JPB.L Regulatory News (JPB)

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN BRAZIL INVESTMENT TRUST PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED31ST OCTOBER 2017

Legal Entity Identifier: 5493002T5BE3YCTKTE20

Information disclosed in accordance with DTR 4.2.2

CHAIRMAN'S STATEMENT

Introduction and Performance

Following the strong performance of Brazilian equities in the last financial year, domestic political concerns weighed on the market for much of the period under review. As a result, although the six months saw the benchmark and Company produce positive returns, these do not match the strength of the recovery seen in Brazil and reflect the damaging effect on equity prices of corruption concerns raised in May over the presidency of Michel Temer.

Over the six months, the Company reported in sterling terms a 6.7% increase in net asset value per share, which compares with an increase of 8.0% from the benchmark, the MSCI Brazil 10/40 Index. The Company's share price over the six months to 31st October 2017 produced a total return of 11.9%, ahead of these measures and reflecting the narrowing of the share price discount to net asset value. At 31st October 2017, the share price was trading at a discount of 10.1%, compared to 14.0% at 30th April 2017.

In Brazilian reais terms, the net asset value increased 12.7% and the benchmark rose 13.4% over the six months.

The underperformance in the period was largely attributable to underweight positions in the energy and materials sectors which performed well in the second half of the period under review. Despite this, your investment managers retain an overweight exposure towards sectors expected to benefit from the improving economy and strengthening consumer demand flagged by economic indicators and company earnings and outlook data.

The Investment Managers' Report gives a more detailed commentary about the markets and conditions experienced during this period and the outlook for the remainder of the financial year.

Since the period end the Company's NAV and share price have both fallen some 1.8%, outperforming the Company's benchmark which has fallen by some 4.4%. The share price has underperformed the benchmark over the same period, falling some 7.8% with an increase in the discount reflecting a weakening of UK investor sentiment towards trusts investing in emerging markets.

Share repurchases

During the six months to 31st October 2017, the Company repurchased 600,000 shares into Treasury at an average discount of 15.8%, thereby enhancing the net asset value per share by 0.2p/0.3%. The Board will continue to monitor the volatility and the absolute level of discount at which the share price trades relative to NAV. Since 1st May 2017, the share price discount to NAV to date has ranged between 8.1% and 18.0%.

Outlook

Economic data in Brazil suggests that the recovery is gaining momentum as the country emerges from the deepest recession since the 1930s. With the resumption of growth seen recently and the fall in the unemployment rate, both business and consumer confidence have been rising. Despite some political uncertainty in the short term, the Board continues to believe that the outlook is positive and that there are opportunities to deliver good long-term returns to shareholders.

Howard Myles

Chairman

21st December 2017

INVESTMENT MANAGERS' REPORT

Market review

The beginning of the reporting period marked a pause in the market recovery in Brazil, as allegations of corruption made in May against President Michel Temer eroded investor confidence, and sparked a significant correction in the country's equity market. While the Lower House later rejected the charges levelled against the President, the political scandal has undermined his support in Congress, leaving him in a substantially weaker position.

However, the market subsequently recovered to an extent as evidence emerged in a number of economic indicators of tangible progress with the reform agenda and an improving fiscal budget, alongside a recovery in reported earnings expectations.

We believe the economy is recovering after three years of a deep recession. Unemployment peaked in March and we are seeing signs of a pick-up in labour markets. The consumer, once more, looks in good health and low inflation is contributing to a rise in disposable income leading to increasing domestic consumption.

Portfolio review

During the period, the Company's share price outperformed the benchmark, while its net asset value slightly underperformed it. Overall, portfolio exposure remains tilted in favour of domestic themes, especially domestic cyclicals, in anticipation of better growth ahead. The net asset value outperformed the index until October, when the Brazilian market began to ease in response to global rather than domestic factors. At the same time the energy sector began to outperform. We believe the strong relative performance enjoyed by the mega-cap names in this sector may be coming to an end, and we are comfortable with our continued limited exposure to these stocks.

The consumer discretionary sector - the Company's biggest sector-level exposure - was the biggest contributor to performance, led by our overweight position in Smiles Fidelidade. This loyalty programme company has traditionally operated within the airline sector, but has successfully extended its reach into new territories, including the hire car market. We bought into the stock based on our expectation of above-consensus earnings for the year which have since materialised.

Our holding in Localiza, the car hire company, also boosted performance. Despite facing stiff competition from peers undergoing a stock exchange listing, Localiza has responded by remaining price-sensitive and has secured a significant contract from Uber.

We also added to our holding in Ambev, another consumer stock, as it shows evidence both of improved operating results and of cost management following several years of recession.

Acquisitions of the stocks we expect to benefit from improved consumption were funded from a number of sources including sales of Vale, the iron ore producer. We also sold some of our ex-Brazil exposure by removing Globant, an Argentine IT company from the portfolio following strong performance which we think is unlikely to be repeated in the face of increased cost pressures. In addition, we reduced our exposure to the utility sector.

Meanwhile, our lack of exposure to the pulp and paper producers detracted over the period. Suzano Papel e Celulose announced its move to a single share class, as part of a programme of enhanced corporate governance. In addition, the pulp price continued its upward trend due to a shortage of global supply causing the stock to outperform over the period.

PERFORMANCE ATTRIBUTION

FOR THE SIX MONTHS ENDED 31ST OCTOBER 2017

Source: Factset/Datastream/Morningstar. All figures are on a total return basis.

Performance attribution analyses how the Company achieved its recorded performance relative to its benchmark.

Our overweight in insurer BB Seguridade also had a negative effect on returns. The company's earnings were expected to retain their stable, defensive characteristics, but in fact failed to do so as first-half numbers indicated that the company had been unable to properly align sales force compensation for selling insurance products.

Outlook

The growth outlook in Brazil continues to improve, albeit gradually, with the support of the successive interest rate cuts by the central bank from 11.25% at the beginning of the period to 7.0%; its lowest level on record. Crucially, it appears increasingly likely that Temer will keep his job as president but with diminished support at government level.

There is the possibility of some social security reform by mid-February 2018, but if this cannot be achieved by this administration, the agenda will have to be continued by the next president as the current fiscal situation is unlikely to be sustainable. Without a social security reform, the government will exceed the spending cap in 2019 and the potential for another rating agency downgrade lingers.

Driven by the ongoing macro improvement and sound economic policies, company earnings will continue to improve. Following a deep recession, Brazil's economy is now recovering, driven mainly via consumption and exports, fuelled by falling nominal and real interest rates and a modest rise in real wages.

While much of our exposure to Brazil consists of quality franchises in the consumer, services and financial sectors, we continue to add large-cap cyclicality to reflect our more positive view on the outlook more generally. As a long-term investor, we continue to look for quality companies that can deliver growth regardless of the political and macro environments, as we believe these companies will outperform over market and business cycles.

Sophie Bosch De Hood

Luis Carrillo

Investment Managers

21st December 2017

INTERIM MANAGEMENT REPORT-

The Company is required to make the following disclosures in its half year report:

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Company have not changed and fall into the following broad categories: investment and strategy; market; accounting, legal and regulatory; corporate governance and shareholder relations; operational and financial. Information on each of these areas is given in the Directors' Report within the Annual Report and Accounts for the year ended 30th April 2017.

Related Party Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company.

Going Concern

The Directors believe, having considered the Company's investment objectives, risk management policies, capital management policies and procedures, nature of the portfolio and expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future and, more specifically, that there are no material uncertainties pertaining to the Company that would prevent its ability to continue in such operation existence for at least twelve months from the date of the approval of this half yearly financial report. For these reasons, they consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts.

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 Reporting' and gives a true and fair view of the state of affairs of the Company and of the assets, liabilities, financial position and net return of the Company, as at 31st October 2016, as required by the UK Listing Authority Disclosure and Transparency Rules 4.2.4R; and

(ii) the interim management report includes a fair review of the information required by 4.2.7R and 4.2.8R of the UK Listing Authority Disclosure and Transparency Rules.

In order to provide these confirmations, and in preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business;

and the Directors confirm that they have done so.

For and on behalf of the Board

Howard Myles

Chairman

21st December 2017

STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 31ST OCTOBER 2017

STATEMENT OF CHANGES IN EQUITY

1 This reserve forms the distributable reserve of the Company and may be used to fund distribution of profits to investors via dividend payments.

STATEMENT OF FINANCIAL POSITION AT 31ST OCTOBER 2017

STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 31ST OCTOBER 2017

NOTES TO THE FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 31ST OCTOBER 2017

1. Financial statements

The information contained within the financial statements in this half year report has not been audited or reviewed by the Company's auditors.

The figures and financial information for the year ended 30th April 2017 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 including the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

2. Accounting policies

The financial statements have been prepared in accordance with the Companies Act 2006, FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' of the United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the revised 'SORP') issued by the Association of Investment Companies in November 2014 and updated in January 2017.

FRS 104, 'Interim Financial Reporting', issued by the Financial Reporting Council ('FRC') in March 2015 has been applied in preparing this condensed set of financial statements for the six months ended 31st October 2017.

All of the Company's operations are of a continuing nature.

The accounting policies applied to this condensed set of financial statements are consistent with those applied in the financial statements for the year ended 30th April 2017.

3. Return per share

4. Dividends paid

All dividends paid in the period/year have been funded from the revenue reserve.

5. Net asset value per share

For further information, please contact:

Divya Amin

For and on behalf of

JPMorgan Funds Limited, Secretary

020 7742 4000

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

JPMORGAN FUNDS (UK) LIMITED

ENDS

A copy of the half year will be submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM 

The half year will also shortly be available on the Company's website at www.jpmbrazil.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.