Final Results

JPMorgan European Grwth & Inc PLC

06 June 2023

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN EUROPEAN GROWTH & INCOME PLC

FINAL RESULTS FOR THE YEAR ENDED
31ST MARCH 2023

The Directors of JPMorgan European Growth & Income plc announce the Company's results

for the year ended 31^st March 2023

HIGHLIGHTS

-     Total return to shareholders 16.0% (Benchmark 8.6%)

-     Ordinary dividend 4.0p

Legal Entity Identifier: 549300D8SPJFHBDGXS57

Information disclosed in accordance with DTR 4.1

CHAIR'S STATEMENT

Introduction

It is pleasing to note that the Company has generated healthy returns in its first full financial year of its new simplified single portfolio and share structure. The Board believes that the Company's distinctive proposition offers the best of capital growth combined with a resilient income

During the Company's financial year ended 31st March 2023, the markets in which the Company invests, have experienced a turbulent year. The devastating conflict in Ukraine, continuing effects of the Covid-19 pandemic, tensions with China and failure of Credit Suisse and some regional banks in the USA, have combined to create an increasingly uncertain environment. Global energy prices increased dramatically and supply chain issues added to inflationary pressures across major economies. Central banks have acted to curb inflation by increasing interest rates which has the potential to add to existing financial pressures.

Performance

Return to shareholders and return on net assets

Despite the challenging environment the Company achieved a positive return on net assets during the financial year ended 31st March 2023 and an outperformance against the Company's benchmark of 1.3% (debt at par value).

The total return on net assets for the Company's Ordinary shares was +9.9% (debt at par value) and +12.5% (debt at fair value). Both of these returns compare well with the benchmark total return in sterling terms of +8.6%. For an explanation of why the Company's NAV varies when debt is calculated at par and at fair values, please see the Glossary of Terms and Alternative Performance Measures on page 91 of the Company's annual report and financial statements.

The total return to shareholders for the Company's Ordinary shares was +16.0%.

In their Report on page 11 of the Company's annual report and financial statements, the Investment Managers comment in more detail on some of the factors underlying the performance of the Company, including strong stock selection which was the main reason for the out-performance over the benchmark, as well as commenting on the economic and market background.

The restructuring has resulted in some of the performance and dividend data for years prior to this reporting period being calculated on a transitional basis as detailed in various footnotes throughout this report.

Revenue and Dividends

During the 12 months to 31st March 2023, the Company's net revenue attributable to shareholders (net return after taxation) was 4.8% higher at £12,354,000 (2022: £11,784,000).

As detailed in the Company's previous annual report, an aim of the Company's restructuring was to provide shareholders with a predictable dividend income at a level that is consistent and frequent, based on 4% of the preceding year end net asset value per share. The Company pays quarterly dividends in July, October, January and March.

In line with the above aim, in respect of the year ending 31st March 2023, the Company's dividend was 4.0 pence per share, amounting to £17.4 million. This represents a significant increase from the £10.2 million paid in 2022, as illustrated in note 10(b) on page 68 of the Company's annual report and financial statements.

For the Company's financial year ending 31st March 2024 the Board is expecting to adopt the same approach with 4% of the year ended 31st March 2023 net asset value per share being paid as dividend. On 23rd May 2023, the Board declared a first interim dividend of 1.05 pence per share in respect of the financial year ending 31st March 2024, payable on 21st July 2023. As in 2023, brought forward revenue reserves will be utilised to partially cover the dividend for financial year ending 31st March 2024. Although not expected to be required in the financial year ending 31st March 2024, the Company's Articles permit the Company's dividends to be paid from distributable capital reserves.

Gearing

There has been no change in the Investment Manager's permitted gearing range, as previously set by the Board, of between 10% net cash to 20% geared. At 31st March 2023 the Company was 3.1% geared (31st March 2022: 2.7%).

Discounts, Share Issuance and Repurchase

As noted in the half year report, during the period under review, discounts across the Investment Trust sector have widened, in some cases indiscriminately. The sector in which the Company operates has not been immune. The Board will continue to address imbalances in the supply of and demand for the Company's shares. The Board does not wish to see the discount widen beyond 10% under normal market conditions (using the cum-income NAV with debt at fair value) on an ongoing basis. The precise level and timing of repurchases through an active buyback of shares is dependent on a range of factors including the prevailing market conditions. In the period under review, 300,000 Ordinary shares were bought back for cancellation and 2,548,683 Ordinary shares were bought into Treasury. From 1st April 2023 to 1st June 2023, 518,906 Ordinary shares were bought into Treasury. No Ordinary shares were issued.

The Company's Ordinary share discount as at 31st March 2023 was 10.3%. The average discount of a peer group of six companies as at the same date was 10.9%. As at 1st June, 2023, the Company's Ordinary share discount was 8.4%, which compares to the average discount of the same peer group of 9.7% reflecting variation in strategy and performance across the sector.

Board of Directors

As this is my first annual report as the Company's Chair, I would like to thank the Board for deciding to appoint me as the Chair on the retirement of Josephine Dixon, in line with the Board's succession plan in September 2022. I very much look forward to continuing my predecessor's skillful leadership of the Company's Board.

During the year, the Board evaluation process reviewed Directors, the Chair, the Committees and the working of the Board as a whole. It was concluded that all aspects of the Board and its procedures were operating effectively. In accordance with corporate governance best practice, all of the Directors retire by rotation at this year's AGM and will offer themselves for re-election.

The Company's Directors fees and that of the Chair of the Board and the Chair of the Audit Committee were last increased with effect from 1st April 2022. To maintain the fees in line with the increasing demands of time required and relative to its peers, the Board agreed that the current fee for the Audit Committee Chair should be increased with effect from 1st April 2023. The other directors and Chair of the Board's fees would remain unchanged. See page 43 of the Company's annual report and financial statements for further details.

Environmental, Social and Governance

Environmental, Social and Governance ('ESG') considerations are integrated into the Investment Managers' investment process as set out in the ESG Report on page 14 of the Company's annual report and financial statements. The Board shares the Investment Managers' view of the importance of ESG factors when making investments for the long term and of the necessity of continued engagement with investee companies throughout the duration of the investment.

Investment Managers

The performance of the Investment Managers is formally evaluated by the Board annually. The evaluation of the Manager was undertaken in January 2023 and based on the data available at that time; the Board concluded that the performance of the Manager had been satisfactory and that their services in the new restructured format should be retained.

Annual General Meeting

The Company's ninety fourth Annual General Meeting (AGM) will be held at 60 Victoria Embankment, London EC4Y 0JP  at 2.30 p.m. on Thursday, 6th July 2023 as an in-person meeting.

We are pleased that this year we will once again be able to invite shareholders to join us in-person for the Company's AGM, hear from the Investment Managers and ask questions. Shareholders wishing to follow the AGM proceedings but choosing not to attend in person will be able to view proceedings live and ask questions (but not vote) through conferencing software. Details on how to register, together with access details, will be available shortly on the Company's website at www.jpmeuropeangrowthandincome.com or by contacting the Company Secretary at [e-mail]

My fellow Board members, representatives of JPMorgan and I look forward to the opportunity to meet and speak with shareholders after the formalities of the meeting have been concluded. Shareholders who are unable to attend the AGM are strongly encouraged to submit their proxy votes in advance of the meeting, so that they are registered and recorded at the AGM. Proxy votes can be lodged in advance of the AGM either by post or electronically: detailed instructions are included in the Notes to the Notice of Annual General Meeting on pages 88 to 90 of the Company's annual report and financial statements.

If there are any changes to these arrangements for the AGM, the Company will update shareholders via the Company's website and an announcement on the London Stock Exchange.

Outlook

During the Company's financial year the general market continued to be buffeted by significant challenges, although at the start of the current calendar year global markets were performing well following China's emergence from its zero-Covid policy and the prospect of peaking inflation and interest rates. However, in recent months this enthusiasm has been swiftly dampened by the challenges to the financial system caused by the failure of a number of regional banks in the US and also of Credit Suisse in Switzerland. The duration of inflationary pressures is uncertain despite the reduction in energy prices in recent months. The extent of interest rate rises by the European Central Bank, along with counterparts elsewhere in the world leaves commentators unclear as to the impact on consumer confidence and the potential severity of a possible global recession. We hope to see an easing in the tragic events taking place in Ukraine, but it seems likely that the future will offer much uncertainty and continued volatility in asset markets, with tensions with China adding to the concerns around geopolitical risks.

Despite these challenges the Board has confidence that the Company's Investment Managers have the requisite experience to navigate such a tricky environment by continuing to adhere to a proven investment process. In addition, the Board shares the Investment Managers' optimism for European equities in the long term. The Board believes the new structure and objective of the Company provides shareholders with the potential for both strong capital returns and enhanced income through a well constructed portfolio of European equities.

For and on behalf of the Board

Rita Dhut

Chair                                                                                                                                                    5th June 2023

INVESTMENT MANAGERS' REPORT

Market background

Continental European equity markets rose 8.6% in Sterling terms in the year to 31st March 2023 (MSCI Europe ex UK (total return)) as sentiment improved sharply in the second half of the Company's financial year. Prior to that the market had retreated as inflation soared to the highest level for 40 years and Central Banks, both in Europe and the US, started to hike rates aggressively. High food and energy prices, both exacerbated by the Russian invasion of Ukraine, contributed to a collapse in consumer confidence. Combined with ongoing supply chain issues and China's zero tolerance approach to Covid-19 signs of economic weakness started to appear, but any suggestion that Central Banks had completed their tightening cycle was explicitly rejected by the Chairman of the Federal Reserve.

Despite the fact that Central Banks remained trapped between the competing dilemmas of rampant inflation requiring higher interest rates and a looming recession if they kept their foot on the brake for too long, equity markets rallied sharply in the second half of the financial year. As the headline level inflation started to come down as base effects kicked in fears of a recession, which had seemed almost inevitable last summer, gradually receded. Consumer confidence recovered, helped by lower energy prices and government subsidies, and the labour market across Europe remained strong. In general consumer services companies have recovered well. The prospect of China backing away from its restrictive Covid-19 lockdown protocols was also an unanticipated boost for European exporters, particularly the luxury goods companies. Throughout the year corporate results, in aggregate, continued to surprise on the upside.

Towards the end of the Company's financial year markets were faced with the possibility of another banking crisis with the failure of Silicon Valley Bank in the US. It suffered from an over reliance on corporate, particularly Venture Capital related, deposits coupled with the asset side of its balance sheet having too many long duration bonds in its 'hold-to-maturity' portfolio that were bought when yields were low. The combination of rising yields hitting the value of these bonds and corporates suddenly withdrawing their deposits proved toxic. Subsequent to this First Republic Bank was taken over by JPMorgan Chase Bank, N.A after an earlier rescue attempt failed. In Europe Credit Suisse has been taken over by UBS although this has been a more drawn-out issue following a series of scandals over many years and its lack of profitability. So far European banks generally have proved resilient but if there is one lesson from the recent problems in the US it is the speed with which liquidity issues in the banking sector can arise.

Portfolio Positioning

As equity markets derated in the early part of the year, the earnings recovery gave us conviction in re-building positions in some of the more cyclical parts of the market. This included stocks within the Capital Goods and Automobile sectors, while we remained overweight in Semiconductor stocks. A common theme around many of the companies in these sectors was their ability to demonstrate pricing power. We also reduced our underweight to Retail by starting a position in Inditex, the fashion retailer which owns brands such as Zara and Massimo Dutti. We funded some of these positions from areas of the market where we had lower conviction. This included some stocks within Materials, where higher input costs became more of an issue, as well as Pharmaceuticals, where despite valuation support some of the stocks lacked positive catalysts.

Within Capital Goods, one of our largest active positions in the sector is Vinci, a French listed stock with exposure to toll roads, airport concessions, construction, and more recently energy contracting. Apart from an attractive valuation supported by strong free cash flow generation, the prospect for earnings growth is also high, driven by a recovery in passenger numbers. We have also become more positive on their potential growth in developing renewable energy concession projects given their expertise in electrical engineering and following the Cobra acquisition.

We participated in the Porsche IPO within the Automobiles sector. The luxury auto group is benefitting from secular growth, with its addressable market growing 8-10% p.a. The company is also well positioned within the trend towards electrification with plug-in hybrids, full electrics, and ICE vehicles using e-fuels. While the stock trades at a premium to other European autos, its profitability, evidenced by its mid-teens margin, is also much higher than its mass market competitors.

We funded these purchases by selling some healthcare stocks where operating fundamentals had disappointed. For instance, we sold out of Merck KGaA. While their pharmaceuticals business appears to be on track, their Life Science and Electronics businesses were being affected by customer destocking and demand pressures in consumer electronics, respectively. We also trimmed the position in Roche following poor momentum with their pipeline development, such as for their drug treating Alzheimers.

Our overall sector positioning is driven by bottom-up stock selection rather than any top-down asset allocation. As a result of these position changes, our two main sector overweights at the end of the year under review were Capital Goods and Semiconductors, while the biggest underweights were Healthcare Equipment & Services and Materials. As ever, and in line with our investment process, the portfolio as a whole remains cheaper than the benchmark while exhibiting better quality and momentum characteristics.

Portfolio Performance

Year ended 31st March 2023

	%	%
Contributions to total returns
Benchmark return		8.6
Asset allocation	0.6
Stock selection	1.5
Currency	0.3
Gearing/cash	-0.5
Investment manager contribution		1.9
Portfolio return		10.5
Management fee/other expenses	-0.7
Share buyback	0.1
Other effects		-0.6
Return on net assets with debt at par valueA		9.9
Impact of debt at fair value1		2.6
Return on net assets with debt at fair valueA		12.5
Effect of movement in discount		3.5
Return to shareholdersA		16.0

Source: B-One/JPMAM/AIC/Morningstar.

All figures are on a total return basis. Performance attribution analyses how the portfolio achieved its recorded performance relative to its benchmark.

1     See note 14 on page 70 of the Company's annual report and financial statements for reference to fair value of debt.

A    Alternative Performance Measure ('APM').

A glossary of terms and APMs is provided on page 91 of the Company's annual report and financial statements.

Portfolio Performance and Attribution

The portfolio outperformed its benchmark index by 1.3% with the NAV rising 9.9% (with debt valued at par), with most of the excess performance coming from stock selection. Novo Nordisk, a Danish pharmaceutical company focusing on diabetes therapies and obesity treatments, performed strongly again this year driven by strong demand for their weight loss drug Wegovy. This condition affects over 750 million people globally but with only 2% of those treated with medication. Novo is leading the market with innovative drugs that can help people reduce weight effectively and is seeing exceptional demand for their products as a result. Deutsche Telekom, the German telecoms operator with significant operations in the US was another positive performer for the portfolio, with strong operating trends in their European and US businesses and impressive free cashflow generation. LVMH, the diversified luxury group, beat analyst expectations throughout the year helped by the specific strength of their brands including Louis Vuitton and Dior. Unicredit, the Italian bank, is an example where we rebuilt the position in a more cyclical name in the second half of the year and were rewarded for that as earnings continued to recover. Rising interest rates helped their net interest margin expand which, combined with a strong balance sheet, meant the company has been able to return excess capital to shareholders through both dividends and share buybacks. The portfolio also benefitted, in relative terms, from not owning Credit Suisse, where despite a seemingly cheap valuation, the poor profitability and lack of earnings recovery ultimately led to its takeover by UBS.

On the negative side, Boliden, a Swedish mining company, which had been a strong contributor to the performance last year, detracted from relative performance this year. The stock underperformed on a combination of falling commodity prices, weaker volume output from their mines and higher costs impacted by broad-based inflation.

Outlook

The market is facing ongoing uncertainty about the inflation outlook and whether Central Banks can engineer a soft landing in which inflation is reduced without tipping economies into recession. While we continue to believe that the European banking sector is much more robust than it was during previous financial crises, we remain alert to the speed with which things can change and will act accordingly if required. On a more positive note, the concerns mentioned above are well known to the market and may already be priced in. On a longer term view the Company's Managers continue to believe that the investment universe of European companies contains many high quality enterprises across different sectors and often with global reach. Moreover, the valuation of European markets continues to look attractive, particularly in comparison with the US, but importantly within the market too. Valuation spreads remain wide which suggests that there will be opportunities for stock selection to continue to add value.

Alexander Fitzalan Howard

Zenah Shuhaiber

Tim Lewis

Investment Managers                                                                                                                        5th June 2023

PRINCIPAL AND EMERGING RISKS

The Directors have carried out a robust assessment of the principal and emerging risks facing the Company, including climate change and those that would threaten its business model, future performance, solvency or liquidity. With the assistance of the Manager, the Audit Committee has drawn up a risk matrix, which identifies the key and emerging risks to the Company. These are reviewed and noted by the Board. The risks identified and the broad categories in which they fall, and the ways in which they are managed or mitigated are summarised below. The AIC Code of Corporate Governance requires the Audit Committee to put in place procedures to identify emerging risks. The key emerging risks identified are also summarised below.

Principal Risk	Description	Mitigating Activities
Investment	The Board recognises that performance of the Company's investment portfolio is fundamental to the success of the Company. Investment includes market risk and this arises from uncertainty about the future prices of the Company's investments. It represents the potential loss the Company might suffer through holding investments in the face of negative market movements. Market risk is currently heightened due to various factors highlighted in the Chair and Investment Managers' report, these include interest rates rises, ongoing supply chain issues and sustained inflation. Geopolitical concerns will also impact the market; the current conflict in Ukraine and tensions with China are causing increased volatility in the markets.	In order to achieve the objectives given the risks inherent in investment such as market, gearing, currency and interest rates, investment guidelines, policies and processes are in place which aim to mitigate these risks. They are designed to ensure that the portfolios are managed in a way which is aimed at identifying the best stocks and diversifying risk. Regular reports are received by the Board from the Manager on stock selection, asset allocation, gearing, hedging and costs of running the Company and these are reviewed at each Board meeting in detail. Compliance with investment guidelines and policies are reviewed by the Manager and the Board, and discussed at each board meeting in detail together with an analysis of market parameters affecting the business. 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. Further details regarding financial instruments are disclosed in note 21 on pages 75 to 81 of the Company's annual report and financial statements.
Operational	In common with most investment trusts the Board delegates the operation of the business to third parties, the principal delegate being the Manager JPMF. Disruption to, failure of, or fraud in JPMF's accounting, dealing or payments systems or the Depositary or Custodian's records could prevent timely implementation of investment decisions, and potentially shortfalls in the accuracy of reporting and monitoring of the Company's financial position and loss. Cyber crime is a threat to businesses continuity and security.	Details of how the Board monitors the services provided by JPMF and its associates and the Depositary and Custodian and the key elements designed to provide effective internal control are included within the Internal Control section of the Corporate Governance report on page 35 of the Company's annual report and financial statements. The Board has received the cyber security policies of 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 trading applications are tested and reported on every six months against the AAF standard.
Regulatory	The Company operates in an environment with significant regulation including the FCA Listing Rules, The UK Companies Act, the Corporation Taxes Act, Market Abuse Regulation, Disclosure Guidance and Transparency Regulations and the Alternative Investment Fund Managers Directive (AIFMD). There has been no significant change to this risk during the year though the environment as a whole is considered to be one of increasing costs for compliance. The Company also operates under the requirements of the Bribery Act 2010 as referred to in the Directors Report on page 34 of the Company's annual report and financial statements.	The Board relies on the services of its Company Secretary, the Manager and its professional advisers to ensure compliance with the Companies Act 2006, the FCA Prospectus Rules, Listing Rules, DTRs and the Alternative Investment Fund Managers Directive.
Discount premium to NAV	Share price discount or premium to net asset value per share could lead to high levels of uncertainty and reduced shareholder confidence.	The Board monitors the Company's discount level and seeks, where deemed prudent, to address imbalances in the supply and demand of the Company's shares through share buybacks. For details of the Company's Continuation Vote and Tender Offer and Discount Control arrangements, including recent updates, see Key Features at the front of this document.
Strategy	An inappropriate investment strategy, for example asset allocation may lead to underperformance against the Company's benchmark index and peer companies.	The Board reviews the overall strategy and structure of the Company in comparison to performance against benchmark, peer group and share activity. The Board holds a separate meeting devoted to strategy each year which includes consideration of whether the Company's objectives and structures are appropriate for the long term interests of shareholders.
Pandemic Risk	Whilst noting that in May 2023 the World Health Organization announced that Covid-19 no longer qualified as a global emergency, the outbreak and spread of Covid-19 demonstrated the risk of global pandemics, in whatever form a pandemic takes. Should a new variant of the virus spread more aggressively or become more virulent, it may present risks to the operations of the Company, its Manager and other major service providers. The recent 'Zero Covid' policy in China illustrates the continuing potential for Covid-19 to cause disruption. The 'Zero Covid' policy in China that was in place during the year (although recently withdrawn) illustrates the negative impact that a pandemic can have on the global economy.	The Board monitors effectiveness and efficiency of service providers' processes through ongoing compliance and operational reporting and there were no disruptions to the services provided to the Company in the year under review. The Company's service providers are capable of implementing business continuity plans which include working almost entirely remotely. The Board continues to receive regular reporting on operations from the Company's major service providers and would not anticipate a fall in the level of service in the event of a reemergence of a pandemic.
Climate Change	Climate change, which barely registered with investors a decade ago, has today become one of the most critical issues confronting asset managers and their investors. Investors can no longer ignore the impact that the world's changing climate will have on their portfolios, with the impact of climate change on returns now inevitable.	The Company's investment process integrates considerations of environmental, social and governance factors into decisions on which stocks to buy, hold or sell. This includes the approach investee companies take to recognising and mitigating climate change risks. The Board is also considering the threat posed by the direct impact on climate change on the operations of the Manager and other major service providers. As extreme weather events become more common, the resiliency, business continuity planning and the location strategies of our services providers will come under greater scrutiny.
Emerging Risks	Description	Mitigating Activities
Geopolitical and Economic concerns	The recent trade tensions between western economies and China and Russia's invasion of Ukraine in February 2022 may cause long term changes in global trade and technology. This may challenge future growth potential and increased frictions in accessing global markets. Changes in financial or tax legislation in the UK or in some of the countries in which the Company invests may impact the operating model of the Company. In addition policies adopted by Governments/Central banks in response to the issues being seen in markets (e.g. inflation and interest rates) may lead to adverse movements in asset prices and could result in concerns for the ongoing exposure to specific investee markets.	The Company addresses these global developments in regular questioning of the Manager and with external expertise as required will continue to monitor these issues, should they develop. The Manager regularly monitors the Company's portfolio holdings to ensure compliance with any applicable sanctions.
Artificial Intelligence (AI)	While it might equally be deemed a great opportunity and force for good, there appears also to be an increasing risk to business and society more widely from AI. Advances in computing power means that AI has become a powerful tool that will impact a huge range of areas. AI could be a significant driver for new business as well as a disrupter to current business and processes leading to added uncertainty in corporate valuations.	The Board will work with the Manager to monitor the developments concerning AI and its potential impact on the portfolio, our service providers and the wider market.

TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES

Details of the management contract are set out in the Directors' Report on page 34 of the Company's annual report and financial statements. The management fee payable to the Manager for the year was £2,228,000 (2022: £3,343,000), of which £nil (2022: £nil) was outstanding at the year end.

Included in administration expenses in note 6 on page 65 of the Company's annual report and financial statements. are safe custody fees amounting to £46,000 (2022: £52,000) payable to JPMorgan Chase Bank, N.A of which £16,000 (2022: £9,000) was outstanding at the year end.

The Manager may carry out some of its dealing transactions through group subsidiaries. These transactions are carried out at arm's length. Commission amounting to £21,000 (2022: £15,000) was payable to JPMorgan Securities Limited for the year of which £nil (2022: £nil) was outstanding at the year end.

The Company holds investments in funds managed by JPMAM. At 31st March 2023 these were valued at £10.6 million (2022: £11.3 million) and represented 2.3% (2022: 2.5%) of the Company's investment portfolio. During the year the Company made £nil purchases of such investments (2022: £nil) and sales with a total value of £nil (2022: £3,389,000).

Income amounting to £168,000 (2022: £170,000) was receivable from these investments during the year of which £nil (2022: £nil) was outstanding at the year end.

The Company also holds cash in the JPMorgan Euro Liquidity Fund, managed by JPMF. At the year end this was valued at £25.2 million (2022: £24.3 million). Interest amounting to £nil (2022: £nil) was payable during the year of which £nil (2022: £nil) was outstanding at the year end.

Stock lending income amounting to £46,000 (2022: £74,000) was receivable by the Company during the year. JPMAM commissions in respect of such transactions amounted to £5,000 (2022: £8,000).

Handling charges on dealing transactions amounting to £13,000 (2022: £34,000) were payable to JPMorgan Chase Bank N.A. during the year of which £5,000 (2022: £6,000) was outstanding at the year end.

At the year end, total cash of £0.3 million (2022: £5.4 million) was held with JPMorgan Chase Bank N.A. A net amount of interest of £2,000 (2022: £2,000) was receivable by the Company during the year from JPMorgan Chase Bank, N.A of which £nil (2022: £nil) was outstanding at the year end.

Full details of Directors' remuneration and shareholdings can be found on page 43 and in note 6 on page 65 of the Company's annual report and financial statements.

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report & the Financial Statements in accordance with applicable law and regulation.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', and applicable law).

Under company law, Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing the financial statements, the directors are required to:

•   select suitable accounting policies and then apply them consistently;

•   state whether applicable United Kingdom Accounting Standards, comprising FRS 102 have been followed, subject to any material departures disclosed and explained in the financial statements;

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

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

The Directors are 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 Directors are also responsible for keeping adequate 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 enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006.

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.  Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' confirmations

The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company's position and performance, business model and strategy.

Each of the directors, whose names and functions are listed in page 34 of the Company's annual report and financial statements confirm that, to the best of their knowledge:

•   the company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS 102, give a true and fair view of the assets, liabilities, financial position and return of the company; and

•   The Strategic Report and the Directors' Report include 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.

For and on behalf of the Board

Rita Dhut

Chair

5th June 2023

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31st March

	2023			2022
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments and derivatives held at
fair value through profit or loss	-	32,295	32,295	-	25,076	25,076
Foreign exchange gains/(losses) on liquidity fund	-	1,141	1,141	-	(206)	(206)
Net foreign currency (losses)/gains	-	(2,795)	(2,795)	-	332	332
Income from investments	15,138	-	15,138	15,568	-	15,568
Interest receivable and similar income	48	-	48	76	-	76
Gross return	15,186	30,641	45,827	15,644	25,202	40,846
Management fee	(668)	(1,560)	(2,228)	(1,170)	(2,173)	(3,343)
Other administrative expenses	(557)	-	(557)	(649)	-	(649)
Net return before finance costs and taxation	13,961	29,081	43,042	13,825	23,029	36,854
Finance costs	(359)	(837)	(1,196)	(405)	(751)	(1,156)
Net return before taxation	13,602	28,244	41,846	13,420	22,278	35,698
Taxation	(1,248)	-	(1,248)	(1,636)	-	(1,636)
Net return after taxation	12,354	28,244	40,598	11,784	22,278	34,062
Return per share:	2.83p	6.48p	9.31p	2.69p	5.08p	7.77p

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. Net return after taxation represents the profit for the year and also Total Comprehensive Income.

STATEMENT OF CHANGES IN EQUITY

	Called up	Share	Capital
	share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31st March 2021	4,667	131,528	15,791	255,912	11,705	419,603
Repurchase and cancellation of the Company's own shares (note 15)
	(62)	-	62	(4,314)	-	(4,314)
Project costs in relation to restructure	-	(365)	-	-	-	(365)
Net return	-	-	-	22,278	11,784	34,062
Dividends paid in the year (note 10)	-	-	-	-	(9,652)	(9,652)
At 31st March 2022	4,605	131,163	15,853	273,876	13,837	439,334
Reclassification of shares cancelled in respect of the restructure in the prior year (note 15)	(2,418)	-	2,418	-	-	-
Repurchase and cancellation of the Company's own shares (note 15)
	(2)	-	2	(258)	-	(258)
Repurchase of shares into Treasury (note 15)	-	-	-	(2,183)	-	(2,183)
Net return	-	-	-	28,244	12,354	40,598
Dividends paid in the year (note 10)	-	-	-	-	(22,245)	(22,245)
At 31st March 2023	2,185	131,163	18,273	299,679	3,946	455,246

STATEMENT OF FINANCIAL POSITION

At 31st March

	2023	2022
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	469,173	451,154
Current assets
Derivative financial assets	12	137
Debtors	4,782	3,926
Cash and cash equivalents	25,523	29,685
	30,317	33,748
Current liabilities
Creditors: amounts falling due within one year	(364)	(3,334)
Derivative financial liabilities	(101)	(142)
Net current assets	29,852	30,272
Total assets less current liabilities	499,025	481,426
Creditors: amounts falling due after more than one year	(43,779)	(42,092)
Net assets	455,246	439,334
Capital and reserves
Called up share capital	2,185	4,605
Share premium account	131,163	131,163
Capital redemption reserve	18,273	15,853
Capital reserves	299,679	273,876
Revenue reserve	3,946	13,837
Total shareholders' funds	455,246	439,334
Net asset value per share	104.8p	100.5p

STATEMENT OF CASH FLOWS

For the year ended 31st March

	2023	20221
	£'000	£'000
Cash flows from operating activities
Net return before finance costs and taxation	43,042	36,854
Adjustment for:
Net gains on investments held at fair value through profit or loss	(32,295)	(25,076)
Foreign exchange (gains)/losses on Liquidity fund	(1,141)	206
Net foreign currency losses/(gains)	2,795	(332)
Dividend income	(15,138)	(15,567)
Interest income	(2)	(2)
Realised gain on foreign exchange transactions	494	221
Realised exchange gains/(losses) on Liquidity	648	(707)
Decrease/(increase) in accrued income and other debtors	27	(28)
(Decrease)/increase in accrued expenses	(41)	63
	(1,611)	(4,368)
Dividends received	12,264	11,921
Interest received	2	2
Overseas withholding tax recovered	661	2,073
Net cash inflow from operating activities	11,316	9,628
Purchases of investments and derivatives	(120,395)	(229,228)
Sales of investments and derivatives	131,716	234,721
Settlement of forward foreign currency contracts	(1,531)	(317)
Settlement of future contracts	-	(874)
Net cash inflow from investing activities	9,790	4,302
Equity dividends paid	(22,245)	(9,652)
Repurchase of shares for Cancellation	(258)	(4,632)
Repurchase of shares into Treasury	(2,089)	-
Project costs	-	(365)
Interest paid	(1,170)	(1,156)
Net cash outflow from financing activities	(25,762)	(15,805)
Decrease in cash and cash equivalents	(4,656)	(1,875)
Cash and cash equivalents at start of year	29,685	31,032
Unrealised gain on foreign currency cash and cash equivalents	494	528
Cash and cash equivalents at end of year	25,523	29,685
Cash and cash equivalents consist of:
Cash and short term deposits	280	5,402
Cash held in Liquidity fund	25,243	24,283
Total	25,523	29,685

1    The presentation of the Cash Flow Statement, as permitted under FRS 102, has been changed so as to present the 'reconciliation of net return before finance costs and taxation' to 'cash inflow from  operating activities' on the face of the Cash Flow Statement. Previously, this was shown by way of note to the Cash Flow Statement. Other than consequential changes in the presentation of certain cash flow items, there is no change to the cash flows as presented in previous periods.

Reconciliation of net debt

	As at			Other	As at
	31st March		Exchange	non-cash	31st March
	2022	Cash flows	movements	changes	2023
	£'000	£'000	£'000	£'000	£'000
Cash and cash equivalents
Cash	5,402	(5,123)	1	-	280
Cash equivalents	24,283	467	493	-	25,243
	29,685	(4,656)	494	-	25,523
Borrowings
Debt due after one year	(42,092)	-	(1,675)	(12)	(43,779)
Net debt	(12,407)	(4,656)	(1,181)	(12)	(18,256)

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31st March 2023

1.       Accounting policies

(a)     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 'the Financial Reporting Standard applicable in the UK and Republic of Ireland' ('FRS 102') 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 July 2022.

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

The financial statements have been prepared on a going concern basis. In forming this opinion, the Directors have considered as part of its risk assessment: the nature of the Company, its business model and related risks including the continuing impact of the Covid-19 pandemic and the ongoing conflict between Ukraine and Russia, the requirements of the applicable financial reporting framework, the covenants in respect of the Company's private placement debt and the system of internal control.

The Directors believe that, having considered the Company's investment objectives, future cash flow projections, risk management policies, liquidity risk, principal and emerging risks, capital management policies and procedures, nature of the portfolios and expenditure projections, the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence to 30th June 2024, being at least 12 months from approving this annual report and financial statements.

For these reasons, they consider that there is reasonable evidence to continue to adopt the going concern basis in preparing the report.

2.       Dividends

(a)     Dividends paid and declared

	2023	2022
	£'000	£'000
Dividends paid
Unclaimed Growth dividends refunded to the Company	-	(303)
2023 and 2022 Growth second interim dividend of nil (2021: 3.20p) per share1	-	2,348
2023 Growth first interim dividend of nil (2022: 2.50p) per share	-	1,801
2023 and 2022 Income fourth quarterly dividend of nil (2021: 2.50p) per share1	-	2,211
2023 Income first quarterly dividend of nil (2022: 1.40p) per share	-	1,195
2023 Income second quarterly dividend of nil (2022: 1.40p) per share	-	1,201
2023 Income third quarterly dividend of nil (2022: 1.40p) per share	-	1,199
2022 Growth & Income first interim dividend of 1.10p	4,812	-
2023 Growth & Income first interim dividend of 1.00p	4,369	-
2023 Growth & Income second interim dividend of 1.00p	4,358	-
2023 Growth & Income third interim dividend of 1.00p	4,354	-
2023 Growth & Income fourth interim dividend of 1.00p	4,352	-
Total dividends paid in the year	22,245	9,652
Dividends declared
2024 Growth & Income first interim dividend of 1.05 (2023: 1.00p) per share	4,556	4,369
Total dividends declared2	4,556	4,369

1.   These dividends were incorrectly included as paid in 2021 and have now been corrected as they were paid in 2022 (on 1st April 2022).

2    In accordance with the accounting policy of the Company, these dividends will be reflected in the financial statements of the following year.

The first interim dividend of 1.05 pence per share in respect of the Company's financial year ending 31st March 2024 was declared on 23rd May 2023 for shareholders on the register on 2nd June 2023, with payment on 21st July 2023.

All dividends paid and declared in the financial year have been funded from the Revenue Reserve.

(b)    Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010 ('Section 1158')

The requirements of Section 1158 are considered on the basis of dividends declared in respect of the financial year, as follows:

The revenue available for distribution by way of dividend for the year is £12,354,000 (2022: £11,784,000).

	2023	2022
	£'000	£'000
2023 Growth first interim dividend of nil (2022: 2.50p) per share	-	1,801
2023 Income first quarterly dividend of nil (2022: 1.40p) per share	-	1,195
2023 Income second quarterly dividend of nil (2022: 1.40p) per share	-	1,201
2023 Income third quarterly dividend of nil (2022: 1.40p) per share	-	1,199
2022 Growth & Income first interim dividend of 1.10p (2021: nil) per share	-	4,812
2023 Growth & Income first interim dividend of 1.00p (2022: nil) per share	4,369	-
2023 Growth & Income second interim dividend of 1.00p (2022: nil) per share	4,358	-
2023 Growth & Income third interim dividend of 1.00p (2022: nil) per share	4,354	-
2023 Growth & Income fourth interim dividend of 1.00p (2022: nil) per share	4,352	-
Total	17,433	10,208

The revenue reserve after payment of the fourth interim dividend amounts to £3,946,000 (2022: £9,027,000 after payment of the first interim Growth & Income dividend).

3.            Return per share

	2023	20221
	£'000	£'000
Return per share is based on the following:
Revenue return	12,354	11,784
Capital return	28,244	22,278
Total return	40,598	34,062
Weighted average number of shares in issue during the year	435,967,427	438,868,316
Revenue return per share	2.83p	2.69p
Capital return per share	6.48p	5.08p
Total return per share	9.31p	7.77p

¹        A transitional basis has been adopted for the calculation of the Return per share for the year ended 31st March 2022.

4.       Net asset value per share

	2023	2022
Ordinary shareholders' funds (£'000)	455,246	439,334
Number of shares in issue	434,437,846	437,286,529
Net asset value per share	104.8p	100.5p

2022 Financial Information

The figures and financial information for 2022 are extracted from the published Annual Report and Financial Statements for the year ended 31st March 2022 and do not constitute the statutory accounts for that year.  The Annual Report and Financial Statements has been delivered to the Registrar of Companies and included the Report of the Independent Auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

2023 Financial Information

The figures and financial information for 2023 are extracted from the Annual Report and Financial Statements for the year ended 31st March 2023 and do not constitute the statutory accounts for the year. The Annual Report and Financial Statements includes the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The Annual Report and Financial Statements will be delivered to the Registrar of Companies in due course.

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

Annual Report and Financial Statements  

The Annual Report and Financial Statements will be posted to shareholders on or around 8th June 2023 and will shortly be available on the Company's website www.jpmeuropeangrowthandincome.com or in hard copy format from the Company's Registered Office, 60 Victoria Embankment London EC4Y 0JP.

A copy of the annual report will shortly be submitted to the FCA's National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

Up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found on the Company's website at www.jpmeuropeangrowthandincome.com

For further information:

Paul Winship,

JPMorgan Funds Limited, Secretary - 020 7742 4000

6th June 2023 

 

END