Half-year Report

JPMorgan American IT PLC

15 August 2024

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN AMERICAN INVESTMENT TRUST PLC

HALF YEAR REPORT & FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30TH JUNE 2024

Legal Entity Identifier: 549300QNAI4XRPEB4G65

Information disclosed in accordance with the DTR 4.2

CHAIR'S STATEMENT

I became Chair of the Company following the conclusion of the AGM in May 2024, having joined the Board in 2017. I took over the chairmanship from Dr Kevin Carter who had been a Director of the Company since 2014 and Chair since 2017. I would like to take this opportunity on behalf of the Board to thank Kevin for his leadership and dedication during his tenure, first as a Director, and then as Chair of the Company.

Performance

The first six months of 2024 remained positive for the US market. Despite some continuing economic and political uncertainty, US equities extended their streak of new all-time highs, buoyed by hopes of a soft economic landing, a favourable prognosis for corporate earnings and further gains in the handful of stocks expected to benefit most from the rapid adoption of artificial intelligence (AI) tools. US interest rates peaked in August last year, and have remained steady in the year to date, ensuring further modest declines in US inflation towards the Federal Reserve's 2% target. This steady rate stance disappointed some investors who were hoping the Fed would begin to reduce rates in the first half of 2024, but it seems likely that the easing cycle will commence soon, especially now the labour market appears to be slowing.

Against this supportive background, the Company's total return on net assets per share in sterling terms over the period was +19.1%. The return to Ordinary shareholders per share in sterling terms was +16.7%, reflecting a small widening of the Company's discount to net asset value per share ('NAV') at which the shares traded over the period. The total return from the Company's benchmark, the S&P 500 Index in sterling terms, was +16.1%, resulting in outperformance of +3.0 percentage points, in NAV terms.

Since the Company changed its investment approach on 1st June 2019, it has outperformed the benchmark index by +22.4 percentage points in the subsequent 61 months through to the end of June 2024, providing a NAV total return to shareholders of +134.8% compared with a benchmark return of +112.4%. This represents an annualised outperformance of +2.3% since this change.

Share Price and Premium/Discount

The Company's shares have traded between a discount of 5.0% and a premium of 2.1% to NAV throughout the period under review, and the Company has continued to both buy back and issue shares in line with the Board's longstanding position of buying back shares when they stand at anything more than a small discount to NAV and issuing shares at a sufficient premium to NAV (to cover the costs of issuance). The Company bought into Treasury a total of 1,450,348 shares, or 0.8% of the Company's issued share capital during the six months to end of June 2024, excluding shares held in treasury (30th June 2023: 3.4%). These shares were purchased at an average discount to NAV of 3.4%, producing a modest accretion to the NAV for continuing shareholders. The Company issued a total of 850,000 shares from treasury during the same period at an average premium to NAV of 0.95%.

Dividends

The Company is declaring a dividend of 2.75 pence per share (2023: 2.5 pence) for the first six months of this year, which will be payable on 7th October 2024 to shareholders on the register on 30th August 2024. This represents a 10% increase on the constant 2.5 pence per share interim dividend paid since 2018.

While capital growth is the primary aim of the Company, the Board is aware that dividend receipts can be an important element of shareholder returns. The Board continues to monitor the net income position of the Company and in the absence of unforeseen circumstances, the Board aims to continue its progressive dividend policy.

Gearing

The Board has set the current tactical level of gearing at 5% of net assets, with a permitted range around this level of plus or minus 5%, meaning that currently gearing can vary between 0% and 10%. This tactical level of gearing remained unchanged throughout the past six months. Gearing stood at 2.8% at the beginning of 2024 and ended the six-month period at 4.3%.

The Board believes it is prudent for its gearing capacity to be funded from a mix of sources, including short- and longer-term tenors and fixed and floating rate borrowings. The Company has an £80 million revolving credit facility (with an additional £20 million accordion) with Mizuho Bank Ltd. It also has in issue a combined total of US$100 million unsecured loan notes issued via private placements, US$65 million of which are repayable in February 2031 and carry a fixed interest rate of 2.55% per annum. The remaining US$35 million of loan notes mature in October 2032 and carry a fixed interest rate of 2.32%.

Manager Succession

As previously announced, Jonathan Simon, the portfolio manager responsible for the value stocks in the Company's large cap portfolio, has given notice that he intends to retire in early 2025. Jonathan will continue with his existing responsibilities until his retirement. Following this announcement, the Board was able to visit the Manager's offices in New York and held a series of meetings with the portfolio managers and other senior members of the Manager's US equities investment team.

As announced on 7th August, following these meetings it has been agreed that Jack Caffrey will work alongside Jonathan on the value stocks in the large cap portfolio and Eric Ghernati will work alongside Felise Agranoff on the growth stocks in the large cap portfolio. The Board believes in the merit of additional portfolio manager resources and considers that the Company will benefit from four portfolio managers (two growth, two value) on the large cap portfolio as a key element of the Company's ongoing management structure.

Jack has 32 years' experience and is a portfolio manager on a focused dividend growth strategy as well as being a member of the Manager's Value team, which is supported by more than 20 career research analysts. Eric has 24 years' experience and is currently a portfolio manager on a technology fund, as well as having analytical responsibilities covering US technology stocks in the Manager's Growth team, which is supported by over 15 career research analysts.

Change of Registrar

Following a competitive tender process, the Company has transferred the management of its share register from Equiniti Financial Services Limited to Computershare Investor Services PLC ('Computershare') with effect from 24th June 2024.

A notification letter from Computershare was sent to all registered shareholders advising of this change. The letter included an invitation to shareholders to create an online account which will provide access to the details of their shareholdings and an opportunity to participate in the Company's Dividend Reinvestment Plan (DRIP).

Task Force on Climate-related Financial Disclosures (TCFD)

As a regulatory requirement, JPMorgan Asset Management (JPMAM) published its UK Task Force on Climate-related Financial Disclosures ('TCFD') Report for the Company in respect of the year ended 31st December 2023 on 30th June 2024. The report discloses estimates of the Company's portfolio climate-related risks and opportunities according to the Financial Conduct Authority (FCA) Environmental, Social and Governance (ESG) Sourcebook and the Task Force on Climate-related Disclosures (TCFD). The report is available on the Company's website under the ESG documents section: https://am.jpmorgan.com/content/dam/jpm-am-aem/emea/regional/en/regulatory/esg-information/jpm-american-investment-trust-plc-combined-fund-tcfd-report.pdf

Board

As mentioned in the Company's 2023 Annual Report, Mr Colin Moore joined the Board from 1st February 2024 and Dr Kevin Carter, the previous Chair, retired from the Board at the conclusion of the May 2024 Annual General Meeting. Ms Pui Kei Yuen became the Chair of the Risk Committee following my appointment as Chair of the Board.

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://web.gim.jpmorgan.com/emea_investment_trust_subscription/welcome?targetFund=JAM

Outlook

The Board shares the Manager's positive assessment of the outlook for US equities, and your Company, over the near-term, and beyond. November's US Presidential election may spark some market jitters, due to uncertainty regarding the winner's domestic political priorities and their stance on various geopolitical situations, but the economy appears to be on a sound footing and should benefit from interest rate cuts later this year and next.

The Company's long-term performance track record attests to the Manager's skill at negotiating the unusual, challenging and varied market conditions that have confronted investors in recent years. The Board welcomes the Manager's ongoing efforts to identify the most attractive investment opportunities on offer in the US and other North American markets, and remains confident in the Manager's ability to continue delivering capital growth and outperformance for shareholders over the medium term.

Robert Talbut

Chair                                                                                                                                          

INVESTMENT MANAGER'S REPORT

Market Review

2023 was all about 'expect the unexpected': the US economy avoided recession; inflation was tamed; interest rates peaked and looked set to decline soon; and a flare-up in the banking sector proved to be just that, and no more, despite fears of widespread global contagion. US equity markets therefore had good reason to start this year in a positive mood, and continuing optimism around a 'soft landing' propelled markets to an all-time high over the first half of the year. The S&P 500 advanced 15% in US dollar terms and 16% in sterling terms in the six months to 30th June 2024. This surge was fuelled by a solid earnings outlook and advances in the development of artificial intelligence (AI). However, the market is deeply polarised, as the rally so far was driven by the so-called 'Magnificent 7' stocks considered to be the major beneficiaries of the AI revolution. Together, gains in these seven stocks were responsible for over 60% of the index's returns over the period.

The other big surprise was the resilience of investment spending in the face of higher interest rates and a credit crunch exacerbated by last year's mini banking crisis. This resilience largely reflected healthy corporate balance sheets, federal government incentives and a surge in demand for AI-related technology.

However, labour market conditions are beginning to moderate. The unemployment rate edged up to 4% in May 2024, the highest since January 2022. Still, the unemployment rate has now remained near or below 4% for two and a half years, the longest such stretch since the late 1960s. Over that stretch, the economy has created over 9.2 million new jobs and somehow managed to find the workers to fill them all.

The best performing sectors of the S&P 500 so far this year have been information technology (IT), communication services and energy, each of which rallied between 11% to 28% over the review period. Utilities, which was one of the worst performing sectors in 2023, saw a change in its narrative in the first half of this year, due to growing demand for electricity, which is needed to power data centres and AI programs. The worst performing sectors during the period were real estate, materials, and consumer discretionary, where returns ranged between -2% to 6%.

Large cap stocks, as represented by the S&P 500 Index, returned 15% (in US dollar terms), as mentioned above, outperforming the small cap Russell 2000 Index, which returned 2%. As in 2023, growth stocks dominated value names, as the Russell 3000 Growth Index rallied 20%, while the Russell 3000 Value Index returned 6%.

Performance attribution

For the six months ended 30th June 2024

	%	%
Contributions to total returns
Net asset value (debt at fair value) total return
in sterling termsAPM		19.1
Benchmark total return (in sterling terms)		16.1
Excess return		3.0
Combined Portfolio return in US dollar terms1	18.3
Benchmark total return in US dollar terms	15.2
Combined Portfolio relative return in US dollar terms	3.1
Large & Small Cap Portfolio contribution2:
Large Cap Portfolio in US dollar terms	3.8
Small Cap Portfolio in US dollar terms	-0.7
Combined Portfolio relative return in US dollar terms	3.1
Contributions to return
Equity portfolio (ex-cash and gearing) in US dollar terms	2.5
Cash and gearing impact in US dollar terms3	0.6
Combined Portfolio relative return in US dollar terms	3.1
Effect of foreign currency translation4		0.0
Combined Portfolio relative return in sterling terms		3.1
Management fee and other expenses5		-0.2
Finance costs5		-0.1
Share buybacks and issuances6		0.0
Impact of fair valuation of debt7		0.0
Technical differences8		0.2
Total excess		3.0

Source: J.P. Morgan/Morningstar.

All figures are on a total return basis. Performance attribution analyses how the Company achieved its recorded performance relative to its benchmark.

¹            The aggregated returns of both the Large Cap and Small Cap portfolios.

²            The split of returns by portfolio, relative to the benchmark. This has been calculated using the average weighting of the Large Cap and Small Cap portfolios over the year.

³            Cash and gearing - measures the impact on returns of the principle amount of borrowings or cash balances on the Company's relative performance.

⁴            Effect of foreign currency translation - measures the impact of currency exposure differences between the Company's portfolio and its benchmark.

⁵            Management fee, other expenses and finance costs - the payment of fees, expenses and finance costs (interest paid on borrowings) reduces the level of total assets, and therefore has a negative effect on relative performance.

⁶            Share buybacks and issuance - measures the enhancement to net asset value per share of buying back the Company's shares for cancellation at a price which is less than the Company's net asset value per share. Share issuances will increase the net asset value of the Company as they are issued at a price above the net asset value.

⁷            The impact of fair valuation includes the effect of valuing the combined US$100m private placements at fair value.

⁸            A portion of the technical differences arise as a result of rounding to 1 decimal place of the individual line items shown in the table.

^APM        Alternative Performance Measure ('APM').

Performance and overall asset allocation

The Company's net asset value rose 19.1% on a total return basis in the first half of 2024, significantly outpacing the 16.1% return of the S&P 500 Index. The large cap portion of the portfolio, which, at over 94% of the Company's assets is its biggest allocation, added the most value over the period. Gearing was also slightly additive given the market's rally. The Company's small cap allocation, which averaged approximately 5.7% over the period, modestly detracted from relative returns.

Large Cap Portfolio

The outperformance by the large cap portion of the portfolio over the review period was the result of strong stock selection.

Within the IT sector, an overweight position in NVIDIA, the leading producer of the advanced semiconductors required by AI processes, and a lack of exposure to Intel, which also makes semiconductors and related components, proved beneficial. During the six-month period, NVIDIA's shares delivered a 150% return, as the company remained an outsized beneficiary of rapidly accelerating AI infrastructure demand. We believe its addressable market will grow exponentially in the coming five to ten years, and the company's market leadership position suggests it is well-placed to meet this demand. Intel has been the long-term leader of the semiconductor industry, but it has been outpaced by NVIDIA and other names during the AI rally. Intel had disclosed widening losses and sales declines for its foundry business, which leave us comfortable with our decision not to hold this stock.

The largest contributor to performance was social networking and advertising company Meta Platforms. The stock rallied after the company reported higher revenues due to improved customer engagements with Instagram, which benefited from AI utilisation.

Portfolio holdings that detracted from performance during the review period included the US's pre-eminent owner, operator and developer of shopping centres, Regency Centers. Concerns around tenant creditworthiness and slower lease commencements have negatively impacted the entire real estate sector. We continue to believe grocery-anchored shopping centres like Regency Centers will hold up relatively well, and we therefore remain comfortable with our holding. Another real estate company which detracted from performance was Public Storage. This company is one of the largest US players in the self-storage market. It did well during the pandemic as people moved out of big cities and rented space to store their belongings during their absence. However, demand has subsequently declined as this trend reversed in the post-pandemic period. We like the stock, due to its strong balance sheet, and looking at the combination of scale as well as cost of capital advantage.

The performance of our overweight position in transportation and logistics company J.B. Hunt Transport Services proved lacklustre over the past six months. This was due to a drop in volumes in J.B. Hunt's truck-trail intermodal business, which accounts for a large part of the company's revenue. At the same time, J.B. Hunt is increasing capital spending to support future growth. However, we consider these headwinds to be cyclical and remain confident about the company's longer-term prospects.

Portfolio Activity

During the first six months of the year, we added six new names and exited the same number.

One new acquisition was Morgan Stanley, a financial company offering institutional securities trading, investment management and other financial services through its subsidiaries. We like the company's exposure to the wealth management space, which tends to generate relatively stable revenues, in comparison to investment banking, which is more cyclical and volatile. We initiated this position based on the stock's attractive valuation. This acquisition was funded by the sale of Tesla, a leading electric vehicle producer, as the company experienced a dip in US demand and is facing increased competition from Chinese and European players. Tesla has also been facing other challenges - a slowdown in output at its Chinese factory and the Gulf shipping crisis are expected to adversely impact deliveries.

We initiated a new position in Kenvue, which offers a variety of self-care, beauty and essential health products. This company was formerly the consumer healthcare division of Johnson & Johnson. We believe its recent separation from Johnson & Johnson should allow management to focus on opportunities within the consumer health sector, without the constraints previously imposed by its parent company's umbrella. In particular we see scope for Kenvue to introduce innovative, premium products to capitalise on broader health and wellness trends.

Within healthcare, we added Thermo Fisher Scientific and exited Bristol-Myers Squibb. Thermo Fisher Scientific is a diversified life science tools and diagnostics company with a strong portfolio of assets. The company has four business segments, each of which is a market leader in its respective field: 1) Life Science Solutions, 2) Specialty Diagnostics, 3) Analytical Instruments, and 4) Lab Products and Biopharma Services. We like its broad portfolio of high-quality analytical instruments, lab products and services, and the solutions it offers in a variety of life science and diagnostic areas. The company also has a long-term track record of differentiated growth and market outperformance, thanks to the breadth of its products and services, which makes it a one-stop solution for customers. We feel comfortable with both the resilience and attractiveness of the life sciences industry and this company's capacity to maintain its market leadership over the long-term.

Bristol-Myers Squibb is a specialty biopharmaceutical company engaged in the discovery, marketing, distribution and sale of medicines and related medical products. The company needs to offset major patent expirations over the next several years by finding alternative sources of revenue. However, its share price has underperformed due to the disappointing pace of growth in its new product portfolio, so we decided to switch into more attractive risk/reward opportunities.

AutoZone is a retailer of aftermarket automotive parts and accessories. We exited the company on concerns over diminishing demand within the auto part industry, as new car sales accelerate, and inflation subsides. 

Another name we initiated this year was multinational fast food chain McDonald's. The company is well positioned in the current higher cost environment, as the franchisee model gives it low direct cost exposure, while delivering the benefit of higher royalties from pricing taken by operators. McDonald's is an iconic brand and has a very defensive model. It is highly franchised, it owns the real estate on which these franchises operate, it is modestly leveraged, with low cyclicality and low risk from rising interest rates. This defensive model, combined with increasing global unit growth, should produce consistent returns over the long term. During the same month, we exited United Parcel Service, a multinational shipping and supply chain company which has been experiencing a decline in shipping volumes in domestic and international markets.

One of our latest acquisitions is Honeywell International. This is a well-run, well-positioned, diversified industrial company with consistent growth across a range of market conditions. We like the fact that the company is levered to the recovery in the aerospace industry. Additionally, the company has exposure to the transition to low carbon energy sources. This purchase was funded by the sale of Weyerhaeuser, a REIT specialising in timberlands. REITs have underperformed so far this year, due to persistently high interest rates, and we opted to close this position in favour of opportunities in which we have higher conviction.

In the consumer discretionary sector, we bought TJX and exited its competitor, Ross Stores, due to TJX's better risk/reward profile. TJX is one of the leading US off-price retailers of apparel and home fashions. It is a scale player with a disruptive model in a rapidly consolidating market. The company's product range is large and diversified. It is differentiated not only by its buying power and the scale of its outlets, but also by its broad demographic reach, given that it owns multiple brands (Marshalls, TJX Maxx, Home Goods, International), and is investing in its ecommerce offerings.

These recent acquisitions and disposals have not had a significant impact on the portfolio's structure. The Information technology and Financials sectors remain the largest sectoral allocations, which together represent approximately 45% of the overall large cap allocation, consistent with positioning at the start of the year. Financials remain the largest overweight in the portfolio relative to the benchmark, although the allocation is slightly lower than at the start of the year, as we have been trimming modestly to manage position sizes, given that imminent interest rate cuts are likely to have an adverse impact on this sector. Conversely, we remain underweight information technology, but have been adding to our allocation based on our view that this sector is still attractive. The portfolio also remains underweight industrials, communication services and consumer staples, as we continue to find names with better risk/reward profiles in other sectors.

The large cap portfolio is divided between value and growth stocks, with the allocation allowed to vary between 60:40 and 40:60. At the end of the review period, value stocks comprised around 43% of the large cap portfolio, not much lower than the 45% value allocation at the start of the year. The allocation to growth stocks has increased accordingly.

The table below shows that the large cap portfolio is trading at a 24% discount to the market on a free cash flow basis, which confirms that we are still not paying a premium for good cash flow. Additionally, the portfolio is expected to deliver earnings growth of around 18% for the next 12 months, slightly ahead of the market. While earnings may come under pressure over the next year, and may not deliver the forecast double digit growth, it is comforting to have the valuation cushion provided by our holdings, relative to the market.

Characteristics	Large Cap Portfolio	S&P 500
Weighted Average Market Cap	US$ 918.9bn	US$ 943.0bn
Price/Earnings, 12-month forward1	21.5x	20.8x
Price/Free Cash Flow, last 12-months	18.5x	24.3x
EPS Growth, 12-month forward	18.3%	17.3%
Return on Equity, last 12-months	23.9%	24.8%
Predicted Beta	1.01	-
Predicted Tracking Error	2.38	-
Active Share	60%	-
Number of holdings	40	500

Source: FactSet, Barra, J.P. Morgan Asset Management. Data as of 30th June 2024.

¹     Including negatives.

Small Cap portfolio

The Small Cap portfolio generated a positive return over the period but lagged the S&P 500 as the market preference was for stocks higher up the market cap spectrum. The overall allocation to the small cap portfolio was maintained at approximately 6% during the first six months of the year, broadly unchanged from the start of the year.

Outlook

There will always be some risks and uncertainties for investors to consider, and for us, at this moment, one such risk is the labour market, which we expect will continue to slow. While the overall employment market is still experiencing excess job openings, in some key sectors, including construction and retail, job openings are now below their five-year averages. If this trend broadens out, it may create a headwind for consumer spending growth over the remainder of this year and beyond. Investors are also watching developments in the US presidential race, which may increase uncertainty regarding the outcome. The result could possibly aggravate existing geopolitical tensions between the US and China, while also complicating America's relations with its western allies. Any such outcomes could increase market volatility both in the run up to the November vote, and in its aftermath.

However, with economic growth solid, unemployment low, most of the journey back to 2% inflation completed, and rates set to decline, the US economy should continue to provide a rising tide to support most investment boats for the rest of this year and into 2025.

Jonathan Simon

Felise Agranoff

Portfolio Managers                                                                                                                    

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 fall into the following broad categories: Investment Process and Strategy, Loss of Investment Team or Investment Manager, Technological Change and or Disruption, ESG Requirements From investors, Market Performance, Share Price Relative to Net Asset Value, Operational and Cyber-crime, Accounting, Legal and Regulatory Compliance, Legislative and Regulatory Change, Widespread Social and Economic Disruption, Climate Change, Geopolitical and Artificial Intelligence (AI). The Board has recently reviewed these risks and concluded that the emerging risk of Threat to Liberal Democracies should now be considered within the Geopolitical principal risk. In addition, a State-backed Cyber Security Attack has been identified as an emerging risk. The Board believes that a State-backed Cyber Security Attack could result in widespread disruption to the financial system and markets leading to financial loss, loss of confidential data, or disruption to the Company's operations and its service providers.

Information on each of these risks, apart from the new emerging risk, is given in the Strategic Report within the Annual Report and Financial Statements for the year ended 31st December 2023. In the view of the Board, these principal risks and uncertainties are as much applicable to the remaining six months of the financial year as they were to the six months under review.

Related Parties Transactions

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

Going Concern

In accordance with The Financial Reporting Council's guidance on going concern and liquidity risk, the Directors have undertaken a rigorous review of the Company's ability to continue as a going concern. The Board has, in particular, considered the impact of market volatility from the ongoing conflicts between Ukraine and Russia and in the Middle East, and does not believe the Company's going concern status is affected. The Company's assets, the vast majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly under all stress test scenarios reviewed by the Board. Gearing levels and compliance with borrowing covenants are reviewed by the Board on a regular basis. Furthermore, the Directors are satisfied that the Company's key third party service providers have in place appropriate business continuity plans to ensure their operational resilience and the performance of these service providers is reviewed at least annually by the Management Engagement Committee.

Accordingly, having assessed the principal and emerging risks and other matters, the Directors believe 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.

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 year 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 30th June 2024 as required by the UK Listing Authority Disclosure Guidance and Transparency Rules 4.2.4R; and

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

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

•        select suitable accounting policies and then apply them consistently;

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

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

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

and the Directors confirm that they have done so.

For and on behalf of the Board

Robert Talbut

Chair                                                                                                                                               

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

	(Unaudited)			(Unaudited)			(Audited)
	Six months ended			Six months ended			Year ended
	30th June 2024			30th June 2023			31st December 2023
	Revenue	Capital	Total	Revenue	Capital1	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held
at fair value through
profit or loss	-	290,667	290,667	-	183,232	183,232	-	304,636	304,636
Net foreign currency
(losses)/gains	-	(798)	(798)	-	3,908	3,908	-	5,078	5,078
Income from investments	11,281	-	11,281	7,867	365	8,232	16,519	1,214	17,733
Interest receivable and similar
income	750	-	750	672	-	672	1,654	-	1,654
Gross return	12,031	289,869	301,900	8,539	187,505	196,044	18,173	310,928	329,101
Management fee	(499)	(1,995)	(2,494)	(412)	(1,649)	(2,061)	(852)	(3,409)	(4,261)
Other administrative expenses	(619)	-	(619)	(554)	-	(554)	(1,053)	-	(1,053)
Net return before finance
costs and taxation	10,913	287,874	298,787	7,573	185,856	193,429	16,268	307,519	323,787
Finance costs	(236)	(939)	(1,175)	(371)	(1,482)	(1,853)	(627)	(2,506)	(3,133)
Net return before taxation	10,677	286,935	297,612	7,202	184,374	191,576	15,641	305,013	320,654
Taxation	(1,212)	(70)	(1,282)	(468)	(528)	(996)	(1,429)	(909)	(2,338)
Net return after taxation	9,465	286,865	296,330	6,734	183,846	190,580	14,212	304,104	318,316
Return per share (note 3)	5.18p	156.93p	162.11p	3.64p	99.31p	102.95p	7.73p	165.41p	173.14p

¹     For the six months ended 30th June 2023, income in respect of capital dividends from Real Estate Investment Trusts (REITs), has been reclassified to gains on investments held at fair value through profit or loss. This is similar to the presentation adopted in the 31st December 2023 Annual Financial Report. There is no change to the return per share or net asset value per share as a result of this change.

The interim dividend declared in respect of the six months ended 30th June 2024 amounts to 2.75p (2023: 2.5p) per share, costing £5,003,000 (2023: £4,565,000).

All revenue and capital items in the above statement derive from continuing operations. The return/(loss) per share represents the profit/(loss) per share for the period and also the total comprehensive income per share.

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.

CONDENSED STATEMENT OF CHANGES IN EQUITY

	Called up		Capital
	share	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserves1	reserve1	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Six months ended 30th June 2024 (Unaudited)
At 31st December 2023	14,082	151,850	8,151	1,358,329	31,587	1,563,999
Repurchase of shares into Treasury	-	-	-	(13,910)	-	(13,910)
Shares re-issued from Treasury	-	4,443	-	3,715	-	8,158
Proceeds from share forfeiture2	-	-	-	731	-	731
Net return	-	-	-	286,865	9,465	296,330
Dividends paid in the period (note 4)	-	-	-	-	(9,595)	(9,595)
Refund of unclaimed dividends2 (note 4)	-	-	-	-	71	71
At 30th June 2024	14,082	156,293	8,151	1,635,730	31,528	1,845,784
Six months ended 30th June 2023 (Unaudited)
At 31st December 2022	14,082	151,850	8,151	1,099,333	30,667	1,304,083
Repurchase of shares into Treasury	-	-	-	(44,079)	-	(44,079)
Net return	-	-	-	183,846	6,734	190,580
Dividends paid in the period (note 4)	-	-	-	-	(8,727)	(8,727)
At 30th June 2023	14,082	151,850	8,151	1,239,100	28,674	1,441,857
Year ended 31st December 2023 (Audited)
At 31st December 2022	14,082	151,850	8,151	1,099,333	30,667	1,304,083
Repurchase of shares into Treasury	-	-	-	(45,108)	-	(45,108)
Net return	-	-	-	304,104	14,212	318,316
Dividends paid in the year (note 4)	-	-	-	-	(13,292)	(13,292)
At 31st December 2023	14,082	151,850	8,151	1,358,329	31,587	1,563,999

¹     This reserve forms the distributable reserve of the Company and may be used to fund distributions to investors.

²     During the period the Company undertook an Asset Reunification Program for its shareholders. In accordance with the Company's Articles of Association, shares that could not be traced to shareholders over 12 years old were forfeited. These shares were sold in the open market and the proceeds returned to the Company. In addition, unclaimed dividends over 12 years old were also returned to the Company.

CONDENSED STATEMENT OF FINANCIAL POSITION

	(Unaudited)	(Unaudited)	(Audited)
	At	At	At
	30th June	30th June	31st December
	2024	2023	2023
	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	1,925,506	1,515,890	1,608,263
Current assets
Debtors	4,245	729	789
Cash and cash equivalents	15,435	34,025	34,207
	19,680	34,754	34,996
Current liabilities
Creditors: Amounts falling due within one year	(4,760)	(30,458)	(1,121)
Net current assets	14,920	4,296	33,875
Total assets less current liabilities	1,940,426	1,520,186	1,642,138
Creditors: amounts falling due after more than one year	(94,642)	(78,329)	(78,139)
Net assets	1,845,784	1,441,857	1,563,999
Capital and reserves
Called up share capital	14,082	14,082	14,082
Share premium	156,293	151,850	151,850
Capital redemption reserve	8,151	8,151	8,151
Capital reserves	1,635,730	1,239,100	1,358,329
Revenue reserve	31,528	28,674	31,587
Total shareholders' funds	1,845,784	1,441,857	1,563,999
Net asset value per share (note 5)	1,014.2p	789.0p	856.5p

CONDENSED STATEMENT OF CASH FLOWS

	(Unaudited)	(Unaudited)	(Audited)
	Six months	Six months	Year
	ended	ended	ended
	30th June	30th June	31st December
	2024	2023	2023
	£'000	£'000	£'000
Cash flows from operating activities
Net return before finance costs and taxation	298,787	193,429	323,787
Adjustment for:
Net gains on investments held at fair value through
profit or loss	(290,667)	(183,232)	(304,636)
Net foreign currency exchange losses/(gains)	798	(3,908)	(5,078)
Dividend income	(11,281)	(8,232)	(17,733)
Interest income	(750)	(672)	(1,654)
Realised foreign currency exchange losses on transactions	(337)	(915)	(756)
Realised foreign currency exchange losses on
JPMorgan USD Liquidity Fund	(335)	(718)	(596)
Increase in accrued income and other debtors	-	(5)	(14)
(Decrease)/increase in accrued expenses	(11)	170	214
Net cash outflow from operations before dividends and interest	(3,796)	(4,083)	(6,466)
Dividends received	9,704	6,137	14,423
Interest received	826	803	1,656
Overseas withholding tax recovered	259	1,183	1,182
Net cash inflow from operating activities	6,993	4,040	10,795
Purchases of investments	(321,362)	(244,076)	(625,714)
Sales of investments	293,680	293,007	703,254
Settlement of foreign currency contracts	-	4	-
Net cash (outflow)/inflow from investing activities	(27,682)	48,935	77,540
Dividends paid	(9,595)	(8,727)	(13,292)
Shares issued from Treasury	8,158	-	-
Repurchase of shares into Treasury	(12,622)	(42,788)	(45,108)
Proceeds from share forfeiture	731	-	-
Refund of unclaimed dividends (note 4)	71	-	-
Repayment of bank loan	-	-	(26,929)
Drawdown of bank loan	15,790	-	-
Loan interest paid	(208)	(732)	(1,269)
Private placement interest paid	(975)	(1,100)	(2,007)
Net cash inflow/(outflow) from financing activities	1,350	(53,347)	(88,605)
Decrease in cash and cash equivalents	(19,339)	(372)	(270)
Cash and cash equivalents at start of period/year	34,207	34,884	34,884
Foreign currency exchange movements	567	(487)	(407)
Cash and cash equivalents at end of period/year	15,435	34,025	34,207
Cash and cash equivalents consist of:
Cash and short term deposits	12	168	280
Cash held in JPMorgan USD Liquidity Fund	15,423	33,857	33,927
Total	15,435	34,025	34,207

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30th June 2024

1.  Financial statements

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

The figures and financial information for the year ended 31st December 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, 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 condensed financial statements have been prepared in accordance with the Companies Act 2006, FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' of the United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the revised 'SORP') issued by the Association of Investment Companies in July 2022.

FRS 104, 'Interim Financial Reporting', issued by the Financial Reporting Council ('FRC') in March 2015 has been applied in preparing this condensed set of financial statements for the six months ended 30th June 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 December 2023.

3.  Return per share

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	30th June	30th June	31st December
	2024	2023	2023
	£'000	£'000	£'000
Return per share is based on the following:
Revenue return	9,465	6,734	14,212
Capital return	286,865	183,846	304,104
Total return	296,330	190,580	318,316
Weighted average number of shares in issue	182,799,838	185,119,371	183,852,137
Revenue return per share	5.18p	3.64p	7.73p
Capital return per share	156.93p	99.31p	165.41p
Total return per share	162.11p	102.95p	173.14p

4.  Dividends paid

	(Unaudited)		(Unaudited)		(Audited)
	Six months ended		Six months ended		Year ended
	30th June 2024		30th June 2023		31st December 2023
	Pence	£'000	Pence	£'000	Pence	£'000
Dividend paid
Final dividend in respect of prior year	5.25	9,595	4.75	8,727	4.75	8,727
Interim dividend in respect of the six months	-	-	-	-	2.50	4,565
Total dividends paid	5.25	9,595	4.75	8,727	7.25	13,292
Refund of unclaimed dividends over 12 years old	-	(71)	-	-	-	-
Net dividends paid	5.25	9,524	4.75	8,727	7.25	13,292

All the dividends paid in the period/year have been funded from the Revenue Reserve.

An interim dividend of 2.75p (2023:2.5p) has been declared in respect of the six months ended 30th June 2024, amounting to £5,003,000 (2023: £4,565,000).

5. Net asset value per share

The net asset value per Ordinary share and the net asset value attributable to the Ordinary shares at the period/year end are shown below. These were calculated using 182,002,868 (June 2023: 182,736,008; December 2023: 182,603,216) Ordinary shares in issue at the period/year end (excluding Treasury shares).

	(Unaudited)		(Unaudited)		(Audited)
	Six months ended		Six months ended		Year ended
	30th June 2024		30th June 2023		31st December 2023
	Net asset value		Net asset value		Net asset value
	attributable		attributable		attributable
	£'000	pence	£'000	pence	£'000	pence
Net asset value - debt at par	1,845,784	1,014.2	1,441,857	789.0	1,563,999	856.5
Add: amortised cost of US$65 million 2.55% Private
Placement Feb 2031	51,174	28.1	50,848	27.8	50,727	27.8
Less: fair value of US$65 million 2.55% Private
Placement Feb 2031	(45,125)	(24.8)	(43,844)	(24.0)	(45,636)	(25.0)
Add: amortised cost of US$35 million 2.32% Private
Placement Oct 2032	27,646	15.2	27,481	15.0	27,412	15.0
Less: fair value of US$35 million 2.32% Private
Placement Oct 2032	(22,903)	(12.6)	(22,466)	(12.3)	(23,328)	(12.8)
Net asset value - debt at fair value	1,856,576	1,020.1	1,453,876	795.5	1,573,174	861.5

6.  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 June 2024		30th June 2023		31st December 2023
	Assets	Liabilities	Assets	Liabilities	Assets	Liabilities
	£'000	£'000	£'000	£'000	£'000	£'000
Level 1	1,925,506	-	1,515,890	-	1,608,263	-
Total value of investments	1,925,506	-	1,515,890	-	1,608,263	-

7.  Analysis of change in net debt

	As at		Other	As at
	31st December		non-cash	30th June
	2023	Cash flows	charges	2024
	£'000	£'000	£'000	£'000
Cash and cash equivalents
Cash and short term deposits	280	(268)	-	12
Cash held in JPMorgan USD Liquidity Fund	33,927	(19,071)	567	15,423
	34,207	(19,339)	567	15,435
Borrowings
Debt due after one year	(78,139)	(15,790)	(713)	(94,642)
	(78,139)	(15,790)	(713)	(94,642)
Net debt	(43,932)	(35,129)	(146)	(79,207)

Other non-cash charges relate to an amortisation adjustment on borrowings and foreign currency exchange gains/(losses).

14th August 2024

For further information, please contact:

Priyanka Vijay Anand

For and on behalf of

JPMorgan Funds Limited, Company Secretary

0800 204 020

ENDS

A copy of the Half Year Report has been 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.jpmamerican.co.uk  where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

 

END