Source - RNS
RNS Number : 8745M
JPMorgan Glbl Con Inc Fnd Ltd
18 October 2016
 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN GLOBAL CONVERTIBLES INCOME FUND LIMITED

FINAL RESULTS FOR THE YEAR ENDED
30TH JUNE 2016

 

Chairman's Statement

Dear Shareholders

Your Company was launched three years ago with the objective of providing investors with dividend income, struck at 4.5p per share for the first year, together with the potential for some modest capital growth in sterling terms.

In the year to 30th June 2016, the total return on the Company's net assets was 0.0% compared to -1.0% last year. The return to shareholders, which reflects the share price movement and the dividend, was -9.5%.

The review period covered a number of significant market events, including a renewed downturn in energy prices, concerns over a Chinese slowdown, a widening of high yield credit spreads, an increase in the US Federal Reserve's Target Rate and, most recently, the fallout from the UK Brexit vote.

Despite the challenging backdrop, the Board is disappointed by the portfolio's performance and the poor performance of the Company's share price.

Investment performance

In the 12 months to 30th June 2016 the total return on the net assets was 0.0%. The main positive contributors to the portfolio's return over the period were income and exposure to equity and fixed income (specifically duration) factors, while the main detractors included the widening of credit spreads and convertible-specific valuations. Currency hedging prevented the Company from benefiting from sterling's continued weakness against other major currencies, particularly in the aftermath of the UK Brexit vote.

The Board judges performance over the long term. While we continue to believe in the viability and attraction of the Company's income-focused convertible strategy, we have asked the Manager to consider why this is yet to be evidenced by performance.

A more detailed analysis of performance is set out in the Investment Managers' Report .

Benchmark

The MSCI World Index (in sterling terms) is the Company's reference index. It is a broad global equity benchmark that represents large and mid-cap equity performance across 23 developed markets. Since the launch of the Company in 2013 it has become clear that a more appropriate measure of the Company's performance is an appropriately constructed convertible bond index. With the assistance of the Manager, the Board has decided to resolve this issue by changing the Company's reference index from the MSCI World Index to the Bloomberg Barclays Global Convertibles Credit/Rate Sensitive Index (hedged into sterling).

Dividends and performance

When the Company was launched in 2013, it was the stated intention to pay a dividend of 4.5p per share in the first year, thereby attributing a yield of 4.5% on the issue price. It is the Board's intention to continue to pay 4.5p, although maintaining this target has required a top up of capital.

Furthermore, with the Company producing a total return on net assets of -3.4% in the six months to 31st December 2015, the Board also recognised that the portfolio's focus on income generation was acting as a constraint on performance. Therefore, the Board gave the Manager additional flexibility to focus on total returns, within similar risk parameters.

This more flexible approach has had a beneficial impact on performance, with the Company recovering from a disappointing first half to the review period to end the 12 months to 30th June 2016 with a total return on net assets of 0.0%.

The Manager is confident that the investment strategy is capable of generating the necessary returns to achieve the targeted dividend payout, without the need to place undue alpha generation assumptions on the investment team. The Company's performance since inception compared to comparable convertible funds and income-generating funds supports this belief.

Three quarterly dividends totalling 3.375p per share were declared and paid during the year. The Board declared a fourth quarterly dividend of 1.125p per share on 22nd September 2016.

Brexit

In the build-up to the UK's referendum on European Union membership, your Company's portfolio was invested in higher quality issuers trading close to their bond floor. The asymmetric nature of convertible returns provided the chance for the Company to limit its exposure to potential market volatility caused by the vote, while still allowing the portfolio to participate in any recovery in equity markets following the referendum decision. This strategy was rewarded following the outcome of the referendum.

Managing the discount

The Company is authorised by the shareholders to buy back up to 14.99% of the Company's issued share capital. This authority allows the Board to address any imbalance that may arise between supply and demand for shares in the Company, and thereby attempt to control the discount to NAV at which the shares may be trading.

In the ordinary course of business, the Directors would expect to exercise their discretion to buy back shares if the discount to NAV at which the shares are trading exceeds 5% for any significant period of time. The Board has delegated this discretion to the Manager, in consultation with the Broker.

Although there can be no assurance that buybacks alone will prevent a discount emerging or widening, the Board is committed to using the buyback programme to enhance the NAV and to reduce discount volatility.

In the 12 months to 30th June 2016 the share price fluctuated between a 10.04% discount to NAV to a 1.04% premium to NAV. During this period the Company bought back 24,442,295 ordinary shares, representing 11.12% of the share capital of the Company at the start of the year. This intervention did have a positive impact on the discount but the strategy became increasingly challenged in the lead up to the UK referendum as investors looked to de-risk their portfolios and increase cash holdings.

In the weeks following the referendum the Company's share price was extremely volatile and, as a result, the Board suspended the buyback programme. From a broader market-wide perspective, those companies that continued to buy back shares had little or no effect on their discounts. Since the year end the Company has not bought back any further shares. At the time of publication the discount to NAV at which the shares are trading was 9.61%.

Annual General Meeting

The Company's AGM will be held on 7th November 2016 at 10.30 a.m. in Guernsey. I appreciate that many of our shareholders are based in the UK but shareholders who are unable to attend can appoint a proxy to vote their shares or ask questions.

Alternatively, shareholders are encouraged to raise questions with the Company Secretary in advance of the meeting, by email, mail or telephone and we will ensure that they receive an answer.

Outlook

Although the portfolio has performed strongly in recent months, the Board are disappointed by the fall in the absolute value, and the volatility, of the Company's shares and the lack of a more substantial growth in the NAV over the year to 30th June 2016.

Looking forward, markets and the Company face uncertain times. In the short term, markets will be dominated by the US election and the direction of Brexit negotiations. It is in times of volatility that the asymmetric nature of convertible returns can be of most use to investors, offering the opportunity for participation in rising markets and protecting value when markets fall.

We also believe that the action we have taken to allow the Manager to invest across the convertibles market, unconstrained by the need to generate a certain level of revenue returns, promises greater opportunities to both generate and protect returns for shareholders.

 

Simon Miller

Chairman

18th October 2016

 



 

Investment Managers' Report

Performance Review

In the twelve months to 30th June 2016, the portfolio generated a flat net asset value (NAV) total return of 0.0%, whereas the share price total return was -9.5%. While the team aim to generate a positive return, the challenging period covers a number of significant market events, including a renewed downturn in energy prices, concerns over a Chinese slowdown, a widening of high yield credit spreads spurred by the closure of a number of US high yield funds in December 2015, the first increase in the Federal Reserve's Target Rate since 2006, and the fallout from the British referendum on membership of the European Union, which meant capital preservation was also a strong focus over the period. The team also had to contend with general equity underperformance from the small and mid-cap companies that typically comprise a significant proportion of convertible issuers, illustrated by the 10.7% underperformance of the Russell 2000 relative to the S&P 500 over the period.

The team are naturally disappointed by the negative performance of the Company's share price over the period as the discount on the Company's shares expanded, as well as the lack of a more positive NAV return, but believe the flat total return of the NAV during a volatile period (and strong recovery since February 2016) helps to partially demonstrate the advantages of the asset class and, in particular, targeting convertibles with a bias towards income generation. The diversification of the drivers of performance across fixed income and equity return factors can help to reduce the underlying volatility of the portfolio's NAV, and reduces reliance on any particular source of return. Over the twelve month period, the flat NAV performance of the Trust was obtained with an annualised daily volatility of 4.0%, which compares favourably to the Thomson Reuters Global Convertible Index hedged in GBP, which returned -5.1% over the same period with an annualised daily volatility of 7.8%.

The main contributors to the portfolio's return over the period were income and exposure to equity and fixed income (specifically duration) factors. On the other side, a widening of credit spreads and convertible-specific valuations detracted. The portfolio benefited from its exposure to US real estate, driven primarily by the extended low rate environment following delays to the anticipated rate hiking cycle of the Federal Reserve. A number of balanced positions that had been introduced into the portfolio as a way of reducing exposure to credit risk also provided positive contributions, notably in the Technology and Communications sectors. The energy sector continued to drag on performance, driven by the renewed decline in oil prices, although this was partially offset by the rebound in the first half of 2016.

The currency hedging of the account prevented the Company from benefiting from Sterling's continued weakness against other major currencies, particularly in the aftermath of the British referendum. The 17.7% performance differential between the GBP hedged and unhedged versions of the Thomson Reuters Global Convertible index over the review period (+12.6% return for the unhedged version versus -5.1% for the hedged version) illustrates the extent to which currency movements can become the driving force of the returns of a convertible portfolio that is not hedged. It is for this reason that we consider it prudent to currency hedge the portfolio, acknowledging that there will be periods where this precludes the portfolio from benefiting from depreciation of Sterling.

Portfolio Review

The portfolio was positioned defensively during the second half of 2015, motivated by the team's caution on exposure to company specific credit risk. Although the team considered fundamental valuations to remain attractive, particularly in light of the view that credit spreads were pricing in a greater probability of recession in the US than the team believed to be likely, we were increasingly cautious on the ability of companies to access credit markets. As a consequence, we felt the vulnerability of companies to miss-steps was increasing, and sought to protect the portfolio from this increased idiosyncratic risk by further diversifying the portfolio. The equity market sell-off surrounding concerns over the Chinese economy presented a good opportunity for us to do this, lowering the price of a number of balanced convertibles in the Technology and Internet sectors that had previously not offered compelling yield opportunities. While the yields on these names remains lower than other positions in the portfolio, we considered the diversification provided by adding balanced exposure to these companies with high growth potential to be an attractive opportunity.

This enhanced diversification helped the portfolio considerably during the final quarter of 2015 and into 2016, following the realisation of stresses in credit markets and widening of high yield spreads driven in part by the high-profile closure of some hedge funds in the US. The team considered this to open up opportunities to incrementally increase risk within the portfolio, especially since the sell-off appeared to be driven by technical, rather than fundamental, factors. These fund closures and subsequent high yield redemptions on fears of low liquidity hit market risk appetite and pushed credit spreads wider. While the team remained cautious on company-specific risk, we felt this was being increasingly priced in to asset prices going into 2016 and used this opportunity to add some positions to the portfolio.

The positions in more credit sensitive names that were added by the team in the first quarter of 2016 subsequently left the portfolio well-positioned to benefit from the rally in credit spurred by the announcement of aggressive quantitative easing by the European Central Bank.

The team had positioned the portfolio for a 'Remain' scenario in the build-up to the British referendum, but the focus on building the exposure through high-quality issuers with convertibles trading near their bond-only values ensured maximum asymmetry to the result. As such, while the referendum result was generally negative for the portfolio's holdings, particularly its allocation to British real estate, the positions significantly outperformed their respective underlying equities. The portfolio retains its exposure to British real estate, even though the team acknowledges that the result of the referendum has limited the prospect of significant equity upside from here. The rationale for the continued allocation is the fact that these convertibles are generally trading below par value and offer an attractive yield, while we consider the balance sheets of the companies we are exposed to sufficiently robust to withstand the darkening of the fundamental outlook. In particular, we note that British real estate companies are running lower loan-to-value ratios than they were going into the 2008 crisis.

The company continues to deploy a modest degree of gearing, which is invested conservatively in short-dated, high quality balanced convertibles that provide potential for some equity participation and an income in excess of the costs of the facility.

Outlook

The portfolio has performed strongly in the latter part of the review period, driven largely by the strong performance of fixed income factors. We continue to see valuation opportunities, but are choosing to increasingly position the portfolio in companies with specific improvement stories that could drive further credit spread tightening, rather than those with more general exposure to credit conditions. In conjunction with this, we are also adding to convertibles defensively positioned near their bond-only values with positive yields, providing the portfolio with defensive exposure to further equity market upside. These exposures are being funded primarily through profit-taking on positions that have moved higher in price or those where longer-dated maturities mean the security is more exposed to mark-to-market risk.

Although we do not see any significant prospects of an imminent reversal of the recent positive trends in fixed income and credit markets, the board's decision to provide the team with more flexibility to implement a total return approach should give the team the ability to better shield the portfolio during future drawdowns. The team remain convinced that an income-focused approach to investing in the convertibles market is attractive, but acknowledge that there will be times where credit market weakness will make it optimal to temporarily reduce the portfolio's focus on covering the dividend payment through yield factors. We believe that the understanding of the board on this matter provides the Company with the flexibility to be optimally positioned through all market conditions, and should reduce the impact of future credit-related drawdowns.

Despite the positive impact of duration on performance over the past year, we do not see a resumption of rate hiking by the Federal Reserve as a large risk for the portfolio. We would anticipate that the portfolio's holdings would move more in line with high yield and equity return factors than with duration, and as such believe that a scenario in which the US economy improves to the extent that the Federal Reserve can continue increasing rates could be supportive for at least one of these factors, potentially offsetting any directly negative impact from duration. While there is a risk that a perceived Federal Reserve policy error could hit investor confidence and lead to declines in equity and credit markets, it is worth noting that both US equities and US high yield were able to generate positive returns in 2013, despite the 'Taper Tantrum' that pulled US investment grade into negative territory for the year.

The portfolio's exposure to the energy sector remains lower than might be expected for a yield-focused portfolio, and this reflects the teams continued caution on the sector. Nevertheless, the team are increasingly open to opportunities to add exposure to higher quality issuers within the space. In particular, capital raising by a number of companies in the sector in 2016 is seen as a good sign that companies are taking the right approach in addressing balance sheet vulnerabilities rather than waiting for a recovery in prices. Furthermore, some isolated defaults in the sector have helped to address some oversupply concerns. We don't anticipate strong upside to energy prices from here, in light of the flexibility of marginal producers to bring production back on line, and as such prefer to gain exposure through high quality issuers that are profit-making with oil in the $40s, and indirect exposure to the sector through oil services companies that have addressed balance sheet weakness and that could benefit from an increase in the US oil rig count.

We consider the economic picture to remain somewhat clouded, and as such believe the diversified and defensive exposure to fixed income and equity return factors provided by convertibles to be an attractive way for investors to remain exposed to potential further upside in risk assets while being supported by the stable income stream generated by the portfolio's holdings.

 

Antony Vallee

Natalia Bucci

Robin Dunmall

Investment Managers

18th October 2016

 



 

Principal Risks

The Directors confirm that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. The principal risks and how they are being managed or mitigated are summarised as follows:

•  Investment Risk

    An inappropriate investment strategy, for example excessive concentration of investments, asset allocation, the level of gearing, or the degree of portfolio risk, may lead to underperformance against the Company's benchmark index and peer companies, which may result in the Company's shares trading on a wider discount. A widening of the discount results in loss of value for shareholders. In order to try to manage the Company's discount, which can be volatile, the Company operates a share issuance and repurchase programme. The Board regularly discusses discount policy and has set parameters for the Manager and the Company's broker to follow.

    The Board manages investment risks by diversification of investments through its investment restrictions and guidelines which are monitored and reported on by the Manager. The Manager provides the Directors with timely and accurate management information, including performance data and attribution analyses, revenue estimates, liquidity reports and shareholder analyses. The Board monitors the implementation and results of the investment process with the Investment Managers, who attend Board meetings, and reviews data which show statistical measures of the Company's risk profile. The Investment Managers employ the Company's gearing tactically, within a strategic range set by the Board. In addition to regular Board meetings, the Board conducts an annual strategy session where it discusses the portfolio's objective and challenges the strategy they've set to achieve it.

•  Market Risk

    Market risk arises from uncertainty about the future prices of the Company's investments. It represents the potential loss that the Company might suffer through holding investments in the face of negative market movements. The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines, which are monitored and reported on by the Manager. The Board monitors the implementation and results of the investment process with the Manager.

•  Operational Risk

    Disruption to, or failure of, the Manager's accounting, dealing or payments systems or the Depositary's or Custodian's records may prevent accurate reporting and monitoring of the Company's financial position. This includes the risk of cybercrime and consequent potential threat to security and business continuity.

•  Political Risk

    Political risks, such as those the UK leaving the European Union, or a change in financial or tax legislation impacting the treatment of the Company's earnings, may impair the manager's ability to continue with its investment activity. These risks are discussed by the Board on a regular basis.

    Details of how the Board monitors the services provided by the Manager and its associates and the key elements designed to provide effective risk management and internal controls are included within the Risk Management and Internal Controls section of the Corporate Governance Statement.

•  Political and Regulatory Risks

    Political risks, such as the imposition of restrictions on the free movement of capital may impair the Manager's ability to continue with its investment activity. Similarly, adverse tax, regulatory or political change could have a material impact on the Company. The Company must also comply with the provisions of the Guernsey Companies Law and, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules and Disclosure Guidance and Transparency Rules ('DTRs'). A breach of the Companies Law could result in the Company and/or the Directors being fined or the subject of criminal proceedings. Breach of the UKLA Listing Rules or DTRs could result in the Company's shares being suspended from listing. The Board relies on the services of its Company Secretary and its professional advisers to ensure compliance with the Companies Law and the UKLA Listing Rules and DTRs.

 



 

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and Accounts in accordance with applicable laws and regulations.

Guernsey company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted in the European Union. The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the financial performance of the Company for that period. International Accounting Standard 1 requires that financial statements present fairly for each financial year the Company's financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board's 'Framework for the preparation and presentation of financial statements'. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRSs.

In preparing these financial statements, the Directors are required to:

•      properly select and apply accounting policies and then apply them consistently;

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

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

•      make an assessment of the Company's ability to continue as a going concern;

•      state that the Company has complied with IFRSs, subject to any material departures disclosed and explained in the financial statement; and

•      make judgements and estimates that are reasonable and prudent.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and which enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008. 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 ensuring that the Company complies with the provisions of the Listing Rules and the Disclosure Rules & Transparency Rules of the UK Listing Authority which, with regard to Corporate Governance, require the Company to disclose how it has applied the principles, and complied with the provisions, of the UK Corporate Governance Code applicable to the Company.

Disclosure of information to Auditors

In the case of each of the persons who are Directors of the Company at the time when this report was approved:

(a)   so far as each of the Directors is aware, there is no relevant audit information of which the Company's auditor is unaware, and

(b)   each of the Directors has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information (as defined) and to establish that the Company's auditor is aware of that information.

The Directors of the Company each confirm to the best of their knowledge that:

•      the financial statements, which have been prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

•      this annual report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces; and

•      this 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.

 

For and on behalf of the Board
Philip Taylor
Director

18th October 2016

 



 

Financial Statements

Statement of Comprehensive Income

for the year ended 30th June 2016


2016

2015


Revenue

Capital

Total

Revenue

Capital

Total


£'000

£'000

£'000

£'000

£'000

£'000

Investments held at fair value through profit and loss:







Gains/(losses) on investments held at fair value through profit and loss

-

19,778

19,778

-

(6,127)

(6,127)

Income from investments

10,791

-

10,791

9,902

-

9,902

Gains/(losses) on financial instruments:







Realised losses on close out of futures and options contracts

-

(761)

(761)

-

(1,276)

(1,276)

Unrealised (losses)/gains on futures and options contracts

-

(41)

(41)

-

302

302

Realised foreign currency losses on foreign currency contracts

-

(18,697)

(18,697)

-

(8,094)

(8,094)

Unrealised foreign currency (losses)/gains on foreign currency contracts

-

(9,075)

(9,075)

-

5,928

5,928

Realised foreign currency losses

-

(21)

(21)

-

(300)

(300)

Unrealised foreign currency losses

-

(1,935)

(1,935)

-

-

-

Other income

59

-

59

48

-

48

Total income/(loss)

10,850

(10,752)

98

9,950

(9,567)

383

Management fee

(1,012)

(545)

(1,557)

(1,019)

(549)

(1,568)

Other administrative expenses

(545)

-

(545)

(349)

-

(349)

Profit/(loss) before finance costs and taxation

9,293

(11,297)

(2,004)

8,582

(10,116)

(1,534)

Finance costs

(149)

(81)

(230)

(5)

(3)

(8)

Profit/(loss) before taxation

9,144

(11,378)

(2,234)

8,577

(10,119)

(1,542)

Taxation

(369)

-

(369)

(277)

-

(277)

Net profit/(loss)

8,775

(11,378)

(2,603)

8,300

(10,119)

(1,819)

Earnings/(loss) per share

4.13p

(5.35)p

(1.22)p

4.06p

(4.94)p

(0.88)p

 

Earnings per share is based on the weighted average number of shares in issue during the year.

The Company does not have any income or expense that is not included in net profit for the year. Accordingly the 'Net profit for the year' is also the 'Total comprehensive income for the year', as defined in IAS 1 (revised).

The 'Total' column of this statement is the profit and loss account of the Company prepared in accordance with IFRS. The 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies.

All items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year.



 

Statement of Changes in Equity 

for the year ended 30th June 2016


Share

Capital

Revenue



capital

reserves

reserve

Total


£'000

£'000

£'000

£'000

At 30th June 2014

158,438

11,599

3,223

173,260

Issue of ordinary shares

63,209

-

-

63,209

Share issue expenses

(315)

-

-

(315)

Transfer of share premium on share issuance to revenue

(1,312)

-

1,312

-

(Loss)/profit for the year

-

(10,119)

8,300

(1,819)

Dividends paid in the year

-

-

(12,024)

(12,024)

At 30th June 2015

220,020

1,480

811

222,311

Shares bought back and cancelled

(1,052)

-

-

(1,052)

Repurchase of shares into Treasury

-

(20,496)

-

(20,496)

Cancellation of shares in Treasury

(1,600)

1,600

-

-

(Loss)/profit for the year

-

(11,378)

8,775

(2,603)

Dividends paid in the year

-

-

(9,522)

(9,522)

At 30th June 2016

217,368

(28,794)

64

188,638

 



 

Statement of Financial Position

at 30th June 2016


2016

2015


£'000

£'000

Non current assets



Investments held at fair value through profit or loss

201,127

215,487

Current assets



Derivative financial assets

506

6,534

Trade and other receivables

9,628

1,630

Cash and cash equivalents

3,020

19

Cash held at Broker

169

1,128


13,323

9,311

Current liabilities



Derivative financial liabilities

(9,622)

(304)

Trade and other payables

(1,229)

(68)

Bank overdraft

-

(2,115)

Net current assets

2,472

6,824

Total assets less current liabilities

203,599

222,311

Non current liabilities



Loans payable

(14,961)

-

Net assets

188,638

222,311

Amounts attributable to equity holders



Share capital

217,368

220,020

Capital reserve

(28,794)

1,480

Revenue reserve

64

811

Total equity shareholders' funds

188,638

222,311

Net asset value per share

96.6p

101.2p

 

Incorporated in Guernsey with the company registration number: 56625.

 



 

Statement of Cash Flows

for the year ended 30th June 2016


2016

20151


£'000

£'000

Operating activities



Loss before taxation

(2,234)

(1,542)

Deduct dividends received

(1,229)

(966)

Deduct investment income - interest

(9,562)

(8,975)

Deduct bank interest received

(59)

(9)

Add back interest paid

230

8

Add back (gains)/losses on investments held at fair value through profit or loss

(19,778)

6,127

Decrease/(increase) in unrealised gains on foreign currency contracts

15,003

(5,205)

Decrease/(increase) in unrealised gains on future and option contracts

343

(304)

Decrease/(increase) in cash held as collateral by Brokers for futures

959

(1,070)

Increase/(decrease) in unrealised losses on foreign currency

1,935

-

Effect of increase in trade and other receivables

(5)

(1)

Effect of increase/(decrease) in trade and other payables

62

(127)

Net cash outflow from operating activities before interest, taxation and dividends

(14,335)

(12,064)

Taxation

(369)

(277)

Interest paid

(170)

(8)

Dividends received

1,237

1,002

Investment income - interest

6,797

7,728

Bank interest received

59

9

Net cash outflow from operating activities after interest, taxation and dividends

(6,781)

(3,610)

Investing activities



Purchases of investments held at fair value through profit or loss

(217,215)

(224,003)

Sales of investments held at fair value through profit or loss

247,156

171,734

Net cash inflow/(outflow) from investing activities

29,941

(52,269)

Financing activities



Proceeds from the issue of ordinary shares

-

63,209

Share issue expenses

-

(315)

Repurchase of shares into Treasury

(20,496)

-

Shares bought back and cancelled

(1,052)

-

Dividends paid

(9,522)

(12,024)

Drawdown of loan

13,026

-

Net cash (outflow)/inflow from financing activities

(18,044)

50,870

Increase/(decrease) in cash and cash equivalents

5,116

(5,009)

Cash and cash equivalents at the start of the year

(2,096)

2,913

Cash and cash equivalents at the end of the year

3,020

(2,096)2

1  The 2015 comparative figures have been amended in line with the change in presentation to liquidity funds as outlined in note 2(b).

2  The cash and cash equivalents balance as at 30th June 2015 comprises positive balances of £19,000 and overdrafts of £(2,115,000).

 



 

Notes to the Financial Statements
for the year ended 30th June 2016

1.     Principal Activity

The Company is a closed-ended investment company incorporated in accordance with the Companies (Guernsey) Law, 2008. The principal activity of the Company is investing in a globally diversified portfolio of high-yielding convertible securities as set out in the Company's Objective and Investment Policies.

2.     Basis of Preparation

(a)     Statement of compliance

The Company's financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS'), which comprise standards and interpretations approved by the International Accounting Standards Board ('IASB'), the International Accounting Standards and Standing Interpretations Committee and interpretations approved by the International Accounting Standards Committee ('IASC') that remain in effect and to the extent that they have been adopted by the European Union ('EU').

3.     Dividends



2016

2015



£'000

£'000


Dividends paid




2015 Fourth interim dividend 1.125p (2014: Second interim dividend of 2.25p)

2,464

4,686


2016 First interim dividend of 1.125p (2015: 1.125p) per share

2,464

2,402


2016 Second interim dividend of 1.125p (2015: 1.125p) per share

2,355

2,465


2016 Third interim dividend of 1.125p (2015: 1.125p) per share

2,239

2,471


Total dividends paid in the year

9,522

12,024


Dividend declared




2016 Fourth interim dividend proposed of 1.125p (2015: 1.125p)

2,196

2,471

Dividend payments in excess of the revenue amount will be paid out of Company's distributable capital reserve.

The fourth interim dividend declared in respect of the period ended 30th June 2015 amounted to £2,471,000. However, the actual payment amounted to £2,464,000 due to share buy backs after the balance sheet date, but prior to the share register record date.

4.     Net asset value per share



2016

2015


Ordinary shareholders funds (£'000)

188,638

222,311


Number of Ordinary shares in issue

195,187,705

219,630,000


Net asset value per Ordinary share (pence)

96.6

101.2

 

 

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

 

18 October 2016

 

For further information:

 

Rhys Williams,

JPMorgan Funds Limited                                   

020 7742 4000

 

ENDS

 

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

 

The annual report will also shortly be available on the Company's website at www.jpmconvertiblesincome.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

 

JPMORGAN FUNDS LIMITED

 

 


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