Final Results to 30th June 2021

RNS Number : 6253N

JPMorgan Global Growth & Income PLC

30 September 2021

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN GLOBAL GROWTH & INCOME PLC

ANNOUNCEMENT OF FINAL RESULTS FOR THE YEAR ENDED 30TH JUNE 2021

Legal Entity Identifier: 5493007C3I0O5PJKR078

Information disclosed in accordance with DTR 4.2.2

CHAIRMAN'S STATEMENT

In this, my final Annual Report as Chairman, I am pleased to report another very satisfactory year for the Company. Notwithstanding the continuing global COVID-19 pandemic, economies were strong given the unprecedented levels of fiscal and monetary support provided by governments and central banks and the generally successful rollout of vaccines (at least in the developed world). Against this backdrop, global equity markets were strong - the MSCI AC World Index expressed in sterling, which we use as our benchmark, rose by 24.6%.

Our returns were considerably better. Over the year the Company recorded a total return on net asset value ('NAV') of +32.3%. This outperformance was the result of positive stock selection. The total return to shareholders was slightly higher again at +33.0%. The positive return for the year continues the longer term trend of adding value for shareholders. Over 3 and 5 years the return to shareholders has been 51.6% and 153.3% respectively, in both cases comfortably exceeding the benchmark return. The performance attribution below analyses how the Company achieved its performance relative to its benchmark index. The Investment Managers' report that follows provides a detailed commentary on these figures and discusses activity, performance and the market outlook.

PERFORMANCE ATTRIBUTION

YEAR ENDED 30TH JUNE 2021

	%	%
Contributions to total returns
Benchmark return		24.6
Asset allocation	0.0
Stock selection	8.4
Currency effect	-0.2
Gearing/cash	1.1
Investment Managers' contribution		9.3
Portfolio total return		33.9
Management fee/other expenses	-0.5
Performance fee	-1.2
Net asset value total return - prior
to structural effects		32.2
Structural effects
Share buy-backs/issuance	0.1
Net asset value total return - Debt at Par Value		32.3
Impact of Fair Valuation of Debt	1.5
Net asset value total return - Debt at Fair Value		33.8
Return to Shareholders		33.0

Source: JPMAM and Morningstar.

All figures are on a total return basis.

The performance attribution set out above analyses how the Company achieved its performance relative to its benchmark index.

Distribution Policy

The Company's revised dividend policy has now been in place for over five years. As a reminder, the dividend policy aims to pay, in the absence of unforeseen circumstances, dividends totalling at least 4% of the NAV of the Company as at the end of the preceding financial year. Where, in the view of the Board, the target dividend is likely to result in a dividend yield that is materially out of line with the wider market, the Board may choose to set the target dividend at a different level that is more in-line with the wider market and other global income trusts and funds.

The Board announced on 1st July 2021 that, in relation to the year commencing 1st July 2021, the Company intends to pay dividends totalling 16.96p per share, which represents a yield of 4.0% of the unaudited NAV as at the 30th June 2021. It is expected that such dividends will be paid by way of four equal distributions, with the first distribution of 4.24p per share for the quarter to 30th September 2021 being paid on 8th October 2021 to shareholders on the register on 3rd September 2021. The ex-dividend date was 2nd September 2021.

The intended dividend for the year commencing 1st July 2021 represents an increase of 28.9% over the total dividend of 13.16p per share payable for the prior financial year.

Investment Policy

At the forthcoming Annual General Meeting ('AGM') the Board is proposing a change to the investment restrictions within the investment policy to amend the current investment restriction so that the aggregate of the Company's top 10 holdings and top 20 holdings will not exceed 45% (currently 35%) and 65% (currently 55%) of total assets, respectively. This will provide the Investment Managers with increased flexibility to manage the Company's portfolio. The proposed new investment restrictions in the investment policy are set out in full in the Appendix to the Notice of AGM on page 93 of the Annual Report, with the amendment highlighted for ease of reference. The new investment restrictions in the investment policy, if approved by shareholders at the Annual General Meeting, shall come into effect from 27th October 2021.

Share Issuance and Repurchases

As has been the case for several years, our shares traded close to NAV during the year and indeed often traded at a premium. As a result we did not repurchase any shares and during periods when the shares traded at a premium, the Company was able to reissue 9,818,000 shares from Treasury for a total consideration of £38,179,000. In the five years to 30th June 2021 the Company has raised £95,236,000 by reissuing 27,468,000 shares from Treasury. That we have been able to reissue so many shares reflects the gratifying confidence in the Company shown by existing and new shareholders. Since the year-end, the Company has reissued a further 3,776,215 shares from Treasury and issued 1,208,785 new shares for a total consideration of £22,013,000. At the year-end the share price premium to NAV stood at 1.1% and at the time of this report it stands at 3.1%.

A resolution to renew the authority to permit the Company to repurchase shares if necessary will be proposed at the Annual General Meeting ('AGM') in October 2021; resolutions renewing the authorities to issue shares from Treasury and to issue new shares, in both cases at a premium to NAV, and to disapply pre-emption rights over such issues, will also be proposed.

Block Listing

On 27th August 2021, 15 million Ordinary shares of the Company were admitted to the premium segment of the Official List and to trading on its main market. The block listed shares may be issued pursuant to the Company's existing general authority to issue shares on a non pre-emptive basis. The shares may be issued inter alia to satisfy continuing market demand for shares and to manage the premium to NAV at which shares trade. When issued, the new shares will rank pari passu with the existing shares in issue.

Ongoing Charges

The Company's ongoing charges ratio (excluding performance fees) was 0.53% for the year ended 30th June 2021 (2020: 0.55%) There is a performance fee payable of £1,618,000 for the year ended 30th June 2021 (2020: £333,000) and the ongoing charges including the performance fee is 1.59% (2020: 0.66%). Under the current fee arrangements, performance fees are calculated and payable over a four year period. There is an accrual of £5,967,000 included in the financial statements in respect of performance fees that could become payable in future years. The Board reviews regularly the investment management fee paid by the Company and it is currently conducting another detailed review. Should this result in any changes, these will be announced in due course.

Gearing

Gearing is regularly discussed between the Board and the Investment Managers. In 2018, the Board issued £30 million fixed rate 30 year unsecured notes at an annual coupon of 2.93%. On 12th March 2021 the Board issued further £20 million fixed rate 15 year unsecured notes at an annualised coupon of 2.36%. After the issuance of these notes, the Company's total notes amount to £50 million. The Board issued the new notes to take advantage of the market conditions which it considered offered an attractive level of well-priced long term gearing. All the notes are unsecured, which gives the Company increased flexibility to manage its borrowings in the future. There has been no change in the Investment Managers' permitted gearing range, as previously set by the Board, which limits gearing within the range of 5% net cash to 20% geared in normal market conditions.

The gearing level was 1.2% net cash at the start of the period to 0.2% geared at 30th June 2021. During the year gearing ranged from 6.7% geared to 2.8% net cash and made a positive contribution to investment returns of 1.1%. At the time of writing gearing is 0.3%.

Currency Hedging

The Company continues its passive currency hedging strategy (implemented in late 2009) that aims to make stock selection the predominant driver of overall portfolio performance relative to the benchmark, the MSCI World All Countries Index (in sterling terms). This is a risk reduction measure, designed to eliminate most of the differences between the portfolio's currency exposure and that of the Company's benchmark. As a result the returns derived from, and the portfolio's exposure to currencies may differ materially from, that of the Company's competitors, who generally do not undertake such a strategy.

Environmental, Social and Governance Considerations

As detailed in the Investment Managers' report, Environmental, Social and Governance ('ESG') considerations are fully integrated into the Investment Managers' investment process. The Board shares the Investment Managers' view of the importance of ESG factors when making investments for the long term and of the necessity of continued engagement with investee companies throughout the duration of the investment. Further information on the Manager's ESG process and engagement is set out in the ESG Report section within the 2021 Annual Report.

Operations of the Company's Key Service Providers under COVID-19

The Board is pleased to report that, since the on-set of the pandemic in spring 2020 and throughout, the Manager and the Company's other service providers have been able to adjust their business models to continue to accommodate working from home requirements. The Board has been closely monitoring all service arrangements and has received assurances that the Company's operations, to include the management of the portfolio, have continued as normal with no reduction in the level of service provided nor any issues being identified.

The Board

As has already been announced, I will be retiring from the Board at the end of the AGM in October this year and Tristan Hillgarth will replace me as Chairman. Tristan joined the Board in November 2014 and is therefore eligible under the AIC Code of Corporate Governance to serve as Chairman. Gay Collins, who joined the Board in February 2012, will continue to serve as Senior Independent Director for another year. Sarah Whitney, who joined the Board in January 2020, will continue as Chairman of the Audit & Management Engagement Committee and will assume the role of Chairman of the Remuneration Committee from Tristan when he takes over as Chairman of the Board.

As part of the Board's succession planning, the Nominations Committee carried out a recruitment process which led to the appointment of James Macpherson to the Board with effect from 1st April 2021. James was until recently Deputy CIO, Fundamental Active Equities at BlackRock where he led the Global, Thematic, Natural Resources and Health Science strategies and Equity Closed-end funds. He was a senior fund manager at BlackRock and predecessor companies for 35 years, and was co-head of UK Equities from 2001 to 2016.

The Board supports the annual re-election for all Directors, as recommended by the UK Corporate Governance Code, and therefore all Directors will stand for election/re-election at the forthcoming AGM.

Adoption of New Articles of Association

The Company's Articles of Association, the document that specifies the regulations for a company's operations and defines a company's purpose, was last amended following shareholder approval in 2016. Resolution 14 within the Notice of the AGM, which will be proposed as a special resolution, seeks shareholder approval to adopt new Articles of Association (the 'New Articles') in order to update the Company's current Articles of Association (the 'Existing Articles').

A summary of the principal amendments being introduced in the New Articles is set out in the Appendix to the Notice of the AGM on page 93 and 94 of the Annual Report. The proposed amendments, if approved, include the possibility of the Company holding the Company's general meetings by virtual means only. This will facilitate shareholder attendance in situations where they are prevented, through laws or regulations, from attending at a physical location. This format will only be utilised as a contingency to ensure the continued smooth operation of the Company where physical meetings are prohibited; 'virtual-only' meetings will only be held in extremis. Other amendments, which are of a minor, technical or clarifying nature, have been summarised in the Appendix to the Notice of the AGM.

Annual General Meeting

We are holding the Company's AGM at 60 Victoria Embankment, London EC4Y 0JP on 27th October 2021 at 2.30 p.m. We hope to be able to meet shareholders in person this year, but, given the impact of COVID-19, the Board will continue to monitor developments closely and attendance at the physical meeting may still be restricted, depending on the Government's guidelines at the time.

We advise all shareholders to consider their own personal circumstances before attending the AGM in person and we encourage all shareholders to exercise their votes in advance of the meeting by completing and submitting their form of proxy. For shareholders wishing to follow the AGM proceedings but choosing not to attend, we will be able to welcome you through conferencing software. Details on how to register, together with access details, will be available shortly on the Company's website: www.jpmglobalgrowthandincome.co.uk, or by contacting the Company Secretary at [e-mail]. All voting on the resolutions will be conducted on a poll as normal. In addition, shareholders are encouraged to raise any questions in advance of the AGM via the 'Ask the Question' link found under the 'Contact Us' section on the Company's website (www.jpmglobalgrowthandincome.co.uk) or by email at [e-mail] Any questions received will be replied to via the Company Secretary. We will endeavour to answer relevant questions at the meeting or via the website depending on arrangements in place at the time. Due to technological reasons, shareholders viewing the meeting via conferencing software will not be able to vote on the poll.

If there are any changes to the above AGM arrangements, the Company will update shareholders through the Company's website and, as appropriate, through a stock exchange announcement.

Conclusion

Let me say in conclusion that it has been a great pleasure and a privilege to have been a Director of the Company since 2010 and Chairman since 2015. I would like to thank my Board colleagues for all their help and support over these years. Good investment performance has been the vital ingredient to ensure the success of the Company and I am delighted that the Investment Managers have proved to be such able stock pickers. I should like to thank all shareholders for supporting the Board over the period during which I have been involved and I would also like to thank J.P. Morgan for the effective management and administration of the Trust over the time I have been involved.

As I retire, I believe that the future of the Company is bright. As ever, the global economy faces significant challenges. The COVID-19 pandemic is not yet at an end, particularly for less developed countries, although one can only admire the brilliance of scientists who have developed such effective vaccines. Governments have to decide when and how to unwind the emergency programmes that they have put in place to sustain economic activity. In addition, meeting the challenge of climate change will test us all in the coming years.

However, our Investment Managers have demonstrated their ability to rise to every challenge and I expect them to continue to be able to identify successful companies in an environment that will be constantly evolving.

Nigel Wightman

Chairman

 30th September 2021

INVESTMENT MANAGERS' REPORT

A year for the history books - for mankind and markets

The past 12 months have been remarkable for many reasons. The COVID-19 pandemic has had widespread and devastating impacts on public health and global economic activity, but it has also inspired remarkable innovation, manifesting itself not just in the rapid development and roll-out of several viable vaccines, but also in the many imaginative ways that individuals and businesses have adapted to the constraints imposed by the virus. Technology and social media have been deployed to alleviate social isolation, which in turn has facilitated wider public debate on issues such as the environmental crisis. Such ingenuity and determination in the face of adversity is surely cause for optimism about the potential for other positive developments in fields such as climate change mitigation and medical research.

Vaccine rollouts, and the greater freedoms they have heralded for businesses and individuals, underpinned an exceptionally strong run for global equities in H2 2020 and early 2021. More recently, concerns about the risk of higher interest rates and the more contagious delta variant dented investor sentiment, but markets took solace in persistently upbeat economic data and unexpectedly robust company results.

Our focus on key long-term structural trends and good, attractively priced companies has continued unabated throughout this challenging period. The pandemic has served as a powerful reminder that change is ever present, and that we must strive constantly to identify and understand the implications of such disruption. For example, the pandemic-induced trends towards living, working and exercising on-line and accessing services such as healthcare remotely, will persist. This brings with it risks for some businesses, and new avenues of growth for others. By focusing on the evolution and direction of long-term structural changes, rather than trying to predict developments over the next few quarters, and being distracted by short-term noise, we aim to take full advantage of the investment opportunities these trends generate.

Portfolio Review and Spotlight on Stocks

At the onset of the pandemic, we owned very high-quality businesses in sectors such as Media and Technology Hardware and Software, that we expected to benefit from established long-term trends. These businesses received fresh, in some cases startling, impetus from the pandemic to the extent that by autumn 2020, several were trading at substantial premiums to what we believed to be their intrinsic value. At the same time, many solid businesses in more economically sensitive sectors such as industrials, aircraft manufacturing, travel and banks were trading at significant, and, in our view unjustified, discounts to their true worth. We saw this as a meaningful opportunity, which we sought to exploit fully, by trimming our positions in some of the pandemic's biggest structural winners and using the proceeds to gain greater exposure to high-quality businesses in these cyclical, unloved and undervalued areas of the market.

This strategy proved to be highly effective, as evidenced by our very strong performance against our benchmark over the past 12 months. The Company's benchmark, MSCI All Country World Index, rose 24.1% in Pound Sterling. At the same time, the Company's share price rose 31.8%. Our stock selection contributed positively across most sectors over the past year, with returns enhanced by our exposure to both quality cyclical stocks and to companies set to benefit from long term structural trends.

Many of the cyclical names that we purchased in mid-2020 have subsequently outperformed the market significantly, especially in the past six months, as vaccine programs dramatically improved the global economic outlook and bolstered investor confidence in these businesses. Our purchase of Lyft, the US rideshare company, is a great example. It was our best performing stock over the past 12 months, more than doubling in value since acquisition. We were attracted to Lyft by its strong balance sheet and its large share of a concentrated market, which ensured the company was well placed to survive the pandemic, despite market scepticism. And as economies began to reopen, and riders returned, the market's assessment of its near-term prospects improved dramatically. We still own the stock, as we expect it to continue to perform well as demand reverts to pre-pandemic levels, and profitability improves accordingly. In our view, Lyft's longer-term growth outlook is also very favourable, as it is likely to be a lead player in the development of the autonomous (driverless) vehicle rideshare market.

Another example of a name we added last year is American Express. This is a high quality business, which benefits from a consumer recovery as card spending recovers. However they were hit harder than most in the pandemic as large portion of their business comes from Travel & Entertainment. We purchased the stock as we believed that this spend would recover. Importantly, whilst we were uncertain exactly where this spending would return first - be it airlines, hotels, or eating out - with this company we knew we would capture that recovery, as regardless of category, the spend would occur on their card. The stock has been a very strong performer since we purchased it.

Our positions in companies benefiting from long term structural changes, especially tech-related themes, also continued to enhance returns over the period. The Company's holdings in the Semiconductor space did exceptionally well. Demand for semiconductors has been robust across the board, but most notably from the Automotive and Industrial sectors, and we expect the increasing use of semiconductors in electric vehicles (EVs) and smart factories to underpin further growth in demand for chips. We diversified our exposure to this burgeoning industry via with the acquisition of names such as Applied Materials, a US company that supplies materials to semiconductor manufacturers. This position nicely complements our holdings in end product manufacturers such as Taiwan Semiconductor Manufacturing Company and its Dutch competitor, NXP Semiconductors. Global demand for semiconductors has been so strong that supply shortages have created bottlenecks in some industries. In the past, this has triggered instances of double ordering, which can pose a risk to earnings estimates. We have been monitoring the entire supply chain closely in recent months for signs of such practices, but to date, we have found no evidence of inflated demand, and we continue to hold these companies.

Alphabet, the parent of Google, the US online advertising behemoth, was another significant contributor to performance over the past year. The company was hurt at the beginning of the pandemic as businesses reduced advertising expenditures. However, as the world adapted to the constraints imposed by the virus, advertising spending returned to more normal levels, and Google increased its market share. In addition, YouTube, another Alphabet subsidiary, has gone from strength to strength, and Alphabet's Google Cloud Platform continues to see exceptional growth, as more businesses use the cloud for data processing and storage.

Innovation is also proceeding at pace within the Healthcare sector, as evidenced by the rapid development of several different, but equally effective coronavirus vaccines. Within this sector, we favour businesses with a good track record of producing new and creative solutions to significant health challenges. Among our holdings, the US pharmaceutical company Eli Lilly had an exceptional year. This company has seen encouraging results from clinical trials of new treatments for diabetes, a disease which is likely to afflict increasing numbers of people over time. More recently, there has been progress on its breakthrough treatment for Alzheimer's Disease, which appears likely to receive support from the US Federal Drug Administration (FDA). This will open a whole new market to Eli Lilly. Novo Nordisk, the Danish pharma company, was another notable contributor to returns. Like Eli Lilly, it focuses on diabetes treatments and its new anti-obesity drug, Wegovy, was recently approved for use in the US. This is the first drug treatment for one of the Western world's most significant health issues and will no doubt prove very profitable for Novo Nordisk.

We are very pleased with the performance of these and other holdings, which more than offset the adverse impact of disappointing returns in some other areas. Insurance was the most challenged sector on a relative basis, as our holdings lagged the broader sector. Munich Re, a German reinsurance company, detracted most, for two reasons. Losses from natural disasters were particularly heavy in 2020, in large part due to a number of hurricanes and other catastrophes that struck the US. The company also sustained significant losses from COVID-related claims, and its share price remains under pressure due to fears about the extent of further claims arising from the pandemic. However, Munich Re has an exceptionally strong capital position, the management team has a proven willingness to return capital to shareholders and the company has been one of the best performers in the sector over the last 5 years on a total return (share price performance and dividends) basis. We continue to own the shares.

The Automotive sector also detracted from relative returns, mainly because we do not hold Tesla, the US electric vehicles ('EV') and battery manufacturer, which we believe is overvalued. While the operational performance of this company has surpassed all expectations over the past couple of years, in our view, its stellar share price gains has taken the stock well above its intrinsic value. We continue to prefer Volkswagen, the German auto producer, which is also developing EVs. After some teething problems, these vehicles are now coming to market, and we expect they will eventually earn Volkswagen a significant share of the EV market. Yet despite this favourable outlook, the stock is valued as if the company will cease to exist in a decade.

Portfolio positioning and outlook

The particularly good performance of many of the cyclical stocks we acquired in the past year has prompted us to take some profits, reducing our exposure to many of these names. Holdings that we have trimmed recently include Norfolk Southern, a US rail company, and Adidas, the sportswear brand. However, there are many other high quality companies, with attractive long-term metrics, whose short-term outlook remains clouded by the lingering effects of the pandemic. We see many opportunities to buy these so-called 'reopening' stocks at very reasonable valuations.

For example, we have recently added to our holding in Booking.com, which is now a world leader in the provision of accommodation and other travel services. We also opened a position in Airbus, the French aircraft manufacturer, due to our confidence that demand for new aircraft will surpass current expectations over the next decade, as demand for air travel returns. This positive assessment is based in part on our conversations with over 500 businesses about their future corporate travel plans. We found that although many forecast a fall in the number of flights taken to attend internal company meetings, they expect total expenditure on flights to be greater in 2023 than in 2019, as client visits resume and firms send representatives to trade shows and conferences. Companies also foresee a move towards more business class travel - a shift designed to improve staff retention and overcome employees' reluctance to travel in the post-pandemic era. This forecast rise in demand for flights, especially higher margin business class travel, will bolster profitability in the airline industry generally. Airbus, which continues to take market share from Boeing, its primary competitor, will certainly benefit from the associated increase in demand for aircraft.

We have also taken other opportunities to acquire good, but significantly undervalued, businesses in the Industrial and Banks sectors. For instance, we have recently added to Schneider Electric, a French manufacturer of energy management and industrial automation systems, Trane Technologies, a US supplier of air conditioning and heating products, and Wells Fargo, a US bank. However, we continue to avoid stocks we view as overvalued. To us, there appears to be significant risk to the valuations of some exceptionally high growth names, particularly in the US Software space.

We utilised gearing tactically during the review period, especially in autumn 2020, when we saw so many opportunities. However, after such an exceptional year for equity markets, we have since reduced the level of gearing, on the expectation that some market volatility is likely after such a favourable run. The most likely trigger for such volatility will be concerns about inflation. Investors are already worried that if inflation proves persistent, central banks will be forced to raise interest rates quickly to dampen inflationary pressures. Higher rates are likely to have significant adverse implications for equity valuations, particularly for the most expensive stocks, whose elevated multiples are often said to be 'justified' by record low interest rates. Concerns on this front have already unsettled markets and we expect further bouts of volatility over coming months. So, for the moment, we are biding our time on the redeployment of gearing, as we await more clarity on the inflation and interest rate outlook.

These percolating concerns about inflation and higher rates suggest that the global economic backdrop has shifted from its recovery phase to a more mid-cycle mode. Mid-cycle dynamics tend to support stock price rises, as well as drive-up interest rates along the yield curve, and, even if the trajectory will not be entirely smooth, we expect equity markets to continue making strong gains as this cycle progresses. It is therefore more important than ever for us to stay fully invested and focused on our global search for great businesses that will provide superior returns and outperform over the long-term.

We believe your Company's performance, recently and longer-term, attests to the effectiveness of our disciplined process and in-depth stock analysis. Today, we have what we believe is a nicely balanced portfolio, focusing on quality companies, across a variety of sectors and geographies. And the very broad opportunity set provided by global equity markets continues to offer many other exciting and attractive investment possibilities. We therefore feel well-positioned to build on the success of the past 12 months.

We would like to thank you for your support and look forward to continuing our partnership.

Helge Skibeli

Rajesh Tanna

Tim Woodhouse

Investment Managers   30th September 2021

PRINCIPAL AND EMERGING RISKS

The Directors confirm that they have carried out a robust assessment of the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity.

With the assistance of the Manager, the Board has drawn up a risk matrix, which identifies the key risks to the Company. These are reviewed and noted by the Board. The risks identified and the broad categories

in which they fall, and the ways in which they are managed or mitigated are summarised below. The AIC Code of Corporate Governance requires the Audit & Management Engagement Committee to put in place procedures to identify emerging risks. The key emerging risks identified are also summarised below.

Principal & Emerging Risk	Description	Mitigating Activities
Investment and Strategy	An inappropriate investment strategy, for example asset allocation or the level of gearing, may lead to under-performance against the Company's benchmark index and peer companies, resulting in the Company's shares trading on a wider discount.	The Board manages these risks by diversification of investments through its investment restrictions and guidelines which are monitored and reported by the Manager. The Manager provides the Directors with timely and accurate management information, including performance data and attribution analyses, revenue estimates, liquidity reports and shareholder analyses. The Board monitors the implementation and results of the investment process with the Investment Managers, who attend all Board meetings, and reviews data which show statistical measures of the Company's risk profile. The Investment Managers employ the Company's gearing within a strategic range set by the Board. The Board may hold a separate meeting devoted to strategy each year.
Market	Market risk arises from uncertainty about the future prices of the Company's investments. It represents the potential loss that the Company might suffer through holding investments in the face of negative market movements.	The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines, which are monitored and reported on by the Manager. The Board monitors the implementation and results of the investment process with the Manager.
Accounting, Legal and Regulatory	In order to qualify as an investment trust, the Company must comply with Section 1158 of the Corporation Tax Act 2010 ('Section 1158'). Details of the Company's approval are given under 'Structure of the Company' within the Business Review section above. Were the Company to breach Section 1158, it might lose investment trust status and, as a consequence, gains within the Company's portfolio could be subject to Capital Gains Tax.	The Section 1158 qualification criteria are continually monitored by the Manager and the results reported to the Board each month. The Company must also comply with the provisions of the Companies Act 2006 and, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules and Disclosure, Guidance and Transparency Rules ('DTRs'). A breach of the Companies Act 2006 could result in the Company and/or the Directors being fined or the subject of criminal proceedings. Breach of the UKLA Listing Rules or DTRs could result in the Company's shares being suspended from listing, which in turn would breach Section 1158. The Board relies on the services of its Company Secretary to ensure compliance with the Companies Acts and The UKLA Listing Rules and DTRs.
Operational and Cyber Crime	Loss of key staff by the Manager, such as the Investment Managers, could affect the performance of the Company. Disruption to, or failure of, the Manager's accounting, dealing or payments systems or the depositary's or custodian's records could prevent accurate reporting and monitoring of the Company's financial position.	On 1st July 2014, the Company appointed the Bank of New York Mellon (International) Limited to act as the depositary, responsible for overseeing the operations of the custodian, JPMorgan Chase Bank, N.A., and the Company's cash flows. Details of how the Board monitors the services provided by the Manager and its associates and the key elements designed to provide effective internal control are included with the Risk Management and Internal Control section of the Corporate Governance report in the Annual Report. The threat of cyber attack, in all its guises, is regarded as at least as important as more traditional physical threats to business continuity and security. The Company benefits directly or indirectly from all elements of JPMorgan's Cyber Security programme. The information technology controls around the physical security of JPMorgan's data centres, security of its networks and security of its trading applications are tested by independent auditors and reported every six months against the AAF Standard.
Going concern	Pursuant to the Sharman Report, Boards are now advised to consider going concern as a potential risk, whether or not there is an apparent issue arising in relation thereto.	Going concern is considered rigorously on an ongoing basis and the Board's statement on going concern is detailed on page 45 of the Annual Report.
Financial	The financial risks faced by the Company include market price risk, interest rate risk, liability risk and credit risk.	Further details are disclosed in note 23 on pages 76 to 82 of the Annual Report.
Principal & Emerging Risk	Description	Mitigating Activities
Climate Change	Climate change is one of the most critical emerging issues confronting asset managers and their investors. Climate change may have a disruptive effect on the business models and profitability of individual investee companies, and indeed, whole sectors. The Board is also considering the threat posed by the direct impact of climate change on the operations of the Manager and other major service providers.	The Manager's investment process integrates consideration of environmental, social and governance factors into decisions on which stocks to buy, hold or sell. This includes the approach investee companies take to recognising and mitigating climate change risks. In the Company's and Manager's view, companies that successfully manage climate change risks will perform better in the long-term. Consideration of climate change risks and opportunities is an integral part of the investment process. The Manager aims to influence the management of climate related risks through engagement and voting and is a participant of Climate Action 100+ and a signatory of the United Nations Principles for Responsible Investment.
Pandemics	COVID-19 has highlighted the speed and extent of economic damage that can arise from a pandemic. While current vaccination programme results are hopeful, the risk remains that new variants may not respond to existing vaccines, may be more lethal and may spread as global travel opens up again.	The Board receives reports on the business continuity plans of the Manager and other key service providers. The effectiveness of these measures have been assessed throughout the course of the COVID-19 pandemic and the Board will continue to monitor developments as they occur and seek to learn lessons which may be of use in the event of future pandemics.
Economic Responses to the COVID-19 Pandemic	The response to the Pandemic by the UK and other governments may potentially create new risks. • Failure of Mitigation The existing vaccination programme gives hope that the world will be able to live with the COVID-19 virus. Meeting the costs of recent support measures across the world may see an increase in taxation which could be detrimental to investee companies, the appeal of savings and investment products (such as the Company) and to shareholders themselves. • Inflation/Deflation/Depression Risks The government support measures could also result in either significant levels of inflation in the medium term (with a domino effect on valuations and/or growth) or, if insufficient, could lead to depressed levels of demand and deflation.	The Board seeks to manage these risks through: a broadly diversified global equity portfolio, appropriate asset allocation, reviewing key economic and political events and regulatory changes, active management of risk and the application of relevant policies on gearing and liquidity. Deflation would make the real price of the Company's debt rise and increase the effective debt burden. The Company has substantial headroom on its borrowing financial covenants which is closely monitored.
Geopolitical Risk	Risks of economic, political and ultimately military conflicts between nations, regions and trading blocks are an ever present risk. So too are the risks of social dislocation or civil unrest within countries. These bring with them risks to economic growth, to investors' risk appetites and, consequently, to the valuations of companies in the portfolio.	This risk is managed to some extent by diversification of investments and by regular communication with the Manager on matters of investment strategy and portfolio construction which will directly or indirectly include an assessment of these risks. The Board can, with shareholder approval, look to amend the investment policy and objectives of the Company to gain exposure to or mitigate the risks arising from geopolitical instability although this is limited if it is truly global.

TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES

Details of the management contract are set out in the Directors' Report on page 37 of the Annual Report. The management fee payable to the Manager for the year was £2,308,000 (2020: £1,906,000) of which £nil (2020: £nil) was outstanding at the year end.

A performance fee charge of £5,967,000 (2020: £507,000) is applicable for the year and £1,618,000 (2020: £333,000) is immediately payable. An amount £4,728,000 (2020: £380,000) is carried forward and will either be paid or absorbed by underperformance in subsequent years.

During the year £nil (2020: £7,000) was payable to the Manager for administration of savings scheme products, of which £nil (2020: £nil) was outstanding at the year end.

Included in administration expenses in note 6 on page 69 of the Annual Report are safe custody fees amounting to £29,000 (2020: £24,000) payable to JPMorgan Chase Bank N.A. of which £18,000 (2020: £5,000) was outstanding at the year end.

The Manager may carry out some of its dealing transactions through group subsidiaries. These transactions are carried out at arm's length. Commission amounting to £nil (2020: £2,000) was payable to JPMorgan Securities Limited for the year of which £nil (2020: £nil) was outstanding at the year end.

Handling charges on dealing transactions amounting to £19,000 (2020: £21,000) were payable to JPMorgan Chase Bank, N.A. during of which £11,000 (2020: £6,000) was outstanding at the year end.

The Company holds cash in the JPMorgan Sterling Liquidity Fund, which is managed by JPMF. At the year end this was valued at £47.6 million (2020: £31.7 million). Interest amounting to £21,000 (2020: £190,000) was receivable during the year of which £nil (2020: £nil) was outstanding at the year end.

Fees amounting to £28,000 (2020: £21,000) were receivable from securities lending transactions during the year. JPMorgan Chase Bank, N.A. commissions in respect of such transactions amounted to £3,000 (2020: £2,000).

At the year end, total cash of £8,350,000 (2020: £5,255,000) was held with JPMorgan Chase Bank, N.A. A net amount of interest of £nil (2020: £1,000) was receivable by the Company during the year of which £nil (2020: £nil) was outstanding at the year end.

Full details of Directors' remuneration and shareholdings can be found on page 49 and in note 6 on page 69 of the Annual Report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing the financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• state whether applicable United Kingdom Accounting Standards, comprising FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements;

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

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The accounts are published on the  www.jpmglobalgrowthandincome.co.uk   website, which is maintained by the Company's Manager. The maintenance and integrity of the website maintained by the Manager is, so far as it relates to the Company, the responsibility of the Manager. The Directors are responsible for the maintenance and integrity of the corporate and financial information on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Under applicable law and regulations the Directors are also responsible for preparing a Strategic Report, a Directors' Report and Directors' Remuneration Report that comply with the law and those regulations.

Each of the Directors, whose names and functions are listed in Directors' Report confirm that, to the best of their knowledge:

• the Company's financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

• the Directors' Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

For and on behalf of the Board
Nigel Wightman
Chairman

30th September 2021

STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30th June 2021

	2021			2020
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair
value through profit or loss	-	153,997	153,997	-	22,989	22,989
Net foreign currency gains	-	1,764	1,764	-	83	83
Income from investments	10,633	-	10,633	8,329	-	8,329
Interest receivable and similar income	49	-	49	212	-	212
Gross return	10,682	155,761	166,443	8,541	23,072	31,613
Management fee	(577)	(1,731)	(2,308)	(953)	(953)	(1,906)
Performance fee charge	-	(5,967)	(5,967)	-	(507)	(507)
Other administrative expenses	(612)	-	(612)	(565)	-	(565)
Net return before finance costs and taxation	9,493	148,063	157,556	7,023	21,612	28,635
Finance costs	(259)	(779)	(1,038)	(449)	(449)	(898)
Net return before taxation	9,234	147,284	156,518	6,574	21,163	27,737
Taxation	(1,276)	-	(1,276)	(1,091)	-	(1,091)
Net return after taxation	7,958	147,284	155,242	5,483	21,163	26,646
Return per share	5.46p	101.00p	106.46p	4.00p	15.44p	19.44p

STATEMENT OF CHANGES IN EQUITY

for the year Ended 30th June 2021

	Called up		Capital
	share	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserves1	reserve1	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 30th June 2019	7,746	58,956	27,401	347,414	-	441,517
Issue of shares from Treasury	-	12,716	-	15,420	-	28,136
Net return	-	-	-	21,163	5,483	26,646
Dividends paid in the year	-	-	-	(11,979)	(5,483)	(17,462)
At 30th June 2020	7,746	71,672	27,401	372,018	-	478,837
Issue of shares from Treasury	-	20,347	-	17,832	-	38,179
Net return	-	-	-	147,284	7,958	155,242
Dividends paid in the year	-	-	-	(10,926)	(7,958)	(18,884)
At 30th June 2021	7,746	92,019	27,401	526,208	-	653,374

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

STATEMENT OF FINANCIAL POSITION

at 30th June 2021

	2021	2020
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	654,694	473,187
Current assets
Derivative financial assets	2,567	2,026
Debtors	7,153	12,410
Cash and cash equivalents	55,933	36,972
	65,653	51,408
Current liabilities
Creditors: amounts falling due within one year	(11,041)	(13,710)
Derivative financial liabilities	(1,271)	(1,636)
Net current assets	53,341	36,062
Total assets less current liabilities	708,035	509,249
Creditors: amounts falling due after more than one year	(49,932)	(30,032)
Provision for liabilities and charges
Performance fee payable	(4,729)	(380)
Net assets	653,374	478,837
Capital and reserves
Called up share capital	7,746	7,746
Share premium	92,019	71,672
Capital redemption reserve	27,401	27,401
Capital reserves	526,208	372,018
Revenue reserve	-	-
Total shareholders' funds	653,374	478,837
Net asset value per share	432.3p	338.9p

STATEMENT OF CASH FLOWS

for the year ended 30th June 2021

	2021	2020
	£'000	£'000
Net cash outflow from operations before dividends and interest	(3,212)	(2,363)
Dividends received	8,535	7,288
Interest received	21	201
Overseas tax recovered	162	55
Interest paid	(893)	(889)
Net cash inflow from operating activities	4,613	4,292
Purchases of investments	(460,877)	(462,896)
Sales of investments	435,206	472,116
Settlement of forward currency contracts	811	184
Net cash (outflow)/inflow from investing activities	(24,860)	9,404
Dividends paid	(18,884)	(17,462)
Issue of shares from Treasury	38,179	28,235
Issue of secured bond loan (net of costs)	19,894	-
Net cash inflow from financing activities	39,189	10,773
Increase in cash and cash equivalents	18,942	24,469
Cash and cash equivalents at start of year	36,972	12,499
Unrealised gain on foreign currency cash and cash equivalents	19	4
Cash and cash equivalents at end of year	55,933	36,972
Increase in cash and cash equivalents	18,942	24,469
Cash and cash equivalents consist of:
Cash and short term deposits	8,350	5,255
Cash held in JPMorgan Sterling Liquidity Fund	47,583	31,717
Total	55,933	36,972

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30TH JUNE 2021

1.  Accounting policies

Basis of accounting

The financial statements are prepared under the historical cost convention, modified to include fixed asset investments at fair value, and in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ('UK GAAP'), including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies in October 2019.

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

The financial statements have been prepared on a going concern basis. In forming this opinion, the directors have considered any potential impact of COVID-19 pandemic on the going concern and viability of the Company. They have considered the potential impact of COVID-19 and the mitigation measures which key service providers, including the Manager, have in place to maintain operational resilience particularly in light of COVID-19. The Directors have reviewed the compliance with debt covenants in assessing the going concern and viability of the Company. The Directors have reviewed income and expense projections to 30th September 2022 and the liquidity of the investment portfolio in making their assessment. Further details of Directors' considerations regarding this are given in the Chairman's Statement, Investment Managers' report, Going Concern Statement, Viability Statement and Principal Risks section of this Annual Report.

The policies applied in these financial statements are consistent with those applied in the preceding year.

2.  Return per share

	2021	2020
	£'000	£'000
Revenue return	7,958	5,483
Capital return	147,284	21,163
Total return	155,242	26,646
Weighted average number of shares in issue	145,827,704	137,054,495
Revenue return per share	5.46p	4.00p
Capital return per share	101.00p	15.44p
Total return per share	106.46p	19.44p

3.  Dividends

(a)  Dividends paid and declared

	2021	2020
	£'000	£'000
Dividends paid
2020 fourth interim dividend of 3.26p (2019 fourth interim: 3.13p)	4,599	4,154
2021 first interim dividend of 3.29p (2020: 3.26p)	4,673	4,356
2021 second interim dividend of 3.29p (2020: 3.26p)	4,768	4,428
2021 third interim dividend of 3.29p (2020: 3.26p)	4,844	4,524
Total dividends paid in the year	18,884	17,462
Dividend declared
2021 fourth interim dividend of 3.29p (2020: 3.26p)	4,972	4,599

The fourth interim dividend of 3.29p has been declared and was paid on 9th July 2021 for the financial year ending 30th June 2021. In accordance with the accounting policy of the Company, this dividend will be reflected in the financial statements for the year ending 30th June 2022.

(b)  Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010 ('Section 1158')

The requirements of Section 1158 are considered on the basis of dividends declared in respect of the financial year, shown below. The revenue available for distribution by way of dividend for the year is £7,958,000 (2020: £5,483,000). The revenue reserve after payment of the second interim dividend (2020: second interim) amounts to £nil (2020: £nil) and the remaining amount has been drawn from the capital reserve.

	2021	2020
	£'000	£'000
2021 first interim dividend of 3.29p (2020: 3.26p)	4,673	4,356
2021 second interim dividend of 3.29p (2020: 3.26p)	4,768	4,428
2021 third interim dividend of 3.29p (2020: 3.26p)	4,844	4,524
2021 fourth interim dividend of 3.29p (2020: 3.26p)	4,972	4,599
	19,257	17,907

The fourth interim dividend proposed at the year end will be funded from the capital reserves.

4.  Net asset value per share

	2021	2020
Net assets (£'000)	653,374	478,837
Number of ordinary shares in issue	151,129,285	141,311,285
Net asset value per share	432.3p	338.9p

5.   Status of announcement

  2020 Financial Information

The figures and financial information for 2020 are extracted from the Annual Report and Financial Statements for the year ended 30th June 2020 and do not constitute the statutory accounts for that year.  The Annual Report and Financial Statements has been delivered to the Registrar of Companies and included the Report of the Independent Auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

 2021 Financial Information

The figures and financial information for 2021 are extracted from the Annual Report and Financial Statements for the year ended 30th June 2021 and do not constitute the statutory accounts for that year.  The Annual Report and Financial Statements includes the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The Annual Report and Financial Statements will be delivered to the Registrar of Companies in due course.

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.

30th September 2021 

For further information: 

Divya Amin,

JPMorgan Funds Limited

ENDS  

A copy of the 2021 Annual Report will shortly be submitted to the FCA's National Storage Mechanism and will be available for inspection at  https://data.fca.org.uk/#/nsm/nationalstoragemechanism

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

JPMORGAN FUNDS LIMITED

 

END

 

 

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