Annual Financial Report
Jupiter Green Investment trust Plc
Annual Financial Report for the year ended 31 March 2013
The following is an extract from the Company's Annual Report and Accounts for the year ended 31 March 2013. The full Annual Report will shortly be available to be viewed on or downloaded from the Company's website at www.jupiteronline.com.
CHAIRMAN'S STATEMENT
It is with pleasure that I present the Annual Report for the Jupiter Green Investment Trust, covering the 12 months to 31 March 2013. The period under review began and ended with political uncertainty. In the spring of 2012, markets were nervous and it took two attempts for Greek elections to return a stable government amid fears the country might have to leave the euro. Markets eventually stabilised after the European Central Bank made it clear it was willing to take direct action to keep sovereign bond yields down. 2013 started off with a global rally, driven partly by perceived improvements in the US and Europe and partly by loose monetary policy around the world. While improvements in the US economy did indeed seem to materialise, those in Europe proved elusive. Italian elections in February 2013 failed to produce a conclusive result. In Cyprus, deposits were seized from certain savers as part of a controversial EU bailout. While these events unfortunately reintroduced uncertainty to European markets, the overall trend was positive.
During the period under review your Company's total assets, adjusted for share cancellations, increased by 14.7 per cent. to £37,571,000. This compares with an increase in the Company's Benchmark Index, the MSCI World Small Cap Index of 18.3 per cent. over the same period.
Share Issues
Shareholders were given the opportunity to subscribe for new Ordinary shares on 2 April 2013 on the basis of one new Ordinary share for every ten Ordinary shares held. The subscription price was 108.49p. The Board is pleased to report that subscriptions were received from shareholders resulting in the issue of 981,076 new Ordinary shares.
Share Buybacks and Discount Management
In April 2012 your Board announced a revised discount control policy with immediate effect. The essence of that policy is to use buybacks to seek to narrow the discount to net asset value at which the Company's shares trade over time, with a view to achieving a position where the Company's share price does not materially deviate from its net asset value by the time of the Company's Annual General Meeting in 2013. During the year to 31 March 2013 the Company repurchased a total of 3,151,314 Ordinary shares for cancellation. Since the year end an additional 314,133 Ordinary shares have been repurchased for cancellation. The Board is pleased to report that since the introduction of the revised discount control policy the discount has reduced to 4.1 per cent. as at 20 June 2013.
Dividends
As mentioned in last year's Annual Report the Board has not set an objective of a specific portfolio yield of the Company. However, a number of the companies within our investment portfolio continued to grow their dividends over time and, accordingly, I am pleased to announce a 100 per cent. increase in the Company's dividend. On 20 June 2013 the Company declared an interim dividend of 1.20p per share in respect of the year ended 31 March 2013 (2012: 0.60p) payable on 26 July 2013 to Shareholders on the register on 28 June 2013.
Regulatory Changes
Regulatory initiatives are on the horizon. In particular the Alternative Investment Fund Managers' Directive (the Directive) seeks to reduce potential systematic risk by regulating alternative investment fund managers (AIFMs) which fall within the category of alternative investment funds. The Directive focuses on how alternative investment funds conduct business, how they disclose and use leverage, and how they appoint key service providers. The implementation of the Directive will require all investment trusts to appoint an AIFM or become an AIFM themselves and also to appoint an independent depositary. The latter is likely to fulfil a broader role than that currently performed by the custodian and will be obliged to ensure that companies comply with the relevant rules on portfolio composition and diversification. We expect the implementation of the Directive to be effective from 22 July 2013, although it is currently anticipated that the FCA will permit a transitional period of one year within which UK AIFMs must seek authorisation
I recommend the manager's review in which he highlights the strong performance of the Trust. Our North American portfolio performed particularly well in the context of a recovering US. Increased economic activity led to higher demand and generally positive business conditions for companies in fields like water heating, rail services, engineering and recycled car parts. While many Asian companies did well over the past 12 months, European companies struggled, with cyclical industries like waste management bearing the brunt of slower growth. Extreme weather around the world maintained focus on climate change and led to sharp price rises for soft commodities. This could provide opportunities for companies that offer solutions to agricultural operations (e.g. smart irrigation).
Annual General Meeting
This year's AGM will be held at 1 Grosvenor Place, London SW1X 7JJ at 11.00am on 25 July 2013. Details of the resolutions to be proposed at the meetings are set out in the Annual Report.
Outlook
In addition to being an efficient savings vehicle for environmentally conscious investors, the Trust provides a way to participate in the activities of businesses that provide solutions to some of the most pressing issues of our time. For a host of reasons, these businesses are becoming increasingly important to the wider economy. The price of onshore wind power has now fallen below that of coal and gas and, according to a report by Bloomberg New Energy Finance, annual spending on clean-energy projects may rise to $630bn at the end of the next decade. This would mean renewables would account for half of all generation capacity by 2030. These conditions should provide a positive backdrop for many of the companies in which we invest and we remain optimistic about the period ahead.
Perry Crosthwaite
Chairman
21 June 2013
MANAGER'S REVIEW
Performance Review
For the 12 months ended 31 March 2013 the total return for the Trust was 14.7 per cent.* compared to a return of 18.3 per cent.* for the Trust's Benchmark Index, the MSCI World Small Cap Index. During the same period, the FTSE ET100 Index returned 8.99 per cent.** The FTSE ET100 index measures the performance of the largest 50 companies globally whose core business is the development and deployment of environmental technologies.
Market and Policy Review
The market backdrop in the year to 31 March 2013 was marked by extremes. In the first six months, stocks around the world came under pressure as the US and Chinese economies lost momentum, while a backlash against German-led austerity in Greece and other indebted European countries ignited fears about the long term tenability of the single currency. The European Central Bank was once again forced to take radical steps and its pledge to buy the bonds of indebted countries lifted stock market indices markedly. Positive economic data in the US, which was supported by an open-ended asset purchase programme ("QE3") by the US Federal Reserve, gave support to the rally and drove US stock indices to all-time highs. Greater stability in China's economy and the prospect of aggressive fiscal and monetary stimuli in Japan provided a further boost. As the period came to an end, investors had to contend with an inconclusive election in Italy and disorderly bailout in Cyprus, although the market largely took these events in its stride.
The Trust added good value during the year, but underperformed its broad-based benchmark. Our cautious stance towards renewable energy stocks helped the Fund to outperform the more relevant FTSE ET50 index. Performance was especially strong in the second half of the year, driven in part by the pick-up in economic activity in the US and China as well as the prospect that the policy environment might become more supportive. The renewed emphasis President Obama placed on tackling climate change in his second Inaugural Address was notable in this regard, as was his subsequent commitment to renewable energy and energy efficiency in his budget for the 2014 fiscal year.
Our North American portfolio produced a number of notable highlights during the year, with many companies benefiting from the tailwind of economic recovery. A pickup in construction activity in the US and expanding demand for water heaters in China provided a boost for water heating and treatment specialist Smith (A.0) Corp. Freight and passenger rail services business Wabtec was boosted by a material increase in railroad capital expenditure. Mechanical and electrical construction services (energy infrastructure) company Emcor and engineering business Stantec were among other investment area continues to be the increasing economic competitiveness and importance of environmental products and solutions.
Charles Thomas
Jupiter Asset Management Limited
21 June 2013
* Source: Jupiter Asset Management
**Source: Bloomberg
Investment Objective
The Company's investment objective is to generate long-term capital growth through a diverse portfolio of companies providing environmental solutions.
Investment Policy
The Company invests globally in companies which have a significant focus on environmental solutions. Specifically, the Company looks to invest across three key areas: infrastructure, resource efficiency and demographics.
The Company's portfolio has a bias towards small and medium capitalisation companies. It invests primarily in securities which are quoted, listed or traded on a recognised exchange. However, up to 5 per cent. of the Company's Total Assets (at the time of such investment) may be invested in unlisted securities.
The portfolio manager selects each stock on its individual merits as an investment rather than replicating the relevant company's weighting within the Company's benchmark indices. The Company's investment portfolio is therefore unlikely to represent the constituents of its benchmark indices, but instead is intended to offer a well diversified investment strategy focused on maximising returns from the prevailing economic background.
The portfolio manager may enter into contracts for differences in order to gain both long and short exposure for the Company to indices, sectors, baskets or individual securities for both investment purposes and for hedging or efficient portfolio management purposes. The ability to maintain a portfolio of both long and short positions provides the flexibility to hedge against periods of falling markets, to reduce the risk of absolute loss at portfolio level and to reduce the volatility of portfolio returns. The portfolio manager may also invest in single stock, sector and equity index futures and options.
Risk is also mitigated by investing mainly in quoted companies on registered exchanges, ensuring full regulatory compliance for all underlying quoted investments. There are no specific stock and sector size limitations within the portfolio, but the manager is expected to provide sufficient stock, sector and geographic diversification to ensure an appropriate trade-off between risk and return within the portfolio. In order to ensure compliance with this objective there is a two tier monitoring system. Firstly, the manager's portfolio is assessed monthly by the Jupiter Asset Management Limited Performance Committee, which is headed by the Chief Executive of Jupiter Asset Management Limited. Secondly, the Board is provided with a detailed analysis of stock, sector and geographic exposures at the Trust's regular Board meetings.
Any material change in the investment policy of the Company described above may only be made with the approval of Shareholders by an ordinary resolution.
RISKS AND UNCERTAINTIES
The principal risks relating to the Company can be divided into the following areas:
Investment policy and process
Investment strategy and share price movements
Discount to Net Asset Value
Accounting, legal and regulatory
Operational
Financial
The financial risks faced by the Company include:
Market price risk i.e. movements in value of investment holdings caused by factors other than interest rate or currency movement and
Foreign currency risk
The investment Manager's policies for managing the financial risks are summarized below and have been applied throughout the year.
Policy
Market Price Risk
By the very nature of its activities, the Company's investments are exposed to market price fluctuations. Further information on the investment portfolio and investment policy is set out in the Manger's Review.
Foreign Currency Risk
A proportion of the Company's portfolio is invested in overseas securities and their Sterling value can be significantly affected by movements in foreign exchange rates. The Company does not normally hedge against foreign currency movements.
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2013
| Year ended 31 March 2013 | Year ended 31 March 2012 | |||||
| Revenue | Capital | Total | Revenue | Capital | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Gain/(Loss) on investments att fair fair value through profit or loss | - | 4,751 | 4,751 | - | (4,084) | (4,084) |
| Foreign exchange gain/ (loss) | - | 20 | 20 | - | (12) | (12) |
| Income | 756 | - | 756 | 662 | - | 662 |
| ______ | _____ | _____ | ______ | _____ | _____ | |
| Total Income | 756 | 4,771 | 5,527 | 662 | (4,096) | (3,434) |
| ______ | _____ | _____ | ______ | _____ | _____ | |
| Investment management fee | (29) | (260) | (289) | (31) | (277) | (308) |
| Other expenses | (308) | (223) | (531) | (316) | - | (316) |
| ______ | _____ | _____ | ______ | _____ | _____ | |
| Total expenses | (337) | (483) | (820) | (347) | (277) | (624) |
| ______ | _____ | _____ | ______ | _____ | _____ | |
| Return on ordinary activities before taxation | 419 | 4,288 | 4,707 | 315 | (4,373) | (4,058) |
| Taxation | (49) | - | (49) | (41) | - | (41) |
| ______ | _____ | _____ | ______ | _____ | _____ | |
| Net return after taxation | 370 | 4,288 | 4,658 | 274 | (4,373) | (4,099) |
| ______ | _____ | _____ | ______ | _____ | _____ | |
| Return per Ordinary share | 1.17p | 13.54p | 14.71p | 0.82p | (13.11)p | (12.99)p |
| Diluted return per Ordinary share | 1.17p | 13.54p | 14.71p | - | - | - |
The total column of this statement is the income statement of the Company, prepared in accordance with IFRS. The supplementary revenue return and capital return columns are both prepared under guidance produced by the Association of Investment Companies. All items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the year.
All income is attributable to the equity holders of Jupiter Green Investment Trust Plc. There are no minority interests.
STATEMENT OF FINANCIAL POSITION
at 31 March 2013
| 2013 | 2012 | |
| £'000 | £'000 | |
| Non current assets | ||
| Investments held at fair value through profit or loss | 36,468 | 33,893 |
| Current assets | ||
| Prepayments and accrued income | 65 | 78 |
| Cash and cash equivalents | 1,414 | 2,297 |
| 1,479 | 2,375 | |
| Total assets | 37,947 | 36,268 |
| Current liabilities | ||
| Other payables | (376) | (87) |
| Total assets less current liabilities | 37,571 | 36,181 |
| ======= | ======= | |
| Capital and reserves | ||
| Called up share capital | 33 | 37 |
| Share premium | 27,285 | 27,285 |
| Redemption reserve | 238 | 234 |
| Special reserve | 24,292 | 24,292 |
| Retained earnings | (14,277) | (15,667) |
| Total equity shareholders' funds | 37,571 | 36,181 |
| ======= | ======= | |
| Net Asset Value per Ordinary share | 124.42p | 108.49p |
| Diluted Net Asset Value per Ordinary share | 122.97p | - |
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2013
| Share | Share | Special | Redemption | Retained | ||
| Capital | Premium | Reserve | Reserve | Earnings | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| For the year ended 31 March 2013 | ||||||
| Balance at 31 March 2012 | 37 | 27,285 | 24,292 | 234 | (15,667) | 36,181 |
| Net gain for the year | - | - | - | - | 4,658 | 4,658 |
| Dividends paid | - | - | - | - | (196) | (196) |
| Ordinary shares repurchased | (4) | - | - | 4 | (3,072) | (3,072) |
| ______ | _____ | _____ | _____ | _______ | _______ | |
| Balance at 31 March 2013 | 33 | 27,285 | 24,292 | 238 | (14,277) | 37,571 |
| ______ | _____ | _____ | _____ | _______ | _______ |
| Share | Share | Special | Redemption | Retained | ||
| Capital | Premium | Reserve | Reserve | Earnings | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| For the year ended 31 March 2012 | ||||||
| Balance at 31 March 2011 | 37 | 26,229 | 24,292 | 233 | (9,706) | 41,085 |
| Net loss for the year | - | - | - | - | (4,099) | (4,099) |
| Dividends paid | - | - | - | - | (131) | (131) |
| Ordinary shares issued | 1 | 1,056 | - | - | - | 1,057 |
| Ordinary shares repurchased | _____(1) | ____- | _____- | _______1 | ____(1,731) | ___(1,731) |
| Balance at 31 March 2012 | 37 | 27,285 | 24,292 | 234 | (15,667) | 36,181 |
| ______ | _____ | _____ | _______ | _______ | _______ |
CASH FLOW STATEMENT
for the year ended 31 March 2013
| Year ended | Year ended | |
| 31 March 2013 | 31 March 2012 | |
| £'000 | £'000 | |
| Cash flows from operating activities | ||
| Investment income received | 761 | 652 |
| Interest received | 2 | 5 |
| Investment management fee paid | (261) | (424) |
| Other cash expenses | (304) | (380) |
| Net cash inflow / (outflow) from operating activities before taxation | 198 | (147) |
| Taxation | (49) | (41) |
| Net cash inflow/ (outflow) from operating activities | 149 | (188) |
| Cash flows from investing activities | ||
| Purchases of investments | (1,474) | (2,810) |
| Sales of investments | 3,650 | 5,525 |
| Net cash inflow from investing activities | 2,176 | 2,715 |
| Cash flows from financing activities | ||
| Shares issued | - | 1,057 |
| Shares repurchased | (2,809) | (1,827) |
| Reconstruction costs | (223) | - |
| Equity dividends paid | (196) | (131) |
| Net cash outflow from financing activities | (3,228) | (901) |
| (Decrease)/increase in cash | (903) | 1,626 |
| Change in cash and cash equivalents | ||
| Cash and cash equivalents at start of year | 2,297 | 683 |
| Realised gain /(loss) on foreign currency | 20 | (12) |
| Cash and cash equivalents at end of year | 1,414 | 2,297 |
NOTES:
1. Income
| Year ended | Year ended | |
| 31 March 2013 | 31 March 2012 | |
| £'000 | £'000 | |
| Income from investments: | ||
| Dividends from UK companies | 394 | 373 |
| Dividends from overseas companies | 360 | 284 |
| 754 | 657 | |
| Other income: | ||
| Deposit interest | 2 | 5 |
| Total Income | 756 | 662 |
| Income from investments is derived: | ||
| Listed on the UK Stock Exchange | 400 | 379 |
| Listed overseas | 354 | 278 |
| 754 | 657 |
2 Reconciliation of net cash outflow from operating activities
| 2013 | 2012 | |
| £'000 | £'000 | |
| Net return before finance costs and taxation | 4,707 | (4,058) |
| (Gain) / loss on investments | (4,751) | 4,084 |
| Decrease / (increase)in prepayments and accrued income | 13 | (23) |
| Increase / (decrease) in accruals and other creditors | 26 | (162) |
| Reconstruction costs | 223 | - |
| Foreign exchange (gain)/ loss | (20) | 12 |
| ___ | ____ | |
| Net cash inflow / (outflow) from operating activities | 198 | (147) |
Related parties
Mr Crole is an employee of Jupiter Asset Management Limited which receives investment management fees as set out below. Jupiter Administration Services Limited, a fellow subsidiary company of Jupiter Investment Management Group Limited receives administration fees as set out below.
Jupiter Asset Management Limited is contracted to provide investment management services to the Company (subject to termination by not less than twelve months' notice by either party) for a fee payable monthly, of one twelfth of 0.85 per cent. of the net assets of the Company after deduction of the value of any Jupiter managed investments. The fee payable for the year ended 31 March 2013 was £289,000 (2012: £307,000) with £53,000 (2012: £26,000) outstanding at the year end.
Jupiter Asset Management Limited is also entitled to an investment performance fee which is based on the outperformance of the Net Asset Value per Ordinary Share over the total return on the Benchmark Index in an accounting year. Any performance fee payable will equal the time weighted average number of Ordinary shares in issue during the period multiplied by 15 per cent. of the amount by which the increase in the Net Asset Value per Ordinary Share (plus any dividends per Ordinary Share paid or payable and any accrual for unpaid performance fees for the period) exceeds the total return on the Benchmark Index. The performance fee will only be payable if the Net Asset Value per Ordinary Share (adjusted as described above) exceeds the highest of (i) the Net Asset Value per Ordinary Share on the last business day of the previous performance period; (ii) the Net Asset Value per Ordinary share on the last day of a performance period in respect of which a performance fee was last paid: and (iii) 100p. The total amount of management fees and any performance fee payable in respect of one accounting period is limited to 1.75 per cent. of the Net Asset Value of the Company on the last business day of the relevant performance period. No performance fee was payable for the year ended 31 March 2013 (2012: £Nil).
Jupiter Administration Services Limited is contracted to provide secretarial, accounting and administrative services to the Company for an annual fee of £91,000 (2012: £88,000). The fee is adjusted each year in line with the Consumer Prices Index and is payable half yearly in advance.
The Company has invested from time to time in funds managed by Jupiter Investment Management Group Limited or its subsidiaries. There were no such holdings as at 31 March 2013.
4. Going Concern
The financial statements have been prepared on a going concern basis. The Directors consider that this is the appropriate basis as they have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. In considering this, the Directors took into account the Company's investment objective (see page 2), risk management policies and capital management policies (see Note 10), the diversified portfolio of readily realisable securities which can be used to meet short-term funding commitments and the ability of the Company to meet all of its liabilities and ongoing expenses. Thus the Directors continue to adopt the going concern basis of accounting in preparing the financial statements
5. Directors' Responsibilities For The Accounts
The Companies Act 2006 requires the Directors to prepare accounts for each financial period which give a true and fair view of the state of affairs of the Company at the end of the financial period and of the revenue for that period.
In preparing these accounts, the Directors are required to:
select suitable accounting policies and then apply them consistently;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other event and conditions on the entity's position and financial performance;
state whether applicable accounting standards have been followed, subject to any material departure disclosed and explained in the accounts; and
Make judgements and estimates that are reasonable and prudent.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the accounts 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.
So far as each Director is aware at the time the report is approved, there is no relevant audit information of which the auditors are unaware and that each Director has taken all reasonable steps to make themselves aware of any relevant information and to establish that the auditors are aware of that information.
The Directors, who are listed on page 6 of the Report and Accounts for the year to 31 March 2013, confirm to the best of their knowledge that:
the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
the Management Report includes a fair view 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 the Company faces.
On behalf of the Board
Perry Crosthwaite
Chairman
21 June 2013
The annual report will be sent to all registered shareholders and copies may be obtained from the registered office of the Company at 1 Grosvenor Place, London, SW1X 7JJ. A copy of the Annual Report will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.hemscott.com/nsm.do.
The Annual General Meeting of the Company is scheduled to take place at 11.00 a.m. on 25 July 2013 at the Company's registered office.
The contents of websites referred to in this document, or accessible from links within those websites are not incorporated into, nor do they form part of, this document.
By order of the Board
Jupiter Asset Management Limited
Secretaries
Enquiries:
Richard Pavry
Jupiter Asset Management Limited
020 7314 4822
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.
Source: Jupiter Green Investment Trust PLC via Thomson Reuters ONE
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