TIDMJSGI TIDMJPSS
RNS Number : 4067H
JPMorgan Japan Small Cap G&I PLC
24 November 2022
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN JAPAN SMALL CAP GROWTH & INCOME PLC
(the 'Company')
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHSED
30TH SEPTEMBER 2022
Legal Entity Identifier: 549300KP3CRHPQ4RF811
Information disclosed in accordance with DTR 4.2.2
Chairman's Statement
Investment Performance
The Company underperformed its benchmark over the six months to
30th September 2022. The total return on the Company's net assets
was -8.7% (in GBP) over the review period, compared to a total
return of -0.2% the MSCI Japan Small Cap Index. This amounts to an
underperformance of 8.5%. However, it is worth noting that while
performance was disappointing in the first three months of the
period, it improved in the following three months, delivering a
return of 5.4% in NAV terms and outperforming its benchmark by
1.6%.
The half year results are an extension of the poor performance
which began in early 2022, and are due to the Company's preference
for quality and growth stocks. This focus means the portfolio
usually differs significantly from the benchmark, which comprises
many low-quality companies with unappealing growth characteristics.
It is therefore to be expected that performance will also vary
substantially from the benchmark, regardless of market
conditions.
Growth stocks have been under sustained selling pressure in all
major markets since the beginning of 2022, when Russia's invasion
of Ukraine intensified investors' fears about rising inflation and
aggressive monetary tightening. A series of hefty interest rate
hikes by the US Federal Reserve, the Bank of England and the ECB,
accompanied by hawkish rhetoric about the need for further rate
increases, took a particular toll on quality and growth-oriented
stocks. Japanese growth stocks were not immune to the change in
sentiment, despite subdued Japanese inflation, an accommodative
central bank and a positive outlook. The Company's performance was
therefore negatively impacted. However, the significant improvement
in performance in the latter part of the review period is
encouraging and the hope is that investors may be beginning to
appreciate that the situation in Japan is markedly different from
that in other markets.
Given the Investment Managers' conviction that good quality
companies with strong growth prospects will always outperform in
the long run, it is arguably more meaningful to assess performance
over a longer timeframe, and on this basis, the portfolio has
performed strongly. Over the 10 years ended 30th September 2022,
the Company achieved an average annualised return of 9.8%,
outpacing the benchmark return of 8.7%.
The Company's investment performance is explained in depth in
the Investment Managers' Report, along with details of portfolio
activity over the past six months. The managers also outline the
themes they expect will drive Japan's equity markets over the short
term and beyond.
Dividend Policy and Discount Management
The Company's revised dividend policy has now been in place for
four years. As a reminder, in the absence of unforeseen
circumstances, this dividend policy aims to pay a regular dividend
equal to 1% of the Company's NAV on the last business day of the
preceding financial quarter, being the end of March, June,
September and December. Over the year, this would approximate to 4%
of the average NAV. This dividend is paid from other reserves.
For the year ended 31st March 2022, quarterly dividends paid
totalled 20.3p per share (2021: 21.9p). For the half year ended
30th September 2022, the Board has declared two dividends of 3.4
pence and 3.6 pence for the quarters ended 30th June and 30th
September 2022 respectively. Two further dividends will be declared
on the first business day after 31st December 2022 and 31st March
2023. The Company currently offers an attractive dividend yield of
4.9% based on the last four dividend payments and the share price
at 325p.
The Company's discount stood at 8.6% at 30th September 2022, a
moderate increase from the 7.4% reported at the Company's year end,
31st March 2022. This widening is broadly in line with the
experience of many other investment trusts over this period. The
Company did not repurchase any shares during the period under
review. However, the Board continues to monitor the discount
closely and is prepared to repurchase shares to narrow the discount
when it considers this is appropriate and taking account of market
conditions. At the time of writing, the discount stood at
9.91%.
Gearing/Borrowing
The Managers seek, at times, to enhance investment returns for
shareholders by borrowing money to buy more assets ('gearing'),
subject to their view on prevailing market conditions. The
Company's investment policy permits such tactical gearing within a
range of 10% net cash to 25% geared. However, the Board requires
the Managers to operate in the narrower range of 5% net cash to 15%
geared in normal market conditions. The Company's gearing is
discussed regularly by the Board and the Managers, and the gearing
level is reviewed by the Directors at each Board meeting. During
the six months to end September 2022, the Company's gearing level
ranged between 4.6% to 11.5%, ending the half year at 4.8% (end
March 2022: 6.1%).
The Company's revolving credit facility of Yen 4.0 billion (with
an option to increase available credit to Yen 6.0 billion) with
Scotiabank matured in October 2022. I am pleased to report that the
Company has agreed a new Yen 4 billion, 2 year revolving credit
facility with ING Bank.
Outlook
Despite the headwinds generated by the concerns and
geo-political uncertainties currently pervading global financial
markets, the Board shares the Investment Managers' conviction that
the prospects for Japanese small cap companies remain strong over
the long term. Japan is undergoing significant technological and
structural changes which will bolster growth and productivity well
into the future. Innovative and dynamic small cap companies are
ideally placed to thrive in this environment and they are already
leading the way in a variety of niche markets. Yet these vibrant
sectors of the market are still under-researched, and thus
overlooked, by many investors, often to their detriment.
The Board believes that the Investment Managers' focus on
quality and growth, supported by JPMorgan's extensive, global and
Tokyo-based research resources, mean that the Company is ideally
placed to identify and capitalise on the opportunities available
amongst Japan's small cap businesses. Whilst we are disappointed
with the recent underperformance, we therefore share the Investment
Managers' confidence in the Company's capacity to continue to
deliver attractive returns and outperformance, combined with a
regular income, to shareholders over the longer term.
Alexa Henderson
Chairman
23rd November 2022
Investment Managers' Report
Performance and market review
Over the six months to September 2022, the Company
underperformed its benchmark, the MSCI Japan Small Cap Index (in
GBP terms), by 8.5%, delivering a return of -8.7% on a net asset
value (NAV) basis (in GBP terms), compared to the benchmark return
of -0.2%. Performance was particularly weak in the April-June
quarter, before it improved in the July-September quarter, with the
Company NAV delivering a return of 5.4%, outperforming its
benchmark by 1.6% during the quarter.
The portfolio has a quality and growth bias, and focuses on
long-term growth stories with strong business models. The
underperformance over the six month period was mainly an extension
of the difficult period which began at the start of 2022, when
Russia's invasion of Ukraine drove geo-political tensions to their
highest level in decades and exacerbated global inflation pressures
by driving up energy and commodity prices. Investors were also
surprised by central banks' very aggressive response to inflation.
The sudden sharp rise in interest rates in the US, UK and Europe
had an especially adverse impact on the valuations of technology
and other high growth stocks in all major markets, as higher rates
reduce the value of these companies' future cash flows.
While inflation pressures have been much more subdued in Japan
than other major economies, and the Bank of Japan has so far shown
no signs of tightening its ultra-loose monetary policy stance,
Japanese growth stocks were also caught up in this sell-off.
The widening interest rate differentials between Japan and the
US induced further weakening of the yen against the US dollar over
the review period, although the yen remained relatively stable
against sterling, which came under pressure as the British
government struggled with a series of political scandals that
eventually unseated the Prime Minister, Boris Johnson.
Our investment strategy looks beyond such short-term market
fluctuations and adopts a long-term perspective, based on the view
that excess returns take time to accumulate, especially for smaller
cap stocks. The Company's long term performance track record of
strong outright gains and outperformance suggests that this
approach is merited and pays off for patient investors.
Spotlight on stocks and sectors
During the six months under review, both stock selection and
sector allocation had negative impacts on performance.
At the stock level, the top detractors from returns included
MEC, Taiyo Yuden and Tosho. Companies involved in semiconductor
supply chains and suppliers of other electronic components
performed poorly over the period due to macroeconomic uncertainty
and concerns over ongoing supply constraints. However, we continue
to see great potential for these companies over the longer term,
with structural growth underpinned by Japan's digitalisation drive,
the advent of 5G technologies and the burgeoning demand for
Internet of Things (IoT).
-- MEC is the global leader in the manufacture of advanced
adhesion enhancer products, which are used in printed circuit
boards. These products improve the adhesion between the wiring and
insulating materials in the semiconductor package. Despite its
recent disappointing performance, we expect MEC to enjoy future
revenue growth as advances in semiconductor miniaturisation
increase demand for their products.
-- Taiyo Yuden is benefiting from technological innovation in
the automotive industry. It manufactures products such as
multi-layer ceramic capacitors (MLCCs), which are used in many
electronic devices, with demand from vehicle manufacturers
increasing especially rapidly. The automotive industry is
undergoing significant technological innovations including the
rapid development of electric vehicles, autonomous driving and
so-called 'connected cars' that use mobile internet technology. All
these advances will translate into huge potential markets for
several Japanese manufacturers such as Taiyo Yuden, which provide
high quality MLCCs.
-- In a completely different sector of the market, Tosho
operates sports gyms targeted at beginners. Tosho is the most
efficiently run gym operator in Japan, offering simple,
competitively-priced facilities while keeping staffing costs
relatively low. The company originated in the Chubu region near
Nagoya, but there is ample scope for expansion into other major
urban areas such as Kanto and Kansai, where the population and
addressable markets are considerably larger. The business has been
heavily impacted by COVID, hence its poor recent performance, but
we expect a recovery and fresh demand for Tosho's services over the
medium term.
The major positive contributors to returns over the review
period included Nippon Gas, Capcom and Yamato Kogyo.
-- Nippon Gas supplies liquefied petroleum gas (LPG) to
households and businesses. The company is transforming into a
platform intended to provide software services to micro enterprises
in the very traditional, highly-fragmented LPG industry, which
currently uses very little technology. Nippon Gas is also launching
an online gas smart meter service that will significantly reduce
the time and manpower costs involved in meter readings, which are
presently done manually by meter readers visiting individual
sites.
-- Capcom develops and publishes video games, including Street
Fighter, Monster Hunter, and Resident Evil (Biohazard). The
earnings of gaming companies have become notably steadier over the
past few years, especially for those with large and varied
catalogues of games, which represent very valuable intellectual
property. This is the case because digital downloads of games are
rising steadily and selling games in this way is more profitable,
as distribution is much easier than marketing games in boxes, via
traditional retail outlets. Online gaming also opens the way for
additional ongoing revenue streams via the sale of in game
merchandise. Companies like Capcom, with several popular titles,
will benefit as this shift to digital downloads continues.
-- Yamato Kogyo is a steel producer which uses electric arc
furnaces, rather than conventional blast furnaces, in its
manufacturing process. Electric arc furnaces emit only around one
sixth to a quarter of the greenhouse gases produced by conventional
blast furnaces, and Yamato Kogyo is one of the largest Japanese
steelmakers using this technology. It also has joint venture
operations and subsidiaries in the United Stated, Thailand and
several other countries. The company has performed very well and is
likely to see further increases in demand for its products as
construction and manufacturing companies strive to reduce the
carbon footprint of their steel inputs.
With respect to sector allocation, top detractors to relative
performance included our overweight position in the software and
services and semiconductors and semiconductor equipment sectors. As
discussed above, tech companies were the worst affected by this
year's global equity market sell-off, and share price declines have
been exacerbated by profit taking after a long period of very
strong (in some cases remarkable) performance. However, we continue
to believe that digitalisation remains an area of significant
growth potential in Japan, considering the still low penetration of
digital services such as e-commerce, digital advertising and
cashless payments, and we remain overweight sectors exposed to this
growth. While we do see competition heating up in some areas, we
intend to remain focused on companies that are leaders in their
respective fields.
The portfolio's gearing, which averaged 6% over the period, also
negatively impacted returns over the six month period.
About our investment philosophy
The Company aims to provide shareholders with access to the
innovative and fast-growing smaller companies at the core of the
Japanese economy. Our investment approach favours quality and
structural growth, and we target companies (other than Japan's
largest 200) which we believe can compound earnings growth over the
long term, supported by sustainable competitive advantages, good
management teams and sound capital allocation. We believe the
strong and durable market positioning of such businesses will allow
them to substantially increase their intrinsic value over time. We
avoid stocks that have no clear differentiation and those that
operate in industries plagued by excess supply and structural
decline. Our focus on quality and growth means that the portfolio
tends to benefit from the ability to invest the portfolio into
stocks with different weightings to that of the benchmark, which
provides a potential source for additional return, enhancing the
Company's scope to outperform over the long term.
Our stock selection is based on fundamental analysis,
'on-the-ground' knowledge and extensive contact with the management
teams of prospective and current portfolio companies. The Company
is managed by a team of three, supported by over 20 Tokyo-based
investment professionals. Their knowledge of the local market
provides us with significant strength in identifying investment
opportunities in small cap companies - a sector of the market which
is under-researched and overlooked by many investors.
The starting point in our bottom-up investment process is our
Strategic Classification framework, where we address the key
question 'Is this a business that we want to own?'. Through this
process we assign a rating of Premium, Quality or Trading to each
stock based on its fundamentals, governance and the sustainability
of its revenues over the long term. We aim to maximise our exposure
to Premium and Quality companies, and where possible, we invest
from an early stage in order to benefit fully as companies realise
their growth potential.
This patient perspective is key to generating excess returns
over the long term, although the portfolio's focus on quality and
growth means it tends to struggle during value rallies. Having said
that, the Company does not target 'growth at any price'. We always
strive to acquire shares at a reasonable price. To this end, we use
a five-year expected return framework to consider whether a stock's
price is at an attractive level. We believe it is also important to
construct a well-balanced, diversified portfolio, to minimise
exposure to unintended risks. The Company's prospective and current
portfolio holdings include a broad range of sectors, including not
only IT hardware and software, but materials, chemicals,
construction, machinery and consumer goods and services.
We believe that well-run companies, which exhibit behaviour that
respects the environment and the interests of their shareholders,
customers, employees and other stakeholders, are most likely to
deliver sustainable, long-term returns. Such environmental, social
and governance ('ESG') considerations are thus integral to our
investment process and a key driver of our quest to generate
financial returns. ESG factors influence our decisions both at the
portfolio construction stage and thereafter once companies are held
in the portfolio, when ongoing engagement with managers can be
effective in encouraging them to realise and maintain acceptable
ESG standards. Our long-term holding in Litalico, Japan's top
provider of support services for disabled workers, is one example
of the way in which ESG considerations influence our investment
decisions, as this company is at the forefront of Japan's efforts
to improve employee well-being and workplace diversity.
Trends and themes
While our investment decisions are based on company-specific
factors, there are also structural, long-term trends and themes
that underlie our stock selection.
Our investment themes include:
-- Changing demographics: Japan's ageing and declining
population is creating significant challenges for Japanese
policymakers. The government is committed to tackling these issues
through regulatory reforms and digitalisation, and this is
providing opportunities for innovative smaller companies working to
improve the quality of life for the elderly by, for example,
reducing the need for face-to-face medical consultations. The
telemedicine company, Medley, is an example of our holding that
benefits from such innovation.
-- Improving labour productivity via digitalisation: Japan's
ageing population is also leading to a contraction in labour
supply, and digitalisation is a key part of the solution to this
problem, as it raises labour productivity. The government wants to
encourage the adoption of digitalisation across the economy, and to
this end it has established an agency which is focused on
digitalising the operations of national and local governments, as
well as Japan's education and healthcare systems. Portfolio
holdings Rakus, a software company supplying business services such
as digital invoicing and expense management systems, and Infomart,
which provides business to business services to the food industry,
are examples of our holdings that benefit from this long term
trend.
-- Technological innovation: While certain areas of the Japanese
economy such as financial services lag other markets in terms of
their technological sophistication, Japanese manufacturers are
world class. The country is a leading global supplier of factory
automation equipment, robots and electronics parts and materials,
presenting attractive investment opportunities for portfolio
companies such as MEC and specialist chemicals producer C. Uyemura
that operate in niche technology markets.
-- De-carbonisation: The Japanese government's commitment to
reduce carbon emissions to net zero by 2050 has galvanised efforts
to transition the economy to renewable energy sources and take
other necessary steps to mitigate climate change. Some smaller
Japanese companies possess unique technologies related to the
production of electric vehicles, solar and wind power and other
forms of clean energy, and we continue our search for companies
such as Canadian Solar Infrastructure Fund and Hirano Tecseed, a
producer of specialist machinery, that are well-positioned to
benefit from the global push towards carbon neutrality.
-- Overseas growth: The Asian region is experiencing rapid
structural growth. Japanese luxury goods producers and other strong
brands such as our investments in Milbon and Casio Computer are
likely to continue experiencing strong demand from new customers in
China, India and other increasingly prosperous Asian countries.
-- Corporate governance: Japan's corporate sector is making a
concerted effort to strengthen governance standards via the
appointment of more independent, external directors to company
boards, enhanced shareholder returns and tighter internal controls
and disclosure rules. There is, however, room for further
improvement, and we engage in regular dialogues with portfolio
companies and potential investments on this broad theme, on the
view that the market is likely to keep rewarding companies that
upgrade their governance practices.
Positioning the portfolio for future success
The upside of recent market volatility is that it has provided
us with opportunities to purchase quality, long-term growth stories
at especially attractive valuations. Kyushu Railway, Sangetsu and
JGC are three names which we have added to the portfolio during the
past six months:
-- Kyushu Railway is a railway operator in the Kyushu region of
Japan. It also has non-railway businesses such as real estate
leasing and hotels. Railway companies have been negatively impacted
by COVID, but we anticipate steady growth over the
mid-to-long-term, supported by the return of inbound tourism as
well as support from shareholder returns while valuations are not
demanding.
-- Sangetsu is Japan's top domestic wallpaper company. While the
market is mature, comprising an oligopoly of three companies,
Sangetsu has been consistently expanding its market share which
currently stands at over 50%. The pricing environment has also been
improving recently, and the market's number two player has followed
Sangetsu's lead in hiking prices. The company also has a solid
balance sheet with a net cash position, and has committed to a
total payout ratio of approximately 100% over its three year
mid-term plan period.
-- JGC is an engineering company which constructs large scale
liquefied natural gas (LNG) projects. Gas is considered to be the
main transition fuel while globally there has been underinvestment
in LNG production and storge facilities in the past few years, and
many companies have either scaled back or exited the industry. This
suggests to us that the medium-term outlook for LNG is favourable
and we expect JGC to enjoy strong demand in the foreseeable
future.
To fund these and other acquisitions, we closed our position in
Money Forward, one of the top cloud accounting service providers
for mid- and small-sized enterprises. We still expect demand for
cloud accounting services to rise over time, but we have been
disappointed by Money Forward's bigger than expected losses and
mounting uncertainty about when it will become profitable. We also
trimmed and took some profit on our holding in Yamato Kogyo after
its strong performance, as mentioned above. Similarly, we took some
profit in IT service company DTS after significant
outperformance.
Over the review period, annualised portfolio turnover was around
25%, which is similar to the level of the previous financial year.
Our ongoing bias towards quality and growth is evidenced by the
fact that the portfolio has a higher return on equity (ROE) and
higher growth in earnings per share (EPS) than the overall market.
In turn, the portfolio's forward price to earnings ratios tend to
be at a premium versus the benchmark's, although we believe paying
the higher price is justified for the higher earnings growth.
Outlook and strategy
While there have been some concerns in Japan about cost
pressures from global inflation and a weaker yen, in contrast to
developments in other developed economies, to date there are few
signs of inflation in either wages or rents. As a result, the Bank
of Japan currently maintains its loose monetary policy stance. The
political environment also remains stable. Following July's upper
house election, no further elections are due in Japan for three
years. Meanwhile, we expect Prime Minister Fumio Kishida to
continue to pursue the policies and reforms implemented by the
previous two Prime Ministers, including the implementation of
structural reforms such as digitalisation and decarbonisation. The
Japanese government lifted its ban on inbound tourism in October
2022 - a major policy shift after nearly two and a half years of
strict COVID restrictions, and one that will be welcomed across the
tourism and hospitality sectors. The government is also planning to
launch a nationwide travel discount programme which was temporarily
suspended at the onset of the pandemic.
Regardless of the economic concerns and geo-political
uncertainties currently overshadowing global financial markets, we
remain optimistic about the long-term outlook for Japanese small
cap companies. Japanese businesses typically have large cash
positions and stronger balance sheets than their peers in other
countries. And the average valuations of Japanese companies remain
reasonable, both lower than historical averages and below those of
their counterparts in other major markets. As importantly, the
pandemic has given added impetus to some positive long term
structural trends developing in the Japanese economy, especially
the application of technology and digitalisation in multiple areas
of economic activity. These trends are set to underpin growth,
productivity and corporate earnings for many years to come. In
sharp contrast to other developed economies, Japan's smaller and
more entrepreneurial companies are at the forefront of this
innovation, and are therefore ideally positioned to prosper over
the longer term.
We believe that it is always important to focus on the best of
these businesses - good quality companies with leading market
positions and the potential for structural growth. In a part of the
market where sell-side coverage is patchy at best, JPMorgan's large
team of Tokyo-based analysts puts the Company in a favourable
position to identify exciting investment opportunities amongst
smaller companies, and thus to capitalise on the long-term
structural changes playing out in Japan.
It is clear from the portfolio's sector allocations that it
differs substantially from the benchmark. This often leads to
significant oscillations in relative performance, as we have seen
to our detriment over the last six months and in some previous
periods. However, we believe our investment approach is capable of
weathering this volatility and any short-term shifts in sentiment
driven by economic roadblocks or geopolitical developments, just as
it has done in the past. This leaves us confident that the Company
will deliver positive returns and relative outperformance to
patient investors over the longer term.
Miyako Urabe
Xuming Tao
Naohiro Ozawa
Investment Managers
23rd November 2022-
Interim Management Report
Principal and Emerging Risks and Uncertainties
The principal and emerging risks and uncertainties faced by the
Company have not changed and fall into the following broad
categories: investment and strategy; market; operational and cyber
crime; loss of investment team or investment managers; share price
relative to NAV per share; accounting, legal and regulatory;
political and economic; global pandemics; climate change; ESG
requirements from investors and geopolitical instability.
Information on each of these areas is given in the Business Review
within the Annual Report and Financial Statements for the year
ended 31st March 2022.
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. For these reasons, they consider that there is
reasonable evidence to continue to adopt the going concern basis in
preparing the financial statements.
Directors' Responsibilities
The Board of Directors 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 the affairs of the Company and of the
assets, liabilities, financial position and net return of the
Company as at 30th September 2022, as required by the UK Listing
Authority Disclosure and Transparency Rule 4.2.4R; and
(ii) the interim management report includes a fair review of the
information required by DTRs 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
Alexa Henderson
Chairman
23rd November 2022
Statement of Comprehensive Income
For the six months ended 30th September 2022
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th September 2022 30th September 2021 31st March 2022
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- --------- --------- -------- -------- -------- -------- ---------- ----------
(Losses)/gains on
investments held at
fair value through
profit or loss - (19,640) (19,640) - 21,680 21,680 - (72,449) (72,449)
Net foreign currency
gains/(losses) - 358 358 - (321) (321) - 920 920
Income from
investments 1,993 - 1,993 1,536 - 1,536 3,855 - 3,855
Other interest
receivable 1 - 1 - - - - - -
---------------------- -------- --------- --------- -------- -------- -------- -------- ---------- ----------
Gross return/(loss) 1,994 (19,282) (17,288) 1,536 21,359 22,895 3,855 (71,529) (67,674)
Management fee (939) - (939) (1,293) - (1,293) (2,498) - (2,498)
Other administrative
expenses (262) - (262) (225) - (225) (454) - (454)
---------------------- -------- --------- --------- -------- -------- -------- -------- ---------- ----------
Net return/(loss)
before finance costs
and taxation 793 (19,282) (18,489) 18 21,359 21,377 903 (71,529) (70,626)
Finance costs (107) - (107) (108) - (108) (215) - (215)
---------------------- -------- --------- --------- -------- -------- -------- -------- ---------- ----------
Net return/(loss)
before taxation 686 (19,282) (18,596) (90) 21,359 21,269 688 (71,529) (70,841)
Taxation (227) - (227) (152) - (152) (357) - (357)
---------------------- -------- --------- --------- -------- -------- -------- -------- ---------- ----------
Net return/(loss)
after taxation 459 (19,282) (18,823) (242) 21,359 21,117 331 (71,529) (71,198)
---------------------- -------- --------- --------- -------- -------- -------- -------- ---------- ----------
Return/(loss) per
share (note 3) 0.84p (35.37)p (34.53)p (0.44)p 39.18p 38.74p 0.61p (131.22)p (130.61)p
---------------------- -------- --------- --------- -------- -------- -------- -------- ---------- ----------
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.
Net return/(loss) after taxation represents the profit/(loss)
for the period/year and also Total Comprehensive Income.
Statement of Changes in Equity
Called
up Capital
share Share redemption Other Capital Revenue
capital premium reserve reserve(1,2) reserves(2) reserve(2) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- -------- ----------- ------------- ------------ ----------- ---------
Six months ended 30th September 2022 (Unaudited)
At 31st March 2022 5,595 33,978 1,836 270,952 (84,760) (10,864) 216,737
Net (loss)/return - - - - (19,282) 459 (18,823)
Dividends paid in the
period (note 4) - - - (4,034) - - (4,034)
------------------------ -------- -------- ----------- ------------- ------------ ----------- ---------
At 30th September 2022 5,595 33,978 1,836 266,918 (104,042) (10,405) 193,880
------------------------ -------- -------- ----------- ------------- ------------ ----------- ---------
Six months ended 30th September 2021 (Unaudited)
At 31st March 2021 5,595 33,978 1,836 282,835 (13,231) (11,195) 299,818
Net return/(loss) - - - - 21,359 (242) 21,117
Dividends paid in the
period (note 4) - - - (5,996) - - (5,996)
------------------------ -------- -------- ----------- ------------- ------------ ----------- ---------
At 30th September 2021 5,595 33,978 1,836 276,839 8,128 (11,437) 314,939
------------------------ -------- -------- ----------- ------------- ------------ ----------- ---------
Year ended 31st March 2022 (Audited)
At 31st March 2021 5,595 33,978 1,836 282,835 (13,231) (11,195) 299,818
Net (loss)/return - - - - (71,529) 331 (71,198)
Dividends paid in the
year - - - (11,883) - - (11,883)
------------------------ -------- -------- ----------- ------------- ------------ ----------- ---------
At 31st March 2022 5,595 33,978 1,836 270,952 (84,760) (10,864) 216,737
------------------------ -------- -------- ----------- ------------- ------------ ----------- ---------
(1) The share premium was cancelled in the period ended 31st
March 2001 and redesignated as 'other reserve'.
(2) These reserves form the distributable reserves of the
Company and may be used to fund distributions to investors.
Statement of Financial Position
At 30th September 2022
(Unaudited) (Unaudited) (Audited)
30th September 30th September 31st March
2022 2021 2022
GBP'000 GBP'000 GBP'000
--------------------------------------------------------- --------------- --------------- -----------
Fixed assets
Investments held at fair value through profit or loss 203,091 339,381 229,912
--------------------------------------------------------- --------------- --------------- -----------
Current assets
Debtors 1,444 1,510 2,672
Cash and cash equivalents 9,485 3,788 10,143
--------------------------------------------------------- --------------- --------------- -----------
10,929 5,298 12,815
Creditors: amounts falling due within one year (20,140) (3,152) (25,990)
--------------------------------------------------------- --------------- --------------- -----------
Net current (liabilities)/assets (9,211) 2,146 (13,175)
--------------------------------------------------------- --------------- --------------- -----------
Total assets less current liabilities 193,880 341,527 216,737
Creditors: amounts falling due after more than one year - (26,588) -
--------------------------------------------------------- --------------- --------------- -----------
Net assets 193,880 314,939 216,737
--------------------------------------------------------- --------------- --------------- -----------
Capital and reserves
Called up share capital 5,595 5,595 5,595
Share premium 33,978 33,978 33,978
Capital redemption reserve 1,836 1,836 1,836
Other reserve 266,918 276,839 270,952
Capital reserves (104,042) 8,128 (84,760)
Revenue reserve (10,405) (11,437) (10,864)
--------------------------------------------------------- --------------- --------------- -----------
Total shareholders' funds 193,880 314,939 216,737
--------------------------------------------------------- --------------- --------------- -----------
N et asset value per share (note 5) 355.7p 577.8p 397.6p
--------------------------------------------------------- --------------- --------------- -----------
Statement of Cash Flows
for the six months ended 30th September 2022
(Unaudited) (Unaudited) (Audited)
30th September 30th September 31st March
2022 2021 2022
GBP'000 GBP'000 GBP'000
----------------------------------------------------------------------- --------------- --------------- -----------
Net cash outflow from operations before dividends and interest (note
6) (1,261) (1,596) (3,246)
Dividends received 2,259 1,928 3,231
Interest received 1 - -
Interest paid (113) (112) (223)
----------------------------------------------------------------------- --------------- --------------- -----------
Net cash inflow/(outflow) from operating activities 886 220 (238)
----------------------------------------------------------------------- --------------- --------------- -----------
Purchases of investments (26,071) (36,650) (67,865)
Sales of investments 33,372 45,566 89,635
Settlement of forward currency contracts 5 22 45
----------------------------------------------------------------------- --------------- --------------- -----------
Net cash inflow from investing activities 7,306 8,938 21,815
----------------------------------------------------------------------- --------------- --------------- -----------
Dividends paid (4,034) (5,996) (11,883)
Repayment of bank loan (4,844) - -
----------------------------------------------------------------------- --------------- --------------- -----------
Net cash outflow from financing activities (8,878) (5,996) (11,883)
----------------------------------------------------------------------- --------------- --------------- -----------
(Decrease)/increase in cash and cash equivalents (686) 3,162 9,694
----------------------------------------------------------------------- --------------- --------------- -----------
Cash and cash equivalents at start of the period 10,143 627 627
Exchange movements 28 (1) (178)
Cash and cash equivalents at end of the period 9,485 3,788 10,143
----------------------------------------------------------------------- --------------- --------------- -----------
(Decrease)/increase in cash and cash equivalents (686) 3,162 9,694
----------------------------------------------------------------------- --------------- --------------- -----------
Cash and cash equivalents consist of:
Cash and short term deposits 9,485 3,788 10,143
----------------------------------------------------------------------- --------------- --------------- -----------
Total 9,485 3,788 10,143
----------------------------------------------------------------------- --------------- --------------- -----------
Reconciliation of net debt
As at As at
31st March Exchange 30th September
2022 Cash flows movement 2022
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ----------- ----------- --------- ---------------
Cash and cash equivalents
Cash 10,143 (686) 28 9,485
--------------------------- ----------- ----------- --------- ---------------
10,143 (686) 28 9,485
Borrowings
Debt due after one year (25,030) 4,844 381 (19,805)
--------------------------- ----------- ----------- --------- ---------------
(25,030) 4,844 381 (19,805)
--------------------------- ----------- ----------- --------- ---------------
Total (14,887) 4,158 409 (10,320)
--------------------------- ----------- ----------- --------- ---------------
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30th September 2022
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 31st
March 2022 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, 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 April
2021.
FRS 104, 'Interim Financial Reporting', issued by the Financial
Reporting Council ('FRC') in March 2015 has been applied in
preparing this condensed set of financial statements for the six
months ended 30th September 2022.
All of the Company's operations are of a continuing nature.
The accounting policies applied to this condensed set of
financial statements are consistent with those applied in the
financial statements for the year ended 31st March 2022.
3. Return/(loss) per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th September 2022 30th September 2021 31st March 2022
GBP'000 GBP'000 GBP'000
------------------------------------------------------ -------------------- -------------------- ----------------
Return per Ordinary share is based on the following:
Revenue return/(loss) 459 (242) 331
Capital (loss)/return (19,282) 21,359 (71,529)
------------------------------------------------------ -------------------- -------------------- ----------------
Total (loss)/return (18,823) 21,117 (71,198)
------------------------------------------------------ -------------------- -------------------- ----------------
Weighted average number of shares in issue 54,510,339 54,510,339 54,510,339
Revenue return/(loss) per share 0.84p (0.44)p 0.61p
Capital (loss)/return per share (35.37)p 39.18p (131.22)p
------------------------------------------------------ -------------------- -------------------- ----------------
Total (loss)/return per share (34.53)p 38.74p (130.61)p
------------------------------------------------------ -------------------- -------------------- ----------------
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th September 30th September
2022 2021 31st March 2022
GBP'000 GBP'000 GBP'000
------------------------------- ----------------- ----------------- ----------------
2022 fourth quarterly
dividend of 4.0p (2021:
5.5p) 2,180 2,998 2,998
2023 first quarterly dividend
of 3.4p (2022: 5.5p) 1,854 2,998 2,998
2022 second quarterly
dividend of 5.8p (2021:
5.5p) - - 3,162
2022 third quarterly dividend
of 5.0p (2021: 5.9p) - - 2,725
------------------------------- ----------------- ----------------- ----------------
Total dividends paid 4,034 5,996 11,883
------------------------------- ----------------- ----------------- ----------------
The dividends paid in the period have been funded from the other
reserve.
A second quarterly dividend of 3.6p (2022: 5.8p) per share,
amounting to GBP1,962,372 (2022: GBP3,161,600) has been declared
payable in respect of the year ending 31st March 2023. It was paid
on 18th November 2022 to shareholders on the register at the close
of business on 21st October 2022.
5. Net asset value per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th September 2022 30th September 2021 31st March 2022
GBP'000 GBP'000 GBP'000
--------------------------- -------------------- -------------------- ----------------
Net assets (GBP'000) 193,880 314,939 216,737
Number of shares in issue 54,510,339 54,510,339 54,510,339
--------------------------- -------------------- -------------------- ----------------
Net asset value per share 355.7p 577.8p 397.6p
--------------------------- -------------------- -------------------- ----------------
6. Reconciliation of net return before finance costs and
taxation to net cash outflow from operations before dividends and
interest
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th September 30th September
2022 2021 31st March 2022
GBP'000 GBP'000 GBP'000
----------------------------------- ----------------- ----------------- ----------------
Net (loss)/return before
finance costs and taxation (18,489) 21,377 (70,626)
Add capital loss/(less
capital return) before
finance costs and taxation 19,282 (21,359) 71,529
Decrease/(increase) in
accrued income and other
debtors 469 470 (345)
Decrease in accrued expenses (7) (13) (35)
Overseas withholding tax (200) (152) (384)
Dividends received (2,259) (1,928) (3,231)
Interest received (1) - -
Realised (losses)/gains
on foreign exchange transactions (56) 9 (154)
----------------------------------- ----------------- ----------------- ----------------
Net cash outflow from
operations before dividends
and interest (1,261) (1,596) (3,246)
----------------------------------- ----------------- ----------------- ----------------
7. Fair valuation of instruments
The fair value hierarchy analysis for financial instruments held
at fair value at the period end is as follows:
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th September 2022 30th September 2021 31st March 2022
Assets Liabilities Assets Liabilities Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- ------------ --------- ------------ -------- ------------
Level 1 203,091 - 339,381 - 229,912 -
---------------------------- --------- ------------ --------- ------------ -------- ------------
Total value of instruments 203,091 - 339,381 - 229,912 -
---------------------------- --------- ------------ --------- ------------ -------- ------------
JPMORGAN FUNDS LIMITED
23rd December 2022
For further information, please contact:
Divya Amin
For and on behalf of
JPMorgan Funds Limited
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.
ENDS
A copy of the half year 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 will also shortly be available on the Company's
website at www.jpmjapansmallercompanies.co.uk where up to date
information on the Company, including daily NAV and share prices,
factsheets and portfolio information can also be found.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR BLBDBXUDDGDX
(END) Dow Jones Newswires
November 24, 2022 02:00 ET (07:00 GMT)
Jpmorgan Japan Smaller C... (LSE:JPS)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
Jpmorgan Japan Smaller C... (LSE:JPS)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024