JPMorgan Global E.M. - Half-year Report to 31 January 2023
03/04/2023 07:00
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RNS Number : 0350V JPMorgan Global Emerging Mkts I.T. 03 April 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN GLOBAL EMERGING MARKETS INCOME TRUST PLC
(the "Company")
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 31ST JANUARY 2023
CHAIR'S STATEMENT
Introduction
In October 2022, in her final statement as chair, Sarah Fromson highlighted
the challenges faced by global markets, which included inflationary pressures
and higher interest rates, together with the continuing war in Ukraine and
tensions between the US and China. Despite this challenging environment, I am
pleased to report the Company's improved performance over the six months to
31st January 2023.
Before I say more about performance, the Board and I would like to thank Sarah
for her leadership and wise counsel in her time first as a Director and then
as chair of the Company.
Performance
Over the six months to 31st January 2023, your Company showed a positive
return which was comfortably ahead of the Benchmark Index. Over the six
months, the total return on the Company's net assets, including dividends, was
+9.0% (in GBP) comparing favourably with the return on the Benchmark of +3.7%.
Over the same period, the return to shareholders was +13.8%, reflecting the
narrowing of the discount to net asset value ('NAV') at which the Company's
shares trade, from -11.6% at the previous financial year end to -8.0% at the
half year end.
The Investment Manager's Report, which can be found below, reviews the
Company's performance over the reporting period in more detail and comments on
the investment strategy. The Board is pleased that the Portfolio Managers'
stock selection has been a positive contributor to performance and that the
changes they have made to the portfolio have added value, as shown in both
absolute and relative performance over the reporting period.
Dividends
In the Company's current financial year, the Board has declared two interim
dividends of 1.0p each, in line with the same period last year. In the last
financial year, the Board paid a total dividend of 5.2p per share, a modest
increase from 5.1p in 2021 and, which was fully covered by income.
As highlighted in the Investment Manager's Report, the Directors monitor
dividend receipts at their Board meetings, given their importance to the
Company. Over the longer term, both the Investment Manager and your Board are
of the view that Emerging Markets offer long term growth potential with
attractive income prospects. The Board carefully considers the outlook 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 buffeted by adverse currency movements (if
sterling strengthens) and flattered by favourable moves (if sterling weakens
relative to Emerging Market currencies and US dollars).
Gearing and Loan Facilities
The Board regularly discusses gearing with the Portfolio Managers, who use it
to enhance long-term shareholder returns. As reported in our 2022 Annual
Report, the Company's US$20 million fixed interest loan facility with National
Australia Bank ('NAB') was repaid in November 2022 following NAB's strategic
decision to move away from investment trust lending. I am pleased to report
that the Company secured a competitive US$20 million two-year revolving loan
facility with Mizuho Bank Limited, repayable in November 2024, with an
interest rate of margin plus Sterling Overnight Index Average (SONIA).
The Company maintains a US$20 million rolling interest loan facility with ING
Bank, which is repayable in October 2023. With the pending maturity of this
facility later in the year, your Board will be working closely with the
Manager on our borrowing options. As at 31st January 2023, gearing stood at
7.1% (31st July 2022: 5.7%).
Share Repurchases and Issuance
During the six months to 31st January 2023, the Company's share price traded
at an average discount to NAV of -11.4%. The Board regularly considers the
merits of buying back shares in order 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. During the reporting period, the Company bought
back 183,101 shares into Treasury for a total cost of £221,322. It did not
issue any shares. These purchases were value accretive for shareholders and
underscores your Board's belief that there is attractive value in the
investments held by the Company.
Environmental, Social and Governance ('ESG')
The Investment Manager incorporates ESG considerations into its investment
process with the potential impact of 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 support 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/assetmanagement/institutional/about-us/investment-stewardship/
Corporate Governance
Since the end of the reporting period, the Board has established a separate
Management Engagement Committee (the 'Committee'), chaired by me, and
comprising the entire Board, all of whom are independent of the Company, its
Manager and its advisers. The 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 Committee will not review the performance of the Company's auditor, which
will remain within the remit of the Audit & Risk Committee.
Outlook
We continue to observe a fragile world characterised by heightened risks.
Global growth may be slower than hoped in 2023 and some economies, including
the USA, may slip into recession. Economic volatility may remain elevated in
the near term.
However, despite these negatives, recent US dollar weakness and the reopening
of China after the covid-19 restrictions have benefited Emerging Markets.
While a number of risks remain, lower inflation and the likelihood of lower
interest rates from some Latin American central banks, should mean that
Emerging Markets will continue to be attractive to investors. Furthermore, our
experienced Portfolio Managers have repositioned the Company's portfolio so
that it is well placed to deliver attractive returns for our shareholders in
this more positive environment.
Elisabeth Scott
Chair
31(st) March 2023
INVESTMENT MANAGERS' REPORT
Introduction
For the six-month period ended 31st January 2023, the Company's total return
on net assets, including dividends, was 9.0% (in GBP). The portfolio
outperformed its Benchmark, which returned 3.7%. Longer-term relative
performance also looks positive: the Company's NAV has achieved cumulative
outperformance of the Benchmark of 2.1 percentage points over the year to end
January 2023, 12.0 percentage points over three years and 21.4 percentage
points over five years.
Backdrop
During the six-month review period, the most important, very positive
development within Emerging Markets was the re-opening of China after a long
period of very stringent Covid-19 restrictions. The timing of China's decision
to re-open was somewhat of a surprise to markets, as the government had
repeatedly reiterated its firm commitment to its zero-Covid-19 policy and
showed no early signs of softening its stance, let alone lifting all
restrictions. This sudden decision follows a period in which Chinese policy
makers implemented a number of other measures, in addition to the zero-Covid
strategy, which were all severely detrimental to growth. These included a
property market clampdown and 'common prosperity' policies targeting internet
companies. We view China's sudden move to end lockdowns as an incremental
shift towards a more pro-growth stance. This can only have favourable
implications for the economy and thus greatly improved market sentiment
towards China (and Emerging Markets in general). After more than a year of
steady declines, the market rebounded sharply on news of the re-opening and
has since recouped some of its lost ground.
On a less positive note, the other key issue for markets has been the
continuing tightening of monetary policy by the US Federal Reserve, to deal
with inflation which remains at high levels (a similar picture to many other
economies globally). This has adverse ramifications for the US economy and,
indirectly, Emerging Markets, as a slowdown in US activity and consumption
would reduce demand for imports from Emerging Markets. In addition, the
ongoing effects of the Russia-Ukraine war continue to be felt, for example in
commodity markets, with oil and grain supply affected.
Performance
During the six months to end-January 2023, at the country level the portfolio
benefited from its overweight exposure to Mexico (the portfolio's largest
country overweight), and stock selection within Taiwan. Mexico is increasingly
being seen as a relative beneficiary of outsourcing trends as companies seek
to diversify supply chains from China. The Company's underweight in India also
contributed to returns, as this market came under pressure as investors
reassessed corporate fundamentals and relatively high valuation levels.
In terms of individual stocks, the table below shows the top five and bottom
five contributors to relative performance over the period:
Positive contributors Negative contributors
B3 Tencent - not owned
(Brazil, Financials) (China, Communication Services)
Vanguard Semiconductor Yili
(Taiwan, Information Technology) (China, Consumer Staples)
Tisco Pinduoduo - not owned
(Thailand, Financials) (China, Consumer Discretionary)
Banorte Telkom Indonesia
(Mexico, Financials) (Indonesia, Communication Services)
Southern Copper Vale - not owned
(Peru, Materials) (Brazil, Materials)
B3, which operates Brazil's main stock exchange, was the largest contributor
to relative returns over the six months. This company is a good example of why
we like financial exchanges as income investments. B3 offers the capacity to
trade a variety of financial instruments including equities, bonds,
derivatives, and currencies. It also offers clearing and settlement
facilities, as well as market data services. As Brazil's dominant exchange, it
is well-placed to capture long-term growth as local financial markets develop.
B3's 2022 reported return on equity of 19.8% illustrates the business's
inherent profitability. Its appeal to us is strengthened further by its strong
free cash flow conversion and attractive dividend policy, as well as share
buybacks. However, during the period, we did take some profits on our
position, as the company's strong performance had led to slightly less
attractive valuation levels.
Vanguard International Semiconductor was the second largest contributor to
performance over the period. This Taiwanese company manufactures specialty
chips for customers who wish to outsource production. During the period, the
stock rerated from relatively cheap levels as market concerns around
utilisation rates and product pricing abated, partly as inventory levels
across the sector began to show signs of improvement. The management's focus
on the absolute dividend per share is relatively rare within Emerging Markets
and is a key motivator of our decision to maintain our position in this stock.
The main detractors from relative performance over the period were our
decisions not to own two Chinese internet stocks - Tencent, an internet
information and content provider, and Pinduoduo, an on-line retailer. Both
stocks performed strongly over the period, boosted by China's reopening. Our
decision not to hold these names is a result of our income criteria - we only
seek to own stocks which contribute meaningfully to portfolio income. This
excludes companies, like Pinduoduo, which do not pay dividends, and companies
such as Tencent, whose current dividend yield of 0.5% is less than our 1%
threshold. However, in our view, it is possible that Chinese internet
companies will alter their dividend policies over time, and we would certainly
welcome this development, but for the moment we generally look elsewhere for
Emerging Market income stocks.
Portfolio Changes
We usually build the portfolio on a bottom-up basis, selecting stocks based on
their sound fundamental qualities, strong balance sheets and long-term
dividend paying capacity. However, some key portfolio changes over the past
year have been driven by our efforts to limit the portfolio's exposure to
recent geo-political and macroeconomic events. In addition to our timely
reduction in Russian exposure in late 2021 and Q122, discussed in the 2022
Annual Report, we began to reduce our overweight exposure to Taiwan in H122
and continued to scale back exposure during the second half of the year. This
decision was driven partly by worries about the near-term outlook for tech
stocks, as well as our wish to limit risks associated with heightened tensions
between Taiwan and China.
Conversely, in the case of China, we continued to slowly add to exposure here,
continuing a slow trend since 2020, in which we have tried to take advantage
of more attractive valuation levels in a market experiencing policy
difficulties, as discussed above.
As well as adjusting the portfolio in response to some top down, macroeconomic
and geo-political developments, we have continued to focus on stock selection,
maintaining our efforts to strike a balance between value and quality.
Examples of stock changes during the period include:
Korean banks
Our most interesting trades were the initiations of two positions in Korean
banks (KB Financial and Shinhan Financial), an area we have avoided for many
years. Several factors have combined to change our view:
• Returns on equity (ROEs) have been lacklustre for many years, which is
never a great starting point. However, going forward, the higher interest rate
environment should be more helpful, or at least less harmful, than the
headwinds generated by the persistently low rates of recent years.
• Korean banks have not grown lending at a particularly fast rate in
recent years, which should bode well from an asset quality perspective.
• Shareholder return policies have improved over time and banks now have
consistent, or slowly rising dividend payout ratios (currently in the mid-20's
and heading towards 30). They have also begun to undertake share buybacks and
share cancellations, which is a new, and welcomed, initiative within the
sector.
• These positive developments have occurred in the context of a
multi-year derating of Korean bank stocks (as measured by their price-to-book
and price-earnings ratios and dividend yields), which makes them attractive
from a valuation perspective. As such, these stocks certainly make an
appealing addition to the value component of the portfolio.
Brazilian utilities
We also opened a new position in EDP Energias do Brasil, a Brazilian utility
company participating in energy generation, transmission, and distribution. We
like the company's strategy to invest more in its distribution activities and
in solar power generation, as these areas of the business are growing, at the
expense of hydro and thermal generation. This looks incrementally positive on
an earnings quality basis, as well as from an environmental, social and
governance (ESG) perspective. With a disciplined dividend policy (which sets a
minimum dividend per share, or 50% payout, whichever is higher), and
a healthy yield, we were comfortable initiating this position.
Dividend disappointment
Understanding dividend policies and their implementation is a crucial part of
our investment process. If companies disappoint on this front, we seek to
understand the reasons and ensure the stock still fits our investment
criteria. If it does not, we close the position, to maintain the discipline of
our income approach. A recent example of this approach in action is Spar, a
South African supermarket chain also operating in some international markets.
The company announced a significant and unexpected reduction in its dividend
payout, which the company attempted to justify on the grounds of increased
software investment requirements, but in our view, this development in fact
suggested a broader deterioration in the business's fundamentals.
Consequently, we sold our position.
Dividends
Near term dividend receipts will, in broad terms, be driven by the
countervailing influences of China's re-opening, which has been generally
positive, and the adverse implications of a possible US slowdown on global
trade. However, any slowdown in US growth is likely to be modest and
short-lived and we remain positive on the long-term dividend outlook for
portfolio companies, supported by healthy returns on equity and generally
strong balance sheets.
As a reminder, we receive dividends from portfolio companies in local
currencies and pay out dividends in sterling. Currency movements therefore
have an impact on revenue receipts year-by-year. (All else being equal, a
rising pound puts pressure on revenue receipts from Emerging Markets).
ESG Considerations
We believe that the integration of 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 ESG considerations into their analysis to gauge the
durability 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
Our starting point is to build a portfolio via bottom-up stock selection. 2022
was characterised by the need to carefully manage country and sector
exposures, to protect the portfolio from several very significant top-down
risks which were driving financial markets. Foremost amongst these risks were
Russia's invasion of Ukraine, increased geo-political tensions between China
and the west, over China's territorial claims to Taiwan, and tech sector risks
due to a potential US downturn.
The past year's top-down risks, and opportunities, remain, but with related
portfolio adjustments now in place, looking ahead, we believe that our
portfolio positioning, and portfolio returns, are once again going to be
driven more by our individual stock selection decisions. As a reminder, we
have three key issues in mind whenever we select income stocks: return on
equity, free cash flow and dividend policy. Our ideal is to find companies
which can generate high returns on equity, for a long period of time, produce
healthy cash flow and, of course, have positive dividend policies that reward
minority shareholders with regular payouts. In our view, successfully
identifying such stocks will allow us to build a portfolio with a higher yield
than the market.
We remain confident that the portfolio is well set to provide income for
shareholders and to participate in capital returns from Emerging Markets.
For and on behalf of
JPMorgan Asset Management
Investment Manager
Omar Negyal
Jeffrey Roskell
Isaac Thong
Portfolio Managers
31st March 2023
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 2022 and fall into the following broad
categories: investment; strategy; financial; corporate governance and
shareholder relations; 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 conflict on the Company's
financial, operational position and market conditions. For these reasons, they
consider there is reasonable evidence to continue to adopt the going concern
basis in preparing the financial statements.
Directors' Responsibilities
The Board of Directors confirms that, to the best of its knowledge:
(i) the condensed set of financial statements contained within the half
yearly financial report has been prepared in accordance with FRS 104 'Interim
Financial 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 2023, 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
31st March 2023
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st January 2023 31st January 2022 31st July 2022
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments
held at fair value through
profit or loss - 31,809 31,809 - 26,167 26,167 - (31,037) (31,037)
Net foreign currency
gains/(losses) - 917 917 - (632) (632) - (3,249) (3,249)
Income from investments 7,027 - 7,027 6,818 - 6,818 22,232 - 22,232
Interest receivable and similar
income 133 - 133 26 - 26 66 - 66
Gross return/(loss) 7,160 32,726 39,886 6,844 25,535 32,379 22,298 (34,286) (11,988)
Management fee (457) (1,066) (1,523) (526) (1,226) (1,752) (1,030) (2,402) (3,432)
Other administrative expenses (433) - (433) (412) - (412) (758) - (758)
Net return/(loss) before finance
costs and taxation 6,270 31,660 37,930 5,906 24,309 30,215 20,510 (36,688) (16,178)
Finance costs (264) (615) (879) (133) (311) (444) (239) (557) (796)
Net return/(loss) before taxation 6,006 31,045 37,051 5,773 23,998 29,771 20,271 (37,245) (16,974)
Taxation (380) (120) (500) (394) (1,565) (1,959) (2,118) (1,205) (3,323)
Net return/(loss) after taxation 5,626 30,925 36,551 5,379 22,433 27,812 18,153 (38,450) (20,297)
Return/(loss) per share (note 3) 1.90p 10.42p 12.32p 1.81p 7.55p 9.36p 6.11p (12.94)p (6.83)p
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 represents the profit 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) reserves reserve(2) Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Six months ended 31st January 2022 (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
Six months ended 31st January 2022 (Unaudited)
At 31st July 2021 2,973 222,582 13 100,605 111,660 14,667 452,500
Net return - - - - 22,433 5,379 27,812
Dividends paid in the period (note 4) - - - - - (9,214) (9,214)
At 31st January 2022 2,973 222,582 13 100,605 134,093 10,832 471,098
Year ended 31st July 2022 (Audited)
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 4) - - - - - (15,155) (15,155)
At 31st July 2022 2,973 222,582 13 100,092 73,210 17,665 416,535
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
2023 2022 2022
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 474,971 495,269 440,419
Current assets
Derivative financial assets - - 1
Debtors 1,150 1,408 8,556
Cash and cash equivalents 3,417 6,550 4,287
4,567 7,958 12,844
Current liabilities
Creditors: amounts falling due within one year (19,742) (16,152) (20,210)
Derivative financial liabilities - (1) (2)
Net current liabilities (15,175) (8,195) (7,368)
Total assets less current liabilities 459,796 487,074 433,051
Creditors: amounts falling due after more than one year (16,246) (14,907) (16,435)
Provision for capital gains tax (182) (1,069) (81)
Net assets 443,368 471,098 416,535
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 99,870 100,605 100,092
Capital reserves 104,135 134,093 73,210
Revenue reserve 13,795 10,832 17,665
Total shareholders' funds 443,368 471,098 416,535
Net asset value per share (note 5) 149.5p 158.5p 140.3p
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st January 31st January 31st July
2023 2022 2022
£'000 £'000 £'000
Net cash outflow from operations before dividends and
interest (note 6) (1,917) (2,171) (3,073)
Dividends received 9,166 8,372 18,648
Interest received 123 4 17
Overseas tax recovered 159 (172) 174
Indian capital gains tax paid (19) - (1,124)
Interest paid (766) (390) (829)
Net cash inflow from operating activities 6,746 5,643 13,813
Purchases of investments (72,177) (31,763) (102,855)
Sales of investments 74,088 39,140 106,618
Settlement of forward currency contracts - (46) (46)
Net cash inflow from investing activities 1,911 7,331 3,717
Dividends paid (9,496) (9,214) (15,155)
Repurchase of shares into Treasury (222) - (513)
Repayment of bank loans (16,614) - -
Drawdown of bank loans 16,614 - -
Net cash outflow from financing activities (9,718) (9,214) (15,668)
(Decrease)/increase in cash and cash equivalents (1,061) 3,760 1,862
Cash and cash equivalents at start of period 4,287 2,467 2,467
Exchange movements 191 323 (42)
Cash and cash equivalents at end of period 3,417 6,550 4,287
Cash and cash equivalents consist of:
Cash and short term deposits 1,155 199 3,603
Cash held in JPMorgan US Dollar Liquidity Fund 2,262 6,351 684
Total 3,417 6,550 4,287
Reconciliation of net debt
As at Other As at
31st July non-cash 31st January
2022 Cash flows charges 2023
£'000 £'000 £'000 £'000
Cash and cash equivalents
Cash 3,603 (2,616) 168 1,155
Cash equivalents 684 1,555 23 2,262
4,287 (1,061) 191 3,417
Borrowings
Debt due within one year (16,435) - 189 (16,246)
Debt due after one year (16,435) - 189 (16,246)
(32,870) - 378 (32,492)
Net debt (28,583) (1,061) 569 (29,075)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31(ST) JANUARY 2023
1. Financial statements
The information contained within the condensed financial statements in this
half year report has not been audited or reviewed by the Company's auditor.
The figures and financial information for the year ended 31st July 2022 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 2023.
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 2022.
3. Return per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st January 2023 31st January 2022 31st July 2022
£'000 £'000 £'000
Return per share is based on the following:
Revenue return 5,626 5,379 18,153
Capital return/(loss) 30,925 22,433 (38,450)
Total return/(loss) 36,551 27,812 (20,297)
Weighted average number of shares in issue during
the period 296,726,127 297,240,161 297,087,353
Revenue return per share 1.90p 1.81p 6.11p
Capital return/(loss) per share 10.42p 7.55p (12.94)p
Total return/(loss) per share 12.32p 9.36p (6.83)p
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st January 2023 31st January 2022 31st July 2022
£'000 £'000 £'000
2022 fourth interim dividend of 2.2p (2021: 2.1p) 6,529 6,242 6,242
2023 first interim dividend paid of 1.0p (2022: 1.0p) 2,967 2,972 2,972
2022 second interim dividend paid of 1.0p n/a n/a 2,972
2022 third interim dividend paid of 1.0p n/a n/a 2,969
Total dividends paid in the period/year 9,496 9,214 15,155
All dividends paid and declared in the six months period to 31st January 2023
have been funded from the revenue reserve.
A second interim dividend of 1.0p per share, amounting to £2,966,570 has been
declared and will be paid on 21st April 2023 in respect of the year ending
31st July 2023.
5. Net asset value per share
(Unaudited) (Unaudited) (Audited)
31st January 2023 31st January 2022 31st July 2022
Net assets (£'000) 443,368 471,098 416,535
Number of shares in issue 296,657,060 297,240,161 296,840,161
Net asset value per share 149.5p 158.5p 140.3p
6. Reconciliation of net return before finance costs and taxation to
net cash outflow from operations before dividends and interest
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st January 2023 31st January 2022 31st July 2022
£'000 £'000 £'000
Net return/(loss) before finance costs and taxation 37,930 30,215 (16,178)
(Less capital return)/add capital loss before finance
costs and taxation (31,660) (24,309) 36,688
Scrip dividends received as income - (7) (14)
Decrease/(increase) in accrued income and
other debtors 2,710 2,273 (1,290)
(Decrease)/increase in accrued expenses (302) (153) 150
Management fee charged to capital (1,066) (1,226) (2,402)
Overseas withholding tax (586) (724) (2,302)
Dividends received (9,166) (8,372) (18,648)
Interest received (123) (4) (17)
Realised (loss)/gain on foreign exchange transactions (63) 96 461
Realised gains on liquidity funds 409 40 479
Net cash outflow from operations before dividends
and interest (1,917) (2,171) (3,073)
7. Fair valuation of investments
The fair value hierarchy analysis for financial instruments held at fair value
at the period end is as follows:
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st January 2023 31st January 2022 31st July 2022
Assets Liabilities Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000 £'000 £'000
Level 1 474,943 - 495,269 - 440,391 -
Level 2(1) - - - (1) 1 (2)
Level 3(2) 28 - - - 28 -
Total value of investments 474,971 - 495,269 (1) 440,420 (2)
1 The Level 2 investment relates to Forward currency contracts.
2 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 2023 31st January 2022 31st July 2022
Assets Liabilities Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000 £'000 £'000
Level 3
Opening balance 28 28 - - - -
Transfers into Level 3 - - - - 5,377 5,377
Sales - - - - (1,252) (1,252)
Change in fair value of unquoted investment
during the year(1) - - - - (4,097) (4,097)
Closing balance 28 28 - - 28 28
1 For these Russian stocks a valuation method has been applied to the
25th February 2022 close of day prices (ie: when market was still trading
normally) which have then been tapered at 99% haircut for valuation purposes.
JPMORGAN FUNDS LIMITED
31(st) March 2023
For further information, please contact:
Emma Lamb
For and on behalf of
JPMorgan Funds Limited
020 7742 4000
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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