Annual Report • Jul 17, 2020
Annual Report
Open in ViewerOpens in native device viewer
Annual Report & Accounts
For the year ended 31 March 2020
| Contents | |
|---|---|
| Corporate Purpose, Strategic and Investment Objectives and Investment Approach | 2 |
| Strategic Report | |
| Financial Highlights | 4 |
| Chairman's Statement | 5 |
| Investment Adviser's Review | 10 |
| Investment Portfolio | 12 |
| Company Profiles for Top Twenty Investments | 14 |
| Sector and Geographical Analysis of Investments | 16 |
| Strategic Review | 17 |
| Dividend Policy, Planned Life of the Company, Discount Control and Subscription Rights | 26 |
| Report of the Directors & Governance | |
| Directors | 27 |
| Report of the Directors | 28 |
| Corporate Governance | 36 |
| Report of the Audit Committee | 39 |
| Directors' Remuneration Report and Policy | 41 |
| Statement of Directors' Responsibilities | 44 |
| Independent Auditors' Report | 45 |
| Accounts | |
| Statement of Comprehensive Income | 54 |
| Statement of Financial Position | 55 |
| Statement of Changes in Equity | 56 |
| Cash Flow Statement | 57 |
| Notes to the Accounts | 58 |
| Company Information | 73 |
| Investor Information | 74 |
| Important Risk Warnings | 76 |
| Glossary of Terms including Alternative Performance Measures | 77 |
| Annual General Meeting | |
| Notice of Annual General Meeting | 79 |
| Notes for the Annual General Meeting | 82 |
Jupiter Green Investment Trust PLC (the 'company') exists to generate a total return by investing in companies which are developing and implementing solutions for the world's environmental challenges.
The strategic objectives of the company are;
JUPITER GREEN INVESTMENT TRUST PLC IANNUAL REPORT AND ACCOUNTS
The investment objective of the company is to achieve capital growth and income, both over the long term, through investment in a diverse portfolio of companies providing environmental solutions.
To achieve its investment objective, the company invests globally in companies which have a significant focus on environmental solutions. Specifically, the company looks to invest across seven environmental themes;
Circular Economy
Solutions for sustainable materials and resource stewardship
Clean
Energy
Generation, storage and distribution Water Conservation and management
Mobility Technologies and services for sustainable movement
Energy Efficiency Enabling a low-carbon transition
Sustainable Agriculture, Nutrition and Health Solutions protecting
natural resources and wellbeing
Environmental Services
Pollution control, testing and impact management
The company invests primarily in listed companies with a bias towards small and medium sized companies.
The investment approach employed by the company was established in 1988, making it one of the first sustainable investment strategies in the world. The underlying investment philosophy of the strategy has remained unchanged from that date: To identify long-term investment opportunities in companies that provide solutions to environmental challenges. In our opinion, the increasingly pivotal role that sustainability plays in global development means that this philosophy is more relevant to investors today than ever before.
In essence, we believe that companies focused on providing solutions in areas such as climate change mitigation, pollution prevention, the circular economy, and the sustainable use and protection of water and natural ecosystems present multi-decade investment opportunities. The company offers clients focused and specialist exposure to these companies, generating both positive investment returns and beneficial outcomes for society.
The company uses a benchmark, the FTSE Environmental Technology 100 ('FTSE ET100') Total Return Index, as a basis to assess and compare its investment performance. The board considers this benchmark to be the most appropriate measure of the company's performance. However, the company does not necessarily seek to replicate the constituent companies of the benchmark in the company's investment portfolio. As a result, there is likely to be significant variation between the company's performance and that of the benchmark.
| As at 31 March | As at 31 March | ||
|---|---|---|---|
| 2020 | 2019 | ||
| Total assets less current liabilities (£'000) | 32,581 | 35,934 |
| As at 31 March 2020 |
As at 31 March 2019 |
% change | |
|---|---|---|---|
| Mid market price (p) | 160.50 | 178.00 | -9.8 |
| Undiluted and diluted net asset value per ordinary share | 173.31 | 188.70 | -8.2 |
| Undiluted and diluted net asset value per ordinary share (p) (with dividends paid of 2.3p added back) |
175.61 | 188.70 | -6.9 |
| FTSE ET100 Total Return Index*** | 2,945.65 | 2,847.64 | +3.4 |
| Discount to net asset value (%) | 7.39 | 5.67 | - |
| Ongoing charges ratio (%) excluding finance costs (Note 6) | 1.59 | 1.50 | +6.0 |
| Year ended 31 March | Total assets less current liabilities £'000 |
Net asset value per ordinary share p |
Dividends declared per ordinary share p |
Year-on-year change in net asset value per ordinary share % |
Year-on-year change in benchmark index*** % |
|---|---|---|---|---|---|
| 8 June 2006 (launch) | 24,297 | 97.07 | - | - | - |
| 2007 | 31,679 | 118.07 | - | +22.3* | - |
| 2008 | 52,734 | 114.14 | - | -3.9** | - |
| 2009 | 33,809 | 76.86 | - | -32.7 | -36.5 |
| 2010 | 43,590 | 106.65 | - | +38.8 | +41.6 |
| 2011 | 41,085 | 120.49 | 0.40 | +13.0 | +11.0 |
| 2012 | 36,181 | 108.49 | 0.60 | -10.0 | -23.8 |
| 2013 | 37,571 | 124.42 | 1.20 | +14.7 | +10.3 |
| 2014 | 38,142 | 145.00 | 1.10 | +16.5 | +28.6 |
| 2015 | 38,545 | 152.35 | 0.55 | +5.1 | +10.6 |
| 2016 | 33,418 | 150.79 | 0.65 | -1.0 | -3.3 |
| 2017 | 38,509 | 184.33 | 1.20 | +22.2 | +28.4 |
| 2018 | 40,147 | 191.31 | 1.30 | +3.8 | +3.7 |
| 2019 | 35,934 | 188.70 | 2.20 | -1.4 | +6.0 |
| 2020 | 32,581 | 173.31^ | 2.40† | -8.2 | +3.4 |
* In September 2006, new ordinary shares totalling 1,058,859 were issued and in November 2006, new ordinary shares totalling 600,000 were issued. Investment performance adjusted for the new issues of ordinary shares.
** In April, July and August 2007, new ordinary shares totalling 20,249,074 were issued and a total of 737,963 ordinary shares were cancelled in March 2008. Investment performance adjusted for the new issues and the subsequent cancellation of shares.
*** The FTSE ET100 Total Return Index was created on 24 December 2007.
^ Being the exercise price for the purposes of the 2021 subscription rights.
† An interim dividend of 1.10p per ordinary share was paid on 27 March 2020 to shareholders on the register at 6 March 2020. A final
dividend of 1.30p is subject to approval by shareholders at the Annual General Meeting to be held on 16 September 2020.
For definitions of the above Alternative Performance Measures please refer to the Glossary of Terms on page 77.
Dear Fellow Shareholders
It is with pleasure that I present the Annual Report & Accounts of the Jupiter Green Investment Trust PLC for the year ended 31 March 2020.
Since the start of 2020, Covid-19 has understandably replaced climate change at the top of the investor agenda. While I expect that environmental issues will see a temporary dip in focus over the coming months, in time they are likely to command even greater attention as a direct consequence of the Covid-19 pandemic and a broader recognition of the range of existential threats including climate change which now face mankind.
Of those other threats facing mankind, climate change will remain the greatest single threat. Globally, 2019 was the second warmest year on record and 2020 is already shaping up to deliver a new record global average temperature. There is clear evidence that human society is also pushing the limits of the planetary boundaries on water usage, biodiversity and agricultural productivity. This underlines the importance of the company's purpose – to generate a total return by investing in companies which are developing and implementing solutions to the world's environmental challenges. Promisingly, we are starting to see real change in society's mindset for tackling these issues - across the world and supported by governments, corporations and individuals alike. A recent example of this is the announcement by the European Union ('EU') that it will incorporate environmental issues and its Green Deal framework into Europe's Covid-19 economic recovery plan. Similarly, at the World Economic Forum this year, environmental issues were clearly recognised as the largest global risks to economies, geopolitics and societies' well-being.
Amid all the talk of the pandemic and of climate change, we must not lose sight of the impact of Brexit on the company. The directors have considered the adverse impact of potential changes in law, regulation and taxation arising from the United Kingdom's departure from the EU. Although there are a number of potential risks associated with the exit process, your board does not believe that
this represents a material threat to the company's strategy and business model, nor does it believe that the investment adviser will be significantly impeded in achieving the company's investment objective. Monitoring the Brexit process and its implications for the company remains a priority for the directors and our investment adviser.
The company was awarded the new Green Economy Mark by the London Stock Exchange in October 2019. This new classification has been created to highlight companies that are driving the global green economy.
During the twelve months to 31 March 2020, the decrease in the diluted net asset value of the company's ordinary shares, with dividends added back, was -6.9% (being the net asset value that would apply to them were all the ordinary shareholders to have exercised their annual subscription rights at the same time). This compares with an increase of +3.4% in the company's benchmark index which is based on the FTSE ET100 Index Total Return Index and decrease in the middle market price of the company's shares of -9.8% during the same twelve-month period.
Since the year end the net asset value per share and the share price of the company have recovered by 19.30% and 18.07% respectively to 23 June 2020.
The FTSE ET100 Total Return Index has been selected due to its focus on companies delivering environmental solutions. It is part of the FTSE Environmental Technology Index Series and, importantly, now has more than a ten-year performance track record. As a general point, the weightings of individual companies within the benchmark have no bearing on our investment process or portfolio construction. More fundamental for us are the merits of individual stocks and themes, as well as our assessment of prevailing market risks – factors to which benchmarks are typically insensitive. Nevertheless, we appreciate the usefulness of a
reference index to put in context the decisions we make in relation to the market.
The performance of the company over the course of the year is discussed in detail by your fund manager, Charlie Thomas, in the Investment Adviser's Review in the following pages. I recommend his review in which he highlights the progress made by holdings providing vital solutions to increasingly pressing environmental problems.
Last year the company moved from a policy of paying the minimum dividend necessary in order to maintain its beneficial investment trust status to paying a higher, total annual dividend intended to be increased progressively over future years.*
The UK reached a clean energy milestone in 2019, generating more of its energy from zero carbon sources than fossil fuels for the first time since the industrial revolution.
Notwithstanding the reduction in dividend receipts by the company in the first quarter of 2020 resulting from the challenges presented by Covid-19 to a number of our portfolio holdings, the board intends to remain, at least for the time being, committed to the dividend policy set out last year. It is too early to assess the longer-term ability of the company to maintain this policy because of the uncertainties presented by the Covid-19 pandemic. Accordingly the policy will be held under regular review by the board.
For the year ended 31 March 2020, an interim dividend of 1.10p per ordinary share (2019: 1.00p) was paid on 27 March 2020 to shareholders on the register at 6 March 2020. A resolution to declare a final dividend of 1.30p per share (2019: 1.20p) will be proposed at the company's Annual General Meeting ('AGM') on 16 September 2020. This will result in a total dividend payable in respect of the financial year ended 31st March 2020 of 2.40p per share, an increase of +9.1% on the previous year. Subject to shareholder approval, the final dividend will be paid on 16 October 2020 to those shareholders on the register as at 25 September 2020. An interim dividend in respect of the new financial year will be declared in January for payment in March 2021.
The board is mindful of the need to maintain a flexible approach to share buybacks in order to support the discount management policy. As at the 31st March 2020, most of the capital of the company was held in a share premium account and was therefore not available for distribution to shareholders.
The board intends to seek shareholder approval at the AGM on 16 September to cancel the balance on the share premium account of £29.7 million and to allocate this amount, less £16,275, to a distributable reserve account of the company to increase distributable reserves. These reserves could be used to make distributions by way of dividends to, or share buybacks from, shareholders. This is a common procedure employed by investment trust companies which has no impact on the net assets of the company. The £16,275 will be transferred to a special reserve to ensure that the company's issued share capital, plus the special reserve is equal to £50,000.
At the same time and in order to simplify the presentation of the capital and reserves of the company, the balance on the special reserve of £24.3 million, which was established in 2006 out of the share premium account, has been transferred to the capital account of the retained earnings. This transfer has no impact on the level of distributable reserves or on the net assets of the company.
* This is a target only and not a profit forecast and there can be no assurance that it will be met.
The company's total asset base is currently smaller than the minimum size preferred for prospective investment by many institutional and wealth management investors. The board and the investment adviser are committed to growing the company over time. In this context, it was pleasing to note that the demand for the company's shares at the start of 2020 was such that they traded at a premium to net asset value (see chart below) and permitted the company to issue shares out of treasury to satisfy that demand. While the value of the share issuance was only £100,000, it was an encouraging sign of how the board intends to grow the company in the next few years.
The board remains committed to its stated policy of using 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 will track their underlying net asset value. The board believes that this commitment to the active removal of discount and premium risk will provide materially improved liquidity for both buyers and sellers of the company's shares.
Shareholders were given the opportunity to subscribe for new ordinary shares on 1 April 2020 on the basis of one new ordinary share for every ten held. The subscription price of 188.70p (being the
audited undiluted net asset value of the ordinary shares as at 31 March 2019) was set before the onset of Covid-19. The prevailing market price on the subscription date was 160.50p. Not surprisingly, no subscription requests were received from shareholders resulting in the issue of no ordinary shares from treasury on this occasion.
During the twelve months to 31 March 2020, the company issued 50,043 shares from treasury and repurchased a total of 297,500 shares. The discount to net asset value ('NAV') per share was 7.39%. at the end of the year compared to 5.67% on 31 March 2019. As at 23 June 2020 the share price stood at a discount of 8.35% to NAV.
Shareholders should note there can be no guarantee that any discount control mechanism implemented by the board will necessarily have its desired effect. This is because the making and timing of share buybacks are subject to a number of legal and regulatory regulations and which, subject to these, remain at the discretion of the board.
Gearing is defined as the ratio of a company's longterm 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 growth 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.
The company had a revolving £3 million bank loan facility with Scotiabank Europe PLC which expired on 27 September 2019. The company had no need to draw down this loan during the year under review and has not entered into a new facility.
It is intended that the company's AGM will be held on Wednesday, 16 September 2020 at 11:30 a.m. at the offices of Jupiter Asset Management Limited, The Zig Zag Building, 70 Victoria Street, London SW1E 6SQ. However, in consideration of the wellbeing of the company's shareholders and in light of Government guidance around social distancing, shareholders will not be permitted to attend the AGM this year. Please refer to the Notice of the AGM on page 79 for full details on how to vote and how to communicate any questions that would usually be raised at the meeting.
Please note that we have removed paper from the voting process to reduce further the environmental impact of the company. Electronic proxy voting is now available and shareholders may also submit voting instructions using the web-based voting facility at www.signalshares.com and www.proxymity.io for institutional shareholders. If you have not already registered with Signal Shares you will need your Investor Code which can be found on your share certificate or recent dividend confirmation. Once registered you will be able to vote immediately by selecting 'Proxy Voting' from the menu.
If you are unable to submit voting instructions electronically, details of how to obtain a paper proxy form can be found in note 4 of the Notes for the AGM on page 82.
Notice of the AGM, containing full details of the business to be conducted at the meeting, is set out on page 79 of this report. This includes a continuation vote, as required every three years by the Articles of Association ('Articles') of the company. Your attention is also drawn to the Report of the Directors on page 34 where various resolutions relating to special business are explained, including a resolution to amend the company's Articles to allow a 'virtual AGM' to be held in the future. This would allow shareholder attendance and voting using appropriate technology should public health or other measures so require.
In advance of the AGM a short presentation by the investment adviser will be made available on the company's website from mid-August on the performance of the company over the past year, as well as an outlook for the future. Despite not being able to attend in person, the board and investment adviser would welcome shareholders' questions which may be submitted to Magnus.Spence@ jupiteram.com. Subject to confidentiality, we will respond to any questions submitted either directly or by publishing our response on the company's website.
We are required by new EU regulations introduced at the beginning of 2018 to provide investors with a Key Information Document ("KID") which includes performance projections which are the product of prescribed calculations based on the company's past performance. Whilst the content and format of the KID cannot be amended under the applicable EU regulations, the board does not believe that these projections are an appropriate or helpful way to assess the company's future prospects.
Accordingly, the board urges shareholders also to consider the more complete information set out in both the company's Half Yearly Financial Report and Annual Report & Accounts together with the monthly fact sheets and daily NAV announcements, when considering an investment in the company's shares. These documents, together with a link to Edison's third-party research coverage of the company are published at www.jupiteram.com/JGC.
Many of the environmental and sustainable themes can present multi-year, if not multi-decade, opportunities and therefore the investment approach employed by the company needs to be long-term. At the same time, Charlie Thomas and his team will take advantage of any underappreciated opportunities that arise as a result of the current market turmoil caused by the Covid-19 pandemic. As we have seen in the past, unprecedented change can create significant investment opportunities across each of the seven investment themes that comprise the portfolio.
Chairman 7 July 2020
It was a turbulent twelve months for global stock markets. While the US/China trade war caused sharp retreats in May and August, global stocks overcame these setbacks with many markets closing 2019 at near record highs. Sentiment was bolstered by cuts in interest rates from many central banks, as well as optimism over a "phase one" trade deal between the US and China.
However, despite a strong start to 2020, global stock markets tumbled in February and March amid rising concerns over the impact of the Covid-19 pandemic on the global economy. With the global economy coming to a virtual standstill, bond yields plummeted as central banks cut interest rates and governments announced unprecedented fiscal measures to support both companies and citizens.
This environment favoured sectors with defensive characteristics such as utilities and consumer goods. In contrast, fears of a severe recession caused the financials and basic materials sectors to retreat sharply.
During the twelve months under review the movement on the net asset value of the company's ordinary shares, with the dividends added back, was -6.9%. This compares with an increase of +3.4% in the company's benchmark index, the FTSE ET100 Total Return Index.
This underperformance was mostly driven by our lack of exposure to Tesla, which is the largest constituent of the FTSE ET100 Total Return Index, accounting for around 11% of that index. While not holding Tesla was beneficial for performance during the first six months of the financial year, Tesla's share price had a stellar run in in the fourth quarter of 2019 and the surge continued into 2020. In February, Tesla shares reached more than \$900 for the first time as lofty expectations of growth drove a remarkable re-rating in some pockets of the investment universe to which we have remained largely on the side lines. However,
Tesla shares subsequently retreated sharply amid the supply and demand-side shock from the Covid-19 pandemic and the rapidly developing global response to mitigating its effects. We continue to have no exposure to the stock as, in our view, Tesla remains very expensive and struggles to generate and sustain cash and profits.
The company's largest holding is Cranswick, a producer of high welfare pork products.
Among the positive contributors to performance was UK-based food products supplier Cranswick, which benefited from increased supermarket shopping and strong demand for food staples as the Covid-19 pandemic led to a growing number of countries imposing lockdown measures. Holdings in Japanbased automation equipment manufacturer Azbil and industrial boiler manufacturer Miura were also helpful, with both supported by solid results in the quarter ended 31 December 2019. Atlas Copco was another contributor. The company makes energy efficient industrial products, such as air compressors, vacuum pumps and tools, and continued to beat earnings estimates due to an improved product mix, despite weakness in global manufacturing.
Additionally, we benefited from not owning stocks such as composites provider Hexcel, semiconductor company AMS and LED lighting manufacturer Cree. Having no holding in Umicore, a metals recycler,
catalysis and cathode producer for stationary battery storage and electric vehicles (EVs), was also beneficial as the company guided down due to a slowdown in demand for EVs in China and difficulties finding ethically sourced cobalt at a competitive price. However, we took advantage of the sharp sell-off in 2020 to establish a position in the company.
On the negative side, our position in UK-listed bus and rail passenger transport company National Express was a key detractor, with its share price hit by Covid-19 travel restrictions and social distancing measures in the UK, Spain and the US. The company announced cost-cutting and cash conservation measures as its passenger numbers and revenues slumped. Water heater manufacturer A.O. Smith also weighed on the company's performance, as did engine-efficiency business BorgWarner. Both holdings were affected by their exposure to the US-China trade tensions along with broader concerns that the Covid-19 pandemic would lead to a severe global recession. In January, BorgWarner announced that it intended to acquire Delphi Technologies, which provides automotive companies solutions for power electronics. This represents the latest initiative of BorgWarner's strategy to pivot towards hybrid and electric vehicle solutions such as high voltage inverters, battery management systems and thermal management amidst a challenging global automotive sector.
Looking ahead, while we believe that the current market will offer some attractive opportunities for active investors focused on long-term structural growth stories, we are conscious that the extent (and length) of actions to mitigate the impact of Covid-19 are currently unknown, and will remain so for some time. Therefore, our long-term optimism for the opportunities that our investment themes present is tempered somewhat due to the prospect of prolonged subdued economic activity.
There has been a wide dispersion in returns from the companies held in the portfolio so far, with some share prices up year-to-date, while others have been hurt. However, it is important to remember
that many of the environmental and sustainable themes can present multi-year, if not multi-decade, opportunities, and we will look to take advantage of any underappreciated opportunities that arise as a result of the recent market turmoil.
Fund Manager Jupiter Asset Management Limited Investment Adviser 7 July 2020
| 31 March 2020 | 31 March 2019 | ||||
|---|---|---|---|---|---|
| Market value | Percentage | Market value | Percentage | ||
| Company | Country of Listing | £'000 | of Portfolio | £'000 | of Portfolio |
| Cranswick | United Kingdom | 1,128 | 3.5 | 864 | 2.5 |
| Orsted | Denmark | 1,126 | 3.5 | 733 | 2.1 |
| Veolia Environnement | France | 1,034 | 3.2 | 1,030 | 2.9 |
| Vestas Wind Systems | Denmark | 1,017 | 3.2 | 1,000 | 2.8 |
| Azbil | Japan | 955 | 3.0 | 938 | 2.6 |
| Xylem | United States of America | 914 | 2.9 | 1,550 | 4.4 |
| NextEra Energy Partners | United States of America | 886 | 2.8 | 912 | 2.6 |
| AO Smith | United States of America | 886 | 2.8 | 1,495 | 4.2 |
| TOMRA Systems | Norway | 801 | 2.5 | 1,158 | 3.3 |
| Schneider Electric | France | 789 | 2.5 | 684 | 1.9 |
| Eaton | Ireland | 782 | 2.5 | 773 | 2.2 |
| Siemens | Germany | 744 | 2.3 | 901 | 2.5 |
| Itron | United States of America | 730 | 2.3 | 581 | 1.6 |
| Horiba | Japan | 710 | 2.2 | 751 | 2.1 |
| Pennon Group | United Kingdom | 697 | 2.2 | – | – |
| Koninklijke DSM | Netherlands | 641 | 2.0 | 418 | 1.2 |
| Miura | Japan | 635 | 2.0 | 390 | 1.1 |
| Watts Water Technologies 'A' | United States of America | 627 | 2.0 | 570 | 1.6 |
| Hannon Armstrong Sustainable | |||||
| Infrastructure Capital, REIT | United States of America | 626 | 2.0 | 747 | 2.1 |
| Daiseki | Japan | 585 | 1.8 | 634 | 1.8 |
| Innergex Renewable Energy | Canada | 582 | 1.8 | 436 | 1.2 |
| Prysmian | Italy | 580 | 1.8 | 461 | 1.3 |
| Shimano | Japan | 574 | 1.8 | 623 | 1.8 |
| Enel | Italy | 565 | 1.8 | – | – |
| Sensata Technologies Holding United Kingdom | 556 | 1.7 | 823 | 2.3 | |
| Stantec | Canada | 555 | 1.7 | 495 | 1.4 |
| Regal Beloit | United States of America | 552 | 1.7 | 684 | 1.9 |
| Knorr-Bremse | Germany | 531 | 1.7 | 565 | 1.6 |
| Novozymes 'B' | Denmark | 521 | 1.6 | 504 | 1.4 |
| Greencoat Renewables | United Kingdom | 513 | 1.6 | 454 | 1.3 |
| Johnson Matthey | United Kingdom | 512 | 1.6 | 896 | 2.5 |
| Mayr Melnhof Karton | Austria | 490 | 1.5 | 475 | 1.3 |
| Valmont Industries | United States of America | 471 | 1.5 | 549 | 1.6 |
| First Solar | United States of America | 464 | 1.4 | 648 | 1.8 |
| National Express Group | United Kingdom | 448 | 1.4 | 886 | 2.5 |
| East Japan Railway | Japan | 421 | 1.3 | 511 | 1.4 |
| Atlas Copco 'A' | Sweden | 407 | 1.3 | 309 | 0.9 |
| SKF 'B' | Sweden | 405 | 1.3 | 464 | 1.3 |
| BorgWarner | United States of America | 402 | 1.3 | 603 | 1.7 |
| Clean Harbors | United States of America | 400 | 1.2 | 630 | 1.8 |
| Hoffmann Green Cement | |||||
| Technologies | France | 353 | 1.1 | – | – |
| Covanta Holding | United States of America | 347 | 1.1 | 671 | 1.9 |
| Market value | 31 March 2020 Percentage |
Market value | 31 March 2019 Percentage |
||
|---|---|---|---|---|---|
| Company | Country of Listing | £'000 | of Portfolio | £'000 | of Portfolio |
| Toray Industries | Japan | 346 | 1.1 | 671 | 1.9 |
| ANDRITZ | Austria | 344 | 1.1 | 461 | 1.3 |
| Casella Waste Systems 'A' | United States of America | 342 | 1.1 | 738 | 2.1 |
| Jupiter Global Ecology Diversified Fund Class I GBP Q |
|||||
| Inc Dist HSC* | Luxembourg | 341 | 1.1 | 348 | 1.0 |
| Umicore | Belgium | 335 | 1.0 | – | – |
| Beijing Enterprises Water Group |
Bermuda | 318 | 1.0 | – | – |
| Infineon Technologies | Germany | 315 | 1.0 | 406 | 1.2 |
| Acuity Brands | United States of America | 311 | 1.0 | – | – |
| Brambles | Australia | 286 | 0.9 | 353 | 1.0 |
| NSK | Japan | 271 | 0.9 | 376 | 1.1 |
| Salmar | Norway | 209 | 0.7 | – | – |
| Wartsila | Finland | 207 | 0.6 | 433 | 1.2 |
| China Everbright International Hong Kong | 200 | 0.6 | 337 | 0.9 | |
| Renewi | United Kingdom | 196 | 0.6 | 187 | 0.5 |
| Salmones Camanchaca | Chile | 190 | 0.6 | 308 | 0.9 |
| RA International Group | United Kingdom | 186 | 0.6 | 186 | 0.5 |
| Fjord1 | Norway | 184 | 0.6 | 263 | 0.7 |
| Ricardo | United Kingdom | 180 | 0.6 | 279 | 0.8 |
| Simec Atlantis Energy | Singapore | 157 | 0.5 | 234 | 0.7 |
| Total Investments | 31,880 | 100.00 |
* Shares in a sub-fund of the Jupiter Global Fund SICAV, see note 23 Related Parties for further information.
The holdings listed above are all equity shares unless otherwise stated.
As at 31 March 2020, 1.6% of the company's total assets was invested in Greencoat Renewables, a UK listed investment company. Whilst the requirements of the UK Listing Authority permit the company to invest up to 10% of the value of the total assets of the company (before deducting borrowed money) in other investment companies (including investment trusts) listed on the Main Market of the London Stock Exchange, it is the directors' current intention that the company invests not more than 5% in other investment companies.
| Circular Economy Solutions for sustainable materials and resource stewardship |
Clean Energy Generation, storage and distribution |
Water Conservation and management |
Mobility Technologies and services for sustainable movement |
Energy Efficiency Enabling a low-carbon transition |
Sustainable Agriculture, Nutrition and Health Solutions protecting natural resources and wellbeing |
Environ mental Services Pollution control, testing and impact management |
|---|---|---|---|---|---|---|
| Cranswick | high quality and organic foods. | Cranswick is a producer of high-welfare pork products, including free range and organic sausages. The Company should continue to benefit from increased consumer demand for |
||||
| Orsted | on green energy. | Renewable energy company that takes tangible action to create a world that runs entirely | ||||
| Veolia Environnement | transportation systems. | Veolia Environnement SA operates utility and public transportation businesses. The company supplies drinking water, provides waste management services, manages and maintains heating and air conditioning systems and operates rail and road passenger |
||||
| Vestas Wind Systems | Vestas Wind Systems develops, manufactures, and markets wind turbines that generate electricity. The Company also installs the turbines and offers follow-up and maintenance services of the installations. Vestas produces the wind turbines and its components through subsidiaries and associated companies in many countries, and operates a worldwide sales and service network. |
|||||
| Azbil | meters. | Azbil Corporation develops, manufactures, and markets total automation equipment used in industrial and commercial buildings. The Company's products include sensors, switches, recording meters, security systems, air conditioners, pressure transmitters, and flow |
||||
| Xylem | Xylem is a designer, manufacturer, equipment and service provider for water and wastewater applications addressing the full-cycle of water from collection, distribution, and use to the return of water to the environment. The Company's products include water and wastewater pumps, treatment and testing equipment, industrial pumps, valves, heat exchangers, and dispensing equipment. |
|||||
| NextEra Energy Partners | including wind and solar. | NextEra Energy Partners LP owns, operates and acquires contracted clean energy projects | ||||
| AO Smith | AO Smith is a large American manufacturer and supplier of water heaters. Applying innovative technology, it develops energy-efficient water heating solutions. |
|||||
| TOMRA Systems | Tomra Systems is a Norway-based Company providing advanced and cost-effective systems for recovering packaging and other used material for recycling. |
|||||
| Schneider Electric | Schneider Electric SE manufactures electrical power products. The Company offers car chargers, home security goods, light switches, access control, sensors, valves, circuit breakers, cables, accessories, signaling devices, fuse, motor starters, and voltage transformers. Schneider Electric serves customers worldwide. |
| Eaton | Eaton Corporation PLC manufactures engineered products for the industrial, vehicle, construction, commercial, and aerospace markets. The Company offers hydraulic products and fluid connectors, electrical power distribution and control equipment, truck drivetrain systems, engine components, and a wide variety of controls. Eaton conducts business worldwide. |
|---|---|
| Siemens | Siemens AG is an engineering and manufacturing company. The Company focuses on areas of electrification, automation, and digitalization. Siemens also provides engineering solutions in automation and control, power, transportation, and medical diagnosis. |
| Itron | Itron provides solutions for collecting, communicating, and analyzing electric, gas, and water usage data. The company sells its products to the utility industry. Itron designs, manufactures, markets, sells, installs, and services hardware, software, and integrated systems for handheld computer-based electronic meter reading and automatic meter reading systems. |
| Horiba | Horiba manufactures and markets measuring instruments and analyzers. The Company's main product lines are scientific analyzers, environment monitoring, medical analyzers, engine emission analyzers, and semiconductor test equipment. Horiba operates worldwide. |
| Pennon Group | Pennon Group Plc operates and invests primarily in the areas of water and sewerage services and waste management. Their principal subsidiary, SouthWest Water Limited, holds the water and sewerage appointments for Devon, Cornwall and parts of Somerset and Dorset. Viridor Waste Limited operates a waste treatment and disposal businesses in the United Kingdom. |
| Koninklijke DSM | Koninklijke DSM N.V. is a Dutch-based multinational life sciences and materials sciences company. The Company's global end markets include food and dietary supplements, personal care, feed, pharmaceuticals, medical devices, automotive, paints, electrical and electronics, life protection, alternative energy, and bio-based materials. |
| Miura | Miura Co., Ltd. manufactures, inspects, and maintains industrial boilers and related equipment. The Company offers a variety of boilers including steam, hot water, marine, and waste heat recycling types. Miura also produces non-boiler products such as pumps, refrigerators, ice makers, sterilizers and water treatment systems. |
| Watts Water Technologies 'A' |
Watts Water Technologies, Inc. designs, manufactures, and sells a line of products to the water regulation and control markets. The Company has manufacturing plants and distribution channels in the United States, Canada, and Europe, as well as a joint venture in The People's Republic of China. |
| Hannon Armstrong | Hannon Armstrong Sustainable Infrastructure Capital, Inc. provides debt and equity financing to the energy efficiency and renewable energy markets. The Company focuses on providing preferred or senior level capital to established sponsors and high credit quality obligors for assets that generate long-term, recurring and predictable cash flows. |
| Daiseki | Daiseki Co., Ltd. provides waste disposal services in Chubu area. The Company uses high technology for oil sludge treatment and for recycling. Daiseki also sells processing and lubricating oil for industrial use. |
| Equities | United States of America % |
Japan % |
United Kingdom % |
Denmark % |
France % |
Other % |
Totals 2020 % |
Totals 2019 % |
|---|---|---|---|---|---|---|---|---|
| Basic Materials | – | 1.1 | 1.6 | – | – | 3.0 | 5.7 | 5.6 |
| Chemicals | – | 1.1 | 1.6 | – | – | 3.0 | 5.7 | 5.6 |
| Consumer Goods | 1.3 | 2.7 | 3.5 | – | – | 1.3 | 8.8 | 9.6 |
| Food Producers | – | – | 3.5 | – | – | 1.3 | 4.8 | 3.4 |
| Automobiles & Parts | 1.3 | 0.9 | – | – | – | – | 2.2 | 4.4 |
| Leisure Goods | – | 1.8 | – | – | – | – | 1.8 | 1.8 |
| Consumer Services | – | 1.3 | 1.4 | – | – | 0.6 | 3.3 | 5.5 |
| Travel & Leisure | – | 1.3 | 1.4 | – | – | 0.6 | 3.3 | 5.5 |
| Financials | 2.0 | – | – | – | – | 2.7 | 4.7 | 4.4 |
| Global Equity Funds | – | – | – | – | – | 1.1 | 1.1 | 1.0 |
| Real Estate Investment Trusts | 2.0 | – | – | – | – | – | 2.0 | 2.1 |
| Equity Investment Instruments | – | – | – | – | – | 1.6 | 1.6 | 1.3 |
| Health Care | – | – | – | 1.6 | – | – | 1.6 | 1.4 |
| Pharmaceuticals & | ||||||||
| Biotechnology | – | – | – | 1.6 | – | – | 1.6 | 1.4 |
| Industrials | 17.6 | 9.0 | 3.5 | – | 3.6 | 19.8 | 53.5 | 55.8 |
| Industrial Engineering | 2.9 | 2.0 | – | – | – | 8.5 | 13.4 | 13.5 |
| Support Services | 3.4 | 1.8 | 1.2 | – | – | 2.3 | 8.7 | 12.9 |
| Construction & Materials | 5.8 | – | – | – | 1.1 | – | 6.9 | 7.4 |
| Electronic & Electrical Equipment |
4.0 | 5.2 | 1.7 | – | 2.5 | 1.8 | 15.2 | 14.5 |
| General Industrials | 1.5 | – | 0.6 | – | – | 7.2 | 9.3 | 7.5 |
| Technology | – | – | – | – | – | 1.0 | 1.0 | 1.2 |
| Technology Hardware & Equipment |
– | – | – | – | – | 1.0 | 1.0 | 1.2 |
| Oil & Gas | 1.4 | – | – | 3.2 | – | – | 4.6 | 4.6 |
| Alternative Energy | 1.4 | – | – | 3.2 | – | – | 4.6 | 4.6 |
| Utilities | 2.8 | – | 2.2 | 3.5 | 3.2 | 5.1 | 16.8 | 11.9 |
| Gas, Water & Multiutilities | – | – | 2.2 | 3.5 | 3.2 | 1.0 | 9.9 | 6.4 |
| Electricity | 2.8 | – | – | – | – | 4.1 | 6.9 | 5.5 |
| Totals 2020 | 25.1 | 14.1 | 12.2 | 8.3 | 6.8 | 33.5 | 100.0 | 100.0 |
| Totals 2019 | 30.1 | 13.8 | 15.6 | 6.3 | 4.8 | 29.4 | 100.0 | 100.0 |
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.
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 ('HMRC') 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 a public limited company and 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 on 12 April 2006 and started trading on 8 June 2006, immediately following the company's launch.
Reviews of the company's activities are included in the Chairman's Statement and Investment Adviser's Review on pages 5 to 11.
There has been no significant change in the activities of the company during the year to 31 March 2020 and the directors anticipate that the company will continue to operate in the same manner during the current financial year.
The investment objective of the company is to achieve capital growth and income, both over the long-term, through investment in a diverse portfolio of companies providing environmental solutions.
The investment adviser has adopted a bottomup approach. The investment adviser, supported by Jupiter's Governance and Sustainability team, researches companies, ensuring that each potential investment falls within the company's stated investment policy. Consideration is also given to a potential investment's risk/return profile and growth prospects before an investment is made. Once companies operating within the appropriate theme have been identified and due diligence has been carried out, the investment adviser will decide whether a particular investment would be appropriate.
The company's portfolio has a bias towards small and medium capitalisation companies. It invests primarily in securities which are quoted, listed or traded on a recognised exchange.
The following investment restrictions are observed:
In accordance with the requirements of the UK Listing Authority, any material changes in the principal investment policies and restrictions of the company would only be made with the approval of shareholders by ordinary resolution.
It is the board's ambition to grow the asset base of the company through a combination of organic growth and new issuance of shares with a view to achieving the critical mass necessary to attract broader demand from wealth managers, Independent Financial Advisers ('IFAs') and other institutional buyers of investment trust shares.
The board has also agreed in principle to cancel the balance of the share premium account (£29.7m) and to allocate this amount, less £16,275, to a distributable reserve account of the company to increase distributable reserves to approximately £32.3m. The £16,275 will be transferred to a special reserve to ensure that the company's issued share capital, plus the special reserve, is equal to £50,000. In order to transfer the share premium account, the company will need to approach a limited number of creditors of the company to seek their agreement to the reduction of capital and will also need to apply to the courts for approval for the scheme. This will also need approval by the shareholder at the company's AGM on 16 September 2020 as detailed on page 79
The company's benchmark is the FTSE Environmental Technology 100 ('FTSE ET100') Total Return Index, expressed in sterling.
The company has no employees and most of its day to day responsibilities are delegated to Jupiter Asset Management Limited ('JAM'), who act as the company's investment adviser and company secretary. Further details of the company's arrangement with JAM and the Alternative Investment Fund Manager ('AIFM'), Jupiter Unit Trust Managers Limited, can be found in Note 23 to the accounts on page 71. Both JAM and JUTM are part of the Jupiter Group which comprises Jupiter Fund Management PLC and all of its subsidiaries ('Jupiter').
J.P. Morgan Europe Limited ('JPMEL') acts as the company's depository. The company has also entered into an outsourcing arrangement with J.P. Morgan Chase Bank N.A. ('JPMCB') for the provision of accounting and administration services.
Although JAM is named as the company secretary, JPMEL provides administrative support to the company secretary as part of its formal mandate to provide broader fund administration services to the company.
In accordance with Provision 36 of the Code of Corporate Governance as issued by the Association of Investment Companies in February 2019 (the 'AIC Code'), the board has assessed the prospects of the company over a longer period than the twelve months required by the 'Going Concern' provision, reviewing the next three years in line with the three year cycle of the company continuation vote. The company's investment objective is to achieve capital growth and income, both over the long term and the board regards the company as a long-term investment.
The board has considered the company's business model including its investment objective and investment policy as well as the principal and emerging risks and uncertainties that may affect the company as detailed on page 21.
In addition, the board has considered the reporting produced by the Jupiter Investment Risk Team concerning a number of potential future scenarios resulting from the Covid-19 pandemic including a material and prolonged fall in equity markets and a significant rise in operating expenses along with the portfolio's liquidity. The board continues to monitor income and expense forecasts for the company. The board has also assessed the operational resilience of its key service providers in light of Covid-19.
The board has noted that:
The board has therefore concluded that there is a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the next three years.
The investment adviser and the company's brokers engage with shareholders on an ongoing basis and the board, having taken into account the
composition of shareholders of the company, the results of previous continuation votes and the ongoing demand for shares in the company, considers it to be likely, at this juncture, that the company's continuation vote by shareholders at this year's AGM will be passed. Further information regarding the planned life of the company can be found on page 26.
Gearing is defined as the ratio of a company's longterm debt less cash held compared to its equity capital, expressed as a percentage. The effect of gearing is that in rising markets a geared share class tends to benefit from any outperformance of the relevant 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 value of the geared shares class suffers more if the company's investment portfolio underperforms the cost of those prior entitlements.
The company may utilise gearing at the director's discretion for the purpose of financing the company's portfolio and enhancing shareholder returns. In particular, the company may be geared by bank borrowings which will rank in priority to the ordinary shares for repayment on a winding up or other return of capital.
The Articles provide that, without the sanction of the company in a general meeting, the company may not incur borrowings above a limit of 25% of the company's total assets at the time of drawdown of the relevant borrowings.
The company had a revolving £3 million bank loan facility with Scotiabank Europe PLC which expired on 27 September 2019. The company did not draw down this loan during the year under review and has not entered into a new facility. The finance costs shown in the Statement of Comprehensive Income are in respect of the costs incurred for non-utilisation of the facility during the year to the end of the loan term.
The company may invest in derivative financial instruments comprising options, futures and contracts for difference for investment, hedging and efficient portfolio management, as more fully described in the investment policy. There is a risk that the use of such instruments will not achieve the goals desired. Also, the use of swaps, contracts for difference and other derivative contracts entered into by private agreements may create a counterparty risk for the company. This risk is mitigated by the fact that the counterparties must be institutions subject to prudential supervision and that the counterparty risk on a single entity must be limited in accordance with the individual restrictions. There were no open derivatives at year end.
The company's accounts are maintained in sterling while investments and revenues are likely to be denominated and quoted in currencies other than sterling. Although it is not the company's present intention to do so, the company may, where appropriate and economic to do so, employ a policy of hedging against fluctuations in the rate of exchange between sterling and other currencies in which its investments are denominated.
At their 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:
Information on some of the above key performance indicators and how the company has performed against them can be found on page 4.
In addition, a history of the net asset values, the price of the ordinary shares and the benchmark index are shown on the monthly factsheets which can be viewed on the investment adviser's website www.jupiteram.com/JGC and which are available on request from the company secretary.
The directors review the level of the discount or premium between the middle market price of the company's ordinary shares and their net asset value on a regular basis.
The directors have powers granted to them at the last AGM to purchase ordinary shares and either cancel or hold them in treasury as a method of controlling the discount to net asset value and enhancing shareholder value.
The company repurchased 297,500 ordinary shares for holding in treasury during the year under review at an average discount of 5.7%.
Under the Listing Rules, the maximum price that may currently be paid by the company on the repurchase of any ordinary shares is 105% of the average of the middle market quotations for the ordinary shares for the five business days immediately preceding the date of repurchase. The minimum price will be the nominal value of the ordinary shares. The board is proposing that its authority to repurchase up to approximately 14.99% of its issued share capital should be renewed at the AGM. The new authority to repurchase will last until the conclusion of the AGM of the company in 2021 (unless renewed earlier). Any repurchase made will be at the 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 Model Code.
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 repurchased, pursuant to the above authority, may be held in treasury. These ordinary shares may subsequently be cancelled or
sold for cash. This would give the company the ability to reissue shares quickly and cost effectively and provide the company with additional flexibility in the management of its capital. The company issued 50,043 ordinary shares from treasury during the year under review.
The principal and emerging risk factors relating to the company can be divided into the following areas:
Investment policy and process – Inappropriate investment policies and processes may result in under performance against the prescribed benchmark index and the company's peer group.
The board manages these risks by ensuring a diversification of investments and regularly reviewing the portfolio asset allocation and investment process. In addition, certain investment restrictions have been set and these are monitored as appropriate.
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. There can be no assurances that appreciation in the value of the company's investments will occur but the board seeks to reduce this risk.
Covid-19 – The outbreak of the Covid-19 pandemic poses additional risks to the company beyond the risks described under market risks above. They include liquidity risks to markets, risks associated with the maintenance of the current dividend policy and business continuity risks for the investment adviser. Each of these risks is being assessed on a day to day basis by the investment adviser.
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. As a means of controlling the discount to net asset value the board has established a buyback programme which is under constant review as market conditions change.
Liquidity Risk – The company may invest in securities that have a very limited market which will affect the ability of the investment adviser to dispose of securities when it is no longer felt that 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.
Regulatory Risk – The company operates in a complex regulatory environment and faces a number of regulatory risks. A breach of section 1158 of the Corporation Tax Act 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, JAM, and its professional advisers to ensure compliance with, amongst other regulations, the Companies Act 2006, the UKLA Listing Rules, the FCA's Disclosure and Transparency Rules and the Alternative Investment Fund Managers' Directive. The investment adviser is contractually obliged to ensure that its conduct of business conforms to applicable laws and regulations.
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. Further details of the management of this risk can be found in Note 13 to the accounts on pages 67 and 68.
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 JAM 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 core accounting systems, or a disastrous disruption to the investment adviser's business or that of the administration provider JPMCB, could lead to an inability to provide accurate reporting and monitoring.
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 report on its internal controls and procedures.
Details of how the board monitors the operational services and financial controls of Jupiter and J.P. Morgan are included within the Internal Control section of the Report of the Directors on page 31.
Enterprise risk is reviewed twice a year, taking into its remit emerging risks as they become immediate, whist still maintaining a long-term perspective where they are evolving at a fast rate. Climate change and its potential impacts is under scrutiny at every meeting, this being the very purpose of the company.
The closing price of the ordinary shares on the first date of dealing for capital gain tax purposes was 99p.
Details of the directors of the company and their biographies are set out on page 27.
The company's policy on board diversity is included in the Corporate Governance section of the Report of the Directors on page 37.
As at 31 March 2020, the board comprises of one female and three male directors.
The company has no employees as the board has delegated the day to day management and administration functions to JUTM, JAM and other third-party suppliers. There are therefore no disclosures to be made in respect of employees.
Jupiter Asset Management Limited ('JAM') has a 30 year record of integrating ESG factors into the investment process. Its Governance and Sustainability team leverages its relationships with partner organisations such as the UN Principles for Responsible Investment (UN PRI), the Investor Forum and Institutional Investors Group on Climate Change (IIGCC) and regularly engages with these and other industry bodies to ensure it remains at the forefront of ESG integration. Where relevant, lessons learned are disseminated across JAM's wider investment team via its Stewardship Committee.
JAM's Sustainability Investment team considers stewardship to be an integral component of its investment process. Typically, the team does not seek to exclude companies based on headline risk factors, disclosures or practices, instead believing that engagement aimed at enhancing long-term outcomes for investors requires a more rigorous and nuanced approach. Moreover, the investment adviser is of the view that compelling opportunities can arise in companies where there is evidence of positive change in the areas of environmental and social
risk mitigation and governance practices, but where the market may be yet to reflect this in investee company share prices.
The Modern Slavery Act 2015 requires certain companies to prepare a slavery and human trafficking statement. As the company has no employees and does not supply goods and services, it is not required to make such a statement.
The company has no greenhouse gas emissions to report from its operations as the 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 on Directors' Reports) Regulations 2013.
Under section 172 of the Companies Act 2006, the directors have a duty to act in good faith and to promote the success of the company for the benefit of its shareholders as a whole. This includes taking into consideration the likely consequences of their decisions on the long term and on the company's stakeholders such as its shareholders, employees and suppliers, while acting fairly between shareholders. The directors must also consider the impact of the company's decisions on the environment, the community and its reputation for maintaining high standards of business conduct.
The company ensures that the directors are able to discharge this duty by, amongst other things, providing them with relevant information and training on their duties. The company also ensures that information pertaining to its stakeholders is provided, as required, to the directors as part of the information presented in regular board meetings in order that stakeholder considerations can be factored into the board's decision making. The directors' responsibilities are also set out in the
schedule of matters reserved for the board and the terms of reference of its committees, both of which are reviewed regularly by the board. At all times the directors can access as a board, or individually, advice from its professional advisers including the company secretary and independent external advisers.
The company's investment objective, to achieve capital and income growth over the long term, supports the directors' statutory obligations to consider the long term consequences of the company's decisions. How the long-term focus of the company is achieved, is set out in more detail on page 3 and above where the investment adviser's approach to environmental, social and governance issues is explained in the section entitled Integration of ESG considerations into the investment adviser's investment process. This approach is fundamental to the company achieving long-term success for the benefit of all of its stakeholders.
As set out on page 2, the company's corporate purpose is to generate a total return by investing in companies which are developing and implementing solutions for the world's environmental challenges. The company is also aware of its own potential impact on the environment and has a number of practical policies in place to reduce that impact. Examples include the use and sharing of electronic documents by the board rather than printing documentation and the provision of electronic copies of the annual report and accounts which are available to shareholders and others on the company website. Where physical copies of the annual and half yearly financial reports are made, they use materials and processes designed to both minimise the environmental impact and to maximise the recycling potential as described in more detail on the inside back cover of this document. The proxy voting form previously printed in the annual report and accounts and posted back to the registrars has been removed and shareholders are invited to vote via the registrar's secure portal. Increasingly, board meetings are held virtually, reducing travel and associated pollution. The board would, however, expect to meet physically at least twice each year. The directors as a matter of course continue to seek new opportunities
and to make use of new technologies and processes that will further enhance environmental operation of the company.
The Shareholders – The shareholders of the company are both institutional and retail and details of those with substantial shareholdings are detailed on page 28.
The board believe that shareholders have a vital role in encouraging a higher level of corporate performance and is committed to listening to the views of its shareholders and giving useful and timely information by providing open and accessible channels of communication including those listed below.
The AGM – The company encourages participation from shareholders at its AGMs where they can communicate directly with the directors and investment adviser. In view of the alternative arrangements for the AGM this year as a result of Covid-19, in advance of the AGM a short presentation by the investment adviser will be made available on the company's website on the company's performance with information about the activities of the portfolio companies, the outlook for the company itself and for the market in which it functions. The board and investment adviser welcome your questions which may be submitted to [email protected]. Subject to confidentiality, we will respond to any questions submitted either direct or by publishing our response on the company's website. All views of the shareholders will be taken into consideration and action taken where appropriate.
Online Information – The company website contains the Annual and Half Yearly Financial Report along with monthly factsheets and commentaries from the investment adviser. The daily NAV per share, monthly top ten portfolio listings, dividend announcements and various regulatory announcements can be found on the regulatory news service of the London Stock Exchange.
Shareholders can raise issues or concerns at any time by writing to the Chairman or the Senior Independent Director at the registered office.
Further details about how the board incorporates the views of the company's shareholders in its decisionmaking process can be found in the UK Stewardship Code and the Exercise of Voting Powers section on page 32. Further information about how the board ensures that each director develops an understanding of the views of the company's shareholders and can be found in the section entitled Shareholder Relations on page 33 of this report.
The investment management function is critical to the long-term success of the company. The board and the investment adviser maintain an open and constructive relationship, with meetings taking place a minimum of four times per annum with monthly updates and additional meetings as circumstances require. The Audit Committee meets at least twice a year and as part of its role considers the internal controls put in place by the investment adviser. The 'Management of the company' section on page 30 in this report details the board's consideration of the investment adviser's performance, its terms of appointment and their annual assessment of its continued stewardship of the portfolio and its oversight of the administrative functions.
The day to day responsibilities of the company are delegated to the investment adviser who is the key service provider and supplies investment management, administration and company secretarial services. The investment adviser oversees the activities of the company's other third-party suppliers on behalf of the company and maintains open and collaborative relationships to maintain quality, efficiency and cost control through regular communication with dedicated members of the investment adviser's operational teams. The board regularly reviews reports from its investment adviser, the AIFM, the depositary, the company broker, the investor relations research provider and the auditors.
These provide vital information concerning changes in market practice or regulation which affect the company and assist the board in its decision-making process. Representatives from these providers attend company board meetings and give presentations on a regular basis enabling in depth discussions concerning both their findings and their performance.
As an externally managed investment company with no employees or physical assets, the principal stakeholders of the company are its shareholders, investment adviser, AIFM, depositary, custodian, administrator and registrar. The continuance, or otherwise, of engagement of key third-party service providers are principal decisions taken by the board every year.
The directors take into account the s172 considerations in all material decisions of the company. Examples of this can be seen as follows.
company to increase distributable reserves. The £16,275 will be transferred to a special reserve to ensure that the company's issued share capital, plus the special reserve, is equal to £50,000.
The structure of the board and its various committees and the decisions it makes are underpinned by the duties of the directors under s172 on all matters. The board firmly believes that the sustainable long-term success of the company depends upon taking into account the interests of all the company's key stakeholders.
The board has not set an objective of a specific portfolio yield for the company in relation to the year under review and the level of such yield has historically varied with the sectors and geographical regions to which the company's portfolio is exposed at any given time. However, with effect from the AGM on 4 September 2018 shareholders approved a change of dividend policy whereby the company moved from a policy of paying the minimum dividend necessary in order to maintain its beneficial investment trust status to paying a higher, semiannual dividend.
Shareholders also approved the proposal to alter the Articles of Association of the company to allow dividends to be financed through a combination of available net income in each financial year and the company's capital reserves and other reserves so that the company may, at the discretion of the board, pay all or part of any future dividends out of this, or other, distributable reserves of the company.
Notwithstanding the challenges presented by Covid-19 to a number of our portfolio holdings, the board intends to remain committed, at least for the time being, to the dividend policy set out last year. It is too early to assess the longer-term ability of the company to maintain this policy because of the uncertainties presented by the Covid-19 pandemic. Accordingly the policy will be held under regular review by the board.
The company does not have a fixed life, however, the board considers it desirable that shareholders should have the opportunity to review the future of the company every three years. Accordingly, the directors will propose Resolution 10 on page 79, as an ordinary resolution for the continuation of the company in its current form at the AGM of the company to be held on 16 September 2020. If such resolution is not passed, the directors will formulate proposals to be put to shareholders to reorganise or reconstruct the company or for the company to be wound-up and the assets realised at fair value.
The directors believe that the ordinary shares should not trade at a significant discount to their prevailing net asset value.
The board uses share buy-backs to assist in diluting discount volatility and to seek to narrow the discount to net asset value at which the company's shares trade over time where in normal market conditions, the company's share price does not materially vary from its net asset value per share.
Shareholders have an annual opportunity to subscribe for ordinary shares on the basis of one new ordinary share for every ten ordinary shares held at 31 March of each year. The subscription price will be equal to the audited undiluted net asset value per share being 173.31p as at 31 March 2020. The next subscription date will be 31 March 2021. A reminder will be sent to shareholders prior to the subscription date.
For and on behalf of the board
Michael Naylor Chairman 7 July 2020
(Chairman of the board and Management Engagement Committee) Date of appointment: 3 July 2009
Is an advisory board member of Toronto based water technology private equity fund XPV Water Partners LLC. He is also a Senior Advisor to Actis Energy Funds, used on energy infrastructure specifically in emerging markets.
(Senior Independent Director) Date of appointment: 4 December 2018
Is the Group Risk & Investment Director for Renewable Energy Systems (RES), which he joined in 2003. On behalf of RES he also co-manages The Renewables Infrastructure Group, which is listed on the FTSE 250. He has spent his working life in power and electricity businesses. Prior to joining RES he worked for Midlands Electricity and Cinergy Corporation. He has a BSc degree in Mathematics with Management Applications from Brunel University.
(Chairman of the Audit Committee) Date of appointment: 31 July 2015
Was a director and fund manager of Charities Official Investment Fund 1983, chairman of Tideford Organic Foods, co-founder of Windsor Investment Management 1985 and is trustee of various charity, sports and education trusts. He was employed by Jupiter between 1994 and 2006 as director and head of the green department.
(Chairman of the Nomination Committee) Date of appointment: 24 April 2006
Is the director of the Cambridge Institute for Sustainability Leadership (CISL) which runs leadership development courses, strategic dialogues and other educational services for executives from private, public and not-for-profit organisations around the world. She is a non-executive director of Anglian Water Services Ltd and also serves on several corporate advisory panels. She was made a Dame Commander of the Order of the British Empire (DBE) in June 2016 and was appointed a member of the Royal Victorian Order in 2008. Her first degree is from the University of Cape Town and she has an MA from the University of Cambridge.
† Members of the Audit Committee, Management Engagement Committee and Nomination Committee.
The directors present the Annual Report and Accounts of the company for the year ended 31 March 2020.
At the AGM of shareholders held on 4 September 2018 a resolution was passed to alter the Articles of Association of the company to allow dividends to be financed through a combination of available net income in each financial year and the company's capital reserves and other reserves so that the company may, at the discretion of the board, pay all or part of any future dividends out of this, or other, distributable reserves of the company. The ability of the company to distribute capital as dividends is intended to allow for the implementation of the new dividend policy. The board intends to utilise capital reserves where, without limitation, it considers it appropriate to seek to smooth the company's dividend yield over the short to medium term. However, the company intends to maintain a longer term dividend that is supported by revenues arising from the investment performance of the company.
The financial highlights of the company are set out on page 4. In addition, results and reserve movements for the year are set out in the Statement of Comprehensive Income and Statement of Financial Position on pages 54 and 55 and the Notes to the Accounts on pages 58 to 72.
On 18 September 2019 the company announced the payment of a final dividend of 1.20p (net) per ordinary share for the year ended 31 March 2019 which was paid on 18 October 2019 to those shareholders on the register of shareholders on 27 September 2019.
An interim dividend of 1.10p (net) per ordinary share for the year ended 31 March 2020 was paid on 27 March 2020 to shareholders on the register on 6 March 2020. A resolution to declare a final dividend of 1.30p (net) per ordinary share for the year ended 31 March 2020 will be proposed at the company's AGM on 16 September 2020. Subject to shareholder approval, the final dividend will be paid on 16 October 2020 to those shareholders on the register on 25 September 2020.
As at 31 March 2020 the company's issued share capital was 33,724,958 ordinary shares of 0.1p each of which 14,925,972 were held in treasury. As a result the total voting rights as at 31 March 2020 were 18,798,986. All of the ordinary shares are fully paid and carry one vote per share. The ordinary shares are listed on the London Stock Exchange. There are no restrictions on the holding or transfer of the ordinary shares which are governed by the general provisions of the Articles of the company. During the year under review a total of 54,043 ordinary shares were issued from treasury and 297,500 ordinary shares were repurchased for holding in treasury. The company is not aware of any agreements between shareholders that restrict the transfer of ordinary shares.
In accordance with the Disclosure and Transparency Rules as issued by the Financial Conduct Authority ('FCA'), the company has been notified of the following substantial interests in the ordinary shares. The directors are not aware of any other material interests amounting to 3% or more of the share capital of the company.
The company has been notified of the following substantial shareholdings in the ordinary shares:
| Ordinary shares | ||
|---|---|---|
| Number | % | |
| Jupiter Asset Management | ||
| Limited* | 3,940,375 | 20.96 |
* date of notification 30 April 2020
As at 31 March 2020, the board is also aware of the following material interests which amount to 3% or more of the share capital of the company:
| Shareholder | Ordinary Shares held |
% of total voting rights |
|---|---|---|
| Hargreaves Lansdown | ||
| (execution only) | 2,822,624 | 15.01 |
| Rathbone Nominees | ||
| Limited | 1,161,971 | 6.18 |
| Interactive Investor | ||
| Services Nominees | 1,030,619 | 5.48 |
| Brewin Dolphin | ||
| Stockbrokers | 637,518 | 3.39 |
| Transact (execution only) | 614,365 | 3.27 |
| Smith & Williamson Wealth | ||
| Management | 579,982 | 3.09 |
At the AGM of shareholders held on 20 June 2012 resolutions were approved altering the Articles of Association of the company to provide for subscription rights to be embedded within the ordinary shares. In addition a revised discount control policy was ratified and the share buyback authority renewed. Shareholders have an annual opportunity to subscribe for ordinary shares on the basis of one new ordinary share for every ten ordinary shares held at 31 March of each year.
The subscription price will be equal to the audited undiluted NAV per share as shown in the published report and accounts prepared at 31 March in the previous year. The next subscription date will be 31 March 2021.
No shares were issued as a result of the 2020 subscription rights exercise.
At the AGM held on 18 September 2019 shareholders renewed the authority to buy back the company's ordinary shares for cancellation or holding in treasury. The board are seeking to renew the company's buyback powers at the forthcoming AGM. It is believed that these provisions provide a valuable tool in the management of the company's share value against net asset value. The current authority allows the company to purchase up to 14.99% of the issued ordinary shares. Purchases would be made at the discretion of the board and within guidelines set from time to time. Under the Listing Rules and the buy-back and stabilisation regulation the maximum price for such a buy-back cannot be more than the higher of (i) 105% of the average middle market price for the five days immediately preceding the date of repurchase; and (ii) the higher of the price of the last independent trade and the highest current independent bid.
The board believes that the effective use of treasury shares can assist the company in improving liquidity in the company's ordinary shares, managing any imbalance between supply and demand and minimizing the volatility of the discount at which the ordinary shares trade to their net asset value for the benefit of shareholders. It is believed that this facility gives the company the ability to sell ordinary shares held in treasury quickly and cost effectively, and provides the company with additional flexibility in the management of the capital base.
The board shall have regard to current market practice for the reissue of treasury shares by investment trusts and the recommendations of the investment adviser. The board will make an announcement of any change in its policy for the reissue of ordinary shares from treasury via a Regulatory Information Service approved by the FCA. The board's current policy is that any ordinary shares held in treasury will not be resold by the company at a discount to the investment adviser's estimate of the presiding net asset value per ordinary share as at the date of issue.
The directors of the company and their biographies can be found on page 27. All directors held office throughout the year under review. In March 2020 Jaz Bains was appointed the additional role of Senior Independent Director. The Senior Independent
Director serves as a sounding board for the Chairman and acts as an intermediary for other directors and shareholders. The SID is responsible for:
The Directors' Remuneration Report and Policy on pages 41 and 42 provides information on the remuneration and shareholdings of the directors.
Subject to the provisions of the Companies Act 2006, the Memorandum and the Articles and to any directions given by special resolution, the business of the company shall be managed by the directors who may exercise all the powers of the company.
These include the powers to act as the company's agents, to cause the company to enter into valid contracts, to borrow and give security, and determine terms and conditions under which the company's shares are issued and repurchased.
Each director has a statutory duty to avoid a situation where he has or might have a direct or indirect interest which conflicts or might conflict with the interests of the company, unless, in terms of the Articles of Association, the relevant conflict or potential conflict has been authorised by the board. The directors have declared all potential conflicts of
interest with the company. The register of potential conflicts of interest is kept at the registered office of the company. It is reviewed regularly by the board and all directors will advise the company secretary as soon as they become aware of any potential conflicts of interest. Directors who have potential conflicts of interest will not take part in any discussions which relate to any of their potential conflicts.
During the year under review the company purchased and maintained liability insurance for its directors and officers as permitted by Section 233 of the Companies Act 2006.
The company has indemnified its directors and company secretary in respect of their duties as directors and officers of the company, certain civil claims brought by third-parties and associated legal costs to the extent that they are permitted by the Companies (Audit, Investigations and Community Enterprise) Act 2004.
JUTM was appointed as AIFM to the company on 22 July 2014. JUTM subsequently delegated the portfolio management of the company to JAM. JUTM and JAM are wholly owned subsidiaries of Jupiter Fund Management PLC. Further details of the company's arrangement with JUTM and JAM can be found in Note 23 to the Accounts on page 71.
The directors have reviewed the performance and terms of appointment of JUTM as the company's AIFM. A summary of the terms of the appointment including the notice of termination period and annual fee is set out in Note 23 to the Accounts on page 71. The directors believe that it is in the best interests of all shareholders for the company to continue the appointment of the investment adviser on its existing terms of appointment, having reviewed the company secretarial, accounting, fund management and other services provided by Jupiter and having regard to the company's performance against its benchmark index
during the year under review. The directors are of the view that the portfolio should remain under the investment adviser's stewardship.
The financial statements have been prepared on a going concern basis. The directors consider that this is the appropriate basis as they have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. In considering this, the directors took into account the company's investment objective, risk management policies and capital management policies, the diversified portfolio of readily realisable securities which can be used to meet short-term funding commitments and the ability of the company to meet all of its liabilities and ongoing expenses. In determining the appropriateness of the going concern basis, the directors gave particular focus this year to the operational resilience and ongoing viability of the investment adviser and other key third-party suppliers in light of the economic uncertainty arising from the Covid-19 pandemic. The directors were satisfied that all key third-party suppliers had quickly and effectively put in place contingency planning measures to ensure that operational functionality was not affected as a result of the Covid-19 pandemic and that regular monitoring of these measures was in place. In assessing the viability of the company the directors focused on: whether the company's strategic and investment objectives continue to be achievable in the current economic climate; the size threshold below which the fund would be considered uneconomic or unviable; and the company performance and attractiveness to investors in the current environment. The directors were satisfied that there were no viability issues that would affect the going concern of the company. The directors continue to adopt the going concern basis of accounting in preparing the financial statements while recognising that the Articles of the company require a continuation vote at every third AGM, including this year's AGM scheduled to be held on 16 September 2020. The investment adviser and the company's brokers engage with shareholders on
an ongoing basis and the board, having taken into account the composition of shareholders of the company, the results of previous continuation votes and the ongoing demand for shares in the company, considers it to be likely, at this juncture, that the company's continuation vote by shareholders at this year's AGM will be passed. Further information regarding the planned life of the company can be found on page 26.
The company currently manages its affairs so as to be a qualifying investment trust under the Individual Saving Account (ISA) rules. As a result, under current UK legislation, the ordinary shares qualify for investment via the stocks and shares component of an ISA up to the full annual subscription limit, currently £20,000 (2020/21) in each tax year. It is the present intention that the company will conduct its affairs so as to continue to qualify for ISA products.
The provision of bribes of any nature to thirdparties in order to gain a commercial advantage is prohibited and is a criminal offence. The board takes its responsibility to prevent bribery by Jupiter on its behalf very seriously. To aid the prevention of bribery being committed for the benefit of the company; Jupiter has adopted a Bribery Prevention Policy. Jupiter will advise the board of any changes to the policy.
In accordance with the AIC Code, the board is responsible for monitoring the company's risk management and internal control systems and reviewing their effectiveness, at least annually, and report on that review in the company's annual report. Internal control systems are designed to meet the particular requirements of the company and to manage rather than eliminate the risks of failure to achieve its objectives. The systems by their very nature can provide reasonable but not absolute assurance against material misstatement or loss. The board has reviewed the effectiveness of the company's internal control systems including
the financial, operational and compliance controls and risk management. These systems have been in place for the period under review and to the date of signing the accounts.
The company receives services from JAM and JPMCB relating to investment advice, global custody and certain administration activities. JPMEL was appointed as depository to the company with effect from 22 July 2014. Documented contractual arrangements are in place with JAM, JPMCB and JPMEL which define the areas where the company has delegated authority to them. The directors have considered the reports on the internal control objectives and procedures of JAM and J.P. Morgan together with the opinion of the service auditor for these reports which detail the measures and the testing of the measures which are in place to ensure the proper recording, valuation, physical security and protection from theft of the company's investments and assets and the controls which have been established to ensure compliance with all regulatory, statutory and fiscal obligations of the company.
The directors have also had regard to the procedures for safeguarding the integrity of the computer systems operated by Jupiter, JPMBC and JPMEL and the key business disaster recovery plans. By way of the procedures described above the board reviews the procedures in place to manage the risks to the company on an annual basis.
The company does not have an internal audit function. The Audit Committee considers whether there is a need for an internal audit function on an annual basis. As most of the company's functions are delegated to third-party suppliers the board does not consider it necessary for the company to establish its own internal audit function.
The company's investment adviser is responsible for voting the shares it holds on the company's behalf. The investment adviser supports the UK Stewardship Code as issued by the FRC, which sets out the responsibilities of institutional shareholders in respect of monitoring and engaging with investee companies.
The investment adviser's UK voting policies are consistent with the UK Stewardship Code. The investment adviser's Corporate Governance & Voting Policy can be found at www.jupiteram.com.
The board and the investment adviser believe that shareholders have a vital role in encouraging a higher level of corporate performance and therefore adopt a positive approach to corporate governance. The investment adviser aims to act in the best interests of all its stakeholders by engaging with companies that they invest in, and by exercising its voting rights with care. Not only is this commensurate with good market practice, it goes hand in hand with ensuring the responsible investment of its clients' funds. Equally, companies are asked to present their plans for maintaining social and environmental sustainability within their business.
The board and the investment adviser believe that institutional investors should exercise their corporate governance rights including voting at general meetings.
In order to assist in the assessment of corporate governance and sustainability issues and contribute to a balanced view, the investment adviser subscribes to external corporate governance and sustainability research providers but does not routinely follow their voting recommendations. Contentious issues are identified and, where necessary (and where timescales permit), are discussed with corporate governance and/or sustainability analysts and portfolio managers, and companies. The investment adviser ensures that its policy is voted in practice and timely voting decisions made.
From time to time resolutions will be brought to annual general meetings by third-parties encouraging companies to address specific environmental and/or social concerns. In such instances, Jupiter's corporate governance and sustainability analysts will discuss their views with the investment adviser and the company if appropriate. The investment adviser will then vote for what it considers to be in the best financial interests of shareholders, whilst having regard to any specific sustainability concerns unless otherwise directed.
With effect from 1 January 2016, The Organisation for Economic Co- operation and Development ('OECD') introduced new Regulations for Automatic Exchange of Financial Account Information (the Common Reporting Standard, 'CRS'). HMRC enacted the CRS in the UK through The International Tax Compliance Regulations 2015.
These regulations require all financial institutions to share certain information on overseas shareholders with HMRC; this scope includes an obligation for investment trust companies which had previously had no such reportable accounts under the UK FATCA regulations. Accordingly, the company will be required to provide information to HMRC on the tax residencies of a number of non-UK based certificated shareholders and corporate entities on an annual basis. HMRC will in turn exchange this information with tax authorities in the country in which the shareholder may be resident for taxation purposes. HMRC has advised that the company will not be required to provide such information on uncertified holdings held through CREST. The company has engaged Link Asset Services to provide such information on certificated holdings to HMRC on an ongoing basis.
Under the requirements of the Alternative Investment Fund Managers Directive ('AIFMD'), JUTM (part of the Jupiter Group, which comprises Jupiter Fund Management PLC and all of its subsidiaries ('Jupiter') and is required to comply with certain disclosure and reporting obligations for funds that are considered to be Alternative Investment Funds. This includes the Jupiter Green Investment Trust PLC.
Jupiter operates a Group-wide remuneration policy, which applies to all employees across the Group. All employees are incentivised in a similar way and are rewarded according to personal performance and Jupiter's success. Details of the remuneration policy, including the applicable financial and non-financial criteria, are set out in the detailed remuneration policy disclosures available via the following link:
https://www.jupiteram.com/corporate/ Governance/Risk-management
Remuneration decisions are governed by Jupiter's Remuneration Committee (the 'Committee'), which meets on a regular basis to consider remuneration matters across the Group. In order to avoid conflicts of interest, the Committee comprises independent non-executive directors, and no individual is involved in any decisions regarding their own remuneration.
JUTM's board includes two independent, nonexecutive directors who are remunerated directly by the company. No other members of the board receive remuneration from JUTM and are instead remunerated directly by their employing entity in the Jupiter Group. JUTM does not employ any other staff. In the interests of transparency, Jupiter has apportioned the total employee remuneration paid to all 508 Jupiter staff in respect of JUTM's AIFMD duties performed for the AIFs on a 'number of funds' basis. It has estimated that the total amount of employee remuneration paid in respect of duties for the Fund is £625,521 of which £374,773 is fixed remuneration and £250,748 is variable remuneration.
The aggregate total remuneration paid to AIFMD Identified Staff that is attributable to duties for the Fund is £168,111 of which £103,915 is paid to Senior Management and £64,196 is paid to other staff. It should be noted that the aforementioned Identified Staff also provide services to other companies within Jupiter and its clients. They are included because their professional activities are considered to have a material impact on the risk profile of the company.
All shareholders have the opportunity to vote on the resolutions set out in the Notice of Meeting ('Notice') and to put questions regarding the company to the directors and the investment adviser, in advance of the AGM. The Notice sets out the business of the AGM and any item not of an entirely routine nature is explained in the Directors' Report or notes accompanying the Notice. Separate resolutions are proposed for each substantive issue. Information on proxy votes cast is available to shareholders attending the AGM and published thereafter on the company's website.
The company reports to shareholders twice a year by way of the Half Yearly Financial Report and Annual Report & Accounts. In addition, net asset values are published on a daily basis and monthly factsheets are published on the company's website www.jupiteram.com/JGC.
The board has developed the following procedure for ensuring that each director develops an understanding of the views of shareholders. Regular contact with major shareholders is undertaken by the company's corporate brokers and the corporate finance executive of the investment adviser. Any issues raised by major shareholders are then reported to the board. The board also receives details of all material correspondence with shareholders and the chairman and individual directors are willing to meet shareholders to discuss any particular items of concern regarding the performance of the company. The chairman, directors and representatives of the investment adviser are also available to answer any questions which may be raised by a shareholder.
More information about how the board fosters the relationships with its shareholders and other stakeholders, and how the board considers the impact that any material decision will have on relevant stakeholders, can be found in the section 172 statement in the Strategic Report on pages 23 to 25.
Having taken all available information into consideration, the board has concluded that the Annual Report & Accounts for the year ended 31 March 2020, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company's performance, income business model and strategy. The board's conclusions in this respect are set out in the Statement of Directors' Responsibilities on page 44.
This year's AGM will be held on Wednesday, 16 September 2020 at 11.30 a.m. at the offices of Jupiter Asset Management Limited, The Zig Zag Building, 70 Victoria Street, London SWIE 6SQ.
In consideration of the wellbeing of the company's shareholders and in light of Government guidance around social distancing, shareholders will not be permitted access to the building. Please refer to the Notice on page 79 for full details on how to vote and how to communicate any questions that would usually be raised at the meeting.
In addition to the ordinary business to be conducted at the meeting, the following resolutions will be proposed.
In accordance with the Articles, the directors are required to propose an ordinary resolution at the forthcoming AGM (and at every third annual general meeting thereafter) that the company shall continue in being as an investment trust. Accordingly, the directors are proposing Resolution 10, which will be proposed as an ordinary resolution.
Resolution 11 seeks authority for the directors to allot ordinary shares up to an aggregate nominal amount of approximately £6,266. This authority will represent one third of the company's issued share capital as at 23 June 2020 (excluding treasury shares). This authority will expire at the conclusion of the company's AGM in 2021 and it is the intention of the directors to seek renewal of this authority at that AGM. The board will only use this authority to allot ordinary shares where it believes that it is in the best interests of the company to issue shares for cash.
The directors may only allot shares for cash or sell shares held in treasury, other than by way of offer to all existing shareholders pro rata to their shareholdings if they are authorised to do so by the shareholders in general meeting. This resolution seeks authority for the directors to allot shares for cash or sell ordinary shares held in treasury without first offering them to existing shareholders up to a nominal amount of £1,879. This sum represents 1,879,898 ordinary shares of 0.1p each, being equivalent to approximately 10% of the current issued share capital as at 23 June 2020 (excluding treasury shares).
The directors will only use this authority in circumstances where they consider it is in the best interests of the company. Shares will only be issued at a premium to NAV at the time of issue.
Resolution 13 is seeking to renew authority to purchase through the London Stock Exchange ordinary shares representing 14.99% of the issued share capital of the company.
The decision as to whether the company purchases any such shares will be at the discretion of the directors. Purchases of ordinary shares will be made within the guidelines permitted by the UK Listing Authority.
Any ordinary shares which are repurchased may be held in treasury. These shares may subsequently be cancelled or issued for cash at a premium to their net asset value at the time of sale.
Resolution 14 is required to reflect the Shareholders Rights Directive (the 'Directive'). The Directive has increased the notice period for general meetings of the company to 21 days. If resolution 14 is passed the company will be able to call all general meetings, (other than annual general meetings), on 14 clear days' notice. In order to be able to do so shareholders must have approved the calling of meetings on 14 clear days' notice. Resolution 14 seeks such renewal of the equivalent approval given at the 2019 AGM.
The approval will be effective until the company's next AGM, when it is intended that a similar resolution will be proposed. The company will also need to meet the requirements for electronic voting under the directive before it can call a general meeting on 14 clear days' notice.
Resolution 15 is a special resolution to cancel the entire amount standing to the credit of the company's account (the 'Capital Reduction') and to allocate the entire amount, less £16,275, to a distributable reserve account of the company in order to support the future payment by the company of dividends to its shareholders or buying back ordinary shares (should circumstances in the future make it desirable to do so). The £16,275 will be transferred to a special reserve to ensure that the company's issued share capital, plus the special reserve, is equal to £50,000.
The Capital Reduction is subject to approval by the shareholders at the AGM and approval by the High Court of Justice in England and Wales. Further details on the Capital Reduction and allocation to the company's distributable reserves is found in Note 15 on page 69.
The company is seeking shareholder approval to amend its Articles of Association to allow any future general meeting to be held as a physical meeting or an electronic meeting, or a combination of both. This will give the company more options for future AGM's to facilitate shareholder attendance remotely should this be required.
The board considers that the passing of the resolutions being put to the company's AGM would be in the best interests of the company and its shareholders as a whole. It therefore recommends that shareholders vote in favour of resolutions 1 to 16, as set out in the Notice of Annual General Meeting.
Jupiter Asset Management Limited Company Secretary 7 July 2020
This statement, together with the Statement of Directors' Responsibilities on page 44 and the statement of Internal Controls on page 31, indicates how the company has complied with the recommendations of the AIC Code as issued in February 2019.
The AIC Code addresses the Principles and Provisions set out in the UK Corporate Governance Code (the UK Code as issued by the Financial Reporting Council ('FRC')), as well as setting out additional Provisions on issues that are of specific relevance to the company.
The board considers that reporting against the Principles and Provisions of the AIC Code, which has been endorsed by the FRC provides more relevant information to shareholders.
The company has complied with the provisions of the AIC Code (which incorporates the UK Code), except as set out below. The UK Code included provisions relating to:
The board considers these provisions not relevant to the position of the company being an externally managed investment company with no employees. The company has not therefore reported further in respect of these provisions.
The AIC Code is available on the AIC website (www. theaic.co.uk). It includes an explanation of how the AIC Code adapts the Principles and Provisions set out in the UK Code to make them relevant for investment companies.
A description of the main features of the company's internal control and risk management functions can be found on pages 31 and 32 of this report.
The board receives monthly reports and meets at least quarterly to review the overall business of the company and to consider matters specifically reserved for its review. At these meetings the board monitors the investment performance of the company. The directors also review the company's activities every quarter to ensure that it adheres to its investment policy or, if appropriate, to make any changes to that policy.
Additional ad hoc reports are received as required and directors have access at all times to the advice and services of the company secretary, who is responsible for ensuring that board procedures are followed and that applicable rules and regulations are complied with. The board has adopted a schedule of items specifically reserved for its decision.
A procedure has been adopted for the directors, in the furtherance of their duties, to take independent professional advice at the expense of the company.
As at 31 March 2020 the board comprised four non-executive directors comprising three males and one female, all of whom are independent of the investment adviser. All directors are required to disclose the existence of conflicts of interest at each board meeting.
Michael Naylor is Chairman of the board. The Chairman is independent of the investment adviser. The Chairman has no conflicts of interest between his interests and those of shareholders – the Chairman is also a shareholder. Potential conflicts are reported to the rest of the board who consider such conflicts and where appropriate approve them. The Chairman is not, and has never been, an employee of the investment adviser nor a professional adviser to the investment adviser or the company. The Chairman does not serve as a director of any other investment companies managed by Jupiter.
The board is mindful of the AIC and UK Corporate Governance Codes in relation to the tenure of directors (including the Chairman) however it is the board's policy that it does not consider it appropriate that directors should be appointed for a specific term.
The Nomination Committee undertakes an annual evaluation of the composition of the board and its committees taking into account the requirements of the AIC Code. Appropriate recommendations will then be made to the board in respect of the need to refresh the composition of the board and its committees.
As part of its annual evaluation process, and in accordance with good corporate governance practice, the board considers the length of tenure of all directors. Prior to the formal evaluation process, both Michael Naylor and Dame Polly Courtice, having served on the board in excess of nine years, advised of their intention to retire as directors of the company in advance of the 2020 AGM. It was therefore agreed that the process to search for candidates to succeed both directors should be undertaken. In the intervening period, as a result of the Covid-19 pandemic and resultant market conditions, Simon Baker discussed the proposed retirement of Michael Naylor and Dame Polly Courtice with Jaz Bains (Senior Independent Director). Both directors were in agreement that changing the composition of the board during the current economic climate was not in the best interests of shareholders as stability and leadership was critical to the future success of the company. Accordingly, given their extensive knowledge and experience of the environmental and sustainability sectors, Michael Naylor and Dame Polly Courtice were asked to re-consider their proposed retirement as directors of the company and both have subsequently agreed to remain as directors of the company until the conclusion of the 2022 AGM or until such time that suitable replacement directors have been sourced prior to the 2022 AGM.
It is seen as a prerequisite that each member of the board must have the skills, experience and character that will enable them to contribute 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 overall board balance and diversity when considering the tenure of directors, in any decisions to refresh the board and in making new appointments to the board.
It is the company's policy for all directors to stand for election annually. The board is recommending that all directors be re-elected at the forthcoming AGM.
The company secretary provides directors with induction training on appointment. Although no formal training in corporate governance is given to directors, the directors are kept up-to-date on statutory, regulatory and corporate governance issues through bulletins and training materials provided from time to time by the company secretary. Directors are also encouraged to attend industry events including those specific to investment trusts.
The board has not arranged an externally facilitated evaluation during this period, although this is considered by the board on a regular basis. The independent non-executive directors undertake on an annual basis an appraisal in relation to their oversight and monitoring of the performance of the investment adviser and other key service providers. In addition the directors undertake, on an annual basis, a written assessment of the effectiveness of the board as a whole by completion of a formal evaluation questionnaire. The SID also leads a formal evaluation of the performance of the Chairman.
The board has established an Audit Committee which consists of the entire board. Simon Baker is Chairman of the Audit Committee. The Report of the Audit Committee can be found on page 39.
The board has established a Management Engagement Committee which consists of the entire board. Michael Naylor is Chairman of the Management Engagement Committee. The function of this Committee is to ensure that the investment adviser complies with the terms of the investment management agreement and that the provisions of the investment management agreement follow industry practice and remain competitive and in the best interests of shareholders.
entire board. Dame Polly Courtice is Chairman of the Nomination Committee. The function of this Committee is to evaluate the appointment of additional or replacement directors against the requirements of the company's business and the need to have a balanced board. The Nomination Committee considers job specifications and assesses whether candidates have the necessary skills and time available to devote to the company's business. All newly appointed directors receive any necessary training and induction.
Following due consideration and taking into account the size, nature and complexity of the company, the board has determined that it will not establish a Remuneration Committee at this time; this function is performed by the board.
Terms of Reference of all board committees are published on the company's website www.jupiteram. com/JGC.
The board has established a Nomination Committee which, given the size of the board, consists of the
| Board | Audit Committee |
Management Engagement Committee |
Nomination Committee |
|
|---|---|---|---|---|
| M Naylor | 4/4 | 2/2 | 1/1 | 1/1 |
| S Baker | 4/4 | 2/2 | 1/1 | 1/1 |
| J Bains | 4/4 | 2/2 | 1/1 | 1/1 |
| Dame P Courtice | 4/4 | 2/2 | 1/1 | 1/1 |
For and on behalf of the board
Chairman 7 July 2020
The Audit Committee meets at least annually to consider the financial reporting by the company, the internal controls and relations with the company's external auditors. In addition, it reviews the independence and objectivity of the auditors and the effectiveness of the audit process, the quality of the audit engagement partner and the audit team and consider the reappointment of the auditors. It will also provide an opinion as to whether the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company's performance, business model and strategy.
During the course of the year, representatives of the AIFM, Investment Adviser and other third-party service providers are invited to attend meetings of the committee to report on issues as required.
The company does not have an internal audit function as most of its day to day operations are delegated to professional third-parties.
The committee also reviews the company's compliance with the AIC Code.
The Audit Committee consists of the entire board. Simon Baker is Chairman of the Audit Committee.
All the committee members are independent nonexecutive directors. The Committee has direct access to Ernst & Young LLP ('EY'), the Heads of Internal
Audit, Risk and Compliance of the investment adviser and to its group audit committee and reports its findings to the board. The board retains ultimate responsibility for all aspects relating to external financial statements and other significant published financial information.
The company's current independent auditors EY, was appointed by the board on 18 September 2019. As part of its review of the continuing appointment of the auditor, the Audit Committee considers the length of tenure of the audit firm, its fees and independence from the AIFM, the investment adviser along with any matters raised during each audit.
The fees paid to EY in respect of audit services are disclosed in Note 5 of the notes to the accounts on page 61. The company's year ended 31 March 2020 is the current audit partner's second of a five year maximum term.
During its review of the company's accounts for the year ended 31 March 2020, the Audit Committee considered the following significant issues, including the consideration of principal and emerging risks and uncertainties in light of the company's activities, Covid-19 and issues communicated by the auditors during their review, all of which were satisfactorily addressed:
| Issue considered | How the issue was addressed |
|---|---|
| " Valuation of the investment portfolio | " Review of reports from the investment adviser and custodian |
| " Receipt of dividend income | " Review of income received as detailed in the monthly revenue forecast report from the investment adviser |
| " Compliance with section 1158 of the Corporation Tax Act 2010 |
" Review of portfolio holdings reports and revenue forecasts to ensure compliance criteria is met |
| " Calculation of management fees | " Consideration of methodology used to calculate fees, matched against the criteria set out in the investment management agreement |
| " Statement of going concern | " Review of the investment portfolio, risks and uncertainties, projected cash flow and forecast revenue |
Auditor effectiveness is assessed by means of the auditors' direct engagement with the committee at Audit Committee meetings and also by reference to feedback from the AIFM, investment adviser and its employees who have direct dealings with the auditors during the annual audit of the company.
The Audit Committee concluded that the auditors continue to be independent of the company and the investment adviser and that their reappointment be proposed at the 2020 Annual General Meeting.
The directors are not aware of any relevant audit information of which the company's auditors are unaware. The directors also confirm that they have taken all the steps required of a company director to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information.
The Committee ensures that the auditors' objectivity and independence is safeguarded by requiring pre-approval by the Committee for all non-audit services provided to the company, which takes into consideration:
The Committee has adopted a policy that all non-audit services are subject to its approval. No non-audit fees were payable to the auditors for the period under review and no services were undertaken.
Having taken all available information into consideration, and having discussed the content of the Annual Report & Accounts with the AIFM, investment adviser, company secretary and other third-party service providers, the Audit Committee has concluded that the Annual Report & Accounts for the year ended 31 March 2020, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company's position, income and performance, business model and strategy, and has reported on these findings to the board.
For and on behalf of the Audit Committee
Chairman of the Audit Committee 7 July 2020
The board is pleased to present the company's annual remuneration report for the year ended 31 March 2020 in accordance with Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) regulations 2013.
The law requires the company's auditors to audit certain of the disclosures provided. Where disclosures have been audited, they are indicated as such. The independent auditors' opinion is included in their report on pages 45 to 53.
The board's policy on remuneration is set out below. It must be noted that it is essential that fees payable to directors should reflect the time spent on the company's affairs, and should be sufficient to attract and retain individuals of high calibre with suitable knowledge and experience.
The directors of the company are non-executive and by way of remuneration receive an annual fee, payable quarterly in arrears.
As reported last year, following a review the director's fees were increased with effect from 1 January 2019. No further increases have taken place since that date.
During the year to 31 March 2020, directors' fees were as follows:
| Chairman of the Board | £30,000 |
|---|---|
| Chairman of the Audit Committee | £27,000 |
| Director | £25,000 |
Details of the total emoluments paid to directors for the years ended 31 March 2019 and 31 March 2020 are provided in the Annual Report on Remuneration.
The company does not award any other remuneration or benefits to the Chairman or directors. There are no bonus schemes, pension schemes, or long-term incentive schemes in place for the directors.
The remuneration policy of the company was approved by shareholders at the AGM held on 4 September 2018.
The current remuneration policy as set out below will apply until 4 September 2021 (being three years from the date of shareholder approval of the policy) unless renewed, varied or revoked by shareholders at a general meeting.
In accordance with Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, the directors are required to propose a remuneration policy to shareholders that will remain in place for a maximum of three years.
The company's remuneration policy is that fees payable to directors are commensurate with the amount of time directors are expected to spend on the company's affairs, whilst seeking to ensure that fees are set at an appropriate level so as to enable candidates of a sufficient calibre to be recruited. The company's Articles states the maximum aggregate amount of fees that can be paid to directors in any one year. This is currently set at £150,000 per annum and shareholder approval is required for any changes to this.
Each director is entitled to a base fee; the Chairman of the board is paid a higher fee than the other directors, to reflect the additional work required to be carried out in this role. The Chairman of the Audit Committee also receives a higher fee on the same basis.
The board has not established a Remuneration Committee and any review of the directors' fees is undertaken by the board as whole and has regard to the level of fees paid to non-executive directors of other investment companies of equivalent size.
No director has a contract of service with the company. Accordingly, the directors are not entitled to any compensation in the event of termination of
their appointment or loss of office, other than the payment of any outstanding fees.
The board is authorised to obtain, at the company's expense, outside legal or other professional advice on any matters within its Terms of Reference. The board did not seek external advice during the year under review.
The board does not consider it appropriate that directors should be appointed for a specific term. All directors are subject to annual re-election. Any new director appointed would be subject to election by shareholders at the next AGM following their appointment.
The terms and conditions of directors' appointments are set out in formal letters of appointment.
| Director | Date of Appointment |
Due date for Re-election |
|---|---|---|
| M Naylor | 3 July 2009 | Annually |
| S Baker | 31 July 2015 | Annually |
| J Bains | 4 December 2018 | Annually |
| Dame P Courtice | 24 April 2006 | Annually |
A single figure for the total remuneration of each director is set out in the table below for the year ended 31 March 2020 and 31 March 2019 respectively:
| Director | Fees £ |
Expenses £ |
Total remuneration for the year ended 31 March 2020 £ |
Fees £ |
Expenses £ |
Total remuneration for the year ended 31 March 2019 £ |
|---|---|---|---|---|---|---|
| Michael Naylor* | 30,000 | – | 30,000 | 24,375 | – | 24,375 |
| Simon Baker** | 27,000 | – | 27,000 | 20,250 | – | 20,250 |
| Jaz Bains | 25,000 | – | 25,000 | 7,543 | – | 7,543 |
| Dame Polly Courtice | 25,000 | 106 | 25,106 | 19,000 | 72 | 19,072 |
| Total | 107,000 | 106 | 107,106 | 71,168 | 72 | 71,240 |
* Chairman of the board.
** Chairman of the Audit Committee.
The following sets out the votes received at the AGM of the shareholders of the company, held on 18 September 2019, in respect of the approval of the Directors' Remuneration Report.
| Number of votes |
Total votes |
Votes cast against | Votes cast for | |||
|---|---|---|---|---|---|---|
| withheld | cast | % | Number | % | Number | |
| 15,898 | 5,501,294 | 0.16 | 8,671 | 99.78 | 5,492,623 |
The directors who held office at the end of the year covered by these accounts and their beneficial interests in the ordinary shares at 31 March 2020 are shown in the table below.
| 31 March 2020 |
31 March 2019 |
|
|---|---|---|
| M Naylor | 16,381 | 16,381 |
| S Baker | 8,250 | 8,250 |
| J Bains | – | – |
| Dame P Courtice | 16,936 | 16,936 |
There are no requirements for directors to own shares. All such holdings are subject to the disclosure obligations set out in the Listing Rules of the UK Listing Authority.
The directors' interests in contractual arrangements with the company are as detailed in note 23 to the Accounts on page 71. Subject to these exceptions, no director was a party to or had any interest in any contract or arrangement with the company at any time during the year or subsequently.
The graph below shows the company's share price performance compared with the movement of the FTSE Environmental Technology 100 Total Return Index, expressed in sterling
On behalf of the board and in accordance with Part 2 of Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, I confirm that the Directors' Remuneration Report and Policy summarises, for the year ended 31 March 2020, the review undertaken and the decisions made regarding the fees paid to the board, and the future remuneration policy of the company which is to be approved by shareholders.
By order of the board Michael Naylor Chairman 7 July 2020
The directors are responsible for preparing the Annual Report and financial statements in accordance with applicable United Kingdom law and 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 those financial statements, the directors are required to:
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website www.jupiteram.com/JGC. The work carried out by the auditors does not include consideration of the maintenance and integrity of the website and accordingly the auditors accept no responsibility for any changes that have occurred to the financial statements when they are presented on the website.
The financial statements are published on www. jupiteram.com/JGC, which is a website maintained by Jupiter Asset Management Limited.
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 are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements 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 Strategic Report, Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations.
Each of the directors, who are listed on page 27 of this report, confirm to the best of their knowledge that:
By order of the board
7 July 2020
We have audited the financial statements of Jupiter Green Investment Trust PLC (the 'Company') for the year ended 31 March 2020 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Cash Flow Statement and the related notes 1 to 25, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union.
In our opinion, the financial statements:
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 'Auditor's responsibilities for the audit of the financial statements' section of our report below. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (UK) require us to report to you whether we have anything material to add or draw attention to:
| Key audit matters | " Risk of incomplete and / or inaccurate revenue recognition through classification of special dividends as revenue or capital items in the Statement of Comprehensive Income |
|---|---|
| " Risk of incorrect valuation and/or defective title to the investment portfolio | |
| " Risk of the going concern assumption being applied incorrectly | |
| Materiality | " Overall materiality of £0.33m which represents 1% of equity shareholders' funds |
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
| Risk | Our response to the risk | Key observations communicated to the Audit Committee |
|---|---|---|
| Incomplete and/or inaccurate revenue recognition, including classification of special dividends as revenue or capital items in the Statement of Comprehensive Income (per the Audit Committee report set out on page 39 and the accounting policy set out on page 584). |
We have performed the following procedures: We obtained an understanding of the Manager's and Administrator's processes and controls surrounding revenue recognition and classification of special dividends by reviewing their internal controls report and performing our |
The results of our procedures are: Based on the work performed, we had no matters to report to the Audit Committee. |
| The income received for the year to 31 March 2020 was £0.89m (2019: £0.83m), consisting primarily of dividend income from listed equity investments. |
walkthrough procedures to evaluate the design and implementation of controls. We agreed a sample of dividends |
|
| The income receivable by the Company during the year directly |
paid on investments held during the year per an independent source to the income report. |
|
| affects the Company's revenue return. There is a risk of incomplete and/or inaccurate recognition of income through the failure to recognise proper income entitlements or apply appropriate accounting treatment. |
We agreed 100% of ordinary dividends received and receivable from investments per the income report to an independent source. For a sample of these items, we recalculated the total consideration and verified the cash receipts to bank statements. |
| Risk | Our response to the risk | Key observations communicated to the Audit Committee |
|---|---|---|
| The investment income earned by the Company during the year directly affects the Company's ability to pay a dividend to shareholders. There is therefore a risk of incomplete and or inaccurate recognition of revenue. |
Recognising that a number of Companies have responded to the COVID-19 pandemic by cancelling their dividend payments, we traced 100% of the cash receipts of the accrued dividend income to post year end bank statements. |
|
| In accordance with the Association of Investment Companies Statement of Recommended Practice ('AIC SORP'), special dividends can be included within either the revenue or capital columns of the Statement of Comprehensive Income, depending on the commercial circumstances behind the payments. As such, there is a manual and judgmental element in allocating special dividends between revenue and capital. There |
We performed a review of the income and acquisition and disposal reports to identify all dividends received and accrued during the period that are above our testing threshold. We identified which of the dividends above our testing threshold were special dividends with reference to an external source. There were no special dividends above our testing threshold. |
|
| is a risk that this judgment is not reasonable. There is therefore also a risk that an incorrect allocation could potentially result in an incorrect distribution of revenue and put the Company's investment trust status at risk. |
Incorrect valuation and/or defective title to the investment portfolio (as described on page 39 in the Report of the Audit Committee and as per the accounting policy set out on page 58).
The valuation of the investment portfolio at 31 March 2020 was £31.88m (2019: £35.47m) consisting entirely of quoted investments.
The valuation of the assets held in the investment portfolio is the key driver of the Company's net asset value and total return. Incorrect investment pricing, or a failure to maintain proper legal title of the investments held by the Company could have a significant impact on the portfolio valuation and the return generated for shareholders.
The fair value of listed investments is based on their quoted bid price at the reporting date without any deduction for estimated future selling costs.
We obtained an understanding of the Administrator's process surrounding the valuation and existence of quoted investments by reviewing their internal control reports and by performing our walkthrough procedures over these.
We agreed 100% of quoted investment valuations and exchange rates to a relevant independent pricing vendor.
We reviewed pricing exception and stale pricing reports to identify illiquid or non-priced securities to determine if their price represents fair value. We independently verified trading volumes to an external source to confirm that there were no stale priced securities.
We assessed the liquidity of the investment portfolio through analysing the monthly average trading volume of the investments.
We obtained confirmation from the Custodian and Depositary of all investments held at the year-end and agreed those to the Company's records.
Based on the work performed, we had no matters to report to the Audit Committee.
| w | |||
|---|---|---|---|
The going concern assumption is incorrectly applied (as described on page 31 in the Report of the Directors and as per the accounting policy set out on page 58).
The Directors are required to determine the appropriateness of preparing the financial statements on a going concern basis for a period of at least twelve months from the date of approval of the financial statements. The Company prepares financial statements on a going concern basis unless the Directors either intend to liquidate the Company or to cease trading, or have no realistic alternative but to do so. When a Company does not prepare financial statements on a going concern basis, it shall disclose that fact, together with the basis on which it prepared the financial statements and the reason why the entity is not regarded as a going concern.
The Directors are also required to assess the adequacy of the going concern disclosures in the annual report and financial statements.
The voluntary continuation vote at the Annual General Meeting to be held on 16 September 2020, creates uncertainty for the Company. There is a risk, that the continuation vote is not passed, and the Company in its current legal form is wound up and therefore no longer a going concern.
We have reviewed and checked to relevant documentation, the directors' assessment of going concern and as part of that review the likely outcome of the continuation vote which included:
We reviewed whether the Annual Report and Financial Statement transparently presented the Directors' assessment of the impact of the continuation vote on the going concern assumption.
We considered the performance of the Company in comparison with the benchmark and peer group, and the share price discount to net asset value.
We reviewed and challenged the inputs and assumptions to the Company's going concern assessment which included revenue forecasts and various stress testing scenarios in order to determine whether the Company remains able to meet its financial liabilities as they fall due for the foreseeable future.
Based on the procedures performed, we are satisfied that the Directors have appropriately considered the upcoming continuation vote and the impact of COVID 19 on the going concern assessment.
| Risk | Our response to the risk | Key observations communicated to the Audit Committee |
|---|---|---|
| Additionally, the recent outbreak of coronavirus ("COVID-19"), which the World Health Organization has declared to constitute a pandemic, has adversely impacted global commercial activity and contributed to significant declines in global equity and debt markets. It is uncertain how long this volatility will continue. As COVID-19 continues to spread, the potential impact, including a global, regional or other |
We discussed with the Directors whether they had assessed the impact, caused by COVID-19, and reviewed the assessment that they had prepared challenging the assumptions and judgements that have been made. We reviewed the related disclosures in the Annual Report and financial statements of the Company. As referred to in the valuation risk above we have performed |
|
| economic recession, are increasingly uncertain and difficult to assess. The outbreak and the resulting financial and economic market uncertainty described above could have a significant adverse impact on the operations and financial outlook of the Company through an adverse impact on the service providers the company relies on for its operations, reduced liquidity in its investment portfolio, and reduced or cancelled dividend payments. |
procedures over the liquidity risk. We confirmed through discussion with the Company Secretary and the Directors that they are in close contact with key service providers and that Business Continuity Plans are in place with no significant deterioration of service being experienced. As referred to in the revenue recognition risk above we have performed additional procedures on outstanding dividends at 31 March |
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for the Company. This enables us to form an opinion on the financial statements. We take into account size, risk profile, the organisation of the Company and effectiveness of controls, including controls and changes in the business environment when assessing the level of work to be performed.
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion.
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Company to be £0.33m (2019: £0.36m) which is 1% of equity shareholders' funds. We believe that equity shareholders' funds provides us with materiality aligned to users interests as it represents a key measurement of the Company's position.
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Company's overall control environment, our judgement was that performance materiality was 75% of our planning materiality, namely £0.24m (2019: £0.27m).
Given the importance of the distinction between revenue and capital for the Company, we have also applied a separate testing threshold for the revenue column of the Statement of Comprehensive Income of £0.02m (2019: £0.02m) being 5% of revenue profit before taxation.
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.02m (2019: £0.02m) which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.
The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other information and to report as uncorrected material misstatements of the other information where we conclude that those items meet the following conditions:
compliance with the UK Corporate Governance Code containing provisions specified for review by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code.
In our opinion the part of the directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement set out on page 27, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The objectives of our audit, in respect to fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement
due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
Our approach was as follows:
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council's website at https://www. frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Following the recommendation of the Audit Committee, we were appointed by the Company on 4 September 2018 to audit the financial statements for the year ended 31 March 2019 and subsequent financial periods.
The period of total uninterrupted engagement is 2 years, covering periods from our appointment through to the period ending 31 March 2020.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Susan Dawe (Senior statutory auditor) for and on behalf of Ernst & Young LLP, Statutory Auditor Edinburgh 7 July 2020
Notes:
| Year ended 31 March 2020 | Year ended 31 March 2019 | ||||||
|---|---|---|---|---|---|---|---|
| Note | Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
| Loss on investments at fair value through | |||||||
| profit or loss | 10 | – | (2,783) | (2,783) | – | (773) | (773) |
| Foreign exchange gain | – | 94 | 94 | – | 190 | 190 | |
| Income | 3 | 889 | – | 889 | 828 | – | 828 |
| Total income | 889 | (2,689) | (1,800) | 828 | (583) | 245 | |
| Investment management fee | 4 | (66) | (197) | (263) | (69) | (205) | (274) |
| Other expenses | 5 | (341) | – | (341) | (311) | (6) | (317) |
| Total expenses | (407) | (197) | (604) | (380) | (211) | (591) | |
| Net return/(loss) before finance costs and tax | 482 | (2,886) | (2,404) | 448 | (794) | (346) | |
| Finance costs | 7 | (1) | (3) | (4) | (2) | (7) | (9) |
| Return/(loss) on ordinary activities | |||||||
| before taxation | 481 | (2,889) | (2,408) | 446 | (801) | (355) | |
| Taxation | 8 | (68) | – | (68) | (59) | – | (59) |
| Net return/(loss) after taxation | 413 | (2,889) | (2,476) | 387 | (801) | (414) | |
| Return/(loss) per ordinary share | 9 | 2.20p | (15.34)p | (13.14)p | 1.89p | (3.91)p | (2.02)p |
| Diluted return/(loss) per ordinary share | 9 | 2.20p | (15.34)p | (13.14)p | 1.89p | (3.91)p | (2.02)p |
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). All items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the year.
All income is attributable to the equity holders of Jupiter Green Investment Trust PLC. There are no minority interests.
| 2020 | 2019 | ||
|---|---|---|---|
| Note | £'000 | £'000 | |
| Non current assets | |||
| Investments held at fair value through profit or loss | 10 | 31,880 | 35,466 |
| Current assets | |||
| Prepayments and accrued income | 11 | 215 | 174 |
| Cash and cash equivalents | 604 | 449 | |
| 819 | 623 | ||
| Total assets | 32,699 | 36,089 | |
| Current liabilities | |||
| Other payables | 12 | (118) | (155) |
| Total assets less current liabilities | 32,581 | 35,934 | |
| Capital and reserves | |||
| Called up share capital | 15 | 34 | 34 |
| Share premium | 16 | 29,748 | 29,705 |
| Redemption reserve* | 18 | 239 | 239 |
| Special reserve | 17 | – | 24,292 |
| Retained earnings* | 19 | 2,560 | (18,336) |
| Total equity shareholders' funds | 32,581 | 35,934 | |
| Net Asset Value per ordinary share | 20 | 173.31p | 188.70p |
| Diluted Net Asset Value per ordinary share | 20 | 173.31p | 188.70p |
* Under the company's Articles of Association, dividends may be paid out of any distributable reserve of the company.
Approved by the board of directors and authorised for issue on 2020 and signed on its behalf by:
Chairman
Company Registration Number 05780006
| For the year ended 31 March 2020 | Share Capital £'000 |
Share Premium £'000 |
Special Reserve £'000 |
Redemption Reserve £'000 |
Retained Earnings £'000 |
Total £'000 |
|---|---|---|---|---|---|---|
| Balance at 31 March 2019 | 34 | 29,705 | 24,292 | 239 | (18,336) | 35,934 |
| Net loss for the year | – | – | – | – | (2,476) | (2,476) |
| Dividends paid | – | – | – | – | (433) | (433) |
| Ordinary shares reissued from treasury | – | 43 | – | – | 73 | 116 |
| Ordinary shares repurchased | – | – | – | – | (560) | (560) |
| Transfer to capital account in retained earnings | – | – | (24,292) | – | 24,292 | – |
| Balance at 31 March 2020 | 34 | 29,748 | – | 239 | 2,560 | 32,581 |
Dividends paid during the period were paid out of revenue reserves.
| For the year ended 31 March 2019 | Share Capital £'000 |
Share Premium £'000 |
Special Reserve £'000 |
Redemption Reserve £'000 |
Retained Earnings £'000 |
Total £'000 |
|---|---|---|---|---|---|---|
| Balance at 31 March 2018 | 34 | 29,630 | 24,292 | 239 | (14,048) | 40,147 |
| Net loss for the year | – | – | – | – | (414) | (414) |
| Dividends paid | – | – | – | – | (466) | (466) |
| Ordinary shares reissued from treasury | – | 75 | – | – | 167 | 242 |
| Ordinary shares repurchased | – | – | – | – | (3,575) | (3,575) |
| Balance at 31 March 2019 | 34 | 29,705 | 24,292 | 239 | (18,336) | 35,934 |
Dividends paid during the period were paid out of revenue reserves.
| 2020 | 2019 | ||
|---|---|---|---|
| Note | £'000 | £'000 | |
| Cash flows from operating activities | |||
| Investment income received (gross) | 890 | 781 | |
| Deposit interest received | 1 | 4 | |
| Investment management fee paid | (241) | (279) | |
| Performance fee* | – | (59) | |
| Other cash expenses | (325) | (334) | |
| Interest paid | (4) | (9) | |
| Net cash inflow from operating activities before taxation | 321 | 104 | |
| Taxation | (68) | (59) | |
| Net cash Inflow from operating activities | 21 | 253 | 45 |
| Net cash flows from investing activities | |||
| Purchases of investments | (3,540) | (8,690) | |
| Sale of investments | 4,295 | 9,848 | |
| Net cash inflow from investing activities | 755 | 1,158 | |
| Cash flows from financing activities | |||
| Shares repurchased | (630) | (3,505) | |
| Shares reissued from treasury | 116 | 242 | |
| Equity dividends paid | (433) | (466) | |
| Net cash outflow from financing activities | 22 | (947) | (3,729) |
| Increase/(decrease) in cash | 61 | (2,526) | |
| Change in cash and cash equivalents | |||
| Cash and cash equivalents at start of year | 449 | 2,785 | |
| Realised gain on foreign currency | 94 | 190 | |
| Cash and cash equivalents at end of year | 604 | 449 |
* Performance fee paid this period in relation to previous financial year.
The Accounts comprise the financial results of the company for the year to 31 March 2020. 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 7 July 2020. 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 October 2019 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 board continues to adopt the going concern basis in the preparation of the financial statements.
Income includes dividends from investments quoted ex-dividend on or before the date of the Statement of Financial Position.
Dividends receivable from equity shares are taken to the revenue return column of the Statement of Comprehensive Income.
Special dividends are treated as repayment of capital or as revenue depending on the facts of each particular case.
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the Association of Investment Companies (AIC), supplementary information
which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the statement. In accordance with the company's Articles of Association, net capital returns may not be distributed by way of dividend.
An analysis of retained earnings broken down into revenue items and capital items is given in Note 19. Investment Management fees and finance costs are charged 75 per cent. to capital and 25 per cent. to revenue (2019: 75 per cent. to capital and 25 per cent. to revenue). All other operational costs including administration expenses to capital) are charged to revenue.
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 fair value, being the consideration given.
All investments are classified as held at fair value through profit or loss. All investments are measured at fair value with changes in their fair value recognised in the Statement of Comprehensive Income in the period in which they arise. The fair value of listed investments is based on their quoted bid price at the reporting date without any deduction for estimated future selling costs.
Foreign exchange gains and losses on fair value through profit and loss investments are included within the changes in the fair value of the investments.
For investments that are not actively traded and/or where active stock exchange quoted bid prices are not available, fair value is determined by reference to a variety of valuation techniques. These techniques may draw, without limitation, on one or more of: the latest arm's length traded prices for the instrument concerned; financial modelling based on other observable market
data; independent broker research; or the published accounts relating to the issuer of the investment concerned.
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.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At the date of each Statement of Financial Position, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on that 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 the Statement of Comprehensive Income within the revenue or capital column depending on the nature of the underlying item.
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 periods and it further excludes items that are never taxable or deductible. The company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the date of the Statement of Financial Position.
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.
Investment trusts which have approval under Section 1158 of the Income and Corporation Taxes Act 2010 ('ICTA') are not liable for taxation of capital gains.
As outlined in the launch prospectus dated 3 May 2006, application was made to the Court for the reduction of the share premium account and the creation of a special reserve which was granted on 20 December 2006. This reserve may be used for the purposes of repurchasing shares for treasury or cancellation pursuant to the company's discount management policy and making distributions to shareholders.
In order to simplify the presentation of the Capital and Reserves of the company, the balance on the special reserve has been transferred to the Capital Account in Retained Earnings.
At the date of authorisation of the financial statements, the following amendment to the IFRS Standards and Interpretations was assessed to be relevant and is effective for annual periods beginning on or after 1 January 2019:
IFRIC 23: Uncertainty over Income Tax Treatments
IFRIC 23 has not had an effect on the measurement or disclosure of amounts recognised within the financial statements of the company.
At the date of authorisation of the financial statements, the following standards and interpretations were assessed to be relevant and are all effective for annual periods beginning on or after 1 January 2020:
The directors expect that the adoption of the standards listed above will have either no impact or that any impact will not be material on the financial statements of the company in future periods.
The financial statements have been prepared on the historical cost basis, except for the measurement at fair value of certain financial instruments. The principal accounting policies adopted are set out below.
At 31 March 2020, the company had net current assets of £32,581,000 (31 March 2019: £35,934,000). The directors have a reasonable expectation that the company has sufficient resources to continue in operational existence for the foreseeable future and for the company to meet its objectives and measure performance against them. The directors considered the Covid-19 pandemic and the impact this may have on the company, noting in particular that, in addition to its net current assets the company holds a portfolio of largely liquid assets that, if required, can be sold to maintain adequate cash balances to meet its expected cash flows. The directors also reviewed scenarios of a significant drop in value of the assets and noted that they will still be significantly higher than liabilities. They have also confirmed the resiliency of the company's key service providers and are satisfied that their contingency plans and working arrangements are sustainable. The board has established a framework of prudent and effective controls performed periodically by the Audit Committee, which enable risks to be assessed and managed. The investment adviser and the company's brokers engage with shareholders on an ongoing basis and the board, having taken into account the composition of shareholders of the company, the results of previous continuation votes and the ongoing demand for shares in the company, considers it to be likely, at this juncture, that the company's continuation vote by shareholders at this year's AGM will be passed. Therefore, the going concern
basis has been adopted in preparing the company's financial statements. The Going Concern statement is set out on page 31.
All financial assets and financial liabilities are recognised (or derecognised) on the date of the transaction by the use of "trade date accounting".
Management have not applied any significant accounting judgements to this set of Financial Statements or those of the prior period other than the allocation of special dividends received between revenue and capital.
The allocation is dependent upon the underlying reason for the payment. Examples of capital events which would result in the dividend being allocated to capital is a return of capital to shareholders or proceeds from the disposal of assets. Examples of revenue events which would result in the dividend being allocated to revenue are the distribution of excess or exceptional profits in the year. The circumstances are reviewed by the manager who determines the appropriate allocation.
The management make no other significant accounting estimates.
| Year ended 31 March 2020 £'000 |
Year ended 31 March 2019 £'000 |
|
|---|---|---|
| Income from investments | ||
| Dividends from UK companies | 163 | 164 |
| Dividends from overseas companies | 725 | 660 |
| Deposit interest | 1 | 4 |
| Total income | 889 | 828 |
| Year ended 31 March 2020 | Year ended 31 March 2019 | |||||
|---|---|---|---|---|---|---|
| Revenue | Capital | Total | Revenue | Capital | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Investment management fee | 66 | 197 | 263 | 69 | 205 | 274 |
75% (2019: 75%) of the investment management fee is treated as a capital expense. Details of the investment management contract are given in Note 23.
| Revenue £'000 |
Year ended 31 March 2020 Capital £'000 |
Total £'000 |
Revenue £'000 |
Year ended 31 March 2019 Capital £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|
| Directors' remuneration (see page 42) | 107 | – | 107 | 71 | – | 71 |
| Auditors' remuneration including VAT – audit | 31 | – | 31 | 30 | – | 30 |
| Fund accounting | 55 | – | 55 | 54 | – | 54 |
| Broker fees | 30 | – | 30 | 30 | – | 30 |
| Registrar services | 32 | – | 32 | 28 | – | 28 |
| Other | 86 | – | 86 | 98 | 6 | 104 |
| 341 | – | 341 | 311 | 6 | 317 |
| Year ended 31 March 2020 £'000 |
Year ended 31 March 2019 £'000 |
|
|---|---|---|
| Investment management fees | 263 | 274 |
| Other expenses | 341 | 317 |
| Total expenses (excluding finance costs) | 604 | 591 |
| Average net assets | 37,928 | 39,322 |
| Ongoing charges % | 1.59 | 1.50 |
| Revenue £'000 |
Year ended 31 March 2020 Capital £'000 |
Total £'000 |
Revenue £'000 |
Year ended 31 March 2019 Capital £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|
| Non–utilisation fee | 1 | 3 | 4 | 2 | 6 | 8 |
| Bank overdraft interest | – | – | – | – | 1 | 1 |
| 1 | 3 | 4 | 2 | 7 | 9 |
Finance costs are in respect of the costs incurred for non-utilisation during the year of the bank loan facility.
There was no drawdown of the loan facility as at 31 March 2020 (2019: Nil). The facility was not renewed at the end of the loan term on 27 September 2019.
| Revenue | Year ended 31 March 2020 Capital |
Total | Revenue | Year ended 31 March 2019 Capital |
Total | |
|---|---|---|---|---|---|---|
| Tax on ordinary activities | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Overseas tax | 68 | – | 68 | 59 | – | 59 |
The tax assessed for the year equates to that resulting from applying the standard rate of corporation tax in the UK of 19% (2019: 19%).
The calculation is explained below:
| Year ended 31 March 2020 £'000 |
Year ended 31 March 2019 £'000 |
|
|---|---|---|
| Return on ordinary revenue activities before taxation | 481 | 446 |
| Corporation tax at 19% (2019: 19%) | 91 | 85 |
| Effects of | ||
| Exempt dividend income | (160) | (151) |
| Unrelieved tax losses and other deductions arising in the period | 108 | 109 |
| Capital expenses deductible for tax purposes | (38) | (42) |
| Foreign tax suffered | 68 | 59 |
| Double tax relief received | (1) | (1) |
| Current tax charge for the year | 68 | 59 |
There are unrelieved management expenses at 31 March 2020 of £7,852,000 (2019: £7,304,000) but the related deferred tax asset at 19% has not been recognised. This is because the company is not expected to generate taxable income in a future period in excess of the deductible expenses of that future period and, accordingly, it is unlikely that the company will be able to reduce future tax liabilities through the use of existing unrelieved expenses.
The earnings per ordinary share figure is based on the net loss for the year of £2,476,000 (2019: net loss £414,000) and on 18,831,660 (2019: 20,489,683) ordinary shares, being the weighted average number of ordinary shares in issue during the year.
The earnings per ordinary share figure detailed above can be further analysed between revenue and capital, as below.
| Year ended 31 March 2020 £'000 |
Year ended 31 March 2019 £'000 |
|
|---|---|---|
| Net revenue profit | 413 | 387 |
| Net capital loss | (2,889) | (801) |
| Net total loss | (2,476) | (414) |
| Weighted average number of ordinary shares in issue during the year used for the purposes of the undiluted calculation |
18,831,660 | 20,489,683 |
| Weighted average number of ordinary shares in issue during the year used for the purposes of the diluted calculation |
18,831,660 | 20,489,683 |
| Undiluted | ||
| Revenue earnings per ordinary share | 2.20p | 1.89p |
| Capital losses per ordinary share | (15.34)p | (3.91)p |
| Total losses per ordinary share | (13.14)p | (2.02)p |
| Diluted | ||
| Revenue earnings per ordinary share | 2.20p | 1.89p |
| Capital losses per ordinary share | (15.34)p | (3.91)p |
| Total losses per ordinary share | (13.14)p | (2.02)p |
Any ordinary shares to be issued under the ordinary subscription rules had no dilution effect on the earnings per ordinary share for the year ended 31 March 2019 and 31 March 2020.
| Year ended 31 March 2020 £'000 |
Year ended 31 March 2019 £'000 |
|
|---|---|---|
| Market value of investments at beginning of year | 35,466 | 37,397 |
| Net unrealised gain at beginning of year | (9,576) | (13,952) |
| Cost of investments at beginning of year | 25,890 | 23,445 |
| Purchases at cost during year | 3,540 | 8,690 |
| Sales at cost during year | (3,447) | (6,245) |
| Cost of investments at end of year | 25,983 | 25,890 |
| Net unrealised gain at the year end | 5,897 | 9,576 |
| Market value of investments at end of year | 31,880 | 35,466 |
| Year ended 31 March 2020 £'000 |
Year ended 31 March 2019 £'000 |
|
|---|---|---|
| Listed on UK stock exchange | 3,904 | 5,536 |
| Listed on overseas stock exchanges | 27,976 | 29,930 |
| Market value of investments at end of year | 31,880 | 35,466 |
| 2020 £'000 |
2019 £'000 |
|
|---|---|---|
| Net gains on sale of investments | 896 | 3,603 |
| Movement in unrealised losses | (3,679) | (4,376) |
| Loss on investments | (2,783) | (773) |
The following transaction costs were incurred during the year:
| Year ended 31 March 2020 £'000 |
Year ended 31 March 2019 £'000 |
|
|---|---|---|
| Purchases | 6 | 11 |
| Sales | 2 | 6 |
| 8 | 17 |
| 2020 £'000 |
2019 £'000 |
|
|---|---|---|
| Sales for future settlement | 48 | – |
| Prepayments and accrued income | 167 | 174 |
| 215 | 174 |
| 2020 £'000 |
2019 £'000 |
|
|---|---|---|
| Amounts payable on the repurchase of shares into treasury | – | 70 |
| Other creditors | 118 | 85 |
| 118 | 155 |
The company's financial instruments comprise securities and other investments, cash balances and debtors and creditors that arise directly from its operations, for example, in respect of sales and purchases awaiting settlement and debtors for accrued income. The numerical disclosures below exclude short-term debtors and creditors.
During the year under review, the company had little exposure to credit, cash flow and interest rate risks.
The principal and emerging risks the company faces in its portfolio management activities are:
The investment adviser's policies for managing these risks are summarised below and have been applied throughout the year.
A proportion of the company's portfolio is invested in overseas securities and their sterling value can be significantly affected by movements in foreign exchange rates. The company does not normally hedge against foreign currency movements affecting the value of the investment portfolio, but takes account of this risk when making investment decisions.
The following table illustrates the sensitivity of the return after tax for the year to exchange rates for the Pound Sterling against the US Dollar, Euro, Japanese Yen, Canadian Dollar, Danish Krone, Swedish Krona, Norwegian Krone, Hong Kong Dollar and Australian Dollar. It assumes the following changes in exchange rates:
| £/US Dollar +/-10% | £/Norwegian Krone +/-15% | £/Australian Dollar +/-5% |
|---|---|---|
| (2019 +/-5%) | (2019: +/-5%) | (2019: +/-5%) |
| £/Japanese Yen +/-10% | £/Euro +/-5% | £/Swedish Krona +/-5% |
| (2019: +/-5%) | (2019: +/-5%) | (2019: +/-5%) |
| £/Danish Krone +/-5% | £/Canadian Dollar +/-5% | £/Hong Kong Dollar +/-10% |
| (2019: +/-5%) | (2019: +/-5%) | (2019: +/-5%) |
These percentages have been determined based on market volatility in exchange rates over the previous twelve months. The sensitivity analysis is based on the company's foreign currency financial instruments held at the date of each Statement of Financial Position.
If sterling had weakened against the currencies below this would have the following effect:
| Impact on revenue return £'000 |
2020 Impact on capital return £'000 |
Total £'000 |
Impact on revenue return £'000 |
2019 Impact on capital return £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|
| US Dollar | (2) | 979 | 977 | (1) | 610 | 609 |
| Euro | (1) | 370 | 369 | (1) | 313 | 312 |
| Japanese Yen | (1) | 447 | 446 | (1) | 243 | 242 |
| Canadian Dollar | – | 57 | 57 | – | 46 | 46 |
| Danish Krone | – | 133 | 133 | – | 111 | 111 |
| Swedish Krona | – | 40 | 40 | – | 39 | 39 |
| Norwegian Krone | – | 207 | 207 | – | 86 | 86 |
| Hong Kong Dollar | – | 52 | 52 | – | 35 | 35 |
| Australian Dollar | – | 14 | 14 | – | 18 | 18 |
| (4) | 2,299 | 2,295 | (3) | 1,501 | 1,498 |
If sterling had strengthened against the currencies below this would have the following effect:
| Impact on revenue return £'000 |
2020 Impact on capital return £'000 |
Total £'000 |
Impact on revenue return £'000 |
2019 Impact on capital return £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|
| US Dollar | 2 | (979) | (977) | 1 | (610) | (609) |
| Euro | 1 | (370) | (369) | 1 | (313) | (312) |
| Japanese Yen | 1 | (447) | (446) | 1 | (243) | (242) |
| Canadian Dollar | - | (57) | (57) | - | (46) | (46) |
| Danish Krone | - | (133) | (133) | - | (111) | (111) |
| Swedish Krona | - | (40) | (40) | - | (39) | (39) |
| Norwegian Krone | - | (207) | (207) | - | (86) | (86) |
| Hong Kong Dollar | - | (52) | (52) | - | (35) | (35) |
| Australian Dollar | - | (14) | (14) | - | (18) | (18) |
| 4 | (2,299) | (2,295) | 3 | (1,501) | (1,498) |
By the very nature of its activities, the company's investments are exposed to market price fluctuations. Further information on the investment portfolio and investment policy is set out in the Investment Adviser's Review.
A portion of the financial assets of the company are denominated in currencies other than sterling with the result that the Statement of Financial Position and total return can be significantly affected by currency movements.
The following illustrates the sensitivity of the return after taxation for the year and the equity to an increase or decrease of 20% in the fair value of the company's equities. This level of change is considered to be reasonably possible based on observation of market conditions during the year. The sensitivity analysis is based on the company's equities at each financial position statement date, adjusted for the management fee paid in the year.
The impact of a 20 per cent. increase in the value of investments on the revenue return as at 31 March 2020 is a decrease of £11,000 (2019: £12,000) and on the capital return is an increase of £6,342,000 (2019: £7,056,000).
The impact of a 20 per cent. fall in the value of investments on the revenue return as at 31 March 2020 is an increase of £11,000 (2019: £12,000) and on the capital return is a decrease of £6,342,000 (2019: £7,056,000).
Interest rate movements may affect:
The financial assets (excluding short-term debtors and creditors) consist of:
| Floating rate £'000 |
2020 Non-interest bearing £'000 |
Total £'000 |
Floating rate £'000 |
2019 Non-interest bearing £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|
| Sterling | 58 | 3,845 | 3,903 | 18 | 5,295 | 5,313 |
| US Dollar | 544 | 9,297 | 9,841 | 429 | 12,265 | 12,694 |
| Euro | – | 7,440 | 7,440 | – | 6,290 | 6,290 |
| Japanese Yen | 2 | 4,497 | 4,499 | 2 | 4,894 | 4,896 |
| Norwegian Krone | – | 1,385 | 1,385 | – | 1,729 | 1,729 |
| Danish Krone | – | 2,664 | 2,664 | – | 2,237 | 2,237 |
| Hong Kong Dollar | – | 518 | 518 | – | 700 | 700 |
| Swedish Krona | – | 811 | 811 | – | 772 | 772 |
| Canadian Dollar | – | 1,137 | 1,137 | – | 931 | 931 |
| Australian Dollar | – | 286 | 286 | – | 353 | 353 |
| 604 | 31,880 | 32,484 | 449 | 35,466 | 35,915 |
The floating rate assets consist of cash deposits at call. Sterling cash deposits at call earn interest at floating rates based on daily Sterling Overnight Index Average (SONIA) rates.
The non-interest bearing assets represent the equity element of the investment portfolio at 31 March 2020.
As interest rates for any short-term loans are fixed at the commencement of the loan, only cash at call are subject to interest rate movement.
All such deposits at call earn interest at a daily rate. Therefore, if a sensitivity analysis was performed by increasing or decreasing theinterest rates applicable to the company's cash balances held at each reporting date, with all other variables held constant, there would be no material change to the profit after taxation or net assets for the year.
Credit Risk is the exposure to loss from the failure of a counterparty to deliver securities or cash for acquisitions or to repay deposits. The company manages credit risk by using brokers from a database of approved brokers who have undergone rigorous due diligence tests by the Investment Adviser's Risk Management Team and by dealing through JAM with banks approved by the Financial Conduct Authority.
Any derivative positions are marked to market and exposure to counterparties is monitored on a daily basis by the fund manager; the board of directors reviews it on a quarterly basis. The maximum exposure to credit risk as at 31 March 2020 was £819,000 (2019: £623,000) consisting of short-term debtors, cash and cash equivalents.
The company holds only trade receivables with no financing component and which have maturities of less than 12 months at amortised cost and, as such, has chosen to apply an approach similar to the simplified approach for expected credit losses (ECL) under IFRS 9 to all its trade receivables. Therefore, the company does not track changes in credit risk, but instead, recognises a loss allowance based on lifetime ECLs at each reporting date.
The company's approach to ECLs reflects a probability-weighted outcome, the time value of money and reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.
In the investment advisors' opinion, due to the low level of expected future losses on cash and receivables, no provision has been made for ECLs.
Liquidity risk is not considered significant. All liabilities are payable within three months. The company's assets comprise mainly readily realisable securities which can be sold to meet funding requirements if necessary. Short-term flexibility is achieved through the use of short-term borrowings.
IFRS 13 'Fair Value Measurement' requires an entity to classify fair value measurements using fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following levels:
Level 1 reflects financial instruments quoted in an active market.
Level 2 reflects financial instruments whose fair value is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables includes only data from observable markets.
Level 3 reflects financial instruments whose fair value is determined in whole or in part using a valuation technique based on assumptions that are not supported by prices from observable market transactions in the instrument and not based on available observable market data.
The financial assets measured at fair value in the Statement of Financial Position are grouped into the fair value hierarchy as follows:
| 2020 | 2019 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
||
| Equity Investments | 31,880 | – | – | 31,880 | 35,466 | – | – | 35,466 | |
| 31,880 | – | – | 31,880 | 35,466 | – | – | 35,466 |
The company's capital comprises the equity share capital, share premium and reserves as shown in the Statement of Financial Position.
The board, with the assistance of the investment adviser, monitors and reviews the broad structure of the company's capital on an ongoing basis. This review includes:
During the period, the company complied with the externally imposed capital requirements:
| Number | 2020 £ |
Number | 2019 £ |
|
|---|---|---|---|---|
| Allotted, issued and fully paid | ||||
| Ordinary shares of 0.1p each | 33,724,958 | 33,725 | 33,724,958 | 33,725 |
54,043 new ordinary shares were issued from treasury between 10 April 2019 and 31 January 2020 at an average price of 213.23p per share.
Between 1 April 2019 and 31 January 2020, 297,500 (0.88%) ordinary shares were repurchased into treasury at prices between 176.00p and 193.75p per share.
14,925,972 ordinary shares were held in treasury at 31 March 2020 (31 March 2019: 14,682,515).
| 2020 £'000 |
2019 £'000 |
|
|---|---|---|
| At beginning of year | 29,705 | 29,630 |
| Premium on reissue of shares from treasury during the year | 43 | 75 |
| At end of year | 29,748 | 29,705 |
| 2020 £'000 |
2019 £'000 |
|
|---|---|---|
| At beginning of year | 24,292 | 24,292 |
| Transfer to capital account in retained earnings | (24,292) | – |
| At end of year | – | 24,292 |
| 2020 £'000 |
2019 £'000 |
|
|---|---|---|
| At beginning of year | 239 | 239 |
| At end of year | 239 | 239 |
The table below shows the movement in the retained earnings analysed between revenue and capital items.
| Revenue £'000 |
2020 Capital £'000 |
Total £'000 |
Revenue £'000 |
2019 Capital £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|
| At beginning of year | 269 | (18,605) | (18,336) | 348 | (14,396) | (14,048) |
| Net income for the year | 413 | (2,889) | (2,476) | 387 | (801) | (414) |
| Dividends paid 2.30p (2019: 2.30p) | (433) | - | (433) | (466) | - | (466) |
| Ordinary shares reissued from treasury | - | 73 | 73 | - | 167 | 167 |
| Ordinary shares repurchased | - | (560) | (560) | - | (3,575) | (3,575) |
| Transfer from special reserve | – | 24,292 | 24,292 | – | – | – |
| At end of year | 249 | 2,311 | 2,560 | 269 | (18,605) | (18,336) |
Dividends during the period paid from revenue reserves.
The net asset value per ordinary share is based on the net assets attributable to the equity shareholders of £32,581,000 (2019: £35,934,000) and on 18,798,986 (2019: 19,042,443) ordinary shares, being the number of ordinary shares in issue at the year end, excluding treasury shares.
| 2020 | 2019 | |
|---|---|---|
| £'000 | £'000 | |
| Undiluted | ||
| Ordinary shareholders' funds | 32,581 | 35,934 |
| Number of ordinary shares in issue | 18,798,986 | 19,042,443 |
| Net asset value per ordinary share (pence) | 173.31 | 188.70 |
| Diluted | ||
| Ordinary shareholders' funds assuming exercise of Subscription shares | 32,581 | 39,527 |
| Number of potential ordinary shares in issue | 20,678,885 | 20,946,687 |
| Net asset value per ordinary share (pence) | 173.31 | 188.70 |
The diluted net asset value per ordinary share assumes that all outstanding dilutive subscription rights (2020: 1,879,899, 2019: 1,904,244) were converted into ordinary shares at the year end and is calculated using the net asset value per ordinary share at the prior year end. Any shares to be issued under the subscription rules had no dilution effect on the net asset value per ordinary share for the year ended 31 March 2020.
| 21. | Reconciliation of net cash inflow from operating activities | |||
|---|---|---|---|---|
| 2020 £'000 |
2019 £'000 |
|
|---|---|---|
| Net return before finance costs and taxation | (2,404) | (346) |
| Loss on investments at fair value through profit or loss | 2,783 | 773 |
| Decrease/(increase) in prepayments and accrued income | 7 | (51) |
| Increase/(decrease) in accruals and other creditors | 33 | (73) |
| Foreign exchange loss | (94) | (190) |
| Interest paid | (4) | (9) |
| Taxation | (68) | (59) |
| Net cash inflow from operating activities | 253 | 45 |
| At 1 April 2019 £'000 |
Transactions in the year £'000 |
Cashflow £'000 |
At 31 March 2020 £'000 |
|
|---|---|---|---|---|
| Ordinary shares repurchased | 70 | 560 | (630) | – |
| Equity dividends paid | – | 433 | (433) | – |
| Sales of ordinary shares from treasury | – | (116) | 116 | – |
| Cash flows from financing activities | 70 | 877 | (947) | – |
Jupiter Unit Trust Managers Limited ('JUTM'), the Alternative Investment Fund Manager, is a company within the same group as Jupiter Asset Management Limited ('JAM'), the investment adviser. JUTM receives an investment management fee as set out below.
JUTM is contracted to provide investment management services to the company subject to termination by not less than twelve months' notice by either party. The basis for calculation of the management fee charged to the company was adjusted with effect from 1 June 2018 from 0.75% of net assets per annum to a tiered fee amounting to 0.70% of net assets up to £150 million, reducing to 0.60% for net assets over £150 million and up to £250 million, and reducing further to 0.50% for net assets in excess of £250 million after deduction of the value of any Jupiter managed investments.
The management fee payable to JUTM for the period 1 April 2019 to 31 March 2020 was £262,995 (year to 31 March 2019: £273,536) with £41,832 (31 March 2019: £19,757) outstanding at period end.
With effect from 1 April 2018 the proportion of the investment management fee and finance costs that are treated as a capital expense in the company's reports and accounts were reduced from 90% to 75%, so as to bring its accounting policy into line with that of comparable investment trusts.
The company has invested from time to time in funds managed by Jupiter Fund Management PLC or its subsidiaries. There was one such investment with a market value of £340,560 (31 March 2019: £347,820). 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.
All transactions with related parties were carried out on an arm's length basis.
There were no contingent liabilities or capital commitments at 31 March 2020 (2019: Nil).
During the first week of March 2020 the average daily share price was 199.00p per share. After the implementation of lockdown, in the second week of March, the price fell to 151.00p per share at its lowest point on 19 March. Since then the price has recovered to 189.50p per share on 23 June 2020.
Since the year end (1 April to 23 June 2020) no ordinary shares were repurchased to be held in treasury.
| Directors | Michael Naylor, Chairman |
|---|---|
| Jaz Bains, Senior Independent Director | |
| Simon Baker, Chairman of the Audit Committee | |
| Dame Polly Courtice | |
| Registered Office | The Zig Zag Building |
| The Zig Zag Building, 70 Victoria Street, London SW1E 6SQ | |
| Telephone | 020 3817 1000 |
| Facsimile | 020 3817 1820 |
| Website | www.jupiteram.com/JGC |
| [email protected] | |
| Authorised and regulated by the Financial Conduct Authority | |
| Investment Adviser & Secretary | Jupiter Asset Management Limited |
| The Zig Zag Building, 70 Victoria Street, London SW1E 6SQ | |
| Telephone | 020 3817 1000 |
| Facsimile | 020 3817 1820 |
| Authorised and regulated by the Financial Conduct Authority | |
| Custodian | J.P. Morgan Chase Bank N.A |
| 25 Bank Street, Canary Wharf, London E14 5JP | |
| Authorised and regulated by the Financial Conduct Authority | |
| Depositary | J.P. Morgan Europe Limited |
| 25 Bank Street, Canary Wharf, London E14 5JP | |
| Authorised by the Prudential Regulation Authority and regulated by the | |
| Financial Conduct Authority and the Prudential Regulation Authority | |
| Registrars | Link Asset Services |
| 34 Beckenham Road, Beckenham, Kent BR3 4TU | |
| Telephone | 0371 664 0300 |
| Lines are open from 09:00 a.m. to 5:30.p.m. Monday to Friday. Calls are charged | |
| at the standard geographic rate and will vary by provider. | |
| Telephone (international) | +44 (0)371 664 0300 |
| Calls outside the United Kingdom will be charged at the applicable | |
| international rate | |
| [email protected] | |
| Website | www.linkassetservices.com |
| Independent Auditors | Ernst & Young LLP |
| Atria One, 144 Morrison Street, Edinburgh EH3 8EX | |
| Company Registration Number | 05780006 |
| Registered in England & Wales | |
| An investment company under s.833 of the Companies Act 2006. | |
| Investor Codes | |
| Sedol Number | |
| Ordinary shares | B120GL7 |
| ISIN | |
| Ordinary shares | GB00B120GL77 |
| Ticker | |
| Ordinary shares | JGC LN |
The company is a member of
This document contains information based on the FTSE Environmental Technology 100 Total Return Index. 'FTSE®' is a trade mark jointly owned by the London Stock Exchange Plc and The Financial Times Limited and is used by FTSE International Limited ('FTSE') under licence. The FTSE Environmental Technology 100 Total Return Index is calculated by FTSE. FTSE does not sponsor, endorse or promote the product referred to in this document and is not in any way connected to it and does not accept any liability in relation to its issue, operation and trading. All copyright and database rights in the index values and constituent list vest in FTSE.
The company currently conducts its affairs so that its shares 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 company's 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 publishes a monthly factsheet which contains key information about its performance, investment portfolio and pricing. The factsheets together with electronic copies of the most recent annual and halfyearly reports and accounts are available for download from www.jupiteram.com/JGC. Should you wish to be added to an email distribution list for future editions of the monthly factsheet, please send an email to [email protected]. For investors who do not have access to the internet, these documents are also available on request from Jupiter's Customer Services Team on 0800 561 4000.
Further information about the company is also available from third-party websites such as www. edisoninvestmentresearch.com, www.morningstar.co.uk and www.theaic.com.
With effect from 6 April 2016 the dividend tax credit was replaced by an annual tax-free dividend allowance. Dividend income in excess of this allowance will be taxed according to your personal income tax bracket. The company's registrar will continue to provide shareholders with confirmation of dividends paid shareholders should retain such confirmations to enable them to calculate and report total dividend income received. Shareholders should note that it is their sole responsibility to report any dividend income in excess of their annual tax-free allowance to HMRC.
Further information on the dividend tax allowance can be obtained from the HMRC website at https://www.gov.uk/tax-on-dividends
Shareholders may elect for the company's registrar, Link Asset Services, to reinvest dividends automatically on their behalf.
The reinvestment plan terms and conditions are available upon request from the helpline, by email to shares@ linkgroup.co.uk, or through www. signalshares.com. The helpline number is 0371 664 0300, or from overseas +44 (0) 371 664 0300. Calls to this number are charged at the standard geographical rate and will vary by provider. Calls outside of the United Kingdom will be charged at the applicable international rate. Lines are open from 09:00 a.m. to 5:30 p.m. Monday to Friday.
Signal shares is the Link Asset Services online portal enabling you to manage your shareholding online. If you are a direct investor you can view your shareholding, change the way the registrar communicates with you or the way you receive your dividends, and buy and sell shares. If you haven't used this service before, all you need to do is enter the name of the company and register your account. You'll need your investor code (IVC) printed on your share certificate in order to register.
We have updated our Privacy Notice to align with the new data privacy law in the European Union, known as the General Data Protection Regulation (GDPR) to which we are subject. Data protection and the security of your information always has been and remains of paramount importance to us.
Any information concerning shareholders and other related natural persons (together, the data subjects) provided to, or collected by or on behalf of, Jupiter Unit Trust Managers Limited (the management company) and/or Jupiter Green Investment Trust PLC (the controllers) (directly from Data Subjects or from publicly available sources) may be processed by the controllers as joint controllers, in compliance with the GDPR.
You are not required to take any action in respect of this notice, but we encourage you to read our Privacy Notice. Our privacy notice can be found on our website, www.jupiteram.com/Shared-Content/Legal-contentpages/Privacy/Investment-trusts. In the event that you hold your shares as a nominee, we request that you promptly pass on the details of where to find our privacy notice to the underlying investors and/or the beneficial owners.
In recent years investment related scams have become increasingly sophisticated and difficult to spot. We are therefore warning all our shareholders to be cautious so that they can protect themselves and spot the warning signs.
Fraudsters will often:
You can avoid investment scams by:
If you are suspicious, report it
For further helpful information about investment scams and how to avoid them please visit www.fca.org.uk/ scamsmart.
The European Securities and Markets Authority ('ESMA') published its guidelines on Alternative Performance Measures ('APMs'). APMs are defined as being a 'financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable accounting framework.' The guidelines are aimed at promoting the usefulness and transparency of APMs included in regulated information and aim to improve comparability, reliability and/or comprehensibility of APMs. The following APMs (indicated by *) are used throughout the annual report, financial statements and notes to the financial statements.
A total return index is a type of equity performance index that tracks both the capital gains of a group of stocks over time, and assumes that any cash distributions, such as dividends, are reinvested back into the index.
The diluted NAV per share is the net asset value per ordinary share adjusted to assume that all the current subscription rights are taken up in full. Shareholders have the opportunity to subscribe for one new ordinary share for every ten held so the diluted net asset value per share of the company at any point is calculated by dividing the net assets of the company by the number of shares, plus 10%, in issue. The subscription rights of the shareholders are described in more detail in the Strategic Report on page 26.
The amount, expressed as a percentage, by which the share price is less than the net asset value per share.
As at 31 March 2020 the share price was 160.50p and the net asset value per share (cum income) was 173.31p, the discount therefore being -7.39%
Discount management is the process of the buyback and issue of company shares by the company, to and from its own holding or 'treasury' with the intention of managing any imbalance between supply and demand for the company's shares and thereby the market price. The aim is to ensure that, in normal market conditions, the market price of the company's shares will not materially vary from its NAV per share. The authority to repurchase the company's shares is voted upon by the shareholders at each annual general meeting.
Gearing is the borrowing of cash to buy more assets for the portfolio with the aim of making a gain on those assets larger than the cost of the loan. However, if the portfolio doesn't perform well the gain might not cover the costs. The more an investment company gears, the higher the risk.
Gearing is calculated at as the ratio of the company's borrowings to its total assets (less cash) expressed as a percentage. As discussed in the Chairman's Statement the company is not currently geared.
The mid-market price is the mid-point between the buy and the sell prices.
The net asset value ('NAV') is the value of the investment company's assets less its liabilities. The NAV per share is the NAV divided by the number of shares in issue. The difference between the NAV per share and the share price is known as the discount or premium.
As shown in note 20 to the Accounts, the NAV per share was 173.31p as at 31 March 2020.
Ongoing charges are the total expenses including both the investment management fee and other costs, but excluding finance costs and performance fees, as a percentage of NAV.
The calculation of the ongoing charges is provided in note 6 of the accounts.
(continued)
The amount, expressed as a percentage, by which the share price is more than the net asset value per share.
Treasury shares are the part of the issued share capital that is held by the company. They do not rank for dividend income and do not have voting rights. The company uses treasury shares for discount management purposes as described above and in more detail in the Report of the Directors on page 29.
The undiluted NAV per share is the net asset value per ordinary share with no adjustment for the assumed exercise of all current subscription rights.
* Alternative performance measure.
This Notice of Meeting is an important document. If you are in any doubt as to what action to take, you should consult an appropriate independent adviser.
The safety and wellbeing of the company's shareholders is of utmost importance to the company. In light of Government guidance around social distancing and in accordance with industry guidance on the conduct of annual general meetings, shareholders will not be permitted to attend in person. Please do not travel to the meeting as regrettably you would not be given access to the building. Shareholders are requested to exercise their proxy vote online in accordance with Note 3 on page 61.
The company will ensure that the meeting is conducted in accordance with its Articles of Association and all legal requirements, including the presence of the minimum number of two shareholders.
The AGM will comprise only the formal votes for each resolution set out in this Notice.
The company will continue to monitor the UK Government and industry guidance on Covid-19 which could impact the arrangements of the meeting and will issue a statement if this requires any amendment to the arrangements advised above and in the notes on page 82.
Notice is hereby given that the Annual General Meeting of Jupiter Green Investment Trust PLC will be held at the offices of Jupiter Asset Management Limited, The Zig Zag Building, 70 Victoria Street, London SW1E 6SQ on Wednesday 16 September 2020 at 11:30 a.m. for the following purposes:
To consider and, if thought fit, pass the following as ordinary resolutions:
To consider, and if thought fit, to pass resolutions 10 and 11 as ordinary resolutions and resolutions 12 to 16 as special resolutions:
(a) the maximum number of shares that may be purchased is 2,817,968 ordinary shares, being 14.99% of the issued number of ordinary shares at 23 June 2020 or, if lower, such number as is equal to 14.99% of the issued number of ordinary shares at the date of passing the resolution;
Jupiter Asset Management Limited Company Secretary 7 July 2020
If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the company and approved by the Registrar. For further information regarding Proxymity, please go to www. proxymity.io. Your proxy must be lodged by not less than forty-eight hours before the meeting in order to be considered valid. Before you can appoint a proxy via this process you will need to have agreed to Proxymity's associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy.
If you require a paper proxy please call our Registrar Link Asset Services on 0371 664 0300 or, if calling from overseas, on +44 (0) 371 664 0391. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a 'CREST Proxy Instruction') must be properly authenticated in accordance with CRESTCo's specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the company's agent ID (RA10) by the latest time(s) for receipt of proxy appointments specified in the notice of meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the company's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that CRESTCo does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting
service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
The Capital Reduction is subject to approval by the shareholders at the Annual General Meeting and approval by the High Court of Justice in England and Wales (the 'Court').
The company has built up a substantial capital reserve in its share premium account through the issue of shares at prices in excess of the nominal value of those shares. At the date of this document, the balance standing to the credit of the share premium account was £29,747,027.
The company is not permitted to pay any dividends or (except in limited circumstances) make share repurchases unless it has distributable reserves. As the share premium account has only limited applications and cannot be used to pay dividends or make share repurchases, the company is proposing to cancel the entirety of its share premium account in order to create distributable reserves to support the future payment by the company of dividends to its shareholders or buying back ordinary shares (should circumstances in the future make it desirable to do so).
On completion of the Capital Reduction, the company's entire share premium account will be cancelled and, subject to the Court being satisfied with the company's approach to creditors an equivalent amount will be added to the company's distributable reserves (less £16,275.04 which will be transferred to a special reserve as described above).
The completion of the Capital Reduction will not affect the rights attaching to the ordinary shares and will not result in any change to the number of ordinary shares in issue.
Pursuant to section 641(1)(b) of the Act a company may, with the sanction of a special resolution of its shareholders and the confirmation of the Court, reduce or cancel its existing share capital (including by way of the reduction or cancellation of its share premium account).
In considering the company's application for an order confirming the Capital Reduction (the 'Court Order'), the Court will need to be satisfied that the interests of any creditors (including contingent creditors) of the company, whose debts remain outstanding on the date of the Court Order is registered, are protected and may require the company give undertakings to the Court to protect creditors (although the board does not currently expect that any such undertakings will be required).
The directors reserve the right not to proceed with the company's application for the Court Order in the event that (contrary to current expectations) the Court requires undertakings which the directors consider to be unduly onerous or contrary to the company's interests.
Printed by Park Communications on FSC® certified paper.
Park is an EMAS certified company and its Environmental Management System is certified to ISO14001.
100% of the inks used are vegetable oil based, 95% of press chemicals are recycled for further use and, on average 99% of any waste associated with this production will be recycled.
This document is printed on Cocoon 50% Silk, a paper containing 50% recycled fibre (25% post consumer waste and 25% preconsumer waste) and 50% virgin fibre sourced from well-managed, responsible FSC® certified forests. The pulp used in this product is bleached using an Elemental Chlorine Free (ECF) process.
Jupiter Unit Trust Managers Limited, PO Box 10666, Chelmsford CM99 2BG Tel: 0800 561 4000 Fax: 0800 561 4001 www.jupiteram.com/JGC
Authorised and regulated by the Financial Conduct Authority whose address is 12 Endeavour Square, London E20 1JN
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.