JPMorgan Multi-Asset - Final Results
18/05/2023 11:00
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RNS Number : 8968Z JPMorgan Multi-Asset Grwth & Income 18 May 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN MULTI-ASSET GROWTH & INCOME PLC
ANNOUNCEMENT OF FINAL RESULTS
The Directors of JPMorgan Multi-Asset Growth & Income plc announce the
Company's results
for the period ended 28(th) February 2023
Legal Entity Identifier:
549300C0UCY8X2QXW762
Information disclosed in accordance with DTR 4.1.
CHAIRMAN'S STATEMENT
Introduction
The objective of the Company is to generate income and capital growth through
a multi-asset strategy, while seeking to maintain lower levels of volatility
than an equity portfolio. Our commitment to this objective is underpinned by
the Company's progressive distribution policy (adopted on 1st March 2021),
which aims to increase the dividend in line with the UK's annual Consumer
Price Index from the initial distribution level of 4p per share per annum set
at launch in 2018.
Portfolio Performance
For the year ended 28th February 2023, the Company recorded a negative total
return of -5.3% on its opening net asset value, an underperformance of 11.3%
for the year, compared to the Company's Reference Index. The Company's share
price returned -1.5% during the period as the discount to net asset value
narrowed, despite the prevailing trend over the year of widening discounts
across the investment trust sector. Although the underperformance is
disappointing, it should be noted that the Company's Reference Index is a
total return of 6.0% per annum measured over a rolling five-year period.
Therefore, unlike a typical benchmark, it is not a relative index and is
unaffected by the extremely challenging market conditions experienced during
this reporting period.
2022 was a difficult year for global equity and bond markets. Post Covid
supply chain issues and tight labour markets, combined with a surge in demand
post the pandemic, created inflationary pressures which were then
significantly heightened by the Russian invasion of Ukraine elevating global
energy and commodity prices. Inflation has remained at persistently higher
levels than initially expected and the resolve of most central Banks to tackle
the issue with increased interest rates have been the prevailing features of
many of the world's major economies in this reporting period. Equity and bond
markets fared poorly in this environment as economic growth forecasts and
corporate earnings expectations have been successively revised downwards.
Heightened geopolitical tensions have further depressed investor sentiment.
During the reporting period, with the support of the Board, the Manager
transitioned its global equity exposure away from higher yielding companies to
those that they believe offer superior returns over the long term. Further
details of the portfolio are provided in the investment manager's report on
page 11 of the Company's annual report and financial statements.
Discount Management
The Board recognises that it is in the interests of shareholders to maintain a
share price as close as possible to the Net Asset Value per share. The Board
utilises share buybacks to address imbalances in supply of and demand for the
Company's shares in the market, when it believes it is in the interests of all
shareholders and subject to normal market conditions. During the 12 months,
the Board utilised its authority to buy back shares in the Company to narrow
the discount and bought back 3,075,000 shares at an average discount of -4.5%.
The discount commenced the period under review at -4.2% but moved steadily
inwards to close on 28th February 2023 at -0.4%. The Company's shares traded
at a premium during part of the year ended 28th February 2023, which allowed
the Company to reissue 100,000 shares from Treasury for a total consideration
of £103,800. The Company's average share discount for the year under review
was -2.6%. From 1st March 2023 to 15th May 2023 the Company bought back
1,625,000 shares. The Company's share price on 15th May 2023 (the last
practical date before printing this document), was 94.5p per share, with a
discount to net asset value of -3.1% For further details please see the share
capital section on page 26 of the Company's annual report and financial
statements.
Revenue and Distributions
During the 12 months to 28th February 2023, the Company's net return on
revenue after taxation was £1,786,000 (2022: £2,650,000). The Board has
declared four interim distributions, each of 1.1p per share in respect of the
financial year ended 28th February 2023, making a total of 4.4p per share for
the year (2022: 4.1p). The Company has utilised its power to draw on its
distributable reserves to cover the dividend. The Company did not 'stream'
part of these distributions in the year ended 28th February 2023, as detailed
further on page 25 of the Company's annual report and financial statements.
As referred to in my Chairman's Statement in the Company's half year report,
the Board's aim is to help protect shareholders' distribution income from the
longer term effects of inflation and so for the Company's year ending 28th
February 2024, the Board's expectation is to pay a total distribution of 4.8p
per share. This represents an increase of 9.1% on the 2023 distribution and an
increase of 20.0% since the distribution policy was adopted on 1st March 2021.
As in previous years, the distributions are expected to be paid to
shareholders in August, November, February and May.
Gearing
The Company may use gearing, in the form of borrowings and derivatives, to
seek to enhance returns over the long term. During the period the Company had
no bank loans/facilities or structured debt, but did use derivatives to
enhance portfolio returns and for efficient portfolio management. The level of
the Company's cash position at 28th February 2023 was 4.8%, (28th February
2022: 3.0%), reflecting a slight increase in the net cash position of the
Company during this reporting period. See page 25 of the Company's annual
report and financial statements for further details and definition of Gearing.
Further details of the portfolio are provided in the investment manager's
report on page 11 of the Company's annual report and financial statements.
The Board of Directors
There were no changes to the composition of the Board of Directors during the
reporting period and the intention is to continue with a complement of four
directors.
In compliance with corporate governance best practice, all Directors will be
standing for re-appointment at the forthcoming Annual General Meeting.
Following the Company's annual evaluation of the existing Directors, the
Chairman, the Board and its Committees, the Board recommends to shareholders
that all directors standing be reappointed.
In accordance with the AIC 2019 Code of Corporate Governance, endorsed by the
Financial Reporting Council, the Company has established a separate
Remuneration Committee. The Company's Directors fees and that of the Chairman
of the Board and the Chairman of the Audit Committee were last increased with
effect from 1st March 2022. In order to maintain the fees in line with its
peers, the Board agreed that the current fees should be increased with effect
from 1st March 2023. See page 46 of the Company's annual report and financial
statements for further details.
Continuation Vote and Tender
In accordance with the Company's Articles, the Directors are required to
propose an ordinary resolution that the Company continues its business as a
closed-ended investment company at the fifth annual general meeting of the
Company. If the Continuation Vote is passed by a simple majority, the
Directors are required to put a further Continuation Vote to Shareholders at
the Annual General Meeting (AGM) of the Company every fifth year thereafter.
Therefore, a continuation vote will be put to shareholders as an ordinary
resolution at the Company's forthcoming AGM to be held on 4th July 2023. The
five years of the Company's life has been particularly turbulent with an
extended period of global pandemic and a major equity and bond sell off during
the last financial year. This has affected the Company's ability to match its
absolute return benchmark over the five year period. Nevertheless the board
has confidence that the JPMorgan Multi-Asset team has both the resources and
experience required to deliver sustainable income and growth from a
diversified multi-asset portfolio. In uncertain times there is an ongoing need
for experienced active managers to help investors navigate current financial
markets, and your Board recommends to shareholders that they vote in favour of
the Company continuing as an investment trust for a further five year period.
Since the outcome of the continuation vote is not certain, this represents a
material uncertainty which may cast significant doubt on the Company's future
and its ability to continue as a going concern. Notwithstanding this, the
financial statements have been prepared on a going concern basis, for the
reasons noted above.
Investment Manager
The performance of the Manager was formally evaluated by the Board. Following
this review, undertaken in February 2023 by the Management Engagement
Committee, and constructive engagement with the manager with regard to the
investment approach and process, the Board concluded that the performance of
the Manager had been satisfactory and that their services should be retained.
The review also resulted in the decision to remove the investment restriction
that required the Company to hold a minimum of 50% in listed equities and
fixed income. This change was made in order to afford the Investment Managers
added flexibility in managing the Company's portfolio.
Environmental, Social and Governance Considerations
As detailed in the Investment Manager's report, Environmental, Social and
Governance ('ESG') considerations are integrated into the Investment Manager's
investment process. The Board shares the Investment Manager's view of the
importance of ESG factors when making investments for the long term and of the
necessity of continued engagement with investee companies throughout the
duration of the investment. Further information on the Manager's ESG process
and engagement is set out in the ESG Report on pages 15 to 17 of the Company's
annual report and financial statements.
Annual General Meeting
The Company's fifth AGM will be held at 60 Victoria Embankment, London EC4Y
0JP London at 2.30 p.m. on Tuesday, 4th July 2023. We are pleased that this
year we will once again be able to invite shareholders to join us in-person
for the Company's AGM, hear from the Investment Managers and ask questions.
Shareholders wishing to follow the AGM proceedings but choosing not to attend
in person will be able to view proceedings live and ask questions (but not
vote) through conferencing software. Details on how to register, together with
access details, will be available shortly on the Company's website at
www.jpmmultiassetgrowthandincome.com or by contacting the Company Secretary at
invtrusts.cosec@jpmorgan.com
My fellow Board members, representatives of JPMorgan and I look forward to the
opportunity to meet and speak with shareholders after the formalities of the
meeting have been concluded. Shareholders who are unable to attend the AGM are
strongly encouraged to submit their proxy votes in advance of the meeting, so
that they are registered and recorded at the AGM. Proxy votes can be lodged in
advance of the AGM either by post or electronically: detailed instructions are
included in the Notes to the Notice of Annual General Meeting on pages 88 to
90 of the Company's annual report and financial statements.
If there are any changes to these arrangements for the AGM, the Company will
update shareholders via the Company's website and an announcement on the
London Stock Exchange.
Outlook
In recent months, at the start of the current calendar year, global markets
had found renewed optimism on the back of China's successful emergence from
its zero-Covid policy and the prospect of peaking inflation and interest
rates. However, post the Company's financial year end this enthusiasm has been
swiftly dampened by the challenges to the financial system caused by the
failure of Silicon Valley Bank and Credit Suisse in March, and the subsequent
turmoil in the US regional banking sector. Furthermore, geopolitical tensions
continue to unsettle equity markets with Russia's aggression against Ukraine,
China's lack of condemnation of Russia's invasion tactics, and difficult
US/China relations over Taiwan, US sanctions and US technology transfer to
Chinese companies. In such uncertain markets the Board has confidence in the
breadth and depth of the investment expertise of the JPMorgan Multi-Asset
team. The Investment Managers have the knowledge and experience to allocate
across a wide range of asset classes to adapt to this challenging economic
outlook. The investment trust structure facilitates a long-term investment
outlook and the Company's progressive dividend policy should provide some
reassurance to shareholders in the current environment of exceptionally high
levels of inflation.
Sarah MacAulay
Chairman
17th May 2023
INVESTMENT MANAGERS' REPORT
Introduction
In this report, we review the Company's investment performance for the year
ending 28th of February 2023. The period witnessed heightened volatility with
Russia's invasion of Ukraine, central banks pivoting aggressively to combat
high and stubborn inflation, fading yet still widespread effects of global
pandemic, and elevated political uncertainty shifting the landscape of
economies globally. We review how the Company's diversified portfolio has
performed in this environment, how our asset allocation has evolved and how we
are positioned for the year ahead.
Setting the scene - Our investment approach
We seek to achieve attractive returns by investing in a globally diversified
portfolio that includes company shares, bonds, and other assets. Our aim is to
construct a well-balanced portfolio which is flexible with respect to both
asset class and geography. This flexibility allows us to take advantage of the
best opportunities to deliver an attractive total return to our shareholders.
We take a research-based approach, positioning assets in line with our medium-
to long-term view of markets and leveraging the expertise of active managers
in portfolio construction.
Market review: A challenging period for markets as supply chain disruptions,
the lagged effect of loose monetary and fiscal policy and Russia's invasion of
Ukraine caused US and UK inflation to surge to its highest level in 40 years.
The financial year proved to be a volatile and challenging year for investors
as markets faced several headwinds: the Russian invasion of Ukraine and
resultant impact on global energy supply, central bank action to combat
stubbornly high inflation and ongoing Covid-19 related lockdowns in China.
Equity and bond markets suffered significant decline through the year, with
some improvement towards the period end.
Following a sluggish start to 2022, global equity markets rebounded in March,
however the potential need for a faster pace of interest rate hikes to combat
higher inflation once again started to dominate investor sentiment. In the
second quarter, US headline inflation reached 8.5%, its highest level since
1981 and remained elevated in Europe and the UK. Central banks reacted with
the Federal Reserve and Bank of England continuing to raise rates. In Europe,
concerns over potential gas shortages and higher inflation drove equities
lower. Globally, labour markets continued to show resilience, with
unemployment rates across both the UK and Euro area close to multi-decade
lows. Outside of developed markets, promising news about a drop in Covid-19
infections in China and the prospect of an easing of lockdowns led to an
improvement in growth expectations across emerging markets.
Markets staged somewhat of a recovery in July; economic news in the US
revealed business activity was still in expansionary territory and US job
prints were strong. However, inflation remained stubbornly high and in
response, central banks continued to raise rates with the ECB delivering its
first-rate hike in over a decade in July, followed by a second hike in
September. The recovery in equity markets proved to be short-lived, as central
banks' narrative around their commitment to bring inflation under control,
despite inherent risks to the growth outlook, led to further declines in
equity and bond markets through August and September. In the UK, the fiscal
package that was announced under the leadership of Liz Truss was poorly
received by markets, sending Sterling to an all-time low in September together
with significant losses in the UK gilt market.
Risk assets rallied in October and continued to perform strongly in November,
as markets anticipated a slowing in the pace of tightening of financial
conditions on the back of moderating inflationary pressures, although some of
these gains were reversed in December. The major central banks delivered
another round of policy rate hikes during the final quarter of the year. The
Bank of Japan unexpectedly widened its target range for 10-year Japanese
government bonds which led to a sell-off in markets towards the year end.
Emerging markets posted stronger returns over the quarter as investors
welcomed the easing of Covid-19 restrictions and the weaker US dollar.
2023 started on a more optimistic note on the back of improving investor
sentiment regarding the outlook for the global economy. Fading recession risks
in Europe due to a mild winter and signs of slowing inflation in January in
the US and Eurozone strengthened market hopes that central banks could end
their hiking cycles soon. Meanwhile in China, the prospect of a release of
pent-up demand on the back of the fast re-opening raised expectations that the
Chinese economy would experience a strong recovery in the first half of 2023.
However, both equity and fixed income markets once again came under pressure
in February as markets recalibrated higher terminal rate expectations
following resilient economic and inflation data. One exception was European
equities which performed strongly due to the fall in energy prices, rebounding
consumer and business confidence and reduced risk of recession in the region.
How has the Company performed over the year under review?
The Company delivered a negative return on net assets of -5.3% over the year,
underperforming the Company's Reference Index of +6.0% over a five year
rolling period.
The most significant driver of negative performance was our fixed income
exposure, with our government bond positions in aggregate suffering
significant decline. While we maintained a lower exposure to equities on
average through the year relative to longer term averages, our aggregate
equity exposure also provided a negative contribution to return, driven by our
emerging market exposure and our decision to reduce overall European equity
exposure. Our global equity manager performed well ahead of the broad equity
market over the period, generating positive absolute returns. In an
environment where broad equity and fixed income markets struggled, our
alternative fund holdings generated positive returns, proving their
diversification benefit.
Portfolio review
We made significant changes in our asset allocation through the period as we
continued to position the Company in line with favoured markets and regions.
While we entered the review period with a slight overweight to equities, we
began scaling this back in March 2022 as the global macro environment and
investor sentiment deteriorated. We continued to reduce exposure through the
summer months before adding back to the asset class in January this year, when
inflation prints looked to be moderating, recession risks in Europe were
fading and the growth outlook for China dramatically improved owing to the
removal of the Zero-Covid-19 policy.
While stock selection is undertaken by our in-house International Equity
Group, we tilt regional positioning to reflect our latest views, implemented
via index futures.
We reduced our physical global equity allocation in March 2022 and took down
exposure further using regional equity futures. We scaled back our European
equity allocation given concerns around the impact of the Russian Ukraine war
and having initially added to the US as a high-quality equity market, reduced
this allocation from May. We further reduced equity exposure in these regions
through the summer months, as central banks continued with their hiking paths
to curb stubbornly high inflation. While we added back to Europe from August,
we continued to reduce our US equity exposure which proved beneficial. We
increased our overall equity weight by 10% in January, adding to both
developed and emerging markets as markets rallied during the month as
investors anticipated a deceleration in the pace of rate hikes from the
Federal Reserve.
In the Company's portfolio of fixed income investments, we actively managed
duration, generally favouring long-dated US government bonds. We maintained
low levels of duration for much of 2022 although we began adding back to US
Treasuries at the end of the year whilst maintaining shorts in JGB's and
10-year Bunds before adding again at the start of 2023. Outside of government
bonds, we significantly reduced high yield bond exposure and removed both
global convertible and emerging market debt holdings as we looked to moderate
overall risk in the portfolio. Having removed our investment grade corporate
bond holding in 2020, we reintroduced this in January as overall risk appetite
increased, at a level less than half of our long-term strategic weight. We
also re-introduced a small emerging market debt position as we felt there
would be some relative value opportunities in parts of local currency emerging
market debt.
Our bespoke equity portfolio generated positive returns relative to the MSCI
World Index. We made some changes in the composition of the equity portfolio
at the end of July when we moved from an approach that focused on companies
that generate high and rising income, to one that uses an actively managed,
bottom-up, research-driven approach to outperform the MSCI World Index. This
change highlights the flexibility in portfolio construction and ability to
represent favoured asset classes and styles in the portfolio in line with
forward looking views.
At a sector level, the largest contributors to performance were
pharmaceutical/medtech and retail. Detractors included banks and
telecommunications. At a stock level, Analog Devices, the US semiconductor
company, was one of the largest contributors. The stock performed very
strongly over the period after the company cited 'resilient' demand in its
quarterly results. An overweight position in Volvo, the Swedish automobile
company also contributed to relative returns. The stock rallied as sales
increased over the period despite supply chain issues. On the other hand, our
overweight in Amazon, the US retail and technology company, detracted from
returns. Shares were under pressure after the company reported results which
missed expectations as AWS (their cloud business) slowed more than expected
and retail margins didn't improve as much as expected. An overweight position
in Bank of America, a US multinational investment bank and financial services
company, also detracted from performance. The stock declined as the company
warned of a negative impact from a weaker global economic outlook in 2023 with
interest rates rising further to tackle inflation.
Asset Class %
Global Equities 2.0
European Equities -0.3
Emerging Market Equities -1.2
Alternatives 0.9
Government Bonds -2.4
Corporate Bonds -0.1
High Yield -1.2
Emerging Market Debt -0.3
Equity Futures -1.5
Convertibles -0.5
Cash 0.2
-4.4
Ongoing charges -1.1
Share Buybacks 0.2
Other 0.0
Total Return on Net Asset Value(A) -5.3
Source: JPMAM.
(A) Alternative Performance Measure ('APM').
A glossary of terms and APMs is provided on pages 91 and 92 of the Company's
annual report and financial statements.
Outlook
The recent events in the banking sector are likely to lead to a further
tightening of bank lending standards, which could further slow growth in
developed economies, possibly leading to a moderate recession over the course
of the year. However, with little evidence of extreme excess in the real
economy and with better capitalised banks, we see a repeat of 2008 as
unlikely. If the commercial banks tighten lending standards, the Federal
Reserve and other central banks will need to do less to bring about the
desired slowdown in activity and reduction in inflation. At this stage, there
are considerable uncertainties - in both directions - over the extent to which
the recent turmoil will affect sentiment and activity. This uncertain backdrop
argues against extreme positioning between or within asset classes. We believe
that investors should maintain balance in their portfolios with a focus on
quality within both equity and bond allocations. Against this backdrop, we
maintain a cautious outlook with a more favourable view on government bond
markets whilst being underweight equities. Within equities we expect US large
cap stocks to outperform small caps whilst economic resilience in Europe and
the UK leads us to favour these regions. We have become more positive on
emerging markets where we believe the growth recovery in China has further to
run. The government bond markets appear increasingly attractive as global
inflation continues to fade which should re-focus markets back towards growth
concerns and drive a return of the stock-bond correlation towards more
negative levels which is beneficial for multi-asset portfolios.
Katy Thorneycroft
Gareth Witcomb
Investment Managers
17th May 2023
PRINCIPAL AND EMERGING RISKS
The Directors confirm that they have carried out a robust assessment of the
principal risks and emerging risks facing the Company, including climate
change and those that would threaten its business model, future performance,
solvency or liquidity.
With the assistance of the Manager, the Audit Committee has drawn up a risk
matrix which identifies the key and emerging risks to the Company. These are
reviewed and noted by the Board. The risks identified and the broad categories
in which they fall, and the ways in which they are managed or mitigated are
summarised below. The AIC Code of Corporate Governance requires the Audit
Committee to put in place procedures to identify emerging risks. The key
emerging risks identified are also summarised below.
Principal Risk Description Mitigating activities
Investment Strategy An inappropriate investment strategy, for example asset allocation or the The Board manages these risks by diversification of investments through its
level of gearing or foreign exchange exposure, may lead to underperformance investment restrictions and guidelines, which are monitored and reported on by
against the reference index or peer companies. This may result in the the Manager. The Manager provides the Directors with timely and accurate
Company's shares trading on a narrower premium or a wider discount. management information, including performance data, revenue estimates,
currency performance, liquidity reports and shareholder analyses. The Board
monitors the implementation and results of the investment process with the
Investment Managers, who attend Board meetings, and reviews data which show
statistical measures of the Company's risk profile. The Investment Managers
review the Company's gearing strategically.
Financial The financial risks faced by the Company include market price risk, interest The Board considers the split in the portfolio between companies, sector and
rate risk, liquidity risk and credit risk. stock selection and levels of gearing on a regular basis and has set
investment restrictions and guidelines, which are monitored and reported on by
JPMF. The Board monitors the implementation and results of the investment
process with the Manager. However, the performance of the portfolio is
significantly determined by market movements in global equity and bond
markets.
Corporate Governance and Shareholder Relations Failure to comply with relevant statute law or regulation may have an impact The Board relies on the services of its Company Secretary, the Manager and its
on the Company both in terms of fines and in terms of its ability to continue professional advisers to ensure compliance with Corporate Governance best
to operate. practice, are set out in the Corporate Governance Statement on pages 38 to 42
of the Company's annual report and financial statements.
Some investors within the sector will only consider investing into an
investment trust where its AUM is over a certain level; the Company's AUM The Board manages shareholder relations by review of sales and marketing
currently stands below these levels. activity and also receipt of regular feedback via the Manager's sales and
marketing teams and the Broker from both existing and prospective
shareholders.
Operational Loss of key staff by the Manager, such as the Investment Managers, could The Manager takes steps to reduce the likelihood of loss of key staff by
affect the performance of the Company. Disruption to, or failure of, the ensuring appropriate succession planning and the adoption of a team based
Manager's accounting, dealing or payments systems or the depositary's or approach. The threat of cyber attack, in all its guises, is regarded as at
custodian's records could prevent accurate reporting and monitoring of the least as important as more traditional physical threats to business continuity
Company's financial position. This includes the risk of cybercrime and and security. The Company benefits directly or indirectly from all elements of
consequent potential threat to security and business continuity. JPMorgan's Cyber Security programme. The information technology controls
around the physical security of JPMorgan's data centres, security of its
networks and security of its trading applications are tested by independent
reporting accountants and reported on every six months against the Audit and
Assurance Faculty ('AAF') standard.
Accounting, Legal and Regulatory In order to qualify as an investment trust, the Company must comply with The Section 1158 qualification criteria are continually monitored by the
Section 1158 of the Corporation Tax Act 2010 ('Section 1158'). Details of the Manager and the results reported to the Board each month. The Board relies on
Company's approval are given on page 24 of the Company's annual report and the services of its Company Secretary, the Manager and its professional
financial statements. Was the Company to breach Section 1158, it would lose advisers to ensure compliance with the Companies Act 2006, the FCA Prospectus
its investment trust status and, as a consequence, gains within the Company's Rules, Listing Rules, DTRs and the Alternative Investment Fund Managers
portfolio could be subject to Capital Gains Tax. A breach of the Companies Act Directive.
could result in the Company and/or the Directors being fined or the subject of
criminal proceedings. Breach of the FCA Listing Rules or DTRs could result in
the Company's shares being suspended from listing which in turn would breach
Section 1158. The Company must also comply with the provisions of the
Companies Act 2006 and, since its shares are listed on the London Stock
Exchange, the FCA Prospectus Rules, Listing Rules and Disclosure, Guidance
& Transparency Rules ('DTRs').
Global Pandemics The outbreak and spread of Covid-19 demonstrated the risk of global pandemics, The Board monitors the effectiveness and efficiency of service providers'
in whatever form a pandemic takes. Should a new variant of the virus spread processes through ongoing compliance and operational reporting and there were
more aggressively or become more virulent, it may present risks to the no disruptions to the services provided to the Company in the year under
operations of the Company, its Manager and other major service providers. The review. The Company's service providers are capable of implementing business
'Zero Covid' policy in China that was in place during the year (although continuity plans which include working almost entirely remotely. The Board
recently withdrawn) illustrates the negative impact that a pandemic can have continues to receive regular reporting on operations from the Company's major
on the global economy. service providers and would not anticipate a fall in the level of service in
the event of a re-emergence of a pandemic.
Emerging Risks Description Mitigating activities
Climate Change Climate change, which barely registered with investors a decade ago, has today The Company's investment process integrates considerations of environmental,
become one of the most critical issues confronting asset managers and their social and governance factors into decisions on which stocks to buy, hold or
investors. Investors can no longer ignore the impact that the world's changing sell. This includes the approach investee companies take to recognising and
climate will have on their portfolios, with the impact of climate change on mitigating climate change risks. The Board is also considering the threat
returns now inevitable. It is also likely to have a significant impact on posed by the direct impact on climate change on the operations of the Manager
business models, sustainability and even viability of individual companies, and other major service providers. As extreme weather events become more
whole sectors and even asset classes. common, the resilience, business continuity planning and the location
strategies of our operations and those of our services providers will come
under greater scrutiny.
Geopolitical Tensions Since the end of the Second World War, the world has enjoyed a technology and The Company addresses these global developments in regular questioning of the
economic hegemony with the US at its core. With the development of China as Manager and with external expertise and will continue to monitor these issues,
a political, cultural, technological and economic rival, there is the risk as they develop. The Manager regularly monitors the Company's portfolio
that alongside the trade tensions we have seen in recent years, there may holdings to ensure compliance with any applicable sanctions.
develop a rival technology and economic infrastructure which is not compatible
with or available to some of the companies in which we invest. This process is
likely to be accelerated by Russia's invasion of Ukraine in February 2022 and
the significant impact that has had on global commodities markets.
Artificial Intelligence (AI) While it might equally be deemed a great opportunity and force for good, there The Board will work with the Manager to monitor developments concerning AI as
appears also to be an increasing risk to business and society more widely from its use evolves and consider how it might threaten the Company's activities,
AI. Advances in computing power means that AI has become a powerful tool that which may, for example, include a heightened threat to cybersecurity. The
will impact a huge range of areas and with a wide range of applications that Board will work closely with the Manager in identifying these threats and, in
include the potential to disrupt and even to harm. In addition the use of AI addition, monitor the strategies of our service providers. Furthermore, the
could be a significant disrupter to business processes and whole companies Company's investment process includes consideration of technological
leading to added uncertainty in corporate valuations. advancement and the resultant potential to disrupt both individual companies
and the wider markets.
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
Details of the management contract are set out in the Directors' Report on
page 36 of the Company's annual report and financial statements. The
management fee payable to the Manager for the year was £453,000 (2022:
£534,000) of which £nil (2022: £nil) was outstanding at the year end.
Included in administration expenses in note 6 on page 64 of the Company's
annual report and financial statements are safe custody fees payable to
JPMorgan Chase N.A. amounting to £2,000 (2022: £3,000) of which £nil (2022:
£1,000) was outstanding at the year end.
The Manager may carry out some of its dealing transactions through group
subsidiaries. These transactions are carried out at arm's length. The
commission payable to JPMorgan Securities Limited for the period was £nil
(2022: £nil) of which £nil (2022: £nil) was outstanding at the year end.
The Company holds investments in funds managed by JPMAM. At 28th February 2023
these were valued at £10.8 million (2022: £20.2 million) and represented
15.2% (2022: 24.3%) of the Company's investment portfolio. During the year the
Company made £6.9 million (2022: £11.5 million) purchases and sales with a
total value of £15.1 million (2022:£13.7 million). Income amounting to £0.9
million (2022:£1.7 million) of such investments was receivable from these
investments during the year of which £nil (2022: £nil) was outstanding at
the year end.
The Company holds investments in Infrastructure Investment Fund (IIF UK 1 LP),
the General Partner of IIF UK 1 LP is an affiliate of JPMorgan Asset
Management (UK) Limited. At 28th February 2023 these were valued at £8.8
million (2022: £8.0 million) and represented 12.3% (2022: 9.7%) of the
Company's investment portfolio. During the year the Company made £nil (2022:
£nil ) purchases and £nil (2022: £nil) sales. Income amounting to £506,000
(2022: £900,000) of such investments was receivable from these investments
during the year of which £nil (2022: £nil) was outstanding at the year end.
The Company also holds cash in JPMorgan Sterling Liquidity Fund, which is
managed by JPMF. At the year end, this was valued at £1,322,000 (2022:
£797,000). Interest amounting to £74,000 (2022: £1,000) were payable during
the year of which £nil (2022: £nil) was outstanding at the year end.
Handling charges on dealing transactions amounting to £45,000 (2022:
£24,000) were payable to JPMorgan Chase N.A. during the year of which
£15,000 (2022: £7,000) was outstanding at the year end.
During the period under review JPMorgan Asset Management Holdings (UK) Ltd, an
affiliate of the Company's Manager did not acquire any shares in the Company
(2022:nil).
At the year end, a bank balance of £736,000 (2022: £884,000) was held with
JPMorgan Chase. A net amount of interest of £69,000 (2022: £nil) was
receivable by the Company during the year from JPMorgan Chase of which £nil
(2022: £nil) was outstanding at the year end.
Full details of Directors' remuneration and shareholdings can be found on page
47 and in note 6 on page 64 of the Company's annual report and financial
statements.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the annual report and financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law, the Directors have elected to prepare the
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards) and applicable law.
Under Company law the Directors must not approve the financial statements
unless they are satisfied that, taken as a whole, the annual report and
financial statements are fair, balanced and understandable, provide the
information necessary for shareholders to assess the Company's performance,
business model and strategy and that they give a true and fair view of the
state of affairs of the Company and of the total return or loss of the Company
for that period. In order to provide these confirmations, and in preparing
these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable and
prudent;
• state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and explained in the
financial statements; and
• prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company will continue in
business
and the Directors confirm that they have done so.
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and to
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The annual and report and financial statements are published on the
www.jpmmultiassetgrowthandincome.com website, which is maintained by the
Company's Manager. The maintenance and integrity of the website maintained by
the Manager is, so far as it relates to the Company, the responsibility of the
Manager. The work carried out by the auditors does not involve consideration
of the maintenance and integrity of this website and, accordingly, the
auditors accept no responsibility for any changes that have occurred to the
annual and report and financial statements since they were initially presented
on the website. The annual and report and financial statements are prepared in
accordance with UK legislation, which may differ from legislation in other
jurisdictions.
Under applicable law and regulations the Directors are also responsible for
preparing a Directors' Report and Directors' Remuneration Report that comply
with that law and those regulations.
Each of the Directors, whose names and functions are listed on page 35 of the
Company's annual report and financial statements, confirm that, to the best of
their knowledge, the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law), give a true and fair view of
the assets, liabilities, financial position and return or loss of the Company.
The Board confirms that it is satisfied that the annual report and financial
statements taken as a whole are fair, balanced and understandable and provide
the information necessary for shareholders to assess the strategy and business
model of the Company.
For and on behalf of the Board
Sarah MacAulay
Chairman
17(th) May 2023
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 28th February 2023
2023 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on investments held at fair value
through profit or loss - (412) (412) - 5,903 5,903
Net foreign currency losses - (5,757) (5,757) - (1,464) (1,464)
Income from investments 2,459 - 2,459 3,548 - 3,548
Interest receivable and similar income 143 - 143 1 - 1
Gross return/(loss) 2,602 (6,169) (3,567) 3,549 4,439 7,988
Management fee (159) (294) (453) (187) (347) (534)
Other administrative expenses (404) - (404) (418) - (418)
Net return/(loss) before finance costs and taxation 2,039 (6,463) (4,424) 2,944 4,092 7,036
Finance costs (4) (8) (12) (3) (5) (8)
Net return/(loss) before taxation 2,035 (6,471) (4,436) 2,941 4,087 7,028
Taxation (charge)/credit (249) 45 (204) (291) 45 (246)
Net return/(loss) after taxation 1,786 (6,426) (4,640) 2,650 4,132 6,782
Return/(loss) per share 2.27p (8.17)p (5.90)p 3.22p 5.02p 8.24p
STATEMENT OF CHANGES IN EQUITY
Called up
share Share Special Capital Revenue
capital Premium reserve(1) reserves(1) reserve(1) Total
£'000 £'000 £'000 £'000 £'000 £'000
At 28th February 2021 931 - 84,768 1,882 681 88,262
Net return - - - 4,132 2,650 6,782
Repurchase of shares into Treasury - - (5,992) - - (5,992)
Distributions paid in the year - - - (43) (3,331) (3,374)
At 28th February 2022 931 - 78,776 5,971 - 85,678
Issue of shares from Treasury - 5 - 99 - 104
Repurchase of shares into Treasury - - (2,975) - - (2,975)
Net (loss)/return - - - (6,426) 1,786 (4,640)
Distributions paid in the year - - (1,618) - (1,786) (3,404)
At 28th February 2023 931 5 74,183 (356) - 74,763
(1) These reserves form the distributable reserve of the Company and
may be used to fund distributions to shareholders.
STATEMENT OF FINANCIAL POSITION
At 28th February 2023
2023 2022
£'000 £'000
Fixed assets
Investments held at fair value through profit or loss 71,148 83,091
Current assets
Derivative financial assets 804 676
Debtors 1,764 1,018
Cash and cash equivalents 4,690 2,515
7,258 4,209
Current liabilities
Creditors: amounts falling due within one year (1,893) (824)
Derivative financial liabilities (1,750) (798)
Net current assets 3,615 2,587
Total assets less current liabilities 74,763 85,678
Net assets 74,763 85,678
Capital and reserves
Called up share capital 931 931
Share premium account 5 -
Special reserve 74,183 78,776
Capital reserves (356) 5,971
Revenue reserve - -
Total shareholders' funds 74,763 85,678
Net asset value per share 96.7p 106.7p
STATEMENT OF CASH FLOWS
For the year ended 28th February 2023
2023 2022
£'000 £'000
Net cash outflow from operations before dividends and interest (1,046) (1,174)
Dividends received 1,716 2,238
Interest received 745 882
Overseas tax recovered 40 89
Interest paid (12) (8)
Net cash inflow from operating activities 1,443 2,027
Purchases of investments (86,840) (58,934)
Sales of investments 101,828 63,171
Settlement of forward foreign currency contracts (2,762) 670
Settlement of future contracts (5,421) (515)
Net cash inflow from investing activities 6,805 4,392
Issue of shares from Treasury 104 -
Repurchase of shares into Treasury (2,832) (5,992)
Distributions paid (3,404) (3,374)
Net cash outflow from financing activities (6,132) (9,366)
Increase/(decrease) in cash and cash equivalents 2,116 (2,947)
Cash and cash equivalents at start of year 2,515 5,459
Exchange movements 59 3
Cash and cash equivalents at end of year 4,690 2,515
Cash and cash equivalents consist of:
Cash and short term deposits 3,368 1,718
Cash held in JPMorgan Sterling Liquidity Fund 1,322 797
Total 4,690 2,515
RECONCILIATION OF NET DEBT
As at Exchange As at
28th February 2022 Cash flows movement 28th February 2023
£'000 £'000 £'000 £'000
Cash and cash equivalents
Cash 1,718 1,591 59 3,368
Cash equivalents 797 525 - 1,322
Total 2,515 2,116 59 4,690
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 28th February 2023
1. Accounting policies
(a) Basis of accounting
The financial statements are prepared under historical cost convention,
modified to include fixed asset investments at fair value, and 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.
The financial statements have been prepared on a going concern basis. In
forming this opinion, the Directors have considered the ongoing impact of the
Covid-19 pandemic, the conflict between Ukraine and Russia and the forthcoming
continuation vote at the AGM on 4th July 2023, on the going concern and
viability of the Company. In making their assessment, the Directors have
reviewed income and expense projections and the liquidity of the investment
portfolio, and considered the mitigation measures which key service providers,
including the Manager, have in place to maintain operational resilience. The
disclosures on long term viability and going concern on pages 31 and 43 of the
Directors' Report in the Company's annual report and financial statements form
part of these financial statements. At the Annual General Meeting (AGM) to be
held on 4th July 2023, a continuation vote will be held whereby shareholders
will vote for or against the continuation of the Company. A vote of 50% plus
one of votes cast in favour at the AGM is required for continuation. Since the
outcome of the continuation vote is not certain, this indicates the existence
of a material uncertainty which may cast significant doubt about the Company's
ability to continue as a going concern. The financial statements do not
include the adjustments that would result if the Company were unable to
continue as a going concern. In arriving at the decision on the basis of
preparation, the Board has considered the financial position of the Company,
its cashflow and liquidity position as well as the uncertainty surrounding the
outcome of the continuation vote. If it were not appropriate to prepare the
financial statements on a going concern basis of accounting then adjustments
would be required to reclassify all assets as current, and a provision for
further liabilities, including liquidation costs, would be made. In the
Directors' opinion the impact of these adjustments on the financial statements
is not expected to be significant. These financial statements have been
prepared on a going concern basis in accordance with the Disclosure Guidance
and Transparency Rules of the Financial Conduct Authority, FRS 102 issued by
the FRC in September 2015, the revised Statement of Recommended Practice
"Financial Statements of Investment Trust Companies and Venture Capital
Trusts" (SORP) issued by the AIC in November 2014 and updated in October 2019
and Companies Act 2006.
The policies applied in these financial statements are consistent with those
applied in the preceding year.
2. Distributions
(a) Dividends paid and declared
2023 2022
£'000 £'000
Distributions paid
2022 fourth distribution of 1.025p (2021: 1.0p) 816 858
2023 first interim distribution of 1.10p (2022:1.025p) 871 855
2023 second interim distribution of 1.10p (2022:1.025p) 859 836
2023 third interim distribution of 1.10p (2022:1.025p) 858 825
Total distribution paid in the year 3,404 3,374
All distributions paid and declared in the year are and will be funded from
the revenue, capital and special reserves.
(b) Distributions for the purposes of Section 1158 of the Corporation
Tax Act 2010 ('Section 1158')
The revenue available for distribution by way of dividend and interest for the
year is £1,786,000 (2022: £2,650,000) and the interim distributions for 2023
have been funded from revenue and special reserves.
2023 2022
£'000 £'000
2023 first interim distribution of 1.10p (2022: 1.025p) 871 855
2023 second interim distribution of 1.10p (2022:1.025p) 859 836
2023 third interim distribution of 1.10p (2022:1.025p) 858 825
2023 fourth interim distribution declared of 1.10p (2022: 1.025p) 846 823
3,434 3,339
3. Return/(loss) per share
2023 2022
£'000 £'000
Revenue return 1,786 2,650
Capital (loss)/return (6,426) 4,132
Total (loss)/return (4,640) 6,782
Weighted average number of shares in issue during the year 78,605,531 82,351,055
Revenue return per share 2.27p 3.22p
Capital (loss)/return per share (8.17)p 5.02p
Total (loss)/return per share (5.90)p 8.24p
4. Net asset value per share
2023 2022
Net assets (£'000) 74,763 85,678
Number of shares in issue 77,293,408 80,268,408
Net asset value per share 96.7p 106.7p
Status of results announcement
2022 Financial Information
The figures and financial information for 2022 are extracted from the Annual
Report and Accounts for the year ended 28(th) February 2022 and do not
constitute the statutory accounts for the year. The Annual Report and Accounts
include the Report of the Independent Auditors which is unqualified and does
not contain a statement under either section 498(2) or section 498(3) of the
Companies Act 2006. The Annual Report and Accounts will be delivered to the
Register of Companies in due course.
2023 Financial Information
The figures and financial information for 2023 are extracted from the
published Annual Report and Accounts for the year ended 28(th) February 2023
and do not constitute the statutory accounts for that year. The Annual Report
and Accounts has been delivered to the Registrar of Companies and included the
Report of the Independent Auditors which was unqualified and did not contain a
statement under either section 498(2) or section 498(3) of the Companies Act
2006.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
For further information please contact:
Paul Winship
For and on behalf of
JPMorgan Funds Limited, Secretary - 020 7742 4000
18(th) May 2023
ENDS
Annual Report and Financial Statements
The Annual Report and Financial Statements will be posted to shareholders on
or around the 24 May 2023 and will shortly be available on the Company's
website (www.jpmmultiassetgrowthandincome.com ) or in hard copy format from
the Company's Registered Office, 60 Victoria Embankment London EC4Y 0JP.
A copy of the annual report will shortly be submitted to the FCA's National
Storage Mechanism and will be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The annual report is also available on the Company's website at
www.jpmmultiassetgrowthandincome.com 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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