JPMorgan Global Core JPM Glbl Core - JARU JPM Glbl Core - JARE - Final Results
30/06/2023 07:01
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RNS Number : 4714E JPMorgan Global Core Real Assets Ld 30 June 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN GLOBAL CORE REAL ASSETS LIMITED
(the "Company")
FINAL RESULTS FOR THE YEAR ENDED 28(TH) FEBRUARY 2023
CHAIRMAN'S STATEMENT
I am pleased to present a robust set of results for the Company for the year
ended 28th February 2023 (the 'Period') against a challenging and volatile
macroeconomic environment.
Performance
The Company's strategy is continuing to generate attractive returns for
investors, delivering a share price total return of +7.0% for the Period, but
it must be recognised that a significant part of this return derives from the
strengthening of the US dollar against our reference currency, sterling. The
Company's NAV performance was +11.6%, the difference between this number and
the share price return reflecting the higher discount prevailing at the end of
the Period as compared with that at the start of the year. During the Period
the price at which the Company's shares traded relative to its underlying NAV
fluctuated from a discount at the start of -10.8%, to a premium in the middle
(which allowed for incremental share issuance in August 2022), with the
Company ending its financial year at a discount of -14.9%. The discount has
since narrowed and, at the time of writing, stands at -9.5% to NAV. The share
price has been relatively stable post year end, through what has been a
volatile time for markets overall.
It is worth noting that over the Period significant changes were seen in
global financial markets, with the end of an extended period of very low
interest rates. This has had a major impact on asset prices, especially in the
public markets. Higher rates have weighed on real assets, although not to the
same extent seen in the public markets. Within our portfolio, an appropriate
debt structure and some inflation linkage for cashflows have been important in
offsetting the impact of higher rates, which JARA has to date been able to
manage well.
Measured in local currency terms, the Listed Real Assets investment registered
a decline in its NAV, but the other strategies in which the Company was
invested posted positive returns over the Period in their local currencies.
Given the testing macroeconomic and financial conditions during the year, the
Board regards this as a respectable outcome, one which supports both the
diversification and in aggregate defensive characteristics of the portfolio.
Most of the Company's assets are denominated in U.S. dollars and a variety of
other currencies, so returns were significantly assisted by sterling's general
weakness over the Period. One of JARA's attributes is that it offers
shareholders access to real assets globally and with this comes a global
currency exposure. It should be noted that, subsequent to the Period end,
sterling has strengthened and acted as a drag on the NAV. Later in this
Statement I describe the Board's recent actions to reduce the Company's
exposure to foreign exchange volatility.
The Investment Manager's Report reviews the Company's performance and gives a
detailed commentary on the investment strategy and portfolio construction, and
an outlook for the individual strategies which comprise JARA's portfolio.
Portfolio
As described in more detail in the Investment Manager's Report, the Company
remains well diversified across a range of different sectors throughout the
real asset spectrum. Relatively new additions to the portfolio mix, such as
real estate debt, have offered useful stability and a growing income stream,
with potential for further increases due to its exposure to floating rates. An
important aspect of JARA is its diversification, which aims to ensure no
over-exposure to any one sector, asset or counterparty. JARA benefits from the
active management at both the portfolio and underlying strategy level to drive
returns and manage risk for investors. One example of this active allocation
saw a reduction in office exposure by 4% and an increase in energy logistics.
Since the Period end, the Investment Manager has started the process of
restoring the allocations in infrastructure and transport to their target
range after strong performance in the other portfolio allocations. This
rebalancing should help increase the level of portfolio income and provide
further stability to the NAV given the long-term predicable nature of the
cashflows of the underlying transport and infrastructure assets.
Share Issuance
The Company grew its share capital by circa 1% through the issue of 2,000,000
new shares. As at 28th February 2023, the Company had 219,407,952 shares in
issue and net assets of £223.7 million. These proceeds were invested in line
with the Company's investment policies across the underlying investment
strategies.
Share issuance is always executed at a premium to the prevailing cum-income
NAV per share and so is accretive to existing shareholders. If conditions are
appropriate, the Company will continue to issue new shares which, as well as
assisting with premium management, will also enhance liquidity and continue to
underpin the Company as an attractive investment. The Board also assesses the
need for buybacks when the shares are trading at a discount to NAV and will
aim to balance factors such as changes on the shareholder register and whether
buybacks would be more accretive to NAV when compared to any foregone
opportunity for potential investment opportunities.
Revenue and Dividends
The Board declared total dividends of 4.05 pence per share in respect of the
financial year under review, comprising three quarterly dividends of 1 penny
per share and a fourth quarterly dividend of 1.05 pence per share, providing
an uplift on the prior year (2022: 4.00 pence per share). This dividend has
been delivered notwithstanding the macroeconomic challenges of recent years,
including inflation, Covid-19, energy shortages and the impact of the war
consequent upon the Russian invasion of the Ukraine, all of which have
affected valuations and revenues across all sectors of real assets.
The first interim dividend for the financial year ending 29th February 2024,
being 1.05 pence per share, was paid to shareholders on 31st May 2023; the
Directors intend for there to be three further interim dividends and -
following the pattern established in the 2022/23 financial year - if the
Directors believe that an increase in distributions is warranted this will be
paid as part of the last dividend for the financial year.
Your Board believes that, over the longer term, the success of the underlying
businesses and strategies into which JARA invests will facilitate a steadily
growing level of dividends.
Currency Exposure
Since JARA's IPO in September 2019 there has been no currency hedging employed
across the portfolio (although the ability to do so has always been available)
and it has therefore been primarily exposed to currencies other than the
Company's base currency of GBP.
Currency volatility since IPO has been significantly above long-run levels,
and this has resulted in additional volatility in the NAV. Following a review
of the approach to currency exposure, and taking into account recent investor
feedback, the Board has resolved to introduce a currency hedging strategy with
the aim of reducing, but not eliminating, the currency-related volatility in
returns.
The initial step in this strategy will be the reallocation of the existing
unhedged investment in the Infrastructure allocation to the GBP hedged
investment and the Board will continue to monitor its currency hedging
strategy.
The Board and Corporate Governance
In accordance with the Company's Articles of Incorporation and the AIC Code of
Corporate Governance, all Directors will be retiring and seeking re-election
by shareholders at the Company's Annual General Meeting. The Board's knowledge
and experience is detailed in the Company's full annual report.
The Board recognises the importance of having a diverse range of views and
experiences, along with broad professional expertise, to support
decision-making. The current Board composition - with one female director on a
board of four and no director from a minority ethnic background - means that
the Board composition does not currently comply with the recommendations made
by the FTSE Women Leaders Review (the successor of the Hampton-Alexander
Review and the Davies Review) and Parker Review as well as the Financial
Conduct Authority's Listing Rule. The Board's succession planning is
considered and discussed by the Nomination Committee, which will take into
account these recommendations for future Board appointments.
Environmental, Social and Governance ('ESG')
The Investment Manager continues to enhance its ESG approach which ensures it
best captures the fundamental insights of the investment team. The Board
continues to engage with the Investment Manager on ESG considerations and how
the investment team integrates ESG into investment decisions.
Across the portfolio the Investment Manager considers climate change risk and
mitigation, which is strongly supported by the Board. This involves
identifying and measuring physical risks, then assessing and developing
mitigation strategies for high-risk assets. Finally, it involves analysing
climate-related transition risks and opportunities. Further details can be
found in the ESG Report in the Company's full annual report.
Keeping Investors Informed
The Company releases monthly NAVs to the market, as well as quarterly NAVs
with more detailed commentary at the end of May, August, November and
February, all via the London Stock Exchange's Regulatory News Service. The
monthly NAVs contain the latest pricing for the liquid strategy and exchange
rates, with the private strategies being priced on a quarterly basis.
Annual General Meeting
The Company's fourth Annual General Meeting ('AGM') will be held on Wednesday,
2nd August 2023 at 12.30p.m. at the offices of JPMorgan, Level 3, Mill Court,
La Charroterie, St Peter Port, Guernsey GY1 1EJ. I would encourage all
shareholders to vote.
If shareholders are unable to attend the AGM, they are welcome to raise any
questions in advance of the meeting with the Company Secretary at the
Company's registered address, or by writing to the Company Secretary at the
address provided in the Company's full annual report, or via email to
invtrusts.cosec@jpmorgan.com.
Outlook
The current environment is both at the political and macro level one of the
most uncertain in the last decade, if not since the global financial crisis of
2008/09. The public capital markets have adjusted rapidly to the increase in
central bank rates and monetary tightening; the private markets have begun
this process, but the market has been and will continue to go through a
process of price discovery as views on the trajectory of inflation and rate
movements become clearer and therefore allow both buyers and sellers to focus
on what is an acceptable range of pricing.
The resetting of rates has also led many investors to revisit levels of
leverage and portfolio allocations, leading to a large dispersion of sector
and asset level returns. In many ways the Company was designed with such an
environment in mind, given that its exposure to multiple asset classes and
interest rate environments ensures that no one external change either at the
monetary, economic or political level should threaten the viability of the
Company. Overall, the Board believes that the Company is well placed to
continue navigating the evolving core real asset landscape, given the
experience and scale of the underlying strategies and overall size and reach
of the Alternatives Platform. The Board is confident that the portfolio will,
in aggregate, benefit from the inflation which has become a feature in all
Western economies, and which seems likely to be with us for some time. On the
basis of this confidence, the Board envisages providing shareholders with a
progressive dividend profile, paid quarterly, but as in the Period under
review, with increments paid as part of the fourth distribution.
There remains a significant appetite for new capital, not least in the area of
decarbonising our energy cycle, notably the substitution of wind, solar and
nuclear electricity for fossil fuelled generation. An advantage enjoyed by
your Company is that, even as the current environment sees capital raising in
the investment trust market all but closed, the underlying strategies in which
the Company is invested, given their perpetual life and core nature, are able
to recycle capital and change their allocations to adapt to this shift.
Global, secular trends such as the drive to net zero and increasing
digitisation of industry and consumer experience, will be long term asset
growth drivers, fundamental to shaping the economies of tomorrow. JARA,
through its underlying portfolios, is well placed to harness these
opportunities.
John Scott
Chairman
29th June 2023
INVESTMENT MANAGER'S REPORT
Portfolio Review
During the financial year, the Company continued to implement its
multi-alternatives allocation strategy across global real estate,
infrastructure and transportation markets, providing access to many investment
opportunities that are otherwise difficult for UK retail investors to access.
JARA's low UK exposure means it is well-positioned to complement UK investors'
allocations to domestic real assets. (See graphic in the Company's full annual
report showing the portfolio's weighting to each sector as at end February
2023.)
A central tenet of JARA's investment philosophy is to provide shareholders
with a diversified real asset portfolio allocated not only across asset
classes, but also across end user counterparties and regions. This flexibility
proved crucial in the past year, as inflation, rising interest rates and
geopolitical events had a significant impact on financial markets, and some
real assets were also challenged. At the year-end, JARA's allocation remained
truly global and very diversified.
This diversification allowed the Company to weather the year's market
volatility and deliver an NAV total return of +11.6% (in GBP terms), while the
local currency performance was +3.9%. The difference between the GBP return
and the local currency return was caused by the weakness of sterling, which
was accretive to the Company's GBP NAV. This was the case because, as always,
the Company's portfolio is unhedged and therefore foreign exchange risk is
incurred when allocating to overseas markets. This can impact performance in
GBP terms both positively, as in the past year, and negatively.
The table below shows the contributors to JARA's performance calculated using
each strategy's investment performance and its average weighting within the
portfolio throughout the year.
U.S. Real Estate +0.5%
Asia-Pacific Real Estate +1.1%
Global Infrastructure +1.1%
Global Transportation +2.2%
U.S. RE Mezzanine Debt +0.4%
Listed Real Assets -1.4%
Total Local Return 3.9%
Currency Impact 8.0%
Company Level Costs -0.4%
Total GBP Return 11.6%
Source: J.P. Morgan Asset Management. Numbers may not sum due to rounding.
Currency impact also includes return earned from cash holdings over the year.
Table shows the components of return contribution made up of income and
capital. Strategy level returns are net of associated management fees. Company
level costs includes the management fee charged by JPMF (0.05% pa) and the
Company's other administration expenses. The strategy returns above are net
returns and include the impact of the relevant management fee of each
strategy. Capital contribution may be negative for reasons including asset
depreciation, asset write downs or due to income return including some return
of capital.
Interest rates rose rapidly and significantly from their historic lows across
most developed markets in the year just past, making the extent, cost and
nature of leverage across private real asset markets a clear focus for
investors, including JARA. At the year-end, JARA had no company level
leverage. However, on a look-through basis, JARA's underlying vehicles do
utilise leverage, primarily at an asset level. The weighted average
loan-to-value for JARA's private asset exposure was 36.6% at the end of the
reporting period. Importantly, over 70% of this debt is fixed rate, which
provided the portfolio with significant protection from the year's rates
hikes.
As is to be expected in the current market environment, higher interest rates
have lifted discount rates. The weighted average discount rate of the
portfolio's private assets was 7.9% at year end, up from 7.3% at the end of
the previous year. This increase in discount rates over the year has, to some
extent, been offset by increasing allocations to lower risk sectors such as
liquid natural gas and utilities, whose discount rates are, on average,
relatively lower due to their risk profile.
Portfolio Movement
As shown in the table in the Company's full annual report, at the year end,
JARA was fully invested across a range of different sectors throughout the
real asset universe. This positioning aligns with both our strategic asset
allocation and also areas of conviction in the medium term.
Review of underlying strategies
A further detailed review of the individual underlying strategies can be found
below.
Global Private Real Estate
The Company's investments in global private real estate fall into several
categories:
• High quality real estate equity, across the US and Asia-Pacific
regions. The focus is on core property sectors - logistics, warehouses,
residential, office and retail - in major growth markets and in the most
dynamic gateway cities, which are important hubs for economic growth. These
core real assets are low risk investments which have reliable, highly
predictable, long-term cash flows;
• 'Extended core' real estate equity. The strategy seeks assets with
exposure to structural shifts in the way we shop, work and live. This includes
'extended core' sectors, for example truck terminals, outdoor storage, and
other facilities which serve new, high growth industries such as healthcare
and biotech companies. These assets tend to cluster in parts of the market
overlooked by other property investors; and
• Core real estate mezzanine debt in the US. This is an income-producing
portfolio of loans backed by high quality, moderately leveraged core real
estate assets. These investments were new to the portfolio over the past year,
and serve as both an income diversifier, and as a dampener on volatility, as
mezzanine real estate debt is less sensitive to macroeconomic fluctuations
than real estate equity. In addition, by being more senior in the debtors'
capital structure than equity financing, this allocation is less exposed to
changes in real estate values.
The financial year under review was a tale of two halves within the real
estate sector. The year began on a positive note, supported by extraordinary
demand fuelled by a tight job market, upbeat consumers and relative supply
constraints. However, this very strong early year performance cooled, and in
some cases, reversed, in the second half as investors became increasing
concerned about the pace of interest rate increases and their inevitable
adverse impact on the sector.
The Company's overall allocation to real estate has been broadly stable over
the review period.
During much of the first two quarters, JPMorgan's real asset platform
(explained in further detail in the Company's full annual report) utilised the
favourable real estate environment to evolve its exposure, focusing on
sectors, geographies and assets in which we have the highest long-term
conviction. For example, we increased our exposure to Industrial Logistics by
1%, via investments in both infill locations (assets near urban areas) and
assets across the Asia-Pacific market.
In early 2022, the global energy supply chain was upended by Russia's invasion
of Ukraine. This caused a major shift in how countries, particularly in
Europe, source their energy and think about their future energy security.
These major ructions benefitted assets involved in the transportation of oil
and gas around the globe (referred to as Energy Logistics), which saw a surge
in demand. In response, we increased exposure to Energy Logistics by 2%.
The other significant change to the Company's real estate positioning was a
£14.4 million allocation to real estate mezzanine debt, for reasons discussed
above. This investment, which represented 7% of the Company's real estate
holdings at year end, was made at the end of February 2022, and unitised on
1st April 2022.
In terms of divestments, the underlying strategy sold more than $4 billion of
retail and office assets that fell short of its long-term growth objectives.
For example, the disposal of some US office investments was motivated by what
was perceived as a structural decline in demand for office space, as this
market adapts to more flexible working patterns.
As the year progressed, the twin drags of higher borrowing costs and reduced
liquidity adversely impacted both real estate transaction activity and
valuations. However, these effects were not felt equally across all real
estate markets, and as such, JARA's global exposure and diversification across
both real estate equity and debt provided significant stability compared with
standalone sector and country-specific allocations. This can be seen in the
returns; JARA's US real estate exposure contributed 0.5% to the Company's
total return over the year, while our Asia-Pacific exposure added 1.1% and
real estate debt contributed a further 0.4%.
US real estate saw the greatest reversal over the course of the year. Sectors
that have seen the greatest appreciation in the last few years - namely
industrial and residential - gave back most of the gains realised in H122.
While these sectors generally continued to see growth in rents, some
moderation in the rate of rental increases saw cap rates expand, driving
valuations lower.
Asia-Pacific (APAC) real estate outperformed, remaining consistently positive
throughout the year. This sector did not experience the same appreciation in
2021 and early 2022 as the US, and so escaped the same degree of subsequent
decline. This relative stability was driven in part by the diversity of the
region, where economies are in varying stages of their economic cycles and
interest rate tightening journeys. There are also specific trends in the APAC
region which helped create differentiated performance relative to other
regions. For example, while the US office sector has been one of the most
operationally challenged, due to the widespread adoption of flexible working,
this has not been the case in much of the APAC region, where flexible working
has proved less popular amongst workers and employers. This has underpinned
the APAC office market, especially in business hubs like Singapore.
The allocation to real estate debt, initiated just before the beginning of the
financial year, was also a consistent, but more modest, performer. The
interest rate structure of the debt within the strategy's portfolio of real
estate loans is primarily floating rate, which generated increasing income as
rates rose over the year - the annualised yield of this allocation is now in
excess of 8%.
At end-February 2023, the real estate allocation, on a look through basis,
held 299 assets and loans globally, equating to $49 billion in value
(including leverage). The average leverage (loan-to-value) across the real
estate portfolio was 25%.
Global Private Infrastructure & Transportation
JARA invests in core and core+ infrastructure and transportation assets.
Within Infrastructure, the Company has exposure to a global portfolio of +20
operating company platforms, each benefiting from dedicated management, and
are active across a diverse range of infrastructure sectors such as power
generation, regulated and unregulated utilities and fixed transportation.
JARA's infrastructure allocation therefore represents a conglomerate of
separately managed and incentivised businesses operating to maximise
efficiency and grow within their respective market places.
These investments come with specialised management teams and a unique avenue
of capital deployment due to the ability to add smaller assets over time via
acquisitions, developments and build outs. This approach can provide the
means for long term value creation. While there were some larger transactions
in the past financial year, over the last ten years, investment through this
platform investment approach has accounted for approximately half of all
capital deployed. We continue to see significant opportunities to employ this
form of investment, especially in the utility and renewables spaces. These
industries are currently fragmented, and thus ripe for consolidation, and
there will be an ongoing need for investment as the global transition to
renewable energy gathers momentum.
Over the past year, overall exposure to infrastructure was stable but the
Company's infrastructure allocation has shifted away from 'GDP-sensitive'
assets such as airports and seaports, towards contracted power provision and
utilities. In our view, these sectors exhibit strong cash-flow generation,
with lower sensitivity to fluctuations in demand and macroeconomic
developments, which leaves them well-positioned to cope with slowing growth.
In addition, these sectors will remain supported by broader structural trends
- primarily the push towards net zero carbon emissions.
JARA's private infrastructure allocation had a strong year, contributing 1.1%
to the Company's total return. In this part of the portfolio, a significant
majority of the return is generated by income, with income returns typically
within the 6%-9% range. This performance illustrates the resilience of
infrastructure markets, and the sector's ongoing popularity amongst investors
seeking refuge from declines in conventional equity and bond markets.
Power generation was one area of outperformance, as this industry has
benefited from significantly higher energy prices. Whilst JARA's exposure is
primarily focused on fixed long-term energy supply contracts, many assets do
retain some merchant (spot market) exposure - typically in the region of
20%-30% - and these served to enhance returns over the past year as spot
prices rose. In addition, several of the underlying strategy's fixed
transportation assets, such as ports and airports, which comprise part of our
infrastructure portfolio, also performed strongly, thanks to post-COVID
rebounds, which had been delayed in some cases by congestion and operational
challenges such as shortages of trained staff. Japan's decision to re-open its
borders to foreign tourists last October, which was closely followed by
China's surprise decision to lift all pandemic restrictions, also boosted the
performance of these assets.
At year end, the underlying strategy owned a total of 141 infrastructure
assets (or 931, if look-through assets are considered), equating to $62
billion in asset value (including leverage)). The average loan-to-value ratio
of these assets was 47%.
The strategy within the transportation sector focuses on leasing out large,
'backbone' transport assets such as ships, aircraft, rail and fleet leasing
and energy logistics, which are critical to the functioning of global trade.
It is preferred, on average, to deal with investment grade counterparties, and
these assets are leased to some of the largest corporates in the world.
JARA's exposure to transportation assets rose marginally over the past year
and this sector contributed +2.1% to the Company's total return over the
period. As is the case with infrastructure investments, most of the return on
the Company's transport allocation is income orientated. Performance from our
transport allocation was in line with expectations, and the strategy collected
all lease payments on time.
Although JARA's exposure in Energy Logistics real assets benefited from
changes to the energy sector sparked by Russia's invasion of Ukraine, as
mentioned above, the Company's largest exposure to recent developments in the
energy market is via its investments in liquid natural gas (LNG) carriers.
Demand for these vessels has surged as gas pipelines have become less
reliable, and we believe that the carriers to which JARA is exposed are
particularly competitive and attractive, as they are new and highly fuel
efficient.
Towards the end of the year, the strategy added exposure to several new
transportation sub-sectors, including electric vehicle (EV) charging points
and railcar leasing. Demand for EV charging points is certain to increase as
these vehicles become more popular. Railcar leasing is an integral part of the
North American supply chain, currently representing c. 26% of annual US
freight ton miles. This share is likely to rise over time as moving freight by
rail rather than road significantly reduces greenhouse gas emissions. Demand
for existing railcar inventory is therefore likely to strengthen, and there is
scope for the sector to grow substantially as efforts to achieve 'net zero'
carbon emissions intensify.
Liquid Real Assets
JARA's exposure to liquid real assets comprises listed investments across real
estate, infrastructure and transportation securities. The Company's listed
real asset allocation is made up of two distinct strategies: US all-tranche
REITs, in which investments are diversified into debt securities; and a
broader allocation across a variety of other listed real assets, including
sectors such as data centres and medical real estate. We are currently equally
weighted between these two strategies. Our allocations to liquid real assets
bring dual benefits. Their liquidity provides us with greater flexibility
within our asset allocation process, and they are also an additional
diversifier in terms of both returns and sectoral exposure. Overall exposure
to liquid real assets declined over the year.
The past year was a volatile period for public markets and, as a result, our
allocation to liquid real assets was the only area which detracted from
returns. Our investments in liquid assets declined by 1.4% over the period.
However, historically, such sell-offs in public markets are typically followed
by rebounds, and these rebounds often coincide with sell-offs in private
markets, which tend to lag developments in public markets. This lack of
correlation between the returns across public and private markets helps smooth
performance across the portfolio over time, and we expect a similar dynamic to
play out in the current market environment. Indeed, public markets began to
rebound in the months since the Company's year-end.
Real Asset Market Outlook
Inflation is expected to remain elevated throughout the course of 2023, with
labour shortages and pricing pressures likely to continue. This suggests that
the current high interest rate environment will remain in place throughout
2023. The impact these high rates will have on real assets, as well as other
financial markets, will thus remain a major focus for investors, and
volatility will stay high across asset classes. Other macroeconomic drivers
such as China's faltering recovery, combined with simmering geo-political
tensions, may add further uncertainty to the prevailing climate. However, on
the positive side, core real assets provide essential economic services, and
are thus largely immune to adverse short-term macroeconomic developments.
The impact of higher rates on real asset markets will be dependent on several
factors, including the timing of refinancing, the level of fixed vs. floating
debt and assumptions regarding the trajectory of interest rates and the equity
cost of capital over the long-term. Possibly most importantly, performance
will hinge on the extent of repricing of both debt and equity required to
reflect the new, higher rate environment. Investors who based valuations on
consistent long-term methodologies - typically inherent across most core real
asset markets - will be best placed to cope with current tight monetary
conditions.
Global Real Estate Outlook: Divergence across markets calls for a diversified
approach
We expect to see divergence across real estate markets by sectors, regions and
security types over coming months, although by the end of 2023, asset
valuations should stabilise, as the outlook for inflation and interest rates
becomes clearer. In this climate, diversified portfolios should prove most
resilient, so adopting a globally diversified approach remains as important as
ever.
In the US real estate market, we expect the risk of recession to linger, while
growth in rents will slow further and transaction volumes will stay low. The
availability of debt financing is likely to remain limited and will be further
constrained as US regional banks reassess their lending practices in the wake
of recent turmoil in the sector. As mentioned above, office real estate has
been under pressure due to the enduring popularity of flexible working
patterns. Going forward, tenants are likely to be more selective in the office
space they rent. This can already be seen in the net absorption levels - the
net newly occupied space minus the newly vacant space (see graph in the
Company's full annual report). As shown in the graph in the Company's full
annual report, newer assets, are continuing to see demand a premium whilst
older, lower quality assets are struggling.
In the APAC real estate markets, performance patterns have differed markedly
from other regions, for reasons discussed above, and we expect the APAC region
to maintain its comparatively steady course, due to the lack of correlation in
economies across the region and the nuances of local market dynamics. Real
estate across the region will be the main beneficiary of China's reopening.
These factors all support the case for ongoing exposure to the APAC region.
On the positive side, commercial vacancy rates are still comparatively low,
and despite the recent slowdown, rent growth is still trending above its
long-term average, so real estate fundamentals are broadly holding up. This,
combined with low levels of liquidity, suggests that it is a lenders' market
for investors such as JARA. We believe core mezzanine lending constitutes a
particularly attractive way to invest during the current market dislocation,
as it provides a high-quality hedge against rising rates, declining values and
inflation, and thus helps to moderate volatility in returns. We will therefore
remain vigilant for opportunities to add more of this form of real estate debt
to our portfolio.
Longer-term, real estate performance will continue to be driven by how we
consume, work and live. Investors therefore need to look beyond the current
market volatility and uncertainties and consider how best to reposition their
portfolios to take advantage of longer-term trends in consumption, working
practices and lifestyles. We believe it is especially important to focus on
opportunities in 'extended' subsectors, such as truck terminals, outdoor
storage, single family rentals, age-restricted housing and life sciences
facilities, so we will be monitoring these areas closely.
Infrastructure Outlook: Positive, with the transition to renewable energy set
to boost certain energy assets
The outlook for core private infrastructure remains strong, despite the
macroeconomic headwinds. The asset class offers investors a highly attractive
mix of built-in inflation protection, uncorrelated returns and consistent
income. Core private infrastructure is proving to be immune to the economic
cycle, in large part due to the essential nature of the services provided by
the underlying assets. This should ensure relatively low volatility and steady
returns. Yields are therefore likely to remain consistent, and in some
sectors, especially core focused infrastructure, the ability to pass on
commodity cost increases to end customers will boost revenues.
The cycle agnostic nature of utilities can be seen on the right-hand side of
the chart in the Company's full annual report- the chart shows how household
utility spending has not, in the past, been negatively impacted by periods of
recession.
The transition to renewable energy is expected to remain foremost in the
considerations for many investors, in both the immediate future and over the
mid- to long-term. This represents a major opportunity for utilities and
renewable energy assets contributing to the decarbonisation of energy sources.
On the downside, persistently high interest rates will hamper some
more opportunistic approaches to infrastructure, as most projects are
reliance on leverage, which is more expensive in the current environment.
Transportation outlook: Ship and aircraft leasing rates should remain
well-supported
We are also constructive on global transportation in the year ahead, and
longer-term. We do not expect further significant bottlenecks in ports, as the
backlogs that accumulated during the pandemic have now largely dissipated.
However, sanctions against Russia are shifting and lengthening supply chains,
especially in energy transport, and causing other forms of disruption.
While the global transport fleet has been growing steadily, worldwide order
books for new ships remain relatively weak. The graph in the Company's full
annual report on the right-hand side shows how the Orderbook as a percentage
of the operating fleet has dropped and remains significantly lower than during
the Global Financial Crisis. In our view, this is due at least in part to
uncertainties related to future asset designs. In any case, shipyards are
already operating above full capacity, so the supply of new assets will remain
tight. These supply constraints, combined with shifting supply chains, should
continue to support lease rates across the industry.
Beyond shipping markets, we are also positive on the prospects for aviation
and land-based transport assets. The continued recovery in travel demand,
combined with inflation kickers and a limited supply of new aircraft, should
all have a positive impact on aircraft lease rates in 2023/2024.
Sovereign-backed carriers should remain attractive counterparties if
governments prioritise airline services and support national carriers, as they
have done in the past. In the land-based transport sector, rail freight will
remain a highly fuel-efficient means of transporting cargo, compared to road
haulage, and is thus an attractive alternative for shippers in the current,
higher fuel cost environment, and longer-term, as they step-up their efforts
to reduce carbon-emissions.
Real assets - worthy of a place in all truly diversified portfolios
Recent events attest to the resilience of real asset markets, even in times of
extreme market uncertainty. Investment in real assets also provides
diversification benefits, inflation protection and exposure to major
investment themes such as the transition to renewable energy. All this
suggests that real assets deserve a place in any fully diversified portfolio,
especially at times when the performance of more traditional asset classes
such as equities and bonds has been disappointing. We believe JARA offers
investors the ideal means of investing in this exciting, but otherwise hard to
access, asset class.
Investment Manager
J.P. Morgan Asset Management, Inc.
Security Capital Research & Management Inc. and J.P. Morgan Alternative
Asset Management Inc.
29th June 2023
PRINCIPAL AND EMERGING RISKS
The Board has overall responsibility for the Company's system of risk
management and internal controls. 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 JPMF, the Audit Committee and Market Risk
Committee, chaired by Helen Green and Simon Holden, respectively, have drawn
up a risk matrix, which identifies the key risks to the Company. These are
reviewed and noted by the Board. The principal and emerging risks identified
and the broad categories in which they fall, and the ways in which they are
managed or mitigated, are summarised below. The AIC Code of Corporate
Governance requires the Audit Committee to put in place procedures to identify
emerging risks and to provide an explanation of how these are managed or
mitigated.
Principal risk Description Mitigating activities
Investment management and performance
Discount control risk Investment company shares often trade at discounts to their underlying NAVs, The Board monitors the level of both the absolute and sector relative
although they can also trade at a premium. Discounts and premiums can premium/discount at which the shares trade. The Board reviews both sales and
fluctuate considerably leading to volatile returns for shareholders. marketing activity and sector relative performance, which it believes are the
primary drivers of the relative premium/discount level. In addition, the
Company has authority, when it deems appropriate, to buy back its existing
shares to enhance the NAV per share for remaining shareholders and to reduce
the absolute level of discount and discount volatility.
Foreign exchange risk to income There is a risk that material sterling strength or volatility will result in a A decision was taken at launch not to hedge the capital value of the portfolio
diminution of the value of income received when converted into sterling. into sterling, nor to hedge the income generated by the portfolio into
sterling. One of JARA's attributes is that it offers shareholders access to
real assets globally and with this comes a global currency exposure. Whilst
this currency impact has benefited the Company over the last year and post the
year end, experience of recent years suggests that currency movements have a
habit of reversing themselves and should represent a neutral impact for
shareholder returns in the long run. The Board keeps the decision on whether
to hedge the capital value or income generation under review. Please see the
Chairman's Statement above for further details.
Foreign exchange risk to NAV/share price volatility There is a risk that material sterling strength or volatility will result in a
volatile NAV/share price since most the Company's assets are denominated in
U.S. dollars, or in currencies which tend to be closely correlated with the
dollar.
Income generation risk There is a risk that the Company fails to generate sufficient income from its The Board reviews quarterly detailed estimates of revenue income and
investment portfolio to meet the Company's target annual dividend yield of 4 expenditure prepared by the Manager and, if required, challenges the Manager
to 6%, based on the initial issue price of 100.0p per share. as to the underlying assumptions made in earnings from the underlying
strategies and the Company's expenditure. Under Guernsey company law, the
Company is permitted to pay dividends despite losses provided solvency tests
are performed and passed ahead of dividend declaration.
Underperformance Poor implementation of the investment strategy, for example as to thematic The Board manages these risks by diversification of investments and through
exposure, sector allocation, undue concentration of holdings, factor risk its investment restrictions and guidelines, which are monitored and reported
exposure or the degree of total portfolio risk, may lead to the Company not on by the Manager. The Manager provides the Directors with timely and accurate
achieving its investment objective of providing a stable income and capital management information, including performance data, revenue estimates,
appreciation, and/or underperformance against the Company's peer companies. liquidity reports and shareholder analyses.
Operational risks
Corporate strategy and shareholder demand The corporate strategy, including the investment objectives and policies, may The Manager has a dedicated investment company sales team that engages with
not be of sufficient interest to current or prospective shareholders. both existing and prospective shareholders of the Company. This engagement
includes the education/description of how JARA's portfolio is invested and the
Certain buyers within the sector will only consider investing into an exposures that this generates. The Board regularly reviews its strategy, and
investment trust where its AUM is over a certain level; the Company's AUM assesses, with its broker and Manager, shareholder demand.
currently stands below these levels.
Cyber crime The threat of cyber attack, in all guises, is regarded as at least as The Company benefits directly or indirectly from all elements of JPMorgan's
important as more traditional physical threats to business continuity and Cyber Security programme. The information technology controls around physical
security. security of JPMorgan's data centres, security of its networks and security of
its trading applications, are tested by independent auditors and reported
In addition to threatening the Company's operations, such an attack is likely every six months against the AAF Standard.
to raise reputational issues which may damage the Company's share price and
reduce demand for its shares.
Counterparty risk The nature of the contractual frameworks that underpin many of the real assets The Board is able to seek information from the Manager in relation to
within the underlying strategies necessitate close partnerships with a range counterparty concentration and correlation of providers. As counterparty
of counterparties. In addition to the financial risks arising from exposure to quality is key to maintaining predictable income streams, the Manager seeks
customers, client and lenders, there are a large number of operational regular contact with key counterparties throughout the supply chain and with
counterparties including construction and maintenance subcontractors. revenue-providing counterparties, while also actively monitoring the financial
Counterparty risk would primarily manifest itself as either counterparty strength and stability of all these entities.
failure or underperformance of contractors.
Investment delay Investment into underlying strategies could be delayed resulting in loss of The Manager monitors and reports to the Board on 'queue' length and the
expected income and capital growth opportunity. underlying pattern of deployment in the underlying strategies. Any slowing of
deployment patterns is reported to Board and the income impact is modelled.
Outsourcing Disruption to, or failure of, the Manager's accounting, dealing or payments Details of how the Board monitors the services provided by JPM and its
systems or the Depositary or Custodian's records may prevent accurate associates and the key elements designed to provide effective risk management
reporting and monitoring of the Company's financial position or a and internal control are included within the Risk Management and Internal
misappropriation of assets. Controls section of the Corporate Governance Statement in the Company's full
annual report.
The Manager has a comprehensive business continuity plan which facilitates
continued operation of the business in the event of a service disruption
(including and disruption resulting from the COVID-19 pathogen). Directors
have received reassurance that the Manager and its key service providers have
business continuity plans in place and that these are regularly tested.
Regulatory risks
Regulatory change Various legal and regulatory changes may adversely impact the Company and its The Manager and its advisers continually monitor any potential or actual
underlying investments. This could take the form of legislation impacting the changes to regulations to ensure its assets and service providers remain
supply chain or contractual costs or obligations to which the underlying compliant. Most social and transportation infrastructure concessions provide a
strategies are exposed. Certain investments in the underlying strategies are degree of protection, through their contractual structures, in relation to
subject to regulatory oversight. Regular price control reviews by regulators changes in legislation which affect either the asset or the way the services
determine levels of investment and service that the portfolio company must are provided. Regulators seek to balance protecting customer interests with
deliver and revenue that may be generated. Particularly severe reviews may making sure that investments have enough money to finance their functions.
result in poor financial performance of the affected investment.
The Company invests in real assets via a series of private funds. The
operation of these entities including their ability to be bought, held or sold
by investors across a number of jurisdictions and the taxation suffered within
the funds and by investors into the funds depend on a complex mix of
regulatory and tax laws and regulations across a wide range of countries.
These may be subject to change that may threaten the Company's access to and
returns earned from the private funds.
Environmental risks
Climate change Climate change is one of the most critical emerging issues confronting asset In the Board's and Manager's view, investments that successfully manage
managers and their investors. Climate change may have a disruptive effect on climate change risks will perform better in the long-term. Consideration of
the business models and profitability of individual investments, and indeed, climate change risks and opportunities is an integral part of the investment
whole sectors. The Board is also considering the threat posed by the direct process. The Manager aims to influence the management of climate related risks
impact of climate change on the operations of the Manager and other major through engagement and voting with respect to the equity portion of the
service providers. portfolio, and is a participant of Climate Action 100+ and a signatory of the
United Nations Principles for Responsible Investment.
The Company may be exposed to substantial risk of loss from environmental
claims arising in respect of its underlying real assets that have Generally, the Manager (or, in the case of an investment made by a JPMAM
environmental problems, and the loss may exceed the value of such underlying product, the relevant manager) performs market practice environmental due
assets, although for some real assets this can be mitigated to some extent by diligence of all of the investments to identify potential sources of
contracted lease commitments. Furthermore, changes in environmental laws and pollution, contamination or other environmental hazard for which such
regulations or in the environmental condition of investments may create investment may be responsible and to assess the status of environmental
liabilities that did not exist at the time of acquisition of an underlying regulatory compliance.
asset and that could not have been foreseen. It is also possible that certain
underlying assets to which the Company will be exposed could be subject to
risks associated with natural disasters (including wildfire, storms,
hurricanes, cyclones, typhoons, hail storms, blizzards and floods) or non
climate related manmade disasters (including terrorist activities, acts of war
or incidents caused by human error).
Global risks
Geopolitical risk The Company's investments are exposed to various geopolitical and This risk is managed to some extent by diversification of investments and by
macro-economic risks incidental to investing. Political, economic, military regular communication with the Manager on matters of investment strategy and
and other events around the world (including trade disputes) may impact the portfolio construction which will directly or indirectly include an assessment
economic conditions in which the Company operates, by, for example, causing of these risks. The Board can, with shareholder approval, look to amend the
exchange rate fluctuations, interest rate changes, heightened or lessened investment policy and objectives of the Company to gain exposure to or
competition, tax advantages or disadvantages, inflation, reduced economic mitigate the risks arising from geopolitical instability although this is
growth or recession, and so on. Such events are not in the control of the limited if it is truly global.
Company and may impact the Company's performance.
The crisis in Ukraine has affected energy and commodity markets and may cause
further damage to the global economy. The ongoing conflict between Russia and
Ukraine has heightened the possibility that tensions will spill over and
intensify geo-political unrest between other countries sharing a common
border.
Inflation Excessive inflation is likely to increase the Company's cost of capital and There is a degree of inflationary linkage within the investment portfolio,
cost of operations. albeit on a lagging basis.
Global inflation is largely stablising. However, the Board is unable to
forecast macro-economic developments.
Emerging risk Description Mitigating activities
Technological and behavioural change The returns generated from the underlying investment strategies in which the The Board manages these risks through maintaining a diversified portfolio of
Company is invested may be materially affected by new or emerging changes in investments, ensuring the underlying investment team consider these threats in
technology which change the behaviour of individuals or corporations, or may portfolio construction and investment plans and are aware of the investment
require substantial investment in new or replacement technologies. Such opportunities as well as the threats presented by these shifts in the sectors
changes may include the decline in demand for office space as remote working in which they invest.
technologies become widespread, material changes in transport technologies and
new technologies for the generation and transmission of energy.
Pandemics The emergence of COVID-19 has highlighted the speed and extent of economic During the year under review, much of the world adapted to living with
damage that can arise from a pandemic from both known or unknown pathogens, or COVID-19 and the disruption caused by the pandemic. The Board receives reports
unforeseen global emergencies. The Company is at risk from both the financial on the business continuity plans of the Manager and other key service
impacts of such an event, as well as possible disruption to the day-to-day providers. The effectiveness of these measures have been assessed throughout
activities of its service providers. the course of the COVID-19 pandemic and the Board will continue to monitor
developments as they occur and seek to learn lessons which may be of use in
the event of future pandemics. China in particular was affected by its pursuit
of 'Zero COVID'. This approach changed by the end of the year, when
restrictions were removed. The Company has minimal exposure to China, circa 3%
of the Company's NAV.
Real Estate Material shift in real estate usage patterns (increasing working from home, The portfolio is actively managed with a focus on ensuring that the properties
accelerating decline of retail) or substantial increase in environmental are ESG rated in accordance with GRESB. Please see the ESG Report in the
standards expected of new and built properties renders current real estate Company's full annual report.
strategies inappropriate or unable to meet expected returns.
Transport Significant reduction in global trade reduces demand/pricing for maritime The assets are on long term leases.
assets. Rising environmental awareness reduces demand for aviation and
increased emission obligations increase the cost and reduce the demand for
aviation.
Energy Cost of renewable energy drops materially either through increased supply or The Company has a broadly diversified portfolio and has exposure to energy
new rival technologies (e.g. fusion) materially reducing returns from transition assets which expands both traditional and renewable sources.
renewable energy projects. Renewable assets tend to be on long-tern off-take agreements providing a
stabilised cash flow.
Emerging Risks
The Board continually monitors the changing risk landscape and any emerging
and increasing threats to the Company's business model, as they come into view
via a variety of means, including advice from the Manager, the Company's
professional advisors and Directors' knowledge of markets, changes and events.
These threats and/or changes have a degree of uncertainty in terms of
probability of occurrence and possible effects on the Company. Should an
emerging risk become sufficiently clear and the implications evaluated, it may
be moved to a principal risk. The Board escalated Climate Change and
Geopolitical risks as Principal Risks from Emerging Risks.
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
Details of the management contract are set out in the Directors' Report in
the Company's full annual report. The management fee payable to the Manager
for the year was £2,231,000 (2022: £1,628,000) of which £27,000 (2022:
£67,000) was outstanding at the year end.
The Company holds cash in JPMorgan Sterling Liquidity Fund, which is managed
by JPMF. At the year end, this was valued at £0.71 million (2022: £0.01
million). Interest amounting to £28,000 (2022: £4,000) was receivable during
the year of which £nil (2022: £nil) was outstanding at the year end.
The Company holds cash in JPMorgan US Dollar Liquidity Fund, which is managed
by JPMF. At the year end, this was valued at £0.46 million (2022: £0.1
million). Interest amounting to £9,000 (2022: £8,000) was receivable during
the year of which £nil (2022: £nil) was outstanding at the year end.
Included in administrative expenses in note 7 in the Company's full annual
report are safe custody fees amounting to £1,000 (2022: £2,000) payable to
JPMorgan Chase N.A. of which £nil (2022: £1,000) was outstanding at the year
end.
Handling charges on dealing transactions amounting to £27,000 (2022:
£30,000) were payable to JPMorgan Chase N.A. during the year of which £nil
(2022: £4,000) was outstanding at the year end.
At the year end, a bank balance of £2,374,000 (2022: £1,052,000) was held
with JPMorgan Chase N.A. A net amount of interest of £7,000 (2022: £171,000)
was receivable by the Company during the year from JPMorgan Chase N.A. of
which £nil (2022: £nil) was outstanding at the year end.
Please see below for details of the Directors' remuneration.
Single total figure of remuneration(1)
The single total figure of remuneration for each Director is detailed below.
2023 2022
Total Total
Directors £ £
John Scott 61,800 60,000
Helen Green 51,500 50,000
Simon Holden 55,650 54,000
Chris Russell 43,300 42,000
Total 212,250 206,000
(1) Other subject headings for the single figure table are not
included because there is nothing to disclose in relation thereto.
Whilst not required by the Company and not constituting part of the Directors'
remuneration, the Directors own shares in the Company. The Directors'
received a dividend from their shares over the reporting period commensurate
with their shareholdings, which does not constitute part of their
remuneration. There are no balances payable to the Directors at the year end.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report & Financial
Statements in accordance with applicable law and regulations.
The Companies (Guernsey) Law, 2008 ('the law') requires the Directors to
prepare the Financial Statements for each financial year. Under that law, the
Directors have elected to prepare the financial statements in accordance with
International Financial Reporting Standards to meet the requirements of
applicable law and regulations. Under Company law the Directors must not
approve the Financial Statements unless they are satisfied that, taken as
a whole, the Annual Report & Financial Statements are fair, balanced and
understandable, provide the information necessary for shareholders to assess
the Company's position, 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 accounting estimates that are reasonable and
prudent;
• state whether applicable International Financial Reporting Standards
have been followed, subject to any material departures disclosed and explained
in the financial statements; and
• prepare the financial statements on a 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 law. 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 accounts are published on the www.jpmrealassets.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 accounts since they were initially presented on the website.
Legislation in Guernsey governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions. The
accounts are prepared in accordance with International Financial Reporting
Standards.
Under applicable law and regulations the Directors are also responsible for
preparing a Directors' Report, Corporate Governance Statement and Directors'
Remuneration Report that comply with that law and those regulations.
Each of the Directors, whose names and functions are listed in the Company's
full annual report confirms that, to the best of their knowledge:
• the financial statements, which have been prepared in accordance with
International Financial Reporting Standards and applicable law, give a true
and fair view of the assets, liabilities, financial position and return or
loss 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 and emerging risks and uncertainties that it
faces.
The Board also confirms that it is satisfied that the Strategic Report and
Directors' Report include a fair review of the development and performance of
the business, and the position of the Company, together with a description of
the principal and emerging risks and uncertainties that the Company faces.
For and on behalf of the Board
John Scott
Chairman
29th June 2023
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 28th February 2023
Year ended Year ended
28th February 28th February
2023 2022
£'000 £'000
Gains on investments held at fair value through profit or loss 16,763 15,896
Net foreign currency gains 183 905
Investment income 10,853 9,846
Interest receivable and similar income 44 183
Total return 27,843 26,830
Management fee (2,231) (1,628)
Other administrative expenses (687) (1,023)
Return before finance costs and taxation 24,925 24,179
Finance costs (1) (1)
Return before taxation 24,924 24,178
Taxation (1,094) (485)
Return for the year 23,830 23,693
Return per share 10.91p 11.06p
STATEMENT OF CHANGES IN EQUITY
Share Retained
premium earnings Total
£'000 £'000 £'000
Year ended 28th February 2022
At 28th February 2021 209,136 (25,619) 183,517
Issue of ordinary shares 7,987 - 7,987
Return for the year - 23,693 23,693
Dividends paid in the year (note 2) - (8,608) (8,608)
At 28th February 2022 217,123 (10,534) 206,589
Year ended 28th February 2023
At 28th February 2022 217,123 (10,534) 206,589
Issue of ordinary shares 2,155 - 2,155
Return for the year - 23,830 23,830
Dividends paid in the year (note 2) - (8,846) (8,846)
At 28th February 2023 219,278 4,450 223,728
STATEMENT OF FINANCIAL POSITION
At 28th February 2023
2023 2022
£'000 £'000
Assets
Non current assets
Investments held at fair value through profit or loss 219,960 204,667
Current assets
Other receivables 990 1,063
Cash and cash equivalents 3,541 1,175
4,531 2,238
Liabilities
Current liabilities
Other payables (763) (316)
Net current assets 3,768 1,922
Total assets less current liabilities 223,728 206,589
Net assets 223,728 206,589
Amounts attributable to shareholders
Share premium 219,278 217,123
Retained earnings 4,450 (10,534)
Total shareholders' funds 223,728 206,589
Net asset value per share 102.0p 95.0p
STATEMENT OF CASH FLOWS
For the year ended 28th February 2023
Year ended Year ended
28th February 28th February
2023 2022
£'000 £'000
Operating activities
Return before taxation 24,924 24,179
Deduct dividend income (10,770) (9,730)
Deduct investment income - interest (83) (116)
Deduct deposit and liquidity fund interest income (44) (183)
Less interest expense (1) (1)
Add indirect management fee 1,265 880
Add performance fee 128 -
Deduct gains on investments held at fair value through profit or loss (16,763) (15,896)
Decrease/(increase) in prepayments and accrued income 6 (14)
Increase/(decrease) in other payables 255 (101)
(Deduct exchange gains)/add exchange losses on cash and cash equivalents (6) 107
Taxation (1,101) (484)
Net cash outflow from operating activities before interest and taxation (2,190) (1,359)
Dividends received 10,856 9,413
Investment income - interest 80 150
Deposit and liquidity fund interest received 44 183
Interest expense 1 -
Purchases of investments held at fair value through profit or loss (21,148) (53,630)
Sales of investments held at fair value through profit or loss 21,408 27,279
Net cash inflow/(outflow) from operating activities 9,051 (17,964)
Financing activities
Issue of ordinary shares 2,155 7,987
Dividends paid (8,846) (8,608)
Net cash outflow from financing activities (6,691) (621)
Increase/(decrease) in cash and cash equivalents 2,360 (18,585)
Cash and cash equivalents at start of year 1,175 19,867
Exchange movements 6 (107)
Cash and cash equivalents at end of year(1) 3,541 1,175
(1) Cash and cash equivalents includes liquidity funds.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 28th February 2023
1. General information
The Company is a closed-ended investment company incorporated in accordance
with The Companies (Guernsey) Law, 2008. The address of its registered office
is Level 3, Mill Court, La Charroterie, St Peter Port, Guernsey GY1 1EJ.
The principal activity of the Company is investing in securities as set out in
the Company's Objective and Investment Policies.
The Company was incorporated on 22nd February 2019. The Company was admitted
to the Main Market of the London Stock Exchange and had its first day of
trading on 24th September 2019.
Investment objective
The Company will seek to provide Shareholders with stable income and capital
appreciation from exposure to a globally diversified portfolio of core real
assets.
Investment policy
The Company will pursue its investment objective through diversified
investment in private funds or accounts managed or advised by entities within
J.P. Morgan Asset Management (together referred to as 'JPMAM'), the asset
management business of JPMorgan Chase & Co. These JPMAM Products will
comprise 'Private Funds', being private collective investment vehicles, and
'Managed Accounts', which will typically take the form of a custody account
the assets in which are managed by a discretionary manager.
2. Dividends
2023 2022
£'000 £'000
Dividends paid
2022/2023 First interim dividend of 1.00p (2022: 1.00p) per share 2,174 2,088
2022/2023 Second interim dividend of 1.00p (2022: 1.00p) per share 2,174 2,172
2022/2023 Third interim dividend of 1.00p (2022: 1.00p) per share 2,194 2,174
2022/2023 Fourth interim dividend of 1.05p (2022: 1.00p) per share 2,304 2,174
Total dividends paid in the year 8,846 8,608
Dividend declared
2023/2024 First interim dividend declared of 1.05p (2022: 1.00p) 2,304 2,174
3. Return per share
2023 2022
£'000 £'000
Total return 23,830 23,693
Weighted average number of shares in issue during the year 218,481,925 214,182,610
Total return per share 10.91p 11.06p
4. Net asset value per share
2023 2022
Shareholders' funds (£'000) 223,728 206,589
Number of shares in issue 219,407,952 217,407,952
Net asset value per share 102.0p 95.0p
5. Status of announcement
2022 Financial Information
The figures and financial information for 2022 are extracted from the Annual
Report and Financial Statements for the year ended 28th February 2022 and do
not constitute the statutory accounts for the year. The Annual Report &
Financial Statements includes the Report of the Independent Auditors which was
unqualified.
2023 Financial Information
The figures and financial information for 2023 are extracted from the
published Annual Report and Financial Statements for the year ended 28th
February 2023 and do not constitute the statutory accounts for that year.
The Annual Report and Financial Statements include the Report of the
Independent Auditors which is unqualified.
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.
29th June 2023
For further information:
Emma Lamb,
JPMorgan Funds Limited
020 7742 4000
ENDS
A copy of the annual report will shortly be submitted to the FCA's National
Storage Mechanism and will be available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://secureweb.jpmchase.net/readonly/https:/lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDIsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMDA0MDUuMTk3NzA4MDEiLCJ1cmwiOiJodHRwczovL2RhdGEuZmNhLm9yZy51ay8jL25zbS9uYXRpb25hbHN0b3JhZ2VtZWNoYW5pc20ifQ.b7Q7NXHGRA8MjB_Ugl8Tv4JxhiU28TbcoNb04FTTMiY/br/77057565556-l)
The annual report will shortly be available on the Company's website
at www.jpmrealassets.co.uk (http://www.jpmrealassets.co.uk/) where
up-to-date information on the Company, including daily NAV and share prices,
factsheets and portfolio information can also be found.
JPMORGAN FUNDS LIMITED
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