REG - JPMorgan Japanese IT - Half-year Report
30/05/2024 12:15
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RNS Number : 4923Q JPMorgan Japanese Inv. Trust PLC 30 May 2024
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN JAPANESE INVESTMENT TRUST PLC
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS
ENDED 31ST MARCH 2024
Legal Entity Identifier: 549300JZW3TSSO464R15
Information disclosed in accordance with DTR 4.2.2
JPMorgan Japanese Investment Trust plc, the FTSE 250 trust investing in
Japanese companies, announces its interim results for the six-month
period ended 31st March 2024 (the "Reporting Period").
Financial highlights for the Reporting Period include:
· During the six months ended 31st March 2024 the Company made a
return of 19.3% in net asset value (NAV) terms, outperforming the benchmark
return of 14.6%. Over ten years, the Company returned +10.7% on an annualised
basis, ahead of the benchmark annualised return of +9.6%.
· As of 31st March 2024, the share price discount to NAV with debt
at fair value was 8.9%, compared to 8.8% at the end of 30th September 2023.
· During the Reporting Period, the Company repurchased 4,565,000
shares at an average discount of 9.0% and at a cost of £22.2 million.
Operational highlights for the Reporting Period include:
· Corporate governance reforms, including business reorganisations,
are increasing the number of companies that may, in future, deem to be Premium
or Quality rated, and this has created many more opportunities to invest in
the kind of businesses favoured by the Investment Managers. New stocks added
to the portfolio include Softbank Group, Suzuki Motor and Niterra.
Outlook:
· The most important positive influence on the outlook for Japanese
equities remains the ongoing reform of the corporate sector. There has been
significant progress to date, and, with the encouragement of the government,
regulators, and shareholders, Japanese companies are adopting ever higher
standards of independence and transparency and implementing best practices in
their capital allocation decisions.
· Shareholder returns are benefiting from share buybacks and higher
dividends, and the Investment Managers expect dividend payout ratios to
continue to rise.
· The combination of improving economic fundamentals, structural
transformation, and corporate governance reforms, should help sustain and
encourage investors' appetite for Japan stocks after their long absence from
this market.
Stephen Cohen, Chairman, commented:
"Reform in Japan's corporate governance practices continues apace, which is
very positive for Japanese equities in general, and for your Company's
holdings, as it should ensure continued improvement in shareholder returns,
and valuations, over the medium term."
CHAIRMAN'S STATEMENT
Investment Performance
This is my first opportunity to report to shareholders since taking on the
role of Company Chairman in January 2024, so I am especially pleased to report
that our Company during the six months ended 31st March 2024 made a return of
19.3% in net asset value (NAV) in GBP terms, outperforming its benchmark
return of 14.6% by approximately five percentage points. Since the period end,
the Company returned -5.2% to 27th May 2024, while the TOPIX index returned
-4.6% over the same period.
The Investment Managers' Report below discusses performance, the investment
rationale behind recent portfolio activity and the outlook in more detail.
Gearing
The Board of Directors believes that gearing can be beneficial to performance.
It sets the overall strategic gearing policy and guidelines and reviews 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.
During the review period, gearing ranged from 10.5% to 15.3%, with an average
of 13.2%. As at 31st March 2024, gearing was equivalent to 10.5% of net
assets. At the time of writing this report, the gearing increased to 13.2%.
After the period end, it was decided not to renew the existing Mizuho Loan and
this was repaid by the Company. Along with the short-term revolving facility
of JPY 10,000,000,000 with Industrial and Commercial Bank of China Limited,
London Branch, the Company also has long-term fixed rate debt in place. The
Company is also exploring other options, so as always to be able to deploy the
level of gearing it wishes.
Revenue and Dividends
Japanese companies often have stronger balance sheets than many of their
international counterparts. Both dividend pay-out ratios and dividends have
been rising strongly over the last few years and have continued to do so in
the latest results announcements. This is in good measure a function of
Japan's improving corporate governance practices and is one of several reasons
why investors might consider Japan a relatively attractive equity market.
Nonetheless, it cannot be assumed that dividends will be maintained, and prior
year dividend payments made by your company should not therefore be taken as a
guide to future payments.
For the year ended 30th September 2023, the Company paid a dividend of 6.5p
per share on 5th February 2024, reflecting the available revenue for
distribution. Consistent with previous years, the Company will not be
declaring an interim dividend.
Discount Management/Share Repurchases
The Board monitors the discount to NAV at which the Company's shares trade.
The directors believe that for the Company's shares to trade close to NAV over
the long term, the focus must remain on consistent, strong investment
performance over the key one-, three- and five-year timeframes. The effective
marketing and promotion of the Company also has a key role to play in keeping
its shares trading close to par.
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 to seek a stable discount or premium
over the long run, commensurate with investors' appetite for Japanese equities
and the Company's various attractions, not least the quality of the investment
team and the investment process, and the strong long-term performance these
have delivered. Since 2020, this commitment has resulted in increased
expenditure on marketing and a series of targeted buybacks.
As of 31st March 2024, the share price discount to NAV with debt at fair value
was 8.9%, compared to 8.8% at the end of 30th September 2023. Over the
six-month period to 31st March 2024, the Company's share price discount to net
asset value ranged from 6.4% to 10.3% (average: 8.7%) and the Company
repurchased 4,565,000 shares at an average discount of 9.0% and at a cost of
£22.2 million.
Since 31st March 2024, the Company has repurchased a further 855,000 shares at
an average discount of 9.0%, at a cost of £4.5 million.
Shares are only repurchased at a discount to the prevailing net asset value,
which increases the Company's net asset value per share, and may either be
cancelled or held in Treasury for possible reissue at a premium to net asset
value.
Environmental, Social and Governance ('ESG')
As detailed in the Investment Managers' ESG Report (included in the full Half
Year Report), ESG considerations are integrated into their investment process.
The Board shares the Investment Managers' view of the importance of
financially material ESG factors when making investments for the long term and
the necessity of continued engagement with investee companies over the
duration of the investment.
Further information on JPMorgan's ESG process and engagement is set out in the
ESG Report in the JPMorgan Asset Management 2023 Investment Stewardship
Report, which can be accessed at
https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/sustainable-investing/investment-stewardship-report.pdf
The Board
At the end of the Company's Annual General Meeting, held earlier this year,
Chris Samuel retired as the Chairman of the Company, after serving the Company
for nine years and I took over as Chairman. I would like to take this
opportunity to thank Chris for the very significant contribution he made to
the Company during his tenure. Sally Duckworth took over the role of the Chair
of Audit & Risk Committee, my previous role, from the conclusion of the
AGM.
As previously reported in the Company's 2023 Annual Report, George Olcott will
be retiring from the Board following the 2025 Annual General Meeting. The
Board has started the recruitment process to appoint a new Non-Executive
Director. Further updates will be provided in due course.
Change of Registrar
As part of the review of its key service providers, the Company, through its
Manager, undertook a review of its registrar. After a request for proposals
and a thorough due diligence process by the Manager, and after careful
consideration, the Board has resolved to appoint Computershare as the
Company's registrar. The Board believes this to be in the best interest of the
shareholders. The Manager and the new registrar will ensure a smooth
transition of the Company's shareholder register during the year.
A notification letter from Computershare will be sent to all registered
shareholders advising of this change. The letter will also include an
invitation to create an account for online access to details on your
shareholdings.
Stay Informed
The Company delivers email updates with regular news and views, as well as the
latest performance. If you have not already signed up to receive these
communications and you wish to do so, you can opt in via
https://web.gim.jpmorgan.com/emea_investment_trust_subscription/welcome?targetFund=JFJ
or by scanning the QR code on this page.
Outlook
Reform in Japan's corporate governance practices continues apace, which is
very positive for Japanese equities in general, and for your Company's
holdings, as it should ensure continued improvement in shareholder returns,
and valuations, over the medium term.
Recent developments have been having a favourable impact on market sentiment
towards Japanese stocks and global investors have begun to recognise the
opportunities. As most began with an underweight position in Japan, foreign
investor inflows have provided a strong impetus to the market, and this is
expected to continue. That said, investors should remember that the Company
continues to emphasise investment in 'growth' companies, so that, if the
market has a period when 'deep value' companies do better, then the Company
may underperform for a period.
We are confident that, overall, the Company, and its shareholders, will
benefit from the many changes afoot in Japan, and I look forward to reporting
on the Company's further progress as these exciting developments play out.
On behalf of the Board, I would like to thank you for your ongoing support.
Stephen Cohen
Chairman
INVESTMENT MANAGERS' REPORT
Performance
During the six months ended 31st March 2024, the Company made a return of
+19.3% in net asset value with debt at fair value (NAV) terms, outperforming
its benchmark return of +14.6%, by +4.7 percentage points. While our portfolio
focuses on quality and growth stocks, which we believe help us achieve the
best performance over the long term, this performance was nevertheless
achieved during a period when Japanese value stocks - unlike their US
counterparts - continued to perform well, relative to the growth and quality
names we prefer.
Although performance over the three years to 31st March 2024 lagged the
benchmark - the Company recorded an annualised return of -2.5%, compared to
the average annual benchmark return of +6.3% - long term absolute and relative
performance remains strong. Over ten years, the Company returned +10.7% on an
annualised basis, better than the benchmark return of +9.6%.
Performance attribution
Six months ended 31st March 2024
% %
Contributions to total returns
Benchmark return 14.6
Stock selection 2.1
Currency -0.1
Gearing/Cash 3.0
Investment Manager contribution 5.0
Portfolio return(A) 19.6
Management fee/other expenses -0.4
Share Buy-Back 0.3
Other effects -0.1
Return on net assets - Debt at par value(A) 19.5
Impact of fair value of debt -0.2
Return on net assets - Debt at fair value(A) 19.3
Return to shareholders(A) 19.3
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').
A glossary of terms and APMs is provided on pages 32 and 33 of the Half Year
Report.
Economic and market background
After a long period of being unloved and under-owned by international
investors, the past year has seen the Japanese market return to the limelight.
The Trust's benchmark, the TOPIX, delivered a total return of 23% during
calendar 2023 and has continued to rise since. In February 2024, Japan's
bellwether Nikkei Index hit a new all-time high, for the first time since
1989. The main reason for this is investors' positive reaction to corporate
governance reforms currently underway in Japan. This includes, most recently,
action by the Financial Services Authority to urge non-life insurers to sell
their strategic shareholdings - as part of the regulator's efforts to reduce
anti-competitive behaviour in the sector.
Investors have also welcomed signs of improvement in Japan's domestic economy,
after years of stagnation and deflation. The Spring wage negotiations, known
as the shunto, agreed a 5.3% wage increase, the highest in 33 years and
substantially ahead of the rate of inflation, which is currently 2.8% pa. This
rise in real wages should boost consumer sentiment and support domestic
demand, especially as prices are now rising, albeit modestly, providing some
incentive to buy now, rather than save for tomorrow.
The Bank of Japan (BoJ) recently announced a shift in monetary policy
announcing the first interest rate hike for 17 years in response to improving
economic conditions, in particular the aforementioned wage growth. Policy is
still loose, however, in order to support the economic recovering amidst
lingering uncertainties. The central bank thus remains committed to bolstering
liquidity and stimulating growth, which should be positive for the market in
the near term.
Japanese exporters are being assisted by continued yen weakness - the result,
in part, of the divergence in interest rates between Japan and the US and
other major economies, which remains significant even after the BoJ's recent
hike. Against sterling, the yen declined by 4.5% over the review period and at
the time of writing, the yen is at its weakest level against the USD since
1990. Within the corporate sector, management buyouts hit a record high in
2023, suggesting that private equity investors are finally beginning to
recognise value in Japanese businesses. One portfolio holding, Benefit One, a
provider of staffing and employment services and benefits, was subject to a
hostile takeover, a highly unusual occurrence in Japan.
Significant contributors and detractors from performance
The largest contributors to returns over the six months ended 31st March 2024
were all rated (by us) as Quality companies and included Tokyo Electron, where
demand for semiconductor production equipment led to strong earnings.
Shin-Etsu Chemical, the world's leader producer of silicon wafers and PVC, was
another key contributor. Its good share price performance was driven by
improving shareholder returns, although the company's balance sheet remains
over-capitalised. ASICS, a leading brand of running shoes, has seen a major
turnaround over recent years thanks to new management, and this has been
reflected in rising earnings. Hitachi, a conglomerate that is a major supply
of cabling for power grids amongst other businesses, has also seen earnings
improve due to substantial changes within the company, including an increased
focus on profitability and cash flow. We upgraded Hitachi's strategic
classification from Standard to Quality over the period. Japan Exchange, a
financial exchange operator, has benefited from the renewed investor interest
in the Japanese market, which has lifted trading volumes.
The main detractors from performance over the review period included
Nakanishi, the leading maker of dental equipment. This Quality-rated business
has struggled following a recent acquisition. OBIC, a Quality-rated IT
services business languished due to a lack of positive news flow. Our decision
not to hold the carmaker, Toyota, a Standard-rated company, also hurt returns
as the stock did well during the period. Earnings have been strong, driven by
robust demand for its products, particularly hybrid vehicles, while yen
weakness has boosted the yen value of foreign sales. However, we have avoided
this stock as we think the valuation is high relative to other international
vehicle manufacturers.
Portfolio activity
Corporate governance reforms, including business reorganisations, are
increasing the number of companies we may, in future, deem to be Premium or
Quality rated, and this has created many more opportunities for us to invest
in the kind of businesses we favour. During the review period, we added five
new stocks to the portfolio:
- Softbank Group - The Group listed its Quality-rated subsidiary ARM,
a chipmaker, in the US last year. This has greatly improved visibility
regarding the value of the whole group, which in our assessment is trading at
a wide, and appealing, discount to NAV;
- Suzuki Motor - The company owns close to 60% of Quality-rated Maruti
Suzuki, which occupies a very dominant position in India's car market. The
discount to the value of this stake is wide. Additionally, the company is
reviewing its shareholder return policy; and
- Niterra -This business is the world's number one maker of spark
plugs, which gives it excellent pricing power. Recurring revenues are also
robust due to demand for replacements.
We also made smaller acquisitions of Sanrio, the owner of the Hello Kitty
brand as well as other popular characters, and Megachips, a supplier to
Nintendo that we bought on valuation grounds.
These purchases were funded by the sale of eleven stocks. The most significant
of these disposals were Nippon Telegraph, a telecommunications company,
T&D Holdings, an insurance company and Unicharm, a supplier of personal
and household products. We used the proceeds of our sale of Nippon Telegraph,
where earnings have been somewhat lacklustre, to fund the purchase of
Softbank. We sold T&D Holdings as the investment case had, in our view,
run its course once the company announced an improved capital allocation plan.
We exited Unicharm due to intensifying competition in China and South-East
Asia. As mentioned above, we sold Benefit One as it was subject to a takeover
offer.
The net effect of these transactions was that turnover during the six-month
period under review was 26% on an annualised basis, in line with its long-term
average. On a geared basis, the portfolio's active share was 88% at the end of
the review period, while gearing stood at 10.5%, as compared to 13.7% at the
end of September 2023.
Outlook
After a strong performance in 2023, recent encouraging news flow about the
economy and further corporate governance reforms, the global investment
community's view on Japan is starting to change for the better. Several
factors justify this more optimistic assessment and bode well for the market's
medium to longer term prospects.
Firstly, global investors remain mostly underweight Japanese equities, so
there is still significant scope for improved market sentiment to translate
into foreign investor inflows, especially since the market, while not cheap,
still offers relatively good value. At the end of February 2024, it was priced
at 16.1x earnings on a forward price to earnings basis and at 1.5x book value
(in trailing price to book terms). Japanese investors are also showing greater
interest in their domestic market.
For foreign investors, the currency is a key consideration. The yen continues
to weaken, and it is difficult to know when this trend will reverse. However,
the currency is approaching its lowest level against the pound in nine years;
it is at a 34-year low versus the USD; and with the BoJ beginning to raise
rates, it is possible the currency may begin to stabilise soon. Any reversal
would clearly be beneficial for GBP-based investors.
A much more profound transformation is also underway across the Japanese
economy, generating exciting investment opportunities capable of flourishing
regardless of the near-term economic environment. Japan is at a very early
stage of digitalisation compared to the rest of the world, and this, combined
with the trend towards industrial automation, has the potential to help drive
significant growth and/or productivity gains over the medium term. Demographic
changes, developments in medical technology and the transition to renewable
energy are also contributing to rapid structural change - an ideal environment
for the dynamic, quality businesses we want to own.
There are also signs of change in Japan's labour market. Increasing wages is
one indicator of the extremely tight conditions in this market, and the supply
of labour is set to contract further as the country's aging workforce retires.
However, this situation has one major potential upside. Traditionally, Japan's
labour market has been characterised by a rigid and stultifying 'jobs for
life' mentality. But there are now signs that the high demand for labour is
making workers bolder in their employment choices, with many more inclined to
change jobs in pursuit of higher income. If this trend gains further traction,
the resulting improvement in labour market flexibility would have a favourable
effect on overall productivity and the long-term future of Japan's corporate
sector.
However, in our view, the most important positive influence on the outlook for
Japanese equities remains the ongoing reform of the corporate sector. There
has been significant progress to date, and, with the encouragement of the
government, regulators, and shareholders, Japanese companies are adopting ever
higher standards of independence and transparency and implementing best
practices in their capital allocation decisions. Shareholder returns are
benefiting from share buybacks and higher dividends, and we expect dividend
payout ratios to continue to rise. As we discussed in the Company's Annual
Report, we see potential for these developments to lift the whole market,
including the Company's holdings, to a higher valuation.
This combination of improving economic fundamentals, structural
transformation, and corporate governance reforms, should help sustain and
encourage investors' appetite for Japan stocks after their long absence from
this market. These developments also form the basis of our optimism regarding
the market and leave us confident about the long-term prospects of the
portfolio's holdings and its ability to deliver capital growth to shareholders
over the long term.
Thank you for your ongoing support.
Nicholas Weindling
Miyako Urabe
Investment Managers
INTERIM MANAGEMENT REPORT
The Company is required to make the following disclosures in its half year
report.
Principal and Emerging Risks and Uncertainties
The Directors confirm that they have carried out a robust assessment of the
principal and emerging risks facing the Company, including those that would
threaten its business model, future performance, solvency or liquidity. With
the assistance of JPMF, the Audit & Risk Committee has drawn up a risk
matrix, which identifies the key risks to the Company. These are reviewed and
noted by the Board. The Board believes that the principal and emerging risks
and uncertainties faced by the Company fall into the following broad
categories:
• Market and Economic Risks - including currency; global inflation
and global recession.
• Trust Specific Risks - including underperformance; widening
discount; loss of investment team or investment manager; outsourcing; cyber
crime; loss of investment trust status; statutory and regulatory compliance.
• Geopolitical Risks - including climate change; natural
disasters; social dislocation & conflict.
As part of the review, the Board believes that the risk related to
Geopolitical uncertainty has increased and the risk related to inflation has
decreased. Information on each of these areas is given on pages 41 to 44 of
the Strategic Report within the Annual Report and Financial Statements for the
year ended 30th September 2023.
Related Parties Transactions
During the first six months of the current financial year, no transactions
with related parties have taken place which have materially affected the
financial position or the performance of the Company during the period.
Going Concern
In accordance with The Financial Reporting Council's guidance on going concern
and liquidity risk, the Directors have undertaken a rigorous review of the
Company's ability to continue as a going concern.
The Board has, in particular, considered the impact of heightened market
volatility since the Russian invasion of Ukraine, the persistent inflationary
environment, rising interest rates and other geopolitical risks, and does not
believe the Company's going concern status is affected. The Company's assets,
the vast majority of which are investments in quoted securities which are
readily realisable, exceed its liabilities significantly under all stress test
scenarios reviewed by the Board. Gearing levels and compliance with borrowing
covenants are reviewed by the Board on a regular basis. Furthermore, the
Company's key third party suppliers, including its Manager are not
experiencing any operational difficulties which would adversely affect their
services to the Company.
Accordingly, having assessed the principal and emerging risks and other
matters, the Directors believe that there are no material uncertainties
pertaining to the Company that would prevent its ability to continue in such
operational existence for at least 12 months from the date of the approval of
this half yearly financial report.
Directors' Responsibilities
The Board of Directors confirms that, to the best of its knowledge:
(i) the condensed set of financial statements contained within the
interim financial report has been prepared in accordance with FRS 104 'Interim
Financial Reporting' and gives a true and fair view of the state of the
affairs of the Company and of the assets, liabilities, financial position and
net return of the Company, as at 31st March 2024, as required by the UK
Listing Authority Disclosure Guidance and Transparency Rule ('DTR') 4.2.4R;
and
(ii) the interim management report includes a fair review of the
information required by DTR 4.2.7R and DTR 4.2.8R.
In order to provide these confirmations, and in preparing these financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are reasonable and
prudent;
• state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and explained in the
financial statements; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business;
and the Directors confirm that they have done so.
For and on behalf of the Board
Stephen Cohen
Chairman
Condensed Statement of Comprehensive Income
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 2024 31st March 2023 30th September 2023
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains on investments held at
fair value through profit
or loss(1) - 133,184 133,184 - 55,483 55,483 - 33,592 33,592
Net foreign currency gains(2) - 5,153 5,153 - 1,986 1,986 - 12,918 12,918
Income from investments 6,946 43 6,989 7,516 - 7,516 14,180 135 14,315
Interest receivable and similar
income 216 - 216 301 - 301 526 - 526
Gross return 7,162 138,380 145,542 7,817 57,469 65,286 14,706 46,645 61,351
Management fee (229) (2,058) (2,287) (221) (1,992) (2,213) (450) (4,048) (4,498)
Other administrative expenses (671) - (671) (601) - (601) (1,276) - (1,276)
Net return before finance
costs and taxation 6,262 136,322 142,584 6,995 55,477 62,472 12,980 42,597 55,577
Finance costs (78) (708) (786) (65) (580) (645) (134) (1,202) (1,336)
Net return before taxation 6,184 135,614 141,798 6,930 54,897 61,827 12,846 41,395 54,241
Taxation (697) - (697) (752) - (752) (1,418) - (1,418)
Net return after taxation 5,487 135,614 141,101 6,178 54,897 61,075 11,428 41,395 52,823
Return per share (note 3) 3.70p 91.45p 95.15p 4.01p 35.66p 39.67p 7.46p 27.03p 34.49p
(1) Includes foreign currency gains or losses on investments.
(2) Foreign currency gains are due to Yen denominated loan notes and
bank loans.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the period.
The 'Total' column of this statement is the profit and loss account of the
Company and the 'Revenue' and 'Capital' columns represent supplementary
information prepared under guidance issued by the Association of Investment
Companies.
The net return after taxation represents the profit for the period and also
the total comprehensive income.
CONDENSED 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
Six months ended 31st March 2024 (Unaudited)
At 30th September 2023 40,312 8,650 166,791 519,304 20,414 755,471
Repurchase of shares into Treasury - - - (22,274) - (22,274)
Net return - - - 135,614 5,487 141,101
Dividends paid in the period (note 4) - - - - (9,657) (9,657)
At 31st March 2024 40,312 8,650 166,791 632,644 16,244 864,641
Six months ended 31st March 2023 (Unaudited)
At 30th September 2022 40,312 8,650 166,791 496,089 18,532 730,374
Repurchase of shares into Treasury - - - (4,967) - (4,967)
Net return - - - 54,897 6,178 61,075
Dividends paid in the period (note 4) - - - - (9,546) (9,546)
At 31st March 2023 40,312 8,650 166,791 546,019 15,164 776,936
Year ended 30th September 2023 (Audited)
At 30th September 2022 40,312 8,650 166,791 496,089 18,532 730,374
Repurchase of shares into Treasury - - - (18,180) - (18,180)
Net return - - - 41,395 11,428 52,823
Dividends paid in the year (note 4) - - - - (9,546) (9,546)
At 30th September 2023 40,312 8,650 166,791 519,304 20,414 755,471
(1) In accordance with the Company's Articles of Association and with
ICAEW Technical Release 02/17BL on Guidance on Realised and Distributable
Profits under the Companies Act 2006, the Capital reserves may be used as
distributable profits for all purposes and, in particular, the repurchase by
the Company of its ordinary shares and for payments of dividends.
As at 31st March 2024, the £632,644,000 Capital reserves are made
up of net gains on the sale of investments of £341,519,000, a gain on the
revaluation of investments still held of £256,036,000 and an exchange gain on
the foreign currency loans of £35,089,000. The £35,089,000 of Capital
reserves, arising on the exchange gain on the foreign currency loan, is not
distributable. The remaining amount of Capital reserves totalling
£597,555,000 is subject to fair value movements, may not be readily
realisable at short notice and as such may not be entirely distributable.
The Capital redemption reserve is not distributable under the
Companies Act 2006.
The Other reserve of £166,791,000 was created during the year
ended 30th September 1999, following a cancellation of the share premium
account, and forms part of the Company's distributable reserves.
The investments are subject to financial risks, as such Capital
reserves (arising on investments sold) and Revenue reserve may not be entirely
distributable if a loss occurred during the realisation of these investments.
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
At At At
31st March 31st March 30th September
2024 2023 2023
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 955,497 879,381 859,289
Current assets
Debtors 5,575 5,874 12,967
Cash and cash equivalents 8,390 974 2,141
13,965 6,848 15,108
Creditors: amounts falling due within one year (37,116) (372) (47,867)
Net current (liabilities)/assets (23,151) 6,476 (32,759)
Total assets less current liabilities 932,346 885,857 826,530
Creditors: amounts falling due after more than one year (67,705) (108,921) (71,059)
Net assets 864,641 776,936 755,471
Capital and reserves
Called up share capital 40,312 40,312 40,312
Capital redemption reserve 8,650 8,650 8,650
Other reserve 166,791 166,791 166,791
Capital reserves 632,644 546,019 519,304
Revenue reserve 16,244 15,164 20,414
Total shareholders' funds 864,641 776,936 755,471
Net asset value per share (note 5) 591.1p 505.8p 500.9p
CONDENSED STATEMENT OF CASH FLOWS
Six months ended Six months ended For the year ended
(Unaudited) (Unaudited) (Audited)
31st March 31st March 30th September
2024 2023 2023
£'000 £'000 £'000
Cash flows from operating activities
Net profit before finance costs and taxation 142,584 62,472 55,577
Adjustment for:
Net gains on investments held at fair value through profit or loss (133,184) (55,483) (33,592)
Net foreign currency gains (5,153) (1,986) (12,918)
Dividend income (6,989) (7,516) (14,315)
Interest income (1) - (2)
Realised gain on foreign exchange transactions (31) (102) (695)
(Increase)/decrease in accrued income and other debtors (19) 13 -
Increase in accrued expenses 57 86 77
Net cash outflow from operations before dividends and interest (2,736) (2,516) (5,868)
Dividends received 5,935 6,063 12,885
Interest received 1 - 2
Net cash inflow from operating activities 3,200 3,547 7,019
Purchases of investments and derivatives (116,848) (94,379) (190,000)
Sales of investments and derivatives 152,519 88,243 183,372
Net cash inflow/(outflow) from investing activities 35,671 (6,136) (6,628)
Equity dividends paid (9,657) (9,546) (9,546)
Repurchase of shares into Treasury (22,274) (4,965) (18,180)
Drawdown of bank loan - - (9,225)
Repayment of bank loan - (9,225) 12,014
Interest paid (691) (671) (1,287)
Net cash outflow from financing activities (32,622) (24,407) (26,224)
Increase/(decrease) in cash and cash equivalents 6,249 (26,996) (25,833)
Cash and cash equivalents at start of period/year 2,141 27,974 27,974
Exchange movements - (4) -
Cash and cash equivalents at end of period/year 8,390 974 2,141
Cash and cash equivalents consist of:
Cash and short term deposits 8,390 974 2,141
Total 8,390 974 2,141
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
For the six months ended 31st March 2024
1. Financial statements
The information contained within the financial statements in this half year
report has not been audited or reviewed by the Company's auditor.
The information contained within the financial statements in this half year
report does not constitute statutory accounts as defined by sections 434 and
436 of the Companies Act 2006 and has not been audited or reviewed by the
Company's auditors.
The figures and financial information for the year ended 30th September 2023
are extracted from the latest published financial statements of the Company.
The financial statements for the year ended 30th September 2023 have been
delivered to the Registrar of Companies including the report of the auditors
which was unqualified and did not contain a statement under either section
498(2) or 498(3) of the Companies Act 2006.
2. Accounting policies
The condensed financial statements are prepared in accordance with the
Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ('UK
GAAP') including FRS 102 'The Financial Reporting Standard applicable in the
UK and Republic of Ireland' and with the Statement of Recommended Practice
'Financial Statements of Investment Trust Companies and Venture Capital
Trusts' (the 'SORP') issued by the Association of Investment Companies in July
2022.
FRS 104, 'Interim Financial Reporting', issued by the Financial Reporting
Council ('FRC') in March 2015 has been applied in preparing this condensed set
of financial statements for the six months ended 31st March 2024.
All of the Company's operations are of a continuing nature.
The accounting policies applied to this condensed set of financial statements
are consistent with those applied in the financial statements for the year
ended 30th September 2023.
3. Return per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 31st March 30th September
2024 2023 2023
£'000 £'000 £'000
Return per share is based on the following:
Revenue return 5,487 6,178 11,428
Capital return 135,614 54,897 41,395
Total return 141,101 61,075 52,823
Weighted average number of shares in issue 148,297,034 153,963,270 153,121,747
Revenue return per share 3.70p 4.01p 7.46p
Capital return per share 91.45p 35.66p 27.03p
Total return per share 95.15p 39.67p 34.49p
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 31st March 30th September
2024 2023 2023
£'000 £'000 £'000
2023 final dividend paid of 6.5p (2022: 6.2p) per share 9,657 9,546 9,546
All dividends paid in the period have been funded from the revenue reserve
(2023: same).
No interim dividend has been declared in respect of the six months ended 31st
March 2024 (2023: nil).
5. Net asset value per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 31st March 30th September
2024 2023 2024
Net assets (£'000) 864,641 776,936 761,402
Number of shares in issue (excluding shares
held in Treasury) 146,267,089 153,592,089 150,832,089
Net asset value per share 591.1p 505.8p 500.9p
6. Fair valuation of instruments
The fair value hierarchy disclosures required by FRS 102 are given below:
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 2024 31st March 2023 30th September 2023
Assets Liabilities Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000 £'000 £'000
Level 1 955,497 - 879,381 - 859,289 -
Total 955,497 - 879,381 - 859,289 -
7. Analysis of Changes in Net Debt
As at Other As at
30th September non-cash 31st March
2023 Cash flows charges 2024
£'000 £'000 £'000 £'000
Cash and cash equivalents
Cash and short term deposits 2,141 6,249 - 8,390
2,141 6,249 - 8,390
Borrowings
Debt due within one year (38,433) - 1,820 (36,613)
Debt due after one year (71,059) - 3,354 (67,705)
(109,492) - 5,174 (104,318)
Net debt (107,351) 6,249 5,174 (95,928)
JPMORGAN FUNDS LIMITED
30 May 2024
For further information, please contact:
Priyanka Vijay Anand
For and on behalf of
JPMorgan Funds Limited -0 Company Secretary
020 7742 4000
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.
ENDS
A copy of the 2024 Half Year 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 2024 Half Year 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.
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