REG - JPMorgan Euro Discov - Half-year Report
09/12/2024 07:00
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RNS Number : 2255P JPMorgan European Discovery Trust 09 December 2024
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN EUROPEAN DISCOVERY TRUST PLC
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED
30TH SEPTEMBER 2024
Legal Entity Identifier: 54930049CEWDI46Y3U28
Information disclosed in accordance with DTR 4.2.2
Highlights
• NAV total return of -0.5% compared with +1.0% for the MSCI Europe
(ex UK) Small Cap Index (the 'Benchmark'), The share price return was +2.2%
due to a narrowing of the discount at which the Company's shares traded
relative to its NAV.
• For the ten years ended 30th September 2024, the Company
comfortably outperformed the Benchmark with a NAV total return of +163.5%
compared to +140.1% for the Benchmark. The share price increased by 183.7%
over the same period.
• Interim dividend of 3.0 pence (2023: 2.5 pence) per share, which
will be paid on 5th February 2025 to shareholders on the register as at 20th
December 2024 (the ex-dividend date will be 19th December 2024).
• A total of 6,734,095 shares were repurchased into Treasury in the
six months to 30th September 2024.
• Earlier in the year, the Company undertook a Tender Offer
resulting in the repurchase of 15% of the issued share capital (excluding
Shares held in Treasury).
The Chairman of JEDT, Marc Van Gelder commented:
"The outlook for European small caps, and for your Company, is positive,
despite the recent upsurge in global political uncertainty. Easing inflation
pressures, declining interest rates and more buoyant consumer sentiment will
continue to provide favourable economic tailwinds."
"We share the Investment Manager's conviction that innovative and nimble small
cap companies are by their nature best placed to capitalise on emerging
trends, such as the rapid adoption of artificial intelligence (AI). 2025 looks
set to be an interesting and remunerative one for your Company, and one which
should serve to extend its long-term track record of strong gains and
outperformance. "
JEDT's Portfolio Managers, Jon Ingram, Jack Featherby and Jules Bloch
commented:
"Macroeconomic developments over the review period have been decisively
positive. Looking across the asset class, we expect the easing of monetary
headwinds and improving economic growth indicators to be favourable for
economically geared smaller companies."
"We anticipate that the combination of attractive valuations, supportive
macroeconomic conditions, and long-term thematic drivers will serve as
significant catalysts for European smaller companies. This sector of the
market has outperformed most other major public asset classes globally over
the past two decades, and after a protracted period of underperformance, these
stocks are overdue for a resurgence. As we said in our last report, the
outlook has rarely been brighter, and we look forward to reporting the
Company's progress on capturing this recovery as it unfolds. "
CHAIR'S STATEMENT
I am pleased to present the Company's results for the half-year ended 30th
September 2024.
Investment Performance
The improvement in the market environment which I noted in the Annual Report
continued in the half year to 30th September 2024. Inflationary pressures
continued to subside, the European Central Bank (ECB) initiated a monetary
easing cycle and real wage increases are lifting consumer confidence. These
developments were generally supportive of small cap companies. The Company's
benchmark, the MSCI Europe (ex UK) Small Cap Index, returned +1.0% over the
six month period. However, the Company's performance lagged, recording a total
return on net assets of -0.5%. The total return to shareholders was +2.2%, due
to a moderate narrowing of the discount at which the Company's shares traded
relative to its NAV, from 10.6% to 8.3%.
This recent underperformance in NAV terms is disappointing, but it follows a
period of outperformance for the financial year ended 31st March 2024. As the
Company adopts a long-term investment strategy, it is important to also
consider performance over a longer timeframe. Over the past five years, the
total return on net assets was +32.4%, compared to the benchmark total return
of +39.2%. Over the past ten years, the total return of +163.5% was high in
absolute terms and comfortably above the benchmark return of +140.1%.
The Investment Manager's Report that follows provides a review and outlook of
markets, as well as more detail on the performance drivers within the
portfolio.
Revenue and Dividends
The Company's net revenue return for the six months to 30th September 2024 was
higher than the corresponding period in 2023, at 10.72 pence per share (30th
September 2023: 10.42 pence). The Board has decided to increase the interim
dividend to 3.0 pence (2023: 2.5 pence) per share, which will be paid on
5th February 2025 to shareholders on the register as at 20th December 2024
(the ex-dividend date will be 19th December 2024). When determining the final
dividend for the current financial year, the Board will take into account the
income received over the year as a whole, and the level of the Company's
revenue reserves, which stood at £24.47m as at 30th September 2024.
Discount Management and Share Repurchases
The Board continues to monitor the level of the share price discount and
believes that its ability to repurchase shares to minimise the short-term
volatility and the absolute level of the discount is of prime importance to
shareholders. A total of 6,734,095 shares were repurchased into Treasury in
the six months to 30th September 2024. A further 2,015,144 shares have been
repurchased since the period end. At the time of writing, the share price
discount was 12.2%.
Tender Offer
As previously announced, during the year, the Company undertook a Tender Offer
providing shareholders with the opportunity to tender up to 15% of the issued
share capital in the Company (excluding Shares held in Treasury). 21,160,028
shares were validly tendered pursuant to the Tender Offer.
The Board
In line with the Board's succession planning on the retirement of Nicholas
Smith at the 2024 Annual General meeting, in July, the Board undertook a
search to identify a new Director. Following the successful conclusion of this
search and as announced, James Will was appointed as an independent
non-executive director with effect from the conclusion of the 2024 Annual
General Meeting.
James brings a wealth of Investment Trust industry experience, his other
Non-Executive Director roles include being the Chair of Asia Dragon Trust plc
and the Senior Independent Director at Herald Investment Trust plc.
Environmental, Social and Governance ('ESG')
The Board has continued to engage with the Manager on the integration of ESG
factors into its investment process. These issues are considered at every
stage of the investment decision. The Board shares the Investment Managers'
view of the significance of financially material ESG factors, both when making
initial investment decisions and throughout the period of the investment. To
this end, it seeks to maintain a meaningful and ongoing engagement with
investee companies.
For more details, please refer to pages 30 to 32 of the 2024 Annual Report
which can be found on the Company's website at:
www.jpmeuropeandiscovery.co.uk.
Change of Registrar
As mentioned in the 2024 Annual Report, following a competitive tender
process, the Company transferred the management of its share register from
Equiniti Financial Services Limited to Computershare Investor Services PLC
('Computershare'), with effect from 16th September 2024.
A notification letter from Computershare was sent to all registered
shareholders advising of this change. The letter included an invitation to
shareholders to create an online account which will provide access to the
details of their shareholdings and an opportunity to participate in the
Company's Dividend Reinvestment Plan (DRIP). Please visit
www.investorcentre.co.uk. for further information.
Outlook
The outlook for European small caps, and for your Company, is positive,
despite the recent upsurge in global political uncertainty. Easing inflation
pressures, declining interest rates and more buoyant consumer sentiment will
continue to provide favourable economic tailwinds. In addition, lower rates
combined with tempting valuations, are likely to reignite interest in M&A
activity in the sector. Some of the Company's portfolio holdings may be direct
beneficiaries. We share the Investment Manager's conviction that innovative
and nimble small cap companies are by their nature best placed to capitalise
on emerging trends, such as the rapid adoption of artificial intelligence
(AI). Also, after an uncharacteristically long period of underperformance,
European small caps are ripe for a rebound. In conclusion, 2025 looks set to
be an interesting and remunerative one for your Company, and one which should
serve to extend its long-term track record of strong gains and outperformance.
On behalf of the Board I would like to thank you for your ongoing support.
Marc van Gelder
Chairman
INVESTMENT MANAGERS' REPORT
As we reflect on the first half of the financial year, we observe a dynamic
landscape that has significantly influenced the performance of Europe's
smaller companies. Key developments, such as inflation stabilisation, interest
rate cuts by the ECB, and rising consumer confidence have shaped market and
stock performance. These factors, alongside political events, have created
opportunities for investors like us who focus on uncovering overlooked
companies ('hidden gems') across continental Europe.
In this report we will discuss how these elements have affected the Company's
performance, and we outline our strategic approach moving forward. We will
also highlight some of the hidden gems in the Company's investment portfolio
and share our views on European smaller companies.
Macroeconomic Review
Three main factors influenced the performance of Europe's smaller companies
over the past six months: inflation stabilisation, central bank rate cuts,
and increased consumer confidence.
• Inflation: In the Euro area, the Consumer Price Index (CPI) fell
from 2.4% in March 2024 to 1.7% in September 2024, down from highs of +10% in
2022. Core inflation has fallen to 2.7%.
• Financial Conditions: Lower inflation has allowed central banks
to cut interest rates. The ECB has so far reduced rates three times this year,
from 4.00% to 3.25%.
• Consumer Confidence: Rising real wages in Europe have boosted
consumer confidence, benefiting domestically focused smaller companies.
While political developments can influence market sentiment and risk
perceptions, recent elections in the UK and France are only likely to have
moderate long-term impact on company fundamentals.
The same can be said about the severe bout of weakness in Japanese stocks
during July, after the Bank of Japan raised interest rates and warned of
further tightening ahead.
The Chinese government's array of stimulus measures, announced in September,
have led to a rally in Chinese equities, although their success remains
uncertain.
Additionally, the result of the US election is expected to add more volatility
to global markets as investors react to potential policy changes, though as
with the other regions, we believe the long-term performance of stock prices
will ultimately be driven by company fundamentals.
Portfolio Performance
Table 1: Performance of JPMorgan European Discovery Trust versus major markets
Company/index name 31st March -
30th September
2024
(%)
JEDT (NAV) -0.5
NAV relative to benchmark -1.5
JEDT (Price) 2.2
End of period discount -8.3
MSCI Europe (ex UK) Small Cap 1.0
MSCI Europe (ex UK) -0.4
Source: JPMorgan Asset Management and Bloomberg.
Relative to the MSCI Europe ex UK Small Cap index, the Company's investment
portfolio underperformed by 1.5% over the period. The portfolio's intra-period
performance volatility was relatively muted, with an equal number of
outperforming months and underperforming months. Portfolio underperformance
was driven by some major political and macroeconomic events during the period,
including the announcement of the French legislative elections in June, the
sudden unwinding of the Yen carry trade in early August, and the announcement
of Chinese stimulus measures over September. Each of these events led to a
significant increase in the stock market's risk premium, and this subsequently
weighed on the performance of Europe's Smaller Companies.
Table 2: Sector Performance - Top 3 and Bottom 3 sectors contributing to
performance
Account Benchmark Attribution
Avg Wgt Return Avg Wgt Selection Allocation Total
Group (%) (%) (%) (%) (%) (%)
Real Estate 6.27 19.32 7.85 0.45 -0.17 0.27
Consumer Staples 4.43 6.82 4.80 0.27 -0.05 0.23
Communication Services 7.55 2.98 4.51 0.32 -0.10 0.22
Financials 13.91 3.17 14.24 -0.41 -0.02 -0.43
Consumer Discretionary 11.67 -8.67 8.30 -0.29 -0.30 -0.59
Industrials 32.31 -2.21 25.99 -1.39 0.12 -1.27
Source: JPMorgan Asset Management.
Analysing the Company's performance by sector, the Real Estate sector was the
largest positive contributor to returns. Here, performance was principally
driven by increasingly positive sentiment around ECB rate cuts. Within the
sector, TAG Immobillen, a German residential building owner and operator,
contributed most, on the back of its initially depressed valuation and a
stabilisation in property valuations.
The Company's exposure to Consumer Staples and Communication Services also
enhanced returns, with individual stock specifics driving performance in both
sectors. Within Consumer Staples, returns were driven by Swedish specialty
vegetable oils and fats producer, AAK. This company has benefited over the
last six months from a dramatic increase in the price of cocoa butter, which
has driven demand for substitutes, including AAK's palm oil-based products.
Within Communication Services, performance was supported by the Company's
investment in CTS Eventim, a German-based online ticketing platform for the
entertainment industry. CTS is doing well thanks to rocketing demand for live
entertainment. Activity is surging due to changing monetisation trends in the
music industry which have led to a rise 'mega' tours by artists such as Taylor
Swift and Adele.
The Company's largest sectorial detractors were Industrials, Consumer
Discretionary and Financials. The industrial sector underperformance was
primarily the result of a ~7% overweight to the sector. Over the review
period, the Company exited several of its largest Industrial sector holdings
to reduce this overweight. Otherwise, negative performance within Industrials
was driven by the continued weakness of the German industrial economy (see
'Portfolio Changes' section for further details). Financial sector holdings
have been adversely impacted by expectations of a decline in net interest
income (NII) now the ECB has begun cutting rates. Despite this headwind for
NII, we think the current mantra of 'higher for longer' interest rates,
coupled with still deeply discounted valuations, should support share price
performance in Financials going forward. Finally, Consumer Discretionary names
have suffered from a weak automotive market, as well as broader weakness in
consumer spending across the US and Europe. Within all these sectors, negative
performance was primarily the result of our sector allocation, rather than
stock specifics.
Table 3: Investment performance - Top 3 and Bottom 3 investments contributing
to performance
Account Benchmark
Avg Avg Wgt Total
Wgt Return Wgt Diff Effect
Security Name (%) (%) (%) (%) (%)
Nexans 2.12 35.04 0.41 1.71 0.50
Unipol Gruppo 1.94 38.35 0.44 1.50 0.46
Bonesupport 1.66 33.04 0.16 1.50 0.43
Scor 1.01 -34.87 0.44 0.58 -0.51
Stabilus 1.01 -35.50 0.14 0.87 -0.52
Kion 1.55 -33.26 0.34 1.22 -0.67
Source: JPMorgan Asset Management.
The top three contributors to performance over the period were Nexans, Unipol
Gruppo, and Bonesupport.
Nexans, a French company, is the world's second largest supplier of high
voltage cables. This investment contributed strongly to performance thanks to
continued massive demand for their high voltage cable solutions. Nexans
provide the high specificity cables needed to connect offshore wind farms to
the electrical grid. Their cables are also used as transnational
interconnectors to connect power grids in one country to those of other
countries. Through these businesses Nexans play a key role in the transition
to renewable energy. We believe their investment thesis is just starting to
play out, and we have a high conviction for Nexans' investment proposition
going forward.
Unipol Gruppo is an Italian insurance provider and financial conglomerate. The
stock contributed strongly to returns following the company's decision to
streamline its operating structure by merging its Hold-Co structure with its
listed subsidiary, Unipol Sai. In addition, results have been consistently
strong throughout the year.
Bonesupport, a Swedish healthcare company specialising in orthobiologics, also
contributed positively following their expansion into the US market. FDA
clearance of the company's spinal fusion treatment was also received sooner
than expected.
The top three detractors were Scor, Kion and Stabilus. We have subsequently
exited all three positions.
Scor, a French reinsurer, underperformed due to missed expectations driven by
US mortality claims. This led to a profit warning which raised questions
around the potential volatility of future profits. Kion, a German manufacturer
of forklift trucks, also faced a weak start to the year. Poor order intake
delayed the potential for recovery and left no indication of when a recovery
could start. Stabilus, a German manufacturer of gas springs and power risers,
also issued a negative profit update citing lower demand for automotive and
commercial vehicles. This also led us to believe the recovery we expected
would continue to be delayed.
Portfolio Changes
Table 4: Top 3 investment portfolio buys and Top 3 sells
Change Trade
Security Name Sector PRT (%) Type
Nexans SA Industrials 1.7 Topped up
Banco Comercial Portugues Financials 1.5 New buy
Cairn Homes PLC Consumer Discretionary 1.4 Topped up
Kion Industrials -2.7 Sell out
Scor Financials -2.4 Sell out
Hensoldt AG Industrials -1.8 Sell out
Source: JPMorgan Asset Management.
During the period, we increased the Company's investment holdings in Nexans
and Cairn Homes, an Irish home builder, and initiated a new position in Banco
Comercial Portugues (BCP).
The boosted position in Nexans followed its recent strong performance, as
discussed earlier, which increased our confidence in the business's strong
market position. We also like Nexan's ability to drive shareholder value
through higher margins and through cash flows, thanks to extraordinarily
strong global demand for high voltage cables in a tight supply market.
The decision to invest in BCP, a Portuguese retail bank, was driven by
confidence in its investment case following a turnaround in business
performance supported by persistently high interest rates.
The Company's third largest portfolio position change was the increase in
holding of Cairn Homes. Cairn are currently benefitting from improved housing
demand in Ireland. We also received positively their announcement to extend
their share buyback programme. We increased our position when the ECB began
lowering rates as this should, on a fundamental level, support further demand
for new housing.
The Company exited positions in Scor, Kion, Stabilius and Hensoldt. We felt
uncertain about the future earnings prospects of each of these investments
(the reasons for the disposal of the first three names are discussed earlier).
With Hensoldt, a key supplier of sensor technologies to the defence industry,
the decision to sell was motivated by our concerns about domestic political
support for further German defence spending, given the country's fiscal
challenges.
As a result of the above portfolio changes, the Company's investment portfolio
sector positioning has evolved as shown in the 2024 Half Year Report of the
Company.
Over the half year, exposure to Communication Services grew to become the
Company's largest sector overweight. This growth was driven by strong
performance from the Company's investments in businesses such as the
previously mentioned CTS Eventim.
Industrial sector exposure contracted, becoming the second largest sector
overweight. We continue to see a significant number of opportunities within
this sector, and we believe industrials should do well as Europe recovers from
the effects of inflation and the European energy crisis. We have, however,
decided to reduce the portfolio's sector weighting based on stock specific
decisions.
The Company's exposure to the Real Estate and Healthcare sectors, both sectors
sensitive to interest rates, increased over the period. We feel that the ECB's
rate cuts should support specific areas of the Real Estate sector, especially
German residential real estate investment, over the coming months.
In Healthcare, we have increasing conviction in several companies offering
unique technologies, which have so far been overlooked by the market. For
example, we have built a position in Camurus, a Swedish drug development
company with proprietary drug delivery technology that we believe is at the
beginning of a multi-year growth cycle. Top performer Bonesupport, mentioned
above, also falls into this category.
Materials remain the portfolio's largest underweight due to their cyclical
nature and poor track record in value creation. Although post-pandemic demand
and energy price spikes boosted materials sector margins, recent declines in
gas and electricity prices pose challenges for the sector.
Outlook
When considering the outlook for European financial markets, one uncomfortable
reality is that political uncertainty is escalating, especially given the
perceived binary nature of many national elections occurring around the region
and world. However, we cannot second guess the impact of political events on
financial markets. The Company's investment strategy remains focused instead
on identifying Europe's 'hidden gems' - great companies with strong
fundamentals that have escaped the attention of most investors.
Macroeconomic developments over the review period have been decisively
positive. Looking across the asset class, we expect the easing of monetary
headwinds and improving economic growth indicators to be favourable for
economically geared smaller companies.
In addition, after a period of subdued deal flow, lower interest rates in
concert with attractive valuations, are likely to catalyse an uptick in
M&A within the European smaller companies space. We believe this should
benefit both the asset class and the Company. Private equity investors and
other participants in M&A activity tend to seek out the same kind of
overlooked businesses that we seek, and we expect some of our portfolio
holdings to be targeted by these investors. Please refer to the charts in the
2024 Half Year Report of the Company.
The portfolio's exposure to structural themes will be another driver of
portfolio returns. We continue to hold a strong conviction that many of the
companies that will be most successful in harnessing the AI revolution,
pharmaceutical advancements, and other emerging structural trends, are likely
to originate from the smaller companies space within Europe. Many of these
future leaders are yet to be identified (or even conceived), but we are always
on the lookout.
We anticipate that the combination of attractive valuations, supportive
macroeconomic conditions, and long-term thematic drivers will serve as
significant catalysts for European smaller companies. This sector of the
market has outperformed most other major public asset classes globally over
the past two decades, and after a protracted period of underperformance, these
stocks are overdue for a resurgence. As we said in our last report, the
outlook has rarely been brighter, and we look forward to reporting the
Company's progress on capturing this recovery as it unfolds.
Jon Ingram
Jack Featherby
Jules Bloch
Investment Managers
INTERIM MANAGEMENT REPORT
The Company is required to make the following disclosures in its half year
report:
Principal Risks and Uncertainties
The principal & emerging risks and uncertainties faced by the Company fall
into the following broad categories: investment underperformance &
strategy; market and currency; geo-political, global economics; accounting,
legal and regulatory; operational & cyber-crime, corporate governance
& shareholder relations, climate change, artificial intelligence, and
global pandemic. The Board has reviewed the principal risks and uncertainties,
reported in the Annual Report and Financial Statements for the year ended 31st
March 2024, and concluded that it does not believe that currently there are
any emerging risks facing the Company. In the view of the Board, these
principal risks and uncertainties are as much applicable to the remaining
six months of the financial year as they were to the six months under review.
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.
Going Concern
The Directors believe, having considered the Company's investment objectives,
risk management policies, capital management policies and procedures, nature
of the portfolio and expenditure projections, that the Company has adequate
resources, an appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the foreseeable
future. More specifically, that there are no material uncertainties pertaining
to the Company that would prevent its ability to continue in such operational
existence for at least 12 months from the date of the approval of this half
yearly financial report. For these reasons, they consider that there is
reasonable evidence to continue to adopt the going concern basis in preparing
the financial statements.
Directors' Responsibilities
The Board of Directors confirm that, to the best of its knowledge:
(i) the condensed set of financial statements contained within the
half-yearly financial report has been prepared in accordance with FRS 104
Interim Financial Reports and gives a true and fair view of the state of
affairs of the Company and of the assets, liabilities, financial position and
net return of the Company, as at 30th September 2024, as required by the UK
Listing Authority Disclosure Guidance and Transparency Rules 4.2.4R; and
(ii) the interim management report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the UK Listing Authority
Disclosure Guidance and Transparency Rules.
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
Marc van Gelder
Chairman
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th September 2024 30th September 2023 31st March 2024
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on investments
held at fair value through
profit or loss - (23,245) (23,245) - (102,583) (102,583) - 25,759 25,759
Foreign exchange
(losses)/gains on JPMorgan
EUR Liquidity Fund - (1,536) (1,536) - 235 235 - (172) (172)
Net foreign currency gains - 2,710 2,710 - 1,166 1,166 - 2,225 2,225
Income from investments 19,080 - 19,080 19,519 - 19,519 23,050 - 23,050
Interest receivable and
similar income 948 - 948 351 - 351 932 - 932
Gross return/(loss) 20,028 (22,071) (2,043) 19,870 (101,182) (81,312) 23,982 27,812 51,794
Management fee (838) (1,956) (2,794) (944) (2,202) (3,146) (1,732) (4,041) (5,773)
Other administrative expenses (424) - (424) (355) - (355) (860) - (860)
Net return/(loss) before finance
costs and taxation 18,766 (24,027) (5,261) 18,571 (103,384) (84,813) 21,390 23,771 45,161
Finance costs (756) (1,764) (2,520) (657) (1,532) (2,189) (1,227) (2,861) (4,088)
Net return/(loss) before taxation 18,010 (25,791) (7,781) 17,914 (104,916) (87,002) 20,163 20,910 41,073
Taxation (2,969) - (2,969) (1,509) - (1,509) (1,493) - (1,493)
Net return/(loss) after taxation 15,041 (25,791) (10,750) 16,405 (104,916) (88,511) 18,670 20,910 39,580
Return/(loss) per share (note 3) 10.72p (18.38)p (7.66)p 10.42p (66.62)p (56.20)p 12.04p 13.49p 25.53p
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/(loss) after taxation represents the profit/(loss) for the
period/year and also the total comprehensive income.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Called up Capital
share Share redemption Capital Revenue
capital premium reserve reserves(1) reserve(1) Total
£'000 £'000 £'000 £'000 £'000 £'000
Six months ended 30th September 2024 (Unaudited)
At 31st March 2024 7,874 1,312 7,762 731,289 20,809 769,046
Repurchase of shares for cancellation (1,058) - 1,058 (104,375) - (104,375)
Repurchase of shares into Treasury - - - (31,569) - (31,569)
Cost in relation to Tender offer - - - (105) - (105)
Net (loss)/return after taxation on ordinary shares - - - (25,791) 15,041 (10,750)
Dividends paid in the period (note 4) - - - - (11,383) (11,383)
At 30th September 2024 6,816 1,312 8,820 569,449 24,467 610,864
Six months ended 30th September 2023 (Unaudited)
At 31st March 2023 7,874 1,312 7,762 749,999 18,115 785,062
Repurchase of shares into Treasury - - - (185) - (185)
Net (loss)/return after taxation on ordinary shares - - - (104,916) 16,405 (88,511)
Dividends paid in the period (note 4) - - - - (12,283) (12,283)
At 30th September 2023 7,874 1,312 7,762 644,898 22,237 684,083
Year ended 31st March 2024 (Audited)
At 31st March 2023 7,874 1,312 7,762 749,999 18,115 785,062
Repurchase of shares into Treasury - - - (40,278) - (40,278)
Proceeds from unclaimed shares forfeited - - - 658 - 658
Net return after taxation on ordinary shares - - - 20,910 18,670 39,580
Dividends paid in the year (note 4) - - - - (15,976) (15,976)
At 31st March 2024 7,874 1,312 7,762 731,289 20,809 769,046
(1) These reserves form the distributable reserves of the Company and
may be used to fund distribution of profits to investors via dividend
payments.
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
30th September 30th September 31st March
2024 2023 2024
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 639,330 710,083 829,738
Current assets
Debtors 5,939 5,966 6,815
Cash and cash equivalents 24,375 43,530 7,554
30,314 49,496 14,369
Current liabilities
Creditors: amounts falling due within one year (538) (75,496) (2,391)
Net current assets/(liabilities) 29,776 (26,000) 11,978
Total assets less current liabilities 669,106 684,083 841,716
Creditors: amounts falling due after more than one year (58,242) - (72,670)
Net assets 610,864 684,083 769,046
Capital and reserve
Called up share capital 6,816 7,874 7,874
Share premium 1,312 1,312 1,312
Capital redemption reserve 8,820 7,762 7,762
Capital reserves 569,449 644,898 731,289
Revenue reserve 24,467 22,237 20,809
Total shareholders' funds 610,864 684,083 769,046
Net asset value per share (note 5) 509.9p 434.5p 520.7p
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th September 30th September 31st March
2024 2023 2024
£'000 £'000 £'000
Cash flows from operating activities
Net (loss)/return before finance costs and taxation (5,261) (84,813) 45,161
Adjustment for:
Net losses/(gains) on investments held at fair value
through profit or loss 23,245 102,583 (25,759)
Foreign exchange losses/(gains) on JPMorgan EUR
Liquidity Fund 1,536 (235) 172
Net foreign currency gains (2,710) (1,166) (2,225)
Dividend income (19,080) (19,519) (23,050)
Interest income (815) (246) (801)
Realised gain/(loss) on foreign exchange transactions 470 (494) (486)
Realised foreign exchange losses on JPMorgan EUR
Liquidity Fund (1,206) (123) (267)
Decrease/(increase) in accrued income and other debtors 47 23 (37)
Increase/(decrease) in accrued expenses 50 32 (31)
Net cash outflow from operations before dividends, interest
and taxation (3,724) (3,958) (7,323)
Dividends received 15,969 16,517 23,751
Interest received 868 147 748
Overseas withholding tax recovered/(paid) 298 1,227 (2,881)
Net cash inflow from operating activities 13,411 13,933 14,295
Purchases of investments (175,822) (350,432) (683,947)
Sales of investments 342,521 381,566 723,852
Net cash inflow from investing activities 166,699 31,134 39,905
Dividends paid (11,383) (12,283) (15,976)
Repurchase and cancellation of the Company's own Shares (104,375) - -
Repurchase of shares into Treasury (31,982) - (39,592)
Cost in relation to Tender offer (105) - -
Proceeds from unclaimed shares forfeited - - 658
Repayment of bank loans (33,562) (34,447) -
Drawdown of bank loans 21,377 - (34,447)
Interest paid (2,532) (2,169) (4,770)
Net cash outflow from financing activities (162,562) (48,899) (94,127)
Increase/(decrease) in cash and cash equivalents 17,548 (3,832) (39,927)
Cash and cash equivalents at start of period/year 7,160 47,000 47,000
Exchange movements (333) 362 87
Cash and cash equivalents at end of period/year 24,375 43,530 7,160
Cash and cash equivalents consist of:
Cash and short term deposits 376 497 312
Cash held in JPMorgan Euro Liquidity Fund 23,999 43,033 7,242
Cash and cash equivalents per the Statement of
Financial Position 24,375 43,530 7,554
Bank overdraft - - (394)
Total cash, cash equivalents and bank overdraft per the
Statement of Cash Flows 24,375 43,530 7,160
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
For the six months ended 30th September 2024
1. Financial statements
The information contained within the condensed financial statements in this
half year report has not been audited or reviewed by the Company's auditors.
The figures and financial information for the year ended 31st March 2024 are
extracted from the latest published financial statements of the Company and do
not constitute statutory accounts for that year. Those financial statements
have been delivered to the Registrar of Companies and include 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 have been prepared in accordance with the
Companies Act 2006, FRS 102 'The Financial Reporting Standard applicable in
the UK and Republic of Ireland' of the United Kingdom Generally Accepted
Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice
'Financial Statements of Investment Trust Companies and Venture Capital
Trusts' (the revised '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 30th September 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 31st March 2024.
3. Return/(loss) per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th September 30th September 31st March
2024 2023 2024
£'000 £'000 £'000
Return/(loss) per share is based on the following:
Revenue return 15,041 16,405 18,670
Capital (loss)/return (25,791) (104,916) 20,910
Total (loss)/return (10,750) (88,511) 39,580
Weighted average number of shares in issue 140,300,451 157,474,385 155,063,487
Revenue return per share 10.72p 10.42p 12.04p
Capital (loss)/return per share (18.38)p (66.62)p 13.49p
Total (loss)/return per share (7.66)p (56.20)p 25.53p
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th September 30th September 31st March
2024 2023 2024
Pence £'000 Pence £'000 Pence £'000
Dividends paid
Final dividend in respect of the prior year 8.0 11,383 7.8 12,283 7.8 12,283
Interim dividend - - - - 2.5 3,813
Unclaimed dividends returned to the Company - - - - - (120)
Total dividends paid in the period/year 8.0 11,383 7.8 12,283 10.3 15,976
All dividends paid in the period have been funded from the revenue reserve.
An interim dividend of 3.0p (2023: 2.5p) has been declared in respect of the
six months ended 30th September 2024, amounting to £3,594,000.
5. Net asset value per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th September 30th September 31st March
2024 2023 2024
Net assets (£'000) 610,864 684,083 769,046
Number of shares in issue 119,798,336 157,424,931 147,692,459
Net asset value per share 509.9p 434.5p 520.7p
6. Fair valuation of investments
The fair value hierarchy analysis for financial instruments held at fair value
at the period end is as follows:
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th September 30th September 31st March
2024 2023 2024
Assets Liabilities Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000 £'000 £'000
Level 1 639,330 - 710,083 - 829,738 -
Total value of investments 639,330 - 710,083 - 829,738 -
7. Analysis of change in net debt
As at Other As at
31st March non-cash 30th September
2024 Cash flows charges 2024
£'000 £'000 £'000 £'000
Cash and cash equivalents
Cash 312 67 (3) 376
Cash equivalents 7,242 17,087 (330) 23,999
Bank overdraft (394) 394 - -
7,160 17,548 (333) 24,375
Borrowings
Debt due after one year (72,670) 12,185 2,243 (58,242)
(72,670) 12,185 2,243 (58,242)
Net debt (65,510) 29,733 1,910 (33,867)
JPMORGAN FUNDS LIMITED
6th December 2024
For further information, please contact:
Priyanka Vijay Anand
For and on behalf of JPMorgan Funds Limited,
Company Secretary
0800 20 40 20 or +44 1268 44 44 70
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014. Upon the publication of this announcement via Regulatory
Information Service this inside information is now considered to be in the
public domain.
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 FCA's National Storage
Mechanism and will shortly be available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
The half year will also shortly be available on the Company's website at
www.jpmeuropeandiscovery.co.uk (http://www.jpmeuropeandiscovery.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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