REG - JPMorgan Japanese IT - Half-year Report
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RNS Number : 5041K JPMorgan Japanese Inv. Trust PLC 29 May 2025
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN JAPANESE INVESTMENT TRUST PLC
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED
31st MARCH 2025
Legal Entity Identifier: 549300JZW3TSSO464R15
Information disclosed in accordance with the DTR 4.2.2
Highlights
• NAV total return* of +2.4 % compared with +1.0% for the TOPIX Index
(in Sterling terms), (the 'Benchmark'). Share price return of +2.3%.
• For five years annualised ended 31st March 2025, NAV total return* of
+7.8% compared with +7.8% for the Benchmark. Share price return of +9.4%.
• For ten years annualised ended 31st March 2025, NAV total return* of
+8.0% significantly ahead of the +6.8% for the Benchmark. Share price return
of +7.9%.
• The Board's dividend policy is to pay out the majority of revenue
available each year. Consistent with previous years, the Company will not be
declaring an interim dividend.
• Over the six-month period to 31st March 2025, the Company repurchased
3.1 million shares at a cost of £ 17.7 million and an average discount of
12.1%.
• The Board also announces the appointment of Xuming Tao as a Portfolio
Manager for the Company, supplementing the Portfolio Management team of
Nicholas Weindling and Miyako Urabe, with immediate effect. Xuming has been a
member of the Japanese equity team at JPMAM in Tokyo for five years. He works
closely with Nicholas and Miyako, particularly on the Small & Mid-Cap
Strategies.
*With debt at fair value
The Chairman of JFJ, Stephen Cohen, commented:
"Despite market volatility, the performance over the six-month review period
demonstrates remarkable resilience, building on the strong excess returns
achieved during the financial year ended 30th September 2024."
"Notwithstanding broader economic and geopolitical headwinds, we are confident
that the Company, under the guidance of a highly skilled and experienced
investment management team, remains well placed to deliver long-term capital
growth for shareholders."
Portfolio Managers, Nicholas Weindling, Miyako Urabe and Xuming Tao commented:
"We remain positive about the outlook for Japanese equities and confident in
the positioning of our portfolio. While the market has performed strongly over
the past two years, we believe the transformation underway in Japan is still
in its early stages. The full impact of corporate governance reforms and other
structural changes, such as increased focus on capital efficiency and
shareholder returns, has yet to be realised, and these shifts should continue
to support investor interest well into 2025 and beyond."
CHAIRMAN'S STATEMENT
During the six months ended 31st March 2025 the Company made a net asset value
(NAV) return, with debt at fair value, of +2.4% in Sterling terms,
outperforming the benchmark return of +1.0%. Since the period end, the Company
returned +7.2% to 26th May 2025, while the TOPIX returned +3.2% over the same
period.
Despite market volatility, the performance over the six-month review period
demonstrates remarkable resilience, building on the strong excess returns
achieved during the financial year ended 30th September 2024. Although
three-year returns slightly trail the benchmark, it is encouraging to note
that five-year returns as of March 2025 now align with the benchmark, and
ten-year returns are significantly ahead. This highlights the sustained
strength of the Company's growth investment strategy, even during periods when
market conditions have favoured value-oriented approaches.
The most significant positive development in Japanese markets over recent
years has been the accelerating impact of reforms to corporate governance and
capital allocation practices. These reforms are being encouraged by the
authorities and by shareholders, who have seen their returns boosted by better
capital allocation, increased dividend payments and share buybacks. The
reforms have encouraged activist investors and takeover activity, as well as
greater interest from international investors.
The Portfolio Managers attribute their outperformance during the latest
six-month review period to the fact that they have increased their focus on
companies which are embracing these reforms and benefiting accordingly.
The yen was far less volatile over the review period than it was during the
last financial year, although the currency nonetheless depreciated by 0.6%
over the six months to end March 2025. The Company's performance was thus
reduced modestly in sterling terms by this currency weakness. The policy of
the Company remains not to hedge its currency exposure.
The Investment Manager's Report on pages 13 to 16 of the Half Year Report
(available on the Company's website) 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 Portfolio 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 6.1% to 15.7%, with an average
of 13.3%. As at 31st March 2025, gearing was equivalent to 13.8% of net
assets, a level that reflects the Portfolio Managers' confidence in the
outlook for the Japanese market. At the time of writing this report, the
gearing had decreased to 13.2%.
The Board believes it is prudent for the Company's gearing capacity to be
funded from a mix of sources. The Company's gearing strategy will thus be
implemented via the use of two forms of debt, low-cost long-term fixed rate
debt, with an average coupon rate of 1.1%, and the use of CFDs (Contracts for
Difference). The short-term revolving facility of JPY 10 billion with ICBC
Limited, London Branch is being terminated as it is no longer necessary and
relatively expensive. More details can be found on page 85 of the 2024 Annual
Report of the Company (also available on the Company's website).
The Company has now been using CFDs since 2024. They are a flexible, low-cost,
capital efficient alterative to loan facilities and thus offer considerable
advantages to the Portfolio Managers. These instruments are a form of
financial derivative which allow investors to gain exposure to stock price
movements without actually owning the individual shares. As such, CFDs provide
the investor with leveraged exposure to the underlying asset. The Board
closely monitors the use and cost-effectiveness of this form of gearing.
Revenue and Dividends
The Board's dividend policy is to pay out the majority of revenue available
each year. For the year ended 30th September 2024, the Company paid a dividend
of 6.75p per share (2023: 6.50p) on 12th February 2025, reflecting the
available revenue for distribution. Consistent with previous years, the
Company will not be declaring an interim dividend.
Japanese companies' dividend payouts and payout ratios have increased
meaningfully in recent years, supported by improved corporate governance,
stronger balance sheets, and a growing focus on shareholder returns. While
this upward trend is encouraging, it should not be assumed that current levels
of dividend income from portfolio holdings will remain constant.
Discount Management and Share Repurchases
The Board monitors carefully 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 2025, the share price discount to NAV with debt at fair value
was 10.5%, compared to 10.2% at the end of 30th September 2024. Over the
six-month period to 31st March 2025, the Company's share price discount to NAV
ranged from 14.4% to 7.9% (average: 11.4%) and the Company repurchased
3,146,996 shares at an average discount of 12.1% and at a cost of £17.7
million.
Since 31st March 2025, the Company has repurchased a further 425,000 shares at
an average discount of 11.5%, at a cost of £2.3 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.
Management Fees and Cost Ratio
As detailed in the Company's Annual Report, the successful combination with
JPMorgan Japan Small Cap Growth & Income plc ('JSGI') was completed on
25th October 2024, creating an investment trust with net assets of
approximately £1 billion and a leadership position within Japanese investment
trusts.
Following the combination, the Company now benefits from a more competitive
management fee structure and a significantly reduced Ongoing Charges Ratio
(OCR). For the year ending 30th September 2025, the OCR is estimated at 0.45%.
This figure reflects the decision to recognise the benefit of the Manager's
fee waiver against the first six months of this fiscal year.
From 1st April 2025 onwards, the management fee will resume, and the OCR is
expected to normalise to approximately 0.60% on an annualised basis. This
compares favourably to the OCR of 0.74% for the year ended 30th September
2024, and is well below the peer group average of 1.06%*, reinforcing the
Company's position as a cost-efficient and attractive investment option.
The Board believes this cost structure delivers enhanced value for
shareholders and further strengthens the Company's leadership among Japanese
investment trusts.
*Source: JPMAM; includes investment trusts and open ended funds.
Investment Management Team
Following the combination, the Company follows the same unconstrained all-cap
Japanese equity strategy and benefits from the expertise of its Tokyo-based
Portfolio Managers, so I am especially happy to announce the Company's
Portfolio Management team of Nicholas Weindling and Miyako Urabe will now be
supplemented by the appointment of Xuming Tao as a Portfolio Manager for the
Company with immediate effect. Xuming has been a member of the Japanese equity
team at JPMAM in Tokyo for five years. He works closely with Nicholas and
Miyako, particularly on the Small & Mid-Cap strategies.
Environmental, Social and Governance ('ESG')
As detailed in the Investment Manager's ESG Report on pages 17 to 20 of the
Half Year Report, financially material ESG considerations are integrated into
the investment process. The Board shares the Investment Manager's view of the
importance of financially material ESG factors when making investments for the
long term, and we are equally convinced of 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 2024 Investment Stewardship
Report, which can be accessed at
https://am.jpmorgan.com/gb/en/asset-management/per/investment-themes/sustainable-investing/
(https://am.jpmorgan.com/gb/en/asset-management/per/investment-themes/sustainable-investing/)
The Board
As outlined in the Company's 2024 Annual Report, George Olcott will retire
from the Board at the 2026 Annual General Meeting. I will be stepping down the
following year, in 2027. To ensure a smooth transition and continued strength
in governance, the Board has initiated the recruitment process for a new
Non-Executive Director based in Japan.
In line with previous announcements regarding the combination with JSGI, we
are pleased to confirm that Thomas Walker - who served as a Non-Executive
Director of JSGI since 2019 - was appointed as a Non-Executive Director of the
Company effective 25th October 2024.
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 available in the Half Year Report.
Outlook
The Company's growth-focused investment strategy has delivered strong results
over the ten-year period and tracked benchmark for the five-year period.
Notably, it has continued to perform well in recent years even during periods
when markets have favoured value stocks. This enduring performance is a
testament to the skill of the Portfolio Managers, who are supported by a
large, experienced team based in Japan. Their on-the-ground presence and deep
local insight enable them to capitalise on the ongoing modernisation of
Japan's equity markets, particularly through active engagement with corporate
governance reforms.
The Board shares the Investment Manager's conviction that the transformation
of Japan's corporate landscape is set to accelerate. Investment conditions
remain favourable, supported by a strengthening domestic economy, sustained
wage growth, and the gradual normalisation of monetary policy. We see
increased international interest in Japanese equities, as global investors
continue to address their long-standing underexposure to this market.
These dynamics are expected to benefit both the broader Japanese equity market
and our Company. In addition, the Company is well positioned to enhance
returns through the disciplined use of gearing, taking advantage of its access
to low-cost capital. This ability to deploy capital efficiently provides an
important strategic advantage, particularly in a market undergoing structural
change.
While uncertainties persist, particularly around U.S. - Japan trade
negotiations and the long-term implications of global tariffs and in the macro
environment as a whole, the Board continues to believe this is a compelling
time to invest in Japanese equities. Despite broader economic and geopolitical
headwinds, we are confident that the Company, under the guidance of a highly
skilled and experienced management team, remains well placed to deliver
long-term capital growth for shareholders.
On behalf of the Board, I would like to thank you for your ongoing support.
Stephen Cohen
Chairman
28th May 2025
INVESTMENT MANAGERS' REPORT
Performance
The positive returns and good relative performance we saw in the last
financial year continued in the six months ended 31st March 2025, although
absolute returns were more muted. Over this half-year period the Company's
total return NAV with debt at fair value was +2.4% in sterling terms,
outpacing the benchmark return of +1.0% by +1.4 percentage points. We
attribute this outperformance over the past six months to the fact that over
the past year or so we have been increasing our focus on companies embracing
reforms to governance and capital efficiency, and this positioning continued
to pay dividends, literally, over the past six months.
These latest returns further enhanced the Company's longer-term performance
track record. The NAV total return with debt at fair value over the five-year
period ended 31st March 2025 was +45.6%, consistent with the benchmark, while
over the ten-year period, the Company made a NAV total return of +115.3%,
ahead of the benchmark return of +93.5%.
Performance - Value vs Growth
The graph in the Half Year Report shows the style rotation seen in the market
with growth underperforming value since 2021.
Shareholders will of course be aware that the investment style of the Company
is to focus on Premium and Quality companies as we believe these will deliver
the best long-term performance. It is interesting however to look at the chart
in the Half Year Report which shows that the value companies in Japan have
been significantly outperforming the growth companies every year since 2021.
It is expected that there will be cycles whereby growth and then value
outperform in turn and that these cycles may persist for some time. What is
interesting is that the team have been outperforming even in the value
environment, not because we have been buying value companies but rather
because we have been able to find opportunities widely across the market
arising from the ever-improving corporate governance story.
Performance attribution
Six months ended 31st March 2025
% %
Contributions to total returns
Benchmark return 1.0
Stock selection 1.1
Currency 0.2
Gearing/Cash 0.1
Investment Manager contribution 1.4
Portfolio return(A) 2.4
Management fee and other expenses (0.4)
Share Buy-Back/Issuance 0.2
Other effects (0.2)
Return on net assets - Debt at par value(A) 2.2
Impact of fair value of debt 0.2
Return on net assets - Debt at fair value(A) 2.4
Return on Share Price(A) 2.3
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 35 to 38 of the Half Year
Report.
Economic and market background
Over the past six months, Japan's stock market has seen notable volatility.
The Nikkei 225 peaked in July 2024 and fell around 11% by May 2025, largely
due to global trade tensions and U.S. tariff threats targeting key exporters
like Toyota. Despite this, international investor interest in Japanese
equities has surged-particularly since Q1 2024, marking a striking reversal of
decades-long underinvestment, driven by strong corporate earnings,
shareholder-friendly reforms, and a more competitive corporate environment.
Domestically, the economic outlook has improved with a second consecutive year
of wage increases over 5%, fuelled by a tight labour market, supporting real
income growth and consumer spending.
In early 2024, the Bank of Japan ended its negative interest rate policy in
response to sustained inflation above 2%, signalling a long-awaited exit from
deflation and an important normalisation of monetary policy. October 2024's
general election saw the Liberal Democratic Party lose its majority for the
first time since 2009, but no major policy shifts followed. Global
uncertainties increased with Donald Trump's re-election and a new wave of U.S.
tariffs announced in April 2025, though negotiations with Japan have postponed
their implementation, particularly in the auto sector.
Meanwhile, corporate governance reforms have gained momentum, leading to
higher dividends, share buybacks, and a significant rise in unsolicited
takeover bids.
Significant contributors to and detractors from recent performance
The most significant contributors to returns over the review period included
several stocks we rate as Quality names. Rakuten Bank, Japan's largest online
bank, is the only bank that we rate as Quality*.
*A glossary of terms and APMs is provided on pages 35 to 38 of the Half Year
Report.
It reported strong results and growth in its customer base over the period. A
recently opened position in IHI Corporation, a heavy industry conglomerate,
also did well. It is benefitting from increasing Japanese government defence
spending, and we like the fact that the company is aggressively restructuring
to focus on its high-quality aero engineering business. Sanrio, which owns the
very popular Hello Kitty character, amongst other valuable intellectual
property, announced strong results under its new management team.
The favourable performance impact of these and other holdings was partially
offset by disappointing performance from other positions. Keyence manufactures
sensors used in factory automation. We rate this stock as Premium*. The
company reported results that were much better than peers, but nonetheless
slightly below expectations. Japan Exchange, the Quality-rated operator of the
Japanese stock exchange, had slightly weaker than expected results. Our
underweight to Mitsubishi UFJ Financial Group also detracted, as the shares
performed well due to good results and expectations of further rises in
Japanese interest rates, which should support margins. The company also made
progress on unwinding its strategic shareholdings in other financial names. It
also owns 24% of Quality-rated US bank Morgan Stanley, which is also doing
well. We opened a position in Mitsubishi UFJ Financial Group in January.
Portfolio activity
As we noted in our last Annual Report, corporate governance reforms, including
business re-organisations, are increasing the number of companies we may, in
future, deem to be Premium- or Quality-rated, and this is significantly
expanding our investment universe. Over the past six months, we have made
several acquisitions. The most significant included IHI and Mitsubishi UFJ
Financial Group, both mentioned above. We also added several other new
holdings, including a couple of companies that are leaders in their respective
industries - DMG Mori, a leading global manufacturer of high-precision machine
tools, which has high exposure to the German market, and Tsumura, Japan's
dominant producer of Chinese herbal medicine. We topped up our existing
position in Sony, a consumer electronics manufacturer. is becoming more
efficient and rationalising its business lines, with the upcoming listing of
its financial services operations. Sony's valuation is undemanding considering
the leading positions of its entertainment assets.
As part of JPMorgan Japanese Investment Trust's combination with JPMorgan
Japan Small Growth & Income (JSGI), in addition all the holdings that were
common to both funds, we retained six names held solely by JSGI - Genky
Drugstores, a pharmaceutical retailer, Sumitomo Densetsu, a construction
company, Rakus, an IT services provider, Nohmi Bosai, a supplier of fire
protection systems, Tamron, which makes optical and surveillance equipment,
and Daiei Kankyo, a waste management and recycling business. The combination
of the two portfolios did not significantly alter the market cap breakdown of
your Company.
The new acquisitions and top-ups initiated during the review period were
funded in part by reductions in some other holdings, and several complete
disposals. We locked in some profits by reducing our position in Hitachi, an
industrial conglomerate, following its strong performance during 2024. We
closed positions in Shin-Etsu Chemical, which produces silicon wafers, and
Infomart, an on-line business services provider, on concerns over rising
competition in these sectors. We also sold our holding in Softbank Group, a
telecoms services business, as we lack confidence in its capital allocation
decisions. Our concerns about the potential portfolio impact of US tariffs led
us to reduce exposure to the auto sector via the complete sale of Denso, an
auto parts producer which supplies global markets, including the US.
Outlook
We remain positive about the outlook for Japanese equities and confident in
the positioning of our portfolio. While the market has performed strongly over
the past two years, we believe the transformation underway in Japan is still
in its early stages. The full impact of corporate governance reforms and other
structural changes, such as increased focus on capital efficiency and
shareholder returns, has yet to be realised, and these shifts should continue
to support investor interest well into 2025 and beyond.
Broader structural trends like digitalisation and automation, discussed on
pages 12 to 19 in the Annual Report, are also accelerating change and creating
fertile ground for the type of high-quality, innovative businesses we aim to
own. In parallel, international interest in Japan remains elevated,
shareholder activism is gaining traction, and M&A activity, particularly
unsolicited bids, is on the rise, all of which reflect growing confidence in
the market's evolving landscape.
That said, risks remain. Chief among them are uncertainties related to U.S.
trade policy. Japanese automakers are especially vulnerable to potential
tariff increases; accordingly, we currently have no exposure to companies with
significant U.S. auto sales. We also manage currency risk carefully,
maintaining a well-balanced portfolio that can adapt to external shocks.
It is important, however, not to overstate these risks. Trade negotiations are
ongoing, and any eventual tariffs may be less severe than initially feared.
Moreover, Japanese corporates benefit from strong balance sheets and
operational resilience, positioning them to withstand short-term disruptions.
Market volatility, when it arises, provides opportunities to acquire
exceptional businesses at more attractive valuations.
With an experienced investment team based in Tokyo, we are well-equipped to
navigate this dynamic environment. Our local presence and analytical reach
allow us to uncover compelling opportunities that are often overlooked by the
broader market. We remain confident in the Company's ability to deliver
capital growth and sustained outperformance for shareholders over the long
term, and we look forward to updating you on our continued progress.
Thank you for your ongoing support.
Nicholas Weindling
Miyako Urabe
Xuming Tao
Investment Managers
28th May 2025
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 market volatility and external
factors, discount widening and lack of investor demand, liquidity risks.
• Trust Specific Risks - including poor strategy selection, poor
execution of strategy, gearing and loan covenants risk, change in portfolio
manager, statutory and regulatory compliance risk, cybercrime.
• Geopolitical Risks - including natural disasters and climate change
risk.
Information on each of these areas is given on pages 41 to 42 of the Strategic
Report within the Annual Report and Financial Statements for the year ended
30th September 2024.
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 2025, 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
28th May 2025
CONDENSED STATEMENT OF COMPREHENSIVE INCOME -
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 2025 31st March 2024 30th September 2024
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) - 3,155 3,155 - 133,184 133,184 - 160,568 160,568
Gains on derivative instruments - 7,223 7,223 - - - - - -
Net foreign currency gains(2) - 2,207 2,207 - 5,153 5,153 - 5,954 5,954
Income from investments 9,134 53 9,187 6,946 43 6,989 13,664 100 13,764
Income from derivative
instruments 1,065 - 1,065 - - - - - -
Interest receivable and similar
income 125 - 125 216 - 216 365 - 365
Gross return 10,324 12,638 22,962 7,162 138,380 145,542 14,029 166,622 180,651
Management fee(3) (91) (814) (905) (229) (2,058) (2,287) (473) (4,253) (4,726)
Other administrative expenses (630) - (630) (671) - (671) (1,225) - (1,225)
Net return before finance
costs and taxation 9,603 11,824 21,427 6,262 136,322 142,584 12,331 162,369 174,700
Finance costs (83) (744) (827) (78) (708) (786) (159) (1,430) (1,589)
Net return before taxation 9,520 11,080 20,600 6,184 135,614 141,798 12,172 160,939 173,111
Taxation (913) - (913) (697) - (697) (1,368) (5) (1,373)
Net return after taxation 8,607 11,080 19,687 5,487 135,614 141,101 10,804 160,934 171,738
Return per share (note 3) 5.32p 6.85p 12.17p 3.70p 91.45p 95.15p 7.37p 109.82p 117.19p
(1) Includes foreign currency gains or losses on investments.
(2) Foreign currency gains are due to Yen denominated loan notes and
bank loans.
(3) During the period to 31st March 2025, the Company acquired the
assets of JPMorgan Japan Small Cap Growth & Income plc (JSGI) following
a scheme of reconstruction. As a result, the Manager waived its management
fee in lieu of its contribution towards the total costs associated with the
Company's combination with JSGI. Further details on the Manager's Contribution
can be found in the circular issued by the Company dated 19th September 2024.
All revenue and capital items in the above statement derive from continuing
operations.
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 Share redemption Other Capital Revenue
capital premium reserve(1) reserve(1) reserves(1) reserve(1) Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Six months ended 31st March 2025
(Unaudited)
At 30th September 2024 40,312 - 8,650 166,791 641,289 21,561 878,603
Repurchase of shares into Treasury - - - - (17,711) - (17,711)
Issue of Ordinary shares in respect of the
Combination with JSGI(2) 5,841 138,713 - - - - 144,554
Costs in relation to issue of Ordinary shares - (164) - - - - (164)
Net return - - - - 11,080 8,607 19,687
Dividends paid in the period (note 4) - - - - - (11,112) (11,112)
At 31st March 2025 46,153 138,549 8,650 166,791 634,658 19,056 1,013,857
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
Year ended 30th September 2024 (Audited)
At 30th September 2023 40,312 - 8,650 166,791 519,304 20,414 755,471
Repurchase of shares into Treasury - - - - (38,949) - (38,949)
Net return - - - - 160,934 10,804 171,738
Dividends paid in the year (note 4) - - - - - (9,657) (9,657)
At 30th September 2024 40,312 - 8,650 166,791 641,289 21,561 878,603
( )
(1) 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.
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 2025, the £634,658,000 Capital reserves comprise
net gains on the sale of investments amounting to £384,567,000, a gain from
the revaluation of investments still held totalling £220,574,000 and an
exchange gain on the foreign currency loans of £29,353,000. The £29,353,000
of capital reserves, resulting from the exchange gain on the foreign currency
loan, is not distributable. The remaining Capital reserves, totalling
£605,305,000, are subject to fair value movements, may not be readily
realisable at short notice, and therefore may not be entirely distributable.
The investments are subject to financial risks, therefore Capital
reserves (arising on investments sold) and Revenue reserve may not be entirely
distributable if a loss occurred during the realisation of these investments.
(2) During the period to 31st March 2025, the Company acquired the
assets of JPMorgan Japan Small Cap Growth & Income plc (JSGI), following a
scheme of reconstruction ('Combination').
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
At At At
31st March 31st March 30th September
2025 2024 2024
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 834,776 796,897 881,405
Investments on loan 199,094 158,600 89,022
Total investments held at fair value through profit or loss 1,033,870 955,497 970,427
Current assets
Derivative financial assets 592 - -
Debtors 12,185 5,575 5,422
Cash at bank 40,740 8,390 23,497
Amounts held with clearing houses and brokers 11 - -
53,528 13,965 28,919
Creditors: amounts falling due within one year (1,266) (37,116) (53,269)
Derivative financial liabilities (5,194) - -
Net current assets/(liabilities) 47,068 (23,151) (24,350)
Total assets less current liabilities 1,080,938 932,346 946,077
Creditors: amounts falling due after more than one year (67,081) (67,705) (67,474)
Net assets 1,013,857 864,641 878,603
Capital and reserves
Called up share capital(1) 46,153 40,312 40,312
Share premium(1) 138,549 - -
Capital redemption reserve 8,650 8,650 8,650
Other reserve 166,791 166,791 166,791
Capital reserves 634,658 632,644 641,289
Revenue reserve 19,056 16,244 21,561
Total shareholders' funds 1,013,857 864,641 878,603
Net asset value per share (note 5) 620.6p 591.1p 613.8p
( )
(1) During the period to 31st March 2025, the Company issued ordinary
shares in exchange for the assets acquired of JPMorgan Japan Small Cap Growth
& Income plc (JSGI), following a scheme of reconstruction ('Combination'),
see note 7 for further information.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended For the year ended
31st March 31st March 30th September
2025 2024 2024
£'000 £'000 £'000
Cash flows from operating activities
Net profit before finance costs and taxation 21,427 142,584 174,700
Adjustment for:
Net gains on investments held at fair value through
profit or loss (3,155) (133,184) (160,568)
Net gains on derivative financial instruments (7,223) - -
Net foreign currency gains (2,207) (5,153) (5,954)
Dividend income (9,187) (6,989) (13,764)
Interest income (6) (1) (2)
Derivative income (1,065) - -
Realised gain/(loss) on foreign exchange transactions 632 (31) 466
(Increase)/decrease in accrued income and other debtors (75) (19) 1
(Decrease)/increase in accrued expenses (16) 57 65
Net cash outflow from operations before dividends and interest (875) (2,736) (5,056)
Dividends received 8,025 5,935 12,167
Interest received 6 1 2
Net cash inflow from operating activities 7,156 3,200 7,113
Purchases of investments and derivatives financial instruments (187,697) (116,848) (293,845)
Sales of investments and derivative financial instruments 261,576 152,519 341,969
Settlement of derivative financial instruments 11,825 - -
Amounts held with clearing houses and brokers (11) - -
Costs paid in respect of the Combination with JSGI (882) - -
Net cash inflow from investing activities 84,811 35,671 48,124
Equity dividends paid (note 4) (11,112) (9,657) (9,657)
Net cash acquired following the Combination with JSGI (note 7) 5,895 - -
Costs in relation to issue of Ordinary shares (164) - -
Repurchase of shares into Treasury (17,418) (22,274) (38,393)
Repayment of bank loan (50,958) - (26,023)
Drawdown of bank loan - - 41,637
Interest paid (780) (691) (1,402)
CFD interest paid (198) - -
Net cash outflow from financing activities (74,735) (32,622) (33,838)
Increase in cash and cash equivalents 17,232 6,249 21,399
Cash and cash equivalents at start of period/year 23,497 2,141 2,141
Exchange movements 11 - (43)
Cash and cash equivalents at end of period/year 40,740 8,390 23,497
Cash and cash equivalents consist of:
Cash at bank 40,740 8,390 23,497
Total 40,740 8,390 23,497
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
For the six months ended 31st March 2025
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 2024
are extracted from the latest published financial statements of the Company.
The financial statements for the year ended 30th September 2024 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 2025.
All of the Company's operations are of a continuing nature.
During the period ended 31st March 2025, the Company used Contracts for
Difference (CFDs) as part of its derivative transactions. Under FRS 102, these
derivatives are measured at fair value both initially and subsequently. The
fair value of CFDs is determined by the difference between the initial
contract price of the CFD and the value of the underlying shares, as per the
investment accounting policy. Open CFD positions at the period-end are shown
at fair value in the Statement of Financial Position under current assets or
liabilities.
Income from CFDs is recognised as derivative income in the revenue column of
the Statement of Comprehensive Income, while interest paid on CFDs is
recognised as a finance cost, in accordance with the allocation policy of the
Company. Gains and losses from CFDs are recognised in the capital column of
the Statement of Comprehensive Income.
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 2024.
Issue of Shares Pursuant to a Scheme of Reconstruction of JPMorgan Japan Small
Cap Growth & Income plc (JSGI) with the Company (the 'Combination')
On 25th October 2024, the Company issued new Ordinary shares to shareholders
of JSGI in consideration for the receipt by the Company of assets pursuant to
the Combination with JSGI. The Directors have considered the substance of the
assets and activities of JSGI, determining whether these represent the
acquisition of a business. The acquisition is not judged to be an acquisition
of a business, and therefore has not been treated as a 'business combination'.
Rather, the cost to acquire the assets of JSGI has been allocated between the
acquired identifiable assets and liabilities based on their relative fair
values on the acquisition date without attributing any amount to goodwill or
to deferred taxes. Investments, cash and other assets were transferred from
JSGI. All assets were acquired at their fair value. The value of the assets
received, in exchange for shares issued by the Company, have been recognised
in share capital and share premium, as shown in the Statement of Changes in
Equity. Direct costs in respect of the shares issued have been recognised in
share premium, whereas other professional costs in relation to the Combination
have been recognised as transaction costs included within gains and losses on
investments held at fair value through profit or loss.
3. Return per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 31st March 30th September
2025 2024 2024
£'000 £'000 £'000
Return per share is based on the following:
Revenue return 8,607 5,487 10,804
Capital return 11,080 135,614 160,934
Total return 19,687 141,101 171,738
Weighted average number of shares in issue 161,744,627 148,297,034 146,544,521
Revenue return per share 5.32p 3.70p 7.37p
Capital return per share 6.85p 91.45p 109.82p
Total return per share 12.17p 95.15p 117.19p
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 31st March 30th September
2025 2024 2024
Pence £'000 Pence £'000 Pence £'000
Dividend paid
Final dividend in respect of prior year 6.75 11,112 6.50 9,657 6.50 9,657
All dividends paid in the period have been funded from the revenue reserve
(2024: same).
No interim dividend has been declared in respect of the six months ended 31st
March 2025 (2024: nil).
5. Net asset value per share
The net asset value per Ordinary share and the net asset value attributable to
the Ordinary shares at the year-end are shown below. These were calculated
using 163,370,203 (31st March 2024: 146,267,089 & 30th September 2024:
143,152,089) Ordinary shares in issue at the year-end (excluding Treasury
shares).
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st March 31st March 30th September
2025 2024 2024
Net asset Net asset Net asset
value attributable value attributable value attributable
£'000 pence £'000 pence £'000 pence
Net asset value - debt at par value 1,013,857 620.6 864,641 591.1 878,603 613.8
Add: amortised cost of ¥13 billion senior secured loan notes 67,081 41.1 67,705 46.3 67,474 47.1
Less: fair value of ¥13 billion senior secured loan notes (55,461) (34.0) (61,919) (42.3) (59,622) (41.7)
Net asset value - debt at fair value 1,025,477 627.7 870,427 595.1 886,455 619.2
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 31st March 30th September
2025 2024 2024
Assets Liabilities Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000 £'000 £'000
Level 1 1,033,870 - 955,497 - 970,427 -
Level 2(1) 592 (5,194) - - - -
Total 1,034,462 (5,194) 955,497 - 970,427 -
1 Includes the fair value of derivative financial instruments (long
CFDs).
7. Net assets acquired following the Combination with JPMorgan Japan Small Cap
Growth & Income plc (JSGI)
On 25th October 2024, the Company issued new Ordinary shares to shareholders
of JSGI in consideration for the receipt by the Company of assets pursuant to
the Combination with JSGI. The value of the assets acquired were determined in
accordance with the Scheme and based on the formula asset value at the
calculation date of the transaction.
JSGI
£'000
Investments 137,224
Cash 5,895
Other assets 1,435
Formula Asset Value 144,554
Satisfied by the value of new Ordinary shares issued 144,554
Transaction costs paid by the Company amounted to £882,000 which have been
recognised in gains and losses on investments held at fair value through
profit and loss. Direct share issue costs of £164,000, paid by the Company,
have been recognised in Share Premium. The Manager's contribution towards the
total transaction costs paid by the Company and JSGI which has been settled by
waiver of its management fee, amounted to £1,519,000.
8. Analysis of Changes in Net Debt
As at Exchange Rate As at
30th September Movement and 31st March
2024 Cash flows Amortisation 2025
£'000 £'000 £'000 £'000
Cash and cash equivalents
Cash at bank 23,497 17,232 11 40,740
23,497 17,232 11 40,740
Borrowings
Debt due within one year (52,120) 50,958 1,162 -
Debt due after one year (67,474) - 393 (67,081)
(119,594) 50,958 1,555 (67,081)
Net debt (96,097) 68,190 1,566 (26,341)
JPMORGAN FUNDS LIMITED
28th May 2025
For further information, please contact:
Priyanka Vijay Anand
For and on behalf of
JPMorgan Funds Limited - Company Secretary
Telephone: 0800 20 40 20 or or +44 1268 44 44 70
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 Half Year Report will be submitted to the National Storage
Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
The 2025 Half Year Report will also shortly be available 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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