Last checked at 4 Apr 2024 07:00
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN GLOBAL EMERGING MARKETS INCOME TRUST PLC
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 31ST JANUARY 2024
LEI: 549300OPJXU72JMCYU09
JPMorgan Global Emerging Markets Income Trust Plc (the "Company" or "JEMI") today publishes its unaudited Half Year Report & Financial Statements for the six months ended 31st January 2024.
CHAIR'S STATEMENT
Performance
Following good returns in the year to July 2023, Emerging Markets declined during the six months to 31st January 2024. The Company's benchmark index, the MSCI Emerging Markets Index with net dividends reinvested (in sterling terms) (the 'Benchmark'), fell by 5.0% over the six months under review. In the same period, the Company's total return on net assets was -2.4%, outperforming the Benchmark.
The total return to shareholders (which includes both the share price return and dividends) was -5.0%, which reflects a widening of the discount to net asset value ('NAV') at which the Company's shares trade from 9.3% at the previous financial year end to 12.0% at the end of the half year period.
The Investment Manager's Report, which can be found in the Half Year Report, reviews the market environment and the Company's performance over the reporting period in more detail and comments on the investment strategy and outlook for Emerging Markets.
It is worth highlighting that returns were supported by the positive performance of positions in Korea, Taiwan and South Africa while not owning the three largest Chinese internet stocks also provided a boost to relative performance. The Company's underweight position in the Indian equity market detracted from overall performance although shareholders will be aware that many Indian companies do not pay dividends and are therefore excluded from the Portfolio Managers' universe of stocks. Nonetheless, the Board is pleased that the Portfolio Managers' stock selection was the principal reason for the Company's outperformance against the Benchmark over the reporting period.
Whilst the decline in share price and NAV over the six months is disappointing, I want to draw your attention to the fact that performance over periods of three, five years and beyond is significantly ahead of the Benchmark, reflective of the Company's long-term approach and testament to the experience of the Portfolio Managers and strength of their process. Please see the Half Year Report for the long-term performance figures.
Revenue and Dividends
Net revenue earnings for the six months to 31st January 2024 amounted to 1.78p per share. As is generally the case, the Company expects to earn the bulk of its dividend income during the second half of its financial year.
During the reporting period, the Board has declared two interim dividends of 1.0p each, in line with the same period last year. The second interim dividend will be paid on 19th April 2024 to shareholders on the register as at the close of business on 8th March 2024. The ex-dividend date was 7th March 2024. In the last financial year, the Board paid a total dividend of 5.3p per share, a modest increase from 5.2p in 2022. This was fully covered by income. The fourth interim dividend was paid on 20th October 2023.
The Board reviews dividend receipts at each of its Board meetings, given their importance to the Company. The Board carefully considers the outlook for dividend receipts with the Portfolio Managers on a regular basis, including a sensitivity analysis of the impact of currency movements on revenue receipts. As shareholders are aware, the Company receives dividends in the currencies of developing countries and US dollars but pays dividends in sterling. It has not been the Company's policy to hedge currency risk as that is expensive and, for many currencies, impracticable. That policy inevitably means that the Company's asset values, and cash flows may be damaged by adverse currency movements (if sterling strengthens) and flattered by favourable moves (if sterling weakens) relative to Emerging Market currencies and US dollars. Over the longer term, your Board and the Investment Manager are of the view that Emerging Markets offer attractive income prospects alongside the prospects for strong earnings growth.
Gearing and Loan Facilities
The Board believes that gearing can be used to enhance long-term shareholder returns. Gearing levels are discussed with the Portfolio Managers at each Board meeting. Presently, the Company has a US$20 million two-year revolving loan facility with Mizuho Bank Limited ('Mizuho'), repayable in November 2024, with an interest rate of margin plus Secured Overnight Financing Rate ('SOFR'). The Company also maintains a US$20 million revolving loan facility with ING Bank Limited, which is repayable in October 2025, having been renewed during the reporting period at a competitive market rate plus SOFR.
With the pending maturity of the Mizuho facility later in the year, your Board will be working closely with the Manager to review the borrowing options. As at 31st January 2024, gearing stood at 7.4% (31st July 2023: 5.7%).
Share Repurchases and Issuance
During the six months to 31st January 2024, the Company's share price traded at an average discount to NAV of 11.6%. The Board regularly considers the merits of buying back shares in order to manage the level and volatility of the discount. The Board will buy back shares only if it is considered to be in the best interests of shareholders to do so. During the reporting period, the Company repurchased 1,109,472 shares into Treasury at an average discount of 11.7% and at a total cost of £1.4 million. It did not issue any shares. These purchases were value accretive for shareholders, increasing the NAV per share by 0.1%, and they underscore your Board's belief that there is attractive value in the investments held by the Company.
At the time of writing, the discount stands at 13.2%. The Board will continue to actively manage the Company's discount in its commitment to seek a stable discount or premium over the longer-term, in recognition of the Company's long-term consistent and strong investment performance, and with the aim of enhancing NAV for shareholders. Between the end of the half year period and 3rd April 2024, the Company has repurchased a further 1.6 million shares into Treasury.
Environmental, Social and Governance
The Investment Manager incorporates Environmental, Social and Governance ('ESG') considerations into its investment process, with the potential impact of financially material ESG factors on a company's ability to deliver shareholder value considered as part of the Portfolio Managers' stock selection process in building a strong and resilient portfolio.
Your Board shares this belief in the importance of ESG factors for long-term investments and supports the Portfolio Managers' efforts to maintain continuous engagement with investee companies.
The Investment Manager has recently published a document containing its latest Investment Stewardship Priorities, which may be of interest to shareholders. This can be found at: https://am.jpmorgan.com/gb/en/asset-management/adv/about-us/investment-stewardship/
Investment Management Fees
During the reporting period, the Board agreed with the Manager that the Company's investment management fees should be tiered, as previously announced.
With effect from 1st November 2023, the investment management fee has been charged on a tiered basis at an annual rate of 0.75% of the Company's net assets on the first £500 million and at 0.65% of net assets above that amount. This compares with the previous arrangement under which the management fee was charged at an annual rate of 0.75% on net assets. The fee is calculated and paid monthly.
Investment Team
As previously announced, Jeffrey Roskell, a portfolio manager for the Company since 1st August 2016, retired from JPMorgan Asset Management on 29th February 2024. We would like to thank Jeff for his contribution to the management of the Company's assets and wish him well in his retirement.
Appointment of new Director
I am delighted that Ranjan Ramparia has joined the Board with effect from 1st March 2024, as previously announced. She brings with her considerable experience in corporate finance and investment management along with an early career in accountancy. It is the Board's intention that Ms Ramparia will take on the role of Chair of the Audit & Risk Committee once Ms Gulliver stands down at the conclusion of the Company's November 2024 Annual General Meeting. Ms Ramparia will also serve as a member of the Company's Management Engagement Committee and the Nomination & Remuneration Committee.
The Nomination & Remuneration Committee plans for succession to ensure that the Board retains an appropriate balance of skills, knowledge and diverse perspectives.
Stay Informed
The Company delivers email updates with regular news and views, as well as the latest performance. If you have not already signed up to receive these communications and you wish to do so, you can opt in via https://tinyurl.com/JEMI-Sign-Up or by scanning the QR code on the contents page of the Half Year Report.
Outlook
The geopolitical outlook remains uncertain as tensions continue with the war in Ukraine currently showing no signs of abating and elevated tensions across the Middle East. The US elections and the consequences for relations with China could provide further challenges.
However, there are reasons to be optimistic on the outlook for Emerging Markets. Global inflation is receding and there are expectations that there will be a soft landing for the US economy followed by interest rate cuts later this year. While these might not come about as quickly as many had previously thought, this has provided comfort to the markets. In addition, the Chinese government has taken policy measures to improve its support for the economy and while these fell somewhat short of expectations overall, we note that the Portfolio Managers' successful selective approach to stock picking in China over the reporting period contributed to returns.
In conclusion, the Board believes that there are compelling opportunities for investment in Emerging Markets, with dispersion between sectors at elevated levels and an attractive relative level of valuation compared to developed markets. We are confident that the focused and disciplined stock selection process adopted by the Investment Manager will continue to deliver attractive long term returns to shareholders, as evidenced by the Company's strong track record.
On behalf of the Board, I would like to thank you for your ongoing support.
Elisabeth Scott
Chair 3rd April 2024
INVESTMENT MANAGER'S REPORT
Introduction
For the six-month period ended 31st January 2024, the Company's total return on net assets, including dividends, was -2.4% (in GBP). This compares to the Benchmark which returned -5.0%. The Company's longer-term relative performance is positive. Its net asset value ('NAV') has achieved annualised outperformance of the Benchmark of 17.0% over three years ended 31st January 2024, 20.2% over the past five years, and 27.0% over the past ten years.
Investment environment
Emerging markets were generally weak over the six months ended 31st January 2024. The Company's Benchmark declined by 5.0% over this period, due mainly to the poor performance of the Chinese equity market, where investor sentiment was undermined by concerns about the economy. The widely anticipated post-pandemic rebound failed to materialise as consumer confidence, and hence consumption, were adversely impacted by ongoing problems in the property sector, after a prolonged period of overbuilding and excessive leverage. The Chinese government's apparent reluctance to take decisive steps to solve these problems is exacerbating consumer caution.
We recognise that China faces fundamental challenges, including not only weak consumer demand, and a stricken property market, but also an increasingly fractious relationship with the US, but nonetheless we still see value and opportunities in some areas of the Chinese market. Valuations are low following persistent declines over the past three years, and, in addition, some corporates are returning more cash to shareholders via higher dividend payments and share buybacks - something which is of particular interest to income investors like us.
Elsewhere, Taiwan performed well, supported by the popularity of its technology stocks. The fundamentals of this industry generally look favourable, and some Taiwanese tech companies are also seeing stronger demand due to exposure to the artificial intelligence ('AI') revolution. Mexico also did well. The economy is performing strongly, helped by its proximity to the US, as companies look to diversify and strengthen their global supply chains by moving production closer to their principal markets.
Overall, we have held a cautious view around the potential risk of a slowdown in the US economy, which would dampen global demand. However, we saw little sign of this during the six-month review period. The US Federal Reserve held interest rates steady as inflation pressures eased, and many investors are now expecting rates to begin falling this year.
Performance attribution
The Company's outperformance against its Benchmark over the six months ended 31st January 2024 was driven by stock selection in China and Hong Kong, Korea, Taiwan and South Africa. The biggest drag on relative performance was the portfolio's underweight to India, which outperformed the Benchmark over the period.
Within China, not owning certain internet and e-commerce stocks was helpful, as these stocks sustained significant losses when the post-pandemic rebound in Chinese consumption proved insipid, and investors revised down their expectations about the economy's longer-term growth prospects. These same factors also triggered declines in some of the portfolio's Chinese consumer stocks, including Wuliangye (a distiller specialising in the production of baiju, a Chinese liquor), JD.com (an e-commerce platform) and Tingyi (a manufacturer of noodles and drinks). Overall, however, our Chinese stocks performed better on average than the benchmark, and thus enhanced relative performance.
Outside China we saw strong performance from names such as:
- Infosys and HCL Tech - Indian IT services stocks have been rerating, partly helped by general positive sentiment in the Indian market, and we like these companies due to their strong franchises, attractive returns on equity and positive cash return policies. For instance, Infosys aspires to return close to 90% of free cashflow to shareholders via a combination of dividends and buybacks.
- Taiwanese semiconductor manufacturers Novatek and Realtek - These businesses performed well thanks in part to the end of an inventory correction, which allowed restocking to commence. Our positioning in these two names illustrates the merit of our valuation discipline, as we acquired exposure at what we believed to be attractive yield levels and benefited from their subsequent share price recovery.
- Banco do Brasil - This low-priced, state-owned Brazilian bank saw some rerating over the period. When we met the management recently, we were impressed by the focus on profitability, which allayed our general concerns regarding the bank's public ownership. Dividends are also high on the managements' agenda, which adds to the stock's appeal.
Portfolio changes
We build the portfolio from the bottom up, based on our consistent stock selection process, which incorporates analysis on each stock's return on equity, free cash flow, and dividend policies. As mentioned above, we adopt a disciplined approach to valuations. So, in effect, our approach incorporates both quality and value.
Naturally, some areas within emerging markets offer more investment opportunities than others, and this results in tilts within the portfolio towards some sectors and countries. From a sectoral viewpoint, we continue to find the most attractive income opportunities within Consumer Staples, Financials and Technology, so these remain the portfolio's three key sector overweights, while historically, the portfolio is usually underweight in Materials, Energy and Industrials.
At the country level, portfolio overweights include South Africa, Mexico and Taiwan. As with our sector allocations, these country weightings are driven by the individual stock opportunities we view as attractive from an income investor's perspective. In contrast, our largest country underweight remains India. This country's long-term growth prospects are very positive and investor interest in the market remains strong. However, valuations are high accordingly, which make it difficult for us to find attractive income paying stocks, albeit with some notable exceptions such as Infosys and HCL Tech, mentioned above. The portfolio is modestly overweight China which reflects this market's attractive valuations and improving dividend outlook.
As ever, the portfolio changes we implemented over the review period were mainly driven by individual stock considerations. Recent purchases have included:
- Shoprite - We initiated a position in this South African grocery retailer, as we like its strong franchise and its competitive advantages versus its peers, as the company has a policy of using efficiency gains to reduce prices. This means it can continue to offer its customers good value. We also like Shoprite's cash flow profile, which we expect will support an attractive dividend stream for the portfolio.
- HDFC Bank - This high-quality Indian financial name came under some selling pressure due in part to uncertainties over the merger between the bank and HDFC Corp, a non-bank financial company. We took this opportunity to add at an attractive valuation.
- China Yangtze Power - We are always mindful of the regulatory risks associated with emerging market utility companies, but nonetheless, we view this Chinese utility company as attractive. It offers relatively stable returns on equity and cash flows, which translate into steady dividends - just the kind of business we like to own.
Sales over the review period included:
- Petronet LNG - We sold our position in this state-owned, Indian LNG producer as a result of its plan to make a large investment in a petrochemical facility. We were concerned about both the size of this investment relative to the company's current balance sheet, which has the potential to adversely affect future dividends, and the fact that the investment is not a core business.
- PZU - This Polish insurance company re-rated due to an improvement in Polish stock market sentiment following the election victory by a more EU-friendly political alliance, which could help unlock EU funding for the country. We trimmed the position on valuation grounds.
- Netease - Strong gains in this Chinese internet gaming company reduced its dividend yield and raised other valuation metrics such as the price/earnings ratio. We still like the company's fundamentals, but we trimmed the position to reduce the size of the exposure.
Dividends
Monitoring dividend delivery is clearly essential for this portfolio, given its income focus, and we are pleased to report that in general, portfolio companies are paying dividends in line with our expectations. Looking ahead, the two key determinants of portfolio dividend receipts will remain the performance of the Chinese economy, and the ongoing, but perhaps diminishing, possibility of a US economic downturn. However, despite the near-term uncertainties generated by these two issues, we are confident that the portfolio's long-term dividend generating power remains intact.
As a reminder, emerging market companies mainly determine their dividends using payout ratios (i.e. paying a certain proportion of earnings) so the earnings cycle is important in terms of the dividend companies pay in any given year. This is one reason why we like to have a portfolio that is diversified across countries and sectors, so we can better manage these cycles to ensure a steady stream of portfolio income.
Currency movements also impact near-term dividend receipts, as the Company receives dividends from portfolio companies in local currencies and pays out dividends in sterling. All else being equal, a falling pound increases revenue receipts from Emerging Markets, and vice versa.
Environmental, social and governance
We believe that the integration of financially material environmental, social and governance ('ESG') considerations into our investment process improves the quality of our long-term investment decisions, and helps us build stronger, more resilient portfolios. Each stock's financially material ESG characteristics are considered at every stage of the decision-making process, starting with fundamental research, where our analysts incorporate financially material ESG considerations into their analysis to gauge the duration of a business, the quality of management and the risks posed to minority shareholders.
As income investors in emerging markets, we place particular emphasis on corporate governance, and we draw a direct link between a company's dividend policy and the quality of its governance. In our view, a company's willingness to return cash to shareholders is a tangible and positive governance indicator. We have engaged with many companies on this issue over time, to understand their motivations and capital allocation objectives. We also discuss the magnitude of returns to shareholders and the motivations behind any split between dividends and buybacks.
Outlook
At present we are focused on several areas of interest. At the country level, low valuations in China have created the opportunity for us to slowly increase portfolio exposure to this market, since 2020. We are now modestly overweight, but we intend to manage this exposure quite tightly, as we recognise the risks and challenges of investment in this market, especially the ongoing drag created by the property sector, and escalating geopolitical risks. In Korea, policymakers are taking their cue from developments in Japan, and increasing their efforts to encourage companies to improve shareholders returns via increased dividends and share buybacks. We view this as a generally positive development which will drive up valuations and payout ratios, which suits our income approach very well.
At the sector level, our technology stocks have provided very good returns over the past few years, more recently thanks in part to our holdings in companies set to benefit from the AI revolution. We remain excited about the opportunities unfolding in this sector which can offer exposure to structural growth trends while also contributing to portfolio income.
So, overall, we believe the portfolio remains well-positioned to deliver a healthy level of income to shareholders, while still participating in the ongoing growth and capital gains available in emerging markets.
For and on behalf of
JPMorgan Asset Management
Investment Manager
Omar Negyal
Isaac Thong
Portfolio Managers 3rd April 2024
INTERIM MANAGEMENT REPORT
The Company is required to make the following disclosures in its interim report.
Principal Risks and Uncertainties
The principal and emerging risks and uncertainties faced by the Company have not changed from those reported in the Annual Report and Financial Statements for the year ended 31st July 2023 and fall into the following broad categories: investment; strategy; financial; operational and cybercrime; accounting, legal and regulatory; political and economic; and environmental, social and governance.
Related Parties Transactions
During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company during the period.
Going Concern
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 and, 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. In reaching that view, the Directors have considered the impact of the ongoing Russia-Ukraine and Hamas-Israel conflicts on the Company's financial, operational position and market conditions. The Directors have also reviewed the Company's compliance with debt covenants. In addition, the Board noted the full support from 100% of voting shareholders for the continuation vote at the Company's Annual General Meeting held in November 2021 and does not anticipate any changes to these views for the forthcoming Annual General Meeting in November 2024. For these reasons, they consider it reasonable to continue to adopt the going concern basis in preparing the financial statements.
Directors' Responsibilities
The Board of Directors confirms 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 the affairs of the Company and of the assets, liabilities, financial position and net return of the Company, as at 31st January 2024, as required by the UK Listing Authority Disclosure Guidance and Transparency Rules ('DTR') 4.2.4R; and
(ii) the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.
In order to provide these confirmations, and in preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business;
and the Directors confirm that they have done so.
For and on behalf of the Board
Elisabeth Scott
Chair 3rd April 2024
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) | (Unaudited) | (Audited) | |||||||
Six months ended | Six months ended | Year ended | |||||||
31st January 2024 | 31st January 2023 | 31st July 2023 | |||||||
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 | - | (13,657) | (13,657) | - | 31,809 | 31,809 | - | 21,726 | 21,726 |
Net foreign currency | |||||||||
(losses)/gains | - | (185) | (185) | - | 917 | 917 | - | 1,845 | 1,845 |
Income from investments | 6,919 | - | 6,919 | 7,027 | - | 7,027 | 20,604 | 348 | 20,952 |
Interest receivable and similar | |||||||||
income | 142 | - | 142 | 133 | - | 133 | 236 | - | 236 |
Gross return/(loss) | 7,061 | (13,842) | (6,781) | 7,160 | 32,726 | 39,886 | 20,840 | 23,919 | 44,759 |
Management fee | (467) | (1,090) | (1,557) | (457) | (1,066) | (1,523) | (936) | (2,185) | (3,121) |
Other administrative expenses | (422) | - | (422) | (433) | - | (433) | (735) | - | (735) |
Net return/(loss) before finance |
|
|
|
|
|
|
|
|
|
costs and taxation | 6,172 | (14,932) | (8,760) | 6,270 | 31,660 | 37,930 | 19,169 | 21,734 | 40,903 |
Finance costs | (355) | (830) | (1,185) | (264) | (615) | (879) | (582) | (1,356) | (1,938) |
Net return/(loss) before taxation | 5,817 | (15,762) | (9,945) | 6,006 | 31,045 | 37,051 | 18,587 | 20,378 | 38,965 |
Taxation | (558) | (158) | (716) | (380) | (120) | (500) | (1,679) | (99) | (1,778) |
Net return/(loss) after taxation | 5,259 | (15,920) | (10,661) | 5,626 | 30,925 | 36,551 | 16,908 | 20,279 | 37,187 |
Return/(loss) per share (note 3) | 1.78p | (5.38)p | (3.60)p | 1.90p | 10.42p | 12.32p | 5.70p | 6.84p | 12.54p |
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period.
The 'Total' column of this statement is the profit and loss account of the Company and the 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies.
The net return after taxation represents the profit or loss for the period and also the total comprehensive income.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Called up |
| Capital |
|
|
|
| |
share | Share | redemption | Other | Capital | Revenue |
| |
capital | premium | reserve | reserve1,2 | reserve2 | reserve2 | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Six months ended 31st January 2024 (Unaudited) |
|
|
|
|
|
|
|
At 31st July 2023 | 2,973 | 222,582 | 13 | 99,644 | 93,489 | 19,145 | 437,846 |
Repurchase of shares into Treasury | - | - | - | (1,374) | - | - | (1,374) |
Net (loss)/return | - | - | - | - | (15,920) | 5,259 | (10,661) |
Dividends paid in the period (note 4) | - | - | - | - | - | (9,768) | (9,768) |
At 31st January 2024 | 2,973 | 222,582 | 13 | 98,270 | 77,569 | 14,636 | 416,043 |
Six months ended 31st January 2023 (Unaudited) |
|
|
|
|
|
|
|
At 31st July 2022 | 2,973 | 222,582 | 13 | 100,092 | 73,210 | 17,665 | 416,535 |
Repurchase of shares into Treasury | - | - | - | (222) | - | - | (222) |
Net return | - | - | - | - | 30,925 | 5,626 | 36,551 |
Dividends paid in the period (note 4) | - | - | - | - | - | (9,496) | (9,496) |
At 31st January 2023 | 2,973 | 222,582 | 13 | 99,870 | 104,135 | 13,795 | 443,368 |
Year ended 31st July 2023 (Audited) |
|
|
|
|
|
|
|
At 31st July 2022 | 2,973 | 222,582 | 13 | 100,092 | 73,210 | 17,665 | 416,535 |
Repurchase of shares into Treasury | - | - | - | (448) | - | - | (448) |
Net return | - | - | - | - | 20,279 | 16,908 | 37,187 |
Dividends paid in the year (note 4) | - | - | - | - | - | (15,428) | (15,428) |
At 31st July 2023 | 2,973 | 222,582 | 13 | 99,644 | 93,489 | 19,145 | 437,846 |
1 The balance of the share premium was cancelled on 20th October 2010 and transferred to the 'other reserve'.
2 These reserves form the distributable reserve of the Company and may be used to fund distributions to investors.
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited) | (Unaudited) | (Audited) | |
At | At | At | |
31st January | 31st January | 31st July | |
2024 | 2023 | 2023 | |
£'000 | £'000 | £'000 | |
Fixed assets |
|
|
|
Investments held at fair value through profit or loss | 446,918 | 474,971 | 462,662 |
Current assets |
|
|
|
Debtors | 561 | 1,150 | 3,392 |
Cash and cash equivalents | 876 | 3,417 | 3,475 |
1,437 | 4,567 | 6,867 | |
Current liabilities | |||
Creditors: amounts falling due within one year | (16,321) | (19,742) | (31,559) |
Net current liabilities | (14,884) | (15,175) | (24,692) |
Total assets less current liabilities | 432,034 | 459,796 | 437,970 |
Non current liabilities |
|
|
|
Creditors: amounts falling due after more than one year | (15,706) | (16,246) | - |
Provision for capital gains tax | (285) | (182) | (124) |
Net assets | 416,043 | 443,368 | 437,846 |
Capital and reserves |
|
|
|
Called up share capital | 2,973 | 2,973 | 2,973 |
Share premium | 222,582 | 222,582 | 222,582 |
Capital redemption reserve | 13 | 13 | 13 |
Other reserve | 98,270 | 99,870 | 99,644 |
Capital reserve | 77,569 | 104,135 | 93,489 |
Revenue reserve | 14,636 | 13,795 | 19,145 |
Total shareholders' funds | 416,043 | 443,368 | 437,846 |
Net asset value per share (note 5) | 140.9p | 149.5p | 147.7p |
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited) | (Unaudited) | (Audited) | |
Six months ended | Six months ended | Year ended | |
31st January | 31st January | 31st July | |
2024 | 20231 | 2023 | |
£'000 | £'000 | £'000 | |
Cash flows from operating activities before finance costs |
|
|
|
and taxation |
|
|
|
Net (loss)/return before finance costs and taxation | (8,760) | 37,930 | 40,903 |
Adjustment for: | |||
Net losses/(gains) on investments held at fair value | |||
through profit or loss | 13,657 | (31,809) | (21,726) |
Net foreign currency losses/(gains) | 185 | (917) | (1,845) |
Dividend income | (6,917) | (7,027) | (20,943) |
Interest income | (134) | (117) | (216) |
Scrip Dividends received as income | (2) | - | (9) |
Realised (gains)/losses on foreign exchange transactions | (109) | 106 | 4 |
Realised exchange gains on liquidity fund | 220 | 409 | 70 |
Decrease/(increase) in accrued income and other debtors | 12 | (828) | (7) |
(Decrease) in accrued expenses | (93) | (303) | (221) |
Net cash outflow from operations before dividends and interest | (1,941) | (2,556) | (3,990) |
Dividends received | 8,451 | 9,974 | 20,571 |
Interest received | 134 | 123 | 222 |
Overseas withholding tax recovered | 51 | 159 | - |
Indian capital gains tax recovered/(paid) | 3 | (19) | (56) |
Net cash inflow from operating activities | 6,698 | 7,681 | 16,747 |
Purchases of investments | (43,505) | (72,177) | (117,620) |
Sales of investments | 46,356 | 74,088 | 117,735 |
Net cash inflow from investing activities | 2,851 | 1,911 | 115 |
Dividends paid | (9,768) | (9,496) | (15,428) |
Repurchase of shares into Treasury | (1,248) | (222) | (448) |
Repayment of loan | - | (16,614) | (16,613) |
Drawdown of loan | - | 16,614 | 16,613 |
Interest paid | (1,159) | (766) | (1,786) |
Net cash outflow from financing activities | (12,175) | (10,484) | (17,662) |
Decrease in cash and cash equivalents | (2,626) | (892) | (800) |
Cash and cash equivalents at start of period/year | 3,475 | 4,287 | 4,287 |
Exchange movements | 27 | 22 | (12) |
Cash and cash equivalents at end of period/year | 876 | 3,417 | 3,475 |
Cash and cash equivalents consist of: |
|
|
|
Cash and short term deposits | 229 | 1,155 | 1,291 |
Cash held in JPMorgan US Dollar Liquidity Fund | 647 | 2,262 | 2,184 |
Total | 876 | 3,417 | 3,475 |
1 For the six months ended 31st January 2023, the presentation of the Cash Flow Statement, as permitted under FRS 102, has been changed so as to present the 'reconciliation of net return before finance costs and taxation' to 'net cash inflow from operating activities' on the face of the Cash Flow Statement. Previously, this was shown by way of note to the Cash Flow Statement. Interest paid has also been reclassified to financing activities, previously shown under operating activities, as this relates to the loans drawndown. Other than changes in the presentation of certain cash flow items, there is no change to the cash flows as presented in previous periods.
ANALYSIS OF CHANGE IN NET DEBT
Analysis of change in net debt
As at |
| Other | As at | |
31st July |
| non-cash | 31st January | |
2023 | Cash flows | charges | 2024 | |
£'000 | £'000 | £'000 | £'000 | |
Cash and cash equivalents |
|
|
|
|
Cash | 1,291 | (1,062) | - | 229 |
Cash equivalents | 2,184 | (1,564) | 27 | 647 |
| 3,475 | (2,626) | 27 | 876 |
Borrowings |
|
|
|
|
US$20m revolving rate loan with Mizuho maturing 2024 | (15,544) | - | (161) | (15,705) |
US$20m revolving rate loan with ING maturing 2025 | (15,544) | - | (162) | (15,706) |
| (31,088) | - | (323) | (31,411) |
Total net debt | (27,613) | (2,626) | (296) | (30,535) |
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 31st January 2024.
The Company is a listed public limited company incorporated in England and Wales. The registered office is detailed in the Half Year Report.
1. Financial statements
The information contained within the condensed financial statements in the Half Year Report has not been audited or reviewed by the Company's auditor.
The figures and financial information for the year ended 31st July 2023 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 included the report of the auditor which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.
2. Accounting policies
The condensed financial statements are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ('UK GAAP') including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies in July 2022.
FRS 104, 'Interim Financial Reporting', issued by the Financial Reporting Council ('FRC') in March 2015, and updated in March 2018, has been applied in preparing this condensed set of financial statements for the six months ended 31st January 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 July 2023.
3. (Loss)/return per share
(Unaudited) | (Unaudited) | (Audited) | |
Six months ended | Six months ended | Year ended | |
31st January 2024 | 31st January 2023 | 31st July 2023 | |
£'000 | £'000 | £'000 | |
Return per share is based on the following: | |||
Revenue return | 5,259 | 5,626 | 16,908 |
Capital (loss)/return | (15,920) | 30,925 | 20,279 |
Total (loss)/return | (10,661) | 36,551 | 37,187 |
Weighted average number of shares in issue during | |||
the period | 295,815,677 | 296,726,127 | 296,678,384 |
Revenue return per share | 1.78p | 1.90p | 5.70p |
Capital (loss)/return per share | (5.38)p | 10.42p | 6.84p |
Total (loss)/return per share | (3.60)p | 12.32p | 12.54p |
4. Dividends paid
(Unaudited) | (Unaudited) | (Audited) | |
Six months ended | Six months ended | Year ended | |
31st January 2024 | 31st January 2023 | 31st July 2023 | |
£'000 | £'000 | £'000 | |
2023 fourth interim dividend of 2.3p (2022: 2.2p) | 6,813 | 6,529 | 6,530 |
2024 first interim dividend paid of 1.0p (2023: 1.0p) | 2,955 | 2,967 | 2,966 |
2023 second interim dividend paid of 1.0p | n/a | n/a | 2,966 |
2023 third interim dividend paid of 1.0p | n/a | n/a | 2,966 |
Total dividends paid in the period/year | 9,768 | 9,496 | 15,428 |
All dividends paid and declared in the six months period to 31st January 2024 have been funded from the revenue reserve.
A second interim dividend of 1.0p per share, amounting to £2,944,000 has been declared and will be paid on 19th April 2024 to shareholders on the register on the record date of 8th March 2024 in respect of the year ending 31st July 2024.
5. Net asset value per share
(Unaudited) | (Unaudited) | (Audited) | |
Six months ended | Six months ended | Year ended | |
31st January 2024 | 31st January 2023 | 31st July 2023 | |
Net assets (£'000) | 416,043 | 443,368 | 437,846 |
Number of shares in issue | 295,372,588 | 296,657,060 | 296,482,060 |
Net asset value per share | 140.9p | 149.5p | 147.7p |
6. Fair valuation of investments
The fair value hierarchy disclosures required by FRS 102 are given below:
(Unaudited) | (Unaudited) | (Audited) | ||||
Six months ended | Six months ended | Year ended | ||||
31st January 2024 | 31st January 2023 | 31st July 2023 | ||||
Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Level 1 | 446,892 | - | 474,943 | - | 462,636 | - |
Level 31 | 26 | - | 28 | - | 26 | - |
Total value of investments | 446,918 | - | 474,971 | - | 462,662 | - |
1 The Level 3 investment relates to the Company's holdings in Russian stocks.
(Unaudited) | (Unaudited) | (Audited) | ||||
Six months ended | Six months ended | Year ended | ||||
31st January 2024 | 31st January 2023 | 31st July 2023 | ||||
Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Level 3 | ||||||
Opening balance | 26 | 26 | 28 | 28 | 28 | 28 |
Change in fair value of investment during the year1 | - | - | - | - | (2) | (2) |
Closing balance | 26 | 26 | 28 | 28 | 26 | 26 |
1 For these Russian stocks a valuation method has been applied to the 25th February 2022 close of day prices (i.e.: when market was still trading normally) which have then been tapered at 99% haircut for valuation purposes.
JPMORGAN FUNDS LIMITED
4th April 2024
For further information, please contact:
Emma Lamb
For and on behalf of
JPMorgan Funds Limited
0800 20 40 20 or +44 1268 44 44 70
ENDS
A copy of the half year report will be submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The half year report will also shortly be available on the Company's website at www.jpmglobalemergingmarketsincome.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.