REG - JPMorgan Emerg. EMEA - Half-year Report
24/06/2025 07:00
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RNS Number : 0577O JPMorgan Emerging EMEA Securities 24 June 2025
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN EMERGING EUROPE MIDDLE EAST & AFRICA SECURITIES PLC
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30TH APRIL 2025
Legal Entity Identifier: 549300II3MHI98ZLVH37
Information disclosed in accordance with DTR 4.2.2
CHAIRMAN'S STATEMENT
Overview and performance
During the six months ended 30th April 2025, the Company's net asset value on
a total return basis increased by 6.8%, an out-performance of 4.5% against the
Company's reference index, the S&P Emerging Europe, Middle East &
Africa BMI Net Return in GBP, which increased 2.3% on a total return basis to
the end of this reporting period. The reasons for the outperformance against
the reference index was predominately due to stock selection. The Investment
Manager's Report provides further information.
As at 30th April 2025, the Company's share price was 273 pence, an increase of
127.0% on a total return basis in the six-month period. As at 19th June 2025
the share price was 224 pence. Please see the Discount Control section of this
report for more details on the Company's share price.
Update on VTB Claim
As detailed in my Chairman's Statement included in the Company's 31st October
2024 annual report and financial statements and numerous RNS announcements
since then, in the first half of 2024 VTB made a claim for $439 million in
the Russian courts against a number of J.P.Morgan legal entities, including
JPMorgan Bank International (the Russian sub-custodian for the Company's
Russian assets) and the Company. The lower Russian court granted VTB's claim
in full against all the defendants and the appeal court hearing has been
adjourned until 2nd July 2025.
In addition to VTB's $439 million claim referred to above, as detailed in
previous RNS announcements, VTB has also made additional claims in the
Russian courts against the same J.P.Morgan legal entities and the Company. No
final determination has yet been made in relation to these claims.
For further details regarding VTB's claims please refer to my Chairman's
Statement in the Company's 31st October 2024 annual report and financial
statements available to view on the Company's website:
www.jpmeemeasecurities.com
The RNS announcements made by the Company regarding VTB's claims are available
to view on the London Stock Exchange website
https://www.londonstockexchange.com/stock/JEMA/jpmorgan-emerging-europe-middle-east-africa-securities-plc/analysis
Revenue, earnings and dividend
The Company's net revenue for the six-month period to 30th April 2025 after
taxation was £14,000 (30th April 2024: £41,000) and the return per share,
calculated on the basis of the average number of shares in issue was 0.04
pence (30th April 2024: 0.10 pence) per share.
One of the main drivers of the reduction in the Company's revenue after
taxation compared to the previous year is the increase in legal fees in the
Company's administration expenses. The increased legal fees arose because
during this reporting period the Board engaged a law firm to provide advice
following VTB's claims as detailed above.
The Company's ongoing charge was 3.34% (on an annualised basis) as at 30th
April 2025 (31st October 2024: 4.17%). As detailed in my Chairman's Statement
for the Company's annual report and financial statements to 31st October 2024,
a significant factor in the reason for the Company's relatively high level of
ongoing charge relates to the Company's custody fees, charged by JPMorgan
Chase Bank, N.A. (the Company's Custodian) for the Company's Russian assets.
In the Company's 2024 financial period the custody fees reverted to being
calculated on their local market value which are significantly higher than the
written down valuation included in the Company's accounts. Following the
Board's request, the Custodian agreed to implement a reduction in the
custodian fee, effective from 1st August 2024, which the Board deemed more
satisfactory given the prevailing circumstances.
The management fee charged by JPMorgan Funds Ltd continues to be based on the
Company's assets excluding the value of the Russian holdings.
At present the dividends paid from the Russian securities in the Company's
portfolio are held in a custody 'S' account in Moscow. The balance on the 'S'
account as at 21st May 2025 was equivalent to approximately £42.6 million at
the exchange rate applicable on that date. The Company's Manager is monitoring
the receipts into the 'S' account against dividends announced by the portfolio
companies although there is no certainty that the sums in the 'S' account will
ever be received by the Company. The Board also monitors the underlying local
value of the Russian assets, although there is much uncertainty of these
values ever being realisable by the Company.
As at 21st May 2025, an additional £10.3 million of dividends have been
announced but are yet to be received. Your Board also monitors this in order
to assess whether all dividends due are in fact accurately recorded in the 'S'
account. As previously detailed, these dividends cannot be remitted to the
Company and may never be received. They are not recognised in the Company's
net asset value or in its income statement.
For the protection offered to 'S' Accounts by Decree 8 under Russian law
please see my Chairman's Statement included in the Company's 31st October 2024
annual report and financial statements as referred to above.
Discount control
Due to the current extreme market conditions that have created the unusual
situation whereby the Company's shares are currently trading at a very
elevated premium to its net asset value, the Board has no plans to reinstate
the Company's share discount control programme. As at 30th April 2025, the
premium was 391.0%; this a significant increase from the premium at the year
end of 129.5%. The Board believes that this premium arises because of the
uncertainty of what value if any should be attributed to the Russian assets
and should not be interpreted as an indication that investors are more likely
to derive any value from these assets.
Investment Management
Oleg Biryulyov and Luis Carrillo continue to be the Company's Investment
Managers supported by JPMorgan Asset Management's Emerging Markets and Asia
Pacific equities team (EMAP). JPMAM's EMAP team consists of 100+ investment
professionals based in both the UK and overseas.
Board Composition
As referred to in my Chairman's Statement of the Company's annual report and
financial statements to 31st October 2024, Nicholas Pink informed the Board
that he would be retiring as a Non-executive Director of the Company,
effective 4th February 2025, due to personal reasons. As a result the Board
engaged a third party independent search consultancy to identify appropriate
candidates for the vacancy. Following a thorough selection process the Board
is delighted that as previously announced, Joanne Irvine was appointed as a
Non-executive Director of the Company, effective 1st May 2025. Her extensive
experience and insights will be invaluable to the Board.
Outlook
The promised resolution of the conflict in Ukraine following the arrival of
Donald Trump as President of the USA in early 2025 has not materialised and
the tragic consequences of the military campaign sadly continue.
The appeal hearing date of 2nd July 2025 for the Russian litigation means that
the decision in the VTB case will not be known until after the date of this
report. We will keep shareholders informed of the decision by RNS
announcement.
Despite these unprecedented and complex events, the Company's investment
objective at least helps the Company steer through this very difficult period.
Although cognisant of the impact of the Russian holdings on the Company, the
challenge for the Board is to use the investment objective to grow the
Company's assets in a way that promotes the success of the Company for the
benefit of the shareholders as a whole.
The Board is confident that, with the assistance of the JPMorgan EMAP team
over the long term and a supportive political and regulatory environment, the
Company's investment objective is achievable.
Eric Sanderson
Chairman
23rd June 2025
INVESTMENT MANAGER'S REPORT
Introduction
As mentioned by the Chairman in his latest report, and in previous reporting,
the Company's Russian holdings continue to be subject to strict sanctions, and
their valuations have been discounted accordingly. This Investment Manager's
Report therefore relates to the Company's strategy and portfolio activity
under its revised investment objective, which is to maximise total return to
shareholders from a diversified portfolio of investments in Emerging Europe
(including Russia) Middle East and Africa (EMEA). It covers the six-month
period ended 30th April 2025.
Performance
Over this period, the Company returned +6.8% on an NAV total return basis,
outperforming the Company's Reference Index, which returned +2.3% over the
same period. This outperformance was the result of both stock selection and
asset allocation decisions.
Portfolio
At the end of the six-month review period, the Company's portfolio comprised
102 stocks, compared to 106 holdings at the end of the previous year. Of
these, 25 were Russian stocks and securities, the same as at the end of the
financial year. The Company's Russian securities now comprise approximately 7%
of the written down value of the portfolio, unchanged from the financial year
ended 31st October 2024. The Company's holding in the JPMorgan Liquidity Fund
is not included in the above numbers.
Market backdrop
EMEA markets rose further over the six months ended 30th April 2025, but the
2.3% gain in the Company's Reference Index was more modest than the 11.9%
increase seen in the previous financial year. The market made steady progress
for most of the review period, supported by several factors. Concerns about
the US's trade policy under the incoming administration and the associated
risk of recession led investors to seek opportunities in emerging markets.
This rotation was encouraged by a decline in the US dollar. Emerging market
equities attracted significant inflows, with emerging European equities being
amongst the main beneficiaries. Demand from local investors also remained
supportive over the period. Pervasive economic and geopolitical uncertainties
also ensured a surge in demand for gold. The gold price increased by more than
20% over the six months to end April 2025, giving a significant boost to South
Africa's gold mining stocks.
Country specific drivers provided support for other markets. The Hungarian
market was buoyed by positive earnings surprises from portfolio companies like
OTP Bank and Magyar Telecom, while Greece and Portugal saw gains of more than
30%, due to better earnings momentum and strong results. Greece was the main
contributor to performance at the country level over the past six months. The
Kuwaiti market benefited from speculation about mortgage law, although it
faces ongoing challenges due to its poor fiscal situation and high debt
levels, while Egypt continued to struggle due to capital controls and currency
devaluation.
Like their developed market counterparts, emerging markets dropped sharply in
early April 2025 as investors' concerns about the ramifications of US tariffs
intensified. However, markets rebounded equally swiftly, regaining most of
their lost ground, when the severe market reaction to the proposed tariffs
prompted the US government to delay threatened tariff hikes subject to
negotiations with China, India and other key trading partners.
Emerging market gains over the past six months were made despite a decline in
oil prices. Fears that a trade war would lead to global recession saw the oil
price drop by more than 15%, from US$76 to US$63 pbbl, during review period.
However, unlike equity markets, oil prices have continued to trade around this
lower level, thanks to recent overproduction by some OPEC+ members.
Investment strategy
The Company's investment objective is to maximise the total return from
investments in EMEA markets. We aim to meet this objective by identifying high
quality businesses with high expected returns and the capacity to compound
earnings and generate sustainable dividends, over the long term. This includes
companies with the potential to grow due to their positions as national or
global market leaders. However, we aim to buy stocks at reasonable prices, so
recent acquisitions have a value tilt. We adopt a bottom-up stock selection
process, drawing on the in-depth fundamental analysis of JPMorgan's EMAP
equity research team, which includes assessments of the longevity of
a business's investment case, and the quality of its management and
governance practices.
Our investment approach is permeated by three broad themes:
Commodity sensitivities: EMEA countries are rich in a variety of commodities -
not only oil and gas, but also gold, platinum and copper. We are especially
interested in companies with exposure to the global transition to renewable
energy. Portfolio holdings driven by the commodities theme include Gold
Fields, a South African gold miner, Motor Oil Hellas, a Greek energy company,
and MOL, a Hungarian refinery.
Mass market consumption: 60% of the population of EMEA countries is less than
25 years old, and this percentage is forecast to continue rising. The
youthfulness of the population is a major boon for consumption, as this
demographic is tech savvy and thus easy for digital marketers to access, and
younger people have a higher propensity to spend than older generations.
As incomes across EMEA regions are relatively low by global standards, we look
for companies selling affordable products which are differentiated from their
competitors by their strong branding and customer service. Many day-to-day
household spending decisions are made by women, so companies focused on
products of potential interest to them are another focus. Portfolio holdings
underpinned by this theme include the Hungarian pharmaceutical company,
Richter, and Greek company, Sarantis, a national and potentially regional
leader in the production of cosmetics and household products.
Technology adopters: Many EMEA countries, especially in Africa, are dogged by
structural challenges which can often seem intractable, given the economic and
fiscal constraints and political uncertainties endemic in the region, so we
seek out companies that are able to 'leapfrog' these challenges or provide
much-needed consumer services which the market, or governments, have otherwise
failed to supply. For example, Benefit Systems, a Polish provider of non-pay
employee benefits, provides consumers in many Central and Eastern European
countries with electronic access to sports facilities and cultural events. We
opened a position in this name during the review period as we expect it to
benefit from the evolution of consumer spending towards health and fitness and
well-being.
How have specific sectors and stocks fared over the review period?
Stock selection decisions made a positive contribution to relative performance
over the review period. Several financial names feature among the top
performers. Our out-of-index positions in several central European banks -
TBC, Lion Finance Group, and Halyk - all reported solid performance numbers,
as did OTP where we had an overweight position. All benefited from a reduction
in country risk in a new brave Trump's era. An out-of-index holding in
Raiffeisen, an Austrian bank, also delivered better than expected results. Our
overweight holding in ADIB is a structural play on Islamic banking in the
United Arab Emirates (UAE) and has proved to be a steady compounder of
returns, while our position in ADCB, another UAE bank, exceeded expectations.
We took profits and closed the position in ABCB following strong gains over
the past year. Alpha Services and National Bank of Greece benefited from the
recovery of Greek banking. Elsewhere, our overweights to two South African
gold mining companies, Harmony Gold Mining and Gold Fields, did well, thanks
to rising gold prices. Our decision not to hold ACWA Power, a Saudi
engineering and utilities company, finally began to pay off. We have avoided
this name due to the company's heavy leverage and very expensive valuation,
and the stock dropped more than 40% in the past six months, as poor
fundamentals took their inevitable toll.
Key detractors from relative returns at the stock level during the six-month
period to end April 2025 included out-of-index positions in two Kazakhstani
names. Kaspi, a payment services and fintech company, was hurt by a negative
report from a short seller, despite Kaspi's claim that the report was
'misleading and inaccurate'. We are prepared to ride out this volatility. We
also view the recent weakness in NAC Kazatomprom, a uranium producer, as
transitory, as we still have conviction in the longer-term merits of nuclear
energy. NAC's attractive dividend will provide some compensation for our
patience. Leejam Sports, a Saudi Arabian fitness centre operator, was
adversely affected by heavy capital expenditures, which reduced capacity
utilisation in Q125. Take up for new clients was lower than additional gym
space build. However, we expect this business to do well over the longer term,
and we are inclined to use recent significant share price weakness to increase
our overweight. During the period we opened a new position in Sasol, a South
African specialist chemical company, and although this subsequently detracted
from performance, we retain our strong conviction in Sasol's investment case.
The stock has been under pressure for some time, and at 2.0-2.5x P/E (based on
estimated 2025 earnings), it is now extremely cheap, unjustifiably in our
view. The company has exposure to oil prices, which we expect to rise over
time, and its restructuring plan could eventually see a significant turnaround
in the company's fortunes. This is a speculative position, but we are prepared
to give the company more time to fulfil its potential.
Our decisions to avoid several names also detracted from returns. National
Bank of Kuwait rallied on hopes of an improvement in Kuwait's political
outlook, but we remain sceptical. MTN, a South African telecoms company,
rallied on speculation that Nigeria will allow to increase mobile phone
charges by 50%, but we are wary of the name due to concerns about volatility
of regulatory framework. Recent gains by Orlens, a Polish oil and gas refiner
and retailer, were not supported by earnings, and are thus likely to prove
unsustainable. We have also avoided DINO, a Polish grocery store name for
similar reasons, lower visibility of earnings sustainability.
Our country allocation decisions also enhanced relative performance over the
six months to end April 2025. The three main contributors on this basis were
Greece, the UAE and Saudi Arabia. As mentioned above, the Greek market was
supported by re-rating of banks, while the gains in UAE and Saudi markets were
mainly driven by the real estate sector. Our positioning in several other
countries, including Georgia, Hungary, Austria, Türkiye and South Africa,
also added to returns. Conversely, only Kuwait and Kazakhstan detracted from
performance, and we do not expect the country-specific drivers of these
results to be repeated in future.
Portfolio positioning
Although our investment strategy has a quality bias, it is important to note
that the investment universe defined by our reference index is presently
dominated by companies rated by JPMorgan analysts as 'standard' stocks, the
lowest of their three designations of 'premium', 'quality' and 'standard'.
This is in part because regional equity markets are still young, and in the
initial stages of development, and also because JPMorgan's analytical
framework requires companies to possess a track record of at least five years
before they can be rated more highly. Another notable feature of the EMEA
investment universe is that financials and commodity names feature heavily,
although the index will broaden out over time as economies and financial
markets develop, and we are excited about the prospect of exploring these
markets more deeply as they evolve. However, despite the current market
concentration around these sectors, the Company's reference index already
contains more than 680 names - a much larger and more diverse investment
universe than the extremely limited number of stocks previously available to
us in Russia, and we see many compelling opportunities across the EMEA
regions.
In addition to our purchases of Sasol, and Benefit Systems, both discussed
above, we added few other names to the portfolio over the past six months,
including Jeronimo Martins, a major Polish retailer, as we expect to see a
recovery in earnings. We purchased Ford Otomotiv Sanayi, a Turkish auto
manufacturer, which we believe is a solid business, which we acquired at an
attractive valuation following its recent share price fall. We opened a
position in United Electronic, a Saudi electrical appliances and computer
retailer, on the view that the listing of its financial subsidiary is not
fully reflected in the price.
We added exposure to two new bank names, Moneta, a solid Czech regional bank
with an attractive dividend, and Bank of Cyprus, which offers an even more
appealing 10+% dividend yield, at a very cheap price. We opened new positions
in two airport-related businesses. Athens International Airport has
experienced a 30% increase in traffic since 2019 and is likely to see further
expansion in future. The company pays a high dividend. Our acquisition of
Saudi Ground Services, an airport services business, gives us exposure to
expected growth in Saudi air traffic. Finally, we bought Emaar Development, a
UAE real estate company, which appealed due to its solid earnings outlook and
recently increased dividend.
These purchases were funded by several disposals. In addition to the sale of
ADCB, mentioned above, we took profits on several other stocks whose expected
returns are now lower following recent strong performance. These included
SANLAM, a South African life insurance company, Dubai electricity and water
authority (DEWA) and two UAE names, SALIK, an infrastructure company and ADNOC
GAS, a renewable energy company. Recent re-ratings also prompted the sale of
South African retailers The Foschini Group and Clicks. We also exited Greek
retailer, Jumbo, which is a good business but suffers from poor governance -
the company has cancelled dividends to fund an inventory build-up. We sold
Aramco to fund the acquisition of Sasol, which allowed us to increase the
portfolio's exposure to expected oil price rises. Other energy-related
disposals included Arabian Drilling, a Saudi oil and gas drilling operation
with limited growth prospects, and Motor Oil, a Greek oil and gas refiner,
where the adverse impact of the recent decline in oil prices reduced the
dividend outlook. Our positive assessment of Turkey was undermined by the
arrest of opposition leaders in March 2025, which triggered a significant
depreciation in the currency and a drop in central bank reserves. We trimmed
banking exposure here via the sale of two Turkish banks, Yapi Kredi and
Akbank. We sold three telecoms' names - Kuwait's Ooredoo, Hellenic Telecom,
and Magyar Telecom. Our exit from Ooredoo was prompted by complexity of
business, while Hellenic is facing increased competition and a protracted
exit from Romania, which has delayed the return of capital to shareholders. As
mentioned above, Magyar Telecom's share price has risen dramatically over the
past two years, so we took profits before a mooted price cap reduces expected
returns.
Outlook
US trade policy is foremost in the minds of most investors at present. Rising
protectionism and an associated escalation in geopolitical tensions are
clouding the global economic outlook. However, EMEA countries will be less
affected than most other countries if President Trump follows through on his
threats of aggressive tariff hikes. Saudi Arabia and its fellow Gulf
Co-operation Council (GCC) members (UAE, Qatar, Kuwait, Bahrain and Oman) are
unlikely to see any direct impact. While the oil-related sectors of these
economies are expected to contract in response to lower oil prices, non-oil
sectors are expanding steadily, thanks in part to tourism, which was the GCC's
fastest-growing sector in 2024. Government fiscal policies, including broader
taxation bases and targeted investment, are helping to attract capital and
sustain overall GDP growth of 3-4%. And Saudi Arabia's pledge to invest US$
600 billion in the US via a multi-year deal underscores its commitment to
strengthening economic ties with the US. Qatar's North Field gas expansion is
good news on the investment front, although benefits will only accrue in the
medium term.
In other EMEA regions growth will be modest at best, with pockets of
opportunity emerging from sector reforms and infrastructure and defence
spending. South Africa is showing tentative signs of economic improvement. The
country's power crisis is abating, and policy adjustments aimed at stabilising
the economy are supporting a gradual recovery, but structural challenges such
as inflation and a strained labour market persist. It remains unclear whether
recent tensions between South Africa and the US will impact trade relations
between the two nations. Elsewhere in Africa, countries such as Nigeria, Egypt
and Kenya face ongoing structural problems, and we are not yet willing to
venture into these markets.
The outlook for European countries is gradually improving. Trade tensions with
the US appear to have eased, and negotiations on tariff levels are ongoing.
Fiscal expansion in Germany, including infrastructure investment, allied with
increased defence spending across the European Union, is expected to support
growth, including in Eastern Europe. Greece is a positive outlier, with
stronger-than-average growth driven by tourism and restructuring in the
energy, real estate, and financial sectors. Poland, Hungary, and the Czech
Republic are projected to grow by 2-3%, thanks to infrastructure investment,
robust labour markets and strong wage growth. Inflation, however, is expected
to remain sticky, hovering around 3-5%. Turkey remains challenged. Inflation
has fallen significantly but will remain above 35% in 2025, while GDP growth
will struggle to exceed 2%. And with war on its borders, and the government
repressing its political opponents, it is difficult to be positive on the near
term.
Given this relatively uninspiring economic landscape, our preference across
all markets is for defensive companies-those capable of delivering reliable
growth and income. More nimble and innovative small and mid-sized companies
are expected to outperform mega-caps, and earnings growth will remain specific
to companies, not regions. Within our portfolio, 2025 earnings growth remains
on track to realise our 7-8% forecast, ahead of estimates for the broader
market, due to our bias towards names with positive earnings momentum.
In terms of sectoral positioning, financials remain notably well-positioned.
With interest rates elevated and inflation likely to persist, our overweight
to banks should benefit from healthy interest margins. The broader index will
also be supported, as financials account for 40% of the market. In the energy
sector, we expect short-term pressure from falling oil prices to be offset by
a more constructive medium-term outlook, as OPEC+ is committed to addressing
overproduction. In the tech sector, the rapid spread of artificial
intelligence (AI) remains a key focus for global investors. However, as we
noted in the Annual Report, there are limited ways to gain exposure to this
theme in EMEA markets. Businesses will need to increase capital expenditure to
incorporate AI into their production and administrative processes. This will
deliver productivity improvements and cost savings, but it is too early to say
when and how investors will reap the rewards from these investments,
especially in emerging markets.
However, investing in emerging markets requires a long-term perspective, which
sees beyond near-term uncertainties and less than impressive growth. And from
this viewpoint, we remain optimistic about the prospects of emerging markets
in Europe, the Middle East and Africa over the remainder of this decade and
beyond. The region offers compelling opportunities for high quality growth,
value and income at attractive valuations. It is a young, dynamic part of the
world, where economies and capital markets are evolving and quickly and the
investment universe is expanding as more companies offering a broader range of
goods and services enter the market. IPOs are expected to remain a key driver
of returns, as they have been in recent years. We are well-supported in our
search for opportunities in this exciting investment environment by the depth
and strength of JPMorgan Asset Management's research resources. We believe
this gives us a distinct competitive edge in a region where research coverage
by other investors remains scant and shallow. The portfolio will continue to
evolve over coming years as our target markets develop and deepen-and we look
forward to reporting on the Company's progress.
Thank you for your ongoing support.
Oleg I. Biryulyov
Luis Carrillo
Portfolio
Managers
23rd June 2025
INTERIM MANAGEMENT REPORT
The Company is required to make the following disclosures in its half year
report.
Principal Risks and Uncertainties
The Company is exposed to a variety of risks and uncertainties. Investors
should note that there are significant risks inherent in investing in emerging
market securities not typically associated with investing in securities of
companies in more developed countries. The Board has undertaken an assessment
and review of the principal risks facing the Company, together with a review
of any new risks which may have arisen during the year. The Directors have
also considered the impact of the continued uncertainty on the Company's
financial position regarding the Company's holdings in Russian securities and
based on the information available to them at the date of this Report,
continue to apply a fair valuation methodology to the Russian securities in
response to exchange closures, sanction activities as a result of the
conflict in Ukraine and an assessment of the VTB case. The Directors have
concluded that no further adjustments are required to the accounts as at
30th April 2025. The principal risks and uncertainties faced by the Company
fall into the following broad categories: investing in emerging markets and
holdings Russian securities; share price discount and Net Asset Value per
share; investment underperformance and strategy; failure of investment
process; loss of investment team and Manager; operational and cyber crime;
board relationship and shareholders; political and economic; regulatory and
legal; market and financial; climate change. Information on each of these
areas is given in the Business Review within the Annual Report and Financial
Statements for the year ended 31st October 2024. A review of risks conducted
for this report concluded that the principal risks and uncertainties faced by
the Company have not changed significantly.
Related Parties Transactions
During the first six months of the current financial year, no transactions
with related parties have taken place which have materially affected the
financial position or the performance of the Company during the period.
Going Concern
The Directors believe, having considered the Company's investment objectives,
risk management policies, capital management policies and procedures, nature
of the portfolio and expenditure projections, that the Company has adequate
resources, an appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the foreseeable
future and, more specifically, that there are no material uncertainties
pertaining to the Company that would prevent its ability to continue in such
operation existence for at least 12 months from the date of the approval of
this half yearly financial report. For these reasons, the Board consider there
is reasonable evidence to continue to adopt the going concern basis in
preparing the financial statements.
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
yearly 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/loss of the Company, as at 30th April 2025 as required by the
Disclosure Guidance and Transparency Rules 4.2.4R; and
(ii) the interim management report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the 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
Eric Sanderson
Chairman
23rd June 2025
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th April 2025 30th April 2024 31st October 2024
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains on investments held at
fair value through profit
or loss - 1,545 1,545 - 1,323 1,323 - 2,431 2,431
Net foreign currency losses - (18) (18) - (36) (36) - (29) (29)
Income from investments 538 8 546 429 - 429 974 2 976
Interest receivable and
similar income 2 - 2 21 - 21 35 - 35
Gross return 540 1,535 2,075 450 1,287 1,737 1,009 2,404 3,413
Management fee (38) (56) (94) (32) (48) (80) (66) (98) (164)
Other administrative expenses (460) - (460) (353) - (353) (666) - (666)
Net return before taxation 42 1,479 1,521 65 1,239 1,304 277 2,306 2,583
Taxation (28) - (28) (24) - (24) (52) - (52)
Net return after taxation 14 1,479 1,493 41 1,239 1,280 225 2,306 2,531
Return per share (note 3) 0.04p 3.66p 3.70p 0.10p 3.07p 3.17p 0.56p 5.70p 6.26p
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the period.
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.
The net return/(loss) after taxation represents the profit/(loss) for the
period and also the total comprehensive income.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Called up Capital
share redemption Capital Revenue
capital reserve reserves(1) reserve(1) Total
£'000 £'000 £'000 £'000 £'000
Six months ended 30th April 2025 (Unaudited)
At 31st October 2024 405 196 12,078 8,530 21,209
Net return after taxation - - 1,479 14 1,493
Dividends paid in the period (note 4) - - - (202) (202)
At 30th April 2025 405 196 13,557 8,342 22,500
Six months ended 30th April 2024 (Unaudited)
At 31st October 2023 405 196 9,772 8,507 18,880
Net return after taxation - - 1,239 41 1,280
Dividends paid in the period (note 4) - - - (202) (202)
At 30th April 2024 405 196 11,011 8,346 19,958
Year ended 31st October 2024 (Audited)
At 31st October 2023 405 196 9,772 8,507 18,880
Net return after taxation - - 2,306 225 2,531
Dividends paid in the year (note 4) - - - (202) (202)
At 31st October 2024 405 196 12,078 8,530 21,209
1 Revenue reserve and the capital reserves form the distributable reserves
of the Company and may be used to fund distributions to shareholders.
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
At At At
30th April 2025 30th April 2024 31st October 2024
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 21,889 19,316 21,241
Current assets
Debtors 711 114 247
Current asset investment 1 514 -
Cash at bank(1) 299 163 50
1,011 791 297
Current liabilities
Creditors: amounts falling due within one year (400) (149) (329)
Net current assets/(liabilities) 611 642 (32)
Total assets less current liabilities 22,500 19,958 21,209
Net assets 22,500 19,958 21,209
Capital and reserves
Called up share capital 405 405 405
Capital redemption reserve 196 196 196
Capital reserves 13,557 11,011 12,078
Revenue reserve 8,342 8,346 8,530
Total shareholders' funds 22,500 19,958 21,209
Net asset value per share (note 5) 55.6p 49.4p 52.5p
1 For the period ending 30th April 2024, the 'Cash and cash
equivalents' line item in the Statement of Financial Position has been revised
to 'Cash at bank' and 'Current asset investments, in accordance with the
statutory format required by the Companies Act 2006, this revision separately
reports holdings in the JPMorgan Liquidity Funds, money market funds, as
'Current asset investments'. This adjustment does not affect any other line
items in the Statement of Financial Position or the total current assets.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th April 2025 30th April 2024 31st October 2024
£'000 £'000 £'000
Cash flows from operating activities
Net return before finance costs and taxation 1,521 1,304 2,583
Adjustment for:
Net gains on investments held at fair value through profit
or loss (1,545) (1,323) (2,431)
Net foreign currency losses 18 36 29
Dividend income (546) (429) (976)
Interest income (2) (21) (35)
Realised losses on foreign exchange transactions (26) (61) (24)
Realised exchange losses on the liquidity fund (3) - -
Increase in accrued income and other debtors (28) (4) (46)
Decrease in accrued expenses (25) (77) (11)
Net cash outflow from operating activities before dividends,
interest and taxation (636) (575) (911)
Dividends received 486 353 907
Interest received 2 21 35
Overseas withholding tax recovered - 3 2
Net cash (outflow)/inflow from operating activities (148) (198) 33
Purchases of investments (4,667) (5,302) (10,643)
Sales of investments 5,256 5,314 9,827
Net cash inflow/(outflow) from investing activities 589 12 (816)
Equity dividends paid (202) (202) (202)
Net cash outflow from financing activities (202) (202) (202)
Increase/(decrease) in cash and cash equivalents 239 (388) (985)
Cash and cash equivalents at start of period/year 50 1,040 1,040
Exchange movements 11 25 (5)
Cash and cash equivalents at end of period/year 300 677 50
Cash and cash equivalents consist of:
Cash at bank 299 163 50
Investment in JPMorgan GBP Liquidity Fund - 514 -
Investment in JPMorgan USD Liquidity Fund 1 - -
Total cash and cash equivalents 300 677 50
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
For the six months ended 30th April 2025
1. Financial statements
The information contained within the financial statements in this half year
report has not been audited or reviewed by the Company's auditor.
The figures and financial information for the year ended 31st October 2024 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 and included the report of
the auditors which was unqualified and did not contain a statement under
either section 498(2) or 498(3) of the Companies Act 2006.
2. Accounting policies
The financial statements 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 '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 April 2025.
All of the Company's operations are of a continuing nature.
As reported in the 2024 Annual Report & Financial Statements, the
Directors consider that in the absence of observable market data on its
Russian investments resulting from the closure of the Moscow Exchange (MOEX)
to overseas investors, there has been a material change to the market value of
its Russian investments. The fair value valuation methodology applied to those
investments held at the 30th April 2025 and 31st October 2024 is in accordance
with the established fair valuation policies and procedures of the Manager,
JPMorgan Funds Limited. This fair valuation was applied to the last traded
price on 25th February 2022 for locally held stock on the MOEX (i.e. when the
market was still trading normally) using a 99% provision for valuation
purposes. Similarly, for the American Depositary Receipts and Global
Depositary Receipts the fair value adjustment has been applied to the last
trade price on 2nd March 2022 and a 99% provision for valuation applied. The
quantum of the provision applied of 99% is a subjective view designed to
acknowledge that there is some intrinsic value in the portfolio, albeit, it is
currently untradeable.
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 October 2024.
3. Return per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th April 2025 30th April 2024 31st October 2024
£'000 £'000 £'000
Return per share is based on the following:
Revenue return 14 41 225
Capital return 1,479 1,239 2,306
Total return 1,493 1,280 2,531
Weighted average number of shares in issue 40,436,176 40,436,176 40,436,176
Revenue return per share 0.04p 0.10p 0.56p
Capital return per share 3.66p 3.07p 5.70p
Total return per share 3.70p 3.17p 6.26p
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th April 2025 30th April 2024 31st October 2024
Pence £'000 Pence £'000 Pence £'000
Dividends paid
Final dividend in respect of prior year 0.5 202 0.5 202 0.5 202
Total dividends paid in the period/year 0.5 202 0.5 202 0.5 202
Dividend payments in excess of the revenue amount will be paid out of the
Company's distributable reserves.
5. Net asset value per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th April 2025 30th April 2024 31st October 2024
Net assets (£'000) 22,500 19,958 21,209
Number of shares in issue 40,436,176 40,436,176 40,436,176
Net asset value per share 55.6p 49.4p 52.5p
6. Fair valuation of investments
The fair value hierarchy disclosures required by FRS 102 are given below:
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th April 2025 30th April 2024 31st October 2024
Assets Liabilities Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000 £'000 £'000
Level 1 20,441 - 17,807 - 19,811 -
Level 3(1) 1,448 - 1,509 - 1,430 -
Total value of investments 21,889 - 19,316 - 21,241 -
1 Following Russia's invasion of Ukraine and closure of the Moscow
Exchange (MOEX) to overseas investors, including the Company, a fair value
valuation method was applied to the Company's holdings in Russian stocks.
Therefore the Company has applied an alternative valuation method. For its
MOEX local stock, a fair value adjustment has been applied to the last trade
price on 25th February 2022. The price of these stocks has been determined by
taking the live market price as at 25th February 2022 and applying a 99%
provision for valuation and for American Depositary Receipts and Global
Depositary Receipts a fair value adjustment has been applied to the last trade
price on 2nd March 2022.
7. Analysis of Changes in Net Cash
As at Exchange As at
31st October 2024 Cash flows movements 30th April 2025
£'000 £'000 £'000 £'000
Cash at bank and current asset investment
Cash at bank 50 238 11 299
Current asset investment(1) - 1 - 1
Net Cash 50 239 11 300
1 JPMorgan USD Liquidity Fund.
JPMORGAN FUNDS LIMITED
24(th) June 2025
For further information, please contact:
Paul Winship
For and on behalf of
JPMorgan Funds Limited
Telephone: 0800 20 40 20 or or +44 1268 44 44 70
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
ENDS
A copy of the half year will be 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.jpmeemeasecurities.com (http://www.jpmeemeasecurities.com) where up to
date information on the Company, including daily NAV and share prices,
factsheets and portfolio information can also be found.
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