Half-year Report

RNS Number : 5507N

JPMorgan Japanese Inv. Trust PLC

21 May 2020

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN JAPANESE TRUST PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS

ENDED 31ST MARCH 2020

Legal Entity Identifier: 549300JZW3TSSO464R15

Information disclosed in accordance with the DTR 4.2.2

Chairman's Statement

Investment Performance

The six months to 31st March 2020 has been dominated by the Covid-19 pandemic which is, first and foremost, a human tragedy and one that has challenged governments, companies, organisations of all types and individuals across the world in many ways. Your Manager is no exception and I would therefore like, at the outset of my report, to thank all at JP Morgan Asset Management, and in particular Nicholas, Miyako and the team that support your Company, for their efforts and excellent results during an extremely challenging period.

The world's major economies have all resorted to various levels of 'lockdown' due to the spread of Covid-19 and so the Japanese economy and companies are not alone in feeling the full effects of this pandemic. There has been a sharp reversal in the global economic growth experienced in the latter part of 2019 and the pandemic has the potential to further impact global economies. The events associated with Covid-19 have also caused unprecedented turmoil in global equity markets and this volatility is likely to persist for the foreseeable future.

The six months to 31st March 2020 can be considered therefore as two separate periods of time. In the three months to 31st December 2019 total return on net assets was +2.4%. This compares with a total return for the same period from the Company's benchmark index return, the Tokyo Stock Exchange First Section (TOPIX) Index (in sterling terms), of +0.4%, with outperformance of +2.0%.

By comparison, with the spread of Covid-19 at the beginning of 2020 and the resulting stock market fall-out from the 'lockdowns' in a substantial number of global economies, the total return on net assets for the three months to 31st March 2020 was -10.5%, compared to -11.4% for the TOPIX index, also an outperformance, of +0.9%.

Over the six months to 31st March 2020 the total return on net assets was -8.3%; an outperformance of +2.7% compared to the benchmark index total return.

This good relative performance over the short-term adds to the Company's performance in the medium and longer term, which remains strong. The Company has delivered annualised outperformance against the benchmark index over three, five, and ten years; +6.2%, +3.4% and +6.4%, respectively. The good relative performance from the first calendar quarter has continued through April and into May.

Gearing

The Board of Directors believes that gearing can be beneficial to performance and sets the overall strategic gearing policy and guidelines which are reviewed at each Board meeting. The Investment Managers then manage the gearing within the agreed levels. The Investment Managers' permitted gearing limit is within the range of 5% net cash to 20% geared in normal market conditions. During the period gearing ranged from 6.6% to 17.1%.

Revenue and Dividends

Japanese companies often have stronger balance sheets than many of their international counterparts; nonetheless it cannot be assumed that dividends will be maintained. Prior year dividends should not therefore be taken as a guide to future payments. For the year ended 30th September 2019, we paid a dividend of 5.00p per share, reflecting the available revenue for distribution. Consistent with previous years the Company will not be declaring an interim dividend.

Discount Management

Against the backdrop of the Covid-19 pandemic and the ensuing turmoil in global stock markets, it is unsurprising that discounts across investment companies, including the Company's sector, have seen increased volatility. The Company was not immune from this volatility, with its discount widening to 17.8% as at 31st March 2020, from an average of 9.6% during the period under review.

The Board monitors the discount to NAV at which the Company's shares trade closely. The Directors believe that the main drivers for narrowing the discount are sustained good performance combined with effective promotion. In the Board's view, share buy backs can be effective in supporting the narrowing of a discount when combined with these two factors.

Over the 12 months ending 15th May 2020, the Company's NAV total return was 17.0%, compared to 4.6% for the benchmark. In light of the strong relative NAV performance of the Company, the Board does not believe that the share price discount, which has averaged 12.1% since 31st March 2020, reflects this performance. Accordingly, since the period end, the Company has repurchased 177,000 shares. The Directors will continue to undertake share buybacks on behalf of the Company where they deem such action to be beneficial to the Company.

Environmental, Social and Governance Issues

The Board believes that the Managers have long had a constructive and thorough approach to environmental, social and governance ('ESG') issues, not only in the way in which ESG considerations are incorporated into their investment decisions but also in the way in which they continue to engage with portfolio companies on important ESG matters. The Board believes that effective stewardship can help create sustainable value for clients.

Investors are taking ever greater account of ESG issues when deciding on which investment vehicle to use. The Board believes that JPMorgan's deep experience of ensuring its dedicated ESG resource works seamlessly with its team of fund managers and analysts based in Tokyo and elsewhere provides significant competitive advantage for the Company. Further information on the Manager's ESG process is set out in their report included in the Half Year Report.

The Board

As outlined in the Annual Report, the Board's retirement schedule suggests that we would not currently anticipate any Board retirements until 2022. However, the Board attaches great importance to the principles on diversity included in the Hampton-Alexander Review and is well advanced with its plans to be in full conformity with its recommendations on diversity by the end of 2020.

Outlook

Clearly, the Japanese economy and companies have been significantly affected since the advent of Covid-19. However, the Company's strategy and the Investment Managers' investment philosophy and process worked well in these markets and continued to deliver outperformance. Several investee companies are potentially even beneficiaries of the likely medium term effects of this pandemic crisis. Performance over the period is discussed in more detail in the Investment Managers' Report.

At the time of writing, the future extent or depth of this pandemic and its economic impacts remain uncertain. Outbreaks may persist for some time, as may economic disruption. These are likely to be the major factors affecting the outlook for Japanese equities. Notwithstanding the correction seen in the first three months of 2020, further downside risk exists, as does the possibility of recovery in due course. However, many Japanese companies have relatively strong balance sheets compared to their global counterparts with which to weather the economic storm and the impact of the pandemic.

Against this background, I believe that the investment strategy of JPMorgan Japanese Investment Trust plc remains robust.

Christopher Samuel

Chairman

20th May 2020

INVESTMENT MANAGERS' REPORT

Performance

In the six months to 31st March 2020 the Company produced a net asset total return of -8.3%, in sterling terms and shareholders received a total return of -13.4%. These compare with a total return of -11.0% from the Company's benchmark index, the TOPIX Index in sterling terms. Over the three and five years to the end of March 2020 the Company's annualised net asset total returns were +7.0% and +10.0% respectively, compared to +0.8% and +6.6% for the benchmark, also in sterling, with a share price return of +4.9% and +7.4% over the same periods. The average gearing level over the six month period to 31st March 2020 was 13.9% which detracted from returns given the overall decline in the market.

We are very pleased to see that Morningstar's conviction in our investment approach has increased, resulting in it upgrading its Analyst Rating to Silver from Bronze. This makes the Company the highest rated investment trust in the Japan sector.

Impact of Covid-19

Covid-19 has been a human tragedy that has also caused major global economic, and in the very short-term, societal disruptions. Japan is not alone in this respect. The virus struck at a time when the domestic economy was already quite weak following the October 2019 consumption tax rise. Tourist numbers to Japan collapsed as a result of the outbreak of the virus and very weak demand followed, both overseas and domestically, as people were encouraged to stay at home. Supply chains were also disrupted. At a late stage, and reluctantly, the Tokyo 2020 Olympics were postponed to 2021.

Japanese companies look relatively well positioned to weather this economic storm as more than 50% of non-financial companies have net cash positions. This compares to 23% in Europe and 15% in the United States, as at 3rd April 2020. Moreover, your Company focuses on individual stocks rather than attempting to predict global economic growth. The companies we invest in have strong structural growth outlooks, competitive positions and balance sheets and we believe they will perform well in the long-term regardless of the twists and turns in the wider global economy.

We have, naturally, been thinking about how the world might change over the long-term as a result of the fall-out from the impact of the Covid-19 crisis. We believe that many existing trends are likely to accelerate. Examples of this include:

• Companies may look to further diversify production bases and this may boost demand for robotics and automation. Japan is the home of world leading automation companies.

• E-commerce may become more popular. In Japan the percentage of shopping conducted online is still relatively low compared to other developed countries but we believe this will change in the long-term.

• Cashless payments, adoption of which has been relatively slow in Japan, may start to be more widely used because of health concerns about touching physical notes and coins during the pandemic. Once people start using these payment methods they may discover how convenient they are and may not return to using cash in the same volume.

• People may download computer games rather than buying a physical copy. Downloads are more profitable for games software companies. Additionally, as people spend more time at home during lockdowns, new users may discover gaming.

• Many Japanese companies use internally developed systems that have not been upgraded for many years; they are also not suitable for a working from home environment. As a result of the increase in employees working from home, Japanese companies may invest more in software systems.

Investment Philosophy and Process

Our investment approach emphasises individual stock selection to build a portfolio of quality growth stocks with strong future growth prospects. This means that, within some broad portfolio risk limits, the Company's portfolio is likely to differ materially from the benchmark index as we will avoid companies and sectors that face structural issues even if they are a large constituent of the benchmark index.

The opportunity to find attractive investments is enhanced by the fact that the Japanese market is under-researched when compared with other developed equity markets. With well over 50% of the constituents of the Company's benchmark index being covered by no more than one provider of broker research, there are significant opportunities to identify sources of return from Japanese equities that are not well known. Against the background of a market with poor sell-side coverage, we have the resources in Japan to carry out our own research and identify attractive investment themes and companies. Our Tokyo-based investment team consists of 24 investment professionals who have carried out over 4,000 company visits in the past year.

Further information on our research process is set out in the Investment Managers' Report in the Company's Annual Report and Financial Statements (the '2019 Annual Report').

Portfolio Themes

In building the Company's investment portfolio we have identified several key themes that underlie much of our stock selection. We believe these themes will be long term resilient sources of return for Japanese companies for years to come. The extent to which an individual company is a beneficiary of one or more of these themes adds to the attractions of the company. Background information on each theme is set out in the 2019 Annual Report. As at 31st March 2020 the portfolio breakdown by theme is set out in the Half Year Report.

Investment Performance

The themes to which the portfolio is exposed have not changed during the review period. The financial characteristics are also unchanged; balance sheets and cash flows continue to be stronger, earnings growth faster and return on equity higher than the market as a whole. For example as at 31st March 2020 the holdings in the portfolio generated an average return on equity of almost 15% compared to the benchmark return on equity of close to 9%. The portfolio valuation, as measured by the price-earnings ratio, is higher than the market average but we believe the strong long-term growth prospects of the companies we own more than justifies this.

We seek to invest in the best Japanese companies regardless of their size and are happy to take advantage of the Company's closed ended structure, where we do not have daily inflow and outflow of funds, to hold mid and smaller sized companies. Coverage by analysts is poor in this part of the market, providing us with the opportunity to identity investments overlooked by the broader market. These companies also tend to have more focused business models. Investors should expect to see these characteristics in the portfolio over the economic cycle.

Portfolio Activity/Purchases and Sales

We made a number of changes to the portfolio over the period. Gearing increased from 13.1% as at 30th September 2019 to 15.3% at the end of March, primarily as a result of the fall in the market, combined with our view of the continuing attractiveness of the portfolio companies. The largest new purchases were HOYA, Tokyo Electron and Terumo.

• HOYA (Investment Theme - Stock Specific) amongst its businesses it has a 100% market share in the glass substrate used in hard disk drives for data centres. Glass is currently used in just 20% of these drives but because of superior properties of the material we expect this to grow rapidly. The company has experienced consistently high operating margins and ROE and its free cash flow has always been positive. We have given the company a Premium rating.

• Tokyo Electron (Investment Theme - Automation) is a highly profitable manufacturer of semiconductor production equipment and holds the largest market share across a range of its products. It also has a very strong balance sheet and holds over $3 billion in net cash. We have given the company a Quality rating.

• Terumo (Investment Theme - Healthcare) is a medical equipment company that is steadily expanding overseas and increasing its profitability by withdrawing from low margin products. In Japan it has the largest share in blood management, intervention and general hospital products (51%, 27% and 42%, respectively). It has an excellent record of relatively high margins and ROE as well as consistently positive free cash flow. We have given the company a Quality rating.

The largest complete sales were Nidec, SBI Holdings and Suzuki Motor. Within technology we switched our preference from Nidec to Tokyo Electron. Nidec has repeatedly downgraded its earnings forecasts, and is increasingly exposed to the automotive industry which we believe faces many structural challenges. We sold SBI as we are unconvinced by its project to build a fourth mega bank in Japan via acquisitions. We sold Suzuki because although it is dominant in India, with over 50% market share, we believe that market will eventually face the same issues as car markets all over the world.

Annualised turnover for the portfolio for the six months was almost 40%. This is an increase from last year and mostly reflects changes to the portfolio made as the Covid-19 situation worsened and we saw a significant opportunity to upgrade the overall quality of the portfolio.

Commenting on the Company's five largest holdings:

• Keyence (Investment Theme - Automation). We have held Keyence, a factory automation business that manufactures sensors, since November 2011. It has experienced rapid growth worldwide with rising demand for its products and has seen its percentage of overseas sales increase from 25% to in excess of 50% over the last ten years. Keyence also has one of the highest operating margins of any company globally, at around 50%. Keyence employees are the highest paid of any company in the industrial sector in Japan and rewarded on the basis of profit contribution. We consistently seek this alignment of interests between employees and shareholders.

  Over the past 12 months Keyence's growth rates have slowed as global economic growth has been more muted. However, its results have been much stronger than those of its competitors. It also has a very strong balance sheet and currently holds in excess of $8 billion of net cash.

• Kao (Investment Theme - Japan Brand). Kao is a leading maker of consumer goods such as detergents, nappies and skin cream. It has a strong long-term record of profit growth and has grown dividends for 29 years in a row. In addition it has undertaken share buybacks and cancellations. It has a long-term return on equity target in excess of 20%.

• HOYA (Investment Theme - Stock Specific). Discussed above.

• M3 (Investment Theme - Healthcare). The company operates the number one website used by doctors in Japan and the UK (amongst other countries). Its use is growing rapidly in China and we expect the company to expand both its geographic reach and the range of services it provides. The core business enables pharmaceutical companies to reduce their marketing expenses by promoting their products online. The shares performed strongly due to their defensive nature. Additionally, the company may benefit from doctors carrying out more patient consultations online in the future.

• Tokio Marine Holdings (Investment Theme - Improving Corporate Governance). Tokio Marine is Japan's number one non-life insurer; the top three companies in this sector have an overwhelming 90% domestic market share. Tokio Marine has increased its dividend per share five-fold since March 2012.

Top Contributors and Detractors to Performance

Over the six month period to 31st March 2020 the Trust outperformed the TOPIX index by 2.7%. Stock selection was strong, delivering over 5% of outperformance. However, the gearing detracted 2.3%. The top five contributors to performance were M3, Kao, Miura, OBIC and Keyence. Miura and OBIC are discussed below.

• Miura (Investment Theme - Stock Specific). The company is a small manufacturer of energy-efficient boilers with a 60% market share in Japan. The overwhelming majority of boilers are sold with maintenance contracts that generate recurring annual revenues. The company is using this cash flow to expand into China. The shares performed well as a result of the defensive characteristics of the business.

• OBIC (Investment Theme - Ageing Population). The company provides computers systems and support primarily to small and medium sized businesses. It is highly profitable and generates an operating margin of over 50%. Roughly half of Japanese companies have their own proprietary computer systems which are increasingly expensive and difficult to maintain. Japanese companies have therefore started to buy OBIC's standardised systems. This trend is not particularly economically sensitive and the shares therefore performed well in the falling market.

During the six months the two largest detractors from performance were Fast Retailing (Investment Theme - Japan Brand), which operates multiple clothing brands including UNIQLO, and cosmetics company Shiseido (Investment Theme - Japan Brand). Both companies were hurt by the significant fall in consumer demand following the outbreak of Covid-19. Many of Fast Retailing's stores have been temporarily shut while key markets, such as airport duty free stores, have seen dramatically reduced traffic for Shiseido. We do not know when sales will return to normal (although at the time of writing stores in China have reopened) but we do not think the long-term investment cases have changed for either of these companies.

Outlook

It is impossible in current circumstances to forecast the short-term outlook for the economy or the stock market. Covid-19 has already had a significant impact on both. The Japanese market is more cyclical than other developed markets and can therefore commensurately be more impacted by global economic developments, both positively and negatively. We can say, however, that company valuations are already attractive, trading close to levels seen during the Lehman crisis in 2008, and that Japanese companies are relatively well positioned with their strong net cash balance sheets. This is even more true for your Company's holdings.

The companies we have invested in have strong structural growth outlooks and balance sheets and we are positive about their future prospects. The level of gearing currently deployed reflects our conviction in the companies that we own.

Nicholas Weindling

Miyako Urabe

Investment Managers

20th May 2020

Interim management report

The Company is required to make the following disclosures in its half year report.

Principal and Emerging Risks and Uncertainties

The Board believes the principal risks and uncertainties faced by the Company now fall into the following broad categories: market, economic and Covid-19; investment underperformance and strategy; currency; loss of investment team or portfolio manager and Covid-19; discount; change of corporate control of the Manager; accounting, legal and regulatory; corporate governance and shareholder relations; operational and Covid-19; cyber crime and financial. These risks have been updated to reflect Covid-19, both its potential economic and market impact as well as its potential impact on staff and operating effectiveness. Except for the first of these, which is new, information on each of these areas is given in the Strategic Report within the Annual Report and Financial Statements for the year ended 30th September 2019. This new primary risk reflects the new greater economic uncertainty and the main mitigations consist of more frequent updates from the Manager and liquidity stress testing. The Board also notes that the investment strategy pursued by the Manager has proved robust relative to the broader market. In addition, the Board has begun the process of considering emerging risks.

Related Parties Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company during the period.

Going Concern

The Directors believe, having considered the Company's investment objectives, risk management policies, capital management policies and procedures, nature of the portfolio and expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future. In particular, the Directors have considered the impact of Covid-19 and believe that this will have a limited financial impact on the Company's operational resources and existence. In so doing the Directors have received the results of a stress test they requested from the Manager which models a further sharp decline in market levels and turnover, and which showed that the Company could then raise sufficient funds so as to remain within its debt covenants and pay expenses. The Directors further note that the NAV per share of the Company as of 15th May 2020 at 535.4p is above the high reached on 28th September 2018 of 528.1p. The Directors believe that there are no material uncertainties pertaining to the Company that would prevent its ability to continue in such operational existence for at least twelve months from the date of the approval of this half year financial report. For these reasons, they consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts.

Directors' Responsibilities

The Board of Directors confirms that, to the best of its knowledge:

(i)  the condensed set of financial statements contained within the interim financial report has been prepared in accordance with FRS 104 'Interim Financial Reporting' and gives a true and fair view of the state of the affairs of the Company and of the assets, liabilities, financial position and net return of the Company, as at 31st March 2020, as required by the UK Listing Authority Disclosure Guidance and Transparency Rule ('DTR') 4.2.4R; and

(ii)  the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.

In order to provide these confirmations, and in preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business;

and the Directors confirm that they have done so.

For and on behalf of the Board

Christopher Samuel
Chairman

20th May 2020

statement of comprehensive income

for the six months ended 31st March 2020

	(Unaudited) Six months ended 31st March 2020			(Unaudited) Six months ended 31st March 2019			(Audited) Year ended 30th September 2019
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Losses on investments held at fair value through profit or loss	-	(68,301)	(68,301)	-	(107,833)	(107,833)	-	(19,957)	(19,957)
Net foreign currency losses	-	(1,124)	(1,124)	-	(3,473)	(3,473)	-	(11,073)	(11,073)
Income from investments	5,488	-	5,488	5,747	-	5,747	10,673	-	10,673
Other interest receivable and similar income	859	-	859	364	-	364	1,140	-	1,140
Gross return/(loss)	6,347	(69,425)	(63,078)	6,111	(111,306)	(105,195)	11,813	(31,030)	(19,217)
Management fee	(467)	(1,867)	(2,334)	(426)	(1,704)	(2,130)	(880)	(3,521)	(4,401)
Other administrative expenses	(359)	-	(359)	(305)	-	(305)	(672)	-	(672)
Net return/(loss) before finance costs and taxation	5,521	(71,292)	(65,771)	5,380	(113,010)	(107,630)	10,261	(34,551)	(24,290)
Finance costs	(131)	(571)	(702)	(141)	(562)	(703)	(290)	(1,161)	(1,451)
Net return/(loss) before taxation	5,390	(71,863)	(66,473)	5,239	(113,572)	(108,333)	9,971	(35,712)	(25,741)
Taxation	(549)	-	(549)	(575)	-	(575)	(1,067)	-	(1,067)
Net return/(loss) after taxation	4,841	(71,863)	(67,022)	4,664	(113,572)	(108,908)	8,904	(35,712)	(26,808)
Return/(loss) per share (note 3)	3.00p	(44.57)p	(41.57)p	2.89p	(70.43)p	(67.54)p	5.52p	(22.15)p	(16.63)p

statement of changes in equity

for the six months ended 31st March 2020

	Called up	Capital
	share	redemption	Other	Capital	Revenue
	capital	reserve	reserve1	reserves	reserve2	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Six months ended 31st March 2020 (Unaudited)
At 30th September 2019	40,312	8,650	166,791	587,495	13,422	816,670
Net (loss)/return	-	-	-	(71,863)	4,841	(67,022)
Dividend paid in the period (note 4)	-	-	-	-	(8,062)	(8,062)
At 31st March 2020	40,312	8,650	166,791	515,632	10,201	741,586
Six months ended 31st March 2019 (Unaudited)
At 30th September 2018	40,312	8,650	166,791	623,207	12,580	851,540
Net (loss)/return	-	-	-	(113,572)	4,664	(108,908)
Dividend paid in the period (note 4)	-	-	-	-	(8,062)	(8,062)
At 31st March 2019	40,312	8,650	166,791	509,635	9,182	734,570
Year ended 30th September 2019 (Audited)
At 30th September 2018	40,312	8,650	166,791	623,207	12,580	851,540
Net (loss)/return	-	-	-	(35,712)	8,904	(26,808)
Dividend paid in the year (note 4)	-	-	-	-	(8,062)	(8,062)
At 30th September 2019	40,312	8,650	166,791	587,495	13,422	816,670

¹ Created during the year ended 30th September 1999, following cancellation of the share premium account.

² This reserve forms the distributable reserve of the Company and may be used to fund distributions to investors, via dividend payments.

statement of financial position

at 31st March 2020

	(Unaudited)	(Unaudited)	(Audited)
	31st March 2020	31st March 2019	30th September 2019
	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	855,120	810,064	923,818
Current assets
Debtors	4,187	3,417	3,112
Cash and cash equivalents	26,226	30,182	3,073
	30,413	33,599	6,185
Creditors: amounts falling due within one year	(13,780)	(19,485)	(16,292)
Net current assets	16,633	14,114	(10,107)
Total assets less current liabilities	871,753	824,178	913,711
Creditors: amounts falling due after more than one year	(130,167)	(89,608)	(97,041)
Net assets	741,586	734,570	816,670
Capital and reserves
Called up share capital	40,312	40,312	40,312
Capital redemption reserve	8,650	8,650	8,650
Other reserve	166,791	166,791	166,791
Capital reserves	515,632	509,635	587,495
Revenue reserve	10,201	9,182	13,422
Total shareholders' funds	741,586	734,570	816,670
Net asset value per share (note 5)	459.9p	455.6p	506.5p

statement of cash flows

for the six months ended 31st March 2020

	(Unaudited)	(Unaudited)	(Audited)
	31st March 2020	31st March 2019	30th September 2019
	£'000	£'000	£'000
Net cash outflow from operations before dividends and interest	(1,316)	(1,971)	(2,817)
Dividends received	4,292	5,209	9,976
Interest paid	(687)	(723)	(1,438)
Net cash inflow from operating activities	2,289	2,515	5,721
Purchases of investments	(168,075)	(86,613)	(179,657)
Sales of investments	180,607	149,709	212,445
Settlement of foreign currency contracts	(51)	(63)	(85)
Net cash inflow from investing activities	12,481	63,033	32,703
Dividends paid	(8,062)	(8,062)	(8,062)
Drawdown of bank loan	31,570	-	-
Repayment of bank loan	(14,963)	(34,512)	(34,512)
Net cash Inflow/(outflow) from financing activities	8,545	(42,574)	(42,574)
Increase/(decrease) in cash and cash equivalents	23,315	22,974	(4,150)
Cash and cash equivalents at the start of the period	3,073	7,278	7,278
Exchange movements	(162)	(70)	(55)
Cash and cash equivalents at the end of the period	26,226	30,182	3,073
Increase/(decrease) in cash and cash equivalents	23,315	22,974	(4,150)
Cash and cash equivalents consist of:
Cash and short term deposits	26,226	30,182	3,073

Notes to the financial statements

for the six months ended 31st March 2020

1.  Financial statements

The information contained within the financial statements in this half year report has not been audited or reviewed by the Company's auditors.

The figures and financial information for the year ended 30th September 2019 are extracted from the latest published financial statements of the Company and do not constitute statutory accounts for that year. Those financial statements have been delivered to the Registrar of Companies including the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

2.  Accounting policies

The financial statements are prepared 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.

FRS 104, 'Interim Financial Reporting', issued by the Financial Reporting Council ('FRC') in March 2015 has been applied in preparing this condensed set of financial statements for the six months ended 31st March 2020.

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

The accounting policies applied to this condensed set of financial statements are consistent with those applied in the financial statements for the year ended 30th September 2019.

3.  Return/(loss) per share

		(Unaudited)	(Unaudited)	(Audited)
		Six months ended	Six months ended	Year ended
		31st March 2020	31st March 2019	30th September 2019
		£'000	£'000	£'000
	Return per share is based on the following:
	Revenue return	4,841	4,664	8,904
	Capital loss	(71,863)	(113,572)	(35,712)
	Total loss	(67,022)	(108,908)	(26,808)
	Weighted average number of shares in issue	161,248,078	161,248,078	161,248,078
	Revenue return per share	3.00p	2.89p	5.52p
	Capital loss per share	(44.57)p	(70.43)p	(22.15)p
	Total loss per share	(41.57)p	(67.54)p	(16.63)p

4.  Dividends paid

		(Unaudited)	(Unaudited)	(Audited)
		Six months ended	Six months ended	Year ended
		31st March 2020	31st March 2019	30th September 2019
		£'000	£'000	£'000
	2019 final dividend paid of 5.0p (2018: 5.0p) per share	8,062	8,062	8,062

All dividends paid in the period have been funded from the revenue reserve.

No interim dividend has been declared in respect of the six months ended 31st March 2020 (2019: nil).

5.  Net asset value per share

		(Unaudited)	(Unaudited)	(Audited)
		Six months ended	Six months ended	Year ended
		31st March 2020	31st March 2019	30th September 2019
	Net assets (£'000)	741,586	734,570	816,670
	Number of shares in issue	161,248,078	161,248,078	161,248,078
	Net asset value per share	459.9p	455.6p	506.5p

20th May 2020

For further information, please contact:

Faith Pengelly

For and on behalf of

JPMorgan Funds Limited, Secretary 020 7742 4000

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.

JPMORGAN FUNDS LIMITED

ENDS

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

 

END

 

 

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