REG - JPMorgan Japanese IT - Annual Financial Report
14/12/2022 07:00
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RNS Number : 6115J JPMorgan Japanese Inv. Trust PLC 14 December 2022
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN JAPANESE INVESTMENT TRUST PLC
FINAL RESULTS FOR THE YEAR ENDED 30TH SEPTEMBER 2022
Legal Entity Identifier: 549300JZW3TSSO464R15
Information disclosed in accordance with DTR 4.2.2
Chairman's Statement
Investment Performance
The Investment Manager's high conviction, unconstrained approach, focused on
finding Japan's best investment ideas does, from time to time lead to periods
of underperformance. This is what happened in the financial year ended 30th
September 2022, resulting in a challenging period for shareholders and the
Company.
As stated in the half-year report, the Company underperformed during the first
half of the 2021/22 financial year. This continued into the second half but,
as discussed in the Investment Managers' report both relative and absolute
performance recovered in the final months of the review period. The Company's
total return on net assets (in sterling terms), with debt calculated at fair
value(1), was -34.8%, compared with a total return of -13.9% on the Company's
benchmark index, the Tokyo Stock Exchange (TOPIX) Index (also in sterling
terms), over the same period. Therefore, over the full financial year, the
Company underperformed the benchmark by -20.9% in net asset value (NAV) terms.
The share price total return, with dividends reinvested, was -35.2%, resulting
in very modest widening in the discount to NAV at which the Company's shares
trade. A contributory factor to the absolute return was a decline in the yen
versus sterling over the period of 7.4%.
As the Investment Managers set out in their report on pages 12 to 19 of the
Company's Annual Report & Financial Statements for the year ended 30th
September 2022 the main reason for the poor outcome was the heavy exposure
in the portfolio to companies whose valuations were more sensitive than the
broader market to the negative impact of rapidly rising global inflation and
the associated interest rate increases. The Investment Manager's strategy of
investing for the long term in higher-quality companies with good growth
prospects does mean that these periods of underperformance may occur.
The portfolio remains invested in many attractive companies whose prospects
have not deteriorated and, in some cases, improved, while valuations have come
down. While stock selection for the Company is not driven by macroeconomic
considerations, macroeconomic factors, as we have seen, can affect valuation
levels materially. So, it is worth noting that some macroeconomic indicators
may now be improving. Inflation may be peaking. China may reopen and reflate.
The US dollar may have peaked and rate rises may now slow down. All of this
would most likely be positive for the portfolio's valuation levels.
Shareholders are reminded that, historically, the Company has outperformed
after a period of underperformance of the magnitude we have seen and the
Investment Managers' focus on the longer term means that it is more relevant
to assess the Company's performance over a longer time frame, which remains
strong, in both absolute and relative terms. The Company has outperformed the
benchmark index over five and 10 years, by 4.5% and 47.4%, respectively.
Since the end of the financial year, the Company's NAV has increased by 5.5%
as at 9th December 2022, compared to a benchmark increase of 2.7%, while the
share price increased by 6.3%.
As I commented in the half-year report, the Company's Morningstar Analyst
rating was increased to the highest level, Gold, from the previous rating of
Silver in April 2022, with the Morningstar report recognising the strength of
the Company's Investment Managers and their investment process. As such, your
Manager remains one of only two active Japanese equity managers with a Gold
Morningstar Analyst rating across some 900 Japanese equity funds and share
classes which Morningstar classify as 'Japan Large-Cap equity' and on which
they provide data on their UK website. You can find further details of the
Morningstar research and rating at www.morningstar.co.uk. The Company
continues to maintain the highest Morningstar sustainability rating of five
globes.
Whilst the Board has been monitoring the Investment Managers closely from the
UK, we have not been able to visit the Investment Managers in Japan since
March 2019 due to Covid-imposed travel restrictions. We were finally able to
do so in October 2022 and this gave us the opportunity to spend time
discussing the reason for the Company's underperformance with the Investment
Managers. The Board remains confident that the Investment Managers and their
process will continue to deliver attractive investment returns in the future.
(1) As disclosed in the Company's 2021 Annual Report, the AIC has
recommended that investment trusts with long-term fixed rate debt prepare a
measure of their NAV that values this debt at 'fair value' rather than using
par value. This reflects the fact that the economic value of this debt may
differ materially from the par of accounting value of the debt instrument and
the belief that this value may be of interest to shareholder and potential
investors. Accordingly, the Board has decided to use this measurement when
reporting NAV returns within the Company's financial report; this is also in
line with the basis of the NAV released to the London Stock Exchange every
business day.
Gearing
The Board of Directors believes that gearing can be beneficial to performance
and the overall strategic gearing policy and guidelines, reviewing these at
each Board meeting. The Investment Managers then manage the gearing within the
agreed limits of 5% net cash to 20% geared in normal market conditions. As at
30th September 2022, gearing was equivalent to 11.7% (2021: 12.7%) of net
assets.
During the second half of the financial year, the Company took out a ¥ 5
billion revolving credit facility with Mizuho Bank Ltd to enable the
Investment Managers to invest further as and when they see opportunities and
to diversify the funding sources available to the Company.
The Scotiabank facility expired on 2nd December 2022, therefore the maximum
gearing is currently limited to c. 14%. The Board is reviewing options to
replace this facility.
Revenues and Dividends
Income received during the year ended 30th September 2022 again rose
year-on-year, with earnings per share for the full year of 7.48p (2021:
5.99p). This reflected a continued recovery in the level of dividends paid and
the strong balance sheets of portfolio companies.
The Board's dividend policy is to pay out the majority of the revenue
available each year. The Board therefore proposes, subject to shareholders'
approval at the Annual General Meeting to be held on 12th January 2023, to pay
a final dividend of 6.2p per share (2021: 5.3p) on 3rd February 2023 to
shareholders on the register at the close of business on 23rd December 2022
(ex-dividend date 22nd December 2022). This represents an increase of 17% in
the dividend and follows last year's 4% increase.
We hope to be able to continue to increase the dividend in future years.
Discount Management/Share repurchases
The Board monitors the discount to NAV at which the Company's shares trade and
believes that, over the long term, for the Company's shares to trade close to
NAV, the focus has to remain on consistent, strong investment performance over
the key one, three, five and 10 year timeframes, combined with effective
marketing and promotion of the Company.
The Board recognises that a widening of, and volatility in, the Company's
discount is seen by some investors as a disadvantage of investments trusts.
The Board has restated its commitment over the long run to seek a stable
discount or premium, commensurate with investors' appetite for Japanese
equities and the Company's various attractions, not least the quality of the
investment team, the investment process and the strong long-term performance
these have delivered. Since 2020, this commitment has resulted in not only
increased expenditure on marketing but also a series of targeted buybacks.
During the past financial year, a total of 2,278,345 shares (1.41% of shares
in issue) were repurchased (2021: 2,858,644 shares).
As at 30th September 2022, the discount was 7.3%, very close to the level of
6.8% where it closed the previous year. Over the past financial year, the
discount ranged from 10.6% to a premium of 2.7% and the average discount was
5.7%. This compares with the previous financial year, when the discount ranged
from 9.2% to a premium of 1.5% and the average discount was 3.9%.
Since the end of the current review period, the Board has repurchased a
further 735,000 shares and the discount stood at 6.6% as at 9th December 2022.
Shares are only repurchased at a discount to the prevailing net asset value,
which increases the Company's net asset value per share. Shares may either be
cancelled or held in Treasury for possible re-issue at a premium to net asset
value.
Environmental, Social and Governance Considerations
As detailed in the Investment Managers' Report, Environmental, Social and
Governance ('ESG') considerations are fully integrated into their investment
process. The Board shares the Investment Managers' view of the importance of
ESG factors when making investments for the long term and the necessity of
continued engagement with investee companies over the duration of the
investment. As mentioned above, we are pleased that the Company retains the
highest Morningstar Sustainability rating of five globes.
Further information on JPMorgan's ESG process and engagement is set out in the
ESG Report on pages 10 to 23of the Company's Annual Report & Financial
Statements for the year ended 30th September 2022 and in the JPMorgan Asset
Management 2021 Investment Stewardship Report, which can be accessed at
https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/sustainable-investing/investmentstewardship-report.pdf
Succession Planning
The Board has given considerable thought to its succession planning. In line
with this plan, Sir Stephen Gomersall will retire from the Board and as our
Senior Independent Director at the forthcoming AGM. On behalf of the Board, I
would like to thank Sir Stephen for his invaluable input to the Company over
the years since he joined the Board in 2013 and wish him well for the future.
Sally Macdonald, who has been a Director since 2018, will succeed Sir Stephen
as the Company's Senior Independent Director, effective from the conclusion of
the AGM.
Having served as a Director for nine years next year, the succession plan
recognises that I will be retiring from the Board and as Chairman at the AGM
in 2024. I am delighted that the Board has decided that Stephen Cohen, the
current Audit Chair, will replace me as Chairman.
Board Appointment
Given these plans, in the early part of this year the Company engaged an
independent search consultancy to find a suitably qualified Director to join
the Board and to take over from Stephen Cohen as Audit Chair in due course.
After a thorough selection process, in October 2022 we announced the
appointment of Sally Duckworth, effective from 31st October 2022. Sally is an
established entrepreneur with a focus on technology and has a background in
finance and investment. She qualified as a Chartered Accountant with
PricewaterhouseCoopers LLP.
In appointing Sally Duckworth to the Board, I believe we have set the Company
in good stead to ensure there is continuity with the changes to directorships
over the coming 13 months.
In order that all Directors have sufficient time to dedicate to the Company's
matters and to avoid conflicts of interest, the Board conducts a robust review
prior to, approving a Director taking on a new appointment. Details of this
process are set out in the Directors' Report on page 48 of the Company's
Annual Report & Financial Statements for the year ended 30th September
2022.
Board Evaluation
As required by the Corporate Governance Code, the Company undertook a
comprehensive external Board evaluation this year. While this resulted in a
small number of proposals that the Company will adopt, the overall conclusion
was very positive in terms of the effectiveness of the Board and the skills,
expertise and commitment of the Directors. The combination of the robust way
in which the Board approves new appointments taken on by Directors and the
annual Board evaluation means that the Board remains confident that each
Director has the time to discharge responsibilities to the Company, something
that is evidenced by, for example, full attendance at all the Company's
meetings, as shown on page 48 of the Company's Annual Report & Financial
Statements for the year ended 30th September 2022.
Board Diversity
I am pleased to note that the Board meets the recommendations of the FTSE
Women Leaders Review. The Review set targets for FTSE 350 companies to have
40% female representation, up from 33%, and requires that one of the Chair or
Senior Independent Director be a woman. Other than a brief period at the end
of 2021, the Board has had at least 33% female representation since July 2020,
currently 40%. This will rise to 50% at the conclusion of the AGM and, with
Sally Macdonald taking over as Senior Independent Director from Sir Stephen
Gomersall, I am pleased to report that the Board will meet these targets well
in advance of when it is required to report on them.
The Board is also focused on the requirements of the Parker Review, which
seeks to increase the ethnic diversity of Boards with a recommendation that
FTSE 250 companies have at least one director from an ethnically diverse
background by 2024. The Company has long complied with this recommendation,
with George Olcott appointed as a director in 2016. For the first time, we
have included a table in the Annual Report this year, clearly showing the
gender and ethnic composition of the Board, on page 32 of the Company's Annual
Report & Financial Statements for the year ended 30th September 2022.
In compliance with corporate governance best practice, all Directors, with the
exception of Sir Stephen Gomersall, will be standing for re-appointment at
the forthcoming AGM.
Annual General Meeting and Shareholder Contact
The Company's Annual General Meeting (AGM) will be held on 12th January 2023
at 12.30 pm at 60 Victoria Embankment, London EC4Y 0JP.
We are delighted that this year we will once again be able to invite
shareholders to join us in person for the Company's AGM, to hear from the
Investment Managers. Their presentation will be followed by a question and
answer session. Shareholders wishing to follow the AGM proceedings but
choosing not to attend in person will be able to view proceedings live and ask
questions (but not vote) through conferencing software. Details on how to
register, together with access details, will be available shortly on the
Company's website at www.jpmjapanese.co.uk, or by contacting the Company
Secretary at invtrusts.cosec@jpmorgan.com.
My fellow Board members, representatives of JPMorgan and I look forward to the
opportunity to meet and speak with shareholders after the formalities of the
meeting have been concluded.
Shareholders who are unable to attend the AGM are strongly encouraged to
submit their proxy votes in advance of the meeting, so that they are
registered and recorded at the AGM. Proxy votes can be lodged in advance of
the AGM either by post or electronically: detailed instructions are included
in the Notes to the Notice of Annual General Meeting on pages 93 to 95 of the
Company's Annual Report & Financial Statements for the year ended 30th
September 2022.
If there are any changes to these arrangements for the AGM, the Company will
update shareholders via the Company's website, and, if appropriate, through an
announcement on the London Stock Exchange.
Outlook
Your Board shares the Investment Managers' longer term optimism about the
prospects for holdings in the Company's portfolio and their enthusiasm about
the appealing opportunities in the Japanese market, whilst remaining mindful
of the recent and ongoing challenges resulting from the war in Ukraine and
global inflation. Furthermore, the Board is confident that the Investment
Managers' disciplined investment process and careful approach to risk
management, supported by JPMorgan's extensive research resources, will
continue to identify these opportunities and deliver attractive long-term
returns for shareholders.
On behalf of the Board, I would like to thank you for your ongoing support.
Christopher Samuel
Chairman
13th December 2022
Investment Managers' Report
Performance
For the financial year ended 30th September 2022, the Company returned -34.8%
on a net asset basis (in sterling terms), underperforming its benchmark, the
TOPIX index, which declined 13.9%.
We use an unconstrained investment approach, looking for the very best
companies with excellent long-term prospects. This means the portfolio has a
strong bias towards growth companies, which inevitably leads to poor
performance at times, as it has in the past two years. The extent of the
Company's recent underperformance is certainly very disappointing to us, and
we clearly recognise the disappointment of shareholders. However, we stress
that this underperformance is the result of the same focus, particularly on
quality, that we believe achieves the best performance over a multi-year
period. Indeed, the Company's long-term track record of strong absolute
returns and outperformance is evidence of this. Over the 10 years to 30th
September 2022, the Company's average annualised NAV return was 10.9%,
outpacing the benchmark return of 8.8%. The Company's long-term share price
performance has been even stronger at 12.3% per annum over the same period,
resulting in a narrowing of the discount.
Performance attribution
Year ended 30th September 2022
% %
Contributions to total returns
Benchmark return -13.9
Stock selection -19.9
Currency -0.1
Gearing/Cash -0.8
Investment Manager contribution -20.8
Portfolio return(A) -34.7
Management fee/other expenses -0.7
Share Buy-Back/Issuance +0.1
Other effects -0.6
Return on net assets - Debt at par value(A) -35.3
Impact of fair value of debt +0.5
Return on net assets - Debt at fair value(A) -34.8
Return to shareholders(A) -35.2
Source: JPMAM and Morningstar. All figures are on a total return basis.
Performance attribution analyses how the Company achieved its recorded
performance relative to its benchmark.
(A) Alternative Performance Measure ('APM').
Economic and Market Background
The main reason for recent underperformance was rapidly rising global
inflation and the associated interest rates rises around the world coupled
with the portfolio's high exposure to growth stocks. Performance was
particularly poor during the first four months of 2022 as all major equity
markets reacted to news of Russia's invasion of Ukraine, which compounded
existing inflationary pressures and prompted an aggressive reaction from the
US Federal Reserve and its counterparts in the UK and Europe. This was very
detrimental to our performance as higher interest rates outside Japan reduced
the value of future cash flows, and thus company valuations globally,
including those in Japan. This was especially the case for the valuations of
technology and other growth-oriented stocks, which were hardest hit in the
past year's global stock market rout.
We do not believe the long-term outlook for the companies we own has
deteriorated. Indeed, in certain areas we think the outlook for our companies
has improved materially. One example is factory automation, where rising wages
in manufacturing companies and the desire to shorten supply chains make the
arguments for automation more compelling. Nor do we expect significantly
higher interest rates in Japan. Yet the Japanese market has not escaped the
past year's global sell-off and, as in other markets, the Premium and Quality
growth-oriented stocks we favour have underperformed significantly. This can
be seen in the chart shown in the Company's Annual Report & Financial
Statements for the year ended 30th September 2022. Although these companies
possess the best long-term growth outlooks, highest margins and strongest
balance sheets, their valuations are based on long-term growth projections and
are negatively impacted by the prospect of rising rates.
Performance - Strategic Classifications
At least in the Japanese market, there have already been signs that this
correction may have run its course. The Company's performance, in both
absolute and relative terms, has been recovering in recent months, as
investors have begun to appreciate that the business outlook for quality and
growth names remains as positive as it was before the sell-off. In the three
months to 30th September 2022, the Company returned 3.7%, compared to a
benchmark return of 1.1%. Since the end of the financial year, the Company's
NAV has increased by 5.5% as at 9th December 2022, compared to a benchmark
increase of 2.7%, while the share price increased by 6.3%.
Equally, the business outlook for the cyclical and value sectors that we do
not own remains unattractive. The banking sector is one example. We do not
expect a significant pick-up in loan demand; Japan is 'over-banked' and
returns on equity are low (currently 6%) and look set to remain so.
Investment philosophy and process
Our investment strategy is therefore unchanged. We will remain focused on
high-quality companies with strong balance sheets and leading competitive
positions. Such companies have demonstrated pricing power over many years and
we believe they are well positioned to continue to prosper, regardless of the
challenges of the current macroeconomic environment. In identifying potential
investments, we are supported by JPMorgan Asset Management's well-resourced
investment team on the ground in Tokyo and JPMAM's extensive team of analysts,
both in Japan and globally.
Our bottom-up, unconstrained approach means the portfolio can, and does, look
very different from the benchmark. Typically, we do not hold many of the
well-known names covered by most analysts and included in the benchmark. Many
of these large companies operate in structurally impaired sectors such as
department stores and railway operators, both of which are vulnerable to
long-term declines in demand. As at 30th September 2022, the portfolio had an
active share of 84% (on a geared basis). Active share is a measurement of the
difference in the Company's portfolio compared to the benchmark index.
As an indicator of the quality in the portfolio, as at 30th September 2022,
the Company's return on equity was 17% compared to 12% for the market, while
the operating margin was 24% versus the market's 13%. At the same time, the
portfolio's price to earnings (P/E) ratio was 18x, significantly above the
market's 11.5x. This is lower than a year ago, when the Company's P/E was 35x,
due in part to the general market decline and also because the companies we
hold have, in many instances, revised up their earnings, further reducing
their P/E ratios. In addition, over the past year we have tended to sell more
highly valued companies and buy companies on lower valuations (see below for
further discussion on recent portfolio activity). We believe the portfolio's
higher-than-average P/E ratio is justified by the significantly better
long-term prospects of the companies we hold, compared to others in
traditional, declining sectors.
We use gearing judiciously to enhance returns. Portfolio gearing averaged
12.8% (2021: 14.0%) and was 11.7% (2021: 12.7%) at the end of the period as we
continued to see opportunities to purchase high-quality stocks at attractive
levels.
How we rate companies we consider for investment
A quality growth focus is the core of our investment process. We assign a
strategic classification to each company, based on desk-based research and
company meetings. The highest rating is 'Premium', followed by 'Quality', and
then 'Trading'. When assigning these ratings, in addition to assessing
companies on fundamentals such as balance sheet strength, free cash flow,
market position and growth prospects, we also consider governance issues, as
well as potential risks arising from environmental, social and governance
(ESG) considerations. Only businesses with sound governance practices and
corporate behaviour consistent with our ESG criteria will receive a Premium or
Quality rating, and the bar is high. Within the investable universe of
Japanese companies, we rate only about 20% as Premium or Quality, whereas
Premium or Quality names comprise around 90% of our portfolio. This rating
system means that we incorporated ESG considerations into our strategic and
valuation analysis of individual companies and into our investment decisions.
However, we are continually improving the ways in which we consider ESG
factors and integrate them into our investment process, and we are pleased
with recent progress in this direction. The Environmental, Social and
Governance Report on pages 20 to 23 of the Company's Annual Report &
Financial Statements for the year ended 30th September 2022 provides more
detail.
Portfolio themes
The portfolio is constructed entirely on a stock-by-stock basis as we seek out
the best, most attractive companies. Nonetheless, certain themes tend to
underpin our investment decisions. In fact, C0VID-19 accelerated several
tech-based trends in which we were already invested, strengthening the appeal
of sectors such as online shopping and gaming and cloud computing. However,
Japan remains well behind most other advanced economies in these and many
other areas, leaving plenty of scope for such trends to continue developing
over the coming years. For example, the penetration of e-commerce within the
Japanese retail market is just over 10% and remains much lower than in China,
the UK, South Korea or the US. Portfolio holdings such as Zozo, Japan's number
one online apparel retailer, and Monotaro, a top-ranked business-to-business
e-commerce company, are well placed to benefit, as is Nomura Research
Institute (NRI), a consultancy that advises companies on their digital
strategy. Elsewhere in the portfolio, Nintendo and Sony both own impressive
stables of games and related intellectual property that will ensure growing
revenue streams over the medium to long term.
Standardised cloud-based software for businesses is another digital theme.
Historically, many Japanese companies have used internal software solutions,
but now that the first generation of software engineers is reaching retirement
age, there is an imperative for businesses to switch to standardised software
solutions. Japan's poor demographics will add impetus to this as a structural
shift over time and companies such as OBIC, a supplier of business
administrative systems, provide the portfolio with exposure to this theme.
Japan population 2020
Deglobalisation is another trend gathering momentum. The pandemic, and
subsequent events such as widespread supply chain shortages, the conflict in
Ukraine and mounting US/China trade tensions, have increased companies' desire
to move production nearer to end customers. With wage inflation now an issue
in the US and other markets, businesses establishing new production plants and
warehouses have a stronger incentive to incorporate factory automation into
these facilities wherever feasible. Japan is fortunate to be home to some of
the world's leading automation companies, and the Company numbers several,
including Keyence, SMC and MISUMI, among its holdings.
Even before the outbreak of hostilities in Ukraine, there was already a clear
need for Japan, along with many other Asian and European countries, to shift
its energy mix away from a heavy reliance on imported fossil fuels. The war
only highlighted the need for Japan to speed up its transition to renewable
energy sources, and to make faster progress towards realising its commitment
to reduce carbon emissions to net zero by 2050.
Japan is coal and gas dependent
Our portfolio includes shares in Japan's leading solar energy REIT (Canadian
Solar Infrastructure) and in several companies that help reduce energy usage.
For example, Daikin produces ultra-efficient air conditioners and Shimano has
a dominant market position to components for bicycles and e-bicycles. During
the past six months, we also bought shares in JGC, which constructs liquid
natural gas (LNG) production plants.
Japan is only at the beginning of its journey towards digitalisation and
renewable energy, but these trends are already spawning many exciting new
businesses, especially in the small and mid-cap space. Such growth-oriented
companies are set to gather momentum over time and provide resilient,
long-term sources of returns for investors. For example, our holding in
telemedicine company Medley is already benefiting from this trend, while we
expect our position in Tokyo Electron, the semiconductor equipment supplier,
to gain from associated increases in demand for data processing and storage.
Significant contributors and detractors to performance
The largest detractors from returns were Recruit and Benefit One, providers of
employment and business services, Keyence, a global leader in manufacturing
sensors for factory automation and Hoya, a global business across the fields
of healthcare and information technology. However, we expect the share price
weakness experienced by all of these names to prove transitory, as their
results and investment cases remain robust, and all remain in the portfolio.
Our position in Nihon M&A Center, which provides mergers and
acquisition-related services in Japan and globally, also remained under some
pressure. As we discussed in the half year report, the share price fell
sharply late last year when the company announced an investigation into some
accounting irregularities over the last few years, which had the effect of
artificially enhancing sales revenues in some periods. This issue has now been
resolved and remedial measures are in place to prevent a recurrence of this
problem. Although future revenue growth may be slower than previously expected
as a result, we continue to hold the stock, as we still have confidence in the
long-term investment case.
The detrimental performance impact of these and other holdings was partially
offset by the positive contribution of several other holdings, most notably
Nintendo and another gaming company, Capcom, whose earnings have remained
steady, displaying little economic cyclicality. The decision of Tokio Marine,
a general insurer, to increase shareholder returns triggered a significant
recovery in its share price. Our decision not to own Nidec, which produces
motors and electronic components, or Softbank Group, an owner of stakes in
many energy, financial and technology companies, also helped relative
performance, as both these names underperformed the benchmark over the period.
Portfolio activity
The past year's sharp sell-off in quality and growth companies enabled us to
further increase our exposure to some great companies at compelling
valuations. In addition to a number of acquisitions made in the first half of
the financial year, and discussed in the half-year report, we purchased
several other attractively priced companies in the second half of the year.
JGC, a leading builder of LNG production plants, has performed very well since
acquisition. We also opened positions in Paltac, Japan's number one wholesaler
of household and personal goods, and in Itochu, which owns many stable
cashflow generating businesses including the convenience store operator,
Familymart. We particularly appreciate Itochu's focus on steady profit growth
and ROE, and its determination to improve shareholder returns. Management's
prioritisation of shareholder returns was the main reason for our decision to
acquire Nippon Telegraph and Telephone, Japan's leading telecoms company. We
also added Murata, the leading global supplier of multi layered ceramic
capacitors (MLCCs), which are used in many electronic devices, with demand
from vehicle manufacturers increasing especially rapidly. Deregulation of
retail pharmacies, historically a very fragmented sector, prompted our
purchase of Ain Holdings. The government's recent decision to permit
pharmacies to operate inside large hospitals has allowed Ain to increase
market share and scale up operations, by offering consumers a more
conveniently located service.
These purchases have been funded in part by the outright sales of several
holdings whose potential growth rates have been undermined by increased
competition. The half-year report mentioned several disposals motivated by
such concerns. In addition, in the latter half of the year we closed positions
in Uzabase and Minkabu, providers of financial and business information;
Yappli, a software applications developer; Bengo4, an online legal
consultation service; and Lifenet, a life insurance company. We also sold our
holding in internet retailer Rakuten. Despite very heavy investment, there is
still little evidence of progress in its mobile telecom operations, which
remain heavily loss-making, creating a drain on an otherwise attractive online
business.
In all, portfolio turnover over the past year was 19%, implying an average
holding period of over five years. This is close to last year's turnover, but
lower than 2020's 38%, which was due to the extraordinary opportunities
provided by the onset of the pandemic.
Outlook
Japan's near-term economic outlook has improved since our last report. With
the vaccine programme having been rolled out effectively, the Government has
recently lifted the last of its Covid restrictions and the country is now
fully reopened to foreign tourism. Furthermore, exporters will receive a
fillip from the yen's recent depreciation. The yen/dollar rate was c ¥136.9/$
on l December 2022, thanks to the wide disparity between US and Japanese
interest rates. While the US has rapidly increased rates, the Bank of Japan
(BoJ) has so far maintained an ultra-loose monetary policy stance.
Global central bank policy rate changes
Conversely, the weak yen makes imports more expensive - a particular problem
for Japan as it has almost no natural resources, so it must import energy and
other commodities. The weaker yen has increased the cost of these imports,
adding to price increases triggered by pandemic-related shortages and the war
in Ukraine. As a result, inflation has begun to rise in Japan, but remains
lower than in most other developed countries.
Global inflation rates
Despite a tight labour market, wage growth remains low and there has been no
significant increase in property rents. While we do not expect these
developments yet to elicit any change in BoJ policy, we continually monitor
available data and will reappraise our views if circumstances change. In
particular, we are aware that policy may shift with the likely appointment of
a new BoJ governor next spring.
Improvements in Japan's corporate governance continue, with more companies
focused on improving shareholder returns. The country is in the process of a
major technological transformation that should deliver growth and productivity
gains over the medium term. Japanese equity markets are more vibrant than some
investors appreciate, with many new and interesting listings on the Tokyo
Stock Exchange each year.
Number of IPOs in Japan
Thus, Japan offers a strong environment for the kind of dynamic, quality
businesses in which we invest and Japan is an attractive market in which to
build a differentiated portfolio. This is particularly true for active,
bottom-up investors like us, supported by a large, Tokyo-based team of
researchers.
We are optimistic about the long-term prospects of our portfolio holdings and
will continue our search for exciting companies 'at the heart of Japan's new
growth' and those capable of thriving regardless of the near-term
macroeconomic environment. Most importantly, we remain confident that our
investment approach will ensure the Company continues to deliver
outperformance over the long term.
Nicholas Weindling
Miyako Urabe
Investment Managers
13th December 2022
Principal and Emerging Risks
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 has drawn up a risk matrix, which identifies the
key risks to the Company. These are reviewed and noted by the Board. The 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. Emerging risks, which are not deemed to represent an immediate
threat, are considered by Audit Committee as they come into view and are
incorporated into the existing review of the Company's risk register. However,
since emerging risks are likely to be more dynamic in nature, they are
considered on a more frequent basis, through the remit of Board when the Audit
Committee does not meet. The key principal and emerging risks identified are
summarised below.
Movement in risk
status in year to
Principal risk Description Mitigating activities 30th September 2022
Investment Management and Performance
Underperformance Poor implementation of the investment strategy, for example as to thematic The Board manages these risks by monitoring the Investment Managers Ý
exposure, sector allocation, stock selection, undue concentration of holdings, diversification of investments and through its investment restrictions and
factor risk exposure or the degree of total portfolio risk, may lead to guidelines, which are monitored and reported on by the Manager. The Investment
underperformance against the Company's benchmark index and peer companies. Manager provides the Directors with timely and accurate management
information, including performance data and attribution analyses, revenue
estimates, liquidity reports and shareholder analyses. The Board monitors the
implementation and results of the investment process with the Investment
Managers, at least one of whom usually attends all Board meetings, and reviews
data which show measures of the Company's risk profile. The Investment
Managers employ the Company's gearing tactically, within a strategic range set
by the Board. The Board holds a separate meeting devoted to strategy each
year.
Widening Discount A widening of the discount could result in loss of value for shareholders. The Board monitors the level of both the absolute and sector relative Ý
premium/discount at which the shares trade. The Board reviews both sales and
marketing activity and sector relative performance, which it believes are the
primary drivers of the relative discount level. In addition, the Company has
authority to buy back its existing shares to enhance the NAV per share for
remaining shareholders when deemed appropriate.
Market and Economic Risk Market risk arises from uncertainty about the future prices of the Company's The Board believes that shareholders expect that the Company will and should Ý
investments, which might result from political, economic, fiscal, monetary, be fairly fully invested in Japanese equities at all times. The Board
regulatory or climate change, including the impact from energy shocks, therefore would normally only seek to mitigate market risk through guidelines
recessions or wars. It represents the potential loss the Company might suffer on gearing given to the Investment Manager. The Board receives regular reports
through holding investments in the face of negative market movements. The from the Investment Manager's strategists and Investment Managers regarding
Board considers thematic and factor risks, stock selection and levels of market outlook and gives the Investment Mangers discretion regarding
gearing on a regular basis and has set investment restrictions and guidelines acceptable levels of gearing and/or cash. Currently the Company's gearing
which are monitored and reported on by the Manager. policy is to operate within a range of 5% net cash to 20% geared. The Board
also receives ESG reports from the Investment Manager on the portfolio and the
way ESG considerations are integrated into the investment decision-making.
Currency Risk Currency risk arises from currency volatility and/or significant currency The majority of the Company's assets, liabilities and income are denominated Ý
movements, principally in the yen:sterling rate. in yen rather than in the Company's functional currency of sterling (in which
it reports). As a result, movements in the yen:sterling exchange rate may
affect the sterling value of those items and therefore impact on reported
results and/or financial position. Therefore, there is an inherent risk from
these exchange rate movements. It is the Company's policy not to undertake
foreign currency hedging. Further details about the foreign currency risk may
be found in note 22 on pages 81 and 81 of the Company's Annual Report &
Financial Statements for the year ended 30th September 2022.
Loss of Investment Team or Investment Manager A sudden departure of an Investment Manager or several members of the The Board seeks assurance that the Manager takes steps to reduce the risk Þ
investment management team could result in a short term deterioration in arising from such an event by ensuring appropriate succession planning and the
investment performance. adoption of a team based approach, as well as special efforts to retain key
personnel. The Board engages with the senior management of the Manager in
order to mitigate this risk.
Global Inflation Globally Government/Central Bank fiscal/monetary management could result in The Manager's market strategists are available for the Board and can discuss Ý
significant levels of inflation persisting and/or weaker economic growth market trends. External consultants and experts can be accessed by the Board.
and/or lower valuation levels. The Board can, with shareholder approval look to amend the investment policy
and objectives of the Company, if required, to enable investment in companies
which are less impacted by inflation risks.
Operational Risks
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 Þ
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 on pages 49 to 51 of
the Company's Annual Report & Financial Statements for the year ended 30th
September 2022.
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.
Cyber Crime The threat of cyber attack, in all guises, is regarded as at least as The Company benefits directly and/or indirectly from all elements of Þ
important as more traditional physical threats to business continuity and JPMorgan's Cyber Security programme. The information technology controls
security. around physical security of JPMorgan's data centres, security of its networks
and security of its trading applications, are tested by independent auditors
and reported every six months against the AAF Standard.
Corporate Governance
Loss of Investment Trust Status In order to qualify as an investment trust, the Company must comply with The Section 1158 qualification criteria are continually monitored by the Þ
Section 1158 of the Corporation Tax Act 2010 ('Section 1158'). Manager and the results reported to the Board each month.
Were the Company to breach Section 1158, it may lose investment trust status
and, as a consequence, gains within the Company's portfolio would be subject
to Capital Gains Tax.
Statutory and Regulatory Compliance The Company must also comply with the provisions of the Companies Act 2006 The Board relies on the services of its Company Secretary, the Manager and its Þ
and, since its shares are listed on the London Stock Exchange, the UKLA professional advisers to ensure compliance with the Companies Act 2006, the
Listing Rules and Disclosure Guidance and Transparency Rules ('DTRs'). UKLA Listing Rules, DTRs, MAR and AIFMD. Details of the Company's compliance
A breach of the Companies Act could result in the Company and/or the with Corporate Governance best practice, are set out in the Corporate
Directors being fined or the subject of criminal proceedings. Breach of the Governance Statement on pages 45 to 50 of the Company's Annual Report &
UKLA Listing Rules or DTRs could result in the Company's shares being Financial Statements for the year ended 30th September 2022.
suspended from listing which in turn would breach Section 1158.
Environmental
Climate Change Climate change has become one of the most critical issues confronting The Board receives ESG reports from the Manager on the portfolio and the way Ý
companies and their investors. Climate change can have a significant impact on ESG considerations are integrated into the investment decision-making, so as
the business models, sustainability and even viability of individual to mitigate risk at the level of stock selection and portfolio construction.
companies, whole sectors and even asset classes. As extreme weather events become more common, the resiliency, business
continuity planning and the location strategies of the Company's services
providers will come under greater scrutiny.
Movement in risk
status in year to
Emerging risk Description Mitigating activities 30th September 2022
Specific to Japan
Natural Disasters Although natural disasters anywhere in the world could impact individual The Manager reports on Business Continuity Plans ('BCPs') and other mitigation Ý
companies, the Board believes the largest such impact could arise from an plans in place for itself and other key service providers. BCPs plans are
earthquake causing general economic damage to Japan and to the operations of regularly tested and applied, including split teams, relocations and limiting
specific companies in the portfolio. The Japanese government believes there is access to/meetings with third parties. The Manager discusses BCPs with
a 70% probability of an earthquake, registering a magnitude seven on the investee companies.
Richter Scale, hitting Tokyo over the next 30 years.
Global
Social Dislocation & Conflict Social dislocation/civil unrest may threaten global economic growth and, The Manager's market strategists are available for the Board and can discuss Ý
consequently, companies in the portfolio. market trends. External consultants and experts can be accessed by the Board.
The Board can, with shareholder approval, look to amend the investment policy
and objectives of the Company to gain exposure to or mitigate the risks
arising from geopolitical instability although this is limited if it is truly
global.
Global Recession Government/Central Bank fiscal/monetary response geopolitical risks/rising The Manager's market strategists are available for the Board and can discuss Ý
cost of living could be ineffective in stimulating global recovery meaning market trends. External consultants and experts can be accessed by the Board.
rising debt levels lead to deflation and recession. The Board can, with shareholder approval look to amend the investment policy
and objectives of the Company, if required, to enable investment in companies
which are not impacted by inflation risks.
Long-Term Viability
The Company is an investment trust with an objective of achieving long term
capital growth. Taking account of the Company's current position, the
principal and emerging risks that it faces and their potential impact on its
future development and prospects, the Directors have assessed the prospects of
the Company, to the extent that they are able to do so, over the next five
years. They have made that assessment by considering those principal and
emerging risks, the Company's investment objective and strategy, the liquidity
of the Company's portfolio, the capabilities of the Manager and the current
outlook for the Japanese economy and equity market.
In addition to the above, the Company carried out stress testing in connection
with the Company's principal risks. The stress tests and scenarios considered
the impact of severe market volatility on shareholders' funds. This included
modelling substantial market falls, and significantly reduced market
liquidity. The scenarios assumed that there would be no recovery in asset
prices.
The results demonstrated the impact on the Company's NAV, its expenses and its
ability to meet its liabilities. In even the most stressed scenario, the
Company was shown to have sufficient cash, or to be able to liquidate a
sufficient portion of its listed holdings, in order to meet its liabilities
as they fall due.
In determining the appropriate period of assessment the Directors had regard
to their view that, given the Company's objective of achieving capital growth,
shareholders should consider the Company as a long-term investment
proposition. This is consistent with advice provided by independent financial
advisers and wealth managers, that investors should consider investing in
equities for a minimum of five years. Accordingly, the Directors consider
five years to be an appropriate time horizon to assess the Company's
viability.
The Directors confirm that they have a reasonable expectation, on the
assumption that the principal risks identified above, including investment
underperformance, are managed or mitigated effectively, that the Company will
be able to continue in operation and meet its liabilities as they fall due
over the five year period of assessment.
By order of the Board
Nira Mistry, for and on behalf of
JPMorgan Funds Limited,
Company Secretary
13th December 2022
Transactions with the Manager and related parties
Details of the management contract are set out in the Directors' Report on
page 43 of the Company's Annual Report & Financial Statements for the year
ended 30th September 2022 . The management fee payable to the Manager for the
year was £ 5,124,000 (2021: £5,930,000) of which £nil (2021: £nil) was
outstanding at the year end.
Included in administration expenses in note 6 on page 74 of the Company's
Annual Report & Financial Statements for the year ended 30th September
2022 are safe custody fees amounting to £74,000 (2021: £125,000) payable to
JPMorgan Chase Bank, N.A., of which £nil (2021: £58,000) was outstanding at
the year end.
The Manager may carry out some of its dealing transactions through other
JPMorgan subsidiaries. These transactions are carried out at arm's length. The
commission payable to JPMorgan Securities for the year was £2,000 (2021:
£2,000) of which £nil (2021: £nil) was outstanding at the year end.
Handling charges on dealing transactions amounting to £5,000 (2021: £4,000)
were payable to JPMorgan Chase Bank N.A. during the year of which £2,000
(2021: £2,000) was outstanding at the year end.
At the year end, total cash of £27,974,000 (2021: £8,299,000) was held with
JPMorgan Chase. A net amount of interest of £nil (2021: £nil) was receivable
by the Company during the year from JPMorgan Chase of which £nil (2021:
£nil) was outstanding at the year end.
Stock lending income amounting to £682,000 (2021: £1,551,000) was receivable
by the Company during the year. JPMAM commissions in respect of such
transactions amounted to £76,000 (2021: £172,000).
Full details of Directors' remuneration and shareholdings can be found on
pages 54 and 56 and in note 6 on page 74 of the Company's Annual Report &
Financial Statements for the year ended 30th September 2022.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report & Financial
Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law, the Directors have elected to prepare the
Annual Report & Financial Statements in accordance with United Kingdom
generally accepted accounting practice (United Kingdom Accounting Standards)
including FRS 102 'The Financial Reporting Standards applicable in the UK and
Republic of Ireland' and applicable laws. Under company law, the Directors
must not approve the Annual Report & Financial Statements unless they are
satisfied that, taken as a whole, Annual Report & Financial Statements
are fair, balanced and understandable, provide the information necessary for
shareholders to assess the Company's position and 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 Annual Report
& 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 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 Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The accounts are published on the www.jpmjapanese.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 Auditors does not
involve consideration of the maintenance and integrity of this website and,
accordingly, the Auditors accept no responsibility for any changes that have
occurred to the accounts since they were initially presented on the website.
The accounts are prepared in accordance with UK legislation, which may differ
from legislation in other jurisdictions.
Under applicable law and regulations the Directors are also responsible for
preparing a Directors' Report, Strategic Report, Statement of Corporate
Governance and Directors' Remuneration Report that comply with that law and
those regulations.
Each of the Directors, whose names and functions are listed on pages41 and 42
of the Company's Annual Report & Financial Statements for the year ended
30th September 2022, confirms that, to the best of their knowledge:
• the financial statements, which have been prepared in accordance with
United Kingdom Accounting Standards, and applicable law), (United Kingdom
Generally Accepted Accounting Practice) give a true and fair view of the
assets, liabilities, financial position and net 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 risks and uncertainties that the Company faces.
The Board confirms that it is satisfied that the annual report and financial
statements taken as a whole are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Company's position
and 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.
For and on behalf of the Board
Christopher Samuel
Chairman
13th December 2022
Statement of Comprehensive Income
For the year ended 30th September 2022
2022 2021
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on investments held at fair value through profit or loss - (418,203) (418,203) - 89,356 89,356
Net foreign currency gains(1) - 8,328 8,328 - 16,117 16,117
Income from investments 14,016 - 14,016 11,452 - 11,452
Other interest receivable and similar income 682 - 682 1,551 - 1,551
Gross return/(loss) 14,698 (409,875) (395,177) 13,003 105,473 118,476
Management fee (512) (4,612) (5,124) (1,186) (4,744) (5,930)
Other administrative expenses (959) - (959) (846) - (846)
Net return/(loss) before finance costs and taxation 13,227 (414,487) (401,260) 10,971 100,729 111,700
Finance costs (141) (1,272) (1,413) (295) (1,179) (1,474)
Net return/(loss) before taxation 13,086 (415,759) (402,673) 10,676 99,550 110,226
Taxation (1,400) - (1,400) (1,140) - (1,140)
Net return/(loss) after taxation 11,686 (415,759) (404,073) 9,536 99,550 109,086
Return/(loss) per share 7.48p (266.28)p (258.80)p 5.99p 62.54p 68.53p
(1) Foreign currency gains are due to Yen denominated loan notes and bank
loans.
Statement of Changes in Equity
Called up Capital
share redemption Other Capital Revenue
capital reserve(1) reserve(1) reserves(1) reserve(1) Total
£'000 £'000 £'000 £'000 £'000 £'000
At 30th September 2020 40,312 8,650 166,791 842,661 13,750 1,072,164
Repurchase of shares into Treasury - - - (18,561) - (18,561)
Net return - - - 99,550 9,536 109,086
Dividend paid in the year (note 3) - - - - (8,145) (8,145)
At 30th September 2021 40,312 8,650 166,791 923,650 15,141 1,154,544
Repurchase of shares into Treasury - - - (11,802) - (11,802)
Net (loss)/return - - - (415,759) 11,686 (404,073)
Dividend paid in the year (note3) - - - - (8,295) (8,295)
At 30th September 2022 40,312 8,650 166,791 496,089 18,532 730,374
(1) See footnote to note 16 on page 78 of the Company's Annual Report &
Financial Statements for the year ended 30th September 2022.
Statement of Financial Position
At 30th September 2022
2022 2021
£'000 £'000
Fixed assets
Investments held at fair value through profit or loss 815,789 1,300,867
Current assets
Debtors 7,161 8,402
Cash and cash equivalents 27,974 8,299
35,135 16,701
Current liabilities
Creditors: amounts falling due within one year (9,619) (3,999)
Net current assets 25,516 12,702
Total assets less current liabilities 841,305 1,313,569
Creditors: amounts falling due after more than one year (110,931) (159,025)
Net assets 730,374 1,154,544
Capital and reserves
Called up share capital 40,312 40,312
Capital redemption reserve 8,650 8,650
Other reserve 166,791 166,791
Capital reserves 496,089 923,650
Revenue reserve 18,532 15,141
Total shareholders' funds 730,374 1,154,544
Net asset value per share 472.1p 735.5p
Statement of Cash Flows
For the year ended 30th September 2022
2022 2021
£'000 £'000
Net cash outflow from operations before dividends and interest (6,664) (5,516)
Dividends received 10,967 9,624
Interest paid (1,390) (1,456)
Net cash inflow from operating activities 2,913 2,652
Purchases of investments (176,268) (231,668)
Sales of investments 242,438 249,509
Settlement of foreign currency - 65
Net cash inflow from investing activities 66,170 17,906
Repurchase of shares into Treasury (11,820) (18,975)
Dividends paid (8,295) (8,145)
Drawdown of bank loan 30,979 10,943
Repayment of bank loan (60,364) -
Net cash outflow from financing activities (49,500) (16,177)
Increase in cash and cash equivalents 19,583 4,381
Cash and cash equivalents at start of year 8,299 3,806
Exchange movements 92 112
Cash and cash equivalents at end of year 27,974 8,299
Cash and cash equivalents consist of:
Cash and short term deposits 27,974 8,299
Notes to the Financial Statements
For the year ended 30th September 2022
1. Accounting policies
(a) Basis of accounting
The Annual Report & Financial Statements are prepared under the historical
cost convention, modified to include fixed asset investments at fair value, in
accordance with the Companies Act 2006, United Kingdom Generally Accepted
Accounting Practice ('UK GAAP'), including FRS 102 'The Financial Reporting
Standard applicable in the UK and Republic of Ireland' and with the Statement
of Recommended Practice 'Financial Statements of Investment Trust Companies
and Venture Capital Trusts' (the 'SORP') issued by the Association of
Investment Companies in July 2022.
All of the Company's operations are of a continuing nature.
The Annual Report & Financial Statements have been prepared on a going
concern basis. The Directors have a reasonable expectation that the Company
has adequate resources to continue in operational existence up to 31st January
2024 which is at least 12 months from the date of approval of these Financial
Statements. In making their assessment the Directors have reviewed income and
expense projections, reviewed the liquidity of the investment portfolio and
considered the Company's ability to meet liabilities as they fall due. In
forming this opinion, the Directors have also considered any potential impact
of the COVID-19 pandemic and the heightened market volatility and more
recently the Russian invasion of Ukraine on the going concern and viability of
the Company. In making their assessment, the Directors have reviewed and
considered the mitigation measures which key service providers, including the
Manager, have in place to maintain operational resilience. The disclosures on
long term viability and going concern on pages 36 and 51 of the Directors'
Report of the Company's Annual Report & Financial Statements for the year
ended 30th September 2022 form part of these financial statements.
In preparing these financial statements the Directors have considered the
impact of climate change risk as a principal and as an emerging risk as set
out on page 35 of the Company's Annual Report & Financial Statements for
the year ended 30th September 2022, and have concluded that there was no
further impact of climate change to be taken into account as the investments
are valued based on market pricing.
The policies applied in these financial statements are consistent with those
applied in the preceding year.
2. Return/(loss) per share
2022 2021
£'000 £'000
Revenue return 11,686 9,536
Capital (loss)/return (415,759) 99,550
Total (loss)/return (404,073) 109,086
Weighted average number of shares in issue during the year 156,138,247 159,166,121
Revenue return per share 7.48p 5.99p
Capital (loss)/return per share (266.28)p 62.54p
Total (loss)/return per share (258.80)p 68.53p
There are no dilutive or potentially dilutive shares in issue.
3. Dividends
(a) Dividends paid and proposed
2022 2021
£'000 £'000
Dividends paid
2021 final dividend paid of 5.3p (2020: 5.1p) per share 8,295 8,145
Dividend proposed
2022 final dividend proposed of 6.2p (2021: 5.3p) per share 9,500 8,320
All dividends paid and proposed in the year are and will be funded from the
revenue reserve.
The dividend proposed in respect of the year ended 30th September 2022 is
subject to shareholder approval at the forthcoming Annual General Meeting. In
accordance with the accounting policy of the Company, this dividend will be
reflected in the Annual Report & Financial Statements for the year ending
30th September 2023.
(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act
2010 ('Section 1158')
The requirements of Section 1158 are considered on the basis of the dividend
proposed in respect of the financial year, shown below. The revenue available
for distribution by way of dividend for the year is £11,686,000 (2021:
£9,536,000). The revenue reserve after payment of the final dividend will
amount to £9.0 million.
2022 2021
£'000 £'000
Final dividend proposed of 6.2p (2021: 5.3p) per share 9,500 8,320
4. Net asset value per share
2022 2021
Net assets (£'000) 730,374 1,154,544
Number of shares in issue 154,702,089 156,980,434
Net asset value per share 472.1p 735.5p
5. Status of results announcement
2021 Financial Information
The figures and financial information for 2021 are extracted from the Annual
Report and Accounts for the year ended 30th September 2021 and do not
constitute the statutory accounts for the year. The Annual Report and Accounts
include the Report of the Independent Auditors which is unqualified and does
not contain a statement under either section 498(2) or section 498(3) of the
Companies Act 2006. The Annual Report and Accounts will be delivered to the
Register of Companies in due course.
2022 Financial Information
The figures and financial information for 2022 are extracted from the
published Annual Report and Accounts for the year ended 30th September 2022
and do not constitute the statutory accounts for that year. The Annual Report
and Accounts has been delivered to the Registrar of Companies and included the
Report of the Independent Auditors which was unqualified and did not contain a
statement under either section 498(2) or section 498(3) of the Companies Act
2006.
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.
13th December 2022
For further information, please contact:
Nira Mistry
For and on behalf of
JPMorgan Funds Limited
020 7742 4000
ENDS
A copy of the Annual report will be submitted to the National Storage
Mechanism and will be available shortly 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 also be available shortly on the Company's website at
www.jpmjapanese.co.uk (http://www.jpmjapanese.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
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
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