Interim / Quarterly Report • Feb 10, 2023
Interim / Quarterly Report
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Selecting the stars of the FTSE 250
Half Year Report & Financial Statements for the six months ended 31st December 2022
JPMorgan Mid Cap Investment Trust plc (the 'Company') aims to achieve capital growth from investment in medium-sized UK listed companies. The Company specialises in investment in FTSE 250 companies, using long and short term borrowings to increase returns to shareholders.
The FTSE 250 Index (excluding investment trusts).
The Company employs JPMorgan Funds Limited ('JPMF' or the 'Manager') as its Alternative Investment Fund Manager and Company Secretary. JPMF delegates the management of the Company's portfolio to JPMorgan Asset Management ('JPMAM').
ESG considerations are fully integrated into the stock selection process. JPMAM research teams compile proprietary ESG analyses on each company as well as using external vendor research, and rank them. Following in-depth strategic and financial analysis, these ESG rankings and factors are taken into consideration as part of the investment case. In addition, the Manager, together with Stewardship specialists, conducts extensive engagement on specific ESG issues with investee companies. JPMAM is a United Nations Principles of Responsible Investment ('UN PRI') and Financial Reporting Council ('FRC') UK Stewardship Code signatory and endeavours to vote at all of the meetings called by companies in which your portfolio invests.
The Company currently conducts its affairs so that the shares issued by the Company can be recommended by independent financial advisers to ordinary retail investors in accordance with the FCA's rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future.
The shares are excluded from the FCA's restrictions which apply to non-mainstream investment products because they are shares in an investment trust. The Company's ordinary shares are not considered to be 'complex instruments' under the FCA's 'Appropriateness' rules and guidance in the Conduct of Business sourcebook.
The Company is a member of the AIC.
The Company's website, which can be found at www.jpmmidcap.co.uk, includes useful information on the Company, such as daily prices, factsheets and current and historic half year and annual reports.
| Half Year Performance |
|---|
| ----------------------- |
| Financial Highlights | 5 |
|---|---|
| Chairman's Statement | |
| Chairman's Statement | 8 |
| Investment Review | |
| Investment Managers' Report | 11 |
| List of Investments | 12 |
| Portfolio Analyses | 13 |
| Condensed Financial statements | |
| Condensed Statement of Comprehensive Income | 15 |
| Condensed Statement of Changes in Equity | 16 |
| Condensed Statement of Financial Position | 17 |
| Condensed Statement of Cash Flows | 18 |
| Notes to the Condensed Financial Statements | 19 |
| Interim Management Report | |
| Interim Management Report | 23 |
| Shareholder information | |
| Glossary of Terms and Alternative Performance Measures ('APMs') (Unaudited) Where to Buy J.P. Morgan Investment Trusts Information About the Company |
25 27 28 |
1 Source: Morningstar.
2 Source: Morningstar/J.P.Morgan, using net asset value per share.
3 Morningstar. The Company's benchmark is the FTSE 250 Index (excluding investment trusts).
A Alternative Performance Measure ('APM').
A glossary of terms and APMs is provided on pages 25 and 26.
| 31st December 2022 |
30th June 2022 |
% change |
|
|---|---|---|---|
| Shareholders' funds (£'000) | 219,604 | 222,908 | –1.5 |
| Number of shares in issue (excluding shares held in Treasury) | 22,086,242 | 22,543,730 | — |
| Net asset value per shareA | 994.3p | 988.8p | +0.61 |
| Share price | 878.0p | 854.0p | +2.82 |
| Share price discount to net asset value per shareA | 11.7% | 13.6% | |
| GearingA | 7.2% | 5.6% | |
| Ongoing Charges RatioA | 0.95% | 0.92% |
1 This return excludes dividends reinvested. Including dividends reinvested the return would be +3.0%.
2 This return excludes dividends reinvested. Including dividends reinvested the return would be +5.6%.
A Alternative Performance Measure ('APM').
A glossary of terms and APMs is provided on pages 25 and 26.
John Evans Chairman
In the six months to 31st December 2022 the total return on net assets was +3.0%, marginally ahead of the Company's benchmark, the FTSE 250 Index (excluding investment trusts), which returned +2.8%. The Company's share price total return for the period was +5.6%, reflecting a narrowing of the discount that the Company's shares trade at relative to its Net Asset Value ('NAV').
A review of the Company's performance for the period and the outlook for the remainder of the year is provided in the Investment Managers' report that follows.
At the end of the last financial year, the Company's shares traded at a 13.6% discount, having widened substantially over the financial year in line with the discount experience of its immediate peers and also of investment trusts across many asset classes. Over the last six months the discount has narrowed marginally, closing the half year period at 11.7%.
The Directors recognise the importance to shareholders that the Company's share price should not differ excessively from the underlying NAV and the Board aims to address any imbalance between supply and demand against an overall assessment of general market trends. In the six months to 31st December 2022, the Board utilised the Company's authority to buy back shares and repurchased a total of 457,488 shares. These shares were purchased at an average discount to NAV of 13.4%, producing a modest accretion to the NAV for continuing shareholders. Shares repurchased are held in Treasury and such treasury shares and any new ordinary shares will only be sold or issued at a premium to NAV.
As recently announced, with effect from 1st January 2023, the Company's Manager has agreed to reduce its investment management fee. There are three key changes to the fee agreement. Fees will now be based on net assets, as opposed to total, or gross assets, the tier at which the 0.65% fee rate tapers has been reduced from £250 million of net assets to £200 million and the tapered fee has been reduced from 0.60% to 0.55%.
It is felt that this revised fee structure balances the need for the Company's ongoing charges ratio to remain competitive, whilst rewarding the Manager for its efforts.
Whilst the Company has a capital growth objective, dividends paid are an important component of shareholder total return over the long term. Net revenue after taxation for the six months to 31st December 2022 was £2.99 million (2021: £3.94 million) and earnings per share were 13.41p (2021: 16.77p). The Board has declared an interim dividend of 8.0p (2021: 8.0p) to be paid on 25th April 2023 to shareholders on the register at the close of business on 17th March 2023.
Due to the impact of dividend cuts made by UK companies across all indices and sectors during the COVID-19 pandemic in 2020 and 2021, dividends uncovered by earnings were paid in the Company's financial years ended 30th June 2020 and 2021 by utilising the revenue reserves built up in previous years to maintain the 2019 pre-pandemic total dividend level. In 2022, the Company's dividend was fully covered by revenue generated over that year and revenue reserves were increased to approximately 28.1 pence per share, having fallen to approximately 21.8 pence per share (£5,111,000) at the end of June 2021.
Your Company's revenue in any given year is determined by a combination of the dividend performance of its investment portfolio, including the occasional receipt of 'special dividends' and any changes that the Investment Managers choose to make through transactions which can, in various circumstances, either increase or decrease revenue depending on where the managers identify the most attractive opportunities. It is important that the Investment Managers have such freedom of action.
A decision on the level of the dividends for the current financial year will be carefully reviewed when there is greater clarity on the net income position of the Company for the full year.
The Board has determined that in normal circumstances the Company's overall gearing range is 10% net cash to 20% geared. Within this range, after due consideration at each Board meeting, the Board normally sets a narrower, short term gearing range for the ensuing period. The Company's gearing strategy is implemented through the use of bank borrowing facilities. The Company currently has access to two loan facilities totalling £55 million, with the option of further increasing one of the facilities by £20 million (subject to credit approval by the lender). £25 million of the debt has just been renewed out to February 2025 and the Board will be reviewing the options available for the replacement of the remaining £30 million ahead of its expiry in March 2024. When structuring the Company's debt, the Board considers quantum, terms and tenure and endeavours to ensure that the Investment Managers have access to a flexible structure to assist with the objective of enhancing shareholder returns.
The Company delivers email updates on the Company's progress with regular news and views, as well as the latest performance. If you have not already signed up to receive these communications and you wish to do so you can opt in via https://tinyurl.com/UK-Mid-Cap-Sign-Up or by scanning the QR code on this page.
2022 was a poor year for equites on a global scale and in the UK the Mid Cap index recorded a disappointing return and one that was, unusually, significantly lower than the larger cap indices of UK equities. This is reflected in high levels of outflows from UK equity funds in 2022 and widening discounts for UK equity orientated investment trusts.
The reasons are not difficult to identify being a combination of rising energy and commodity prices, leading to sharply higher than expected rates of inflation which the Bank of England has responded to by beginning to raise short term interest rates. The follow through from the resurgence in inflation has been a rising number of labour disputes as employees seek wage rises in line with the increase in cost of living. Some of these negotiations have culminated in a series of strikes by workers in many key sectors.
The highly damaging political hiatus in September undermined international confidence in UK debt markets and came about at the precise time that the Bank of England was in the process of replacing quantitative easing with quantitative tightening. Debt is now priced more realistically than has been the case since 2008 and perhaps of greater import will now be less freely available and hopefully more appropriately employed.
All of the above combined to produce an awful background for the FTSE 250 and performance has reflected this. However, looking at long term valuations it is clear that much of the downside may now be priced in, indeed over the past 30 years there are only three other periods where forward valuations have been close to current levels.
The market has recession priced in and the ongoing risk is that the decline in earnings and profits is greater than currently anticipated. Your Investment Managers are seeing opportunities to invest in companies with excellent underlying characteristics at valuations only very occasionally on offer. They are seizing these opportunities and it is to be hoped that, over time, these capital allocations will prove to be rewarding for shareholders.
John Evans
Chairman 10th February 2023
The first half of the Company's financial year endured a bleak backdrop. The atrocious war in Ukraine raged on, energy prices and inflation remained uncomfortably high, interest rates rose swiftly and there was a growing threat of recession in much of the developed world. While public sector strike action grew in the UK in response to the stark cost of living increase over the year, towards the end of 2022 there were a few slight positives of note. China backed down on its zero-COVID policy; inflation appeared to have peaked in the US, UK and Europe; and in the UK the new Prime Minister calmed markets and investors after the disastrous mini budget that was delivered in September during the very brief reign of his predecessor.
Against this backdrop, the FTSE 250 Index (excluding investment trusts) rose +2.8% for the six months (although it is notable that in the last three months of 2022 it was up +12.9% as markets looked to life beyond peak inflation). Your Company produced a total return on net assets of +3.0% in the six-month period, and the share price total return was +5.6%, as the discount of the share price relative to net assets narrowed slightly.
Among the contributors to the outperformance in the six months were two of our large positions in the retail sector, Dunelm and JD Sports Fashion, as these category winners reminded the market of their worth with impressive results. In addition, our positions in Indivior, Bank of Georgia and 4imprint also performed strongly, again supported by impressive results in spite of the economic backdrop. On the negative side, the main detractors included the housebuilder Vistry, Future (a media company) and Harbour Energy following the Government's ill-thought-out extra tax levy on North Sea oil and gas producers.
We continued to make changes to the portfolio to adapt to the economic environment. New additions included Inchcape, the motor distributor, following its large South American acquisition, Balfour Beatty, the infrastructure company with significant exposure to US infrastructure, and Spectris, a supplier of precision instrumentation and controls. We also sold out of certain holdings including Capital & Counties, Marshalls and National Express, on concerns over current trading and/or balance sheet strength.
It is very easy to paint a dark and gloomy picture of the UK economy, and therefore of its perceived stockmarket proxy, the FTSE 250 Index. However, markets (and investors) are pre-emptive, and looking out to the next 12-18 months provides reasons to be more optimistic.
In line with most economists, we expect a mild recession in the UK in 2023. We believe inflation has peaked in the UK, and while we expect it to remain elevated, we do foresee a significant decline from the current 10.7% over the course of this year. In part this is due to gas prices, which are substantially lower than the peak in 2022, although still high versus historical metrics. After nine increases last year and one increase on 2nd February 2023, interest rates at 4.0% are much closer to peak. Consumer confidence remains very weak – headlines, strikes, utility bills and potential house price declines are all playing a part – but the unemployment rate remains very low at 3.7% and there are still over a million job vacancies. Freight rates have fallen significantly, and it appears that supply chains are beginning to function more normally, aided by the re-opening of China.
This leads us to valuations. The environment is going to remain extremely difficult for businesses and consumers to navigate this year - but a lot of this is already reflected in valuations. While it has rallied off its 9.8x low in October, the FTSE 250 Index price to earnings ratio is around 12x and on our favoured free cashflow yield metric the Index is undeniably attractive on 4.5%. Your Company's free cashflow yield metric is even more so on 6.3%. As we have said before, acquirors of UK businesses recognise this. Merger & Acquisition ('M&A') activity continued in 2022 despite the economic backdrop, and we strongly believe it will continue this year while valuations remain so compelling on any sensible timeframe.
Georgina Brittain Katen Patel Investment Managers 10th February 2023
Georgina Brittain Investment Manager
Georgina Brittain, managing director, is a portfolio manager within the J.P. Morgan Asset Management International Equity Group, based in London. An employee since 1995, Georgina joined the firm as a graduate trainee. She obtained a MA in Classics from the University of Oxford, and earned a Diploma in Law from City University, London. She is a qualified barrister.
Katen Patel Investment Manager
Katen Patel, executive director, is a portfolio manager within the J.P. Morgan Asset Management International Equity Group, based in London. An employee since April 2013, he previously worked at HSBC Bank Plc in a European equity sales role. He obtained a BSc. in Management from the London School of Economics and Political Science. Katen is a CFA charterholder.
As at 31st December 2022
| Company | Valuation £'000 |
|---|---|
| Industrials | |
| IMI | 7,986 |
| Serco | 7,765 |
| Grafton | 5,914 |
| Inchcape | 5,838 |
| Ashtead1 | 5,758 |
| Diploma | 5,132 |
| Spectris | 3,963 |
| Rotork | 3,848 |
| Oxford Instruments | 3,368 |
| Balfour Beatty | 3,207 |
| Clarkson | 3,160 |
| Chemring | 3,015 |
| Morgan Advanced Materials | 2,956 |
| Page | 2,766 |
| Morgan Sindall | 2,448 |
| Weir1 | 2,251 |
| Videndum | 1,557 |
| 70,932 | |
| Financials | |
| OSB | 10,244 |
| Man | 8,302 |
| Bank of Georgia | 6,643 |
| Investec | 5,881 |
| Hiscox | 4,195 |
| Intermediate Capital | 4,018 |
| Alpha International2 | 3,978 |
| Virgin Money UK | 3,505 |
| Beazley1 | 2,816 |
| TBC Bank | 2,426 |
| TP ICAP | 1,992 |
| Quilter | 1,728 |
| CMC Markets | 874 |
| Consumer Discretionary | 56,602 |
| Watches of Switzerland JD Sports Fashion1 |
7,754 7,020 |
| 4imprint | 6,412 |
| Dunelm | 5,776 |
| Games Workshop | 4,280 |
| Next Fifteen Communications2 | 3,861 |
| Bellway | 3,529 |
| Future | 3,231 |
| Company | Valuation £'000 |
|---|---|
| Consumer Discretionary (continued) | |
| Vistry | 2,685 |
| Jet22 | 2,444 |
| Dr. Martens | 929 |
| 47,921 | |
| Consumer Staples | |
| Premier Foods | 6,027 |
| Greggs | 3,399 |
| Tate & Lyle | 3,307 |
| Britvic | 3,302 |
| 16,035 | |
| Technology | |
| Computacenter | 4,394 |
| Bytes Technology | 3,939 |
| Softcat | 3,078 |
| Moneysupermarket.com | 1,726 |
| 13,137 | |
| Energy | |
| Energean | 5,200 |
| Harbour Energy | 3,043 |
| Serica Energy2 | 2,394 |
| 10,637 | |
| Health Care | |
| Indivior | 7,364 |
| 7,364 | |
| Telecommunications | |
| Telecom Plus | 3,512 |
| Spirent Communications | 3,120 |
| 6,632 | |
| Real Estate | |
| Savills | 1,651 |
| Urban Logistics REIT | 1,521 |
| CLS | 1,269 |
| 4,441 | |
| Basic Materials | |
| Hill & Smith | 1,817 |
| 1,817 | |
| Total Investments | 235,518 |
FTSE 100 Index companies. AIM listed companies.
1
| 31st December 20221 |
30th June 20221 |
|
|---|---|---|
| FTSE 250 Index companies | 87.0 | 87.1 |
| FTSE 100 Index companies | 7.6 | 7.9 |
| AIM Listed companies | 5.4 | 4.6 |
| Other investments2 | — | 0.4 |
| Total | 100.0 | 100.0 |
1 Based on total investments of £235.5m (30th June 2022: £235.3m).
2 At 30th June 2022, Alphawave IP was listed on the main market but not included in any of the above indices.
| 31st December 2022 | 30th June 2022 | |||
|---|---|---|---|---|
| Portfolio | Benchmark | Portfolio | Benchmark | |
| %1 | % | %1 | % | |
| Industrials | 30.1 | 21.4 | 25.0 | 22.6 |
| Financials | 24.0 | 19.5 | 21.2 | 19.9 |
| Consumer Discretionary | 20.4 | 19.0 | 26.6 | 19.0 |
| Consumer Staples | 6.8 | 5.0 | 6.1 | 5.0 |
| Technology | 5.6 | 5.0 | 7.9 | 4.7 |
| Energy | 4.5 | 3.1 | 2.7 | 2.2 |
| Health Care | 3.1 | 5.7 | 2.8 | 4.1 |
| Telecommunications | 2.8 | 1.7 | 3.0 | 1.6 |
| Real Estate | 1.9 | 12.2 | 3.9 | 13.8 |
| Basic Materials | 0.8 | 4.7 | 0.8 | 4.4 |
| Utilities | — | 2.7 | — | 2.7 |
| Total | 100.0 | 100.0 | 100.0 | 100.0 |
1 Based on total investments of £235.5m (30th June 2022: £235.3m).
| (Unaudited) Six months ended 31st December 2022 |
(Unaudited) Six months ended 31st December 2021 |
(Audited) Year ended 30th June 2022 |
|||||||
|---|---|---|---|---|---|---|---|---|---|
| Revenue | Capital | Total Revenue | Capital | Total Revenue | Capital | Total | |||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Gains/(losses) on investments | |||||||||
| held at fair value through | |||||||||
| profit or loss | — | 3,429 | 3,429 | — | 15,735 | 15,735 | — (107,110) (107,110) | ||
| Net foreign currency | |||||||||
| gains/(losses) | — | 5 | 5 | — | (2) | (2) | — | (7) | (7) |
| Income from investments | 3,578 | — | 3,578 | 4,666 | — | 4,666 | 9,516 | — | 9,516 |
| Interest receivable and similar | |||||||||
| income | 67 | — | 67 | 4 | — | 4 | 41 | — | 41 |
| Gross return/(loss) | 3,645 | 3,434 | 7,079 | 4,670 | 15,733 | 20,403 | 9,557 (107,117) | (97,560) | |
| Management fee (note 3) | (227) | (529) | (756) | (365) | (851) | (1,216) | (673) | (1,571) | (2,244) |
| Other administrative expenses | (323) | — | (323) | (231) | — | (231) | (675) | — | (675) |
| Net return/(loss) before finance | |||||||||
| costs and taxation | 3,095 | 2,905 | 6,000 | 4,074 | 14,882 | 18,956 | 8,209 (108,688) (100,479) | ||
| Finance costs | (130) | (304) | (434) | (95) | (221) | (316) | (204) | (476) | (680) |
| Net return/(loss) before taxation | 2,965 | 2,601 | 5,566 | 3,979 | 14,661 | 18,640 | 8,005 (109,164) (101,159) | ||
| Taxation credit/(charge) | 20 | — | 20 | (44) | — | (44) | (68) | — | (68) |
| Net return/(loss) after taxation | 2,985 | 2,601 | 5,586 | 3,935 | 14,661 | 18,596 | 7,937 (109,164) (101,227) | ||
| Return/(loss) per share (note 4) | 13.41p | 11.69p | 25.10p | 16.77p | 62.49p | 79.26p | 34.07p (468.65)p (434.58)p |
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period.
The 'Total' column of this statement is the profit and loss account of the Company and the 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies.
The net return/(loss) after taxation represents the profit/(loss) for the period/year and also the Total Comprehensive Income.
| Called up | Capital | |||||
|---|---|---|---|---|---|---|
| share | Share | redemption | Capital | Revenue | ||
| capital | premium | reserve | reserves1 | reserve1 | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Six months ended 31st December 2022 (Unaudited) | ||||||
| At 30th June 2022 | 6,350 | 454 | 3,650 | 201,271 | 11,183 | 222,908 |
| Repurchase of shares into Treasury | — | — | — | (4,123) | — | (4,123) |
| Net return | — | — | — | 2,601 | 2,985 | 5,586 |
| Dividends paid in the period (note 5) | — | — | — | — | (4,767) | (4,767) |
| At 31st December 2022 | 6,350 | 454 | 3,650 | 199,749 | 9,401 | 219,604 |
| Six months ended 31st December 2021 (Unaudited) | ||||||
| At 30th June 2021 | 6,350 | 454 | 3,650 | 319,752 | 10,155 | 340,361 |
| Net return | — | — | — | 14,661 | 3,935 | 18,596 |
| Dividends paid in the period (note 5) | — | — | — | — | (5,044) | (5,044) |
| At 31st December 2021 | 6,350 | 454 | 3,650 | 334,413 | 9,046 | 353,913 |
| Year ended 30th June 2022 (Audited) | ||||||
| At 30th June 2021 | 6,350 | 454 | 3,650 | 319,752 | 10,155 | 340,361 |
| Repurchase of shares into Treasury | — | — | — | (9,317) | — | (9,317) |
| Net return | — | — | — | (109,164) | 7,937 | (101,227) |
| Dividends paid in the year (note 5) | — | — | — | — | (6,909) | (6,909) |
| At 30th June 2022 | 6,350 | 454 | 3,650 | 201,271 | 11,183 | 222,908 |
1 These reserves form the distributable reserves of the Company and may be used to fund distributions to investors.
| (Unaudited) | (Unaudited) | (Audited) | |
|---|---|---|---|
| At | At | At | |
| 31st December | 31st December | 30th June | |
| 2022 | 2021 | 2022 | |
| £'000 | £'000 | £'000 | |
| Fixed assets | |||
| Investments held at fair value through profit or loss | 235,518 | 381,313 | 235,322 |
| Current assets | |||
| Debtors | 688 | 1,081 | 6,921 |
| Cash and cash equivalents | 703 | 11,738 | 15,831 |
| 1,391 | 12,819 | 22,752 | |
| Current liabilities | |||
| Creditors: amounts falling due within one year | (15,305) | (16,219) | (20,166) |
| Net current (liabilities)/assets | (13,914) | (3,400) | 2,586 |
| Total assets less current liabilities | 221,604 | 377,913 | 237,908 |
| Creditors: amounts falling due after more than one year | (2,000) | (24,000) | (15,000) |
| Net assets | 219,604 | 353,913 | 222,908 |
| Capital and reserves | |||
| Called up share capital | 6,350 | 6,350 | 6,350 |
| Share premium | 454 | 454 | 454 |
| Capital redemption reserve | 3,650 | 3,650 | 3,650 |
| Capital reserve | 199,749 | 334,413 | 201,271 |
| Revenue reserve | 9,401 | 9,046 | 11,183 |
| Total shareholders' funds | 219,604 | 353,913 | 222,908 |
| Net asset value per share (note 6) | 994.3p | 1,508.4p | 988.8p |
| (Unaudited) Six months ended 31st December 2022 £'000 |
(Unaudited) Six months ended 31st December 2021 £'000 |
(Audited) Year ended 30th June 2022 £'000 |
|
|---|---|---|---|
| Net cash outflow from operations before dividends and | |||
| interest (note 7) | (1,013) | (1,488) | (2,948) |
| Dividends received | 3,891 | 4,448 | 9,286 |
| Interest received | 61 | 4 | 41 |
| Overseas tax recovered/(paid) | 72 | (15) | (15) |
| Interest paid | (410) | (319) | (693) |
| Net cash inflow from operating activities | 2,601 | 2,630 | 5,671 |
| Purchases of investments | (57,993) | (44,178) | (113,532) |
| Sales of investments | 62,068 | 51,482 | 142,071 |
| Net cash inflow from investing activities | 4,075 | 7,304 | 28,539 |
| Dividends paid | (4,767) | (5,044) | (6,909) |
| Repurchase of shares into Treasury | (4,035) | — | (9,317) |
| Repayment of bank loan | (13,000) | (6,000) | (15,000) |
| Net cash outflow from financing activities | (21,802) | (11,044) | (31,226) |
| (Decrease)/increase in cash and cash equivalents | (15,126) | (1,110) | 2,984 |
| Cash and cash equivalents at start of period/year | 15,831 | 12,847 | 12,847 |
| Exchange movements | (2) | 1 | — |
| Cash and cash equivalents at end of period/year | 703 | 11,738 | 15,831 |
| Cash and cash equivalents consist of: | |||
| Cash and short term deposits | 684 | 561 | 272 |
| Cash held in JPMorgan Sterling Liquidity Fund | 19 | 11,177 | 15,559 |
| Total | 703 | 11,738 | 15,831 |
| As at | Other | As at | ||
|---|---|---|---|---|
| 30th June | non-cash | 31st December | ||
| 2022 | Cash flows | charges | 2022 | |
| £'000 | £'000 | £'000 | £'000 | |
| Cash and cash equivalents | ||||
| Cash | 272 | 414 | (2) | 684 |
| Cash equivalents | 15,559 | (15,540) | — | 19 |
| 15,831 | (15,126) | (2) | 703 | |
| Borrowings | ||||
| Debt due within one year | (15,000) | — | — | (15,000) |
| Debt due after one year | (15,000) | 13,000 | — | (2,000) |
| (30,000) | 13,000 | — | (17,000) | |
| Total | (14,169) | (2,126) | (2) | (16,297) |
For the six months ended 31st December 2022
The information contained within the condensed financial statements in this half year report has not been audited or reviewed by the Company's Auditor.
The figures and financial information for the year ended 30th June 2022 are extracted from the latest published financial statements of the Company and do not constitute statutory accounts for that year. Those financial statements have been delivered to the Registrar of Companies and included the report of the Auditor which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.
The condensed financial statements have been prepared in accordance with the Companies Act 2006, FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' of the United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the revised 'SORP') issued by the Association of Investment Companies in July 2022.
FRS 104, 'Interim Financial Reporting', issued by the Financial Reporting Council ('FRC') in March 2015 has been applied in preparing this condensed set of financial statements for the six months ended 31st December 2022.
All of the Company's operations are of a continuing nature.
The accounting policies applied to this condensed set of financial statements are consistent with those applied in the financial statements for the year ended 30th June 2022.
For the six month period to 31st December 2022, the investment management fee was based on 0.65% per annum on total assets less current liabilities, excluding amounts held in a liquidity fund ('total assets'), up to £250 million and 0.60% on total assets over £250 million.
With effect from 1st January 2023, the annual investment management fee, will be charged at an annual rate of 0.65% on the first £200 million of net assets and 0.55% on net assets in excess of £200 million.
| (Unaudited) | (Unaudited) | (Audited) | |
|---|---|---|---|
| Six months ended | Six months ended | Year ended | |
| 31st December 2022 | 31st December 2021 | 30th June 2022 | |
| £'000 | £'000 | £'000 | |
| Return per share is based on the following: | |||
| Revenue return | 2,985 | 3,935 | 7,937 |
| Capital return/(loss) | 2,601 | 14,661 | (109,164) |
| Total return/(loss) | 5,586 | 18,596 | (101,227) |
| Weighted average number of shares in issue | 22,248,402 | 23,462,770 | 23,293,115 |
| Revenue return per share | 13.41p | 16.77p | 34.07p |
| Capital return/(loss) per share | 11.69p | 62.49p | (468.65)p |
| Total return/(loss) per share | 25.10p | 79.26p | (434.58)p |
| (Unaudited) | (Unaudited) | (Audited) | |
|---|---|---|---|
| Six months ended | Six months ended | Year ended | |
| 31st December 2022 | 31st December 2021 | 30th June 2022 | |
| £'000 | £'000 | £'000 | |
| 2022 Final dividend of 21.5p (2020: 21.5p) per share | 4,767 | 5,044 | 5,044 |
| 2022 Interim dividend of 8.0p per share | — | — | 1,865 |
| Total dividends paid | 4,767 | 5,044 | 6,909 |
All dividends paid in the period/year have been funded from the Revenue Reserve.
An interim dividend of [8.0]p has been declared in respect of the six months ended 31st December 2022, to be paid on 20th April 2023 to shareholders on the register at the close of business on 17th March 2023.
| (Unaudited) | (Unaudited) | (Audited) | |
|---|---|---|---|
| Six months ended | Six months ended | Year ended | |
| 31st December 2022 | 31st December 2021 | 30th June 2022 | |
| Net assets (£'000) | 219,604 | 353,913 | 222,908 |
| Number of shares in issue | 22,086,242 | 23,462,770 | 22,543,730 |
| Net asset value per share | 994.3p | 1,508.4p | 988.8p |
| (Unaudited) | (Unaudited) | (Audited) | |
|---|---|---|---|
| Six months ended | Six months ended | Year ended | |
| 31st December 2022 | 31st December 2021 | 30th June 2022 | |
| £'000 | £'000 | £'000 | |
| Net return/(loss) before finance costs and taxation | 6,000 | 18,956 | (100,479) |
| (Less capital return)/add capital loss before finance costs | |||
| and taxation | (2,905) | (14,882) | 108,688 |
| Scrip dividends received as income | (23) | — | — |
| Decrease/(increase) in accrued income and other debtors | 354 | (108) | (111) |
| Increase/(decrease) in accrued expenses | 55 | (38) | (17) |
| Management fee charged to capital | (529) | (851) | (1,571) |
| Overseas withholding tax | (20) | (110) | (124) |
| Dividends received | (3,891) | (4,448) | (9,286) |
| Interest received | (61) | (4) | (41) |
| Realised gains/(losses) on foreign currency transactions | 7 | (3) | (7) |
| Net cash outflow from operations before dividends | |||
| and interest | (1,013) | (1,488) | (2,948) |
The fair value hierarchy analysis for financial instruments held at fair value at the period end is as follows:
| (Unaudited) Six months ended 31st December 2022 |
(Unaudited) Six months ended 31st December 2021 |
(Audited) Year ended 30th June 2022 |
||||
|---|---|---|---|---|---|---|
| Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Level 1 | 235,518 | — | 381,313 | — | 235,322 | — |
| Total | 235,518 | — | 381,313 | — | 235,322 | — |
The Company is required to make the following disclosures in its half year report.
The principal risks and uncertainties faced by the Company have not changed and fall into the following broad categories: investment and strategy; financial; accounting, legal and regulatory; corporate governance and shareholder relations; and operational and cybercrime. Information on each of these areas is given in the Business Review within the Annual Report and Financial Statements for the year ended 30th June 2022.
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.
The Directors believe, having considered the Company's investment objectives, risk management policies, capital management policies and procedures, nature of the portfolio and expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future and, more specifically, that there are no material uncertainties pertaining to the Company that would prevent its ability to continue in such operational existence for at least 12 months from the date of the approval of this half yearly financial report. For these reasons, they consider there is sufficient evidence to continue to adopt the going concern basis in preparing the accounts.
The Board of Directors confirms that, to the best of its knowledge:
In order to provide these confirmations, and in preparing these financial statements, the Directors are required to:
and the Directors confirm that they have done so.
For and on behalf of the Board
John Evans
Chairman 10th February 2023
Total return to the shareholder, on a last traded price to last traded price basis, assuming that all dividends received were reinvested, without transaction costs, into the shares of the Company at the time the shares were quoted ex-dividend.
| Six months ended | ||
|---|---|---|
| Total return calculation Page |
31st December 2022 | |
| Opening share price (p) 6 |
854.0 | (a) |
| Closing share price (p) 6 |
878.0 | (b) |
| Total dividend adjustment factor1 | 1.027529 | (c) |
| Adjusted closing share price (d = b x c) | 902.2 | (d) |
| Total return to shareholder (e = d / a – 1) | 5.6% | (e) |
1 The dividend adjustment factor is calculated on the assumption that the dividends paid out by the Company are reinvested into the shares of the Company at the last traded price quoted at the ex-dividend date.
Total return on net asset value ('NAV') per share, on a bid value to bid value basis, assuming that all dividends paid out by the Company were reinvested, without transaction costs, into the shares of the Company at the NAV per share at the time the shares were quoted ex-dividend.
| Six months ended | ||
|---|---|---|
| Total return calculation Page |
31st December 2022 | |
| Opening cum-income NAV per share (p) | 6 988.8 |
(a) |
| Closing cum-income NAV per share (p) | 6 994.3 |
(b) |
| Total dividend adjustment factor1 | 1.024490 | (c) |
| Adjusted closing cum-income NAV per share (d = b x c) | 1,018.7 | (d) |
| Total return on net assets (e = d / a – 1) | 3.0% | (e) |
1 The dividend adjustment factor is calculated on the assumption that the dividends paid out by the Company are reinvested into the shares of the Company at the cum-income NAV at the ex-dividend date.
In accordance with industry practice, dividends payable which have been declared but which are unpaid at the balance sheet date are deducted from the NAV per share when calculating the total return on net assets.
Total return on the benchmark, on a closing-market value to closing-market value basis, assuming that all dividends received were reinvested, without transaction costs, in the shares of the underlying companies at the time the shares were quoted ex-dividend (see page 5).
The benchmark is a recognised index of stocks which should not be taken as wholly representative of the Company's investment universe. The Company's investment strategy does not follow or 'track' this index and consequently, there may be some divergence between the Company's performance and that of the benchmark.
Gearing represents the excess amount above shareholders' funds of total investments, expressed as a percentage of the shareholders' funds. If the amount calculated is negative, this is shown as a 'net cash' position.
| 31st December | 30th June | |||
|---|---|---|---|---|
| 2022 | 2022 | |||
| Gearing calculation | Page | £'000 | £'000 | |
| Investments held at fair value through profit or loss | 17 | 235,518 | 235,322 | (a) |
| Net assets | 17 | 219,604 | 222,908 | (b) |
| Gearing (c = (a / b) – 1) | 7.2% | 5.6% | (c) |
The ongoing charges represent the Company's management fee and all other operating expenses excluding finance costs payable and excluding/including performance fee payable, expressed as a percentage of the average of the daily cum-income net assets during the year and is calculated in accordance with guidance issued by the Association of Investment Companies.
The figure as at 31st December 2022 is an estimated figure based on the actual figures for the six months ended 31st December 2022.
| 31st December 2022 |
30th June 2022 |
|||
|---|---|---|---|---|
| Ongoing charges ratio calculation | Page | £'000 | £'000 | |
| Management Fee1 | 15 | 1,460 | 2,244 | |
| Other administrative expenses | 15 | 646 | 675 | |
| Total management fee and other administrative expenses | 2,158 | 2,919 | (a) | |
| Average daily cum-income net assets | 222,000 | 316,969 | (b) | |
| Ongoing charges (c = a / b) | 0.95% | 0.92% | (c) |
1 The management fee is estimated for the year based on the following:
– from 1st July 2022 to 31st December 2022, on 0.65% per annum on total assets less current liabilities, excluding amounts held in a liquidity fund ('total assets'), up to £250 million and 0.60% on total assets over £250 million; and
– from 1st January 2023 to 30th June 2023, on an annual rate of 0.65% on the first £200 million of net assets and 0.55% on net assets in excess of £200 million.
If the share price of an investment trust is lower than the NAV per share, the shares are said to be trading at a discount. The discount is shown as a percentage of the NAV per share.
The opposite of a discount is a premium. It is more common for an investment trust's shares to trade at a discount than at a premium (page 6).
You can invest in a J.P. Morgan investment trust through the following:
Third party providers include:
AJ Bell You Invest Barclays Smart Investor Charles Stanley Direct Fidelity Personal Investing Halifax Share Dealing Hargreaves Lansdown Interactive Investor EQi
Please note this list is not exhaustive and the availability of individual trusts may vary depending on the provider. These are third party providers and J.P. Morgan Asset Management does not endorse or recommend any. Please observe each provider's privacy and cookie policies as well as their platform charges structure.
The Board encourages all of its shareholders to exercise their rights and notes that many specialist platforms provide shareholders with the ability to receive company documentation, to vote their shares and to attend general meetings, at no cost. Please refer to your investment platform for more details, or visit the Association of Investment Companies' ('AIC') website at
www.theaic.co.uk/aic/shareholder-voting-consumer-platforms for information on which platforms support these services and how to utilise them.
Professional advisers are usually able to access the products of all the companies in the market and can help you find an investment that suits your individual circumstances. An adviser will let you know the fee for their service before you go ahead. You can find an adviser at unbiased.co.uk
You may also buy investment trusts through stockbrokers, wealth managers and banks.
To familiarise yourself with the Financial Conduct Authority (FCA) adviser charging and commission rules, visit fca.org.uk
Have you been:
If so, you might have been
contacted by fraudsters. Remember: if it sounds too good to be true, it probably is!
If you suspect that you have been approached by fraudsters please tell the FCA using the reporting form at www.fca.org.uk/consumers/reportscam-unauthorised-firm. You can also call the FCA Consumer Helpline on 0800 111 6768
If you have lost money to investment fraud, you should report it to Action Fraud on 0300 123 2040 or online at www.actionfraud.police.uk
Find out more at www.fca.org.uk/scamsmart
| 30th June |
|---|
| February |
| September |
| November, April |
| November |
JPMorgan Mid Cap Investment Trust plc was launched in 1972 as Crossfriars Trust Limited. The Company changed its name to The Fleming Enterprise Investment Trust plc in 1982. It adopted its current investment policy of concentrating on FTSE 250 companies in 1993. The Company changed its name to The Fleming Mid Cap Investment Trust plc in October 1998, JPMorgan Fleming Mid Cap Investment Trust plc in October 2001 and adopted its present name on 9th November 2005.
John Evans (Chairman and Chairman of the Nomination Committee) Lisa Gordon Richard Gubbins (Chairman of the Management Engagement Committee and Senior Independent Director) Margaret Payn (Chair of the Audit & Risk Committee) Hannah Philp (Chair of the Marketing & Communication Committee)
Company registration number: 1047690 London Stock Exchange Sedol number: 0235761 Bloomberg code: JMF LEI: 549300QED7IGEP4UFN49
The Company's net asset value ('NAV') is published daily via the London Stock Exchange. The Company's shares are listed on the London Stock Exchange and the price is noted daily in the Financial Times, The Times, The Daily Telegraph, The Scotsman and on the J.P. Morgan website at www.jpmmidcap.co.uk, where the share price is updated every fifteen minutes during trading hours.
www.jpmmidcap.co.uk
The Company's shares may be dealt in directly through a stockbroker or professional adviser acting on an investor's behalf.
Manager and Company Secretary JPMorgan Funds Limited.
60 Victoria Embankment London EC4Y 0JP Telephone number: 020 7742 4000
For company secretarial and administrative matters please contact Alison Vincent.
The Bank of New York Mellon (International) Limited 160 Queen Victoria Street London EC4V 4LA
The Depositary has appointed JPMorgan Chase Bank, N.A. as the Company's Custodian.
Equiniti Limited Reference 1082 Aspect House Spencer Road Lancing West Sussex BN99 6DA Telephone number: 0371 384 2321
Lines open 8.30 a.m. to 5.30 p.m. Monday to Friday. Calls to the helpline will cost no more than a national rate call to a 01 or 02 number. Callers from overseas should dial +44 121 415 0225.
Notifications of changes of address and enquiries regarding certificates or dividend cheques should be made in writing to the Registrar quoting reference 1082.
Registered shareholders can obtain further details on individual holdings on the internet by visiting www.shareview.co.uk
PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors 7 More London Riverside London SE1 2RT
Brokers Investec Bank plc 30 Gresham Street London EC2V 7QP
A member of the AIC
60 Victoria Embankment London EC4Y 0JP Tel +44 (0) 20 7742 4000 Website www.jpmmidcap.co.uk
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