Half Yearly Financial Report to 30 September 2019
Jupiter Green Investment Trust plc ('the company')
Legal Entity Identifier: 549300MFRCR13CT1L845
Half Yearly Financial Report for the six months to 30 September 2019 (unaudited)
Financial Highlights for the six months to 30 September 2019
Capital Performance
|
|
As at |
As at |
|
|
|
30.09.19 |
31.03.19 |
|
|
Total Assets less current liabilities (£'000) |
38,331 |
35,934 |
|
Ordinary Share Performance
|
|
As at |
As at |
|
|
|
|
30.09.19 |
31.03.19 |
|
% Change |
|
Mid market price (p) |
192.50 |
178.00 |
|
+8.1 |
|
Undiluted net asset value per ordinary share (p) |
203.74 |
188.70 |
^^ |
+8.6 |
|
Undiluted net asset value per ordinary share (p) |
|
|
|
|
|
(with dividends paid of 1.0p added back) |
204.94 |
191.00 |
|
+7.3 |
|
Diluted net asset value per ordinary share (p)^ |
203.74 |
188.70 |
|
+8.0 |
|
Diluted net asset value per ordinary share (p) |
|
|
|
|
|
(with dividends paid 1.0p added back) |
204.94 |
191.00 |
|
+7.3 |
|
FTSE ET100 Total Return Index |
3,058.80 |
2,847.64 |
|
+7.4 |
|
Discount to net asset value (%) |
5.51 |
5.67 |
|
|
|
Ongoing charges ratio (%) excluding finance costs |
1.62 |
1.50 |
|
+8.1 |
^ Being the net asset value per share assuming that all annual subscription rights are taken up.
^^ Being the exercise price for the purposes of the 2020 subscription rights.
Chairman's Statement
It is with pleasure that I present the Half Yearly Financial Report for the Jupiter Green Investment Trust PLC for the six months to 30 September 2019.
While the six months under review have certainly been challenging, global equity markets have weathered the various storms to close the period with solid gains. The US administration's increasing protectionist stance, which caused stock markets to retreat sharply in May and August, has remained a persistent concern, with President Trump moving to impose tariffs on almost all Chinese exports to the US, and China retaliating with its own tit-for-tat measures on US goods. Higher tariffs have yet to manifest in higher inflation, but they have led to a reduction in global trade, and manufacturing activity across the world is slowing. Nowhere is this more evident than in the US itself, with September's Institute of Supply Managers survey signalling that US manufacturing activity is contracting at the fastest level in a decade. Elsewhere, Germany, historically Europe's powerhouse, looks like it may fall into recession in the third quarter.
So why have global equity markets rallied? To answer that we need to look to central banks, many of which have undertaken significant monetary policy U-turns. At the end of March, the US Federal Reserve was still forecasting that it would raise rates over the next two years; by the end of September, it had cut rates twice. The European Central Bank, which only ended its asset-purchase programme at the end of 2018, has been forced to reinstate these measures and has also cut rates, taking them further below zero. These U-turns have caused bond yields to tumble, boosting higher yielding areas of stock markets that are often seen as bond proxies while more cyclically focused stocks have lagged.
For UK equities, Brexit has continued to dominate the headlines. The company's limited direct exposure to the UK helps to contain risks, as does its thematic focus, which is on balance driven more by structural economic drivers rather than cyclical. Nevertheless, your fund manager continues to monitor developments closely.
Investment performance
During the six months under review the total return on the diluted net asset value of the company's ordinary shares (being the net asset value that would apply to them were all the ordinary shareholders to have exercised their annual subscription rights at the same time), with the dividends added back, was 7.3%. This compares with an increase of 7.4% in the company's benchmark index, namely the FTSE ET100 Index Total Return Index.
The performance of the company over the course of the period is set out in detail by your fund manager, Charlie Thomas in the Investment Adviser's Review.
Dividend
At the Annual General Meeting held on 18 September 2019 shareholders approved a final dividend of 1.20p per ordinary share in respect of the financial year ended 31 March 2019 that was paid on 18 October 2019 to those shareholders on the register as at 27 September 2019. The Board has today declared an interim dividend of 1.10p per ordinary share in respect of the financial year ending 31 March 2020. The dividend will be paid on 27 March 2020 to those shareholders on the register as at 6 March 2020.
Outlook
Over the last six months, Charlie Thomas has detected an acceleration in the "velocity of change" in companies, markets and regulation, which has benefited the company and has been reflected in his portfolio activity. Maturing technologies and falling costs are at the centre of this process and are emboldening politicians to introduce new regulations and company management teams to modify their business models. For example, Europe's offshore wind market has doubled every three years throughout the last decade, with newer markets developing in places such as the US, Japan and South Korea. Notably, the increased use of offshore wind in the energy mix is largely being driven by technology and the favourable costs rather than politics. Nevertheless, regulation remains a key driver of change. In Europe, emboldened by rising electoral support for parties with a progressive approach to climate change, the European Commission has been pushing forward with the EU Sustainable Finance Action Plan, which should continue to underpin the further development of the circular economy and areas such as energy efficiency.
Against this backdrop, it is no surprise that interest in sustainable forms of investing - environmental, social and governance (ESG) investing - has been expanding rapidly as younger generations demand more responsible corporate behaviour. Some of the world's biggest institutional investors continue to lead the way by allocating more of their funds to companies that score well on ESG criteria. Sapling vehicles for ESG investment also continue to grow, including climate bonds (or green bonds), whose proceeds are earmarked for use on assets or projects that help in the fight against climate change.
In keeping with this, the company continues to invest in businesses tackling some of the world's most urgent challenges including the quest for more sustainable consumption, energy-efficient transport, better pollutions control and testing, and more efficient water infrastructure. Many investee companies are at the forefront of evolving trends, such as in waste recycling and the development of circular economies.
At a time of heightened market volatility, Charlie and his team remain focused on the many opportunities for sustainable investing across a range of themes and continue to be alert to the possibility of buying long-term growth at advantageous valuations.
We are delighted that the Jupiter Green Investment Trust is among the first cohort of companies and funds to be awarded London Stock Exchange's new Green Economy Mark.
This new classification has been created to highlight companies and investment funds listed on all segments of London Stock Exchange's Main Market and AIM that are driving the global green economy.
Michael Naylor
Chairman
20 December 2019
Investment Adviser's Review
Performance review
For the six months ended 30 September 2019, the total return for the company (NAV income reinvested) was 8.6%* compared to returns of 7.4%* for the company's benchmark, the FTSE ET100 TR index.
Market review
Global stocks overcame two setbacks in May and August to close the six-month period with solid gains. Hopes of an improvement in trade tensions between the US and China were dashed, with both sides imposing tariffs on a broader range of each other's exports. With the slowdown in economic activity starting to spread from manufacturing to services, central banks across the developed and developing world acted to prevent a severe slowdown in the global economy. The US Federal Reserve lowered interest rates in July, its first rate cut since 2008, followed by a second cut in rates in September. The European Central Bank also reduced rates, taking them further below zero, and reinstated its bond-buying programme. The change in monetary policy focus caused bond yields to plunge, with $17trn of debt globally trading on yields of less than zero at the end of August. The environment favoured technology stocks and high dividend payers that typically perform well when interest rates fall.
Policy review
The company outperformed the FTSE ET100 index, with performance driven by a combination of thematic and stock specific factors. The company's exposure to the circular economy, which includes recycling providers and technology solutions businesses, was a notable highlight, with companies such as Casella Waste Systems and Veolia Environnement performing strongly. Other highlights included Itron, an innovative company in our energy efficiency theme offering smart grid services, which announced contract wins and positive results. We were also encouraged by the management's long term outlook discussed at the company's capital markets day. Defensive growth company Azbil (a leader in energy efficiency equipment in industrial and commercial buildings) was also a positive for the fund.
In relative terms, the company benefited from not holding Tesla (which accounts for circa 8% of the FTSE ET100 Index) and Umicore. Tesla's share price continued to retreat following weak results, while Umicore, which produces cathode materials for electric vehicles (EVs) batteries, guided down due to a slowdown in demand for EVs in China and difficulties finding ethically sourced cobalt at a competitive price. Our recent engagement with the company also highlighted the potential for longer-term margin erosion given the entrance of new competitors, a factor that is central to why we are currently cautious about this area of the mobility theme.
Detracting from the company's relative returns were Alfa Laval and A.O. Smith. Both holdings were affected by their exposure to the US/China trade tensions along with broader concerns about a cyclical slowdown. These concerns also affected engine efficiency business BorgWarner. Elsewhere, RPS Group, a UK based consultant in the fund's environmental services theme, retreated having revised down its outlook due to weakening growth in Australia. We continue to engage with the company having discussed strategy and the new leadership with executives and non-executives alike.
In terms of transactions, we established a new position in Acuity Brands, a US LED lighting specialist that is well placed to benefit from ongoing structural changes in its end markets. We added to our holdings in Orsted (offshore wind) and Prysmian (power and telco cables) and topped up our position in Renewi. The company has been making constructive progress at its business units in the Netherlands and has an improving balance sheet. In contrast, we disposed of the company's position in FirstGroup, which had rallied hard after the UK Department of Transport blocked Stagecoach from bidding for three domestic rail franchises. We also trimmed positions in A.O. Smith, Republic Services and Tomra, each of which had performed strongly for the company.
Investment Outlook
We are watching developments in the global economy closely and are mindful that bond and stock markets are giving conflicting signals. Flattening yield curves and negative interest rates reflect what appears to be an increasingly entrenched slowdown in the global economy. In contrast, record high equity market indices suggest investors are expecting central bank stimulus to moderate the current slowdown, and that political risks, such as Brexit and the trade war between the US and China, will be resolved relatively smoothly. Our view is that we may be seeing a relatively normal end to the current expansionary cycle in the global economy. While there may be bumps along the way, such times can present potential opportunities and we continue to see some compelling valuations across our seven sustainable solution themes: Circular Economy; Clean Energy; Mobility; Water; Environmental Services; Energy Efficiency; and Sustainable Agriculture, Nutrition and Health. When assessing the opportunities in our investment universe we view companies as potentially evolving along three sequential stages of development: innovators, accelerators and established leaders. For us, these categories reflect the market penetration of a company's core solution, and as a result drive their fundamental characteristics, such as free cash flow generation. In the circular economy and clean energy themes, in particular, we have seen companies that are moving or have moved quickly from innovators to accelerators. This reflects the rapid growth of their addressable markets, driven by technology, regulation and consumer demand trends. While we continue to be cognisant of potential market exuberance that can be a consequence of rapid growth, we continue to find pockets of opportunity where in our view the company's earnings growth potential appears underappreciated.
Charlie Thomas
Fund Manager
Jupiter Asset Management Limited
Investment Adviser
20 December 2019
*Source: Jupiter Asset Management
Investment Portfolio as at 30 September 2019
|
|
|
Market |
|
|
|
Country |
value |
Percentage |
|
Company |
of listing |
£'000 |
of portfolio |
|
Veolia Environnement |
France |
1,234 |
3.2 |
|
Azbil |
Japan |
1,136 |
3.0 |
|
AO Smith |
United States of America |
1,125 |
3.0 |
|
Xylem |
United States of America |
1,124 |
3.0 |
|
NextEra Energy Partners |
United States of America |
1,094 |
2.9 |
|
Orsted |
Denmark |
1,085 |
2.9 |
|
Vestas Wind Systems |
Denmark |
981 |
2.6 |
|
Itron |
United States of America |
974 |
2.6 |
|
Sensata Technologies Holding |
United Kingdom |
968 |
2.6 |
|
Siemens |
Germany |
949 |
2.5 |
|
National Express Group |
United Kingdom |
945 |
2.5 |
|
Cranswick |
United Kingdom |
936 |
2.5 |
|
Hannon Armstrong Sustainable Infrastructure Capital, REIT |
United States of America |
899 |
2.4 |
|
Johnson Matthey |
United Kingdom |
871 |
2.3 |
|
Eaton |
Ireland |
844 |
2.2 |
|
Horiba |
Japan |
828 |
2.2 |
|
Toray Industries |
Japan |
824 |
2.2 |
|
Schneider Electric |
France |
808 |
2.1 |
|
Prysmian |
Italy |
780 |
2.1 |
|
Tomra Systems |
Norway |
780 |
2.1 |
|
First Solar |
United States of America |
752 |
2.0 |
|
Casella Waste Systems 'A' |
United States of America |
727 |
1.9 |
|
Clean Harbors |
United States of America |
719 |
1.9 |
|
Covanta Holding |
United States of America |
709 |
1.9 |
|
Daiseki |
Japan |
704 |
1.8 |
|
Watts Water Technologies 'A' |
United States of America |
698 |
1.8 |
|
Regal Beloit |
United States of America |
644 |
1.7 |
|
Valmont Industries |
United States of America |
618 |
1.6 |
|
Shimano |
Japan |
609 |
1.6 |
|
BorgWarner |
United States of America |
608 |
1.6 |
|
Enel |
Italy |
606 |
1.6 |
|
Knorr-Bremse |
Germany |
567 |
1.5 |
|
East Japan Railway |
Japan |
533 |
1.4 |
|
Pennon Group |
United Kingdom |
531 |
1.4 |
|
Innergex Renewable Energy |
Canada |
504 |
1.3 |
|
Greencoat Renewables |
Ireland |
502 |
1.3 |
|
Miura |
Japan |
500 |
1.3 |
|
Acuity Brands |
United States of America |
492 |
1.3 |
|
Stantec |
Canada |
491 |
1.3 |
|
Koninklijke DSM |
Netherlands |
488 |
1.3 |
|
SKF 'B' |
Sweden |
488 |
1.3 |
|
Novozymes 'B' |
Denmark |
486 |
1.3 |
|
Mayr Melnhof Karton |
Austria |
477 |
1.3 |
|
Huaneng Renewables 'H' |
China |
474 |
1.2 |
|
ANDRITZ |
Austria |
463 |
1.2 |
|
Infineon Technologies |
Germany |
391 |
1.0 |
|
Atlas Copco 'A' |
Sweden |
375 |
1.0 |
|
Jupiter Global Ecology Diversified Fund Class I GBP Q Inc Dist HSC* |
Luxembourg |
359 |
1.0 |
|
NSK |
Japan |
357 |
0.9 |
|
Brambles |
Australia |
343 |
0.9 |
|
Wartsila |
Finland |
317 |
0.8 |
|
Ricardo |
United Kingdom |
279 |
0.7 |
|
IPG Photonics |
United States of America |
275 |
0.7 |
|
China Everbright International |
Hong Kong |
269 |
0.7 |
|
Renewi |
United Kingdom |
254 |
0.7 |
|
Salmones Camanchaca |
Chile |
249 |
0.6 |
|
RPS Group |
United Kingdom |
234 |
0.6 |
|
Fjord1 |
Norway |
231 |
0.6 |
|
RA International Group |
United Kingdom |
202 |
0.5 |
|
Simec Atlantis Energy |
Singapore |
188 |
0.5 |
|
Trainline |
United Kingdom |
41 |
0.1 |
|
Total |
|
37,939 |
100.0 |
*Shares in a sub-fund of the Jupiter Global Fund SICAV
The holdings listed above are all equity shares unless otherwise stated.
Cross Holdings in other Investment Companies
As at 30 September 2019, none of the company's total assets were invested in the securities of other UK listed investment companies.
It is the company's stated policy that not more than 10%, in aggregate, of the value of the total assets of the company (before deducting borrowed money) may be invested in other investment companies (including investment trusts) listed on the Main Market of the London Stock Exchange. Whilst the requirements of the UK Listing Authority permit the company to invest up to this 10% limit, it is the directors' current intention that the company invests not more than 5%, in aggregate, of the value of the total assets of the company (before deducting borrowed money) in such other investment companies.
Interim Management Report
Related Party 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 performance of the company. Details of related party transactions are contained in the Annual Report and Accounts for the year ended 31 March 2019 and in Note 9 of the Notes to the Financial Statements of the Half Yearly Financial Report for the six months ended 30 September 2019.
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the company can be divided into the following areas:
• Investment policy and process;
• Investment strategy and share price movements;
• Discount to net asset value;
• Liquidity risk;
• Regulatory risk;
• Credit and counterparty risk;
• Loss of key personnel;
• Operational; and
• Financial.
The board reported on the above principal risks and uncertainties in the Annual Report & Accounts for the year ended 31 March 2019.
Going Concern
The directors, having considered the company's investment objective, risk management and capital management policies, 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, are satisfied that the company has adequate resources to continue in operation for the foreseeable future. The directors continue to adopt the going concern basis of accounting in preparing the accounts.
As part of its assessment, the board has noted that shareholders will be required to vote on the continuation of the company at the 2020 AGM.
Directors' Responsibility Statement
The board of directors of Jupiter Green Investment Trust PLC confirms that to the best of its knowledge:
a. The condensed set of financial statements have been prepared in accordance with applicable United Kingdom law and those International Financial Reporting Standards ('IFRS') as adopted by the European Union and give a true and fair view of the state of affairs of the company, and of the return or loss of the company as at 30 September 2019.
b. The Chairman's Statement, the Investment Adviser's Review and the Interim Management Report include a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules.
c. The Interim Management Report includes a fair review of the information required by DTR 4.2.8R of the Disclosure and Transparency Rules.
The Half Yearly Financial Report has not been audited or reviewed by the company's auditor.
For and on behalf of the Board
Michael Naylor
Chairman
20 December 2019
Statement of Comprehensive Income
For the six months to 30 September 2019 (unaudited)
|
|
Six months to |
Six months to |
||||
|
|
Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
Gain on investments held at fair value through profit or loss |
- |
2,803 |
2,803 |
- |
1,599 |
1,599 |
|
Foreign exchange gain |
- |
48 |
48 |
- |
185 |
185 |
|
Income |
557 |
- |
557 |
485 |
- |
485 |
|
Total income |
557 |
2,851 |
3,408 |
485 |
1,784 |
2,269 |
|
Investment management fee |
(33) |
(99) |
(132) |
(37) |
(112) |
(149) |
|
Other expenses |
(174) |
- |
(174) |
(148) |
- |
(148) |
|
Total expenses |
(207) |
(99) |
(306) |
(185) |
(112) |
(297) |
|
Net Return on ordinary activities before finance costs and taxation |
350 |
2,752 |
3,102 |
300 |
1,672 |
1,972 |
|
Finance costs |
(1) |
(3) |
(4) |
(1) |
(3) |
(4) |
|
Return on ordinary activities before taxation |
349 |
2,749 |
3,098 |
299 |
1,669 |
1,968 |
|
Taxation |
(48) |
- |
(48) |
(30) |
- |
(30) |
|
Net return after taxation |
301 |
2,749 |
3,050 |
269 |
1,669 |
1,938 |
|
Return per ordinary share |
1.60p |
14.55p |
16.15p |
1.28p |
7.91p |
9.19p |
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 (AIC). All items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the period.
All income is attributable to the equity holders of Jupiter Green Investment Trust PLC. There are no minority interests.
The financial information does not constitute 'accounts' as defined in section 434 of the Companies Act 2006.
Statement of Financial Position
As at 30 September 2019
|
|
30 September 2019 |
31 March 2019 |
|
Non current assets |
|
|
|
Investments held at fair value through profit or loss |
37,939 |
35,466 |
|
Current assets |
|
|
|
Prepayments and accrued income |
155 |
174 |
|
Cash and cash equivalents |
571 |
449 |
|
|
726 |
623 |
|
Total assets |
38,665 |
36,089 |
|
Current liabilities |
|
|
|
Other payables |
(334) |
(155) |
|
Total net assets less current liabilities |
38,331 |
35,934 |
|
Capital and reserves |
|
|
|
Called up share capital |
34 |
34 |
|
Share premium |
29,707 |
29,705 |
|
Redemption reserve* |
239 |
239 |
|
Special reserve |
24,292 |
24,292 |
|
Retained earnings |
(15,941) |
(18,336) |
|
Total equity shareholders' funds |
38,331 |
35,934 |
|
Net asset value per ordinary share |
203.74p |
188.70p |
|
Diluted net asset value per ordinary share |
203.74p |
188.70p |
* Under the company's Articles of Association, dividends may be paid out of any distributable reserve.
Approved by the board of directors and authorised for issue on 20 December 2019 and signed on its behalf by:
Michael Naylor
Chairman
Company Registration number 05780006
Statement of Changes in Equity
For the six months to 30 September 2019
|
For the six months to 30 September 2019 (unaudited) |
Share Capital £'000 |
Share Premium £'000 |
Special Reserve £'000 |
Redemption Reserve £'000 |
Retained Earnings £'000 |
Total £'000 |
|
Balance at 31 March 2019 |
34 |
29,705 |
24,292 |
239 |
(18,336) |
35,934 |
|
Net return for the period |
- |
- |
- |
- |
3,050 |
3,050 |
|
Ordinary shares reissued from treasury |
- |
2 |
- |
- |
6 |
8 |
|
Ordinary shares repurchased |
- |
- |
- |
- |
(435) |
(435) |
|
Dividend declared and approved |
|
|
|
|
|
|
|
by shareholders |
- |
- |
- |
- |
(226) |
(226) |
|
Balance at 30 September 2019 |
34 |
29,707 |
24,292 |
239 |
(15,941) |
38,331 |
|
For the six months to |
Share Capital £'000 |
Share Premium £'000 |
Special Reserve £'000 |
Redemption Reserve £'000 |
Retained Earnings £'000 |
Total £'000 |
|
Balance at 31 March 2018 |
34 |
29,630 |
24,292 |
239 |
(14,048) |
40,147 |
|
Net return for the period |
- |
- |
- |
- |
1,938 |
1,938 |
|
Ordinary shares reissued from treasury |
- |
75 |
- |
- |
166 |
241 |
|
Ordinary shares repurchased |
- |
- |
- |
- |
(19) |
(19) |
|
Dividend paid |
- |
- |
- |
- |
(274) |
(274) |
|
Balance at 30 September 2018 |
34 |
29,705 |
24,292 |
239 |
(12,237) |
42,033 |
Cash Flow Statement
For the six months to 30 September 2019 (unaudited)
|
|
2019 |
2018 £'000 |
|
Cash flows from operating activities |
|
|
|
Investment income received (gross) |
561 |
520 |
|
Deposit interest received |
1 |
2 |
|
Investment management fee paid |
(130) |
(150) |
|
Performance fee |
- |
(59) |
|
Other cash expenses |
(139) |
(219) |
|
Net cash inflow from operating activities before taxation |
293 |
94 |
|
Interest paid |
(4) |
(2) |
|
Taxation |
(48) |
(30) |
|
Net cash inflow from operating activities |
241 |
62 |
|
Net cash flows from investing activities |
|
|
|
Purchases of investments |
(1,997) |
(6,995) |
|
Sales of investments |
2,327 |
4,091 |
|
Net cash inflow/(outflow) from investing activities |
330 |
(2,904) |
|
Cash flows from financing activities |
|
|
|
Shares repurchased |
(505) |
(19) |
|
Shares reissued from treasury |
8 |
241 |
|
Net cash (outflow)/inflow from financing activities |
(497) |
222 |
|
Increase/(decrease) in cash |
74 |
(2,620) |
|
Cash and cash equivalents at start of period |
449 |
2,785 |
|
Realised gain on foreign currency |
48 |
185 |
|
Cash and cash equivalents at end of period |
571 |
350 |
Notes to the Financial Statements for the six months to 30 September 2019
1. Accounting Policies
The Accounts comprise the unaudited financial results of the company for the period to 30 September 2019. The Accounts are presented in pounds sterling, as this is the functional currency of the company. All values are rounded to the nearest thousand pounds (£'000) except where indicated.
The Accounts have been prepared in accordance with International Financial Reporting Standards (IFRS), which comprise standards and interpretations approved by the International Accounting Standards Board (IASB) and International Accounting Standards Committee (IASC), as adopted by the European Union (EU).
Where presentational guidance set out in the Statement of Recommended Practice (SORP) for Investment Trusts issued by the Association of Investment Companies (AIC) in November 2014 is consistent with the requirements of IFRS, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.
The board continues to adopt the going concern basis in the preparation of the financial statements.
(a) Income recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business.
Income includes dividends from investments quoted ex-dividend on or before the date of the Statement of Financial Position.
Dividends receivable from equity shares are taken to the revenue return column of the Statement of Comprehensive Income.
Special dividends are treated as repayment of capital or as revenue depending on the facts of each particular case.
(b) Presentation of Statement of Comprehensive Income
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the Association of Investment Companies (AIC), supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the statement.
An analysis of retained earnings broken down into revenue (distributable) items and capital (non-distributable) items is given in Note 5 of the Half Yearly Financial Report 2019. Investment management fees and finance costs are charged 75% to capital and 25% to revenue (2018: 90% to capital and 10% to revenue). All other operational costs including administration expenses are charged to revenue.
(c) Basis of valuation of investments
Investments are recognised and derecognised on a trade date where a purchase and sale of an investment is under contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at cost, being the consideration given.
All investments are classified as held at fair value through profit or loss. All investments are measured at fair value with changes in their fair value recognised in the Statement of Comprehensive Income in the period in which they arise. The fair value of listed investments is based on their quoted bid price at the reporting date without any deduction for estimated future selling costs.
Foreign exchange gains and losses on fair value through profit and loss investments are included within the changes in the fair value of the investments.
For investments that are not actively traded and/or where active stock exchange quoted bid prices are not available, fair value is determined by reference to a variety of valuation techniques. These techniques may draw, without limitation, on one or more of: the latest arm's length traded prices for the instrument concerned; financial modelling based on other observable market data; independent broker research; or the published accounts relating to the issuer of the investment concerned.
2. Gain on Investments
|
|
Six months to |
Six months to 30 September 2018 |
|
Net gain realised on sale of investments |
334 |
2,452 |
|
Movement in unrealised gains/(losses) |
2,469 |
(853) |
|
Gain on investments |
2,803 |
1,599 |
3. Earnings per ordinary share
The earnings per ordinary share figure is based on the net profit for the six months of £301,000 (six months to 30 September 2018: net profit £269,000) and on 18,892,694 ordinary shares (six months to 30 September 2018: 21,098,426), being the weighted average number of ordinary shares in issue during the period.
The earnings per ordinary share figure detailed above can be further analysed between revenue and capital, as below.
|
|
Six months to |
Six months to |
|
Net revenue profit |
301 |
269 |
|
Net capital profit |
2,749 |
1,669 |
|
Net total profit |
3,050 |
1,938 |
|
Weighted average number of ordinary shares in issue during the period |
18,892,694 |
21,098,426 |
|
Revenue earnings per ordinary share (p) |
1.60 |
1.28 |
|
Capital earnings per ordinary share (p) |
14.55 |
7.91 |
|
Total earnings per ordinary share (p) |
16.15 |
9.19 |
4. Transaction Costs
The following transaction costs were incurred during the period:
|
|
Six months to |
Six months to |
|
Purchases |
4 |
8 |
|
Sales |
1 |
3 |
|
Total |
5 |
11 |
5. Retained Earnings
The table below shows the movement in the retained earnings analysed between revenue and capital items.
|
|
Revenue |
Capital |
Total |
|
At 31 March 2019 |
269 |
(18,605) |
(18,336) |
|
Movement during the period: |
|
|
|
|
Net income for the period |
301 |
2,749 |
3,050 |
|
Shares repurchased |
- |
(435) |
(435) |
|
Ordinary shares reissued from treasury |
- |
6 |
6 |
|
Dividends paid 1.0p |
(226) |
- |
(226) |
|
At 30 September 2019 |
344 |
(16,285) |
(15,941) |
6. Net asset value per ordinary share
The net asset value per ordinary share is based on the net assets attributable to the ordinary shareholders of £38,331,000 (31 March 2019: £35,934,000) and on 18,813,986 (31 March 2019: 19,042,443) ordinary shares, being the number of ordinary shares in issue at the period end excluding treasury shares.
|
|
Six months to 30 September 2019 £'000 |
Year ended 31 March 2019 £'000 |
|
Undiluted |
|
|
|
Ordinary shareholders' funds |
38,331 |
35,934 |
|
Number of ordinary shares in issue |
18,813,986 |
19,042,443 |
|
Net asset value per ordinary share (pence) |
203.74p |
188.70p |
|
Diluted |
|
|
|
Ordinary shareholders' funds |
42,164 |
39,527 |
|
Number of ordinary shares in issue |
20,695,385 |
20,946,687 |
|
Net asset value per ordinary share (pence) |
203.74p |
188.70p |
The diluted net asset value per ordinary share assumes that all outstanding dilutive subscription shares, being one for ten ordinary shares, will be converted to ordinary shares at the end of the financial year.
7. Fair valuation of investments
The financial assets measured at fair value in the Statement of Financial Position are grouped into the fair value hierarchy as follows:
|
|
30 September 2019 |
31 March 2019 |
||||||
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
Level 1 |
Level 2 |
Level 3 |
Total |
|
Equity Investments |
37,939 |
- |
- |
37,939 |
35,466 |
- |
- |
35,466 |
|
|
37,939 |
- |
- |
37,939 |
35,466 |
- |
- |
35,466 |
Level 1 reflects financial instruments quoted in an active market.
Level 2 reflects financial instruments whose fair value is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables includes only data from observable markets.
Level 3 reflects financial instruments whose fair value is determined in whole or in part using a valuation technique based on assumptions that are not supported by prices from observable market transactions in the instrument and not based on available observable market data.
8. Principal risk profile
The principal risks which the company faces include exposure to:
(i) market price risk, including currency risk, interest rate risk and other price risk
(ii) credit and counterparty risk
(iii) liquidity risk
Market price risk - This is the risk that the fair value or future cash flows of a financial instrument held by the company may fluctuate because of changes in market prices. This market risk comprises three elements - currency risk, interest rate risk and other price risk.
Credit and counterparty risk - This is the exposure to loss from the failure of a counterparty to deliver securities or cash for acquisitions or to repay deposits.
Liquidity risk - This is the risk that the company will encounter difficulty in meeting obligations associated with financial liabilities.
Further details of the company's management of these risks can be found in the company's Annual report and accounts for the year ended 31 March 2019.
There have been no changes to the management of or the exposure to these risks since that date.
9. Related parties
Jupiter Unit Trust Managers Limited ('JUTM'), the Alternative Investment Fund Manager, is a company within the same group as Jupiter Asset Management Limited ('JAM'), the Investment Adviser. JUTM receives an investment management fee as set out below.
JUTM is contracted to provide investment management services to the company subject to termination by not less than twelve months' notice by either party. The basis for calculation of the management fee charged to the company was adjusted with effect from 1 June 2018 from 0.75% of net assets per annum to a tiered fee amounting to 0.70%. of net assets up to £150 million, reducing to 0.60% for net assets over £150 million and up to £250 million, and reducing further to 0.50% for net assets in excess of £250 million after deduction of the value of any Jupiter managed investments.
The management fee payable to JUTM for the period 1 April 2019 to 30 September 2019 was £132,207 (year to 31 March 2019: £273,536) with £22,170 (31 March 2019: £19,757) outstanding at period end.
The company and the investment manager agreed to remove the performance fee arrangements with effect from 1 April 2018.
The company has invested from time to time in funds managed by Jupiter Fund Management PLC or its subsidiaries. There was one such investment with a market value of £359,040 (31 March 2019: £347,820). No investment management fee is payable by the company to Jupiter Asset Management Limited in respect of the company's holdings in investment trusts, open-ended funds and investment companies in respect of which Jupiter Fund Management PLC, or any subsidiary undertaking of Jupiter Fund Management PLC, receives fees as investment manager or investment adviser.
Availability of Half Yearly Financial Report
The Half Yearly Financial Report will shortly be available on company's website www.jupiteram.com/JGC.
A copy of the Half Yearly Financial Report will also be submitted to the National Storage Mechanism and will soon be available for inspection at www.morningstar.co.uk/uk/NSM.
By Order of the Board
Jupiter Asset Management Limited
Company Secretary
20 December 2019
For further information, please contact:
Magnus Spence
Head of Investment Trusts & Alternatives
Jupiter Asset Management Limited
investmentcompanies@jupiteram.com
020 3817 1000
[END]
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