Half-year Report

JPMorgan Global Core Real Assets Ld

28 November 2023

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN GLOBAL CORE REAL ASSETS LIMITED

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 31ST AUGUST 2023

RESILIENT POSITIVE ASSET PERFORMANCE +0.7% IN CHALLENGING MARKETS

5% DIVIDEND INCREASE DURING THE PERIOD

SHARE BUYBACKS INITIATED

Legal Entity Identifier: 549300D8JHZTH6GI8F97

Information disclosed in accordance with the DTR 4.2.2

JPMorgan Global Core Real Assets Limited (the 'Company' or 'JARA'), the diversified global infrastructure, transportation and real estate investment company, is pleased to announce its half year results for the six-months ended 31st August 2023, in which its carefully calibrated portfolio performed robustly in the current challenging macroeconomic conditions.

Highlights for the six months ended 31st August 2023

Performance 

·    The net asset value ('NAV') total return was -4.6%, whilst total returns to shareholders was -7.8%.

·    Underlying asset performance in local currency was +0.7%. Currency was the key negative contributor to Company performance during the period (-5.1%) as Sterling generally strengthened. To help reduce this volatility the Company initiated a partial hedge in July.

·    The share price discount to NAV widened during the period, to 18.1%, from 14.9%, against a background of volatile equity markets.

·    At the asset level, transportation (+0.9%), infrastructure (+0.6%) and real estate debt (+0.3%) contributed positively to performance, while US private real estate equity was the principal detractor (-0.9%).

·    Dividends during the period were increased 5% year on year, with two distributions of 1.05p compared with 1 penny per share in the prior year.

Portfolio

·    The portfolio remains highly diversified across geographies, asset classes and importantly macro and political environments, with 344 investments, providing investors a remarkably diverse portfolio of 1,409 core real assets worldwide.

·    During the period, the Company invested a further £2.4m in the infrastructure strategy, increasing investor exposure to a platform of 20 global infrastructure operating businesses which the manager views as attractively positioned.

·    Meanwhile, the Company reduced its private real estate exposure from 40% to 37% in response to the prevailing market conditions.

·    Occupancy across the real estate and transportation segments stands at 96%, in line with expectations.

·    Contracted income received stands at 96%, which is within normal operational levels.

·    Average lease length across the real estate and transportation segments is 4.7 years, with c.10% due to expire in 2023.

·    The blended average discount rate across the portfolio is 7.9%, with 6.5% being applied to property, and infrastructure and transport using a rate of 9.3%.

Valuation

·    Four out of the seven exits at the portfolio level occurred at valuations which were up to 10% higher than their carrying NAV, a reflection of prudent valuations. On average, these seven deals achieved an approximate +2% increase on their appraisal value, which affirms the quality and resilience of JARA's NAV.

·    In contrast to the widening discount, the portfolio management team has reviewed historical sales data in relation to the appraisal (carrying) NAVs for JARA's investments in private real assets.

·    In analysing recently closed transactions across the US real estate, APAC real estate, and global infrastructure strategies, exit valuations were largely in line with the appraisal values at that time. This is an indication of the rigor of the valuation process which is undertaken for each of these portfolios and underlying assets.

·    The stability of underlying valuations reflects the quality of the portfolio and strategy even in a period of considerable market uncertainty, most notably in the real estate sector.

Gearing

·    JARA is debt free at the company level and the underlying portfolio takes a conservative approach to debt given its core nature.

·    The portfolio's look through cost of debt is 4.3%, with a loan to value of 38.2%. Of this leverage, almost 80% is fixed rate and less than 10% is maturing by the end of 2024.

Discount Management

·    The Board and Investment Manager are focused on using the tools available to them to close the discount to NAV at which the Company's shares trade, which has grown during the recent period of macro-economic uncertainty.

·    During the period, the Company initiated a share buyback programme and, to date, 3.2% of the Company's share capital has been bought back at an average discount of 26.2%, providing an uplift in the Company's NAV.

ESG

·    On 30th June 2023, in line with regulatory requirements, the Manager published its first UK Task Force on Climate-related Financial Disclosures ('TCFD') Report for the Company in respect of the year ended 31st December 2022. This is available to view on the Company's website.

Sector Exposure

Sector	Allocation (%)
Industrial / Logistics	17%
Office	9%
Residential	10%
Retail	5%
Other Real Estate	2%
Total Real Estate (private % / public %)	43% (37% / 6%)
Utilities	12%
Renewable Energy	5%
Liquid Bulk Storage	2%
Conventional Energy	2%
Fixed Transportation Assets	1%
Total Infrastructure (private % / public %)	23% (19% / 4%)
Maritime	9%
Energy Logistics	6%
Aviation	2%
Rolling Stocks	3%
Other Transportation	1%
Total Transportation (private % / public %)	22% (20% / 3%)
Real Estate Mezzanine Debt	7%
Other Real Asset Debt	2%
Other Real Assets (private % / public %)	10% (7% / 2%)
Total Invested Portfolio	98%

Geographical and Currency Exposure

Region
North America	56%
Europe (Including 3% U.K.)	18%
Asia-Pacific	26%
Currency
USD	58%
CAD	<1%
GBP	20%
EUR	2%
Other1	<1%
JPY	6%
AUD	4%
Other2	9%

Source: J P. Morgan Asset Management. Data as of 31st August 2023. Totals may not add up to 100% due to rounding. FX exposure differs from regional exposure due to currency hedged investments.

¹Includes DKK (<1%), CHF (<1%), and SEK (<1%).

² Includes SGD (3%), RMB (2%), NZD (2%), HKD (<1%), and KRW (<1%).

John Scott, Chairman, commented:

"Despite the macro-economic challenges that have caused significant share price volatility across the investment companies sector, from which the Company was unfortunately not immune, the Company's underlying portfolio has continued to perform respectably, achieving a +0.7% return at asset level.

"The Company remains focused on addressing the discount to NAV at which the shares currently trade and during the period has initiated four proactive measures. These are: increasing dividend payments by 5%; reducing private real estate exposure which has been the principal asset detractor; introducing a degree of currency hedging into the strategy; and initiating a share buyback programme to preserve and improve shareholder value, as well as attract new demand for the shares.

"Whilst headwinds are still steering the direction of macro-economic travel, there are reasons to be optimistic. Inflation appears to be coming under control and we can expect with a reasonable degree of confidence that central banks will begin to start cutting interest rates, a move that should have a positive impact on the Company's share price.

"Further, we have every confidence in the Company's portfolio positioning with numerous drivers of shareholder value creation across our global asset base now in place. An example of this is the strong outlook for APAC real estate where growth opportunities are less affected by interest rate-driven headwinds. Our real estate mezzanine debt will continue to benefit from the higher rate environment. There is every sign that the valuation declines we have seen in US private real estate are flattening and may be near the bottom. The US government has passed some of the most important public infrastructure legislation in the country's history, presenting a major growth investment opportunity. Finally, the global search for increased energy security has seen demand for traditional and alternative energy sources, as well as for assets in the transportation sector to support this demand.

"Ultimately, the Company's carefully curated and diverse portfolio of 344 investments in 1,409 assets around the world places it in a compelling position to generate an attractive level of risk-adjusted returns for our shareholders and we look to the future with confidence."

Enquiries:

JPMorgan Global Core Real Assets Limited
Press enquiries through Buchanan
JPMorgan Funds Limited	Tel: [phone] or [phone] E-mail: [e-mail]
Buchanan Communications	Tel: [phone]
Financial PR Henry Wilson, Helen Tarbet, George Beale	Email: [e-mail]

CHAIRMAN'S STATEMENT

Introduction

I am pleased to present the interim report for the Company for the six months ended 31st August 2023.

This has been a difficult period for many investment trusts - and JARA is no exception. The Company recorded a 4.6% decrease in total return on net assets over the six months, reflecting a period of respectable performance in our underlying holdings, offset by adverse currency movements which contributed -5.1% to returns. Our main problem, however, has been the significant widening of the discount to our net asset value ('NAV') and the result is a total return for shareholders of -7.8%, the discount having moved out from 14.9% to 18.1% over the same period. Our view is that this widened discount reflects the current weak demand across our sector of the equity markets, and is not a reflection of the underlying quality of our diversified portfolio.

Features of the period

Activity in most developed economies continued its halting recovery from the disruption caused by COVID-19, but many years of loose monetary policy, combined with supply chain difficulties, have provoked widespread inflation. While there are signs that in most economies the worst is past, inflation has worked its way into the system and is proving very difficult to cast aside. On top of this, Russia's war in Ukraine, already by far the most serious conflict in Europe since 1945, shows every sign of descending into a bloody stalemate. Although energy and other commodity markets have to an extent adapted to the new realities of eastern Europe, gas, oil and fertiliser prices remain stubbornly higher than in pre-invasion days, contributing to a cost-of-living crisis in many countries. Your Company, which invests in a diversified portfolio of core real assets, was designed to perform resiliently in difficult environments such as the one we face today and in the main this is proving to be the case; our underlying asset value has borne up well when measured in local currency.

Share Price and Discount

JARA's discount to NAV averaged 15.4% over the six-month period, ending at 18.1% at the end of August. At the time of writing the discount has widened still further and currently stands at 26.2%*. The Directors believe that much of this is driven by investor response to the dramatically changed interest rate environment, and indeed is reflected across the entire listed investment companies sub-sector. As yields on government debt have risen, so in tandem has the yield demanded by the market on other investments which, absent a significant rise in dividends, drives a reduction in share prices. The weakening of our share price pays little heed to the quality of the underlying asset portfolio, nor the prospect of growing dividends. That this is a feature being experienced by a wide range of funds is, we are aware, of little comfort to our shareholders, and that is why your Board is taking a number of concerted actions to address the discount.

* As at 24th November 2023.

Board Actions

Your Board is responding to this challenging environment with the aim of preserving and restoring shareholder value.

First: we have increased dividend payments in order to return greater value to shareholders. Further detail is set out in the 'Dividend' section below.

Secondly: responding to shareholder feedback regarding the proportion of the Company's investments in private real estate strategies, total exposure has been reduced from 40% to 37% over the past year and further adjustments will be made, as needed. Part of the proceeds were used to make a further £2.4 million investment into the Infrastructure strategy, demonstrating the Board's confidence in building greater exposure for shareholders in what is essentially a platform of 20 global infrastructure operating businesses. Furthermore, we have asked the Investment Manager to continue to evaluate the allocations across our entire portfolio to ensure a balance of risk and return best suited to today's environment and opportunities.

Thirdly: the Board has explored cost effective options available to the Company to dampen the effects of currency fluctuations which continue to provide some distraction to shareholders from the resilient constant currency performance of our various real asset strategies. To this end, the Company switched its investment allocation within Infrastructure strategy to a hedged unit class. This reallocation of the existing unhedged investment in Infrastructure to the hedged vehicle is intended to reduce the currency-related volatility in returns. This is discussed in more detail in the Investment Managers' Report below.

Fourthly: we have initiated a series of share buybacks and, to date, 3.2% of our share capital has been bought back, at an average discount of 26.2%; the programme continues and, by buying in our own shares at a significant discount, provides a worthwhile uplift in NAV for continuing shareholders.

Dividends

The Company declared two interim dividends of 1.05 pence each per ordinary share each, which were paid to shareholders on 31st May 2023 and 30th August 2023. A third dividend of 1.05 pence per Ordinary Share was declared after the period end and will be paid to shareholders on 29th November 2023. This is a 5% increase on the comparable quarterly dividends for May and August 2022, which were 1 penny per ordinary share.

Task Force on Climate-related Financial Disclosures

On 30th June 2023, in line with regulatory requirements, the Investment Manager published its first UK Task Force on Climate-related Financial Disclosures ('TCFD') Report for the Company in respect of the year ended 31st December 2022. The report provides estimates of the portfolio's climate-related risks and opportunities, disclosed in accordance with the Financial Conduct Authority's Environmental, Social and Governance ('ESG') sourcebook and TCFD recommendations.

This is the first report under the new disclosure requirements, and it is available on the Company's website: www.jpmrealassets.co.uk. The Board is aware that best practice reporting under the TCFD regime is still evolving both with regard to metrics and input data quality, as well as the interpretation and implications of the outputs produced. We continue to monitor and respond to developments.

Outlook

Despite the acute geopolitical tensions arising from Russia's war in Ukraine and Israel's military operation in Gaza, the global economy and financial markets have to date been relatively muted in their response to these threats. Whilst we all fervently hope that both conflicts will be resolved as rapidly as possible, it is now apparent that in both theatres of war we may be facing the prospect of engagements which endure much longer than was initially thought possible, with the consequent effects on macro-economic conditions of inflation, higher interest rates, and equity market uncertainty.

As I have noted in the past, the Company invests in many different classes of real assets, on a basis that is highly diversified both by sector and by geography. We pursue a progressive dividend policy while also seeking capital growth in real terms. This should appeal to investors wanting a running return combined with the delivery of steady long-term growth in asset values across the cycle. It is deeply frustrating for your Directors to observe that, on the one hand, JARA is achieving what it set out to do, while on the other seeing little of the Company's success reflected in our current share price.

Nonetheless, I see grounds for optimism: inflation's dragon appears to have been tamed, if not yet slain, and there are indications that central banks may start to cut interest rates, a move that would be expected to result in a positive re-rating of your Company's shares, albeit rates will remain at higher levels than have prevailed in recent times. Your Board is aware that there will be a continuation vote in August 2024, at which shareholders will have the opportunity to decide whether the Company continues in business for a further five years. In recommending a course of action, your Board will consider all options before determining what it considers to be the best outcome for investors. Until then, we value the support of our shareholders, whom I ask to reflect on the underlying investment proposition of JARA, which I believe to be sound and carefully calibrated to offer resilience in the times in which we live.

John Scott

Chairman                                                                                                                                27th November 2023

INVESTMENT MANAGERS' REPORT

Review of Markets

The six months to 31st August 2023 brought about some optimism across markets, with inflation cooling off and a reasonable assumption that developed economies are approaching the end of monetary tightening. However, inflationary forces may be stickier than expected as energy prices present upward pressure. In the U.S., equities have rallied on the back of larger tech stocks bolstered by the potential opportunity stemming from Artificial Intelligence (AI), while in the U.K. other fiscal and monetary policy concerns continue to weigh heavily on the public indices. In fixed income, rates remain volatile, with shifting central bank policy expectations driving market pricing.

Monetary policy has continued to tighten over the past six months, with the Federal Reserve and the Bank of England increasing policy rates to above 5% (up +75-100bps over the period). The impact of these hikes has begun to pass through the economy, but this takes time, and hence interest rates are likely to remain higher for longer than initially expected.

During the reporting period, uncertainty remained a prominent theme across markets. The setbacks of interest rates, quantitative tightening, and geopolitical factors were more pronounced. Inflation seems to be cooling across the U.S. and U.K., led by supply-chain related factors and a fall in energy prices. The U.K. is showing slower progress as wage growth is trending higher, whereas in the U.S. this inflationary aspect appears to have peaked. With crude oil prices re-approaching high levels, the ongoing war in Ukraine, the Gaza conflict and other geopolitical tensions in the Middle East there might be upward pressure on overall prices, and this could keep inflation at the forefront of the minds of consumers and central banks alike. Given real assets have historically been able to provide some level of inflation linkage in returns they are a useful asset class for investors looking to protect against this risk.

We continue to believe that the case for core real assets is as attractive as ever. APAC real estate has a strong outlook, with growth opportunities and fewer interest rate-driven headwinds. Real estate mezzanine debt also benefits from higher base rates, resilient spreads, and exposure to floating rate loans. Although U.S. private real estate has continued to face near term difficulties, market pricing has started to flatten out, showing signs that it may be nearing a bottom. In addition, the valuation of listed real assets looks attractive given the recent sell-off. As the U.S. government passed two of the most significant pieces of public infrastructure legislation in the nation's history, fiscal policy has shifted from a short-term pandemic response to a longer-term public investment model. This represents a significant opportunity for infrastructure. Finally, the search for energy security given the distribution in the global energy supply from geopolitics conflicts, has driven demand for both traditional and alternatives energy sources, creating a dynamic, multi-year opportunity for global core transport.

Near term global real assets outlook

See graphs in the half year report, available on the Company's website; www.jpmrealassets.co.uk.

Performance Review

In the first six months of this financial year, the Company's NAV return, in GBP, was -4.6%. This return is inclusive of two 1.05 pence per share dividends. The annualised yield based on the NAV at 31st August 2023 is 4.4% and 4.2% based on initial issue price.

During the same six-month period, the underlying asset performance in local currency was +0.7%. Infrastructure, transportation and real estate debt provided a positive contribution, while U.S. private real estate equity was the primary detractor. A significant driver of the negative return in GBP terms was the impact of currency movements on the portfolio as Sterling generally strengthened. This was most noticeable against the US Dollar (the key currency pair), as Sterling strengthened from 1.21 to 1.27 over the six-month period. To help reduce some of this currency related volatility, the Company initiated a partial currency hedge in July, which is discussed further below.

Return attribution (1st March 2023 to 31st August 2023)

U.S. Real Estate	-0.9%
Asia Pacific Real Estate	-0.2%
Global Infrastructure	0.6%
Global Transportation	0.9%
U.S. Real Estate Mezzanine Debt	0.3%
Listed Real Assets	-0.1%
Total Local Return	0.7%
Currency Impact	-5.1%
Company Level Costs	-0.2%
Total	-4.6%

Source: J.P. Morgan Asset Management. Data as of 31st August 2023. Numbers may not sum due to rounding. Currency impact also includes return earned from cash holdings over the year. Table shows the components of return contribution made up of income and capital. Capital contribution may be negative for reasons including asset depreciation, asset write downs or public mark-to-market.

U.S. private real estate contributed -0.9% to the portfolio in local currency returns. This was primarily driven by the higher interest rate environment which impacted borrowing costs causing buyers to increase underwriting requirements significantly and reduce transaction activity. Further friction was created in the office market, which continued to be challenged as work from home headwinds weigh on the sector resulting in reduced demand.

JARA's global exposure and diversification across both equity and debt in real estate offered some buffer to this U.S. volatility as Asia-Pacific real estate produced a -0.2% local currency performance contribution and U.S. real estate debt was positive in local currency terms, contributing +0.3%. Looking forward, sustained economic growth and a peaking of interest rates will be important for real estate markets. Most fundamentals continue be resilient - an example of this was that at mid-year, the U.S. private real estate strategy is on track to deliver 11% net operating income growth, which is currently over 100 basis points ahead of budget for the year and higher than the growth generated in 2022.

Core infrastructure and transportation markets performed resiliently, providing positive contributions of +0.6% and +0.9% respectively on a local currency basis. As economies have slowed, the demand-insensitive nature of many of these assets and the inflation-linked nature of some cashflows have been supportive to performance. This collective allocation across both private infrastructure and transportation has now reached 38.4% (45.0% including public markets). This increased over the reporting period - both as a result of relative outperformance but also as a result of asset allocation decisions discussed in the next section.

During the period, capital deployment within infrastructure and transportation was primarily focused on incremental or smaller 'bolt-on' investments to existing assets. We typically call these 'platform' investments as they allow for a diversified platform to be created over time. A key benefit of this is that building large, diversified platforms allows for efficient capital deployment and growth which will deliver increasing shareholder value over time. Investments over the period included additional allocations across areas such as railcar leasing, utilities, renewable energy, and dry bulk carriers.

Finally, the Company's listed real asset allocation was a small negative contributor of -0.1% on a local currency basis. This was driven by volatility at the end of the period, as a particularly negative performance in the REIT sector offset gains made earlier in the period. As a reminder, our listed real asset allocation is made up of two distinct strategies: U.S. all-tranche REITs and a broader allocation across a variety of other listed real assets. The benefit of having an allocation to listed real assets within the portfolio is both as a source of liquidity - giving more flexibility around asset allocation - and as a further diversifier in returns and sectoral exposure.

Portfolio Valuations

The portfolio management team has reviewed historical transactional data in relation to the appraisal (carrying) NAVs for JARA's investments in private real assets. In analysing recently closed transactions across US real estate, APAC real estate, and global infrastructure, exit valuations were largely in line with the appraisal values at that time. This is an indication of the rigor of the valuation process which is undertaken for each of these portfolios and underlying assets. It's important to highlight that this has occurred during a period of market uncertainty, most notably in the real estate sector. Four out of the seven exits occurred at valuations which were up to 10% higher than their carrying NAV which is a reflection of prudent valuations. On average, these seven deals observed an approximate +2% increase on their appraisal value, which affirms the quality and resilience of JARA's NAV.

JARA's NAV has shown resilience

Each of JARA's underlying private sub-funds produces a valuation on a quarterly basis which is independently validated by a third-party appraisal firm on a regular basis and no less than once a year.

See data chart in the half year report, available on the Company's website; www.jpmrealassets.co.uk.

Portfolio Rebalancing

At the beginning of the period, the portfolio management team viewed that JARA's overweight exposure to private real estate equity, in comparison to its strategic allocation, coupled with its negative outlook relative to other alternatives, warranted rebalancing.

Consequently, we initiated a rebalancing process in the first and second quarters of 2023 and received partial payouts from both the U.S. Core real estate and APAC Core real estate strategies, amounting to US$5.2 million as of 31st August 2023. This meant JARA ended the period with real estate equity exposure of 43%, reduced from 46% at the start of the financial year. The portfolio management team will continue to monitor the market and make further adjustments as needed.

Hedging Update

The Company announced at the end of June an update to its hedging strategy. As of 3rd July 2023, JARA has been invested in the hedged vehicle of its private Infrastructure allocation. The reallocation of the existing unhedged investment in private infrastructure to the hedged vehicle is intended to reduce the currency-related volatility in returns from the private infrastructure allocation. As a result of the change, based on portfolio weightings as of 31st August 2023, the Company has 20% of its NAV exposed to GBP, with reduced exposure to EUR of 2% and to USD of 58%. The Company will continue to consider additional actions to reduce currency-related NAV volatility as appropriate.

See charts in the half year report, available on the Company's website; www.jpmrealassets.co.uk.

Please find below JARA's detailed breakdown of sector, geographic, and currency exposure as of 31st August 2023.

Sector Exposure

Sector	Allocation (%)
Industrial / Logistics	17%
Office	9%
Residential	10%
Retail	5%
Other Real Estate	2%
Total Real Estate (private % / public %)	43% (37% / 6%)
Utilities	12%
Renewable Energy	5%
Liquid Bulk Storage	2%
Conventional Energy	2%
Fixed Transportation Assets	1%
Total Infrastructure (private % / public %)	23% (19% / 4%)
Maritime	9%
Energy Logistics	6%
Aviation	2%
Rolling Stocks	3%
Other Transportation	1%
Total Transportation (private % / public %)	22% (20% / 3%)
Real Estate Mezzanine Debt	7%
Other Real Asset Debt	2%
Other Real Assets (private % / public %)	10% (7% / 2%)
Total Invested Portfolio	98%

Source: J P. Morgan Asset Management. Data as of 31st August 2023. Holdings, sector weights, allocations and leverage, as applicable, are subject to change at the discretion of the investment manager without notice. Numbers may not sum to total invested portfolio due to rounding. Cash represents ~2% of the total portfolio.

Geographical and Currency Exposure

Region
North America	56%
Europe (Including 3% U.K.)	18%
Asia-Pacific	26%
Currency
USD	58%
CAD	<1%
GBP	20%
EUR	2%
Other1	<1%
JPY	6%
AUD	4%
Other2	9%

Source: J P. Morgan Asset Management. Data as of 31st August 2023. Totals may not add up to 100% due to rounding. FX exposure differs from regional exposure due to currency hedged investments.

¹Includes DKK (<1%), CHF (<1%), and SEK (<1%).

² Includes SGD (3%), RMB (2%), NZD (2%), HKD (<1%), and KRW (<1%).

Buyback Update

Further to the announcement made on 10th August 2023 regarding the Board's decision to make use of the share repurchase authority granted by shareholders at the Company's annual general meeting, the programme's first repurchase was on 11th August 2023 and the Company repurchased 1,400,000 shares in the quarter to 31st August 2023. The shares were repurchased at a weighted average discount of c. 18.4%. The programme is ongoing.

JARA is unlevered at the Company level and the exposure to listed real assets, along with the rebalancing redemption proceeds from private strategies, provides a certain level of flexibility for the buyback without compromising portfolio integrity. The portfolio management team will continue to work with the Board to ensure any future buybacks are balanced against the overall portfolio positioning and liquidity.

Balance Sheet

JARA's private asset balance sheet remains robust. JARA continues to have no Company level leverage whilst look through loan-to-values at the underlying strategies have a weighted average of 38.2%. Of this leverage, almost 80% is fixed rate and less than 10% is maturing by the end of 2024.

Further details on the balance sheet are provided in the half year report, which is available on the Company's website; www.jpmrealassets.co.uk.

Investment Managers

Alternatives Solutions Group Investment Committee

Security Capital Research & Management Inc. and J.P. Morgan Alternative Asset Management Inc.

27th November 2023

INTERIM MANAGEMENT REPORT

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

Principal and Emerging Risks and Uncertainties

The principal and emerging risks and uncertainties faced by the Company fall into the following broad categories: investment management and performance, operational, regulatory, environmental, and global. Information on each of these areas is given in the Company's Strategic Report within the Annual Report and Financial Statements for the year ended 28th February 2023.

Related Parties Transactions

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

Going Concern

The Directors believe that having considered the Company's objective, risk management policies, capital management policies and procedures, the nature of the portfolio and expenditure projections, the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for a period of at least 12 months from the date of approval of this Half Year Report. The Directors have noted that the Company has a relatively large portion of the portfolio (liquid real estate allocation) that is capable of being realised fairly quickly.

The Board is aware that the Company has a continuation vote at its 2024 Annual General Meeting. At this time, the Board considers that the basic investment proposition of the Company is sound.

Directors' Responsibilities

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

(i)      the condensed set of financial statements contained within the Half Year Report has been prepared in accordance with FRS104 'Interim Financial Reporting' and gives a true and fair view of the assets, liabilities, financial position and net return of the Company as required by the Disclosure Guidance and Transparency Rules ('DTR') 4.2.4R; and

(ii)     the interim management report includes a fair review of the information required by DTR 4.2.7R and 4.2.8R.

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

John Scott

Chairman                                                                                                                                27th November 2023

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st August 2023	31st August 2022	28th February 2023
	£'000	£'000	£'000
(Losses)/gains on investments held at fair value through
profit or loss	(13,920)	28,896	16,763
Foreign currency (losses)/gains	(105)	203	183
Investment income	5,517	5,443	10,853
Interest receivable and similar income	39	2	44
Total (loss)/return	(8,469)	34,544	27,843
Management fee	(981)	(934)	(2,231)
Other administrative expenses	(344)	(426)	(687)
(Loss)/return before finance costs and taxation	(9,794)	33,184	24,925
Finance costs	-	(1)	(1)
(Loss)/return before taxation	(9,794)	33,183	24,924
Taxation	(749)	(535)	(1,094)
Net (loss)/return	(10,543)	32,648	23,830
(Loss)/return per share (note 3)	(4.81)p	15.01p	10.91p

CONDENSED STATEMENT OF CHANGES IN EQUITY

	Share	Retained
	premium	earnings	Total
	£'000	£'000	£'000
Six months ended 31st August 2023 (Unaudited)
At 28th February 2023	219,278	4,450	223,728
Repurchase of shares into Treasury	-	(1,096)	(1,096)
Net loss for the period	-	(10,543)	(10,543)
Dividends paid in the period (note 4)	-	(4,608)	(4,608)
At 31st August 2023	219,278	(11,797)	207,481
Six months ended 31st August 2022 (Unaudited)
At 28th February 2022	217,123	(10,534)	206,589
Issue of ordinary shares	2,155	-	2,155
Net return for the period	-	32,648	32,648
Dividends paid in the period (note 4)	-	(4,348)	(4,348)
At 31st August 2022	219,278	17,766	237,044
Year ended 28th February 2023 (Audited)
At 28th February 2022	217,123	(10,534)	206,589
Issue of ordinary shares	2,155	-	2,155
Net return for the year	-	23,830	23,830
Dividends paid in the year (note 4)	-	(8,846)	(8,846)
At 28th February 2023	219,278	4,450	223,728

CONDENSED STATEMENT OF FINANCIAL POSITION

	(Unaudited)	(Unaudited)	(Audited)
	At 31st August	At 31st August	At 28th February
	2023	2022	2023
	£'000	£'000	£'000
Assets
Non current assets
Investments held at fair value through profit or loss	202,997	232,492	219,960
Current assets
Other receivables	1,060	459	990
Cash and cash equivalents	4,056	4,573	3,541
	5,116	5,032	4,531
Liabilities
Current liabilities
Other payables	(632)	(480)	(763)
Net current assets	4,484	4,552	3,768
Total assets less current liabilities	207,481	237,044	223,728
Net assets	207,481	237,044	223,728
Amounts attributable to shareholders
Share premium	219,278	219,278	219,278
Retained earnings	(11,797)	17,766	4,450
Total shareholders' funds	207,481	237,044	223,728
Net asset value per share (note 5)	95.2p	108.0p	102.0p

CONDENSED STATEMENT OF CASH FLOWS

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st August 2023	31st August 2022	28th February 2023
	£'000	£'000	£'000
Operating activities
Loss/(return) before taxation	(9,794)	33,183	24,924
Deduct dividends received	(5,465)	(5,407)	(10,770)
Deduct investment income - interest	(52)	(36)	(83)
Deduct deposit and liquidity fund interest received	(39)	(2)	(44)
Less interest expense	-	(1)	(1)
Add indirect management fee	603	497	1,265
Add performance fee	7	-	128
Add losses/(deduct gains) on investments held at fair value
through profit or loss	13,920	(28,896)	(16,763)
Decrease in prepayments and accrued income	16	25	6
Increase in other payables	8	90	255
Add exchange losses/(deduct exchange gains) on cash and
cash equivalents	13	(71)	(6)
Taxation	(755)	(541)	(1,101)
Net cash outflow from operating activities before interest
and taxation	(1,538)	(1,159)	(2,190)
Dividends received	5,410	6,004	10,856
Investment income - interest	54	38	80
Deposit and liquidity fund interest received	39	2	44
Interest expense	-	1	1
Purchases of investments held at fair value through profit or loss	(7,622)	(31,021)	(21,148)
Sales of investments held at fair value through profit or loss	9,811	31,655	21,408
Net cash inflow from operating activities	6,154	5,520	9,051
Financing activities
Issue of ordinary shares	-	2,155	2,155
Repurchase of shares into treasury	(1,018)	-	-
Dividends paid	(4,608)	(4,348)	(8,846)
Net cash outflow from financing activities	(5,626)	(2,193)	(6,691)
Increase in cash and cash equivalents	528	3,327	2,360
Cash and cash equivalents at the start of the period/year	3,541	1,175	1,175
Exchange movements	(13)	71	6
Cash and cash equivalents at the end of the period/year1	4,056	4,573	3,541

1     Cash and cash equivalents includes liquidity funds.

NOTES TO THE FINANCIAL STATEMENTS

For the six months ended 31st August 2023.

1.  General information

The Company is a closed-ended investment company incorporated in accordance with the Companies (Guernsey) Law, 2008. The address of its registered office is Level 3, Mill Court, La Charroterie, St Peter Port, Guernsey GY1 1EJ.

The principal activity of the Company is investing in securities as set out in the Company's Objective and Investment Policy.

The Company was incorporated on 22nd February 2019. It was admitted to the premium listing category of the Official List of the Financial Conduct Authority and to trading on the Main Market and had its first day of trading on 24th September 2019.

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

Investment objective

The Company will seek to provide shareholders with stable income and capital appreciation from exposure to a globally diversified portfolio of core real assets.

Investment policy

The Company will pursue its investment objective through diversified investment in private funds or accounts managed or advised by entities within J.P. Morgan Asset Management (together referred to as 'JPMAM'), the asset management business of JPMorgan Chase & Co. These JPMAM Products will comprise 'Private Funds', being private collective investment vehicles, and 'Managed Accounts', which will typically take the form of a custody account the assets in which are managed by a discretionary manager.

2.  Accounting policies

The Company's financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS'), which comprise standards and interpretations approved by the International Accounting Standards Board ('IASB'), the IFRS Interpretations Committee and interpretations approved by the International Accounting Standards Committee ('IASC') that remain in effect and the Companies (Guernsey) Law, 2008.

These financial statements have been prepared on a going concern basis in accordance with IAS 1, applying the historical cost convention, except for the measurement of financial assets including derivative financial instruments designated as held at fair value through profit or loss ('FVTPL') that have been measured at fair value.

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 28th February 2023.

3.  Loss/(return) per share

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st August 2023	31st August 2022	28th February 2023
	£'000	£'000	£'000
Total (loss)/return	(10,543)	32,648	23,830
Weighted average number of shares in issue during
the period/year	219,309,718	217,570,995	218,481,925
Total (loss)/return per share	(4.81)p	15.01p	10.91p

4.  Dividends paid

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st August 2023	31st August 2022	28th February 2023
	£'000	£'000	£'000
2023/2024 First interim dividend of 1.05p
(2022/2023: 1.00p) per share	2,304	2,174	2,174
2023/2024 Second interim dividend of 1.05p
(2022/2023: 1.00p) per share	2,304	2,174	2,174
2022/2023 Third interim dividend of 1.00p	-	-	2,194
2022/2023 Fourth interim dividend of 1.05p	-	-	2,304
Total dividends paid in the period	4,608	4,348	8,846

A third interim dividend of 1.05p per share, amounting to £2,242,000 has been declared payable on 29th November 2023 in respect of the year ending 29th February 2024.

5.  Net asset value per share

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st August 2023	31st August 2022	28th February 2023
Net assets (£'000)	207,481	237,044	223,728
Number of shares in issue	218,007,952	219,407,952	219,407,952
Net asset value per share	95.2p	108.0p	102.0p

JPMORGAN FUNDS LIMITED

28th November 2023

For further information:

Emma Lamb,

JPMorgan Funds Limited            

0800 20 40 20 or [phone]

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

ENDS

A copy of the Half Year 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. It will also shortly be available on the Company's website at www.jpmrealassets.co.uk where up-to-date information on the Company, including the NAV and share prices, factsheets and portfolio information can also be found.

 aru

 

END