J O Hambro Capital Management UK Umbrella Fund 2021 Interim Report (Unaudited) for the six months ended 30 June 2021 www.johcm.com Contents Glossary 1 Authorised Corporate Director’s report 2 Accounting Policies 3 JOHCM UK Dynamic Fund, including Financial Statements 4 JOHCM UK Equity Income Fund, including Financial Statements 17 JOHCM UK Opportunities Fund, including Financial Statements 32 JOHCM Global Opportunities Fund, including Financial Statements 45 Appendix I - Securities Financing Transactions Regulation 58 Further information 61 Directory 63 Glossary Abbreviation Description ACD Authorised Corporate Director EU European Union FCA Financial Conduct Authority FRC Financial Reporting Council FRS 102 The Financial Reporting standard applicable in the UK and Republic of Ireland FRS 104 The Financial Reporting Standard 104 Interim Financial Reporting FTSE Financial Times Stock Exchange JOHCM J O Hambro Capital Management KIID Key Investor Information Document ICVC Investment Company with Variable Capital ISAs International Standards on Auditing OCF Ongoing Charge Figure OEIC Open-Ended Investment Company 1 J O Hambro Capital Management UK Umbrella Fund | 30 June 2021 Authorised Corporate Director’s report for the period ended 30 June 2021 General information COVID-19 The J O Hambro Capital Management UK Umbrella Fund With vaccine programmes in many countries making (‘the Company’) is an open-ended investment company headway, the end of the pandemic appears to be in sight. (‘OEIC’) with variable capital. The Company is registered However, the ultimate economic fallout and the long-term and authorised in the United Kingdom by the Financial impact on economies, markets, industries and individual Conduct Authority (‘the FCA’). The Company has been issuers, are not known. The Board continues to monitor the established as a UCITS scheme in the form of an umbrella situation closely. company, currently with four separate sub-funds (the “Sub-Funds”). Statement of Authorised Corporate Director We hereby certify that this report has been prepared Each Sub-Fund has an individual investment objective in accordance with the requirements of the Collective and policy. This interim report reviews and reports on the Investment Schemes Sourcebook as issued and amended financial results of each of the Company’s Sub-Funds for by the Financial Conduct Authority and approve it for the six months ended 30 June 2021. publication on behalf of JOHCM Funds (UK) Limited, Authorised Corporate Director (‘ACD’). Subject to approval by the FCA and the Depositary, the Company may seek to add new Sub-Funds in the future. On Behalf of the JOHCM Funds (UK) Limited, ACD The Sub-Funds are segregated portfolios of assets and, 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. Alexandra Altinger (Chair) Executive Director Whilst the provisions of the OEIC Regulations provide for 25 August 2021 segregated liability between the Sub-Funds, the concept of segregated liability is relatively new. Accordingly, where 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 1 March 2021 and can be accessed at www.johcm.com. As at 30 June 2021 there were no cross-investments where one Sub-Fund invested into another Sub-Fund of the Company. Further information on the Company can be found on page 63. 2 J O Hambro Capital Management UK Umbrella Fund | 30 June 2021 Accounting Policies a) Basis of preparation b) Recognition of revenue These interim financial statements have been prepared Dividends on quoted ordinary shares and non-equity in compliance with UK Financial Reporting Standard 104 shares are recognised when the securities are first quoted Interim Financial Reporting (“FRS 104”) and in accordance ex-dividend. Revenue from unquoted equity investments with the Statement of Recommended Practice for is recognised when the entitlement to the dividend is Authorised Funds issued by the Investment Association in established. Interest on bank deposits is recognised on an May 2014 (2014 SORP). accruals basis. The underlying circumstances behind both special dividends and share buy backs are reviewed on a The Company has not applied the full disclosure case by case basis in determining whether the amount is requirements of FRS 102 as according to FRS 104, issued revenue or capital in nature. Revenue from stocklending is by the Financial Reporting Council, disclosures demanded accounted for net of bank and agent fees and is recognised by Financial Reporting Standards are generally not required on an accruals basis. Stocklending income is split 20% to for interim reports. the stocklending agent and 80% to the Sub-Funds. The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2020 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. 3 J O Hambro Capital Management UK Umbrella Fund | 30 June 2021 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 Exchange. These are the most liquid achieve capital growth over a rolling seven on the exchange, meaning they can be to ten year period as well as providing easily bought and sold without materially income. The Sub-Fund’s target is to have affecting their share price. The Sub-Fund a return greater than the FTSE All-Share also invests in smaller companies. These Total Return index (12pm adjusted), may be less liquid and are therefore which is used in the calculation of widely regarded as being riskier. performance fees. Alex Savvides Other than investing in shares listed in Senior Fund Manager At least 90% of the Sub-Fund is invested the UK, the Sub-Fund may also invest in Alex joined JOHCM in in the shares of companies listed on shares listed elsewhere, money market March 2003 and has either of the two primary markets of the instruments, deposits, warrants and units 24 years industry London Stock Exchange: the Main Market in other collective investment schemes. experience (FTSE) and the Alternative Investment Market (AIM). At all times at least The Sub-Fund’s performance may be 75% of the Sub-Fund is invested in the measured against the FTSE All-Share shares of companies that are domiciled, Total Return Index (12pm adjusted, incorporated or have a significant portion the “Index”). The Index is used as a of their business in the UK. target benchmark for the Sub-Fund as the Performance Fee for the Sub-Fund The Sub-Fund will typically invest in the is payable when the performance of the shares of 35-50 different companies. The Sub-Fund exceeds that of the Index. Sub-Fund invests in companies undergoing The use of the Index does not limit the major transformation in their businesses. investment decisions of the fund manager The fund manager believes these changes therefore the shareholdings of the Sub- will lead to an improvement in the Fund may differ significantly from those of performance of these companies and their the Index. However, it may influence the share prices. weightings of investments in components of the Index. The Index is used as it is At least 50% of the Sub-Fund will be the broadest available index of shares invested in companies listed on the FTSE listed on the London Stock Exchange, 100 index, which contains the 100 largest representing at least 98% of the market companies listed on the London Stock value of the shares listed. 4 J O Hambro Capital Management UK Umbrella Fund | 30 June 2021 JOHCM UK Dynamic Fund INVESTMENT MANAGEMENT REPORT for the period ended 30 June 2021 Performance updates. DMGT performed well after it The JOHCM UK Dynamic Fund Fund review confirmed that Cazoo will list in the US returned 17.16% in sterling terms, The portfolio significantly via a SPAC at a valuation of £5bn. Our net of fees for the ‘A’ share class, for outperformed as operating sum-of-the-parts valuation suggests the six-month period ended 30 June performance and share price significant upside to today’s share 2021. Over the same period, the FTSE momentum continued to build across price. Our position size has increased All-Share Total Return Index (12pm the portfolio. over the period through a blend of adjusted) returned 10.77%.* outperformance and additional share In our Q3 2020 investor presentation, purchases. Investment background we spoke of the likelihood of increased Inflation remained the hot topic over M&A in the UK given the arbitrage With valuation dispersions within the the period. Whilst global central banks between corporate bond yields and UK remaining elevated, bond yields communicated price rises were only earnings yields. Since then, the back at recent lows and continued transitory, investor opinion remained Sub-Fund has received confirmed operational momentum evident across divided. Markets took solace in further approaches for seven of its companies the portfolio, we remain confident record-breaking economic data that out of a portfolio that now stands on our ability to deliver relative demonstrated inflation was not yet at just 40 holdings. This level of outperformance regardless of changes impacting growth. Flash composite corporate activity is unprecedented in the macro. PMI data from the US and UK showed in the history of the Sub-Fund and output growth hitting series and demonstrates quite how marked Alex Savvides two-decade highs, respectively, and valuation discounts have become in Senior Fund Manager demand growth reached a 15-year some UK equities.