JPMorgan Amer InvTst - Half-year Report
15/08/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240815:nRSO5012Aa&default-theme=true
RNS Number : 5012A JPMorgan American IT PLC 15 August 2024
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN AMERICAN INVESTMENT TRUST PLC
HALF YEAR REPORT & FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30TH JUNE 2024
Legal Entity Identifier: 549300QNAI4XRPEB4G65
Information disclosed in accordance with the DTR 4.2
CHAIR'S STATEMENT
I became Chair of the Company following the conclusion of the AGM in May 2024,
having joined the Board in 2017. I took over the chairmanship from Dr Kevin
Carter who had been a Director of the Company since 2014 and Chair since 2017.
I would like to take this opportunity on behalf of the Board to thank Kevin
for his leadership and dedication during his tenure, first as a Director, and
then as Chair of the Company.
Performance
The first six months of 2024 remained positive for the US market. Despite some
continuing economic and political uncertainty, US equities extended their
streak of new all-time highs, buoyed by hopes of a soft economic landing, a
favourable prognosis for corporate earnings and further gains in the handful
of stocks expected to benefit most from the rapid adoption of artificial
intelligence (AI) tools. US interest rates peaked in August last year, and
have remained steady in the year to date, ensuring further modest declines in
US inflation towards the Federal Reserve's 2% target. This steady rate stance
disappointed some investors who were hoping the Fed would begin to reduce
rates in the first half of 2024, but it seems likely that the easing cycle
will commence soon, especially now the labour market appears to be slowing.
Against this supportive background, the Company's total return on net assets
per share in sterling terms over the period was +19.1%. The return to Ordinary
shareholders per share in sterling terms was +16.7%, reflecting a small
widening of the Company's discount to net asset value per share ('NAV') at
which the shares traded over the period. The total return from the Company's
benchmark, the S&P 500 Index in sterling terms, was +16.1%, resulting in
outperformance of +3.0 percentage points, in NAV terms.
Since the Company changed its investment approach on 1st June 2019, it has
outperformed the benchmark index by +22.4 percentage points in the subsequent
61 months through to the end of June 2024, providing a NAV total return to
shareholders of +134.8% compared with a benchmark return of +112.4%. This
represents an annualised outperformance of +2.3% since this change.
Share Price and Premium/Discount
The Company's shares have traded between a discount of 5.0% and a premium of
2.1% to NAV throughout the period under review, and the Company has continued
to both buy back and issue shares in line with the Board's longstanding
position of buying back shares when they stand at anything more than a small
discount to NAV and issuing shares at a sufficient premium to NAV (to cover
the costs of issuance). The Company bought into Treasury a total of 1,450,348
shares, or 0.8% of the Company's issued share capital during the six months to
end of June 2024, excluding shares held in treasury (30th June 2023: 3.4%).
These shares were purchased at an average discount to NAV of 3.4%, producing a
modest accretion to the NAV for continuing shareholders. The Company issued a
total of 850,000 shares from treasury during the same period at an average
premium to NAV of 0.95%.
Dividends
The Company is declaring a dividend of 2.75 pence per share (2023: 2.5 pence)
for the first six months of this year, which will be payable on 7th October
2024 to shareholders on the register on 30th August 2024. This represents a
10% increase on the constant 2.5 pence per share interim dividend paid since
2018.
While capital growth is the primary aim of the Company, the Board is aware
that dividend receipts can be an important element of shareholder returns. The
Board continues to monitor the net income position of the Company and in the
absence of unforeseen circumstances, the Board aims to continue its
progressive dividend policy.
Gearing
The Board has set the current tactical level of gearing at 5% of net assets,
with a permitted range around this level of plus or minus 5%, meaning that
currently gearing can vary between 0% and 10%. This tactical level of gearing
remained unchanged throughout the past six months. Gearing stood at 2.8% at
the beginning of 2024 and ended the six-month period at 4.3%.
The Board believes it is prudent for its gearing capacity to be funded from a
mix of sources, including short- and longer-term tenors and fixed and floating
rate borrowings. The Company has an £80 million revolving credit facility
(with an additional £20 million accordion) with Mizuho Bank Ltd. It also has
in issue a combined total of US$100 million unsecured loan notes issued via
private placements, US$65 million of which are repayable in February 2031 and
carry a fixed interest rate of 2.55% per annum. The remaining US$35 million of
loan notes mature in October 2032 and carry a fixed interest rate of 2.32%.
Manager Succession
As previously announced, Jonathan Simon, the portfolio manager responsible for
the value stocks in the Company's large cap portfolio, has given notice that
he intends to retire in early 2025. Jonathan will continue with his existing
responsibilities until his retirement. Following this announcement, the Board
was able to visit the Manager's offices in New York and held a series of
meetings with the portfolio managers and other senior members of the Manager's
US equities investment team.
As announced on 7th August, following these meetings it has been agreed that
Jack Caffrey will work alongside Jonathan on the value stocks in the large cap
portfolio and Eric Ghernati will work alongside Felise Agranoff on the growth
stocks in the large cap portfolio. The Board believes in the merit of
additional portfolio manager resources and considers that the Company will
benefit from four portfolio managers (two growth, two value) on the large cap
portfolio as a key element of the Company's ongoing management structure.
Jack has 32 years' experience and is a portfolio manager on a focused dividend
growth strategy as well as being a member of the Manager's Value team, which
is supported by more than 20 career research analysts. Eric has 24 years'
experience and is currently a portfolio manager on a technology fund, as well
as having analytical responsibilities covering US technology stocks in the
Manager's Growth team, which is supported by over 15 career research analysts.
Change of Registrar
Following a competitive tender process, the Company has transferred the
management of its share register from Equiniti Financial Services Limited to
Computershare Investor Services PLC ('Computershare') with effect from 24th
June 2024.
A notification letter from Computershare was sent to all registered
shareholders advising of this change. The letter included an invitation to
shareholders to create an online account which will provide access to the
details of their shareholdings and an opportunity to participate in the
Company's Dividend Reinvestment Plan (DRIP).
Task Force on Climate-related Financial Disclosures (TCFD)
As a regulatory requirement, JPMorgan Asset Management (JPMAM) published its
UK Task Force on Climate-related Financial Disclosures ('TCFD') Report for the
Company in respect of the year ended 31st December 2023 on 30th June 2024. The
report discloses estimates of the Company's portfolio climate-related risks
and opportunities according to the Financial Conduct Authority (FCA)
Environmental, Social and Governance (ESG) Sourcebook and the Task Force on
Climate-related Disclosures (TCFD). The report is available on the Company's
website under the ESG documents section:
https://am.jpmorgan.com/content/dam/jpm-am-aem/emea/regional/en/regulatory/esg-information/jpm-american-investment-trust-plc-combined-fund-tcfd-report.pdf
Board
As mentioned in the Company's 2023 Annual Report, Mr Colin Moore joined the
Board from 1st February 2024 and Dr Kevin Carter, the previous Chair, retired
from the Board at the conclusion of the May 2024 Annual General Meeting. Ms
Pui Kei Yuen became the Chair of the Risk Committee following my appointment
as Chair of the Board.
Stay Informed
The Company delivers email updates with regular news and views, as well as the
latest performance. If you have not already signed up to receive these
communications and you wish to do so, you can opt in via
https://web.gim.jpmorgan.com/emea_investment_trust_subscription/welcome?targetFund=JAM
Outlook
The Board shares the Manager's positive assessment of the outlook for US
equities, and your Company, over the near-term, and beyond. November's US
Presidential election may spark some market jitters, due to uncertainty
regarding the winner's domestic political priorities and their stance on
various geopolitical situations, but the economy appears to be on a sound
footing and should benefit from interest rate cuts later this year and next.
The Company's long-term performance track record attests to the Manager's
skill at negotiating the unusual, challenging and varied market conditions
that have confronted investors in recent years. The Board welcomes the
Manager's ongoing efforts to identify the most attractive investment
opportunities on offer in the US and other North American markets, and remains
confident in the Manager's ability to continue delivering capital growth and
outperformance for shareholders over the medium term.
Robert Talbut
Chair
INVESTMENT MANAGER'S REPORT
Market Review
2023 was all about 'expect the unexpected': the US economy avoided recession;
inflation was tamed; interest rates peaked and looked set to decline soon; and
a flare-up in the banking sector proved to be just that, and no more, despite
fears of widespread global contagion. US equity markets therefore had good
reason to start this year in a positive mood, and continuing optimism around a
'soft landing' propelled markets to an all-time high over the first half of
the year. The S&P 500 advanced 15% in US dollar terms and 16% in sterling
terms in the six months to 30th June 2024. This surge was fuelled by a solid
earnings outlook and advances in the development of artificial intelligence
(AI). However, the market is deeply polarised, as the rally so far was driven
by the so-called 'Magnificent 7' stocks considered to be the major
beneficiaries of the AI revolution. Together, gains in these seven stocks were
responsible for over 60% of the index's returns over the period.
The other big surprise was the resilience of investment spending in the face
of higher interest rates and a credit crunch exacerbated by last year's mini
banking crisis. This resilience largely reflected healthy corporate balance
sheets, federal government incentives and a surge in demand for AI-related
technology.
However, labour market conditions are beginning to moderate. The unemployment
rate edged up to 4% in May 2024, the highest since January 2022. Still, the
unemployment rate has now remained near or below 4% for two and a half years,
the longest such stretch since the late 1960s. Over that stretch, the economy
has created over 9.2 million new jobs and somehow managed to find the workers
to fill them all.
The best performing sectors of the S&P 500 so far this year have been
information technology (IT), communication services and energy, each of which
rallied between 11% to 28% over the review period. Utilities, which was one of
the worst performing sectors in 2023, saw a change in its narrative in the
first half of this year, due to growing demand for electricity, which is
needed to power data centres and AI programs. The worst performing sectors
during the period were real estate, materials, and consumer discretionary,
where returns ranged between -2% to 6%.
Large cap stocks, as represented by the S&P 500 Index, returned 15% (in US
dollar terms), as mentioned above, outperforming the small cap Russell 2000
Index, which returned 2%. As in 2023, growth stocks dominated value names, as
the Russell 3000 Growth Index rallied 20%, while the Russell 3000 Value Index
returned 6%.
Performance attribution
For the six months ended 30th June 2024
% %
Contributions to total returns
Net asset value (debt at fair value) total return
in sterling terms(APM) 19.1
Benchmark total return (in sterling terms) 16.1
Excess return 3.0
Combined Portfolio return in US dollar terms(1) 18.3
Benchmark total return in US dollar terms 15.2
Combined Portfolio relative return in US dollar terms 3.1
Large & Small Cap Portfolio contribution(2):
Large Cap Portfolio in US dollar terms 3.8
Small Cap Portfolio in US dollar terms -0.7
Combined Portfolio relative return in US dollar terms 3.1
Contributions to return
Equity portfolio (ex-cash and gearing) in US dollar terms 2.5
Cash and gearing impact in US dollar terms(3) 0.6
Combined Portfolio relative return in US dollar terms 3.1
Effect of foreign currency translation(4) 0.0
Combined Portfolio relative return in sterling terms 3.1
Management fee and other expenses(5) -0.2
Finance costs(5) -0.1
Share buybacks and issuances(6) 0.0
Impact of fair valuation of debt(7) 0.0
Technical differences(8) 0.2
Total excess 3.0
Source: J.P. Morgan/Morningstar.
All figures are on a total return basis. Performance attribution analyses how
the Company achieved its recorded performance relative to its benchmark.
(1) The aggregated returns of both the Large Cap and
Small Cap portfolios.
(2) The split of returns by portfolio, relative to the
benchmark. This has been calculated using the average weighting of the Large
Cap and Small Cap portfolios over the year.
(3) Cash and gearing - measures the impact on returns of
the principle amount of borrowings or cash balances on the Company's relative
performance.
(4) Effect of foreign currency translation - measures
the impact of currency exposure differences between the Company's portfolio
and its benchmark.
(5) Management fee, other expenses and finance costs -
the payment of fees, expenses and finance costs (interest paid on borrowings)
reduces the level of total assets, and therefore has a negative effect on
relative performance.
(6) Share buybacks and issuance - measures the
enhancement to net asset value per share of buying back the Company's shares
for cancellation at a price which is less than the Company's net asset value
per share. Share issuances will increase the net asset value of the Company as
they are issued at a price above the net asset value.
(7) The impact of fair valuation includes the effect of
valuing the combined US$100m private placements at fair value.
(8) A portion of the technical differences arise as a
result of rounding to 1 decimal place of the individual line items shown in
the table.
(APM) Alternative Performance Measure ('APM').
Performance and overall asset allocation
The Company's net asset value rose 19.1% on a total return basis in the first
half of 2024, significantly outpacing the 16.1% return of the S&P 500
Index. The large cap portion of the portfolio, which, at over 94% of the
Company's assets is its biggest allocation, added the most value over the
period. Gearing was also slightly additive given the market's rally. The
Company's small cap allocation, which averaged approximately 5.7% over the
period, modestly detracted from relative returns.
Large Cap Portfolio
The outperformance by the large cap portion of the portfolio over the review
period was the result of strong stock selection.
Within the IT sector, an overweight position in NVIDIA, the leading producer
of the advanced semiconductors required by AI processes, and a lack of
exposure to Intel, which also makes semiconductors and related components,
proved beneficial. During the six-month period, NVIDIA's shares delivered a
150% return, as the company remained an outsized beneficiary of rapidly
accelerating AI infrastructure demand. We believe its addressable market will
grow exponentially in the coming five to ten years, and the company's market
leadership position suggests it is well-placed to meet this demand. Intel has
been the long-term leader of the semiconductor industry, but it has been
outpaced by NVIDIA and other names during the AI rally. Intel had disclosed
widening losses and sales declines for its foundry business, which leave us
comfortable with our decision not to hold this stock.
The largest contributor to performance was social networking and advertising
company Meta Platforms. The stock rallied after the company reported higher
revenues due to improved customer engagements with Instagram, which benefited
from AI utilisation.
Portfolio holdings that detracted from performance during the review period
included the US's pre-eminent owner, operator and developer of shopping
centres, Regency Centers. Concerns around tenant creditworthiness and slower
lease commencements have negatively impacted the entire real estate sector. We
continue to believe grocery-anchored shopping centres like Regency Centers
will hold up relatively well, and we therefore remain comfortable with our
holding. Another real estate company which detracted from performance was
Public Storage. This company is one of the largest US players in the
self-storage market. It did well during the pandemic as people moved out of
big cities and rented space to store their belongings during their absence.
However, demand has subsequently declined as this trend reversed in the
post-pandemic period. We like the stock, due to its strong balance sheet, and
looking at the combination of scale as well as cost of capital advantage.
The performance of our overweight position in transportation and logistics
company J.B. Hunt Transport Services proved lacklustre over the past six
months. This was due to a drop in volumes in J.B. Hunt's truck-trail
intermodal business, which accounts for a large part of the company's revenue.
At the same time, J.B. Hunt is increasing capital spending to support future
growth. However, we consider these headwinds to be cyclical and remain
confident about the company's longer-term prospects.
Portfolio Activity
During the first six months of the year, we added six new names and exited the
same number.
One new acquisition was Morgan Stanley, a financial company offering
institutional securities trading, investment management and other financial
services through its subsidiaries. We like the company's exposure to the
wealth management space, which tends to generate relatively stable revenues,
in comparison to investment banking, which is more cyclical and volatile. We
initiated this position based on the stock's attractive valuation. This
acquisition was funded by the sale of Tesla, a leading electric vehicle
producer, as the company experienced a dip in US demand and is facing
increased competition from Chinese and European players. Tesla has also been
facing other challenges - a slowdown in output at its Chinese factory and
the Gulf shipping crisis are expected to adversely impact deliveries.
We initiated a new position in Kenvue, which offers a variety of self-care,
beauty and essential health products. This company was formerly the consumer
healthcare division of Johnson & Johnson. We believe its recent separation
from Johnson & Johnson should allow management to focus on opportunities
within the consumer health sector, without the constraints previously imposed
by its parent company's umbrella. In particular we see scope for Kenvue to
introduce innovative, premium products to capitalise on broader health and
wellness trends.
Within healthcare, we added Thermo Fisher Scientific and exited Bristol-Myers
Squibb. Thermo Fisher Scientific is a diversified life science tools and
diagnostics company with a strong portfolio of assets. The company has four
business segments, each of which is a market leader in its respective field:
1) Life Science Solutions, 2) Specialty Diagnostics, 3) Analytical
Instruments, and 4) Lab Products and Biopharma Services. We like its broad
portfolio of high-quality analytical instruments, lab products and services,
and the solutions it offers in a variety of life science and diagnostic areas.
The company also has a long-term track record of differentiated growth and
market outperformance, thanks to the breadth of its products and services,
which makes it a one-stop solution for customers. We feel comfortable with
both the resilience and attractiveness of the life sciences industry and this
company's capacity to maintain its market leadership over the long-term.
Bristol-Myers Squibb is a specialty biopharmaceutical company engaged in the
discovery, marketing, distribution and sale of medicines and related medical
products. The company needs to offset major patent expirations over the next
several years by finding alternative sources of revenue. However, its share
price has underperformed due to the disappointing pace of growth in its new
product portfolio, so we decided to switch into more attractive risk/reward
opportunities.
AutoZone is a retailer of aftermarket automotive parts and accessories. We
exited the company on concerns over diminishing demand within the auto part
industry, as new car sales accelerate, and inflation subsides.
Another name we initiated this year was multinational fast food chain
McDonald's. The company is well positioned in the current higher cost
environment, as the franchisee model gives it low direct cost exposure, while
delivering the benefit of higher royalties from pricing taken by operators.
McDonald's is an iconic brand and has a very defensive model. It is highly
franchised, it owns the real estate on which these franchises operate, it is
modestly leveraged, with low cyclicality and low risk from rising interest
rates. This defensive model, combined with increasing global unit growth,
should produce consistent returns over the long term. During the same month,
we exited United Parcel Service, a multinational shipping and supply chain
company which has been experiencing a decline in shipping volumes in domestic
and international markets.
One of our latest acquisitions is Honeywell International. This is a well-run,
well-positioned, diversified industrial company with consistent growth across
a range of market conditions. We like the fact that the company is levered to
the recovery in the aerospace industry. Additionally, the company has exposure
to the transition to low carbon energy sources. This purchase was funded by
the sale of Weyerhaeuser, a REIT specialising in timberlands. REITs have
underperformed so far this year, due to persistently high interest rates, and
we opted to close this position in favour of opportunities in which we have
higher conviction.
In the consumer discretionary sector, we bought TJX and exited its competitor,
Ross Stores, due to TJX's better risk/reward profile. TJX is one of the
leading US off-price retailers of apparel and home fashions. It is a scale
player with a disruptive model in a rapidly consolidating market. The
company's product range is large and diversified. It is differentiated not
only by its buying power and the scale of its outlets, but also by its broad
demographic reach, given that it owns multiple brands (Marshalls, TJX Maxx,
Home Goods, International), and is investing in its ecommerce offerings.
These recent acquisitions and disposals have not had a significant impact on
the portfolio's structure. The Information technology and Financials sectors
remain the largest sectoral allocations, which together represent
approximately 45% of the overall large cap allocation, consistent with
positioning at the start of the year. Financials remain the largest overweight
in the portfolio relative to the benchmark, although the allocation is
slightly lower than at the start of the year, as we have been trimming
modestly to manage position sizes, given that imminent interest rate cuts are
likely to have an adverse impact on this sector. Conversely, we remain
underweight information technology, but have been adding to our allocation
based on our view that this sector is still attractive. The portfolio also
remains underweight industrials, communication services and consumer staples,
as we continue to find names with better risk/reward profiles in other
sectors.
The large cap portfolio is divided between value and growth stocks, with the
allocation allowed to vary between 60:40 and 40:60. At the end of the review
period, value stocks comprised around 43% of the large cap portfolio, not much
lower than the 45% value allocation at the start of the year. The allocation
to growth stocks has increased accordingly.
The table below shows that the large cap portfolio is trading at a 24%
discount to the market on a free cash flow basis, which confirms that we are
still not paying a premium for good cash flow. Additionally, the portfolio is
expected to deliver earnings growth of around 18% for the next 12 months,
slightly ahead of the market. While earnings may come under pressure over the
next year, and may not deliver the forecast double digit growth, it is
comforting to have the valuation cushion provided by our holdings, relative to
the market.
Characteristics Large Cap Portfolio S&P 500
Weighted Average Market Cap US$ 918.9bn US$ 943.0bn
Price/Earnings, 12-month forward(1) 21.5x 20.8x
Price/Free Cash Flow, last 12-months 18.5x 24.3x
EPS Growth, 12-month forward 18.3% 17.3%
Return on Equity, last 12-months 23.9% 24.8%
Predicted Beta 1.01 -
Predicted Tracking Error 2.38 -
Active Share 60% -
Number of holdings 40 500
Source: FactSet, Barra, J.P. Morgan Asset Management. Data as of 30th June
2024.
(1) Including negatives.
Small Cap portfolio
The Small Cap portfolio generated a positive return over the period but lagged
the S&P 500 as the market preference was for stocks higher up the market
cap spectrum. The overall allocation to the small cap portfolio was maintained
at approximately 6% during the first six months of the year, broadly
unchanged from the start of the year.
Outlook
There will always be some risks and uncertainties for investors to consider,
and for us, at this moment, one such risk is the labour market, which we
expect will continue to slow. While the overall employment market is still
experiencing excess job openings, in some key sectors, including construction
and retail, job openings are now below their five-year averages. If this trend
broadens out, it may create a headwind for consumer spending growth over the
remainder of this year and beyond. Investors are also watching developments in
the US presidential race, which may increase uncertainty regarding the
outcome. The result could possibly aggravate existing geopolitical tensions
between the US and China, while also complicating America's relations with its
western allies. Any such outcomes could increase market volatility both in the
run up to the November vote, and in its aftermath.
However, with economic growth solid, unemployment low, most of the journey
back to 2% inflation completed, and rates set to decline, the US economy
should continue to provide a rising tide to support most investment boats for
the rest of this year and into 2025.
Jonathan Simon
Felise Agranoff
Portfolio Managers
INTERIM MANAGEMENT REPORT
The Company is required to make the following disclosures in its half year
report.
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Company fall into the
following broad categories: Investment Process and Strategy, Loss of
Investment Team or Investment Manager, Technological Change and or Disruption,
ESG Requirements From investors, Market Performance, Share Price Relative to
Net Asset Value, Operational and Cyber-crime, Accounting, Legal and Regulatory
Compliance, Legislative and Regulatory Change, Widespread Social and Economic
Disruption, Climate Change, Geopolitical and Artificial Intelligence (AI). The
Board has recently reviewed these risks and concluded that the emerging risk
of Threat to Liberal Democracies should now be considered within the
Geopolitical principal risk. In addition, a State-backed Cyber Security
Attack has been identified as an emerging risk. The Board believes that a
State-backed Cyber Security Attack could result in widespread disruption to
the financial system and markets leading to financial loss, loss of
confidential data, or disruption to the Company's operations and its service
providers.
Information on each of these risks, apart from the new emerging risk, is given
in the Strategic Report within the Annual Report and Financial Statements for
the year ended 31st December 2023. In the view of the Board, these principal
risks and uncertainties are as much applicable to the remaining six months of
the financial year as they were to the six months under review.
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.
Going Concern
In accordance with The Financial Reporting Council's guidance on going concern
and liquidity risk, the Directors have undertaken a rigorous review of the
Company's ability to continue as a going concern. The Board has, in
particular, considered the impact of market volatility from the ongoing
conflicts between Ukraine and Russia and in the Middle East, and does not
believe the Company's going concern status is affected. The Company's assets,
the vast majority of which are investments in quoted securities which are
readily realisable, exceed its liabilities significantly under all stress test
scenarios reviewed by the Board. Gearing levels and compliance with borrowing
covenants are reviewed by the Board on a regular basis. Furthermore, the
Directors are satisfied that the Company's key third party service providers
have in place appropriate business continuity plans to ensure their
operational resilience and the performance of these service providers is
reviewed at least annually by the Management Engagement Committee.
Accordingly, having assessed the principal and emerging risks and other
matters, 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 12 months from the date of the approval of
this half yearly financial report.
Directors' Responsibilities
The Board of Directors confirms that, to the best of its knowledge:
(i) the condensed set of financial statements contained within the
half year financial report has been prepared in accordance with FRS 104
'Interim Financial Reporting' and gives a true and fair view of the state of
affairs of the Company, and of the assets, liabilities, financial position and
net return of the Company as at 30th June 2024 as required by the UK Listing
Authority Disclosure Guidance and Transparency Rules 4.2.4R; and
(ii) the interim management report includes a fair review of the
information required by Rules 4.2.7R and 4.2.8R of the UK Listing Authority
Disclosure Guidance and Transparency Rules.
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
Robert Talbut
Chair
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 2024 30th June 2023 31st December 2023
Revenue Capital Total Revenue Capital(1) Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains on investments held
at fair value through
profit or loss - 290,667 290,667 - 183,232 183,232 - 304,636 304,636
Net foreign currency
(losses)/gains - (798) (798) - 3,908 3,908 - 5,078 5,078
Income from investments 11,281 - 11,281 7,867 365 8,232 16,519 1,214 17,733
Interest receivable and similar
income 750 - 750 672 - 672 1,654 - 1,654
Gross return 12,031 289,869 301,900 8,539 187,505 196,044 18,173 310,928 329,101
Management fee (499) (1,995) (2,494) (412) (1,649) (2,061) (852) (3,409) (4,261)
Other administrative expenses (619) - (619) (554) - (554) (1,053) - (1,053)
Net return before finance
costs and taxation 10,913 287,874 298,787 7,573 185,856 193,429 16,268 307,519 323,787
Finance costs (236) (939) (1,175) (371) (1,482) (1,853) (627) (2,506) (3,133)
Net return before taxation 10,677 286,935 297,612 7,202 184,374 191,576 15,641 305,013 320,654
Taxation (1,212) (70) (1,282) (468) (528) (996) (1,429) (909) (2,338)
Net return after taxation 9,465 286,865 296,330 6,734 183,846 190,580 14,212 304,104 318,316
Return per share (note 3) 5.18p 156.93p 162.11p 3.64p 99.31p 102.95p 7.73p 165.41p 173.14p
(1) For the six months ended 30th June 2023, income in respect of
capital dividends from Real Estate Investment Trusts (REITs), has been
reclassified to gains on investments held at fair value through profit or
loss. This is similar to the presentation adopted in the 31st December 2023
Annual Financial Report. There is no change to the return per share or net
asset value per share as a result of this change.
The interim dividend declared in respect of the six months ended 30th June
2024 amounts to 2.75p (2023: 2.5p) per share, costing £5,003,000 (2023:
£4,565,000).
All revenue and capital items in the above statement derive from continuing
operations. The return/(loss) per share represents the profit/(loss) per share
for the period and also the total comprehensive income per share.
The 'Total' column of this statement is the profit and loss account of the
Company and the 'Revenue' and 'Capital' columns represent supplementary
information prepared under guidance issued by the Association of Investment
Companies.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Called up Capital
share Share redemption Capital Revenue
capital premium reserve reserves(1) reserve(1) Total
£'000 £'000 £'000 £'000 £'000 £'000
Six months ended 30th June 2024 (Unaudited)
At 31st December 2023 14,082 151,850 8,151 1,358,329 31,587 1,563,999
Repurchase of shares into Treasury - - - (13,910) - (13,910)
Shares re-issued from Treasury - 4,443 - 3,715 - 8,158
Proceeds from share forfeiture(2) - - - 731 - 731
Net return - - - 286,865 9,465 296,330
Dividends paid in the period (note 4) - - - - (9,595) (9,595)
Refund of unclaimed dividends(2) (note 4) - - - - 71 71
At 30th June 2024 14,082 156,293 8,151 1,635,730 31,528 1,845,784
Six months ended 30th June 2023 (Unaudited)
At 31st December 2022 14,082 151,850 8,151 1,099,333 30,667 1,304,083
Repurchase of shares into Treasury - - - (44,079) - (44,079)
Net return - - - 183,846 6,734 190,580
Dividends paid in the period (note 4) - - - - (8,727) (8,727)
At 30th June 2023 14,082 151,850 8,151 1,239,100 28,674 1,441,857
Year ended 31st December 2023 (Audited)
At 31st December 2022 14,082 151,850 8,151 1,099,333 30,667 1,304,083
Repurchase of shares into Treasury - - - (45,108) - (45,108)
Net return - - - 304,104 14,212 318,316
Dividends paid in the year (note 4) - - - - (13,292) (13,292)
At 31st December 2023 14,082 151,850 8,151 1,358,329 31,587 1,563,999
(1) This reserve forms the distributable reserve of the Company and
may be used to fund distributions to investors.
(2) During the period the Company undertook an Asset Reunification
Program for its shareholders. In accordance with the Company's Articles of
Association, shares that could not be traced to shareholders over 12 years old
were forfeited. These shares were sold in the open market and the proceeds
returned to the Company. In addition, unclaimed dividends over 12 years old
were also returned to the Company.
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
At At At
30th June 30th June 31st December
2024 2023 2023
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 1,925,506 1,515,890 1,608,263
Current assets
Debtors 4,245 729 789
Cash and cash equivalents 15,435 34,025 34,207
19,680 34,754 34,996
Current liabilities
Creditors: Amounts falling due within one year (4,760) (30,458) (1,121)
Net current assets 14,920 4,296 33,875
Total assets less current liabilities 1,940,426 1,520,186 1,642,138
Creditors: amounts falling due after more than one year (94,642) (78,329) (78,139)
Net assets 1,845,784 1,441,857 1,563,999
Capital and reserves
Called up share capital 14,082 14,082 14,082
Share premium 156,293 151,850 151,850
Capital redemption reserve 8,151 8,151 8,151
Capital reserves 1,635,730 1,239,100 1,358,329
Revenue reserve 31,528 28,674 31,587
Total shareholders' funds 1,845,784 1,441,857 1,563,999
Net asset value per share (note 5) 1,014.2p 789.0p 856.5p
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30th June 30th June 31st December
2024 2023 2023
£'000 £'000 £'000
Cash flows from operating activities
Net return before finance costs and taxation 298,787 193,429 323,787
Adjustment for:
Net gains on investments held at fair value through
profit or loss (290,667) (183,232) (304,636)
Net foreign currency exchange losses/(gains) 798 (3,908) (5,078)
Dividend income (11,281) (8,232) (17,733)
Interest income (750) (672) (1,654)
Realised foreign currency exchange losses on transactions (337) (915) (756)
Realised foreign currency exchange losses on
JPMorgan USD Liquidity Fund (335) (718) (596)
Increase in accrued income and other debtors - (5) (14)
(Decrease)/increase in accrued expenses (11) 170 214
Net cash outflow from operations before dividends and interest (3,796) (4,083) (6,466)
Dividends received 9,704 6,137 14,423
Interest received 826 803 1,656
Overseas withholding tax recovered 259 1,183 1,182
Net cash inflow from operating activities 6,993 4,040 10,795
Purchases of investments (321,362) (244,076) (625,714)
Sales of investments 293,680 293,007 703,254
Settlement of foreign currency contracts - 4 -
Net cash (outflow)/inflow from investing activities (27,682) 48,935 77,540
Dividends paid (9,595) (8,727) (13,292)
Shares issued from Treasury 8,158 - -
Repurchase of shares into Treasury (12,622) (42,788) (45,108)
Proceeds from share forfeiture 731 - -
Refund of unclaimed dividends (note 4) 71 - -
Repayment of bank loan - - (26,929)
Drawdown of bank loan 15,790 - -
Loan interest paid (208) (732) (1,269)
Private placement interest paid (975) (1,100) (2,007)
Net cash inflow/(outflow) from financing activities 1,350 (53,347) (88,605)
Decrease in cash and cash equivalents (19,339) (372) (270)
Cash and cash equivalents at start of period/year 34,207 34,884 34,884
Foreign currency exchange movements 567 (487) (407)
Cash and cash equivalents at end of period/year 15,435 34,025 34,207
Cash and cash equivalents consist of:
Cash and short term deposits 12 168 280
Cash held in JPMorgan USD Liquidity Fund 15,423 33,857 33,927
Total 15,435 34,025 34,207
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
For the six months ended 30th June 2024
1. Financial statements
The information contained within the condensed 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 31st December 2023
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 condensed financial statements have been prepared in accordance with the
Companies Act 2006, FRS 102 'The Financial Reporting Standard applicable in
the UK and Republic of Ireland' of the United Kingdom Generally Accepted
Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice
'Financial Statements of Investment Trust Companies and Venture Capital
Trusts' (the revised 'SORP') issued by the Association of Investment Companies
in July 2022.
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 30th June 2024.
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 31st December 2023.
3. Return per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 30th June 31st December
2024 2023 2023
£'000 £'000 £'000
Return per share is based on the following:
Revenue return 9,465 6,734 14,212
Capital return 286,865 183,846 304,104
Total return 296,330 190,580 318,316
Weighted average number of shares in issue 182,799,838 185,119,371 183,852,137
Revenue return per share 5.18p 3.64p 7.73p
Capital return per share 156.93p 99.31p 165.41p
Total return per share 162.11p 102.95p 173.14p
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 2024 30th June 2023 31st December 2023
Pence £'000 Pence £'000 Pence £'000
Dividend paid
Final dividend in respect of prior year 5.25 9,595 4.75 8,727 4.75 8,727
Interim dividend in respect of the six months - - - - 2.50 4,565
Total dividends paid 5.25 9,595 4.75 8,727 7.25 13,292
Refund of unclaimed dividends over 12 years old - (71) - - - -
Net dividends paid 5.25 9,524 4.75 8,727 7.25 13,292
All the dividends paid in the period/year have been funded from the Revenue
Reserve.
An interim dividend of 2.75p (2023:2.5p) has been declared in respect of the
six months ended 30th June 2024, amounting to £5,003,000 (2023: £4,565,000).
5. Net asset value per share
The net asset value per Ordinary share and the net asset value attributable to
the Ordinary shares at the period/year end are shown below. These were
calculated using 182,002,868 (June 2023: 182,736,008; December 2023:
182,603,216) Ordinary shares in issue at the period/year end (excluding
Treasury shares).
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 2024 30th June 2023 31st December 2023
Net asset value Net asset value Net asset value
attributable attributable attributable
£'000 pence £'000 pence £'000 pence
Net asset value - debt at par 1,845,784 1,014.2 1,441,857 789.0 1,563,999 856.5
Add: amortised cost of US$65 million 2.55% Private
Placement Feb 2031 51,174 28.1 50,848 27.8 50,727 27.8
Less: fair value of US$65 million 2.55% Private
Placement Feb 2031 (45,125) (24.8) (43,844) (24.0) (45,636) (25.0)
Add: amortised cost of US$35 million 2.32% Private
Placement Oct 2032 27,646 15.2 27,481 15.0 27,412 15.0
Less: fair value of US$35 million 2.32% Private
Placement Oct 2032 (22,903) (12.6) (22,466) (12.3) (23,328) (12.8)
Net asset value - debt at fair value 1,856,576 1,020.1 1,453,876 795.5 1,573,174 861.5
6. Fair valuation of instruments
The fair value hierarchy analysis for financial instruments held at fair value
at the period end is as follows:
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 2024 30th June 2023 31st December 2023
Assets Liabilities Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000 £'000 £'000
Level 1 1,925,506 - 1,515,890 - 1,608,263 -
Total value of investments 1,925,506 - 1,515,890 - 1,608,263 -
7. Analysis of change in net debt
As at Other As at
31st December non-cash 30th June
2023 Cash flows charges 2024
£'000 £'000 £'000 £'000
Cash and cash equivalents
Cash and short term deposits 280 (268) - 12
Cash held in JPMorgan USD Liquidity Fund 33,927 (19,071) 567 15,423
34,207 (19,339) 567 15,435
Borrowings
Debt due after one year (78,139) (15,790) (713) (94,642)
(78,139) (15,790) (713) (94,642)
Net debt (43,932) (35,129) (146) (79,207)
Other non-cash charges relate to an amortisation adjustment on borrowings and
foreign currency exchange gains/(losses).
14th August 2024
For further information, please contact:
Priyanka Vijay Anand
For and on behalf of
JPMorgan Funds Limited, Company Secretary
0800 204 020
ENDS
A copy of the Half Year Report has been submitted to the National Storage
Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
The Half Year Report will also shortly be available on the Company's website
at www.jpmamerican.co.uk (http://www.jpmamerican.co.uk) where up to date
information on the Company, including daily NAV and share prices, factsheets
and portfolio information can also be found.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR BLGDIBUBDGSS