Half-year Report

RNS Number : 1222U

JPMorgan Russian Securities PLC

28 July 2022

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN RUSSIAN SECURITIES PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED
30TH APRIL 2022

Legal Entity Identifier:  549300II3MHI98ZLVH37

Information disclosed in accordance with DTR 4.2.2

CHAIRMAN'S STATEMENT

Overview and Performance

Performance in the period can be divided into two parts. Performance from 1st November 2021 to 23rd February 2022 was satisfactory, but that all changes thereafter and it saddens me to report that the tragic events in Ukraine since Russia's military invasion commenced on 24th February 2022 and imposition of strict economic sanctions on Russia and Belarus that followed have drastically reduced the valuation of the Company's assets in this six-month reporting period to 30th April 2022.

The sanctions and restrictions that followed the invasion were wide ranging and had a very sharp negative effect on the Company and international markets. We have detailed the main changes that have happened since the invasion in a schedule of Frequently Asked Questions, which can be found on page 25 of the Company's Half Year Report and Financial Statements. In summary, the changes have included the closure of the Moscow Exchange (MOEX) to trading by overseas investors, unavailability of prices on RDXUSD (Russian Depositary Index USD) and prices of American Depositary Receipts (ADR) and Global Depositary Receipts (GDR), the prohibition of dividend payments by Russian companies to western shareholders and cessation of reporting of the Company's benchmark data by western registered news services.

These restrictions have had a severe negative impact on the value of the Company's portfolio because as required under the terms of the Company's Investment Objective, almost all of the Company's portfolio consisted of Russian equities. Notwithstanding the values at which stocks are traded on the local market without access to the Russian equity market following the invasion of Ukraine, it has been necessary to fair value Russian company stocks in the Company's portfolio, resulting in a massive reduction in the Company's net asset value. The Company's net asset value has continued to be published daily and as at 30th April 2022, it was 47.1 pence per share, a decline of 95.2% in this six month reporting period. Since the period end the value has fallen further and as at 26th July 2022, was 45.4 pence per share. The impact of Russia's invasion of Ukraine have resulted in some events included in the Company's list of Principal Risks becoming realities. In light of this the Board has reviewed its Principal Risks and further details can be seen on page 21 of the Company's Half Year Report and Financial Statements.

The Company's shares have continued to trade on the London Stock Exchange throughout the reporting period, although the precipitous fall in its share value led it to leaving the FTSE All Share Index on 17th June 2022. The Company's share price as at 30th April 2022 was 107.5 pence, a decline of 87.6% in the six month period to 30th April 2022. As at 26th July 2022 the share price was 69.5 pence. We have also seen significant changes in our share register. As some institutions reduced their holdings following the invasion there was significant demand from individuals to buy shares and consequently institutional holdings have fallen from approximately 70% to 36% as at 30th April 2022.  

Proposal to Amend the Company's Investment Objective and Policies

In response to the current closure of the Russian market, the Directors have considered options to preserve value for shareholders. Therefore, the Board is in the process of requesting authorisation from the Financial Conduct Authority (FCA) to amend the Company's investment objective and policies to permit investments in Emerging Europe (including Russia), the Middle East and Africa. If FCA approval is provided, the Board will propose a resolution at a forthcoming General Meeting of shareholders. Details of the General Meeting will be detailed in a notice included in a document that will be sent to shareholders, assuming receipt of FCA approval. The Board will recommend that shareholders vote in favour of the resolution. The change in the Company's investment objective and policies will be detailed in the document referred to above that will be sent to shareholders. Subject to approval of the resolution by shareholders, the intention is that the proposed change in the Company's investment objective and policies to permit such investments will take effect following the General Meeting expected to be held as soon as possible in the autumn of 2022.

Revenue, Earnings and Dividend

The prohibition on receipt by foreign investors of dividends from Russian companies, introduced soon after the invasion, will understandably reduce the Company's revenue for the year significantly. However, revenue for the six month period to 30th April 2021 after taxation was £4,277,000 (30th April 2021: £2,399,000) and the return per share, calculated on the basis of the average number of shares in issue was 10.56 pence (30th April 2021: 5.58 pence) per share, reflecting the healthy dividend receipts before Russia's invasion of Ukraine.

The Company paid its first interim dividend of 15 pence per share for the current financial year, which had been declared before Russia's invasion of Ukraine. No further dividends will be paid in the current circumstances. See above details of the reasons for the dramatic reduction in the Company's revenues.

Directors

During this six-month reporting period two of the Company's directors, Tamara Sakovska and Ashley Dunster resigned, following Russia's occupation of Ukraine. Tamara Sakovska is a Ukrainian citizen and felt she could no longer serve on the Board of a company investing in Russia. Ashley Dunster had a conflict of interest that meant he too felt he must step down. In line with the Company's succession plan, as announced on 4th October 2021, Gill Nott, the Company's former Chairman did not stand for reappointment at the Company's AGM on 4th March 2022. Prior to the date of Gill's departure, the Board had unanimously agreed that I would be appointed as the Company's Chairman immediately following the AGM. Dan Burgess became the Audit Committee Chair immediately following the Company's AGM on 4th March 2022. Dan Burgess was appointed as a Director of the Company on 4th January 2022 after a thorough selection process using the services of an independent third-party search agent.

The current intention is for the Board to continue with a complement of three directors during the current difficult period with no current plans for recruitment of additional directors.

Investment Management

Oleg Biryulyov and Habib Saikaly continue to be the Company's Investment Managers supported by JPMorgan Asset Management's Emerging Markets and Asia Pacific equities team (EMAP), which consists of 100+ investment professionals based in both the UK and overseas. The Company benefits greatly from the extensive experience of the investment management team that have many years of experience of investing in Russia and emerging markets through previous severe global market disruptions. The Board receives regular reports on the service levels of the Manager and its key service providers and the Board is satisfied with the current levels of service.

Outlook

If current levels of public concern in much of the West about the humanitarian crisis unfolding in Ukraine continues, many Western governments will be under pressure to permanently and significantly reduce their reliance on Russian energy supplies. This, together with the continuing exclusion of Russia from Western financial systems may destabilise and isolate Russia to such an extent that holding investments in the country becomes prohibited and/or unviable.

Although the outlook for the Company is uncertain, it is capable of continuing as a going concern for at least several years and it is the Board's hope that it will be possible to amend the Company's investment objective and policies as referred to above and help steer the Company through this difficult period and preserve as much value in the Company for shareholders as possible.

With much of the Company's portfolio effectively 'frozen' for the foreseeable future, this half year report will not include the usual report from the Investment Managers. It is intended that the schedule of Frequently Asked Questions included on page 25 of Company's Half Year Report and Financial Statements, as referred to above, will address many of the questions that shareholders may have. Updates on the Company's portfolio can be viewed via RNSs' released on the London stock Exchange and via the Company's website www.jpmrussian.com

Eric Sanderson

Chairman                                                                                                                                              27th July 2022

INTERIM MANAGEMENT REPORT

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

Principal Risks and Uncertainties

The Company is exposed to a variety of risks and uncertainties. The Board has undertaken an assessment and review of the principal risks facing the Company, together with a review of any new risks which may have arisen during the year. The Directors have considered the impact of the continued uncertainty on the Company's financial position and based on the information available to them at the date of this Report, have fair-value adjusted Russian securities in response to exchange closures and sanction activities as a result of the conflict in Ukraine. The Directors have concluded that no further adjustments are required to the accounts as at 30th April 2022. The principal risks and uncertainties faced by the Company fall into the following broad categories: investing in Russia; share price discount and Net Asset Value per share; investment underperformance and strategy; failure of investment process; loss of investment team and Manager; operational and cyber crime; board relationship and shareholders; political and economic regulatory and legal market and financial. Information on each of these areas is given in the Business Review within the Annual Report and Financial Statements for the year ended 31st October 2021. A review of risks conducted for this report concluded additional risks included unviable size of the Company, discount to share price, sanctions, Broker counter-parties, inability to trade stocks and inappropriate investment strategy. The Board is aware that due to the current situation in Russia and Ukraine, sanctions imposed by a number of jurisdictions have resulted in a downgrade in the country's credit rating, an immediate freeze of Russian assets, a decline in the value and liquidity of Russian securities, property or interests, and/or other adverse consequences. Sanctions could also result in Russia taking counter measures or other actions in response, which may further impair the value and liquidity of Russian securities.

Related Parties Transactions

During the first six months of the current financial year, except for the waiver of the management fee as referred to on page 26 of the Company's Half Year Report and Financial Statements, 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 operation existence for at least 12 months from the date of the approval of this half yearly financial report. In reaching that view, the Directors have considered the impact of the current sanctions regime introduced following Russia's invasion of Ukraine in February 2022 on the Company's financial and operational position. Absent the imposition of stricter sanctions and or regulatory restrictions that would prohibit the Company from holding investments in Russian stocks, the Board consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts.

Directors' Responsibilities

The Board of Directors confirms that, to the best of its knowledge:

(i)  the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with FRS 104 'Interim Financial Reporting' and gives a true and fair view of the state of affairs of the Company and of the assets/liabilities, financial position and net return/loss of the Company, as at 30th April 2021 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 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

Eric Sanderson

Chairman                                                                                                                                              27th July 2022

STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30TH APRIL 2022

	(Unaudited)			(Unaudited)			(Audited)
	Six months ended			Six months ended			Year ended
	30th April 2022			30th April 2021			31st October 2021
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments
held at fair value through
profit or loss	-	(359,285)	(359,285)	-	63,689	63,689	-	141,540	141,540
Net foreign currency
gains/(losses)	-	605	605	-	(273)	(273)	-	(444)	(444)
Income from investments	5,927	-	5,927	3,708	-	3,708	19,691	-	19,691
Interest receivable and
similar income	2	-	2	4	-	4	10	-	10
Gross return/(loss)	5,929	(358,680)	(352,751)	3,712	63,416	67,128	19,701	141,096	160,797
Management fee	(420)	(630)	(1,050)	(599)	(898)	(1,497)	(1,302)	(1,952)	(3,254)
Other administrative expenses	(346)	-	(346)	(365)	-	(365)	(815)	-	(815)
Net return/(loss) before
finance costs and taxation	5,163	(359,310)	(354,147)	2,748	62,518	65,266	17,584	139,144	156,728
Finance costs	-	-	-	(2)	-	(2)	(2)	-	(2)
Net return/(loss) before
taxation	5,163	(359,310)	(354,147)	2,746	62,518	65,264	17,582	139,144	156,726
Taxation	(886)	-	(886)	(347)	-	(347)	(2,552)	-	(2,552)
Net return/(loss) after
taxation	4,277	(359,310)	(355,033)	2,399	62,518	64,917	15,030	139,144	154,174
Return/(loss) per share (note 3)	10.56p	(886.70)p	(876.14)p	5.58p	145.55p	151.13p	35.53p	328.95p	364.48p

STATEMENT OF CHANGES IN EQUITY

	Called up	Capital
	share	redemption	Capital	Revenue
	capital	reserve	reserves1	reserve1	Total
	£'000	£'000	£'000	£'000	£'000
Six months ended 30th April 2022 (Unaudited)
At 31st October 2021	408	193	372,107	24,307	397,015
Repurchase and cancellation of the Company's own shares	(3)	3	(2,530)	-	(2,530)
Net (loss)/return	-	-	(359,310)	4,277	(355,033)
Dividend paid in the period (note 4)	-	-	-	(20,420)	(20,420)
At 30th April 2022	405	196	10,267	8,164	19,032
Six months ended 30th April 2021 (Unaudited)
At 31st October 2020	434	167	251,927	13,571	266,099
Repurchase and cancellation of the Company's own shares	(11)	11	(7,139)	-	(7,139)
Net return	-	-	62,518	2,399	64,917
Dividend paid in the period (note 4)	-	-	-	(4,299)	(4,299)
At 30th April 2021	423	178	307,306	11,671	319,578
Year ended 31st October 2021 (Audited)
At 31st October 2020	434	167	251,927	13,571	266,099
Repurchase and cancellation of the Company's own shares	(26)	26	(18,964)	-	(18,964)
Net return	-	-	139,144	15,030	154,174
Dividends paid in the year (note 4)	-	-	-	(4,294)	(4,294)
At 31st October 2021	408	193	372,107	24,307	397,015

1  These reserves form the distributable reserves of the Company and may be used to fund distributions of profits to investors.

STATEMENT OF FINANCIAL POSITION

AT 30TH APRIL 2022

	(Unaudited)	(Unaudited)	(Audited)
	30th April 2022	30th April 2021	31st October 2021
	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	15,897	311,668	385,822
Current assets
Debtors	38	5,734	716
Cash and cash equivalents	3,254	2,521	10,951
	3,292	8,255	11,667
Current liabilities
Creditors: amounts falling due within one year	(157)	(344)	(414)
Derivative financial liabilities	-	(1)	(60)
Net current assets	3,135	7,910	11,193
Total assets less current liabilities	19,032	319,578	397,015
Net assets	19,032	319,578	397,015
Capital and reserves
Called up share capital	405	423	408
Capital redemption reserve	196	178	193
Capital reserves	10,267	307,306	372,107
Revenue reserve	8,164	11,671	24,307
Total shareholders' funds	19,032	319,578	397,015
Net asset value per share (note 5)	47.1p	756.0p	973.6p

STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30TH APRIL 2022

	(Unaudited)	(Unaudited)	(Audited)
	30th April 2022	30th April 2021	31st October 2021
	£'000	£'000	£'000
Net cash outflow from operations before dividends
and interest	(1,008)	(2,130)	(4,543)
Dividends received	5,740	3,142	16,955
Interest received	2	6	11
Overseas tax recovered	-	16	66
Interest paid	-	(2)	(2)
Net cash inflow from operating activities	4,734	1,032	12,487
Purchases of investments	(17,449)	(86,518)	(151,554)
Sales of investments	28,039	95,315	168,990
Settlement of forward currency contracts	(164)	46	29
Net cash inflow from investing activities	10,426	8,843	17,465
Repurchase and cancellation of the Company's own shares	(2,678)	(7,130)	(18,986)
Dividends paid	(20,420)	(4,299)	(4,294)
Net cash outflow from financing activities	(23,098)	(11,429)	(23,280)
(Decrease)/increase in cash and cash equivalents	(7,938)	(1,554)	6,672
Cash and cash equivalents at start of period/year	10,951	4,129	4,129
Unrealised gains/(loss) on foreign currency cash and
cash equivalents	241	(54)	150
Cash and cash equivalents at end of period/year	3,254	2,521	10,951
(Decrease)/increase in cash and cash equivalents	(7,938)	(1,554)	6,672
Cash and cash equivalents consist of:
Cash and short term deposits	1,583	2,268	313
Cash held in JPMorgan US Dollar Liquidity Fund	1,671	253	10,638
Total	3,254	2,521	10,951

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30TH APRIL 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 October 2021 are extracted from the latest published financial statements of the Company and do not constitute statutory accounts for that year. Those financial statements have been delivered to the Registrar of Companies and including the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

2.  Accounting policies

The financial statements have been prepared in accordance with the Companies Act 2006, FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' of the United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies in October 2019.

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 April 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 October 2021.

3.  Return/(loss) per share

	(Unaudited)	(Unaudited)	(Audited)
	30th April 2022	30th April 2021	31st October 2021
	£'000	£'000	£'000
Return/(loss) per share is based on the following:
Revenue return	4,277	2,399	15,030
Capital (loss)/return	(359,310)	62,518	139,144
Total (loss)/return	(355,033)	64,917	154,174
Weighted average number of shares in issue	40,522,060	42,953,385	42,299,516
Revenue return per share	10.56p	5.58p	34.01p
Capital (loss)/return per share	(886.70)p	145.55p	328.95p
Total (loss)/return per share	(876.14)p	151.13p	364.48p

4.  Dividends paid

	(Unaudited)	(Unaudited)	(Audited)
	30th April 2022	30th April 2021	31st October 2021
	£'000	£'000	£'000
2021 interim dividend paid of 25.0p	10,311	-	-
2021 final dividend of 10.0p (2021: 10.0p)	4,044	4,299	4,294
2022 interim dividend of 15.0p	6,065	-	-
Total dividends paid in the period/year	20,420	4,299	4,294

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

The 2022 interim dividend was paid on 11th March 2022.

5.   Net asset value per share

	(Unaudited)	(Unaudited)	(Audited)
	30th April 2022	30th April 2021	31st October 2021
	£'000	£'000	£'000
Net assets (£'000)	19,032	319,578	397,015
Number of shares in issue	40,436,176	42,273,400	40,776,176
Net asset value per share	47.1p	756.0p	973.6p

FREQUENTLY ASKED QUESTIONS

Please see below an explanation of how Russian markets are currently operating for overseas parties and a list of some of the frequently asked questions about issues effecting JPMorgan Russian Securities plc (the Company/JRS) following Russia's invasion of Ukraine on 24th February 2022 and the sanctions and restrictions that followed.

1.  Russian Markets

2.  JRS Operations

1.  Russian Markets

Effective February 28, 2022, the Central Bank of Russia (CBR) introduced a ban on local Russian brokers from executing non-residents orders to sell Russian securities.

As of March 8, the Moscow Stock Exchange (MOEX) remains closed to foreign investors and since March 1 trading in depositary receipts has not been possible due to the lack of counterparties and limited liquidity. On March 3, trading in Global Depositary Receipts (GDR) was formally suspended on the London Stock Exchange.

• Sanctions

JPMorgan Asset Management ('JPMAM') is obliged to comply with sanctions, including but not limited to those relating to the trading of certain securities which have recently become subject to sanctions.

When sanctions are imposed, JPMAM will assess the changes to our legal and regulatory obligations and take all steps necessary to comply with those obligations. JPMAM continues to monitor and assess the impact of sanctions in relation to a broad variety of risks: investment, convertibility, liquidity, custody, counterparty and settlement risk.

We are committed to meeting our obligations under US sanctions (Executive Order 14024) and any other applicable sanctions directives, including with respect to the execution of transactions for our clients, and have implemented, and will periodically review, controls reasonably designed to comply with the Executive Order, including the identification of Targeted Securities. Our transactions are consistent with US regulatory requirements and to the extent authorized and permissible by OFAC sanctions regulations and general licenses.

The Company currently owns three securities that have been sanctioned by OFAC; Sberbank, VTB and Severstal. Due to the restrictions put in place by the Russian authorities, that prohibit all trading on the Moscow Stock Exchange, the Company, in line with all other investors holding Russian stocks in similar circumstances, is currently unable to sell these securities. Additionally, Russia required that stocks held through American Depositary Receipts (ADR) and GDR programmes should be transferred to the local market although some companies have successfully appealed this decision in relation to their ADR/GDR programmes. However, the sanctions against Russia from the USA and EU have complicated the conversion process of ADR/GDRs. This is because many ADR/GDR structures involve numerous parties based in different jurisdictions. Some of these parties in the ADR/GDR structures have recently introduced restrictions in dealing with Russian based assets, so achieving the coordination of processes required for the conversion of the ADR/GDRs to take place is taking time to implement. The latest information available suggests that the transfer process has reopened for a limited period until 29th July 2022 and so the Company's manager together with other managers of ADR/GDRs in Russian stock, are working with authorities/parties to process the transfers as far as possible. A list of the Company's full portfolio of investments, including ADR and GDR holdings can be located from the Company's website at https://am.jpmorgan.com/gb/en/asset-management/per/products/jpmorgan-russian-securities-plc-ordinary-shares-gb0032164732#/portfolio

• Settlement

Settlement processing for foreign investors, including Delivery vs Payments (DVP) versus USD which is our standard practice, has also been banned as has the payment of income events.

Our focus is on monitoring settlement for trades, particularly local market sales where settlement for foreign investors is still subject to restrictions by the CBR. Depositary Receipt (DR) sales are settling and we do not see systemic issues in the offshore market, although there are ongoing delays.

• Dividends (due from investee companies)

Investee companies continue to pay dividends to their shareholders and such dividends are held in a custodians 'suspense account' and cannot at present be paid to overseas holders. Although these dividends are not recognised as revenue by the Company, we hope that sometime in the future we will be able to access these funds and distribute them to shareholders.

2.  JRS Operations

• Are the Company's shares still trading?

Yes, the shares of the Company have continued to be traded uninterrupted on the London Stock Exchange.

• How is the Net Asset Value currently calculated?

The Company considers that the reopening of the Moscow Exchange (MOEX) for limited trading hours on 24th March 2022 has not materially affected the value of its investments, given the continued inability for non-Russian nationals to trade locally and repatriate proceeds. Therefore, the Company has applied an alternative valuation method and for securities traded on MOEX a fair value adjustment has been applied to the last trade price on 25th February 2022. For American Depositary Receipts and Global Depositary Receipts a fair value adjustment has been applied to the last trade price on 2nd March 2022.

The Company has continued to announce the NAV on a daily basis.

• Will the Company continue to pay dividends?

The current sanctions and restrictions in Russia are expected to limit the Company's ability to pay any further dividends following the payment of the 11th March 2022. It remains the Company's intention to resume the payment of dividends when circumstances permit.

• Have the Portfolio Managers changed their investment approach?

Due to the sanctions and other restrictions on the Company since Russia's invasion of Ukraine, the valuation of the Company's portfolio has changed completely, with cash and cash equivalents now comprising approximately 93% of the value of the portfolio as at 26th July 2022.

We continued to run JRS in accordance with the investment objectives and policy, however, it was necessary for the Board to waive the Company's investment restriction guidelines (IRGs) as it is not possible to manage the portfolio within the IRGs, given the fair valuation policy currently in place and the high proportionate level of cash and liquidity funds.

• Will the Company purchase any additional stocks for its portfolio?

The Company's remaining funds will not be used to purchase further stocks for its portfolio for the foreseeable future. However, this approach may change and investors should look out for announcements from the Company on the London Stock Exchange for latest updates.

In May 2022, the Manager took the opportunity to de-risk the portfolio by selling the Company's holdings in Kazakhstan stock for cash

• Benchmark

Following Russia's invasion of Ukraine on 24th February 2022, the Moscow Exchange (MOEX) has been closed to many overseas investors, including the Company. This has resulted in the Company being prohibited from trading, thereby negating the purpose of measuring the Company's performance against its benchmark. Furthermore, data from many Russian benchmarks, including the Company's, will no longer be distributed by western news services after 30th June 2022. Hence, the Board's decision that, with effect from 1st May 2022 until further notice, the Company will not have a benchmark.

The Company's benchmark has been the RTS index in sterling terms. Prior to 1st November 2016, the Company's benchmark was the MSCI Russian 10/40 Equity Indices Index in sterling terms.

• How long can the Company continue to pay its essential running costs?

Based on current estimates, the Company has adequate liquidity to keep running for many years. This is assisted by the Company's Manager who has waived its management fee with effect following payment of the management fee to 28th February 2022 and will apply until further notice.

• Will the Company continue its share buyback programme?

The Company will not be buying back shares whilst current market conditions prevail.

• Will JPMorgan Funds Ltd continue as the Company's Manager?

Yes.

• Will the Company continue its Continuation Vote and Tender?

Changes may be required to the Continuation Vote and Tender details due to the closure of the Moscow Exchange following Russia's invasion of Ukraine in February 2022 and its impact on the benchmark. As this is still a developing process the Company will announce details which will be notified in due course.

The Company's performance over a five-year period to 31st October 2021 exceeded the performance of its benchmark, thereby achieving its performance related tender offer target. In addition, as shareholders approved the resolution for the Company to continue for a further five years at the Company's Annual General Meeting (AGM) on 4th March 2022, a tender offer was not required. The Board has committed to continue with a similar arrangement for the forthcoming five years. Therefore, in the absence of changes being made to the Company's Continuation Vote and Tender as outlined above, then on the basis that the Continuation Vote is passed at the Company's 2027 AGM, if the Company does not outperform its benchmark on a net asset value cum income basis over the five-year period to 31st October 2026, the Tender Offer would be for 25% (in the previous five-year period this was 20%) of the outstanding shares which would be bought back at NAV less costs and less a discount of 2%.

Note:

The above details are based on information as at 27th July 2022.

This schedule will also be available on the Company's website www.jpmrussian.co.uk

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

JPMORGAN FUNDS LIMITED

28^th July 2022

For further information, please contact:

Paul Winship

For and on behalf of

JPMorgan Funds Limited

020 7742 4000

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A copy of the half year will be submitted to the FCA's National Storage Mechanism and will 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.jpmrussian.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

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.

 

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