Annual Financial Report

RNS Number : 4094Q

JPMorgan European Smaller Co.

06 June 2018

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN EUROPEAN SMALLER COMPANIES TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED
31st MARCH 2018

Legal Entity Identifier: 54930049CEWDI46Y3U28

Information disclosed in accordance with DTR 4.1.3

chairman's statement

Performance

For the year to 31st March 2018 the Company's net asset total return was +14.4%. For the same period the total return from the Company's benchmark index, the Euromoney Smaller European Companies (ex UK) index, was +10.0%. This outperformance is an excellent result in what has been a difficult market for stock pickers. Returns over three, five and ten years (69.0%, 138.3% and 197.5%) also remain well ahead of the benchmark index returns (52%, 102.1% and 128.5%).

The share price rose by 21.6% from 334.0 pence to 406.0 pence over the reporting period, reflecting the rise in NAV and a narrowing of the discount to NAV.

The performance attribution analysis is set out below in the Investment Managers' Report. Their report below reviews the market and provides more detail on performance and the stocks and countries in which the Company is invested.

Revenue and Dividends

The Board's dividend policy is to pay out the majority of the revenue available each year. This is set against the Company's objective of maximising capital growth and the Investment Managers are therefore not constrained to deliver income in any one financial year.

Net revenue return for the year increased to £9.8 million (2017: £7.8 million), reflecting an increase in dividend receipts as well as exchange rate differences. An interim dividend of 1.2 pence per share was paid on 19th January 2018. Subject to shareholder approval at the forthcoming Annual General Meeting, a final dividend of 5.5 pence per share will be paid on 18th July 2018 to shareholders on the register as at the close of business on 15th June 2018 (ex dividend date 14th June 2018).

Discounts and Share Repurchases

The discount of the Company's share price to net asset value narrowed over the year from 13.9% to 7.5% at the year end. The Board continues to monitor the level of the discount carefully and seeks to use its ability to repurchase shares to minimise the short term volatility and the absolute level of the discount. No shares were repurchased during the year.

Investment Manager and Manager Evaluation

We announced on 1st March 2018 that Jim Campbell has returned from personal leave and has informed the Board that he has decided to pursue other opportunities within JPMorgan Asset Management. The Board would like to take this opportunity to thank him for his invaluable contribution over the years.

During the year, the Management Engagement Committee undertook a formal review of the Manager, covering the investment management, company secretarial, administrative and marketing services provided to the Company. The review took into account the Manager's investment performance record, management processes, investment style, resources and risk control mechanisms. I am pleased to report that the Board agreed with the Committee's recommendation that the continued appointment of the Manager is in the interests of shareholders as a whole.

Gearing

Taking into account borrowings, net of cash balances held, the Company ended the year approximately 8.0% geared. During the year gearing varied between 3.6% net cash and 9.4% geared. Borrowings consisted of a revolving credit facility of €105 million, of which €105 million was drawn down at the year end.

PRIIPs/KID

You may be aware that an EU regulation, the Packaged Retail and Insurance-based Investment Products Regulation (the 'PRIIPs Regulation'), came into force on 1st January 2018. The PRIIPs Regulation requires the Investment Managers to prepare a Key Information Document (KID) in respect of the Company. The KID must be made available by the Investment Managers to retail investors prior to them making any investment decision and it is also available on the Company's website. However, the Company is not responsible for the information contained in the KID and investors should note that the procedures for calculating the risks, costs and potential returns are prescribed by the law. The figures in the KID may not reflect the expected returns for the Company and anticipated performance returns cannot be guaranteed.

Board of Directors

All Directors will stand for re-appointment at the Annual General Meeting.

Annual General Meeting

The Company's Annual General Meeting will be held at 60 Victoria Embankment, London EC4Y 0JP on Tuesday, 10th July 2018 at 12.00 noon. The Investment Managers will make a presentation covering the past year and give their outlook for the current year. Shareholders are invited to join the Investment Managers and the Board for lunch following the Annual General Meeting when there will be an opportunity for informal questions.

If you have any detailed or technical questions, it would be helpful if you could raise them in advance with the Company Secretary at 60 Victoria Embankment, London EC4Y 0JP or via the 'Ask a Question' link on the Company's website. Shareholders who are unable to attend the Annual General Meeting are encouraged to use their proxy votes.

Outlook

Equity markets have been very strong for many years now and just the length of this uptrend causes some concern. However equity market valuations for European smaller companies are at similar levels to 2005, economic growth is healthy and company profits growth is encouraging although interest rates have started to rise in the US.

Stock selection looks even more critical than usual as we move into the later parts of this economic cycle.

Carolan Dobson

Chairman

5th June 2018

Investment managers' report

Investment Scope and Process

The objective of the Company is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom. The investment universe is defined at the time of purchase by the countries and market capitalisation range of the constituents of the benchmark index, the Euromoney Smaller European Companies (ex UK) Index. At the end of March 2018 the index consisted of 1,000 companies with a market value of between £138 million and £5.3 billion across 14 countries. This universe of potential investments is screened using a proprietary multi-factor model, the results of which we apply fundamental analysis.

The investment process is driven by bottom-up stock selection with a focus on identifying market leading growth companies with a catalyst for outperformance. Stock position sizing is determined by investment conviction and trading liquidity. Investments are sold when there is a fundamental deterioration in business prospects or the market capitalisation has significantly outgrown the benchmark index. The Board has set a liquidity range of between 20% cash and 20% gearing within which the Managers may operate. The policy is not to hedge the currency exposure of the portfolio's assets.

Market Review

Driven by a global synchronised economic expansion, 2017 was characterised by an extended period of remarkably stable equity markets with extremely low volatility. However, unexpectedly high US wage inflation in early 2018 led to a sharp correction as markets tried to gauge the impact of rising rates on the economy. Moreover, President's Trumps rhetoric on a trade war added to fears of a slowdown in the global economy.

In the 12 months to March 2018, the MSCI Europe (ex UK) Index (total return) rose by 3.7% while the Company's benchmark Euromoney Smaller European Companies (ex UK) Index (total return) rose by 10.0% as a result of the strongest earnings growth since the financial crisis.

Portfolio Performance

Over the financial year, the net asset value of the Company rose by 14.4%, outperforming its benchmark largely due to stock selection. Top performers over the period included French recreational vehicle manufacturer, Trigano, supported by the trend towards more active outdoor lifestyles and selective accretive acquisitions, Swiss semiconductor designer, AMS, due to the company's strong growth outlook driven by its leadership position in 3D sensing technology, and French computer game publisher, Ubisoft, as a result of its improving revenue mix as high margin digital sales continued to grow strongly. Detractors from performance included Swiss and French flooring companies, Forbo and Tarkett, both due to input cost inflation headwinds resulting from rising oil prices, and Norwegian oil services provider, Aker Solutions, as a recovery in orders failed to gain traction.

Portfolio Positioning

Over the period, Industrial Engineering remained the largest overweight sector position compared to the benchmark, and Real Estate the largest underweight sector position. It is important to note that many of the portfolio's holdings in the Industrial Engineering sector operate in defensive end markets. For example, Italian food and pharmaceutical packaging machinery producer, IMA, Swiss farming equipment manufacturer, Bucher, and Norwegian recycling machinery producer, Tomra.

We increased our exposure to the Software & Computer Services sector through purchases including Austrian IT services provider S&T, and Norwegian IT infrastructure advisor Atea, as both are benefitting from their exposure to megatrends such as digitalisation and The Internet of Things.

We financed these purchases by reducing our exposure to more cyclically exposed companies with poor earnings momentum. For instance, we sold oil exposed companies such as Norwegian oil services providers, Aker Solutions and TGS-Nopec, and the Swiss industrial company, Sulzer. We also sold out of our heavy industry exposure with the sale of Danish cement plant manufacturer, FLSmidth, and Finnish mining services company, Metso, on slow order intake. Finally, we divested from French computer game publisher, Ubisoft, and Swiss banking software developer, Temenos, as their market capitalisations became too large for the Company following a sustained period of outperformance.

Ahead of the Italian elections in early March, and subsequent to the election victory of the populist parties, we reduced our exposure to Italy. We sold online bank, Finecobank, and credit management specialist, Banca FarmaFactoring, given their exposure to the Italian domestic economy, as well as taking profits on a number of other holdings.

The Netherlands became the largest overweight as we added a number of attractively valued positions including liquid storage terminal operator, Vopak, which should return to growth following a period of high investment, engineering consultant, Arcadis, as balance sheet concerns abate and organic growth improves due to end market recovery and internal organisational changes. We also added niche consumer goods distributor, B&S, at IPO.

The level of gearing rose from 5.3% geared at the start of the period to 7.9% geared by the end of the period as we selectively used gearing to add to a number of holdings that had experienced short term share price weakness.

Outlook

With persistent fears surrounding the pace of central bank tightening and its potentially negative impact on economic growth, there is uncertainty as to whether we have reached the end of the bull market or if this is a correction within a rising market. From previous cycles, it is normal at this phase of the expansion for markets to have such fears. We still believe that this cycle should be different as the deflationary effect of technological progress across all industries should contain inflationary pressures. This is supported by the fact that, while many companies are warning of rising input costs, unit labour costs in the US are not rising. If we are correct, this should limit ten year bond yields to below their long term average, the level at which interest rates have historically began to have a negative impact on asset prices.

Although economic growth is no longer accelerating due to the rise in bond yields, it remains at a healthy level. While this could potentially be derailed by a trade war, at present neither China nor the US seem inclined to escalate it, precisely because they both know how much there is to lose on all sides.

Large cap valuations are lower than their average since 1990 and small cap valuations are at similar levels to 2005, offering no immediate cause for concern. As was the case in 2005, we are experiencing very strong double digit earnings growth which is expected to continue both this year and next.

In summary, this period feels very analogous to 2005. From a stock selection perspective, periods where we move from early to late cycle are characterised by changes in market leadership. Assuming we are correct in our analysis, a challenge this year will be identifying companies appropriate for a more mature phase of the cycle.

However, the current political environment in Italy is complicating matters somewhat as the populist 5-Star and League have successfully formed a government. While both have toned down their anti-EU rhetoric, we have nevertheless decided to reduce the portfolio's Italian exposure to underweight and lower gearing further until the new government's policies are clearer.

Francesco Conte

Edward Greaves

Investment Managers

5th June 2018

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.

With the assistance of the Manager, the Board has drawn up a risk matrix, which identifies the key risks to the Company. In assessing the risks and how they can be mitigated, the Board has given particular attention to those risks that might threaten the viability of the Company. These key risks fall broadly under the following categories:

• Investment Underperformance and Strategy: Investment performance could be adversely affected by the loss of one or more of the investment management team. To reduce the likelihood of such an event, the Manager ensures appropriate succession planning and adopts a team-based approach as well as special efforts to retain key personnel.

  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.

  The Board manages these risks by diversification of investments through its investment restrictions and guidelines which are monitored and reported on by the Manager. JPMF 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 all Board meetings, and reviews data which show statistical measures of the Company's risk profile. The Board sets strategic guidelines for gearing as well as investments. Once those are agreed, decisions on levels of gearing are delegated to the Investment Managers, whose decisions are subject to challenge by the Board. The Board holds a separate meeting devoted to strategy each year.

  A disproportionate widening of the discount relative to the Company's peers could result in loss of value for shareholders. The Board regularly discusses discount management policy and has set parameters for the Manager and the Company's broker to follow.

• Market and Currency: 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. Investing in smaller companies is inherently more risky and volatile, partly due to the potential lack of liquidity in some shares. The Board discusses these risk factors at each Board meeting and has placed investment restrictions and guidelines to limit these risks.

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 JPMF. The Board monitors the implementation and results of the investment process with the Manager. The majority of the Company's assets, liabilities and income are denominated in Euros rather than in the Company's functional currency of sterling (in which it reports). As a result, movements in the Euro:sterling exchange rate may affect the sterling value of those items. Therefore, there is an inherent risk from these exchange rate movements. The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - currency risk, interest rate risk and other price risk. Information to enable an evaluation of the nature and extent of these three elements of market risk is given in note 22(a) of the financial statements, together with details of how the Board manages these risks.

The Board has identified the decision by the UK to leave the European Union as a risk. The impact on Continental European companies is difficult to assess and this may lead to some market disruption.

Accounting, Legal and Regulatory: In order to qualify as an investment trust, the Company must comply with Section 1158 of the Corporation Tax Act 2010 ('Section 1158'). Details of the Company's approval are given under 'Business of the Company' in the Annual Report. Were the Company to breach Section 1158, it may lose investment trust status and, as a consequence, gains within the Company's portfolio would be subject to capital gains tax. The Section 1158 qualification criteria are continually monitored by JPMF and the results reported to the Board each month. The Company must also comply with the provisions of the Companies Act 2006 and, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules, the Market Abuse Regulations ('MAR'), Disclosure Guidance and Transparency Rules ('DTRs') and, as an investment trust, the Alternative Investment Fund Managers Directive ('AIFMD'). A breach of the Companies Act 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 which in turn would breach Section 1158. Failure of the Manager to comply with the AIFMD could lead to the Manager losing its status as an Alternative Investment Fund Manager ('AIFM') and the Company would then need to change its AIFM. The Board relies on the services of its Company Secretary, the Manager and its professional advisers to ensure compliance with the Companies Act, the UKLA Listing Rules, MAR, DTRs and AIFMD.

• Operational: Disruption to, or failure of, the Manager's accounting, dealing or payments systems or the Depositary or Custodian's records may prevent accurate reporting and monitoring of the Company's financial position. Under the terms of its agreement, the Depositary has strict liability for the loss or misappropriation of assets held in custody. See note 20 for further details on the responsibilities of the Depositary. Details of how the Board monitors the services provided by JPMF and its associates and the key elements designed to provide effective risk management and internal control are included within the Risk Management and Internal Control section of the Corporate Governance Statement in the Annual Report.

• Cyber Crime: The threat of cyber attack, in all its guises, is regarded as at least as important as more traditional physical threats to business continuity and security. The Board has received the cyber security policies for its key third party service providers and JPMF has provided assurance to the Directors that the Company benefits directly or indirectly from all elements of JPMorgan's Cyber Security programme. The information technology controls around the physical security of JPMorgan's data centres, security of its networks and security of its trading applications are tested and reported on every six months against the AAF Standard.

The risk of fraud or other control failures or weaknesses within the Manager or other service providers could result in losses to the Company. The Audit Committee receives independently audited reports on the Managers and other service providers' internal controls, as well as a report from the Manager's Compliance function. The Company's management agreement obliges the Manager to report on the detection of fraud relating to the Company's investments and the Company is afforded protection through its various contracts with suppliers, of which one of the key protections is the Depositary's indemnification for loss or misappropriation of the Company's assets held in custody.

• Financial: The financial risks arising from the Company's financial instruments include market price risk, interest rate risk, liquidity risk and credit risk. Further details are disclosed in note 22 of the financial statements.

Poor control of expenses can lead to an escalation of costs and high Ongoing charges. The Board monitors the expenses of the Trust and is provided with detailed financial information.

• Corporate Governance and Shareholder Relations: Details of the Company's compliance with corporate governance best practice, including information on relations with shareholders, are set out in the Corporate Governance Statement in the Annual Report.

statement of directors' responsibilities

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

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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that, taken as a whole, the Annual Report and Accounts are fair, balanced and understandable, provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy and that they give a true and fair view of the state of affairs of the Company and of the total return or loss of the Company for that period. In order to provide these confirmations, and in preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business

and the Directors confirm that they have done so.

The Directors are responsible for keeping proper 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 to 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.

The financial statements are published on the www.jpmeuropeansmallercompanies.co.uk website, which is maintained by the Company's Manager. The maintenance and integrity of the website maintained by the Manager is, so far as it relates to the Company, the responsibility of the Manager. The work carried out by the Auditors does not involve consideration of the maintenance and integrity of this website and, accordingly, the Auditors accept no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. The financial statements are prepared in accordance with UK legislation, which may differ from legislation in other jurisdictions.

Under applicable law and regulations the Directors are also responsible for preparing a Directors' Report, Strategic Report, Statement of Corporate Governance and Directors' Remuneration Report that comply with that law and those regulations.

Each of the Directors, whose names and functions are listed in the Annual Report confirm that, to the best of their knowledge:

• the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and return or loss of the Company; and

• the Strategic 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.

The Board confirms that it is satisfied that the Annual Report and Accounts taken as a whole are fair, balanced and understandable and provide the information necessary for shareholders to assess the strategy and business model of the Company.

The Board also confirms that it is satisfied that the Strategic Report and Directors' Report include 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 the Company faces.

For and on behalf of the Board

Carolan Dobson

Chairman

5th June 2018

statement of comprehensive income

for the year ended 31st March 2018

	2018			2017
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair value
through profit or loss	-	82,036	82,036	-	127,358	127,358
Net foreign currency gains	-	2,099	2,099	-	164	164
Income from investments	13,129	-	13,129	10,587	-	10,587
Interest receivable and similar income1	122	-	122	184	-	184
Gross return	13,251	84,135	97,386	10,771	127,522	138,293
Management fee	(1,931)	(4,506)	(6,437)	(1,622)	(3,785)	(5,407)
Other administrative expenses1	(739)	-	(739)	(896)	-	(896)
Net return on ordinary activities before
finance costs and taxation	10,581	79,629	90,210	8,253	123,737	131,990
Finance costs	(153)	(356)	(509)	(218)	(508)	(726)
Net return on ordinary activities
before taxation	10,428	79,273	89,701	8,035	123,229	131,264
Taxation	(853)	-	(853)	(228)	-	(228)
Net return on ordinary activities
after taxation	9,575	79,273	88,848	7,807	123,229	131,036
Return per share	5.98p	49.55p	55.53p	4.88p	76.97p	81.85p

1     For the year ended 31st March 2017 negative interest paid on the liquidity fund was included within 'Interest receivable and similar income', this has been reclassified under 'Other administrative expenses' in the current year, with retrospective amendments to comparatives.

A final dividend of 5.5p per share (2017: 3.5p per share) is proposed in respect of the year ended 31st March 2018, costing £8,799,000 (2017: £5,600,000). More details can be found in note 10(a) of the financial statements.

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

The 'Total' column of this statement is the profit and loss account of the Company and the revenue and capital columns represent supplementary information prepared under guidance issued by the Association of Investment Companies.

The net return on ordinary activities after taxation represents the profit for the year and also Total Comprehensive Income.

Statement of Changes in equity

for the year ended 31st March 2018

	Called up		Capital
	share	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserves	reserve1	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31st March 2016	8,008	1,312	7,628	471,545	6,887	495,380
Repurchase and cancellation of the
Company's own shares	(8)	-	8	(447)	-	(447)
Net return on ordinary activities	-	-	-	123,229	7,807	131,036
Dividends paid in the year (note 3)	-	-	-	-	(5,123)	(5,123)
At 31st March 2017	8,000	1,312	7,636	594,327	9,571	620,846
Net return on ordinary activities	-	-	-	79,273	9,575	88,848
Dividends paid in the year (note 3)	-	-	-	-	(7,519)	(7,519)
At 31st March 2018	8,000	1,312	7,636	673,600	11,627	702,175

1     This reserve forms the distributable reserve of the Company and may be used to fund distributions of profits to investors via dividend payments.

statement of financial position

at 31st March 2018

	2018	2017
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	757,861	653,619
Current assets
Debtors	18,186	8,293
Cash and cash equivalents	21,998	24,285
	40,184	32,578
Current liabilities
Creditors: amounts falling due within one year	(3,805)	(65,351)
Derivative financial liabilities	(10)	-
Net current assets/(liabilities)	36,369	(32,773)
Total assets less current liabilities	794,230	620,846
Creditors: amounts falling due after more than one year	(92,055)	-
Net assets	702,175	620,846
Capital and reserves
Called up share capital	8,000	8,000
Share premium	1,312	1,312
Capital redemption reserve	7,636	7,636
Capital reserves	673,600	594,327
Revenue reserve	11,627	9,571
Total equity shareholders' funds	702,175	620,846
Net asset value per share	438.9p	388.1p

statement of cash flows

for the year ended 31st March 2018

	2018	2017
	£'000	£'000
Net cash outflow from operations before dividends and interest1	(3,591)	(3,107)
Dividends received	12,377	8,177
Interest received1	-	109
Overseas tax recovered	66	800
Interest paid	(459)	(688)
Net cash inflow from operating activities	8,393	5,291
Purchases of investments and derivatives	(597,508)	(848,845)
Sales of investments and derivatives	563,457	802,734
Settlement of forward currency contracts	291	97
Net cash outflow from investing activities	(33,760)	(46,014)
Dividends paid	(7,519)	(5,123)
Repurchase and cancellation of the Company's own shares	-	(447)
Drawdown of bank loans	79,613	60,190
Repayment of bank loans	(49,015)	(43,017)
Net cash inflow from financing activities	23,079	11,603
Decrease in cash and cash equivalents	(2,288)	(29,120)
Cash and cash equivalents at start of year	24,285	53,392
Exchange movements	1	13
Cash and cash equivalents at end of year	21,998	24,285
Decrease in cash and cash equivalents	(2,288)	(29,120)
Cash and cash equivalents consist of:
Cash and short term deposits	2,175	265
Cash held in JPMorgan Euro Liquidity Fund	19,823	24,020
Total	21,998	24,285

1     For the year ended 31st March 2017 negative interest paid on the liquidity fund was included within 'Interest receivable and similar income', this has been reclassified under 'Other administrative expenses' in the current year, with retrospective amendments to comparatives.

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31st March 2018

1.     Accounting policies

        Basis of accounting

The financial statements are prepared under the historical cost convention, modified to include fixed asset investments at fair value, and in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ('UK GAAP'), including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies in November 2014, and updated in February 2018.

All of the Company's operations are of a continuing nature.

The financial statements have been prepared on a going concern basis. The disclosures on going concern in the Annual Report and Financial Statements form part of these financial statements.

The policies applied in these financial statements are consistent with those applied in the preceding year.

2.         Return per share

	2018	2017
	£'000	£'000
Revenue return	9,575	7,807
Capital return	79,273	123,229
Total return	88,848	131,036
Weighted average number of shares in issue during the year	159,987,885	160,090,789
Revenue return per share	5.98p	4.88p
Capital return per share	49.55p	76.97p
Total return per share	55.53p	81.85p

3.         Dividends

            Dividends paid and proposed

	2018	2017
	£'000	£'000
Dividends paid
2017 final dividend of 3.5p (2016: 2.0p) per share	5,600	3,203
2018 interim dividend of 1.2p (2017: 1.2p) per share	1,919	1,920
Total dividends paid in the year	7,519	5,123
Dividend proposed
2018 final dividend of 5.5p (2017: 3.5p) per share	8,799	5,600

All dividends paid and proposed in the period have been funded from the revenue reserve.

The final dividend has been proposed in respect of the year ended 31st March 2018 and is subject to approval at the forthcoming Annual General Meeting. In accordance with the accounting policy of the Company, this dividend will be reflected in the financial statements for the year ending 31st March 2019.

4.         Net asset value per share

	2018	2017
Net assets (£'000)	702,175	620,846
Number of shares in issue	159,987,885	159,987,885
Net asset value per share	438.9p	388.1p

JPMORGAN FUNDS LIMITED

5th June 2018

For further information:

Faith Pengelly,

JPMorgan Funds Limited

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.jpmeuropeansmallercompanies.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

 

END

 

 

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