Half-year Report

Jupiter UK Growth Investment Trust PLC (the 'Company')

Legal Entity Identifier: 549300QSBKGE8ZO08A97

Half Yearly Financial Report for the six months to 31 December 2018

Fifteen year history to 31 December 2018

* Prior to 2005, financial information has been prepared under UK GAAP. From 2005 all information is prepared under IFRS.

** Adjusted for five for one stock split in 2013.

Chairman's statement

I present the interim report for the Jupiter UK Growth Investment Trust PLC for the six months to 31 December 2018. It was a turbulent period for stock markets across the globe, and was especially so for the UK stock market. After two years of double digit gains, the total return of the FTSE All-Share index in the final three months of the year was minus 10.25%, ensuring that 2018 ended as the worst year for the UK stock market since 2008, the year of the global financial crisis.

Investment performance

In addition to suffering from the concerns that plagued markets elsewhere, such as rising interest rates in the US, the ongoing trade war between the US and China, and falls in a number of emerging market currencies, UK investors also had to deal with the uncertainties and market negativity surrounding Brexit, which were a long way from being resolved by the end of the year.

Inevitably therefore the company suffered losses during the period under review as the stock market, in the absence of any firm conclusion to Brexit, started to price in a very negative outcome and a possible recession. If there is any silver lining to this it is that, if any different outcome materialises in the coming months, the market should swiftly reappraise the UK market in a more positive light.

Although the half year began with a period of outperformance by the company, the total return (including dividends) for the whole six-month period was minus 19.8%, worse than the benchmark return of minus 11%. The performance of the company was disappointing and suffered from its relatively high exposure to domestic-facing UK stocks and the poor performance of two of its larger holdings.

Dividends

An interim dividend of 7p per share (unchanged on 2017) was paid on 23 November 2018 to shareholders shown on the register of shareholders on 19 October 2018. The board has stated its ambition to maintain the dividend at the level paid in the preceding financial year and, if justified by performance, to grow its dividend over time.

Gearing

As at 31 December 2018 the company's net gearing level (being the amount of drawn down bank debt, less cash held on the balance sheet pending investment on that date, as a proportion of the company's total assets) was 6%. The company's portfolio manager, Steve Davies, expects to increase gearing at times of low valuations while decreasing gearing in stronger markets. Although valuations generally have fallen as a result of the sharp market decline in the fourth quarter of 2018, the case for increasing gearing in the present Brexit-dominated circumstances is not as clear-cut as it might otherwise be.

Outlook

With such a vast range of potential Brexit outcomes it is understandably difficult , for the market to reach a sensible view of the prospects for the UK and UK-based companies for 2019 and into the future. Share prices have therefore been volatile, and volatility can be expected to continue, especially for domestically-focused UK businesses, until there is much greater clarity about what will happen with Brexit.

Beyond the UK, the economic situation is also coloured by uncertainty. The federal government shutdown in the US, combined with the Federal Reserve's apparently hawkish stance on monetary policy, and fears of an economic slowdown in China, badly spooked markets towards the end of 2018. These anxieties have receded somewhat subsequently, helped by clarification of the Federal Reserve's policy intentions, and stock markets rallied in January.

We share the manager's frustration that the welcome improved performance in the first half of 2018 did not carry through into the second half. From a stockpicker's perspective, there are some very lowly-valued stocks in the UK market at the moment, which potentially provide opportunities in the event of what the markets may regard as a positive or even middling outcome to Brexit. It will be disappointing if the company does not share disproportionately in any such positive development if and when it occurs.

Tom Bartlam

Chairman

29 March 2019

Investment adviser's review for the six months to 31 December 2018

Market background

The UK market endured a very tough second half of 2018, in common with major equity markets worldwide, as concerns over the global trade war intensified and markets saw heightened risk aversion.

As the period went on, the ongoing uncertainty surrounding Brexit contributed to an increasingly negative sentiment surrounding the UK market, especially domestically-facing businesses. It was another turbulent period politically for the UK, amid several government resignations, and an attempt at challenging Theresa May's leadership that ultimately resulted in a failed leadership challenge. Mrs May was unable to secure parliamentary backing for the withdrawal agreement negotiated with the EU, however.

As a result of these issues, investors remained concerned around the potential for lasting damage to the UK economy as a result of any unfavourable Brexit deal or even no deal would bring, fears that are compounded by a generally pessimistic mood globally due in part to forecast rate rises in the US and a potential economic slowdown in China.

Performance review

Over the six months to 31 December 2018 the company's share price returned -19.6%% and NAV returned -19.8% (both including dividends) compared to a total return of -11.0%% for the FTSE All-Share Index. The FTSE 250 Index fell particularly sharply compared to the more international FTSE 100 Index (-14.9% vs -10.2%) and this generated a significant headwind for the company's relative performance; the FTSE All-Share index having a much higher weighting to the FTSE 100 Index than the company.

The largest stock detractor from the company's relative returns was Thomas Cook, which issued a series of profit warnings and announced that it would suspend its dividend. The stock has fallen 80% from its peak in May as temperatures soared across Europe and holidaymakers delayed decisions about their summer holiday plans. To put this into context, profits for FY18 came in around 25% lower than was expected before the summer heatwave arrived. This is indicative of how jumpy the market is at the moment, and how myopically focused on near-term earnings it has become. Given a "normal" summer in 2019 and the ongoing cost savings that are being extracted, it is quite possible that Thomas Cook's profits could rebound sharply. The company carries a substantial debt burden (particularly over the winter) and it is now looking to realise value from its profitable airline division in order to improve its balance sheet position. This would dampen current market concerns that the company might need to raise equity.

Sirius Minerals was another notable negative, after announcing that it will require a further $400-600m in its stage 2 financing, due in part to increased costs and contingencies. There was some good news from the company, however, as it secured another supply agreement with a customer in Brazil and has a pending further agreement with a client in Europe. At the time of writing, the company was exploring a variety of options to secure the additional funding. Once this is completed, we believe that there is huge value to be created from this project.

The tough markets during the period meant that stock winners were harder to come by. One that stood out was credit reporting agency Experian - now the largest position in the portfolio - which outperformed the market after delivering strong numbers and an accelerating growth trend off the back of some exciting new products. Another winner was Puretech, an exciting healthcare company specialising in the nervous, immune, and gastrointestinal systems. It performed strongly near the end of 2018, off the back of a number of positive developments, including the announcement of a collaboration with Swiss drug giant Roche.

Other positives included TalkTalk, which rose following a more positive outlook in recent broker updates, Cineworld (a recent addition to the portfolio) after the company posted strong interim results, and Randgold Resources, which announced a 20% increase in profits and an increased dividend, while its shareholders also voted in favour of a merger with Canadian rival, Barrick Gold.

Strategy

The company is managed with a bottom-up approach that focuses on two specific types of opportunity. Firstly 'recovery' stocks, meaning those that have been written off or deemed "uninvestable" by the market. These should be well-placed to benefit from specific catalysts such as industry restructuring or management change, combined with the expectation of substantial valuation upside given the inherent volatility of such situations. Secondly, 'growth' stocks that can generate above‐average rates of growth over an extended time period. I apply a strict free cash‐flow screen to such stocks to ensure that they are acquired at what I consider to be reasonable prices.

Initial position sizes are determined by a mixture of conviction, upside to target price and liquidity, and I generally aim for a starting position size of 2‐3%. This is based on the view that all positions should meaningfully contribute to the performance of the company while still allowing for a sensible level of diversification.

Index weightings are not a primary consideration during portfolio construction. Indeed, I am quite happy to hold zero weightings in big index constituents if the stock does not meet the criteria of either 'recovery' or 'growth'. This can lead to periods of higher volatility relative to the index and also introduces an element of currency risk. I also make use of the flexibility to diversify the company's portfolio geographically through holding a small number of overseas stocks, which provide the company with a means of exposure to investment themes where I feel there is no suitable UK‐listed alternatives (Ferrari and Manchester United are examples from the current portfolio).

Engagement

Engaging closely with the companies that we invest in is a fundamental part of my investment process. I believe that it is crucial in improving my understanding of our holdings and, with such a concentrated portfolio, I can work closely with management and non-executives to enhance the value of our investments or to restore value when things have gone wrong. This does not just involve meeting with the CEO or CFO, but also chairmen and non-executive directors too.

Sometimes the purpose is to help company management understand how their business is viewed in the wider market and assist them to communicate their long-term plans and prospects more effectively. If done well, such communication can help address any misconceptions that exist in the market and will tend to return the share price to a level that reflects the true value and potential of the business. This has been particularly pertinent in recent months and we have spent a lot of time with companies like Thomas Cook, Arrow Global, and Inmarsat.

Outlook

As I write, there is still no certainty on the future relationship between the UK and the European Union. That is the main reason why the UK is still deeply unloved by global investors and indeed has been described in an FT article as "uninvestable"*.

Given the short-term uncertainty surrounding Brexit, my key focus has been on risk management around the Brexit process. To that end, in the final quarter of 2018 I materially reduced the company's exposure to UK domestic companies in the FTSE 100 (e.g. housebuilders, UK banks) and reallocated that capital to the international companies which would perform well were sterling to fall sharply in the wake of a no-deal Brexit. As part of this, we added names such as Compass, Diageo, and Randgold to the portfolio.

More recently, as the risks of no deal have diminished (in my view) in the early months of 2019 (best illustrated by the rise in sterling so far this year), we have reversed some of these tactical moves.

The prevailing negativity means that, in my view, there are some very lowly-valued stocks on the market, especially the UK domestics. Some of these stocks are trading at around half of what I would consider "fair value" in a normal (but not rosy) economic scenario, so I believe the upside in most scenarios besides a disorderly no-deal Brexit could be very substantial. I will continue to manage the portfolio tactically to ensure that we are in the best position to deliver this upside if and when the opportunity does finally present itself, whilst trying to mitigate against the downside risks as best I can if it does not.

It is immensely frustrating that the strong performance for the company in the first eight months of 2018 (largely driven by an unusually high number of M&A bids received in the early part of the year and very limited exposure to the emerging market meltdown in the early summer) ebbed away in the latter part of the year as markets around the world fell sharply. I strongly believe that many of the Trust's holdings are very significantly undervalued at present, but the UK market may be in for further Brexit-related volatility over the coming months, and I thank all of our investors for their ongoing support and patience.

Steve Davies

Fund Manager

Jupiter Asset Management Limited

Investment adviser

29 March 2019

*Source: FT.com, UK equity market descends into 'uninvestable' zone, 26/11/2018.

Cross holdings in other investment companies

As at 31 December 2018, none of the company's total assets were invested in other listed closed-ended investment funds. It is the company's stated policy that no more than 10%, in aggregate, of the company's total assets may be invested in the securities of other listed closed-ended investment funds (including listed investment trusts) other than those which themselves have stated investment policies to invest no more than 15% of their total assets in other listed closed-ended investment funds. The company does not anticipate that the investment adviser will make any new investments in other collective investment schemes, investment companies or investment trusts.

Interim Management Report

Related party transactions

During the first six months of the current financial year no transactions with related parties have taken place which have materially affected the financial position or performance of the company during the period.

Details of related party transactions are contained in the Annual Report & Accounts 2018.

Principal risks and uncertainties

The principal risks to the company are interest rates, investment policy and process, investment strategy and share price movement, liquidity risk, gearing risk, loan facility default risk, the discount to net asset value, regulatory risk, credit and counterparty risk, loss of key personnel, operational risk and financial risk. A detailed explanation of the risks and uncertainties facing the company can be found on pages 18 and 19 of the company's published report and accounts for the year to 30 June 2018.

Going concern

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. The directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Directors' responsibility statement

We the directors of Jupiter UK Growth Investment Trust PLC confirm to the best of our knowledge:

(a) the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with the applicable set of accounting standards and give a true and fair view of the assets, liabilities, financial position and profit and loss of the company;

(b) the half yearly report includes a fair review of the important events that have occurred during the first six months of the financial year and their impact on the financial statements;

(c) the directors' statement of principal risks and uncertainties shown above is a fair review of the principal risks and uncertainties for the remainder of the financial year; and

(d) the half yearly report includes details on related party transactions.

The half yearly financial report for the six months to 31 December 2018 comprises the chairman's statement, investment advisers' review, the directors' responsibility statement and a condensed set of financial statements, and has not been audited or reviewed by the auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.

Tom Bartlam

Chairman

29 March 2019

Statement of comprehensive income for the half year to 31 December 2018 (unaudited)

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.

The financial information does not constitute 'accounts' as defined in section 434 of the Companies Act 2006.

No operations were acquired or discontinued during the period.

All net income is attributable to the equity holders of Jupiter UK Growth Investment Trust PLC. There are no minority interests.

*Under the company's articles of association any dividends are distributed only from the revenue reserve

Statement of changes in net equity for the six months to 31 December 2018 (unaudited)

*Dividends paid during the period were paid out of revenue reserves.

**Jupiter Dividend & Growth Trust PLC, as part of its reconstruction proposals, offered its shareholders the option of rolling over their holdings into Jupiter UK Growth Investment Trust PLC. Those who opted to do this became shareholders in the company with effect from 1 December 2017 after Jupiter Dividend & Growth Trust PLC was wound up. As a result, 7,821,713 shares were issued at a price of 315.10p each.

Notes to the financial statements for the six months to 31 December 2018

1. Accounting policies

The accounts comprise the unaudited financial results of the company for the six months from 1 July 2018 to 31 December 2018, 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).

The accounts are presented in pounds sterling, as this is the functional currency of the company. All values are rounded to the nearest thousand pounds (£'000) except where indicated.

Where presentational guidance set out in the Statement of Recommended Practice (SORP) for investment trusts issued by the Association of Investment Companies (AIC) 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.

A summary of the principal accounting policies, all of which have been applied consistently throughout the period, is set out below:

Revenue recognition

Revenue includes dividends from investments quoted ex-dividend on or before the date of the statement of financial position.

Deposit and other interest receivable, expenses and interest payable are accounted for on an accruals basis. These are classified within operating activities in the statement of cash flow.

Underwriting commission is taken to income and recognised when the issue takes place, except where the company is required to take up all or some of the shares underwritten, in which case an appropriate proportion of the commission received is deducted from the cost of those shares.

Presentation of statement of comprehensive income

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 (distributable) items and capital (non -distributable) items is given the notes to the Half Yearly Financial Report 2018. Investment management fees and finance costs are charged 75% to capital and 25% to revenue.

All other operational costs including administration expenses (but with the exception of any investment performance fees which are charged to capital) are charged to revenue.

Basis of valuation of investments

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 cost, 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.

2. Significant accounting judgements, estimates and assumptions

The preparation of the company's financial statements on occasion requires management to make judgements, estimates and assumptions that affect the reported amounts in the primary financial statements and the accompanying disclosures. These assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in the current and future periods, depending on circumstance.

Management do not believe that any significant accounting judgements have been applied to this set of financial statements, other than the allocations between capital and revenue in the statement of comprehensive income.

3. Earnings per Ordinary Share

The earnings per ordinary share figure is based on the net loss for the period of £12,581,000 (Dec 2017: Net return £399,000) and on 18,725,313 (Dec 2017: 14,571,867) ordinary shares, being the weighted average number of ordinary shares in issue during the period.

The earnings per ordinary share figure detailed above can be further analysed between revenue and capital, as below.

4. (Losses)/Gains on investments

5. Transaction costs

The following transaction costs were incurred during the period:

6. Comparative information

The financial information contained in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the six months to 31 December 2018 and 31 December 2017 has not been audited

The information for the year ended 30 June 2018 has been extracted from the latest published audited financial statements. The audited financial statements for the year ended 30 June 2018 have been filed with the Register of Companies. The report of the auditors on those accounts contained no qualification or statement under section 498(2) of the Companies Act 2006

7. Retained earnings

The table below shows the movement in the retained earnings analysed between revenue and capital items.

8. Net asset value per Ordinary share

The net asset value per ordinary share is based on the net assets attributable to the ordinary shareholders of £48,664,000 (30 June 2018: £65,192,000) and on 18,288,076 (30 June 2018: 19,145,493) ordinary shares, being the number of ordinary shares in issue at the period end, excluding ordinary shares held in treasury.

9. Analysis of changes in net debt

10. Principal risk profile

The principal risks the company faces in its portfolio management activities are:

• foreign currency risk; and

• market price risk i.e. movements in the value of investments holdings caused by factors other than interest rate or currency movement.

Further details of the company's management of these risks can be found in note 13 of the company's annual report and accounts for the year ended 30 June 2018.

There have been no changes to the management of or the exposure to these risks since that date.

11. Fair value hierarchy

IFRS 13 'Fair Value Measurement' requires an entity to classify fair value measurements using a 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 same 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:

Equity investments

A reconciliation of fair value measurements in level 3 is set out in the following table:

The company has received £195,000 liquidation proceeds from Gloo Networks Plc.

12. Related parties

Jupiter Unit Trust Managers Limited ('JUTM'), the Alternative Investment Fund Manager, is a company within the same group as Jupiter Asset Management Limited the investment adviser. JUTM is contracted to provide investment management services to the company, subject to termination by not less than twelve months' notice by either party.

JUTM receives an investment management fee as set out below. The management fee payable to JUTM in respect of the period 1 July 2018 to 31 December 2018 was £138,211 with £60,842 outstanding at period end. JUTM is also entitled to an investment performance fee which is based on the out-performance of the net asset value per ordinary share over the total return on the benchmark index (being the total return on the FTSE All Share Index) in each accounting period. No performance fee was payable to JUTM in respect of the year ended 30 June 2018.

The management fee payable to JUTM is 0.50% of adjusted net assets (being net assets before deducting or making provision for any performance fee which may be due and after deduction of the value of any Jupiter managed investments). This fee will be further reduced to 0.45% to the extent that the company's adjusted net assets come to exceed £150 million and will be reduced further still to 0.40% to the extent that the company's adjusted net assets exceed £250 million.

Any performance fee payable per ordinary share to equal 15% of the amount by which the increase in the adjusted net asset value per ordinary share (being net asset value per ordinary share adjusted by adding back any accrual for unpaid performance fee and any dividends paid or payable by reference to the calculation period in question) exceeds the higher of:

1) in respect of each subsequent calculation period, the net asset value per ordinary share on the last calculation date of the immediately preceding calculation period, as increased or decreased by the percentage by which the total return of the benchmark index increases or decreases during the calculation period plus 2%;

2) if applicable, the net asset value per ordinary share on the last calculation date by reference to which a performance fee was paid (such calculation date not being before 30 June 2016), increased or decreased by the total return of the benchmark index increases or decreases during the calculation period plus 2%; and

3) the estimated net asset value per ordinary share on Friday, 29 July 2016 (being 285.80p).

In respect of the calculation period ending 30 June 2017, the turbulent market conditions in the immediate aftermath of the Brexit referendum resulted in an estimated NAV per share of 265.12p as at 30 June 2016. Rather than adopt this NAV as the new high watermark for the then current and subsequent calculation periods for the purposes of any performance fee accrual, the board agreed with the manager on 26 September 2016 that it would be appropriate to adopt the higher estimated NAV of 285.80p as at 29 July 2016 as its new high watermark for these purposes.

The aggregate of any base management and performance fees payable to JUTM in respect of any one calculation period is limited to 2% of the adjusted net assets of the company on the relevant calculation date.

No 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 Fund Management PLC, or any subsidiary undertaking of Jupiter Fund Management PLC, receives fees as investment manager or investment adviser. During the period there were no such investments.

There are no transactions with the directors other than the remuneration paid to them as disclosed in the directors' remuneration report on page 28 and the beneficial interests of the directors in the ordinary shares of the company as disclosed on page 29 of the 2018 annual report and accounts.

Availability of Half Yearly Financial Report

The Half Yearly Financial Report will shortly be available for download from the Company's website www.jupiteram.com/JUKG

By order of the Board

Jupiter Asset Management Limited, Company Secretary

The Zig Zag Building

70 Victoria Street

London SW1E 6SQ

29 March 2019

For further information, please contact:

Richard Pavry

Head of Investment Trusts

Jupiter Asset Management Limited

[email protected]

020 3817 1000

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