J O Hambro Capital Management UK Umbrella Fund 2019 Interim Report (Unaudited) for the six months ended 30 June 2019 www.johcm.com Contents Authorised Corporate Director’s Report 1 Accounting Policies 2 JOHCM UK Dynamic Fund, including Financial Statements 3 JOHCM UK Equity Income Fund, including Financial Statements 17 JOHCM UK Opportunities Fund, including Financial Statements 33 JOHCM Global Opportunities Fund, including Financial Statements 47 Further information 58 Appendix I – Securities Financing Transactions Regulation 59 Directory 63 Authorised Corporate Director’s report for the six-month period ended 30 June 2019 General information With effect from 6 June 2019, JOHCM Funds (UK) Limited The J O Hambro Capital Management UK Umbrella Fund was appointed as the Authorised Corporate Director of the (‘the Company’) is an open-ended investment company Company. Prior to 6 June 2019 the Investment Manager, (‘OEIC’) with variable capital. The Company is registered J O Hambro Capital Management Limited, was the and authorised in the United Kingdom by the Financial Authorised Corporate Director. Conduct Authority (‘the FCA’). The Company has been established as a UCITS scheme in the form of an umbrella As at 30 June 2019 there were no cross-investments company, currently with four separate sub-funds (the where one Sub-Fund invested into another Sub-Fund of the “Sub-Funds”). Company. A new Sub-Fund, JO Hambro Capital Management Global Further information on the Company can be found on Opportunities Fund, was launched on 3 May 2019. page 58. Each Sub-Fund has an individual investment objective Statement of Authorised Corporate Director and policy. This interim report reviews and reports on the We hereby certify that this report has been prepared financial results of each of the Company’s Sub-Funds for in accordance with the requirements of the Collective the six months ended 30 June 2019. Investment Schemes Sourcebook as issued and amended by the Financial Conduct Authority and approve it for Subject to approval by the FCA and the Depositary, the publication on behalf of JOHCM Funds (UK) Limited, Company may seek to add new Sub-Funds in the future. Authorised Corporate Director (‘ACD’). The Sub-Funds are segregated portfolios of assets and, On behalf of the ACD accordingly, the assets of a Sub-Fund belong exclusively to that Sub-Fund and shall not be used to discharge directly or indirectly the liabilities of, or claims against, any other person or body, including the Company, or any other Sub-Fund, and shall not be available for any such purpose. Whilst the provisions of the OEIC Regulations provide for Emilio Gonzalez segregated liability between the Sub-Funds, the concept Chair of segregated liability is relatively new. Accordingly, where 22 August 2019 claims are brought by local creditors in foreign courts or under foreign law contracts, it is not known how those foreign courts will react to regulations 11A and 11B of the OEIC Regulations. Shareholders are not liable for the debts of the Company. The latest prospectus is dated 7 August 2019 and can be accessed at www.johcm.com. In accordance with the requirements of the Collective Investment Schemes Sourcebook Instrument (Miscellaneous Amendments) 2019, the prospectus was amended on 7 August 2019. to include clarifications to the investment objectives and policies of the Sub-Funds. These clarifications do not affect the risk profile of the Funds and there will be no change to how the Funds are managed. J O Hambro Capital Management UK Umbrella Fund | 30 June 2019 1 Accounting Policies These interim financial statements have been prepared in compliance with UK Financial Reporting Standard 102 (FRS102) and in accordance with the Statement of Recommended Practice for Authorised Funds issued by the Investment Association in May 2014 (2014 SORP). The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2018 and are described in those Financial Statements. In this regard, comparative figures from previous periods are prepared to the same standards as the current period, unless otherwise stated. 2 J O Hambro Capital Management UK Umbrella Fund | 30 June 2019 JOHCM UK Dynamic Fund A Sub-Fund of J O Hambro Capital Management UK Umbrella Fund INVESTMENT OBJECTIVE & POLICY* The Sub-Fund’s investment objective is to affecting their share price. The Sub-Fund achieve capital growth over a rolling seven also invests in smaller companies. These to ten year period as well as providing may be less liquid and are therefore income. The Sub-Fund’s target is to have widely regarded as being riskier. a return greater than the FTSE All-Share Total Return index (12pm adjusted), Other than investing in shares listed in which is used in the calculation of the UK, the Sub-Fund may also invest in performance fees. shares listed elsewhere, money market Alex Savvides instruments, deposits, warrants and units Senior Fund Manager At least 90% of the Sub-Fund is invested in other collective investment schemes. Alex joined JOHCM in in the shares of companies listed on March 2003 and has either of the two primary markets of the The Sub-Fund’s performance may be 22 years industry London Stock Exchange: the Main Market measured against the FTSE All-Share experience (FTSE) and the Alternative Investment Total Return Index (12pm adjusted, the Market (AIM). At all times at least “Index”). The Index is used as a target 75% of the Sub-Fund is invested in the benchmark for the Sub-Fund as the shares of companies that are domiciled, Performance Fee for the Sub-Fund is incorporated or have a significant portion payable when the performance of the Sub- of their business in the UK. Fund exceeds that of the Index. The use of the Index does not limit the investment The Sub-Fund will typically invest in the decisions of the fund manager therefore shares of 35-50 different companies. The the shareholdings of the Sub-Fund may Sub-Fund invests in companies undergoing differ significantly from those of the Index, major transformation in their businesses. however it may influence the weightings of The fund manager believes these changes investments in components of the Index. will lead to an improvement in the The Index is used as it is the broadest performance of these companies and their available index of shares listed on the share prices. London Stock Exchange, representing at least 98% of the market value of the At least 50% of the Sub-Fund will be shares listed. invested in companies listed on the FTSE 100 index, which contains the 100 largest companies listed on the London Stock Exchange. These are the most liquid on the exchange, meaning they can be * The investment objective for this Sub-Fund was updated easily bought and sold without materially on 7 August 2019. See page 1 for further details. J O Hambro Capital Management UK Umbrella Fund | 30 June 2019 3 JOHCM UK Dynamic Fund INVESTMENT MANAGEMENT REPORT for the period ended 30 June 2019 Performance Fund review day, the shares later lost their gains. The JOHCM UK Dynamic Fund The Fund performed broadly in line Although there was a slight trimming returned 12.56% in sterling terms, with its benchmark over the period, of estimates by analysts to account net of fees for the ‘A’ share class, for although there were a number of for the launch costs associated with the six-month period ended 30 June highlights at the stock level. the new Mamago food to go brand 2019. Over the same period, the FTSE and the delivery kitchen business, All-Share Total Return Index (12pm 3i is the Fund’s largest active position share price weakness was more adjusted) returned 12.96%.* and delivered an earnings upgrade as likely a combination of continued management continued to successfully investor concerns over the CEO’s Investment background execute on their strategy, thereby recently announced departure plus Brexit-related uncertainty continued leading its shares to more than regain ongoing Brexit uncertainty. There is to weigh on UK economic growth the decline suffered in the broader more than enough raw material at and investor sentiment. Already market sell-off at the end of last year The Restaurant Group for the new highly rated quality growth stocks and re-rate to reach a new absolute CEO and therefore scope for the performed particularly well as and relative share price high since the existing market narrative to change. investors clamoured for earnings Fund’s ownership. Whilst cognisant In the meantime, extreme value has stability in response to the heightened that the speed of this share price emerged with the current market cap political and economic uncertainty. move will have in part been aided of the group now broadly equal to the Fears of a ‘no deal’ Brexit rose back by the market’s current appetite for total amount paid for Wagamama in up the agenda, with the recently growth stocks, we remain confident December 2018. formed Brexit Party performing well in over the idiosyncratic drivers of future European elections. Sterling continued earnings growth yet to be delivered. Qinetiq also suffered after two to weaken such that the Bank of analysts downgraded their England’s trade-weighted effective There was also a strong contribution recommendations on valuation exchange rate had unwound all its from Moneysupermarket after a grounds. We disagree with their gains for the year by the end of solid set of full-year results that conclusions and see the analysis as the period. demonstrated traction in the new short-term earnings momentum- management team’s strategy to driven rather than based on On a wider scale, government bond re-establish growth by focusing on fundamental valuation.