Half Yearly Report

RNS Number : 1285H

Jupiter Green Investment Trust Plc

26 November 2015

 

Jupiter Green Investment Trust plc

('the Company')

Unaudited Half Yearly Results for the six months to 30 September 2015

Financial Highlights

Capital performance

	30 September	31 March
	2015	2015	% Change
Total Assets less Current Liabilities ( £'000)	33,411	38,545	-13.3

Ordinary share performance

	30 September	31 March
	2015	2015	% Change
Net Asset Value per Share (pence)	135.35	152.35	-11.2
Ordinary Share Net Asset Value with dividends reinvested
on payment date)			-10.8
Mid Market price (pence)	130.5	148.00	-11.2
Mid Market price (with dividends reinvested on
payment date)			-11.5
Discount to Net Asset Value (%)	3.6	2.9
MSCI World Small Cap Index (Total Return)	200.11	224.66	-10.9

Ongoing charges figure for the period to 30 September 2015 was 1.76% ( 31 March 2015: 1.69%).

Chairman's Statement

It is with pleasure that I present the Interim Report for Jupiter Green Investment Trust PLC, covering the six months to 30 September 2015. Growing unease among investors globally about economic weakness in emerging markets and its impact on the West set the backdrop for the period. Global inflation rates remained stubbornly low, despite the expansion of monetary policy in Europe, Japan and China: this was not helped by the decision by China's authorities to devalue the yuan late in the period, a move that sent a deflationary shockwave through the global economy. It is difficult to source the root of the current global imbalances. However, the gradual normalisation of US Federal Reserve policy, has exposed some of the problems that largesse policy has caused, namely excessive US dollar borrowing at the cost of much needed structural improvements in some emerging market economies.

Global growth concerns tend to go hand in hand with weakness in industrial stocks, which is a sector of the market to which the Company has a natural bias given its environmental solutions focus. However, while the six month period proved challenging for the Company, it also provided opportunities for the Investment Manager to increase some holdings at attractive valuations.

During the period under review your Company's total assets, adjusted for share cancellations decreased by 13.3 per cent. to £33,411,800. This compares with a decrease in the Company's benchmark index, the MSCI World Small Cap Index of 10.9 per cent. Over the same period, your Company's Net Asset Value per Ordinary share decreased by 11.2 per cent. to 135.35p whilst the middle market price decreased by 11.8 per cent. to 130.50p.

I recommend the Investment Adviser's review in which he discusses some of the trials the Company faced during the period, but also his optimism about the policy backdrop ahead of the UN Climate Change Conference in Paris later this year, and its potential to add further support to businesses operating in the environmental solutions sector.

There are many reasons to be excited about the conference and to expect quite a constructive outcome to the talks. The commitment shown by countries as part of the UN's Intended Nationally Determined Contributions (INDC) programme in the lead up to the talks has been particularly encouraging, and has for the first time included a pledge by the US. Meanwhile, China has asserted itself as a leader when it comes to climate policy by committing to a dramatic cut in carbon emission by 2030, and in doing so throwing down the gauntlet to those officials that have used China's policy reticence in the past as an excuse for inaction. Finally, since the conference in Copenhagen, which largely ended in disappointment, there has been a marked shift away from a top-down policy model that seeks to rally nations behind a single emissions policy goal to one which recognises heterogeneous policy interests while at the same time introducing a mechanism by which nations increase their climate change commitments on a five-yearly cycle of policy tightening.

Overall, it continues to provide satisfaction that the Company provides an opportunity to invest in this important area.

Michael Naylor

Chairman

26 November 2015

Investment Adviser's Review

Performance Review

For the six months ended 30 September 2015, the Company's net assets value per share decreased by 11.2 per cent*. With dividends reinvested, the total return for the period was a decrease of 10.8 per cent. compared to a decrease of 10.9 per cent* for the Company's benchmark, the MSCI World Small Cap Index (Total Return). During the same period, the FTSE ET100 Total Return Index decreased by 14.9 per cent*. The FTSE ET100 Index measures the performance of the largest 100 companies globally whose core business is the development and deployment of environmental technologies.

Market Review

Global equity markets suffered a sharp downturn in the six months to the end of September 2015. The period, however, started in an ebullient mood. Deflation fears were abating and economic data from the eurozone had improved. Meanwhile, news that the Conservative party had achieved an unexpected majority in the UK general election provided a boost for the domestic stock market. However, against this more benign backdrop, negotiations between the Greek government and its creditors became increasingly fraught and in June, stock markets sold off sharply when talks collapsed and the far-left Syriza party called a referendum over the terms of the latest bailout on offer. Then, in the second half of the period, investor's turned their attention to the China's A-share market, which suffered a steep decline, and grew increasingly concerned that the economic slowdown in China and other emerging markets was beginning to impede growth in the West. These fears were heightened by the decision by China's authorities to devalue the yuan in August, which sent deflationary shockwaves through the global economy. Late in the period, the US Federal Reserve again delayed its policy "lift off", believing imbalances in the global economy were too acute to start normalising interest rates.

Policy Review

Against this backdrop, the Company lost ground, underperforming the MSCI World Small Cap Index, but faring better than the environmental-focused FTSE ET100 Index.

In a world of low economic growth, companies have sought to expand their operations through mergers and acquisitions, and this benefited the portfolio during the period, with Latchways receiving a successful takeover bid. Elsewhere, high-welfare pork business Cranswick made solid progress after it announced market-beating results: the company's acquisition of cooked poultry business Benson Park helped lift revenues, and despite this acquisition, the company paid down some of its debt. Meanwhile, a number of waste and recycling holdings made solid contributions to performance, including Veolia Environnement and Tomra Systems.

In contrast, a key impediment during the period was the poor performance of our US organic food holdings, United Natural Foods and Whole Foods Market, which suffered mainly due to concern about increasing competition in the market. Industrial recycling business Horsehead was also a disappointment after the company announced further delays to the start date of a new production facility. We sold out of our holding in this company after the end of the period.

The VW emissions scandal in late-September weighed on a range of holdings across the auto sector. These included ball bearing specialist SKF and engine efficiency companies BorgWarner and Johnson Matthey. The VW scandal has highlighted the challenges car manufacturer's face in trying to meet complex global auto emissions regulation. The greater transparency on vehicle performance that the incident may produce could, in our view, lead to stronger demand for the products offered by some of these businesses. As discussed below, we added to some of our holdings in this area during the period.

Although painful, market corrections such as the one we have seen in recent months can be constructive, especially after long periods of uninhibited price rises. They tend to recalibrate expectations and in the current case have started to moderate some of the valuation excesses that have built up across the market as a result of highly accommodative monetary policy in recent years. For active long term investors, market pullbacks can also provide opportunities and we have been taking advantage of the market's weakness to selectively add to our holdings in water heater specialist AO Smith and auto efficiency business Johnson Matthey.

Investment Outlook

Although we continue to be mindful of the current macroeconomic headwinds buffeting markets, the policy backdrop for environmental solutions businesses has improved markedly ahead of the UN Climate Change conference in Paris later this year. Individual country pledges for emission cuts have generally gone further than had been widely expected and estimates suggest these combined could keep the rise in global temperatures to about 3°C.** While this is greater than the maximum of 2°C now acknowledged by the UN as required to prevent catastrophic climate change, the draft negotiating agreement proposes that these pledges are reviewed every five years. We believe that this arrangement may put even greater emphasis on the development of disruptive technologies that can compete on price with mainstream counterparts, in turn helping politicians strive for deeper cuts while at the same time potentially opening up new opportunities for the businesses in which we invest. We have also been encouraged in recent weeks by the agreement of the UN Sustainable Development Goals, which will supersede the eight Millennium Development Goals that expire this year. This is comprised of seventeen goals which fall under five key categories "people, planet, prosperity, peace and partnership"; environmental issues feature heavily throughout these fifteen year goals.

Charles Thomas

Jupiter Asset Management Limited

Investment Adviser

26 November 2015

* Source: Jupiter Asset Management

** http://climateactiontracker.org/news/224/INDCs-lower-projected-warming-to-2.7C-significant-progress-but-still-above-2C-.html

Investment Portfolio as at 30 September 2015

		Market
	Country	value	Percentage
Company	of listing	£'000	of portfolio
Wabtec	United States	1,527	4.8
Smith A. O.	United States	1,492	4.7
Cranswick	United Kingdom	1,395	4.4
LKQ Corporation	United States	1,026	3.2
Vestas Wind System	Denmark	990	3.1
Ricardo Group	United Kingdom	945	3.0
Emcor Group	United States	887	2.8
Tomra Systems	Norway	876	2.7
National Express Group	United Kingdom	831	2.6
WS Atkins	United Kingdom	811	2.5
Toray Industries	Japan	798	2.5
Johnson Matthey	United Kingdom	764	2.4
RPS Group	United Kingdom	760	2.4
Stantec	Canada	757	2.4
Novozymes	Denmark	689	2.2
United Natural Foods	United States	674	2.1
Veolia Environnement	France	669	2.1
EDP Renovaveis	Spain	647	2.0
FirstGroup	United Kingdom	630	2.0
Valmont Industries	United States	602	1.9
BorgWarner	United States	579	1.8
Xylem	United States	572	1.8
Sensata Technologies	Netherlands	556	1.7
Covanta	United States	552	1.7
Shanks Group	United Kingdom	552	1.7
Latchways	United Kingdom	550	1.7
Shimano	Japan	479	1.5
China Longyuan Power	China	478	1.5
Azbil	Japan	447	1.4
China Everbright	China	444	1.4
SKF	Sweden	438	1.4
Air Water	Japan	433	1.4
Schneider Electric	France	432	1.4
Andritz	Austria	425	1.3
Regal Beloit	United States	421	1.3
Keller Group	United Kingdom	400	1.2
Mayr-Melnhof Karton	Austria	383	1.2
Daiseki	Japan	381	1.2
Clean Harbors	United States	368	1.1
Suez Environnement	France	367	1.1
NSK	Japan	343	1.1
Centrotec Sustainable	Germany	322	1.0
Boer Power	Hong Kong	317	1.0
Whole Foods Market	United States	303	0.9
Itron	United States	296	0.9
First Solar	United States	296	0.9
Casella Waste	United States	294	0.9
Augean	United Kingdom	282	0.9
Watts Water	United States	268	0.8
Hollysys Automation Technologies	United Kingdom	265	0.8
Pure Technologies	Canada	241	0.8
Vossloh	Germany	239	0.7
Hub Group	United States	187	0.6
Wacker Chemie	Germany	179	0.6
Newalta	Canada	169	0.5
Horsehead Holdings	United States	167	0.5
Greenko Group	United Kingdom	164	0.5
Ameresco	United States	146	0.5
Keurig Green Mountain	United States	120	0.4
SunOpta	United States	115	0.4
Renewable Energy Generation	United Kingdom	111	0.3
Atlantis Resources	United Kingdom	87	0.3
TEG Group	United Kingdom	20	0.1
Total		31,958	100.0

The holdings listed above are all equity shares.

Statement of Comprehensive Income

For the six months to 30 September 2015 (unaudited)

		Six months to			Six months to
		30 September 2015			30 September 2014
Revenue		Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Loss on investments held at fair
value through profit or loss	-	(4,163)	(4,163)	-	(989)	(989)
Foreign exchange gain/(loss)	-	3	3	-	(5)	(5)
Income	346	-	346	360	-	360
Total income	346	(4,160)	(3,814)	360	(994)	(634)
Investment management fee	(16)	(141)	(157)	(16)	(143)	(159)
Other expenses	(132)	-	(132)	(168)	-	(168)
Total expenses	(148)	(141)	(289)	(184)	(143)	(327)
Return/(loss) on ordinary
activities before finance
costs and taxation	198	(4,301)	(4,103)	176	(1,137)	(961)
Finance costs	(5)	-	(5)	(8)	-	(8)
Return/(loss) on ordinary
activities before taxation	193	(4,301)	(4,108)	168	(1,137)	(969)
Taxation	(22)	-	(22)	(31)	-	(31)
Net return/(loss) after taxation	171	(4,301)	(4,130)	137	(1,137)	(1,000)
Return/(loss) per Ordinary share
	0.68p	(17.14)p	(16.46)p	0.53p	(4.37)p	(3.84)p

The total column of this statement is the income statement of the Company, prepared in accordance with International Financial Reporting Standards (IFRS). The supplementary revenue return and capital return columns are both prepared under guidance produced by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations.

No operations were acquired or discontinued during the year.

All income is attributable to the equity holders of Jupiter Green Investment Trust PLC.

The financial information does not constitute 'accounts' as defined in section 434 of the Companies Act 2006.

Statement of Financial Position

As at 30 September 2015

	30 September 2015	31 March 2015
	(unaudited)	(audited)
	£'000	£'000
Non current assets
Investments held at fair value through profit or loss	31,958	36,349
Current assets
Prepayments and accrued income	71	94
Cash and cash equivalents	1,606	2,242
	1,677	2,336
Total assets	33,635	38,685
Current liabilities
Other payables	(224)	(140)
Total net assets less current liabilities	33,411	38,545
Capital and reserves
Called up share capital	34	34
Share premium	29,481	29,348
Redemption reserve	239	239
Special reserve	24,292	24,292
Retained earnings (Note 5)*	(20,635)	(15,368)
Total equity shareholders' funds	33,411	38,545
Net Asset Value per Ordinary share (Note 6)	135.35p	152.35p

* These reserves form the distributable reserves of the Company and may be used to fund distribution of profits to investors via dividend payments.

Statement of Changes in Equity

For the six months to 30 September 2015

	Share	Share	Special	Redemption	Retained
For the six months to	Capital	Premium	Reserve	Reserve	Earnings	Total
30 September 2015 (unaudited)	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2015	34	29,348	24,292	239	(15,368)	38,545
Net loss for the period	-	-	-	-	(4,130)	(4,130)
Ordinary shares issued	-	133	-	-	-	133
Ordinary shares repurchased	-	-	-	-	(999)	(999)
Dividend paid	-	-	-	-	(138)	(138)
Balance at 30 September 2015	34	29,481	24,292	239	(20,635)	33,411
	Share	Share	Special	Redemption	Retained
For the six months to	Capital	Premium	Reserve	Reserve	Earnings	Total
30 September 2014 (unaudited)	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2014	33	28,348	24,292	239	(14,770)	38,142
Net loss for the period	-	-	-	-	(1,000)	(1,000)
Ordinary shares issued	1	5,334	-	-	-	5,335
Ordinary shares repurchased	-	-	-	-	(6,346)	(6,346)
Dividend paid	-	-	-	-	(284)	(284)
Balance at 30 September 2014	34	33,682	24,292	239	(22,400)	35,847

Cash Flow Statement

For the six months to 30 September 2015 (unaudited)

	2015	2014
	£'000	£'000
Cash flows from operating activities
Investment income received	382	356
Investment management fee paid	(136)	(161)
Other cash expenses	(129)	(534)
Cash generated from operations	117	(339)
Interest paid	(5)	(5)
Taxation	(38)	(31)
Net cash inflow/(outflow) from operating activities	74	(375)
Cash flows from investing activities
Purchase of investments	(1,063)	(386)
Sale of investments	1,354	2,931
Net cash inflow from investing activities	291	2,545
Cash flows from financing activities
Shares issued	133	5,335
Shares repurchased	(999)	(6,346)
Dividend paid	(138)	(284)
Net cash outflow from financing activities	(1,004)	(1,295)
(Decrease)/increase in cash	(639)	875
Cash and cash equivalents at start of period	2,242	96
Gain/(loss) on foreign currency	3	(5)
Cash and cash equivalents at end of period	1,606	966

Notes to the Financial Statements

1.  Accounting Policies

The Accounts comprise the unaudited financial results of the Company for the period to 30 September 2015. The Accounts are presented in pounds sterling, as this is the functional currency of the Company. All values are rounded to the nearest thousand pounds (£'000) except where indicated.

The Accounts have been prepared in accordance with International Financial Reporting Standards (IFRS, which comprise standards and interpretations approved by the International Accounting Standards Board (IASB) and International Accounting Standards Committee (IASC), as adopted by the European Union (EU).

Where presentational guidance set out in the Statement of Recommended Practice (SORP) for Investment Trusts issued by the Association of Investment Companies (AIC) in January 2009 and replaced in November 2014 is consistent with the requirements of IFRS, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.

Revenue recognition

Revenue includes dividends from investments quoted ex-dividend on or before the date of the Statement of Financial Position.

Dividends receivable from equity shares are taken to the revenue return column of the Statement of Comprehensive Income.

Deposit and other interest receivable, expenses and interest payable are accounted for on an accruals basis. These are classified within operating activities in the cash flow statement.

Presentation of Statement of Comprehensive Income

In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the Association of Investment Companies (AIC), supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the statement. In accordance with the Company's Articles of Association, net capital returns may not be distributed by way of dividend.

An analysis of retained earnings broken down into revenue (distributable) items and capital (non-distributable) items is given in Note 5. Investment Management fees are charged 90 per cent. to capital and 10 per cent. to revenue. All other operational costs including administration expenses and finance costs (but with the exception of any investment performance fees which are charged to capital) are charged to revenue.

Basis of valuation of investments

Investments are recognised and derecognised on a trade date where a purchase and sale of an investment is under contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at cost, being the consideration given.

All investments are classified as held at fair value through profit or loss. All investments are measured at fair value with changes in their fair value recognised in the Statement of Comprehensive Income in the period in which they arise. The fair value of listed investments is based on their quoted bid price at the reporting date without any deduction for estimated future selling costs.

Foreign exchange gains and losses on fair value through profit and loss investments are included within the changes in the fair value of the investments.

For investments that are not actively traded and/or where active stock exchange quoted bid prices are not available, fair value is determined by reference to a variety of valuation techniques. These techniques may draw, without limitation, on one or more of: the latest arm's length traded prices for the instrument concerned; financial modelling based on other observable market data; independent broker research; or the published accounts relating to the issuer of the investment concerned.

2.  Related parties

Jupiter Unit Trust Managers Limited (JUTM), the Alternative Investment Manager, is a subsidiary company within the same group as the Investment Adviser, Jupiter Asset Management Limited. JUTM is contracted to provide investment management services to the Company (subject to termination by not less than twelve months' notice by either party) for a fee payable monthly, of one twelfth of 0.85 per cent. of net assets of the Company after deduction of the value of any Jupiter Managed investments.

Jupiter Unit Trust Managers Limited is also entitled to an investment performance fee which is based on the outperformance of the Net Asset Value per Ordinary share over the total return on the Benchmark Index in an accounting year. Any performance fee payable will equal the time weighted average number of Ordinary shares in issue during the period multiplied by 15 per cent. of the amount by which the increase in the Net Asset Value per Ordinary share (plus any dividends per Ordinary share paid or payable and any accrual for unpaid performance fees for the period) exceeds the total return on the Benchmark Index. The performance fee will only be payable if the Net Asset Value per Ordinary share (adjusted as described above) exceeds the highest of (i) the Net Asset Value per Ordinary share on the last business day of the previous performance period; (ii) the Net Asset Value per Ordinary share on the last day of a performance period in respect of which a performance fee was last paid: and (iii) 100p. The total amount of management fees and any performance fee payable in respect of one accounting period is limited to 1.75 per cent. of the Net Asset Value of the Company on the last business day of the relevant performance period.

Availability of Half Yearly Report

The Half Yearly Report will shortly be available on Company's website (www.jupiteram.com/JGC). Copies my also be obtained from the registered office of the Company at 1 Grosvenor Place, London SW1X 7JJ on request.

By Order of the Board
Jupiter Asset Management Limited, Secretaries

Enquiries:

Richard Pavry

Head of Investment Trusts

Jupiter Asset Management Limited, Company Secretary

[e-mail]

020 3817 1496

 

END

 

 

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