JPMorgan Global E.M. - Half-year Report
04/04/2024 07:00
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RNS Number : 2214J JPMorgan Global Emerging Mkts I.T. 04 April 2024
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN GLOBAL EMERGING MARKETS INCOME TRUST PLC
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 31ST JANUARY 2024
LEI: 549300OPJXU72JMCYU09
JPMorgan Global Emerging Markets Income Trust Plc (the "Company" or "JEMI")
today publishes its unaudited Half Year Report & Financial Statements for
the six months ended 31(st) January 2024.
CHAIR'S STATEMENT
Performance
Following good returns in the year to July 2023, Emerging Markets declined
during the six months to 31st January 2024. The Company's benchmark index,
the MSCI Emerging Markets Index with net dividends reinvested (in sterling
terms) (the 'Benchmark'), fell by 5.0% over the six months under review. In
the same period, the Company's total return on net assets was -2.4%,
outperforming the Benchmark.
The total return to shareholders (which includes both the share price return
and dividends) was -5.0%, which reflects a widening of the discount to net
asset value ('NAV') at which the Company's shares trade from 9.3% at the
previous financial year end to 12.0% at the end of the half year period.
The Investment Manager's Report, which can be found in the Half Year Report,
reviews the market environment and the Company's performance over the
reporting period in more detail and comments on the investment strategy and
outlook for Emerging Markets.
It is worth highlighting that returns were supported by the positive
performance of positions in Korea, Taiwan and South Africa while not owning
the three largest Chinese internet stocks also provided a boost to relative
performance. The Company's underweight position in the Indian equity market
detracted from overall performance although shareholders will be aware that
many Indian companies do not pay dividends and are therefore excluded from the
Portfolio Managers' universe of stocks. Nonetheless, the Board is pleased that
the Portfolio Managers' stock selection was the principal reason for the
Company's outperformance against the Benchmark over the reporting period.
Whilst the decline in share price and NAV over the six months is
disappointing, I want to draw your attention to the fact that performance over
periods of three, five years and beyond is significantly ahead of the
Benchmark, reflective of the Company's long-term approach and testament to the
experience of the Portfolio Managers and strength of their process. Please see
the Half Year Report for the long-term performance figures.
Revenue and Dividends
Net revenue earnings for the six months to 31st January 2024 amounted to 1.78p
per share. As is generally the case, the Company expects to earn the bulk of
its dividend income during the second half of its financial year.
During the reporting period, the Board has declared two interim dividends of
1.0p each, in line with the same period last year. The second interim dividend
will be paid on 19th April 2024 to shareholders on the register as at the
close of business on 8th March 2024. The ex-dividend date was 7th March 2024.
In the last financial year, the Board paid a total dividend of 5.3p per share,
a modest increase from 5.2p in 2022. This was fully covered by income. The
fourth interim dividend was paid on 20th October 2023.
The Board reviews dividend receipts at each of its Board meetings, given their
importance to the Company. The Board carefully considers the outlook for
dividend receipts with the Portfolio Managers 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 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 values, and cash flows may be damaged by adverse currency
movements (if sterling strengthens) and flattered by favourable moves (if
sterling weakens) relative to Emerging Market currencies and US dollars. Over
the longer term, your Board and the Investment Manager are of the view that
Emerging Markets offer attractive income prospects alongside the prospects for
strong earnings growth.
Gearing and Loan Facilities
The Board believes that gearing can be used to enhance long-term shareholder
returns. Gearing levels are discussed with the Portfolio Managers at each
Board meeting. Presently, the Company has a US$20 million two-year revolving
loan facility with Mizuho Bank Limited ('Mizuho'), repayable in November 2024,
with an interest rate of margin plus Secured Overnight Financing Rate
('SOFR'). The Company also maintains a US$20 million revolving loan facility
with ING Bank Limited, which is repayable in October 2025, having been renewed
during the reporting period at a competitive market rate plus SOFR.
With the pending maturity of the Mizuho facility later in the year, your Board
will be working closely with the Manager to review the borrowing options. As
at 31st January 2024, gearing stood at 7.4% (31st July 2023: 5.7%).
Share Repurchases and Issuance
During the six months to 31st January 2024, the Company's share price traded
at an average discount to NAV of 11.6%. The Board regularly considers the
merits of buying back shares in order to manage the level and volatility of
the discount. The Board will buy back shares only if it is considered to be in
the best interests of shareholders to do so. During the reporting period, the
Company repurchased 1,109,472 shares into Treasury at an average discount of
11.7% and at a total cost of £1.4 million. It did not issue any shares. These
purchases were value accretive for shareholders, increasing the NAV per share
by 0.1%, and they underscore your Board's belief that there is attractive
value in the investments held by the Company.
At the time of writing, the discount stands at 13.2%. The Board will continue
to actively manage the Company's discount in its commitment to seek a stable
discount or premium over the longer-term, in recognition of the Company's
long-term consistent and strong investment performance, and with the aim of
enhancing NAV for shareholders. Between the end of the half year period and
3rd April 2024, the Company has repurchased a further 1.6 million shares into
Treasury.
Environmental, Social and Governance
The Investment Manager incorporates Environmental, Social and Governance
('ESG') considerations into its investment process, with the potential impact
of financially material ESG factors on a company's ability to deliver
shareholder value considered as part of the Portfolio Managers' stock
selection process in building a strong and resilient portfolio.
Your Board shares this belief in the importance of ESG factors for long-term
investments and supports the Portfolio Managers' efforts to maintain
continuous engagement with investee companies.
The Investment Manager has recently published a document containing its latest
Investment Stewardship Priorities, which may be of interest to shareholders.
This can be found at:
https://am.jpmorgan.com/gb/en/asset-management/adv/about-us/investment-stewardship/
Investment Management Fees
During the reporting period, the Board agreed with the Manager that the
Company's investment management fees should be tiered, as previously
announced.
With effect from 1st November 2023, the investment management fee has been
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 is
calculated and paid monthly.
Investment Team
As previously announced, Jeffrey Roskell, a portfolio manager for the Company
since 1st August 2016, retired from JPMorgan Asset Management on 29th
February 2024. We would like to thank Jeff for his contribution to the
management of the Company's assets and wish him well in his retirement.
Appointment of new Director
I am delighted that Ranjan Ramparia has joined the Board with effect from 1st
March 2024, as previously announced. She brings with her considerable
experience in corporate finance and investment management along with an early
career in accountancy. It is the Board's intention that Ms Ramparia will take
on the role of Chair of the Audit & Risk Committee once Ms Gulliver stands
down at the conclusion of the Company's November 2024 Annual General Meeting.
Ms Ramparia will also serve as a member of the Company's Management Engagement
Committee and the Nomination & Remuneration Committee.
The Nomination & Remuneration Committee plans for succession to ensure
that the Board retains an appropriate balance of skills, knowledge and diverse
perspectives.
Stay Informed
The Company delivers email updates with regular news and views, as well as the
latest performance. If you have not already signed up to receive these
communications and you wish to do so, you can opt in via
https://tinyurl.com/JEMI-Sign-Up or by scanning the QR code on the contents
page of the Half Year Report.
Outlook
The geopolitical outlook remains uncertain as tensions continue with the war
in Ukraine currently showing no signs of abating and elevated tensions across
the Middle East. The US elections and the consequences for relations with
China could provide further challenges.
However, there are reasons to be optimistic on the outlook for Emerging
Markets. Global inflation is receding and there are expectations that there
will be a soft landing for the US economy followed by interest rate cuts later
this year. While these might not come about as quickly as many had previously
thought, this has provided comfort to the markets. In addition, the Chinese
government has taken policy measures to improve its support for the economy
and while these fell somewhat short of expectations overall, we note that the
Portfolio Managers' successful selective approach to stock picking in China
over the reporting period contributed to returns.
In conclusion, the Board believes that there are compelling opportunities for
investment in Emerging Markets, with dispersion between sectors at elevated
levels and an attractive relative level of valuation compared to developed
markets. We are confident that the focused and disciplined stock selection
process adopted by the Investment Manager will continue to deliver attractive
long term returns to shareholders, as evidenced by the Company's strong track
record.
On behalf of the Board, I would like to thank you for your ongoing support.
Elisabeth Scott
Chair
3rd April 2024
INVESTMENT MANAGER'S REPORT
Introduction
For the six-month period ended 31st January 2024, the Company's total return
on net assets, including dividends, was -2.4% (in GBP). This compares to the
Benchmark which returned -5.0%. The Company's longer-term relative
performance is positive. Its net asset value ('NAV') has achieved annualised
outperformance of the Benchmark of 17.0% over three years ended 31st January
2024, 20.2% over the past five years, and 27.0% over the past ten years.
Investment environment
Emerging markets were generally weak over the six months ended 31st January
2024. The Company's Benchmark declined by 5.0% over this period, due mainly to
the poor performance of the Chinese equity market, where investor sentiment
was undermined by concerns about the economy. The widely anticipated
post-pandemic rebound failed to materialise as consumer confidence, and hence
consumption, were adversely impacted by ongoing problems in the property
sector, after a prolonged period of overbuilding and excessive leverage. The
Chinese government's apparent reluctance to take decisive steps to solve these
problems is exacerbating consumer caution.
We recognise that China faces fundamental challenges, including not only weak
consumer demand, and a stricken property market, but also an increasingly
fractious relationship with the US, but nonetheless we still see value and
opportunities in some areas of the Chinese market. Valuations are low
following persistent declines over the past three years, and, in addition,
some corporates are returning more cash to shareholders via higher dividend
payments and share buybacks - something which is of particular interest to
income investors like us.
Elsewhere, Taiwan performed well, supported by the popularity of its
technology stocks. The fundamentals of this industry generally look
favourable, and some Taiwanese tech companies are also seeing stronger demand
due to exposure to the artificial intelligence ('AI') revolution. Mexico also
did well. The economy is performing strongly, helped by its proximity to the
US, as companies look to diversify and strengthen their global supply chains
by moving production closer to their principal markets.
Overall, we have held a cautious view around the potential risk of a slowdown
in the US economy, which would dampen global demand. However, we saw little
sign of this during the six-month review period. The US Federal Reserve held
interest rates steady as inflation pressures eased, and many investors are now
expecting rates to begin falling this year.
Performance attribution
The Company's outperformance against its Benchmark over the six months ended
31st January 2024 was driven by stock selection in China and Hong Kong, Korea,
Taiwan and South Africa. The biggest drag on relative performance was the
portfolio's underweight to India, which outperformed the Benchmark over the
period.
Within China, not owning certain internet and e-commerce stocks was helpful,
as these stocks sustained significant losses when the post-pandemic rebound in
Chinese consumption proved insipid, and investors revised down their
expectations about the economy's longer-term growth prospects. These same
factors also triggered declines in some of the portfolio's Chinese consumer
stocks, including Wuliangye (a distiller specialising in the production of
baiju, a Chinese liquor), JD.com (an e-commerce platform) and Tingyi (a
manufacturer of noodles and drinks). Overall, however, our Chinese stocks
performed better on average than the benchmark, and thus enhanced relative
performance.
Outside China we saw strong performance from names such as:
- Infosys and HCL Tech - Indian IT services stocks have been rerating,
partly helped by general positive sentiment in the Indian market, and we like
these companies due to their strong franchises, attractive returns on equity
and positive cash return policies. For instance, Infosys aspires to return
close to 90% of free cashflow to shareholders via a combination of dividends
and buybacks.
- Taiwanese semiconductor manufacturers Novatek and Realtek - These
businesses performed well thanks in part to the end of an inventory
correction, which allowed restocking to commence. Our positioning in these two
names illustrates the merit of our valuation discipline, as we acquired
exposure at what we believed to be attractive yield levels and benefited from
their subsequent share price recovery.
- Banco do Brasil - This low-priced, state-owned Brazilian bank saw some
rerating over the period. When we met the management recently, we were
impressed by the focus on profitability, which allayed our general concerns
regarding the bank's public ownership. Dividends are also high on the
managements' agenda, which adds to the stock's appeal.
Portfolio changes
We build the portfolio from the bottom up, based on our consistent stock
selection process, which incorporates analysis on each stock's return on
equity, free cash flow, and dividend policies. As mentioned above, we adopt a
disciplined approach to valuations. So, in effect, our approach incorporates
both quality and value.
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 continue to
find the most attractive income opportunities within Consumer Staples,
Financials and Technology, so these remain the portfolio's three key sector
overweights, while historically, the portfolio is usually underweight in
Materials, Energy and Industrials.
At the country level, portfolio overweights include South Africa, Mexico and
Taiwan. As with our sector allocations, these country weightings are driven by
the individual stock opportunities we view as attractive from an income
investor's perspective. In contrast, our largest country underweight remains
India. This country's long-term growth prospects are very positive and
investor interest in the market remains strong. However, valuations are high
accordingly, which make it difficult for us to find attractive income paying
stocks, albeit with some notable exceptions such as Infosys and HCL Tech,
mentioned above. The portfolio is modestly overweight China which reflects
this market's attractive valuations and improving dividend outlook.
As ever, the portfolio changes we implemented over the review period were
mainly driven by individual stock considerations. Recent purchases have
included:
- Shoprite - We initiated a position in this South African grocery
retailer, as we like its strong franchise and its competitive advantages
versus its peers, as the company has a policy of using efficiency gains to
reduce prices. This means it can continue to offer its customers good value.
We also like Shoprite's cash flow profile, which we expect will support an
attractive dividend stream for the portfolio.
- HDFC Bank - This high-quality Indian financial name came under some
selling pressure due in part to uncertainties over the merger between the bank
and HDFC Corp, a non-bank financial company. We took this opportunity to add
at an attractive valuation.
- China Yangtze Power - We are always mindful of the regulatory risks
associated with emerging market utility companies, but nonetheless, we view
this Chinese utility company as attractive. It offers relatively stable
returns on equity and cash flows, which translate into steady dividends - just
the kind of business we like to own.
Sales over the review period included:
- Petronet LNG - We sold our position in this state-owned, Indian LNG
producer as a result of its plan to make a large investment in a petrochemical
facility. We were concerned about both the size of this investment relative to
the company's current balance sheet, which has the potential to adversely
affect future dividends, and the fact that the investment is not a core
business.
- PZU - This Polish insurance company re-rated due to an improvement in
Polish stock market sentiment following the election victory by a more
EU-friendly political alliance, which could help unlock EU funding for the
country. We trimmed the position on valuation grounds.
- Netease - Strong gains in this Chinese internet gaming company reduced
its dividend yield and raised other valuation metrics such as the
price/earnings ratio. We still like the company's fundamentals, but we trimmed
the position to reduce the size of the exposure.
Dividends
Monitoring dividend delivery is clearly essential for this portfolio, given
its income focus, and we are pleased to report that in general, portfolio
companies are paying dividends in line with our expectations. Looking ahead,
the two key determinants of portfolio dividend receipts will remain the
performance of the Chinese economy, and the ongoing, but perhaps diminishing,
possibility of a US economic downturn. 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.
As a reminder, emerging market companies mainly determine their dividends
using payout ratios (i.e. paying a certain proportion of earnings) so the
earnings cycle is important in terms of the dividend companies pay in any
given year. This is one reason why we like to have a portfolio that is
diversified across countries and sectors, so we can better manage these cycles
to ensure a steady stream of portfolio income.
Currency movements also impact near-term dividend receipts, as the Company
receives dividends from portfolio companies in local currencies and pays out
dividends in sterling. All else being equal, a falling pound increases
revenue receipts from Emerging Markets, and vice versa.
Environmental, social and governance
We believe that the integration of financially material environmental, social
and governance ('ESG') considerations into our investment process improves the
quality of our long-term investment decisions, and helps us build stronger,
more resilient portfolios. Each stock's financially material ESG
characteristics are considered at every stage of the decision-making process,
starting with fundamental research, where our analysts incorporate financially
material ESG considerations into their analysis to gauge the duration of
a business, the quality of management and the risks posed to minority
shareholders.
As income investors in emerging markets, we place particular emphasis on
corporate 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 motivations
behind any split between dividends and buybacks.
Outlook
At present we are focused on several areas of interest. At the country level,
low valuations in China have created the opportunity for us to slowly increase
portfolio exposure to this market, since 2020. We are now modestly overweight,
but we intend to manage this exposure quite tightly, as we recognise the risks
and challenges of investment in this market, especially the ongoing drag
created by the property sector, and escalating geopolitical risks. In Korea,
policymakers are taking their cue from developments in Japan, and increasing
their efforts to encourage companies to improve shareholders returns via
increased dividends and share buybacks. We view this as a generally positive
development which will drive up valuations and payout ratios, which suits our
income approach very well.
At the sector level, our technology stocks have provided very good returns
over the past few years, more recently thanks in part to our holdings in
companies set to benefit from the AI revolution. We remain excited about the
opportunities unfolding in this sector which can offer exposure to structural
growth trends while also contributing to portfolio income.
So, overall, we believe the portfolio remains well-positioned to deliver a
healthy level of income to shareholders, while still participating in the
ongoing growth and capital gains available in emerging markets.
For and on behalf of
JPMorgan Asset Management
Investment Manager
Omar Negyal
Isaac Thong
Portfolio Managers
3rd April 2024
INTERIM MANAGEMENT REPORT
The Company is required to make the following disclosures in its interim
report.
Principal Risks and Uncertainties
The principal and emerging risks and uncertainties faced by the Company have
not changed from those reported in the Annual Report and Financial Statements
for the year ended 31st July 2023 and fall into the following broad
categories: investment; strategy; financial; operational and cybercrime;
accounting, legal and regulatory; political and economic; and environmental,
social and governance.
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
operational existence for at least 12 months from the date of the approval of
this half yearly financial report. In reaching that view, the Directors have
considered the impact of the ongoing Russia-Ukraine and Hamas-Israel conflicts
on the Company's financial, operational position and market conditions. The
Directors have also reviewed the Company's compliance with debt covenants. In
addition, the Board noted the full support from 100% of voting shareholders
for the continuation vote at the Company's Annual General Meeting held in
November 2021 and does not anticipate any changes to these views for the
forthcoming Annual General Meeting in November 2024. For these reasons, they
consider it reasonable 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 Reports' and gives a true and fair view of the state of the affairs
of the Company and of the assets, liabilities, financial position and net
return of the Company, as at 31st January 2024, as required by the UK Listing
Authority Disclosure Guidance and Transparency Rules ('DTR') 4.2.4R; and
(ii) the interim management report includes a fair review of the
information required by DTR 4.2.7R and DTR 4.2.8R.
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
Elisabeth Scott
Chair
3rd April 2024
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st January 2024 31st January 2023 31st July 2023
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on investments
held at fair value through
profit or loss - (13,657) (13,657) - 31,809 31,809 - 21,726 21,726
Net foreign currency
(losses)/gains - (185) (185) - 917 917 - 1,845 1,845
Income from investments 6,919 - 6,919 7,027 - 7,027 20,604 348 20,952
Interest receivable and similar
income 142 - 142 133 - 133 236 - 236
Gross return/(loss) 7,061 (13,842) (6,781) 7,160 32,726 39,886 20,840 23,919 44,759
Management fee (467) (1,090) (1,557) (457) (1,066) (1,523) (936) (2,185) (3,121)
Other administrative expenses (422) - (422) (433) - (433) (735) - (735)
Net return/(loss) before finance
costs and taxation 6,172 (14,932) (8,760) 6,270 31,660 37,930 19,169 21,734 40,903
Finance costs (355) (830) (1,185) (264) (615) (879) (582) (1,356) (1,938)
Net return/(loss) before taxation 5,817 (15,762) (9,945) 6,006 31,045 37,051 18,587 20,378 38,965
Taxation (558) (158) (716) (380) (120) (500) (1,679) (99) (1,778)
Net return/(loss) after taxation 5,259 (15,920) (10,661) 5,626 30,925 36,551 16,908 20,279 37,187
Return/(loss) per share (note 3) 1.78p (5.38)p (3.60)p 1.90p 10.42p 12.32p 5.70p 6.84p 12.54p
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 after taxation represents the profit or loss for the period and
also the total comprehensive income.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Called up Capital
share Share redemption Other Capital Revenue
capital premium reserve reserve(1,2) reserve(2) reserve(2) Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Six months ended 31st January 2024 (Unaudited)
At 31st July 2023 2,973 222,582 13 99,644 93,489 19,145 437,846
Repurchase of shares into Treasury - - - (1,374) - - (1,374)
Net (loss)/return - - - - (15,920) 5,259 (10,661)
Dividends paid in the period (note 4) - - - - - (9,768) (9,768)
At 31st January 2024 2,973 222,582 13 98,270 77,569 14,636 416,043
Six months ended 31st January 2023 (Unaudited)
At 31st July 2022 2,973 222,582 13 100,092 73,210 17,665 416,535
Repurchase of shares into Treasury - - - (222) - - (222)
Net return - - - - 30,925 5,626 36,551
Dividends paid in the period (note 4) - - - - - (9,496) (9,496)
At 31st January 2023 2,973 222,582 13 99,870 104,135 13,795 443,368
Year ended 31st July 2023 (Audited)
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 4) - - - - - (15,428) (15,428)
At 31st July 2023 2,973 222,582 13 99,644 93,489 19,145 437,846
( )
(1) The balance of the share premium was cancelled on 20th October
2010 and transferred to the 'other reserve'.
(2) These reserves form the distributable reserve of the Company and
may be used to fund distributions to investors.
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
At At At
31st January 31st January 31st July
2024 2023 2023
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 446,918 474,971 462,662
Current assets
Debtors 561 1,150 3,392
Cash and cash equivalents 876 3,417 3,475
1,437 4,567 6,867
Current liabilities
Creditors: amounts falling due within one year (16,321) (19,742) (31,559)
Net current liabilities (14,884) (15,175) (24,692)
Total assets less current liabilities 432,034 459,796 437,970
Non current liabilities
Creditors: amounts falling due after more than one year (15,706) (16,246) -
Provision for capital gains tax (285) (182) (124)
Net assets 416,043 443,368 437,846
Capital and reserves
Called up share capital 2,973 2,973 2,973
Share premium 222,582 222,582 222,582
Capital redemption reserve 13 13 13
Other reserve 98,270 99,870 99,644
Capital reserve 77,569 104,135 93,489
Revenue reserve 14,636 13,795 19,145
Total shareholders' funds 416,043 443,368 437,846
Net asset value per share (note 5) 140.9p 149.5p 147.7p
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st January 31st January 31st July
2024 2023(1) 2023
£'000 £'000 £'000
Cash flows from operating activities before finance costs
and taxation
Net (loss)/return before finance costs and taxation (8,760) 37,930 40,903
Adjustment for:
Net losses/(gains) on investments held at fair value
through profit or loss 13,657 (31,809) (21,726)
Net foreign currency losses/(gains) 185 (917) (1,845)
Dividend income (6,917) (7,027) (20,943)
Interest income (134) (117) (216)
Scrip Dividends received as income (2) - (9)
Realised (gains)/losses on foreign exchange transactions (109) 106 4
Realised exchange gains on liquidity fund 220 409 70
Decrease/(increase) in accrued income and other debtors 12 (828) (7)
(Decrease) in accrued expenses (93) (303) (221)
Net cash outflow from operations before dividends and interest (1,941) (2,556) (3,990)
Dividends received 8,451 9,974 20,571
Interest received 134 123 222
Overseas withholding tax recovered 51 159 -
Indian capital gains tax recovered/(paid) 3 (19) (56)
Net cash inflow from operating activities 6,698 7,681 16,747
Purchases of investments (43,505) (72,177) (117,620)
Sales of investments 46,356 74,088 117,735
Net cash inflow from investing activities 2,851 1,911 115
Dividends paid (9,768) (9,496) (15,428)
Repurchase of shares into Treasury (1,248) (222) (448)
Repayment of loan - (16,614) (16,613)
Drawdown of loan - 16,614 16,613
Interest paid (1,159) (766) (1,786)
Net cash outflow from financing activities (12,175) (10,484) (17,662)
Decrease in cash and cash equivalents (2,626) (892) (800)
Cash and cash equivalents at start of period/year 3,475 4,287 4,287
Exchange movements 27 22 (12)
Cash and cash equivalents at end of period/year 876 3,417 3,475
Cash and cash equivalents consist of:
Cash and short term deposits 229 1,155 1,291
Cash held in JPMorgan US Dollar Liquidity Fund 647 2,262 2,184
Total 876 3,417 3,475
(1) For the six months ended 31st January 2023, 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 changes in the presentation of certain cash flow items,
there is no change to the cash flows as presented in previous periods.
ANALYSIS OF CHANGE IN NET DEBT
Analysis of change in net debt
As at Other As at
31st July non-cash 31st January
2023 Cash flows charges 2024
£'000 £'000 £'000 £'000
Cash and cash equivalents
Cash 1,291 (1,062) - 229
Cash equivalents 2,184 (1,564) 27 647
3,475 (2,626) 27 876
Borrowings
US$20m revolving rate loan with Mizuho maturing 2024 (15,544) - (161) (15,705)
US$20m revolving rate loan with ING maturing 2025 (15,544) - (162) (15,706)
(31,088) - (323) (31,411)
Total net debt (27,613) (2,626) (296) (30,535)
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 31st January 2024.
The Company is a listed public limited company incorporated in England and
Wales. The registered office is detailed in the Half Year Report.
1. Financial statements
The information contained within the condensed financial statements in the
Half Year Report has not been audited or reviewed by the Company's
auditor.
The figures and financial information for the year ended 31st July 2023 are
extracted from the latest published financial statements of the Company and do
not constitute statutory accounts for that year. Those financial statements
have been delivered to the Registrar of Companies and included the report of
the auditor which was unqualified and did not contain a statement under
either section 498(2) or 498(3) of the Companies Act 2006.
2. Accounting policies
The condensed financial statements are prepared 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.
FRS 104, 'Interim Financial Reporting', issued by the Financial Reporting
Council ('FRC') in March 2015, and updated in March 2018, has been applied in
preparing this condensed set of financial statements for the six months ended
31st January 2024.
All of the Company's operations are of a continuing nature.
The accounting policies applied to this condensed set of financial statements
are consistent with those applied in the financial statements for the year
ended 31st July 2023.
3. (Loss)/return per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st January 2024 31st January 2023 31st July 2023
£'000 £'000 £'000
Return per share is based on the following:
Revenue return 5,259 5,626 16,908
Capital (loss)/return (15,920) 30,925 20,279
Total (loss)/return (10,661) 36,551 37,187
Weighted average number of shares in issue during
the period 295,815,677 296,726,127 296,678,384
Revenue return per share 1.78p 1.90p 5.70p
Capital (loss)/return per share (5.38)p 10.42p 6.84p
Total (loss)/return per share (3.60)p 12.32p 12.54p
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st January 2024 31st January 2023 31st July 2023
£'000 £'000 £'000
2023 fourth interim dividend of 2.3p (2022: 2.2p) 6,813 6,529 6,530
2024 first interim dividend paid of 1.0p (2023: 1.0p) 2,955 2,967 2,966
2023 second interim dividend paid of 1.0p n/a n/a 2,966
2023 third interim dividend paid of 1.0p n/a n/a 2,966
Total dividends paid in the period/year 9,768 9,496 15,428
All dividends paid and declared in the six months period to 31st January 2024
have been funded from the revenue reserve.
A second interim dividend of 1.0p per share, amounting to £2,944,000 has been
declared and will be paid on 19th April 2024 to shareholders on the register
on the record date of 8th March 2024 in respect of the year ending 31st July
2024.
5. Net asset value per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st January 2024 31st January 2023 31st July 2023
Net assets (£'000) 416,043 443,368 437,846
Number of shares in issue 295,372,588 296,657,060 296,482,060
Net asset value per share 140.9p 149.5p 147.7p
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
31st January 2024 31st January 2023 31st July 2023
Assets Liabilities Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000 £'000 £'000
Level 1 446,892 - 474,943 - 462,636 -
Level 3(1) 26 - 28 - 26 -
Total value of investments 446,918 - 474,971 - 462,662 -
(1) The Level 3 investment relates to the Company's holdings in
Russian stocks.
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st January 2024 31st January 2023 31st July 2023
Assets Liabilities Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000 £'000 £'000
Level 3
Opening balance 26 26 28 28 28 28
Change in fair value of investment during the year(1) - - - - (2) (2)
Closing balance 26 26 28 28 26 26
(1) For these Russian stocks a valuation method has been applied to
the 25th February 2022 close of day prices (i.e.: when market was still
trading normally) which have then been tapered at 99% haircut for valuation
purposes.
JPMORGAN FUNDS LIMITED
4th April 2024
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 half year report 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.jpmglobalemergingmarketsincome.co.uk
(http://www.jpmglobalemergingmarketsincome.co.uk) 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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