by the Manager and the results reported to the Board each month. The Company must also comply with the provisions of The Companies Act 2006 and, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules and Disclosure, Guidance and Transparency Rules ('DTRs'). A breach of the Companies Act 2006 could result in the Company and/or the Directors being fined or the subject of criminal proceedings. Breach of the UKLA 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 UKLA Listing Rules and DTRs.

• Operational

Loss of key staff by the Manager, such as the Investment Managers, could affect the performance of the Company. Disruption to, or failure of, the Manager's accounting, dealing or payments systems or the depositary's or custodian's records could prevent accurate reporting and monitoring of the Company's financial position. On 1st July 2014, the Company appointed the Bank of New York Mellon (International) Limited to act as the depositary, responsible for overseeing the operations of the custodian, JPMorgan Chase Bank, N.A., and the Company's cash flows. Details of how the Board monitors the services provided by the Manager and its associates and the key elements designed to provide effective internal control are included with the Risk Management and Internal Control section of the Corporate Governance report on pages 32 and 33 of the 2020 Annual 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 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 concern

Pursuant to the Sharman Report, Boards are now advised to consider going concern as a potential risk, whether or not there is an apparent issue arising in relation thereto. Going concern is considered rigorously on an ongoing basis and the Board's statement on going concern is detailed on page 35 of the 2020 Annual Report.

• Financial

The financial risks faced by the Company include market price risk, interest rate risk, liability risk and credit risk. Further details are disclosed in note 23 on pages 66 to 72 of the 2020 Annual Report.

• Climate Change

Climate change, which barely registered with investors a decade ago, has today become one of the most critical issues confronting asset managers and their investors. Investors can no longer ignore the impact that the world's changing climate will have on their portfolios, with the impact of climate change on returns now inevitable. As detailed on page 2 of the 2020 Annual Report, ESG considerations are incorporated at the heart of the Company's investment process.

  Financial returns for long-term diversified investors should not be jeopardised given the investment opportunities created by the world's transition to a low-carbon economy. The Board is also considering the threat posed by the direct impact on climate change on the operations of the Manager and other major service providers. As extreme weather events become more common, the resiliency, business continuity planning and the location strategies of our services providers will come under greater scrutiny.

• Global Pandemics

The recent emergence and spread of coronavirus (COVID-19) has raised the emerging risk of global pandemics, in whatever form a pandemic takes. COVID-19 poses a significant risk to the Company's portfolio. At the date of this report, the virus has contributed to significant volatility in trading recently. The global reach and disruption to markets of this pandemic is unprecedented, so we have no direct comparatives from history to learn from. However, seismic events and situations in the past have also been the catalyst for violent market contractions. Time after time, markets have recovered, albeit over varying and sometimes extended time periods, and so we do have an expectation that the portfolio's holdings will not suffer a material long-term impact and should recover once containment measures ease. Since the on-set of the pandemic and throughout, the Manager and the Company's other service providers have been able to adjust their business models 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 to date. Should the virus become more virulent than is currently the case, it may present risks to the operations of the Company, its Manager and other major service providers.

Should efforts to control a pandemic prove ineffectual or meet with substantial levels of public opposition, there is the risk of social disorder arising at a local, national or international level. Even limited or localised societal breakdown may threaten both the ability of the Company to operate, the ability of investors to transact in the Company's securities and ultimately the ability of the Company to pursue its investment objective and purpose.

TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES

Details of the management contract are set out in the Directors' Report on page 27 of the 2020 Annual Report. The management fee payable to the Manager for the year was £1,906,000 (2019: £1,726,000) of which £nil (2019: £nil) was outstanding at the year end.

A performance fee charge of £507,000 (2019: £1,040,000 writeback) is applicable for the year and £333,000 (2019: £nil) is immediately payable. An amount £380,000 (2019: £206,000) is carried forward and will either be paid or absorbed by underperformance in subsequent years.

During the year £7,000 (2019: £50,000) was payable to the Manager for administration of savings scheme products, of which £nil (2019: £23,000) was outstanding at the year end.

Included in administration expenses in note 6 on page 59 of the 2020 Annual Report  are safe custody fees amounting to £24,000 (2019: £29,000) payable to JPMorgan Chase Bank N.A. of which £5,000 (2019: £7,000) 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 £2,000 (2019: £nil) was payable to JPMorgan Securities Limited for the year of which £nil (2019: £nil) was outstanding at the year end. 

Handling charges on dealing transactions amounting to £21,000 (2019: £20,000) were payable to JPMorgan Chase Bank, N.A. during of which £6,000 (2019: £7,000) was outstanding at the year end.

As at the year ended 30th June 2020, the Company did not hold any investments in trusts managed by JPMF (2019: same). During the prior year, the Company sold its investments in trusts managed by JPMF and made £6.1 million. Income amounting to £130,000 was receivable from these investments during the prior year, of which £nil was outstanding at the prior year end.

The Company also holds cash in the JPMorgan Sterling Liquidity Fund, which is managed by JPMF. At the year end this was valued at £31.7 million (2019: £12.0 million). Interest amounting to £190,000 (2019: £67,000) was receivable during the year of which £nil (2019: £10,000) was outstanding at the year end.

Fees amounting to £21,000 (2019: £42,000) were receivable from stock lending transactions during the year. JPMorgan Chase Bank, N.A. commissions in respect of such transactions amounted to £2,000 (2019: £7,000).

At the year end, total cash of £5,255,000 (2019: £518,000) was held with JPMorgan Chase Bank, N.A. A net amount of interest of £1,000 (2019: £nil) was receivable by the Company during the year of which £nil (2019: £nil) was outstanding at the year end.

Full details of Directors' remuneration and shareholdings can be found on page 39 and in note 6 on page 59 of the 2020 Annual Report.

 

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30TH JUNE 2020

	2020			2019
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair
value through profit or loss	-	22,989	22,989	-	26,453	26,453
Net foreign currency gains	-	83	83	-	2,404	2,404
Income from investments	8,329	-	8,329	8,989	-	8,989
Interest receivable and similar income	212	-	212	109	-	109
Gross return	8,541	23,072	31,613	9,098	28,857	37,955
Management fee	(953)	(953)	(1,906)	(863)	(863)	(1,726)
Performance fee (charge)/writeback	-	(507)	(507)	-	1,040	1,040
Other administrative expenses	(565)	-	(565)	(572)	-	(572)
Net return before finance costs and taxation	7,023	21,612	28,635	7,663	29,034	36,697
Finance costs	(449)	(449)	(898)	(448)	(448)	(896)
Net return before taxation	6,574	21,163	27,737	7,215	28,586	35,801
Taxation	(1,091)	-	(1,091)	(863)	-	(863)
Net return after taxation	5,483	21,163	26,646	6,352	28,586	34,938
Return per share	4.00p	15.44p	19.44p	4.87p	21.91p	26.78p

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30TH JUNE 2020

	Called up		Capital
	share	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserves1	reserve1	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 30th June 2018	7,746	53,976	27,401	318,084	3,583	410,790
Issue of shares from Treasury	-	4,980	-	6,938	-	11,918
Net return	-	-	-	28,586	6,352	34,938
Dividends paid in the year (note 3)	-	-	-	(6,194)	(9,935)	(16,129)
At 30th June 2019	7,746	58,956	27,401	347,414	-	441,517
Issue of shares from Treasury	-	12,716	-	15,420	-	28,136
Net return	-	-	-	21,163	5,483	26,646
Dividends paid in the year (note 3)	-	-	-	(11,979)	(5,483)	(17,462)
At 30th June 2020	7,746	71,672	27,401	372,018	-	478,837

STATEMENT OF FINANCIAL POSITION

AT 30TH JUNE 2020

	2020	2019
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	473,187	458,287
Current assets
Derivative financial assets	2,026	1,770
Debtors	12,410	1,062
Cash and cash equivalents	36,972	12,499
	51,408	15,331
Current liabilities
Creditors: amounts falling due within one year	(13,710)	(571)
Derivative financial liabilities	(1,636)	(1,298)
Net current assets	36,062	13,462
Total assets less current liabilities	509,249	471,749
Creditors: amounts falling due after more than one year	(30,032)	(30,026)
Provision for liabilities and charges
Performance fee payable	(380)	(206)
Net assets	478,837	441,517
Capital and reserves
Called up share capital	7,746	7,746
Share premium	71,672	58,956
Capital redemption reserve	27,401	27,401
Capital reserves	372,018	347,414
Revenue reserve	-	-
Total shareholders' funds	478,837	441,517
Net asset value per share	338.9p	332.4p

 

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30TH JUNE 2020

	2020	2019
	£'000	£'000
Net cash outflow from operations before dividends and interest	(2,363)	(2,202)
Dividends received	7,288	7,954
Interest received	201	61
Overseas tax recovered	55	244
Interest paid	(889)	(892)
Net cash inflow from operating activities	4,292	5,165
Purchases of investments	(462,896)	(473,732)
Sales of investments	472,116	472,974
Settlement of forward currency contracts	184	4,393
Net cash inflow from investing activities	9,404	3,635
Dividends paid	(17,462)	(16,129)
Issue of shares from Treasury	28,235	11,819
Net cash inflow/(outflow) from financing activities	10,773	(4,310)
Increase in cash and cash equivalents	24,469	4,490
Cash and cash equivalents at start of year	12,499	8,008
Unrealised gain on foreign currency cash and cash equivalents	4	1
Cash and cash equivalents at end of year	36,972	12,499
Increase in cash and cash equivalents	24,469	4,490
Cash and cash equivalents consist of:
Cash and short term deposits	5,255	518
Cash held in JPMorgan Sterling Liquidity Fund	31,717	11,981
Total	36,972	12,499

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30TH JUNE 2020

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 have been prepared on a going concern basis. In forming this opinion, the directors have considered any potential impact of 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 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 per share

	2020	2019
	£'000	£'000
Revenue return	5,483	6,352
Capital return	21,163	28,586
Total return	26,646	34,938
Weighted average number of shares in issue	137,054,495	130,500,107
Revenue return per share	4.00p	4.87p
Capital return per share	15.44p	21.91p
Total return per share	19.44p	26.78p

3.  Dividends

(a)  Dividends paid and declared

	2020	2019
	£'000	£'000
Dividends paid
Unclaimed dividends refunded to the Company	-	(12)
2019 fourth interim dividend of 3.13p (2018 fourth interim: 3.04p)	4,154	3,922
2020 first interim dividend of 3.26p (2019: 3.13p)	4,356	4,038
2020 second interim dividend of 3.26p (2019: 3.13p)	4,428	4,081
2020 third interim dividend of 3.26p  (2019: 3.13p)	4,524	4,100
Total dividends paid in the year	17,462	16,129
Dividend declared
2020 fourth interim dividend of 3.26p (2019: 3.13p)	4,599	4,157

The fourth interim dividend proposed in respect of the year ended 30th June 2019 amounted to £4,157,000. However the amount paid amounted to £4,154,000 due to shares repurchased after the balance sheet date but prior to the share register record date.

The fourth interim dividend of 3.26p has been declared and was paid on 3rd July 2020 for the financial year ending 30th June 2020. In accordance with the accounting policy of the Company, this dividend will be reflected in the financial statements for the year ending 30th June 2021.

(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 £5,483,000 (2019: £6,352,000). The revenue reserve after payment of the second interim dividend (2019: second interim) amounts to £nil (2019: £nil) and the remaining amount has been drawn from the capital reserve.

	2020	2019
	£'000	£'000
2020 first interim dividend of 3.26p (2019: 3.13p)	4,356	4,038
2020 second interim dividend of 3.26p (2019: 3.13p)	4,428	4,081
2020 third interim dividend of 3.26p (2019: 3.13p)	4,524	4,100
2020 fourth interim dividend of 3.26p (2019: 3.13p)	4,599	4,157
	17,907	16,376

The fourth interim dividend proposed at the year end will be funded from the capital reserves.

4.  Net asset value per share

	2020	2019
Net assets (£'000)	478,837	441,517
Number of ordinary shares in issue	141,311,285	132,821,285
Net asset value per share	338.9p	332.4p

 

5. Status of announcement

  2019 Financial Information

  The figures and financial information for 2019are extracted from the Annual Report and Financial Statements for the year ended 30th June 2019 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.

  2020 Financial Information

The figures and financial information for 2020 are extracted from the Annual Report and Financial Statements for the year ended 30th June 2020 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.

24th September 2020

For further information:

Divya Amin,

JPMorgan Funds Limited

ENDS

A copy of the 2020 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.jpmglobalgrowthandincome.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

 

END

 

 

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