JPMorgan Global E.M. - Annual Financial Report
26/10/2023 07:00
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RNS Number : 3244R JPMorgan Global Emerging Mkts I.T. 26 October 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN GLOBAL EMERGING MARKETS INCOME TRUST PLC
FINAL RESULTS FOR THE YEAR ENDED 31ST JULY 2023
Legal Entity Identifier: 549300OPJXU72JMCYU09
Information disclosed in accordance with the DTR 4.1.3
JPMorgan Global Emerging Markets Income Trust plc (the 'Company' or 'JEMI')
announces its financial results for the year ended 31(st) July 2023.
CHAIR'S STATEMENT
Performance
This is my first annual report as chair of your Company, and I am pleased to
be able to tell you that the past year ended 31st July 2023 has been an
encouraging one, with the Company making a positive return, comfortably ahead
of the Benchmark Index. I would like to thank my predecessor, Sarah Fromson,
for her leadership of the Company in her time as Chair. Many of the building
blocks upon which the Company's success depends are a consequence of her
contribution. The Board and I wish her well in her future endeavours.
During the period, the Company's total return on net assets, including
dividends, was 9.2%, which compares favourably with the Benchmark return of
2.5%. The total return to shareholders (which includes both the share price
return and dividends) was 12.6%. This reflected some narrowing of the discount
to net asset value at which the Company's shares trade, from 11.6% at
31st July 2022 to 9.3% at the end of the period under review. Given the
Company's long-term investment approach, I want to draw your attention to the
fact that performance over periods of three years and beyond remains
excellent.
China's economy was the key driver of Emerging Market performance over the
past year, giving investors a bumpy and uncomfortable ride. Optimism sparked
by China's unexpectedly rapid abandonment of its harsh zero Covid restrictions
late in 2022 saw Chinese equity markets rise sharply in Q422. However, during
the first half of 2023, hope gave way to disappointment and renewed market
weakness, with China's recovery proving shallower and more hesitant than most
expected. The year's other notable development was investors' sudden
enthusiasm for stocks expected to profit from the rapid integration of
artificial intelligence ('AI') tools into work practices and many aspects of
daily life, which benefitted some of the Company's Taiwanese portfolio
holdings.
The Performance Attribution table below shows that a substantial proportion of
the Company's relative performance was derived from stock selection decisions
made by the Portfolio Managers. B3, Novatek and Grupo Financiero Banorte were
the largest individual stock contributors to performance, although these gains
were partially offset by the adverse influence of underweight positions in
India, South Korea and Turkey. The Investment Manager's Report, which can be
found below, reviews the market environment, the Company's performance and
portfolio allocations in more detail. It also considers the outlook for
emerging markets over the coming year.
Dividends
The Company's gross revenue for the year amounted to £20.8 million (2022:
£22.2 million) with net revenue of £16.9 million (2022: £18.1 million),
slightly reduced from the prior year, in part due to a timing issue of receipt
of dividends from our Taiwanese portfolio holdings. Please see the Investment
Manager's Report below for further details. Net revenue return per ordinary
share for the year, calculated on the average number of shares in issue, was
5.70p (2022: 6.11p).
During the financial year, the Board paid three interim dividends of 1.0p per
share and on 4th September 2023 it announced the payment of a fourth interim
dividend of 2.30p per share. This brings the total dividend for the financial
year to 5.30p per share, a modest increase from the previous year (2022: 5.20p
per share).
The Board pays four interim dividends, reflecting the support we have received
from shareholders for a regular and timely income stream. We are seeking
shareholder authority to maintain this dividend payment policy at the
forthcoming Annual General Meeting ('AGM').
The Board closely monitors dividend receipts, given their importance to the
Company. Both the Investment Manager and the Board are of the view that
Emerging Markets continue to offer long term growth potential with attractive
income prospects. The Board carefully considers the outlook and potential
risks with the investment team on a regular basis, including a sensitivity
analysis of the impact of currency movements on revenue receipts. As
shareholders are aware, the Company receives dividends in the currencies of
developing countries and in US dollars but pays dividends in sterling. It has
not been the Company's policy to hedge currency risk as that is expensive and,
for many currencies, impracticable. That policy inevitably means that the
Company's asset value and cash flows will be buffeted by adverse currency
movements (if sterling strengthens) and flattered by favourable moves (if
sterling weakens relative to emerging market currencies and US dollars).
Loan facilities and gearing
The Board regularly discusses gearing with the Portfolio Managers, who use it
to enhance long-term shareholder returns. As reported in our 2023 Half Year
Report, the Company's US$20 million fixed interest loan facility with National
Australia Bank was repaid in November 2022. The Company secured a competitive
US$20 million, two-year revolving loan facility with Mizuho Bank Limited,
repayable in November 2024.
The Company also maintains a US$20 million floating rate loan facility with
ING Bank, repayable in early October 2023. With the pending maturity of this
facility, your Board has been working closely with the Manager to assess the
Company's borrowing options. The Company has renewed its US$20 million
revolving loan facility with ING Bank for a further two years. Further
details can be found on page 82 of the Annual Report.
As at 31st July 2023, portfolio gearing stood at 5.7% (31st July 2022: 5.7%).
Share repurchases and issuance
During the financial year to 31st July 2023, the Company's share price traded
at an average discount to net asset value ('NAV') of 10.5%.
The Board regularly considers the merits of buying back shares to manage the
level and volatility of the discount and will buy back shares if it is
considered to be in the best interests of shareholders to do so. As shares are
only bought back at a discount to the prevailing NAV, share buybacks benefit
shareholders as they increase the NAV per share of remaining outstanding
shares. During the financial year, the Company bought back 358,101 shares into
Treasury for a total cost of £448,000. It did not issue any shares. These
purchases were value accretive for shareholders and underscore your Board's
belief that there is attractive value in the investments held by the Company.
At the forthcoming AGM, the Board will seek a renewal of shareholder authority
to issue up to a further 10% of the Company's issued share capital and to buy
back its own shares. It is the Board's intention to use the repurchase and
allotment authorities to manage imbalances between the supply and demand of
the Company's shares, thus reducing the volatility of the discount or premium
in normal market conditions and to meet demand for the Company's shares as and
when they trade at an appropriate premium to net asset value.
Investment Management Fees
Since the year end, the Board has agreed with the Manager that the Company's
investment management fees should be tiered.
With effect from 1st November 2023, the investment management fee will be
charged on a tiered basis at an annual rate of 0.75% of the Company's net
assets on the first £500 million and at 0.65% of net assets above that
amount. This compares with the previous arrangement under which the management
fee was charged at an annual rate of 0.75% on net assets. The fee will
continue to be calculated and paid monthly.
Investment Team
Omar Negyal and Isaac Thong are the lead Portfolio Managers, supported by the
Investment Manager's extensive team of analysts across Global Emerging
Markets. As previously announced, Jeffrey Roskell, a portfolio manager for the
Company since 1st August 2016, has announced his retirement from JPMorgan
Asset Management in the first quarter of 2024. We would like to thank Jeffrey
for his contribution to the management of the Company's assets and wish him
the very best in his retirement.
Board and Corporate Governance
During the year, the Board extended the remit of the Nomination Committee to
include responsibility for Directors' remuneration in accordance with the
provisions of the AIC Code of Corporate Governance, this committee is now
known as the Nomination and Remuneration Committee. I am a member of this
committee, being fully independent of the Manager now and on my appointment.
Following the Board's annual evaluation by the Nomination and Remuneration
Committee, it is felt that the Board's composition and size remains
appropriate. The Nomination and Remuneration Committee is cognisant that
Caroline Gulliver will reach her ninth-year anniversary of shareholder
appointment to the Board at the 2024 AGM. The Nomination and Remuneration
Committee will commence a search, in early 2024, with assistance from an
appropriate independent recruitment specialist for board level searches, for
Caroline's successor. An update will be provided in 2024.
The Board has recently established a separate Management Engagement Committee,
chaired by me, and comprising the entire Board, all of whom are independent of
the Company, its Manager and its advisers. The Management Engagement
Committee's key purpose is to review the continued appointment, remuneration
and performance of, and contractual arrangements with, the Manager and the
Company's other key service providers. The Management Engagement Committee
will not review the performance of the Company's auditor, the review of which
remains within the remit of the Audit and Risk Committee.
The Board supports the annual appointment/reappointment for all Directors, as
recommended by the AIC Code of Corporate Governance, and therefore all
Directors will stand for reappointment at the forthcoming AGM. Shareholders
who wish to contact the Chair or other members of the Board may do so through
the Company Secretary or the Company's website, details of which can be found
below.
Environmental, Social and Governance
Whilst the Company is not a sustainable or environmental, social and
governance ('ESG') investment vehicle, and does not explicitly target ESG
outcomes as part of portfolio construction, we welcome the Investment
Manager's incorporation of financially material ESG considerations into its
investment process. The potential impact of financially material ESG factors
on a company's ability to deliver shareholder value is considered as part of
the Portfolio Managers' stock selection process. Your Board shares this belief
in the importance of financially material ESG factors for long-term
investments and supports the Portfolio Managers' efforts to maintain
continuous engagement with investee companies.
Task Force on Climate-related Financial Disclosures
On 30th June 2023, as a regulatory requirement the Investment Manager
published its first UK Task Force on Climate-related Financial Disclosures
Report for the Company in respect of the year ended 31st December 2022. The
report discloses estimates of the portfolio's climate-related risks and
opportunities according to the Financial Conduct Authority Environmental,
Social and Governance Sourcebook and the Task Force on Climate-related
Financial Disclosures Recommendations ('TCFD'). The report is available on the
Company's website: www.jpmglobalemergingmarketsincome.co.uk
This is the first report under the new guidelines and disclosure requirements.
The Board is aware that best practice reporting under the TCFD regime is still
evolving both with regard to metrics and input data quality, as well as the
interpretation and implications of the outputs produced, and will continue to
monitor developments as they occur.
Annual General Meeting
The Company's AGM will be held at 60 Victoria Embankment, London EC4Y 0JP on
Monday, 27th November 2023 at 2.00 p.m. Full details of the format and
explanations of the business proposed at the AGM can be found in the Notice of
Meeting on page 96 of the full Annual Report.
We are delighted to invite shareholders to join us in person for the Company's
AGM. However, those Shareholders wishing to follow the AGM proceedings without
attending in person will be able to view them live and ask questions (but not
vote) through conferencing software. Details on how to register, together with
access details, will be available shortly on the Company's website at
www.jpmglobalemergingmarketsincome.co.uk or by contacting the Company
Secretary at invtrusts.cosec@jpmorgan.com.
As is best practice, all voting on the resolutions will be conducted on a
poll. Shareholders who are unable to attend the AGM in person are strongly
encouraged to submit their proxy votes in advance of the meeting, so that they
are registered and recorded at the AGM. Proxy votes can be lodged in advance
of the AGM either by post or electronically: detailed instructions are
included in the Notes to the Notice of Meeting on pages 96 to 99 of the full
Annual Report.
Shareholders are encouraged to send any questions ahead of the AGM to the
Board via the Company Secretary at the email address above. We will endeavour
to answer relevant questions at the meeting or via the Company's website. My
fellow Board members, representatives of JPMorgan and I look forward to the
opportunity to meet and speak with shareholders after the formalities of the
meeting have been concluded. We would also welcome comments and questions from
shareholders throughout the year, please use the same contact details as
above.
If there are any changes to the above AGM arrangements, the Company will
update shareholders through an announcement to the London Stock Exchange and
on the Company's website.
Outlook
Wariness is spreading across markets as the Middle East crisis looks
increasingly complex. Oil prices are climbing amid concerns about global
supplies and crude is expected to remain susceptible to more spikes on signs
of further disruptions in the Middle East. Global gas supply is set to remain
tight and subject to a wide range of uncertainties. These latest developments
increase concerns on higher inflation and lower growth.
Despite some near-term uncertainties, there are good reasons to be optimistic
about the long-term prospects for Emerging Markets. The uncertainties relate
mostly to how the US and Chinese economies perform in coming months. In the
US, the Federal Reserve's restrictive monetary stance is likely to dampen
activity over the remainder of this year and next, which may reduce demand for
Emerging Market exports. It is not yet clear whether the US economy will dip
into recession as the impact of higher interest rates and tighter financing
conditions are seemingly taking longer to take effect on consumer demand and
inflation than previously expected. With respect to China, we share the
Portfolio Managers' assessment that the market does not fully appreciate that,
although China's near-term growth is less vigorous than before the pandemic,
its GDP is forecast to grow much more rapidly than in most developed
economies. Longer-term growth is likely to be supported by the Chinese
authorities' pro-growth stance. When investors form a more realistic and more
upbeat view of the country's prospects, China is likely to resume its role as
an important positive driver of activity and markets within Asia and further
afield, especially if the recent apparent warming in relations between China
and the US results in an easing of trade and political tensions between the
world's two largest economies.
It is important to note that, while China has been absorbing investors'
attention in recent months, many other Emerging Markets, notably equity
markets in Taiwan, Mexico and Peru have been performing well and are forecast
to continue growing strongly over the medium term. Expansion will be
underpinned by positive structural trends such as digitalisation, urbanisation
and favourable demographics, which result in growing working-age populations
and rising incomes.
In summary, the Board believes that Emerging Markets continue to offer many
attractive opportunities capable of delivering capital growth and above market
yields, especially after the declines in valuations seen over the past couple
of years. The Company's strong track record gives us confidence that the
Portfolio Managers have the skills, experience and discipline to identify and
capitalise on these opportunities for the ongoing benefit of our shareholders.
On behalf of the Board, I would like to thank you for your ongoing support.
Elisabeth Scott
Chair
25th October 2023
INVESTMENT MANAGER'S REPORT
Introduction
For the year ended 31st July 2023, the Company's total return on net assets,
including dividends, was 9.2%. This compares with our Benchmark, with
dividends reinvested, which returned 2.5%. The return on shares, including
dividends, was 12.6%. It is pleasing to be able to report outperformance over
the year, as well as over a longer-term period. Over a three-and five-year
basis, the Company made annualised returns of 9.0% and 5.7% respectively in
NAV terms, compared to Benchmark returns of 2.1% over both periods
respectively.
This supports our view that our income philosophy and process can work well
within Emerging Markets, producing a portfolio with value and quality
characteristics, which can provide a healthy level of income for shareholders
while also providing good participation in Emerging Markets.
Investment environment
In the 12 month period ended 31st July 2023, developments in China were the
main focus for emerging market investors. During the first half of the period,
China's surprisingly rapid reopening late in 2022, after a long period of
severe, 'zero covid' restrictions, prompted a sharp rally in the market. MSCI
China returned 4.5% (in GBP) in the fourth quarter of 2022 in anticipation of
a strong rebound in economic activity. However, the recovery proved to be
unexpectedly lacklustre, as consumer demand remained weak, and the property
market continued to stagnate after the government's harsh crackdown on
speculative activity in 2020. Investors were also wary about persistent
geo-political tensions, both with Taiwan and the US. The Chinese market lost
some of the ground gained in the fourth quarter of 2022, ending the
seven months to 31st July 2023 down 1.4% (MSCI China total return, in GBP).
Investors in all markets also watched the US closely during the review period,
as the Federal Reserve continued to raise interest rates to damp down
inflation pressures. This stringent monetary policy stance raised concerns
about the possibility of a US recession, and emerging market investors worried
about an associated contraction in demand for exports from emerging markets.
The first half of 2023 also saw a surge in interest in artificial intelligence
('AI'), following the launch of Chat GPT, a language processing tool driven by
AI, which can conduct conversation and undertake simple writing and research
tasks. Investors focused on AI's potential to transform work practices and
boost productivity, and semiconductor manufacturers and tech companies
perceived to be at the forefront of this AI revolution have been the key
drivers for markets in recent months.
Performance attribution
for the year ended 31st July 2023
% %
Contributions to total returns
Benchmark total return 2.5%
Asset allocation 0.1%
Stock selection 7.0%
Gearing/cash 0.5%
Investment manager contribution 7.6%
Portfolio total return 10.1%
Management fees/other expenses -0.9%
Share buy-back/issuance 0.0%(1)
Other effects -0.9%
Cum income net asset value total return 9.2%
Cum income share price total return 12.6%
Source: JPMAM and Morningstar. All figures are on a total return basis.
Performance attribution analyses how the Company achieved its recorded
performance relative to its benchmark index.
(1) The Company has bought back shares during the year. However, the
number of shares purchased is not material enough to have a significant impact
as indicated in the table.
A glossary of terms and APMs is provided on pages 100 to 102 in the annual
report.
Performance drivers over the past year
Stock selection enhanced relative returns during the financial year. The table
below shows the top five and bottom five contributors to performance over
this period.
Top five Contributors Top five Detractors
B3 SA-Brasil Bolsa Balcao Inner Monogolia Yili Industrial Group
Novatek Microelectronics Tencent (not owned)
Grupo Financiero Banorte Posco Holdings Inc (not owned)
OPAP Telkom Indonesia Persero TBK
Kimberly-Clark de Mexico Petrobras - Petróleo Brasileiro (not owned)
Looking at some of the main individual contributors to performance:
Our position in B3, Brazil's main stock exchange, was the largest positive
contributor to performance. We like exchanges in general, as they tend to be
high quality companies with few, if any, competitors. Furthermore, they
generate strong free cash flow and often have attractive dividend policies.
All these points hold true for B3, and the stock re-rated strongly over the
period.
The holding in Taiwan's Novatek Microelectronics Corp, which designs chips for
screens as well as other specialised applications, contributed to performance.
Novatek's share price rose strongly, helped by an easing in market worries
over high inventory levels. The company also reported meaningful improvements
in revenue over several quarters. We continue to see the company as being able
to generate a healthy return on equity and we like the fact it has been able
to maintain its strong position within the market over a long period of time,
showing that it has the ability to navigate multiple product cycles.
Within financials, the holding in Grupo Financiero Banorte, a Mexican bank,
contributed to performance. Banorte's net interest margin has expanded thanks
to rate increases and accelerated growth in lending. Additionally, this bank
has demonstrated good governance, and prudent capital allocation, as
illustrated by management's decision to eschew an offer to acquire its
competitor, Banamex, from Citibank. Mexico's macroeconomic prospects are also
positive - its GDP growth is expected to outpace that of other Latin
American countries, thanks in part to nearshoring trends (discussed further
below), which will allow Banorte to benefit from greater local financing
opportunities.
Of our holdings in consumer staples, an overweight in Inner Mongolia Yili
Industrial Group, which produces and sells dairy products, detracted from
performance. The company's share price de-rated due to slower than expected
sales growth and low returns from branding investments. Earnings also became
more volatile due to expenses related to covid controls. However, we continue
to hold this stock, as we expect these issues to fade with time. Furthermore,
the company has been able to hold on to gains in market share and new product
categories are growing well. Among communication services holdings, not owning
China's internet content giant Tencent detracted from performance. However, we
will continue to remain uninvested in the stock, as it does not offer an
attractive dividend yield.
Among materials sector positions, our decision not to own POSCO, a Korean
steelmaker which produces materials used in the manufacture of vehicles,
machinery and home electronics, also detracted from returns. The stock rallied
thanks to Korean retail investors' enthusiasm for battery materials. The
company's plans to produce battery cathodes were also well-received by the
market, but we intend to stay out of the stock, as we do not share the
market's conviction in POSCO's fundamentals, or its ability to fend off
competitors over the long-term.
Country contributors to relative performance
Positive Negative
Mexico (overweight) India (underweight)
Taiwan (overweight) South Korea (underweight)
Peru (overweight) Turkey (not owned)
Our country allocations had a positive impact on relative performance over the
year. The Company's exposure to Mexico was the most important contributor.
Since the pandemic, manufacturers have attempted to diversify and strengthen
their global supply chains, and Mexico's proximity to the large markets of the
US and Canada means it stands to benefit greatly from this nearshoring trend,
via heavier investment in manufacturing, including from foreign investors. In
fact, these benefits are already materialising - Mexico became America's top
trading partner during the first half of 2023. Our positions in Banorte and
Kimberly Clark Mexico, a supplier of household and personal products, have
done well accordingly. Peru was another market which added to relative
returns, due to our position in copper miner Southern Copper. Demand for
copper is strong and likely to increase over time as this mineral is a key
component of batteries and other components and equipment necessary of the
transition to net zero carbon emissions.
In Asia, our exposure to Taiwan was another positive contributor to relative
returns, thanks to gains in our holdings in semiconductor companies such as
Novatek Microelectronics and computer hardware companies such as Wiwynn, which
were supported by rising demand for semiconductors in general and, in a couple
of cases, potential new opportunities in AI.
On the negative side, the Indian market performed well, but our underweight
position relative to the Benchmark created a drag on relative returns. It is
difficult to find Indian stocks offering an attractive yield, partly because
India is more of a 'growth' market, and because valuations are high, thanks to
positive investor sentiment towards the country, which means the yields on
offer are correspondingly low. Our underweight in South Korea also hurt
returns, in large part due to not owning POSCO, which, as previously
mentioned, has gained thanks to retail investor enthusiasm, which we do not
share.
Not owning stock in Turkey was a further drag. The market rose as high
domestic inflation, negative interest rates and unattractive government bond
yields made equity investment the only viable investment alternative for local
investors. However, these are hardly compelling reasons for us to invest in
this market, especially given escalating macroeconomic uncertainty and
currency weakness, so we chose not to hold any Turkish names.
Portfolio positioning and changes
We build the portfolio on a bottom-up basis, selecting stocks based on their
sound fundamental qualities, strong balance sheets and capacity to pay
dividends over the long term. Naturally, some areas within Emerging Markets
offer more investment opportunities than others, and this results in tilts
within the portfolio towards some sectors and countries. From a sectoral
viewpoint, we tend to find the most attractive income opportunities within
Technology, Consumer Staples and Financials, so these are the portfolio's
three key sector overweights, while historically, the portfolio is usually
underweight in Materials, Energy and Industrials.
At the country level, significant portfolio overweights include Mexico, South
Africa and Taiwan - as with our sector allocations, these country weightings
are driven by the many individual stock opportunities which we view as
attractive from an income investor's perspective. In contrast, our largest
country underweight is India. India's long-term growth prospects are very
positive and investor interest in this market is high. However, as mentioned
above, this is reflected in valuations, which makes it difficult for us to
find attractive income paying stocks. The portfolio has a roughly neutral
position in China but is slightly overweight once the holdings of Hong Kong
stocks are included. China faces some challenges, including weak consumer
demand, a stricken property market and a fractious relationship with the US,
as discussed above, but we think overall valuations are more attractive after
recent market weakness. The Chinese market's dividend outlook is also
positive.
The portfolio changes we have implemented over the past year have mainly been
motivated by individual stock considerations. For example, we opened a new
position in TIM, a Brazilian telecom company which we expect to benefit from
market consolidation and more rational behaviour by remaining market
participants. The company is set to generate healthy free cash flow going
forward, which should flow directly to shareholders thanks to TIM's positive
dividend policy. We also purchased JD.com, a Chinese e-commerce business. This
company provides a very interesting illustration of the progression of Chinese
corporate life cycles. Slower Chinese growth has led many companies to
recognise the need to adjust their capital allocation. In JD.com's case, when
we met the company's CEO, she was clear that in the past, the cash generated
by the company's very strong growth was invested across a wide range of areas.
But now, with slower, though still healthy, trend growth, JD.com is being more
considered in its use of cash - the company has adopted an annual dividend
policy and a more disciplined approach to investments. We like JD.com's
new-found balance between dividends and growth, and with the valuation much
lower after the sharp sell-off seen over the past two years, we initiated a
new position.
We also took advantage of better valuations to add to several existing
positions across markets and sectors. Examples include Realtek Semiconductor,
a Taiwanese semiconductor design company involved in Wi-Fi and audio products,
and Haier Smart Home, a Chinese white goods manufacturer producing fridges,
washing machines and air conditioning units both for domestic consumption and
export. In these cases, we followed our valuation (including yield) and
fundamental signals to add to positions we thought looked more attractive.
Conversely, we trimmed positions where we thought valuations were beginning to
look more stretched after relatively strong performance, e.g.,
Walmart de Mexico, the Mexican supermarket operator. This remains a very
strong company and we like the management team's strategy for the long term -
but we also recognise that the stock's performance has reduced yield and
increased other valuations, so we want to manage the position size.
One notable disposal over the past year was the closure of our position in the
Saudi bank, Al Rajhi. This sale was motivated by our view that management was
de-prioritising the dividend. However, we still like the bank's strong
domestic franchise, so we would consider re-opening a position in future if
management decides to place dividends higher up the agenda.
Our engagement on environmental, social and governance issues
We believe that sound environmental, social and governance ('ESG') practices
are extremely important to the resilience of business models, and we welcome
signs that more Emerging Market companies are explicitly recognising this and
improving their practices accordingly. Financially material ESG considerations
are therefore integral to our investment process (please see the dedicated
section on pages 18 to 23 of the full Annual Report). When considering
potential investments, our analysts assess each company on a list of related
factors, including its carbon emissions, renewable energy and recycling
policies, and employment and diversity practices, along with its approach to
corporate governance.
We place particular emphasis on governance, and we draw a direct link between
a company's dividend policy and the quality of its governance. In our view, a
company's willingness to return cash to shareholders is a tangible and
positive governance indicator. We have engaged with many companies on this
issue over time, to understand their motivations and capital allocation
objectives. We also discuss the magnitude of returns to shareholders and the
rationale behind any split between dividends and buybacks.
Examples of recent ESG engagement with portfolio companies can be seen in the
ESG section of the report on pages 20 and 21 in the full annual report.
Dividends
The Company's earnings per share during the financial year was 5.70p, down
from 6.11p in the prior year, partly reflecting the pressure that Emerging
Markets companies are facing currently (particularly in the face of a weaker
Chinese economy). This decline was also partly due to a timing issue we
highlighted last year, when a few Taiwanese companies paid two dividends last
year rather than one, following pandemic-induced delays to their annual
general meetings. The return to normal dividend paying patterns in the
financial year explains roughly 60% of the year-on-year decline in earnings.
As a reminder, the Company receives dividends from portfolio companies in
local currencies and pays out dividends in sterling. Currency movements
therefore have an impact on revenue receipts year-on-year. All else being
equal, a falling pound increases revenue receipts from Emerging Markets, and
vice versa.
Other factors aside from currency will also impact near term dividend
receipts. The two most important of these are the strength of the Chinese
economy and the possibility of a downturn in the US economy, as discussed
above. However, despite the near-term uncertainties generated by these two
issues, we are confident that the portfolio's long-term dividend generating
power remains intact.
Outlook
Emerging markets do face some challenges in the year ahead. A possible
slowdown in the US economy would have an adverse impact on demand for exports
from emerging markets. Our technology company holdings are particularly
exposed to this possibility, although consensus forecasts suggest a growth
slowdown and a soft landing, rather than a contraction in activity. But slower
growth, combined with higher funding costs, will also put pressure on overall
market earnings.
China is likely to remain a principal focus of investors' attention. The
Chinese economy has not accelerated in the way we, and most others, expected
after its re-opening. However, we see several reasons to be incrementally
optimistic about China's prospects. First, after a long period where the
market has absorbed the various issues that China faces (property, the
government's common prosperity agenda, lower consumer confidence),
expectations have been reset to relatively low levels - whether we look at
market valuations, currency valuation, expectations for growth and investor
positioning. Secondly, although we do not expect a one-off massive stimulus
announcement from the government (as happened in 2008), we are starting to see
a series of small positive policy measures which we think will add up over
time to help consumer confidence and the economy. Finally, and most
importantly, we see China as an attractive market from a stock selection
perspective, due to the breadth of the opportunity available as well as the
incremental positive evolution of corporate life cycles (e.g. better capital
allocation) as discussed above.
Taking a broader view, emerging market valuations are, in general, reasonably
low, and we see many interesting opportunities to acquire companies which can
generate healthy cash flow, resilient returns on equity and possess positive
dividend policies that reward minority shareholders with regular pay-outs. In
our view, successfully identifying such stocks will allow us to build a
portfolio with a higher yield than the market, that also continues to deliver
capital growth to shareholders.
We thank you for your ongoing support.
Omar Negyal
Isaac Thong
Portfolio
Managers
25th October 2023
PRINCIPAL AND EMERGING RISKS
The Board has overall responsibility for reviewing the effectiveness of the
Company's system of risk management and internal control. The Board is
supported by the Audit and Risk Committee in the management of risk. The risk
management process is designed to identify, evaluate, manage, and mitigate
risks faced. Although the Board believes that it has a robust framework of
internal controls in place this can provide only reasonable, and not absolute,
assurance against material financial misstatement or loss and is designed to
manage, not eliminate, risk.
The Directors confirm that they have carried out a robust assessment of the
principal risks facing the Company, including those that would threaten its
business model, future performance, solvency or liquidity. With the assistance
of the Manager, the Audit and Risk Committee has drawn up a risk matrix,
which identifies the principal and emerging risks to the Company and the ways
in which these risks are managed or mitigated. These are reviewed and noted by
the Board through the Audit and Risk Committee.
The principal risks fall broadly under the following categories: investment;
strategy; political and economic; financial; operational and cybercrime;
accounting, legal and regulatory; and environmental, social and governance.
The Board, through the Audit and Risk Committee, considers that the risks
detailed below are the principal risks facing the Company currently, along
with the financial risks detailed in note 22 to the financial statements.
These are the risks that could affect the ability of the Company to deliver
its strategy.
Movement in risk
status in year to
Principal risk Description Mitigation/Control 31st July 2023
Investment performance Inappropriate investment decisions, for example poor stock selection or asset The Board manages this risk by diversification of investments through its Risk has been heightened by the current unfavourable economic conditions,
allocation may lead to underperformance against the Company's Benchmark index investment restrictions and guidelines which are monitored and reported by the caused by the inflationary environment and other global geopolitical factors
and peer companies. Manager. The Investment Manager provides the Directors with timely and such as the Russian/Ukrainian war, US/China tensions and the recent attacks by
accurate management information, including performance data and attribution Hamas on Israel.
analyses, revenue estimates, currency performance, liquidity reports and peer
group analyses. The Board monitors the implementation and results of the
investment process with the Portfolio Managers, who attend Board meetings, and
reviews data which show statistical measures of the Company's risk profile.
The Board holds a separate meeting devoted to strategy each year.
Income There is the risk that the Company may underperform resulting in insufficient The Investment Manager has an investment process which is designed to maximise Whilst macroeconomic conditions have been challenging, this risk has remained
local currency generation, reducing the income available to pay dividends to the changes of the investment objective and deliver income. The Board stable during the year. The Company has continued to generate sufficient
shareholders. regularly reviews investment and financial reports, including revenue income over the year and paid a modest increase on the dividend from the prior
estimates, to monitor the effectiveness of the investment process. year.
Strategy If the Company's business objective and strategy is no longer appropriate, it The Board holds a separate meeting devoted to strategy each year. Risk has been heightened. During the year, Emerging Markets lagged the United
may lead to a lack of investor demand. This may result in the Company's shares
States and other asset classes, constrained by concerns about US inflation and
trading at a narrower premium or a wider discount. The Board seeks to narrow the discount by undertaking measured buybacks of the monetary policy, the trajectory of the US dollar, geopolitical risks, and
Company's shares. The Company has authority to buy back its existing shares to global macroeconomic conditions.
enhance the NAV per share for its shareholders and to reduce the absolute
level of discount and discount volatility.
A widening discount out of line with the industry may lead to hostile action
by shareholders or arbitrageurs. The Company and Manager work with the Corporate Broker to seek to increase Nevertheless, Emerging Markets economies have enjoyed an economic growth
demand for the Company's shares. premium over those of developed markets over a number of years now, providing
a source of varied investment opportunities across different asset classes,
with valuations at attractive levels.
An inappropriate gearing strategy may lead to suboptimal returns; poor
performance if over-geared in weak markets or performance foregone if The Board has set a gearing range within which the Investment Managers employ
under-geared in strong markets. the Company's gearing on a strategic basis.
Gearing levels are detailed in the monthly Portfolio restrictions and
guidelines report provided to the Board and the level of gearing is discussed
at each Board meeting.
Political and Economic The Company's returns, both capital and revenue, are affected by changes in This risk is managed to some extent by diversification of investments and by Although political and economic risks have always been part of the investment
the economic, political and corporate conditions, which can cause market and regular communication with the Investment Managers on matters of investment process, the risk has been heightened by the quick succession of the events
exchange rate fluctuations. Sustained underperformance of emerging markets as strategy and portfolio construction which will directly or indirectly include which have unfolded in recent times i.e. the outbreak of the Covid-19
an asset class may result from risks such as the imposition of restrictions on an assessment of these risks. pandemic, inflation and geopolitical crises in Russia-Ukraine, US-China
the free movement of capital, ability to pay corporate dividends and change in
tensions and the events in the Middle East adding significant pressure on
legislation. Risks of economic, political and ultimately military conflicts The Board receives regular reports from the Manager and Company Broker markets and economies.
between nations, regions and trading blocks are an ever present risk. So too regarding market outlook and considers thematic and factor risks, stock
are the risks of social dislocation or civil unrest within countries. These selection and levels of gearing on a regular basis.
bring with them risks to economic growth, to investors' risk appetites and,
consequently, to the valuations and distributions of companies in the
portfolio.
Financial The financial risks faced by the Company include market price risk, interest Further details are disclosed in note 22 on pages 85 to 91 in the annual Risk has been heightened to reflect concerns surrounding global inflation and
rate risk, liquidity risk and credit risk. report. monetary policy, the trajectory of the US dollar, geopolitical risks, and
global
macroeconomic conditions.
Operational and cybercrime The Company is dependent on third parties for the provision of services and The Board keeps the services of the Manager and third-party service providers Risk remained stable during the year.
systems. Disruption to, or failure of, the Manager's accounting, dealing or under continuous review, and the Management Engagement Committee undertakes a
payments systems or the depositary's or custodian's records could prevent formal evaluation of performance on an annual basis. The Manager has in place
accurate reporting and monitoring of the Company's financial position. There service level agreements with its service providers that are attested to on an
is also the potential for fraud, errors or control failures at the Company's annual basis. The Board continues to monitor the outsourced services and an annual appraisal
Manager and or third party service providers, which could result in damage to
of the performance, and ongoing appointment, of the Manager and the Company's
the Company's reputation or result in losses. third-party service providers is undertaken by the Management Engagement
Committee.
Details of how the Board monitors the services provided by the Manager and its
associates and the key elements designed to provide effective internal control
The threat of a cyber-attack is regarded as at least as important as more are included within the Risk Management and Internal Control section of the
traditional physical threats to business continuity and security. In addition Corporate Governance Report. To date the Manager's cyber security arrangements have proven robust and the
to threatening the Company's operations, such an attack is likely to raise
Company has not been impacted by any cyber attacks threatening its operations.
reputational issues which may damage the Company's share price and reduce
demand for its shares.
The Audit and Risk Committee regularly reviews statements on internal controls
and procedures from the Company's Manager. The Audit and Risk Committee also
reviews a summary of annual controls reports from the Manager, with exceptions
found in its control environment highlighted to the Audit and Risk Committee.
The Company is subject to an annual external audit. The Company's service
providers have robust business continuity plans.
The Board works closely with the Investment Manager in identifying these
threats and, in addition, monitor the strategies of its service providers.
The Company benefits directly and/or indirectly from all elements of
JPMorgan's Cyber Security programme. The information technology controls
around the physical security of JPMorgan's data centres, security of its
networks and security of its trading applications are tested by independent
auditors and reported every six months against the AAF Standard.
Accounting, Legal and Regulatory Loss of its investment trust status and, as a consequence, gains within the The Section 1158 qualification criteria are continuously monitored by the Risk remained stable during the year.
Company's portfolio could be subject to Capital Gains Tax. Manager and the results reported to the Board at each Board meeting.
The Board relies on the services of its Company Secretary, the Manager and its
professional advisers to ensure compliance with the Companies Act 2006, the The Board is comfortable that the Manager continuously monitors the Company's
A breach of the Companies Act 2006 could result in the Company and/or the FCA Listing Rules, DTRs and the Alternative Investment Fund Managers' compliance with the section 1158 qualification criteria.
Directors being fined or the subject of criminal proceedings. Directive.
Breach of the FCA Listing Rules or Disclosure, Guidance & Transparency
Rules ('DTRs') could result in the Company's shares being suspended from
listing which in turn would breach Section 1158.
Environmental, Social and Governance The Board acknowledges that there are risks associated with investments in The Manager has integrated the consideration of financially material ESG Risk remained stable during the year.
companies which fail to conduct business in a responsible manner. Insufficient factors into the Company's investment process. Further details are set out in
consideration given to financially material ESG factors may lead to poor the ESG report on pages 18 to 23 of the full Annual Report.
performance, and a reduction in demand for the Company's shares as investors
seek greater ESG oversight in their portfolios. The Board is comfortable that the Investment Manager has integrated ESG
consideration into its investment process.
The Board is also considering the threat posed by the direct impact of climate
change on the operations of the Manager and other key service providers.
Climate change is one of the most critical issues confronting asset managers
and their investors. Climate change may have a disruptive effect on the
business models and profitability of individual investee companies, and
indeed, whole sectors.
Emerging Risks
The AIC Code of Corporate Governance also requires the Audit and Risk
Committee to put in place procedures to identify emerging risks. Emerging
risks, which are not deemed to represent an immediate threat, are considered
by the Audit and Risk Committee as they come into view and are incorporated
into the existing review of the Company's risk register. However, since
emerging risks are likely to be more dynamic in nature, they are considered on
a more frequent basis, through the remit of the Board when the Audit and Risk
Committee does not meet. The Board, through the Audit and Risk Committee,
considers that the following are emerging risks:
Economic Contraction - A long term reduction in returns available from
investments as a result of recession, stagnation, inflation or other extended
exogenous factor which may render the Company's investment objectives and
policies unattractive or unachievable.
Global conflicts - The political tensions between China and Taiwan and Hamas'
attack on Israel have the potential to lead to war which would have
a detrimental effect on the Company's investments in those countries and,
probably, on many other global markets.
Artificial Intelligence - While it might equally be deemed a great opportunity
and force for good, there appears also to be an increasing risk to business
and society more widely from Artificial Intelligence ('AI').
The use of AI could be a significant disrupter to business models and whole
companies, leading to added uncertainty in company valuations. Equally,
embracing AI with strategies and proactive measures can gain advantages for
companies and failing to seize the AI opportunity could lead to a risk of
losing competitiveness.
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
Details of the management contract are set out in the Directors' Report on
page 46 in the annual report. The management fee payable to the Manager for
the year was £3,121,000 (2022: £3,432,000) of which £nil (2022: nil) was
outstanding at the year end.
Included in administration expenses in note 6 on page 78 of the annual report
are safe custody fees amounting to £205,000 (2022: £250,000) payable to
JPMorgan Chase Bank N.A. of which £86,000 (2022: £39,000) was outstanding at
the year end.
The Manager may carry out some of its dealing transactions through its group
subsidiaries. These transactions are carried out at arm's length. The
commission payable to JPMorgan Securities Limited for the year was £5,000
(2022: £14,000) of which £nil (2022: £nil) was outstanding at the year end.
The Company also holds cash in the JPMorgan US Dollar Liquidity Fund, which is
managed by the Manager. At the year end this was valued at £2,184,000 (2022:
£684,000). Income amounting to £212,000 (2022: £21,000) was receivable
during the year of which £nil (2022: £6,000) was outstanding at the year
end.
Stock lending income amounting to £20,000 (2022: £44,000) was receivable by
the Company during the year. The Investment Manager's commissions in respect
of such transactions amounted to £2,000 (2022: £5,000).
Handling charges on dealing transactions amounting to £20,000 (2022:
£36,000) were payable to JPMorgan Chase Bank N.A. during the year of which
£5,000 (2022: £7,000) was outstanding at the year end.
At the year end, total cash of £1,291,000 (2022: £3,603,000) was held with
JPMorgan Chase Bank N.A. A net amount of interest of £4,000 (2022: £1,000)
was receivable by the Company during the year from JPMorgan Chase Bank N.A. of
which £nil (2022: £nil) was outstanding at the year end.
Full details of Directors' remuneration and shareholdings can be found on page
59 and in note 6 on page 78 of the annual report.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the annual report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law, the Directors have elected to prepare the
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law)
including FRS 102 'The Financial Reporting Standard applicable in the UK and
Republic of Ireland'. Under Company law the Directors must not approve the
financial statements unless they are satisfied that, taken as a whole, the
annual report and financial statements are fair, balanced and understandable,
provide the information necessary for shareholders to assess the Company's
performance, business model and strategy and that they give a true and fair
view of the state of affairs of the Company and of the total return or loss of
the Company for that period. 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 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.
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and to
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The financial statements are published on the
www.jpmglobalemergingmarketsincome.co.uk website, which is maintained by the
Company's Manager. The maintenance and integrity of the website maintained by
the Manager is, so far as it relates to the Company, the responsibility of the
Manager. The work carried out by the Auditor does not involve consideration of
the maintenance and integrity of this website and, accordingly, the Auditor
accepts no responsibility for any changes that have occurred to the financial
statements since they were initially presented on the website. The financial
statements are prepared in accordance with UK legislation, which may differ
from legislation in other jurisdictions.
Under applicable law and regulations the Directors are also responsible for
preparing a Directors' Report, Strategic Report and Directors' Remuneration
Report that comply with that law and those regulations.
Each of the Directors, whose names and functions are listed on page 45 of the
annual report confirm that, to the best of their knowledge:
• the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law), give a true and fair view of
the assets, liabilities, financial position and return of the Company; and
• the Strategic Report includes a fair review of the
development and performance of the business and the position of the Company,
together with a description of the principal risks and uncertainties that it
faces.
The Board confirms that it is satisfied that the annual report and financial
statements taken as a whole is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company's position
and performance, business model and strategy.
For and on behalf of the Board
Elisabeth Scott
Chair
25th October 2023
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31st July 2023
2023 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments held at fair value
through profit or loss - 21,726 21,726 - (31,037) (31,037)
Net foreign currency gains/(losses) - 1,845 1,845 - (3,249) (3,249)
Income from investments 20,604 348 20,952 22,232 - 22,232
Interest receivable and similar income 236 - 236 66 - 66
Gross return/(loss) 20,840 23,919 44,759 22,298 (34,286) (11,988)
Management fee (936) (2,185) (3,121) (1,030) (2,402) (3,432)
Other administrative expenses (735) - (735) (758) - (758)
Net return/(loss) before finance costs
and taxation 19,169 21,734 40,903 20,510 (36,688) (16,178)
Finance costs (582) (1,356) (1,938) (239) (557) (796)
Net return/(loss) before taxation 18,587 20,378 38,965 20,271 (37,245) (16,974)
Taxation (1,679) (99) (1,778) (2,118) (1,205) (3,323)
Net return/(loss) after taxation 16,908 20,279 37,187 18,153 (38,450) (20,297)
Return/(loss) per share 5.70p 6.84p 12.54p 6.11p (12.94)p (6.83)p
STATEMENT OF CHANGES IN EQUITY
Called up Capital
share Share redemption Other Capital Revenue
capital premium reserve reserve reserves reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31st July 2021 2,973 222,582 13 100,605 111,660 14,667 452,500
Repurchase of shares into Treasury - - - (513) - - (513)
Net (loss)/return - - - - (38,450) 18,153 (20,297)
Dividends paid in the year (note 2) - - - - - (15,155) (15,155)
At 31st July 2022 2,973 222,582 13 100,092 73,210 17,665 416,535
Repurchase of shares into Treasury - - - (448) - - (448)
Net return - - - - 20,279 16,908 37,187
Dividends paid in the year (note 2) - - - - - (15,428) (15,428)
At 31st July 2023 2,973 222,582 13 99,644 93,489 19,145 437,846
STATEMENT OF FINANCIAL POSITION
At 31st July 2023
2023 2022
£'000 £'000
Fixed assets
Investments held at fair value through profit or loss 462,662 440,419
Current assets
Derivative financial assets - 1
Debtors 3,392 8,556
Cash and cash equivalents 3,475 4,287
6,867 12,844
Current liabilities
Creditors: amounts falling due within one year (31,559) (20,210)
Derivative financial liabilities - (2)
Net current (liabilities)/assets (24,692) (7,368)
Total assets less current liabilities 437,970 433,051
Creditors: amounts falling due after more than one year - (16,435)
Provision for capital gains tax (124) (81)
Net assets 437,846 416,535
Capital and reserves
Called up share capital 2,973 2,973
Share premium 222,582 222,582
Capital redemption reserve 13 13
Other reserve 99,644 100,092
Capital reserves 93,489 73,210
Revenue reserve 19,145 17,665
Total equity shareholders' funds 437,846 416,535
Net asset value per share 147.7p 140.3p
STATEMENT OF CASH FLOWS
For the year ended 31st July 2023
2023 2022(1)
£'000 £'000
Cash flows from operating activities before finance costs and taxation
Total return/(loss) on ordinary activities 40,903 (16,178)
Adjustment for:
Net (gains)/losses on investments held at fair value through profit or (21,726) 31,037
loss
Net foreign currency (gains)/losses (1,845) 3,249
Dividend income (20,943) (22,218)
Interest income (216) (22)
Scrip Dividends received as income (9) (14)
Realised gains on foreign exchange transactions 4 461
Realised exchange gains on US Dollar Liquidity Fund 70 479
Increase in accrued income and other debtors (7) (17)
(Decrease)/increase in accrued expenses (221) 150
Net cash outflow from operations before dividends and interest(1) (3,990) (3,073)
Dividends received 20,571 18,648
Interest received 222 17
Overseas withholding tax recovered - 174
Indian capital gains tax paid (56) (1,124)
Net cash inflow from operating activities 16,747 14,642
Purchases of investments (117,620) (102,855)
Sales of investments 117,735 106,618
Settlement of forward currency contracts - (46)
Net cash inflow from investing activities 115 3,717
Dividends paid (15,428) (15,155)
Repurchase of shares into Treasury (448) (513)
Repayment of loan (16,613) -
Drawdown of loan 16,613 -
Interest paid (1,786) (829)
Net cash outflow from financing activities (17,662) (16,497)
(Decrease)/increase in cash and cash equivalents (800) 1,862
Cash and cash equivalents at start of year 4,287 2,467
Unrealised losses on foreign currency cash and cash equivalents (12) (42)
Cash and cash equivalents at end of year 3,475 4,287
Cash and cash equivalents consist of:
Cash and short term deposits 1,291 3,603
Cash held in JPMorgan US Dollar Liquidity Fund 2,184 684
Total 3,475 4,287
(1) The presentation of the Cash Flow Statement, as permitted under
FRS 102, has been changed so as to present the 'reconciliation of net return
before finance costs and taxation' to 'net cash inflow from operating
activities' on the face of the Cash Flow Statement. Previously, this was shown
by way of note to the Cash Flow Statement. Interest paid has also been
reclassified to financing activities, previously shown under operating
activities, as this relates to the loans drawndown. Other than consequential
changes in the presentation of certain cash flow items, there is no change to
the cash flows as presented in previous periods.
Analysis of changes in net debt
As at Other non-cash As at
31st July 2022 Cash flows charges 31st July 2023
£'000 £'000 £'000 £'000
Cash and cash equivalents
Cash 3,603 (2,312) - 1,291
Cash equivalents 684 1,512 (12) 2,184
4,287 (800) (12) 3,475
Borrowings
US$20m fixed rate loan with NAB matured 2022 (16,435) 16,613 (178) -
US$20m revolving rate loan with ING maturing 2023 (16,435) - 891 (15,544)
US$20m revolving rate loan with Mizuho
maturing 2024 - (16,613) 1,069 (15,544)
(32,870) - 1,782 (31,088)
Total net debt (28,583) (800) 1,770 (27,613)
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st July 2023
1. Accounting policies
(a) Basis of accounting
The financial statements are prepared under the historical cost convention,
modified to include fixed asset investments at fair value, and in accordance
with the Companies Act 2006, United Kingdom Generally Accepted Accounting
Practice ('UK GAAP'), including FRS 102 'The Financial Reporting Standard
applicable in the UK and Republic of Ireland' and with the Statement of
Recommended Practice 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts' (the 'SORP') issued by the Association of Investment
Companies in July 2022.
All of the Company's operations are of a continuing nature.
The financial statements have been prepared on a going concern basis. In
forming this opinion, the Directors have considered the impact of the ongoing
direct and indirect consequences arising from the Russian invasion of Ukraine
on the going concern and viability of the Company. In making their assessment,
the Directors have reviewed income and expense projections and the liquidity
of the investment portfolio, and considered the mitigation measures which key
service providers, including the Manager, have in place to maintain
operational resilience. The Directors have also reviewed the Company's
compliance with debt covenants and noted the full support from 100% of voting
shareholders for the continuation vote at the AGM in November 2021 in
assessing the going concern and viability of the Company, and do not consider
this view to have changed for the foreseeable future.
The policies applied in these financial statements are consistent with those
applied in the preceding year.
2. Dividends
(a) Dividends paid and declared
2023 2022
£'000 £'000
Dividend paid
2022 Fourth interim dividend paid of 2.2p (2021: 2.1p) 6,530 6,242
First interim dividend paid of 1.0p (2022: 1.0p) 2,966 2,972
Second interim dividend paid of 1.0p (2022: 1.0p) 2,966 2,972
Third interim dividend paid of 1.0p (2022: 1.0p) 2,966 2,969
Total dividends paid in the year 15,428 15,155
2023 2022
£'000 £'000
Dividend declared
Fourth interim dividend declared of 2.3p (2022: 2.2p) 6,819 6,530
(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act
2010 ('Section 1158')
The revenue available for distribution by way of dividend for the year is
£16,908,000 (2022: £18,153,000). The revenue reserve after paying the
proposed dividend will be £12,326,000 (2022: £11,135,000).
2023 2022
£'000 £'000
First interim dividend paid of 1.0p (2022: 1.0p) 2,966 2,972
Second interim dividend paid of 1.0p (2022: 1.0p) 2,966 2,972
Third interim dividend paid of 1.0p (2022: 1.0p) 2,966 2,969
Fourth interim dividend declared of 2.3p (2022: 2.2p) 6,819 6,530
Total dividends for Section 1158 purposes 15,717 15,443
3. Return/(loss) per share
2023 2022
£'000 £'000
Revenue return 16,908 18,153
Capital return/(loss) 20,279 (38,450)
Total return/(loss) 37,187 (20,297)
Weighted average number of shares in issue during the year 296,678,384 297,087,353
Revenue return per share 5.70p 6.11p
Capital return/(loss) per share 6.84p (12.94)p
Total return/(loss) per share 12.54p (6.83)p
4. Net asset value per share
2023 2022
Net assets (£'000) 437,846 416,535
Number of shares in issue 296,482,060 296,840,161
Net asset value per share 147.7p 140.3p
5. Status of announcement
2022 Financial Information
The figures and financial information for 2022 are extracted from
the Annual Report and Accounts for the year ended 31st July 2022 and do not
constitute the statutory accounts for that year. The Annual Report and
Accounts includes the Report of the Independent Auditor which is unqualified
and does not contain a statement under either section 498(2) or section 498(3)
of the Companies Act 2006. The Annual Report and Accounts has been delivered
to the Registrar of Companies.
2023 Financial Information
The figures and financial information for 2023 are extracted from
the Annual Report and Accounts for the year ended 31st July 2023 and do not
constitute the statutory accounts for that year. The Annual Report and
Accounts includes the Report of the Independent Auditor which is unqualified
and does not contain a statement under either section 498(2) or section 498(3)
of the Companies Act 2006. The Annual Report and Accounts will be delivered to
the Registrar of Companies in due course.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
JPMORGAN FUNDS LIMITED
26th October 2023
For further information please contact:
Emma Lamb
For and on behalf of
JPMorgan Funds Limited
0800 20 40 20 or +44 1268 44 44 70
ENDS
A copy of the Annual Report will shortly be submitted to the National Storage
Mechanism and will be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The Annual Report will also shortly be available on the Company's website at
www.jpmorganglobalemergingmarkets.co.uk
(http://www.jpmorganglobalemergingmarkets.co.uk) where up to date information
on the Company, including daily NAV and share prices, factsheets and portfolio
information can also be found.
Stay Informed
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and views, as well as performance updates, you can sign up and 'keep in the
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