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Jupiter Primadona (JUKG)

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Friday 25 September, 2015

Jupiter Primadona

Annual Financial Report

RNS Number : 3000A
Jupiter Primadona Growth Trust PLC
25 September 2015
 

Jupiter Primadona Growth Trust plc (the 'Company')

 

Annual Report & Accounts for the year ended 30 June 2015

 

This announcement contains regulated information

 

Chairman's Statement

 

It is with pleasure that I present the Annual Report for Jupiter Primadona Growth Trust PLC for the year to 30 June 2015. It is satisfying that the Trust's returns were once again higher than our benchmark but it was not a vintage twelve months for our trust, with the UK equity market, which by design makes up the greater part of our portfolio, a relatively modest performer when compared with the higher returns on offer in the European, Japanese and to a lesser extent US markets for much of the period.

 

Although we shared in the latter gains through our collective fund investments, and correctly remained underweight the UK equity market throughout the 12-month period, the sluggish performance of our home market was the primary reason for this satisfactory but unexciting performance. The company's net asset value per share rose by 5.3 per cent. over the period. With dividends reinvested, the total return for the year was 7.6 per cent. which was some 3.0 per cent. above that of our benchmark, a composite UK and global stock market index.

 

The one-off boost to the share price from the introduction of a new discount control policy in 2014, which lifted the total share price return to 21.0 per cent. in the 2013-14 financial year, could not by its nature be repeated for a second year. We saw the share price rise by 5.6 per cent. which, including dividends, represented a total return of 7.9 per cent.

 

The advent of yet another protracted drama in the Eurozone, with the Greek government haggling and stumbling towards potentially its third bailout agreement with its international creditors, was a dispiriting development at the end of our reporting period. Most global equity markets fell by at least 5 per cent. in June, dragging down our 12-month performance figures in their wake. But for that late downturn, the return to investors for the year would have been higher.

 

In the UK, sentiment was adversely affected in the run up to the general election in May, but the resulting election of a majority Conservative government, combined with some encouraging signs of a pickup in growth and living standards, has gone some way to restoring investor confidence. The current focus of the financial markets has shifted back to broader global concerns, including the future course of interest rates, the pace of Chinese economic growth and the outlook for commodity prices and inflation.

 

Investment performance

Against this backcloth your company continues with its long-held and consistent strategy of pursuing long term capital gains for its investors through an actively managed portfolio of UK equities and carefully selected global funds. This combination, which is reflected in the makeup of our composite benchmark, gives us a distinctive profile in the global growth sector of the investment trust universe.

 

The UK equity portfolio combines core holdings of large-cap stocks which pay good dividends and a number of smaller, high quality growth stocks where the manager sees potential for above average capital growth. The UK portion of our portfolio outperformed the FTSE AllShare index by 2.1 per cent.

 

The Company's portfolio of funds enables us to take advantage of the fund selection skills and experience of Jupiter's award-winning multimanager team. Our holdings in the Jupiter European investment trust and funds such as Findlay Park American have added considerable value over the last few years. In the 12 months to 30 June the overseas component of the Company's portfolio which is invested in other funds returned 16.1 per cent., which compares with a return of 10.7 per cent. on the FTSE World (Ex UK) index over the same period (being the overseas component of the Company's composite benchmark index).

 

This outperformance has given rise to a performance fee of £285,000 payable to Jupiter Unit Trust Managers Limited. In order to achieve a performance fee the Manager is not only obliged to deliver net asset value total returns in excess of the total return on the Company's composite benchmark index, but it is also obliged to achieve net asset value returns in excess of a 'high water mark', being the highest net asset value by reference to which a performance fee was last paid. The two previous occasions on which a performance fee has been paid by the Company were in relation to 2007 and 2013 years of account.

 

Nil discount management policy

Following our decision to implement a new discount policy in February 2014, the discount to NAV has remained narrow. The average discount at which shares in the trust traded in the 12 months to 30 June 2015 was 1.2 per cent., against 9.9 per cent. in the year leading up to the change in policy. Since 30 June 2014 we have bought back a total of 1,759,000 shares in order to reduce share price volatility. Shareholders should note that the making and timing of share buy backs is subject to a number of legal and regulatory restrictions and will always remain at the discretion of the Board. The Board believes that its commitment to the active removal of discount risk, when combined with the decision to move to the payment of quarterly dividends, should in due course improve liquidity for both buyers and sellers of the Company's shares.

 

Dividend policy

 

The Board has adopted a policy of making quarterly dividend payments so as to provide a regular income stream for its Shareholders. Accordingly a fourth interim dividend of 1.6p per Ordinary Share (2014: 1.6p) was declared on 13 August 2015 and paid on 11 September 2015 to shareholders on the Register of Members on 21 August 2015.

 

This payment brings the total of quarterly dividends paid in relation to the financial year under review to 6.4p.

 

The fourth quarterly dividend was declared as an interim dividend, rather than as a final dividend which would otherwise require approval by Shareholders at the AGM.

 

By way of background, in order for our Company to retain its preferential tax status with HM Revenue & Customs as an 'investment trust' under Section 1158 of the Corporation Tax Act 2010, we are not permitted to retain more than 15 per cent. of so called 'eligible investment income' arising during any given financial year. Instead we must distribute at least 85 per cent. of such eligible income in the form of dividends to our Shareholders. As such, in the unlikely event that Shareholders were to vote against a resolution at the AGM to pay a final dividend, the Company would potentially lose its investment trust tax status, with potentially adverse knock on tax consequences for all of its shareholders.

 

Nevertheless, the Board are conscious that shareholders should be given an opportunity to vote on the Company's dividend policy at the AGM. Accordingly an ordinary resolution is being put to the AGM to approve the Board's policy of making these regular quarterly interim dividends. Should this resolution be defeated then the board will reconsider its distribution policy accordingly for future financial years.

 

While the Company has sought and obtained the authority to pay dividends out of capital as a precautionary measure, the board's policy is that this is only likely to happen in exceptional circumstances.

 

Gearing

As an investment trust we continue to benefit from the potential to make judicious use of gearing to enhance returns. The trust retained its level of gearing throughout the financial year and has negotiated a new loan facility of £10.0m on favourable terms, of which £9.5m was drawn down as at 30 June 2015. Borrowings amounted to 16.1 per cent. of gross assets as at 30 June 2015.

 

Investment strategy

The Board keeps the investment strategy of the company under review. We believe that the stock selection and fund selection abilities of our Investment Adviser should enable the Company to produce attractive returns for our shareholders. However, while we maintain our long term objective of above average long term capital returns, we retain the flexibility to adjust the strategy we pursue to achieve that aim in the light of changing market conditions and the performance of the Investment Adviser's fund management team.

 

Communications with shareholders

Some interim changes have been made to the company's website, which is administered by our Investment Adviser, and further improvements can be expected when Jupiter completes a comprehensive overhaul of its website in a few months time. Since the financial year-end shareholders who invest in the trust through the Jupiter Savings Scheme have been notified that administration of the scheme is being moved to a new provider.

 

Change of name

We have been called Jupiter Primadona Growth Trust plc since 1997 (the Company was incorporated in 1972 as Primadona Limited). While this name remains familiar to our longer term investors your Board have decided that it would benefit the Trust and its shareholders if we had a more appropriate name. We are therefore proposing that our name be changed from Jupiter Primadona Growth Trust plc to Jupiter Global Trust plc, and accordingly a special resolution will be submitted for shareholder approval at the forthcoming Annual General Meeting.

 

Annual General Meeting

The Company's AGM will be held on 16 November 2015 at the offices of Jupiter Asset Management Limited, 1 Grosvenor Place, London SW1X 7JJ. In addition to the formal business, the Investment Adviser will provide a short presentation to shareholders on the performance of the Company over the past year as well as the outlook for the future.

 

Outlook

The Governor of the Bank of England, Mark Carney, has recently suggested that the first rise in UK interest rates for more than six years could be on the agenda of the Monetary Policy Committee around the turn of the year. By then we should know whether or not the Federal Reserve also has opted to raise US interest rates. If so, it will be the first sign that we may be close to the long awaited normalisation of monetary policy after six years of extreme and abnormal measures designed to moderate the impact of the global financial crisis.

 

The current bull market has already run longer than the historical average, and valuations remain full, but given the backcloth of bountiful liquidity and low interest rates, there is room for equity markets to continue to progress over the next year. Some positive signs are apparent as the new financial year begins. The UK economy is gathering speed following the Conservative election victory in May; the US recovery increases the possibility of a rate rise at some stage in 2015, Japan's economy is feeling the benefits of a range of stimulative policies, while consumers in most of the world are yet to feel the full benefit of the sharp fall in oil and other commodity prices since last year.

 

As always however, these positives have to be weighed against a number of broader risks, which include slower than expected growth and unexpected geopolitical shocks. The recent turbulence in the Chinese markets and further evidence of its slowing economy gives cause for concern not only for Asian markets but for global growth generally. Nobody can be sure how the financial markets will react to the first evidence of a normalisation of interest rates in the United States or UK but historic evidence suggests that the market reaction in the year following the first rate rise is not as bad as many fear. On relative valuation grounds, real assets such as equities and property continue to look attractive when set against bonds, but a correction in absolute terms clearly remains a possibility. While the risk of market volatility therefore remains, we are confident of our investment advisers' ability to continue to produce good returns in the years ahead.

 

Tom H Bartlam

Chairman

25 September 2015

 

 

 

Financial Highlights

 

Capital Performance

 

30 June

30 June

 

 

2015

2014

% change

 

 

 

 

Total Assets less current liabilities (£'000)

54,099

56,603

-4.4

 

Ordinary Share Performance

 

30 June

30 June

 

 

2015

2014

% change

 

 

 

 

Net Asset Value per Share (pence)

312.9

297.1

+5.3

 

 

 

 

Ordinary Share Net Asset Value (with dividends reinvested on payment date)

 

 

+7.6

 

 

 

 

Mid Market price (pence)

314.1

297.4

+5.6

 

 

 

 

Mid Market price (with dividends reinvested on payment date)

 

 

+7.9

 

 

 

 

(Discount)/premium to Net Asset Value (%)

(0.4)

0.1

 

 

 

 

 

FTSE All-Share Index Total return (Bloomberg: ASXTR)

5,613.54

5,471.17

+2.6

 

 

 

 

FTSE World ex UK Index Total return (Bloomberg: FTRSWXUK)

862.02

778.81

+10.7

 

 

 

 

Composite Benchmark Index*

-

-

+4.6

 

*    The Company's composite Benchmark Index comprises 75 per cent. FTSE All-Share Index (Total Return) and 25 per cent. FTSE World ex UK Index (Total Return).

 

Revenue Performance

 

Year ended

Year ended

 

 

30 June

30 June

 

 

2015

2014

% change

 

 

 

 

Revenue after taxation (£'000)

1,217

1,190

+2.3

 

 

 

 

Revenue earnings per Ordinary share (pence)

6.67

6.03

+10.6

 

 

 

 

Net Dividend per Ordinary share (pence)

6.40

4.80

+3.3

 

 

 

 

Net Dividend Yield per Ordinary share (%)*

2.0

1.6

 

 

* As a function of the closing middle market price of an Ordinary share at the relevant financial year end.

 

Dividends declared during the period under review

 

 

Announcement

 

Payment

 

Rate/p net

Date

XD Date

Date

 

 

 

 

 

Interim

1.6

12 August 2014

20 August 2014

12 September 2014

 

 

 

 

 

Interim

1.6

11 September 2014

20 November 2014

12 December 2014

 

 

 

 

 

Interim

1.6

24 February 2015

5 March 2015

26 March 2015

 

 

 

 

 

Interim

1.6

13 May 2015

21 May 2015

12 June 2015

 

 

 

Ten Year History to 30 June 2015

 

 

 

 

 

 

 

Year-on-

 

 

 

 

 

 

 

 

year

 

 

 

 

 

 

 

 

Change in

 

 

 

 

 

 

 

Net**

Net

Year-on-

 

Total

 

 

 

 

Asset

Asset

year

 

Assets

 

 

Dividend**

 

Value

Value

Change in

 

less

 

 

per

 

per

per

Composite

 

current

Gross

Net

Ordinary

Cost of

Ordinary

Ordinary

Benchmark

Year ended

liabilities

Revenue

Revenue

Share

Dividend

Share

Share

Index***

30 June

£'000

£'000

£'000

p

£'000

p

%

%

 

 

 

 

 

 

 

 

 

2006

53,743

1,062

521

1.60

482

177.67

+27.2

+14.9

 

 

 

 

 

 

 

 

 

2007

55,985

1,825

1,211

3.60

837

241.06

+35.7

+14.3

 

 

 

 

 

 

 

 

 

2008

49,415

2,072

1,521

4.10

918

221.27

-8.2

-14.6

 

 

 

 

 

 

 

 

 

2009

37,868

2,127

1,706

5.50

1,200

173.51

-21.5

-21.8

 

 

 

 

 

 

 

 

 

2010

43,187

1,968

1,505

7.75

1,646

203.40

+17.2

+17.9

 

 

 

 

 

 

 

 

 

2011

50,552

2,801

2,165

8.35

1,685

250.60

+23.2

+21.1

 

 

 

 

 

 

 

 

 

2012

46,032

1,289

877

8.35

1,667

227.80

-9.1

-6.5

 

 

 

 

 

 

 

 

 

2013 (restated)*

54,683

2,081

1,650

8.35

1,666

274.30

+20.4

+15.2

 

 

 

 

 

 

 

 

 

2014

56,603

1,725

1,190

4.80

931

297.10

+8.3

+8.9

 

 

 

 

 

 

 

 

 

2015

54,099

1,812

1,217

6.40

1,136

312.9

+5.3

+1.4

 

*     Previously consolidated, restated to Company figures to reflect the impact of the liquidation of Pitchwell Ltd in 2013 comparative figures.

**   Adjusted for five for one stock split in 2013.

***  Capital only.

 

 

Investment Adviser's Review

 

Market Background

Global equity markets outperformed the UK over the year to 30 June 2015, with the FTSE All-Share rising by 2.6 per cent. compared to the FTSE World ex-UK, which gained 10.7 per cent. on a total return basis in sterling terms. Most developed markets made gains in the year under review as the US and European economies strengthened and global central bank policies remained broadly supportive of risk assets.

 

The strengthening US dollar was a key theme in the year under review. In the first half of the financial year the dollar appreciated sharply on expectations that the US Federal Reserve would finally begin normalising monetary policy after keeping interest rates at record lows for many years. This proved negative for emerging market currencies and assets, many of which sold off after experiencing strong capital outflows. While the persistent deflationary forces in the global economy led some market participants to believe that interest rates were likely to remain lower for longer, the relative strength of the US economy compared to the rest of the world resulted in continued dollar strength during the year. However, uncertainty over the timing and trajectory of US interest rates did create some volatility in global bond markets in May and early June.

 

In the UK, economic conditions continued to show gradual improvement while the Conservative Party's victory in the General Election in May allayed fears that a hung parliament would create economic and political uncertainty. In Japan, the continued reflationary policies pursued by the authorities were supportive of risk assets and there were some signs of improved corporate governance in the country.

 

In Europe, the first half of the year was largely characterised by falling growth rates and deflationary pressures. From January onwards, European equities rallied hard, partly in response to the European Central Bank's implementation of a programme of quantitative easing. The lower oil price and the depreciation of the euro against the dollar proved a particularly benign backdrop for equities, which were further buoyed by evidence of improved economic conditions in the eurozone. Towards the end of the financial year, European equities in particular and global risk assets more broadly retreated as concerns grew about the possibility of an escalation of the financial crisis in Greece. Following the end of the year, however, an agreement between Greece and the creditor nations was finally announced on 13 July. European equity markets rallied hard on the news, which also prompted a reduction in the risk premia priced into European fixed income markets.

 

The conflict in Ukraine caused concern and fuelled market volatility in the region, prompting the US and EU to impose sanctions which damaged the Russian economy. The damage was exacerbated by the sharp drop in global oil prices in the second half of 2014 which sparked a marked sell-off in oil stocks and areas of the market associated with oil. China's slowing economy was affected by a raft of state anti-corruption measures, a cooling property market and tighter monetary conditions. To combat the slowdown, the government introduced a number of stimulative fiscal and monetary policies, a development leading to a speculative bubble in domestic equities which eventually burst in spectacular fashion.

 

Performance Review

After a relatively lacklustre performance in the first half of the financial year, the Company delivered strong growth in the second half of the year as core holdings in the UK and the portfolio's global exposure delivered good returns.

 

In the first half of the year we reduced the portfolio weighting to the UK where, despite continuing economic growth, markets underperformed international peers. We positioned the reduced UK exposure to take advantage of the recovery in domestic consumer spending, a stance which was rewarded by the strong performance of companies including house builder Crest Nicholson, Dixons Carphone and children's retailer Mothercare. We also sought to take advantage of a strengthening UK economy via banking sector holdings Lloyds and Royal Bank of Scotland, two recovery stories which both outperformed the wider UK market.

 

It was another good year for US equities and the portfolio benefited from both the upward march of the S&P 500 in 2014 and the stronger US dollar over the period. Our holding in the Findlay Park American Fund was the single largest contributor to the Company's annual return, while our position in the Jupiter North American Fund also performed strongly. The Company's allocation to Japan also benefited from the country's improved economic outlook and the reflationary policies pursued by the Bank of Japan. The portfolio's Japanese exposure was hedged against yen weakness for much of the year, but in May we removed the hedges, anticipating that sterling might weaken following the UK General Election. At the time of writing we have no currency hedges in place.

 

Elsewhere, our performance was aided by our exposure to European equities. In particular, our holding in the Jupiter European Opportunities Trust outperformed the wider European equity market to deliver double digit share price growth. However, the Company's mining and oil and gas exposure created a drag on performance following the collapse of global oil prices in the second half of 2014. Company holdings which ended the year in negative territory included Royal Dutch Shell, BP and Glencore. We sold out of a number of positions and reduced our overall exposure to the sector over the course of the year.

 

Strategy

The portfolio is constructed on four investment pillars: large caps, growth, value and special situations. Large caps, such as AstraZeneca and British American Tobacco, provide the backbone to the portfolio. These are supplemented with high-quality, long-term structural growth stories and shorter-term cyclical or value plays. The trust has a global mandate but with a focus on the UK, as demonstrated by its composite benchmark of 75 per cent. FTSE All-Share and 25 per cent. FTSE World ex-UK.

 

Overseas holdings consist of funds as we believe regional specialists are most likely to create value for shareholders. The trust's largest overseas allocation is to the US, with Findlay Park American and M&G North American Value among the top 10 holdings. Smaller allocations are to Japan, through the Morant Wright Nippon Yield Fund and Jupiter Japan Income, and also Europe, with Jupiter European Opportunities and Waverton. In our view, the reflation story in Japan has much further to go as the economy recovers and monetary policy remains supportive to risk assets. We also think that European equities are cheap in comparison to the US market and stand to benefit from the nascent economic recovery now taking place.

 

As we discussed in this year's interim report, we remain relatively cautious on China as it looks to engineer a transition from an investment and export-led growth model towards domestic consumption, particularly in the context of the recent volatility in the domestic equity market. We also remain underweight emerging markets generally amid the prospect of rising interest rates in the US.

 

Outlook

In our view, the UK remains several steps ahead of the rest of Europe both in terms of the recent rise in real incomes and the increased likelihood of a UK interest rate rise at some stage in 2015. The Company's domestic exposure therefore remains weighted towards consumer stocks and financials, sectors which should benefit from a strengthening UK economy. Although headlines have recently been dominated by the crisis in Greece, in the background Europe's economy has shown signs of recovery, with growth expectations for many eurozone countries creeping upwards. For this reason, we remain optimistic on the outlook for our European holdings.

 

Globally, the US stands out as the best performing major economy, and US equities remain the Company's largest overseas exposure. With unemployment continuing to fall, the Federal Reserve has indicated that interest rates will likely rise in the autumn of 2015. While we view the normalisation of monetary policy as a positive development, the process is not without risk. Emerging market assets, in particular, are likely to come under further pressure, particularly given the recent slowdown in China and poor economic fundamentals elsewhere. In our view, the de-synchronisation of US and UK monetary policy with the easing measures pursued elsewhere in the world is likely to drive volatility in already distorted financial markets. Despite these concerns, we are cautiously optimistic about the outlook for the coming financial year.

 

Richard Curling

Jupiter Asset Management Limited

Investment Adviser

25 September 2015

 

 

 

Investment Portfolio as at 30 June 2015

 

 

 

30 June 2015

 

30 June 2014

 

Value

Percentage

Value

Percentage

Company

£'000

of investments

£'000

of investments

 

 

 

 

 

Findlay Park American Funds

4,327

6.7

4,749

7.1

Prusik Umbrella Asian Equity Income Fund

3,649

5.7

3,137

4.7

Jupiter European Opportunities Trust

3,117

4.8

2,935

4.4

Powershares Exchange Traded Achievers Fund

2,781

4.3

2,621

3.9

Jupiter Japan Income Fund

2,154

3.4

1,760

2.6

M&G Investment North American Value A Fund

2,045

3.2

1,879

2.8

Capita Morant Wright Japan B Fund

1,666

2.6

1,149

1.7

Babcock International Group

1,620

2.5

2,011

3.0

Lloyds Banking Group

1,619

2.5

1,778

2.6

BP

1,554

2.4

2,420

3.6

British American Tobacco

1,537

2.4

1,565

2.3

Legal & General

1,493

2.3

1,690

2.5

Royal Dutch Shell

1,410

2.2

1,983

3.0

Crest Nicholson

1,404

2.2

861

1.3

Polar Capital Japan Alpha Fund

1,276

2.0

1,081

1.6

Booker Group

1,262

2.0

1,166

1.7

Schroder European Alpha Z Income Fund

1,239

1.9

-

-

Smith (DS)

1,158

1.8

1,246

1.9

HSBC Holdings

1,140

1.8

1,571

2.3

Barclays

1,091

1.7

891

1.3

Mothercare

1,080

1.7

-

-

Pitchwell*

1,077

1.7

1,086

1.6

BG Group

1,059

1.7

1,329

2.0

Dixons Carphone

1,054

1.6

747

1.1

Odey European Focus Fund

1,027

1.6

-

-

AstraZeneca

1,005

1.6

1,085

1.6

Micro Focus International

964

1.5

662

1.0

Senior

961

1.5

1,048

1.6

Talk Talk Telecom Group

956

1.5

1,236

1.8

Thomas Cook Group

890

1.4

536

0.8

Rio Tinto

863

1.3

1,026

1.5

Glencore Xstrata

781

1.2

1,107

1.6

GlaxoSmithKline

769

1.2

2,345

3.5

Aveva Group

766

1.2

954

1.4

Centrica

726

1.1

859

1.3

Impellam Group

715

1.1

-

-

Speedy Hire

705

1.1

866

1.3

Shire

667

1.0

-

-

Rotork

639

1.0

734

1.1

Meggitt

588

0.9

709

1.1

WPP

577

0.9

573

0.9

Sanne Group

573

0.9

-

-

Newriver Retail

571

0.9

-

-

Fidessa Group

567

0.9

769

1.1

Royal Bank of Scotland Group

562

0.9

591

0.9

Informa

546

0.8

479

0.7

Direct Line Insurance Group

539

0.8

-

-

IMI

534

0.8

780

1.2

DFS Furniture

522

0.8

-

-

Oxford Instruments

485

0.8

650

1.0

Real Estate Investors

480

0.7

-

-

TSB Banking Group

460

0.7

602

0.9

P2P Global Investments Fund

418

0.7

-

-

LXB Retail Properties

396

0.6

558

0.8

Shawbrook Group

396

0.6

-

-

Topps Tiles

359

0.6

-

-

Plexus Holdings

348

0.5

451

0.7

Fevertree Drinks

324

0.5

-

-

Londonmetric Property

322

0.5

148

0.2

Ludgate 181 (Jersey)

246

0.4

252

0.4

Harworth Group

196

0.3

-

-

Auto Trader Group

95

0.1

-

-

Total investments

64,350

100.0

 

 

 

* This is the fair value of the Company's investment in Pitchwell Ltd as at 30 June 2015 based on the net assets of Pitchwell Ltd at 30 June 2015, less any liquidation costs.

 

 

Cross Holdings in other Investment Companies

As at 30 June 2015, 5.6 per cent. of the Company's total assets were invested in the securities of other UK listed investment companies. It is the Company's stated policy that its exposure to other UK listed investment companies should not be permitted to exceed 15 per cent. of total assets.

 

 

 

Classification of Investments as at 30 June 2015

 

 

 

 

 

 

 

Other

North &

 

 

 

 

 

 

 

Asia

Latin

 

2014

2015 

Equities

UK

Europe

Japan

Pacific

America

Others

%

%

 

%

%

%

%

%

%

 

 

 

 

 

 

 

 

 

10.6

6.8

Oil & Gas

 

 

 

 

 

 

1.4

0.5

Oil Equipment, Services & Distribution

0.5

-

-

-

-

-

9.2

6.3

Oil & Gas Producers

6.3

-

-

-

-

-

 

 

 

 

 

 

 

 

 

5.6

2.8

Basic Materials

 

 

 

 

 

 

0.3

-

Industrials Metals & Mining

-

-

-

-

-

-

5.3

2.8

Mining

2.8

-

-

-

-

-

 

 

 

 

 

 

 

 

 

14.5

12.4

Industrials

 

 

 

 

 

 

2.7

2.4

Aerospace & Defence

2.4

-

-

-

-

-

2.4

1.8

General Industrials

1.8

-

-

-

-

-

2.6

0.8

Electronics & Electrical Equipment

0.8

-

-

-

-

-

2.3

1.8

Industrial Engineering

1.8

-

-

-

-

-

4.5

5.6

Support Services

5.6

-

-

-

-

-

 

 

 

 

 

 

 

 

 

3.6

5.1

Consumer Goods

 

 

 

 

 

 

-

0.5

Beverages

0.5

-

-

-

-

-

1.3

2.2

Household Goods & Home Construction

2.2

-

-

-

-

-

2.3

2.4

Tobacco

2.4

-

-

-

-

-

 

 

 

 

 

 

 

 

 

5.1

3.8

Health Care

 

 

 

 

 

 

5.1

3.8

Pharmaceuticals & Biotechnology

3.8

-

-

-

-

-

 

 

 

 

 

 

 

 

 

4.4

11.6

Consumer Services

 

 

 

 

 

 

-

2.0

Food & Drug Retailers

2.0

-

-

-

-

-

1.1

6.4

General Retailers

6.4

-

-

-

-

-

2.5

1.8

Media

1.8

-

-

-

-

-

0.8

1.4

Travel & Leisure

1.4

-

-

-

-

-

 

 

 

 

 

 

 

 

 

1.8

1.5

Telecommunications

 

 

 

 

 

 

1.8

1.5

Fixed Line Telecommunications

1.5

-

-

-

-

-

 

 

 

 

 

 

 

 

 

2.3

1.1

Utilities

 

 

 

 

 

 

1.0

-

Electricity

-

-

-

-

-

-

1.3

1.1

Gas, Water & Multiutilities

1.1

-

-

-

-

-

 

 

 

 

 

 

 

 

 

1.7

-

Consumer Staples

 

 

 

 

 

 

1.7

-

Food Producers

-

-

-

-

-

-

 

 

 

 

 

 

 

 

 

3.7

3.6

Information Technology

 

 

 

 

 

 

3.7

3.6

Software & Computer Services

3.6

-

-

-

-

-

 

 

 

 

 

 

 

 

 

53.3

48.7

Total Non-Financials

48.7

-

-

-

-

-

 

 

 

 

 

 

 

 

 

46.7

51.3

Financials

 

 

 

 

 

 

8.0

8.2

Banks

8.2

-

-

-

-

-

-

0.8

Non-life Insurance

0.8

-

-

-

-

-

2.5

2.3

Life Insurance

2.3

-

-

-

-

-

1.0

2.7

Real Estate

2.7

-

-

-

-

-

6.7

8.1

General Financial

0.4

-

2.0

5.7

-

-

17.7

18.3

Equity Investment Instruments

3.3

8.3

-

-

6.7

-

10.8

10.9

Non-equity Investment Instruments

-

-

3.4

-

7.5

-

 

 

 

 

 

 

 

 

 

 

100.0

2015 Totals

66.4

8.3

5.4

5.7

14.2

-

 

 

 

 

 

 

 

 

 

100.0

 

2014 Totals

67.5

5.9

4.2

4.7

16.0

1.7

 

 

 

Strategic Report

 

The Strategic Report has been prepared in accordance with the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013.

 

The Strategic Report seeks to provide shareholders with the relevant information to enable them to assess the performance of the Directors of the Company during the period under review.

 

Business and Status

During the year the Company carried on business as an investment trust with its principal activity being portfolio investment. The Company has been approved by HM Revenue & Customs as an investment trust subject to the Company continuing to meet the eligibility conditions of sections 1158 and 1159 of the Corporation Taxes Act 2010 and the ongoing requirements for approved companies as detailed in Chapter 3 of Part 2 of the Investment Trust (Approved Company) (Tax) Regulations 2011. In the opinion of the Directors, the Company has conducted its affairs in the appropriate manner to retain its status as an investment trust.

 

The Company is an investment company within the meaning of section 833 of the Companies Act 2006.

 

The Company is not a close company within the meaning of the provisions of the Corporation Tax Act 2010 and has no employees.

 

The Company was incorporated in England & Wales and launched on 1 January 1972.

 

Reviews of the Company's activities are included in the Chairman's Statement and Investment Adviser's Review.

 

Investment Objective and Benchmark

The Company's investment objective is to concentrate on capital appreciation from holding predominantly listed investments.

 

Performance during the year under review was measured against a composite benchmark comprising 75 per cent. FTSE All-Share Index Total Return and 25 per cent. FTSE World ex UK Index Total Return.

 

Strategy

The Board has not set an objective of a specific portfolio yield for the Investment Adviser as the level of such yield is expected to vary with the sectors and geographical regions to which the Company's portfolio is exposed at any given time. However, substantially all distributable revenues that are generated from the Company's investment portfolio will be paid out in the form of quarterly dividends.

 

Business Model and Investment Policy

The Directors have instructed the Investment Adviser to invest the Company's assets in accordance with the Investment Policy.

 

It is the Company's policy to invest no more than 15 per cent. of its gross assets in other investment companies (including investment trusts listed on the London Stock Exchange). At the year end the Company had 5.6 per cent. of its total assets invested in the securities of other UK Listed investment companies.

 

Dividend Policy

The Board decided to move from its policy of declaring semi-annual dividends to the declaration of quarterly interim dividends following the 2013 Annual General Meeting. This was expected to enhance liquidity in the Company's shares as it would spread the reinvestment of dividends for the substantial proportion of shareholders who automatically reinvest across four dates in each year rather than two. Quarterly interim dividends were paid in December 2014, March, June and September 2015.

 

Management

The Company has no employees and most of its day-to-day responsibilities are delegated to Jupiter Asset Management Limited, which acts as the Company's Investment Adviser and Company Secretary.

 

J.P. Morgan Europe Limited acts as the Company's Depositary and the Company has entered into an outsourcing arrangement with J.P. Morgan Chase Bank N.A. for the provision of accounting and administration services.

 

Gearing

Gearing is defined as the ratio of a company's long term debt less cash held compared to its equity capital, expressed as a percentage. The effect of gearing is that, in rising markets, the Company tends to benefit from any outperformance of the Company's investment portfolio above the cost of payment of the prior ranking entitlements of any lenders and other creditors. Conversely, in falling markets the Company suffers more if the Company's investment portfolio underperforms the cost of those prior entitlements.

 

In order to improve the potential for capital returns to shareholders the Company had access to a flexible loan facility with Scotiabank Europe PLC for amounts up to £10 million.

 

The Directors consider it a priority that the Company's level of gearing should be maintained at appropriate levels with sufficient flexibility to enable the Company to adapt at short notice to changes in market conditions.

 

The Board has not set any limits or restrictions on the Company's loan facility other than the limit of the Company's current loan facility with Scotiabank Europe PLC. The Board regularly reviews the Company's level of gearing which is currently set at a maximum level of 20 per cent. of the Company's total assets.

 

Derivative transactions

The Company may take short positions (using contracts for difference) in respect of a small number of larger capital securities. The Directors have set limits to the overall exposures and performance is monitored on a regular basis.

 

Key Performance Indicators

At the quarterly Board meetings the Directors consider a number of performance indicators to help assess the Company's success in achieving its objectives. The key performance indicators used to measure the performance of the Company over time are as follows:

 

•           Net Asset Value changes over time

 

•           Share price movement

 

•           A comparison of the Ordinary share price and NAV to the composite Benchmark

 

•           Discount over varying periods

 

•           Peer Group comparative performance

 

•           Yield - changes over time and when compared to the Company's peers

 

A history of the NAV, Ordinary share price, dividend and benchmark are shown on the monthly factsheets which can be viewed on the Company's page of the Investment Adviser's website www.jupiteram.com/JPG and which are available on request from the Company Secretary.

 

Discount to Net Asset Value

The Directors review the level of the discount between the middle market price of the Company's Ordinary shares and their NAV on a regular basis.

 

The directors had powers granted to them at the last AGM to purchase Ordinary shares and hold them in treasury as a method of influencing the discount to NAV and enhancing shareholder value.

 

The Board is proposing that its authority to repurchase up to approximately 14.99 per cent. of its issued share capital should be renewed at the AGM. Unless renewed earlier, the new authority to repurchase will last until the conclusion of the AGM of the Company in 2016. For the avoidance of doubt, repurchases will always be at the absolute discretion of the Board in light of prevailing market conditions and within guidelines set from time to time by the Board, the Companies Act, the Listing Rules and The Model Code. Any purchases will be made only through the market at prices below the prevailing estimated NAV per Ordinary share and where the Directors believe such purchases will enhance shareholder value and assist in narrowing any discount to NAV at which the Ordinary shares may trade.

 

In February 2014 the Board decided to implement a new discount policy under which it would use share buy backs and new issues of shares with the intention of ensuring that, in normal market conditions, the market price of the Company's shares would track their underlying net asset value.

 

The Board considered that this commitment to the active removal of discount risk would in due course provide materially improved liquidity for both buyers and sellers of the Company's shares, although there could be no guarantee that any discount control mechanism implemented by the Board would have its desired effect.

 

During the year, 1,759,000 Ordinary shares representing 8 per cent. of the total Ordinary shares in issue at 30 June 2015, were bought back at discounts that ranged from 0.4 per cent. to 3.0 per cent. to be held in treasury.

 

Treasury Shares

In accordance with the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003 (the 'Regulations') which came into force on 1 December 2003 any Ordinary shares bought back pursuant to the above authority may be held in Treasury. These Ordinary shares may be subsequently cancelled or sold for cash. This gives the Company the ability to reissue shares quickly and cost effectively and provides the Company with additional flexibility in the management of its capital. The Company may hold in Treasury any of its Ordinary shares that it purchases pursuant to the share buy back authority granted by shareholders.

 

 

Risks and Uncertainties

 

The principal risk factors that may affect the Company and its business can be divided into the following areas:

 

Investment Strategy and Share Price Movement - The Company is exposed to the effect of variations in the price of its investments. A fall in the value of its portfolio will have an adverse effect on shareholders' funds. It is not the aim of the Board to eliminate entirely the risk of capital loss, rather it is its aim to seek capital growth. The Board reviews the Company's investment strategy and the risk of adverse share price movements at its quarterly board meetings taking into account the economic climate, market conditions and other factors that may have an effect on the sectors in which the Company invests.

 

Interest rates - The Company has exposure to cash which generates interest through interest bearing accounts. The Board is mindful of interest rates when setting limits on the Company's exposure to cash.

 

Derivatives - The Company invests in derivatives from time to time. Derivatives may be a riskier investment than equities as they can exaggerate the return that can be achieved compared to investing directly in equities. The Board has set limits on the amount of exposure the Company has to derivatives and it reviews these limits at its quarterly board meetings.

 

Liquidity Risk - This risk can be viewed as the liquidity of the securities in which the Company invests and the liquidity of the Company's shares. The Company may invest in securities that have a very limited market which will affect the ability of the Company's Investment Adviser to dispose of securities when he no longer feels they offer the potential for future returns. Likewise the Company's shares may experience liquidity problems when shareholders are unable to realise their investment in the Company because there is a lack of demand for the Company's shares. At its quarterly meetings the Board considers the current liquidity in the Company's investments when setting restrictions on the Company's exposure. The Board also reviews, on a quarterly basis, the Company's buy back programme and in doing so is mindful of the liquidity in the Company's shares.

 

Gearing Risk - The Company's gearing can impact the Company's performance by accelerating the decline in value of the Company's Total Assets at a time when the Company's portfolio is declining. Conversely gearing can have the effect of accelerating the increase in the value of the Company's Total Assets at a time when the Company's portfolio is rising. At its quarterly meetings the Board is mindful of the outlook for equity markets when reviewing the Company's gearing.

 

Discount to Net Asset Value - A discount in the price at which the Company's shares trade to Net Asset Value would mean that shareholders would be unable to realise the true underlying value of their investment. The Directors have powers granted to them at the last Annual General Meeting to purchase Ordinary shares as a method of controlling the discount to Net Asset Value and enhancing shareholder value. Further details of the buy back programmes can be found on page 15 under the heading 'Discount to Net Asset Value'.

 

Regulatory Risk - The Company operates in a complex regulatory environment and faces a number of regulatory risks. A breach of section 1158 of the CTA 2010 could result in the Company being subject to capital gains tax on portfolio movements. Breaches of other regulations such as the UKLA Listing rules, could lead to a number of detrimental outcomes and reputational damage. Breaches of controls by service providers such as the Investment Adviser could also lead to reputational damage or loss. The Board monitors regulatory risks at its quarterly board meetings and relies on the services of its Company Secretary, Jupiter Asset Management Limited, and its professional advisers to ensure compliance with, amongst other regulations, the Companies Act 2006, the UKLA Listing Rules and the Alternative Investment Fund Managers Directive.

 

Credit and Counterparty Risk - The failure of the counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss.

 

Loss of Key Personnel - The day-to-day management of the Company has been delegated to the Investment Adviser. Loss of the Investment Adviser's key staff members could affect investment return. The Board is aware that Jupiter Asset Management Limited recognises the importance of its employees to the success of its business. Its remuneration policy is designed to be market competitive in order to motivate and retain staff and succession planning is regularly reviewed. The Board also believes that suitable alternative experienced personnel could be employed to manage the Company's portfolio in the event of an emergency.

 

Operational - failure of the Investment Adviser's core accounting systems, or a disastrous disruption to its business, could lead to an inability to provide accurate reporting and monitoring. The Investment Adviser is contractually obliged to ensure that its conduct of business conforms to applicable laws and regulations.

 

Financial - inadequate financial controls could result in misappropriation of assets, loss of income and debtor receipts and inaccurate reporting of Net Asset Value per share. The Board annually reviews the Investment Adviser's and the Administrator's statements on its internal controls and procedures.

 

Social and Environmental Matters

The Investment Adviser considers various factors when evaluating potential investments. While an investee company's policy towards the environment and social responsibility, including with regard to human rights, is considered as part of the overall assessment of risk and suitability for the portfolio, the Investment Adviser does not necessarily decide to, or not to, make an investment on environmental and social grounds alone.

 

All of the Company's activities are outsourced to third parties. As such it does not have any physical assets, property, employees or operations of its own and does not generate any greenhouse gas or other emissions.

 

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from its operations as its day-to-day management and administration functions have been outsourced to third parties and it neither owns physical assets, property nor has employees of its own. It therefore does not have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

 

Board Diversity

It is seen as a prerequisite that each member of the Board must have the skills, experience and character that will enable each Director to contribute individually, and as part of the Board team, to the effectiveness of the Board and the success of the Company. Subject to that overriding principle, diversity of experience and approach, including gender diversity, amongst Board members is of great value, and it is the Board's policy to give careful consideration to issues of overall Board balance and diversity in appointing new directors.

 

The Board currently comprises three male and one female director.

 

Approved and authorised by the Board and signed on its behalf by:

 

Tom H Bartlam

Chairman

25 September 2015

 

 

 

Statement of Directors' Responsibilities in Relation to the Financial Statements

 

The Directors are responsible for preparing the Annual Report and financial statements in accordance with applicable United Kingdom law and those International Financial Reporting Standards ('IFRS') as adopted by the European Union.

 

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 return or loss of the Company for that period. In preparing the financial statements, the Directors are required to:

 

(a)      select suitable accounting policies in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

 

(b)       present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

 

(c)      provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance;

 

(d)        state that the Company has complied with IFRS, subject to any material departures disclosed and explained in the financial statements; and

 

(e)        make judgements and estimates that are reasonable and prudent.

 

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 Company financial statements 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.

 

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations. The financial statements are published on www.jupiteram.com/JPG which is a website maintained by Jupiter Asset Management Limited.

 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. The work carried out by the Auditor does not include consideration of the maintenance and integrity of the website and accordingly the Auditor accepts no responsibility for any changes that have occurred to the financial statements when they are presented on the website.

 

Visitors to the website need to be aware that legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

The Directors confirm to the best of their knowledge that:

 

(a)        the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

 

(b)        the report includes a fair view 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 the Company faces; and

 

(c)        that in the opinion of the Board, the Annual Report and Accounts taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the company's performance, business model and strategy

 

So far as each of the Directors is aware at the time the report is approved:

 

(a)        there is no relevant audit information of which the Company's auditors are not aware; and

 

(b)        the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

 

 

 

 

By Order of the Board

Tom H Bartlam

Chairman

 

25 September 2015

 

 

 

Statement of Comprehensive Income for the year ended 30 June 2015

 

 

Year ended 30 June 2015

Year ended 30 June 2014

 

Revenue

Capital

Total

Revenue

Capital

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Gain on investments at fair value

-

3,484

3,484

-

5,329

5,329

 

 

 

 

 

 

 

Income

1,812

-

1,812

1,725

-

1,725

 

 

 

 

 

 

 

Foreign exchange gain

-

30

30

-

9

9

 

 

 

 

 

 

 

Total income

1,812

3,514

5,326

1,725

5,338

7,063

 

 

 

 

 

 

 

Investment management fee

(158)

(198)

(356)

(192)

(192)

(384)

 

 

 

 

 

 

 

Performance fee

-

(285)

(285)

-

-

-

 

 

 

 

 

 

 

Other expenses

(368)

(127)

(495)

(269)

(144)

(413)

 

 

 

 

 

 

 

Total expenses

(526)

(610)

(1,136)

(461)

(336)

(797)

 

 

 

 

 

 

 

Net return before finance costs and tax

1,286

2,904

4,190

1,264

5,002

6,266

 

 

 

 

 

 

 

Finance costs

(64)

(64)

(128)

(71)

(71)

(142)

 

 

 

 

 

 

 

Return on ordinary activities

 

 

 

 

 

 

before taxation

1,222

2,840

4,062

1,193

4,931

6,124

 

 

 

 

 

 

 

Taxation

(5)

-

(5)

(3)

-

(3)

 

 

 

 

 

 

 

Net return after taxation

1,217

2,840

4,057

1,190

4,931

6,121

 

 

 

 

 

 

 

Return per Ordinary share

6.67p

15.56p

22.23p

6.03p

24.99p

31.02p

 

The Board declared on 10 August 2015 an interim dividend of 1.6p per Ordinary share and the total payable will be £271,325.

 

The total column of this statement is the income statement of the Company, prepared in accordance with IFRS. The supplementary revenue return and capital return columns are both prepared under guidance produced by the Association of Investment Companies (AIC).

 

 

 

Statement of Financial Position as at 30 June 2015

 

 

2015

2014

 

£'000

£'000

Net Current Assets

 

 

 

 

 

Investments held at fair value through profit or loss

64,350

67,112

 

 

 

Current assets

 

 

 

 

 

Other receivables

833

159

 

 

 

Cash and cash equivalents

765

377

 

 

 

 

1,598

536

 

 

 

Total assets

65,948

67,648

 

 

 

Current liabilities

 

 

 

 

 

Other payables

(11,849)

(11,045)

 

 

 

Total assets less current liabilities

54,099

56,603

 

 

 

Capital and reserves

 

 

 

 

 

Called up share capital

1,095

1,095

 

 

 

Share premium

26,136

26,136

 

 

 

Capital redemption reserve

683

683

 

 

 

Retained earnings

26,185

28,689

 

 

 

Total equity shareholders' funds

54,099

56,603

 

 

 

Net Asset Value per Ordinary share

312.9p

297.1p

 

Statement of Changes in Net Equity for the year ended 30 June 2015

 

 

 

 

Capital

 

 

 

Share

Share

Redemption

Retained

 

 

Capital

Premium

Reserve

Earnings

Total

For the year ended 30 June 2015

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

30 June 2014

1,095

26,136

683

28,689

56,603

 

 

 

 

 

 

Net return for the year

-

-

-

4,057

4,057

 

 

 

 

 

 

Equity dividends paid and declared

-

-

-

(1,166)

(1,166)

 

 

 

 

 

 

Ordinary shares repurchased

-

-

-

(5,395)

(5,395)

 

 

 

 

 

 

Balance at 30 June 2015

1,095

26,136

683

26,185

54,099

 

Dividends paid during the period were paid out of revenue reserves.

 

 

 

 

Capital

 

 

 

Share

Share

Redemption

Retained

 

 

Capital

Premium

Reserve

Earnings

Total

For the year ended 30 June 2014

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

30 June 2013

1,091

25,911

683

26,998

54,683

 

 

 

 

 

 

Net return for the year

-

-

-

6,121

6,121

 

 

 

 

 

 

Equity dividends paid and declared

-

-

-

(1,533)

(1,533)

 

 

 

 

 

 

Ordinary shares issued

4

225

-

-

229

 

 

 

 

 

 

Ordinary shares repurchased

-

-

-

(2,897)

(2,897)

 

 

 

 

 

 

Balance at 30 June 2014

1,095

26,136

683

28,689

56,603

 

Dividends paid during the period were paid out of revenue reserves.

 

 

Cash Flow Statement for the year ended 30 June 2015

 

 

Year ended

Year ended

 

30 June

30 June

 

2015

2014

 

£'000

£'000

Cash flows from operating activities

 

 

 

 

 

Investment income received

1,780

1,761

 

 

 

Deposit interest received

-

1

 

 

 

Investment management fee paid

(344)

(392)

 

 

 

Performance fee paid

-

(174)

 

 

 

Other cash receipts

13

24

 

 

 

Other cash expenses

(501)

(370)

 

 

 

Payments from/(to) Contracts for Difference (CFD) counterparty

(151)

(4)

 

 

 

Cash generated from operations

797

846

 

 

 

Interest paid

(124)

(140)

 

 

 

Taxation

(5)

(3)

 

 

 

Net cash inflow from operating activities

668

703

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchases of investments

(12,342)

(21,463)

 

 

 

Sales of investments

18,612

19,995

 

 

 

 

6,270

(1,468)

 

 

 

Cash flows from financing activities

 

 

 

 

 

Shares repurchased

(5,395)

(2,897)

 

 

 

Shares reissued

-

229

 

 

 

Cash (paid*)/received from subsidiaries

(19)

2,780

 

 

 

Equity dividends paid

(1,166)

(1,533)

 

 

 

Short term loan received

-

2,500

 

 

 

Increase in cash

358

314

 

 

 

Change in cash and cash equivalents

 

 

 

 

 

Cash and cash equivalents at start of year

377

54

 

 

 

Realised gain on foreign currency

30

9

 

 

 

Cash and cash equivalents at end of year

765

377

 

*Post-liquidation expenses paid on behalf of Pitchwell Ltd (In Members' voluntary liquidation).

 

 

Notes to the Accounts for the year ended 30 June 2015

 

1.   Accounting policies

The Accounts comprise the financial results of the Company for the year to 30 June 2015. The Accounts are presented in pounds sterling, as this is the functional currency of the Company. The Accounts were authorised for issue in accordance with a resolution of the Directors on 25 September 2015. 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.

 

The Company continues to adopt the going concern basis in the preparation of the financial statements.

 

The following standards and interpretations have been issued and are expected to be relevant to the Company in future periods, which will be effective for this Company's accounts after 1 July 2015.

 

·      IFRS 14 - Regulatory Deferral Accounts (with effect from 1 January 2016)

 

·      Amendments to IFRS 11 - Accounting for Acquisitions of Interests in Joint Operations (with effect from 1 January 2016)

 

·      Amendments to IAS 16 and IAS 38 - Clarification of Acceptable Methods  of  Depreciation  and  Amortisation  (with  effect  from 1 January 2016)

 

·      Amendments to IAS 27 - Equity Method in Separate Financial Statements (with effect from 1 January 2016)

 

·      Amendments to IAS 1 - Disclosure Initiative (with effect from 1 January 2016)

 

·      IFRS 9 - Financial Instruments (with effect from 1 January 2016)

 

The Directors are currently reviewing these standards with a view to implementation on their effective date.

 

Early Adoption of standards

The Company did not early adopt new or amended standards/ interpretations for the year ended 30 June 2015.

 

A summary of the principal accounting policies, all of which have been applied consistently in the current and preceding years, is set out below:

 

(a) Revenue recognition

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

 

Underwriting commission is taken to income and recognised when the issue takes place, except where the Company is required to take up all or some of the shares underwritten, in which case an appropriate proportion of the commission received is deducted from the cost of those shares.

 

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.

An analysis of retained earnings broken down into revenue (distributable) items and capital (non-distributable) items is given in Note 14. In arriving at this breakdown, investment management fees and interest are charged half to the revenue account and half to capital reserves. That part of any investment performance fee which is deemed by the directors to relate to the capital outperformance of the Company's investments will be charged to capital and that part relating to revenue outperformance will be charged to revenue. All expenses relating to the Company's participation in the Jupiter Investment Companies Saving Scheme and ISA are charged to capital reserve.

 

(b) 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 date of the Statement of Financial Position without any deduction for estimated future selling costs.

 

Fair Value of Pitchwell Ltd

Following its liquidation, Pitchwell Ltd is valued at fair value based on its net assets as at 30 June 2015, less any liquidation costs.

 

(c) Finance costs

Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis to the statement of comprehensive income using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

 

(d) Cash and cash equivalents

Cash comprises cash in hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to insignificant risks of changes in value.

 

(e) Borrowing costs

Borrowing costs are recognised in the statement of comprehensive income in the period in which they are incurred. Borrowing costs are directly charged half to revenue and half to capital.

 

(f)  Foreign Currencies

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on retranslation are included in net profit or loss for the period, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised directly in equity.

 

(g) Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

 

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Statement of Financial Position date.

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilised.

 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in the subsidiary except where the group controls the reversal of the temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

 

Investment trusts which have approval under section 1158 of the Corporation Taxes Act 2010 are not liable for taxation of capital gains.

 

 

 

2.   Income

 

 

 

£'000

£'000

Income from fixed asset investments:

 

 

 

 

 

Dividends from UK companies

1,325

1,561

 

 

 

Property income distribution from UK REITS

16

3

 

 

 

Dividends from overseas companies

458

136

 

 

 

 

1,799

1,700

 

 

 

Other income:

 

 

 

 

 

Deposit interest

-

1

 

 

 

Options

3

3

 

 

 

Underwriting Commission

10

21

 

 

 

 

1,812

1,725

 

 

 

Income from fixed asset investments is derived:

 

 

 

 

 

Listed on the UK Stock Exchange

1,799

1,700

 

 

3.   Investment management fees

 

 

 

 

2015

 

 

2014

 

Revenue

Capital

Total

Revenue

Capital

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Investment management fee*

158

198

356

192

192

384

 

 

 

 

 

 

 

Investment performance fee

-

285

285

-

-

-

 

 

 

 

 

 

 

 

158

483

641

192

192

384

 

* During the year, an amount of £40,000 was waived by the Investment Adviser from the total management fee payable and as directed by the Board, this was wholly applied to Revenue.

 

 

4.   Dividends

 

 

2015

2014

Amounts recognised as distributions to equity holders in the period:

£'000

£'000

 

 

 

2014 Fourth interim of 1.6p per Ordinary share (2014: 1.9p)

303

454

 

 

 

First Interim of 1.6p per Ordinary share (2014: 1.9p)

296

453

 

 

 

Second Interim of 1.6p per Ordinary share (2014: 1.6p)

289

320

 

 

 

Third Interim of 1.6p per Ordinary share (2014: 1.6p)

278

306

 

 

 

 

1,166

1,533

 

Set out below is the total dividend payable in respect of the financial year under review, which is the basis on which the requirements of Section 1158 of the Corporation Tax Act 2010 are considered:

 

 

2015

2014

Dividends on equity shares:

£'000

£'000

 

 

 

First Interim of 1.6p per Ordinary share (2014: 1.9p)

296

-

 

 

 

Second Interim of 1.6p per Ordinary share (2014: 1.9p)

289

320

 

 

 

Third Interim of 1.6p per Ordinary share (2014: 1.6p)

278

306

 

 

 

Proposed fourth interim of 1.6p per Ordinary share (2014: 1.6p)

277

305

 

 

 

 

1,140

931

 

 

 

5.   Earnings per Ordinary share

The earnings per Ordinary share figure is based on the net gain for the year of £4,057,000 (2014: £6,121,000) and on 18,249,164 (2014: 19,728,108) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year excluding shares held in Treasury.

 

The earnings per ordinary share figure detailed above can be further analysed between revenue and capital, as below.

 

 

Year ended

Year ended

 

30 June

30 June

 

2015

2014

 

£'000

£'000

 

 

 

Net revenue return

1,217

1,190

 

 

 

Net capital return

2,840

4,931

 

 

 

Net total return

4,057

6,121

 

 

 

Weighted average number of Ordinary shares in issue during the year

18,249,164

19,728,108

 

 

 

Revenue earnings per Ordinary share

6.67p

6.03p

 

 

 

Capital earnings per Ordinary share

15.56p

24.99p

 

 

 

Total earnings per Ordinary share

22.23p

31.02p

 

 

6.   Net Asset Value per Ordinary share

The Net Asset Value per Ordinary share is based on the net assets attributable to the equity shareholders of £54,099,000 (2014: £56,603,000) and on 17,292,145 (2014: 19,051,145) Ordinary shares, being the number of Ordinary shares in issue at the year end (excluding Ordinary shares held in Treasury).

 

7.   Related parties

During the period under review, Jupiter Unit Trust Managers Limited ('JUTM'), the Alternative Investment Manager, a company within the same group as Jupiter Asset Management Limited was contracted to provide investment management services to the Company with effect from 22 July 2014 (subject to a termination by not less than twelve months' notice by either party) for a fee of 0.80 per cent. of the net assets of the company after deduction of the value of any Jupiter managed investments at 31 December and 30 June in each year. The fee payable for the year ended 30 June 2015 was £356,000 (2014: £384,000) with £196,000 (2014: £184,000) outstanding at the year end.

 

JUTM 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 composite Benchmark Index, (75% FTSE All-Share Index Total Return and 25% FTSE World ex UK Index Total Return) in an accounting period. Any performance fee payable will equal the time weighted average number of Ordinary shares in issue during the period multiplied by 15% 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 greater of three "high water marks", being (i) the Net Asset Value per Ordinary share on the last business day of the previous accounting period; (ii) the Net Asset Value per Ordinary share on the last day of a period in respect of which a performance fee was last paid: and (iii) the Net Asset Value per Ordinary Share on 30 June 2001, in each case the high water mark being increased or decreased by the percentage by which the Benchmark increases or decreases during the relevant calculation period. The total amount of management fee payable together with any performance fee payable in respect of one accounting period is limited to 5% of the Net Assets of the Company on the relevant calculation date. A performance fee of £285,000 was payable for the year ended 30 June 2015 (2014: £nil). The amount of £285,000 was outstanding at the year end (2014: Nil).

 

The Company has invested from time to time in funds managed by subsidiaries of Jupiter Investment Management Group Limited. At 30 June 2015 there were two such investments with an aggregate market value of £5,271,000 (2014: Three investments with aggregate value of £5,588,000). No investment management fee is payable by the Company to Jupiter Asset Management Limited in respect of the Company's holdings in investment trusts, open-ended funds and investment companies in respect of which Jupiter Investment Management Group Limited, or any subsidiary undertaking of Jupiter Investment Management Group Limited, receives fees as investment manager or investment adviser.

 

8.   Contingent liabilities

As at 30 June 2015 and 30 June 2014 there were no potential contingent liabilities.

 

9.   Post balance sheet event

Since the year end an additional 550,000 Ordinary shares were repurchased to be held in Treasury for prices between 280.0p and 314.0p per share.

 

 

Availability of Annual Report

A copy of the Annual Report & Accounts will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM.

 

The Annual Report & Accounts will also be available for download from the Company's section of Jupiter Asset

Management's website www.jupiteronline.com/JPG.

 

Hard copies of the Annual Report & Accounts will also be available upon request from the registered office of the Company at 1 Grosvenor Place, London SW1X 7JJ.

 


For further information, please contact:

 

Richard Pavry

Head of Investment Trusts

Jupiter Asset Management Limited, Company Secretary

[email protected]

020 3817 1496

 

25 September 2015

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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