Final Results

RNS Number : 2129C

JPMorgan Mid Cap Invest Trust PLC

27 September 2018

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN MID CAP INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 30TH JUNE 2018

Legal Entity Identifier: 549300QED7IGEP4UFN49

Information disclosed in accordance with the DTR 4.1.3

CHAIRMAN'S STATEMENT

Investment Performance

It is very pleasing to report that for the year ended 30th June 2018, the Company's total return on net assets was +16.4%, compared with the benchmark total return of +11.2%. The discount at which the Company's shares trade to net asset value narrowed over the year and as a result the Company's total return to shareholders was a very healthy +27.4%.

This strong performance was generated by positive stock selection by the Investment Managers, despite increasingly volatile investment conditions as a result of the ongoing uncertainties surrounding the UK's exit from the European Union. Gearing also contributed to this outperformance as can be seen from the performance attribution detailed in the Investment Managers' Report within the Company's Annual Report and Financial Statements 2018 ('2018 Annual Report').

Despite the continued strong performance on both an absolute and relative basis, demand for the Company's shares remains disappointing. Many investors are continuing to steer clear of UK equities until there is clarity on the UK's position in Europe from March 2019. This concern has resulted in the Company's shares trading stubbornly at a discount to net asset value. The Investment Managers believe that such worries, which have now been ongoing since June 2016, are overly pessimistic, particularly given that there is a plethora of companies exposed to both international and domestic earnings within the FTSE 250 Index. As active managers, the team can be selective as to the exposure within the portfolio and, since the result of the Brexit Referendum, have positioned the portfolio to be overweight international earners compared to the benchmark. Most importantly for investors, the mid cap universe offers attractive investment opportunities whatever the economic and market backdrop, despite increasing volatility.

In terms of longer term performance, the Investment Managers' record is very impressive over one, three and five years. Based upon this performance record and taking all factors into account, to include other services provided to the Company and its shareholders, the Board has no hesitation in confirming that JPMF should continue as the Company's Manager and that its ongoing appointment remains in the best interests of shareholders.

The Investment Managers' report below gives more detail on the positioning of the portfolio, actions taken and performance attribution, together with their views on the outlook for the mid cap sector.

The Case for Investing in UK Mid Cap Companies

The table below shows the outperformance of the FTSE 250 Index relative to the FTSE 100 over the last ten years and it is pleasing to note that our Investment Managers, Georgina and Katen, have outperformed the FTSE 250 Index benchmark during their tenure which now extends to more than five years.

	To 30th June 2018
	One Year	Three Year	Five Year	Ten Year
Index	Return %	Return %	Return %	Return %
FTSE 250 (including investment trusts)	10.6	28.8	72.4	200.8
FTSE 250 (excluding investment trusts)	11.2	27.4	72.6	217.3
FTSE 100	8.7	32.0	48.6	98.2

At a recent presentation the Investment Managers presented the case for investing in UK Mid Cap Companies and I thought it was worth sharing some of the charts with shareholders, as I feel they made a compelling case for investing in the asset class. As you can see from the chart within the 2018 Annual Report, over the last 25 years, the FTSE 250 Index excluding Investment Trusts (your Company's benchmark) has significantly outperformed every other major equity index, in sterling terms, including Emerging Markets and the technology heavy S&P 500 Index in the United States. Some of the possible reasons for this very impressive long term performance are highlighted below.

The reason many of these companies have better growth characteristics can often be found in their ownership structure, their ability to operate and compete in more niche areas and the fact that they are usually at a relatively early stage of their life cycle and hence have a stronger growth runway versus FTSE 100 companies.

The nature of the FTSE 250 also means that Investment Managers have a significantly more diverse universe from which to select companies. The 10 largest stocks in the FTSE 250 make up just 11% of the index compared with four times that in the FTSE 100. This diversity is not only by number of companies but also across industries and by income. By investing in the FTSE 250, investors can also receive a more diversified dividend payment stream. In the FTSE 100 the top five dividend payers represent 40% of the total income paid out whereas in the FTSE 250 they represent just 10%.

Mid Cap companies also tend to be target rich areas for mergers and acquisitions. Large companies often target their smaller rivals, which have better growth trajectories, in order to increase their market opportunity and augment growth. These acquisitions are often at a premium to the prevailing market valuations. The below chart highlights the significantly higher percentage of companies that are acquired in the FTSE 250 compared with the FTSE 100. Companies held in the portfolio that have recently been acquired include Fenner, Aldermore and Paysafe.

The final chart within the 2018 Annual Report to draw your attention highlights the number of analysts covering each stock in the FTSE All Share Index. The chart highlights that as the market capitalisation of companies decreases across the UK equity market so too does the average number of analysts covering those companies. This means that Investment Managers with a proven investment process are more able to find under researched, growth companies at attractive valuations.

Revenue and Dividends

Revenue earnings per share for the year to 30th June 2018 were 33.12 pence, a 7.3% increase on last year. The receipt of special dividends remained a notable factor in the strength of the Company's earnings, with just over 20% of the income received arising from the receipt of special dividends. The Board has decided to increase the dividend this year by 7.7%, by proposing a final dividend of 18.5 pence and a special dividend of 1.5 pence, which when added to the interim dividend paid in April of 8.0 pence, equates to total dividend payable of 28.0 pence (2017: 26.0 pence) for the full year. The final and special dividend will be paid on 15th November 2018 to shareholders on the register at the close of business on 12th October 2018.

Whilst it is expected that the payment of special dividends will still be a feature of the UK dividend market for the year ahead, such payments are difficult to forecast and may not continue at previous levels. The company has, however, built up a significant revenue reserve over the years and the Board will seek to increase the dividend by at least the rate of inflation.

Gearing and Borrowing Facilities

The Board sets the overall gearing guidelines and reviews these at each meeting; changes in these guidelines between meetings may be undertaken by the Investment Managers after consultation with the Board. The Board has determined that in normal circumstances the Company's gearing range is 5% net cash to 25% geared. Having varied between 0% and 8.0% throughout the year under review, at the end of the Company's financial year the Company was 4.6% geared.

At the end of the reporting year, the Company had two loan facilities in place totalling £40 million, expiring in 2019 and 2020, with the option of further increasing one of the facilities by £25 million. Shareholders should expect gearing to remain below 5% on average in the run-up to a clear position on the UK's future role in Europe.

Discount Management

The Board continues to monitor the Company's discount closely with its advisers and is prepared to repurchase shares when it feels that it is appropriate, taking into account market conditions. The Company repurchased 25,000 shares in the year. Any shares repurchased are held in Treasury for possible re-issue. Treasury shares and any new Ordinary shares will only be sold or issued respectively at a premium to net asset value.

Board of Directors

The Directors conduct an assessment of the performance of the Board and its committees, as well as their own performance, each year and this is supplemented by one-to-one meetings with me. The Chairman's performance is assessed by the Senior Independent Director after he has consulted with all of the other Directors. A report is made to the Nomination and Remuneration Committee which meets annually to consider the results of the evaluation exercises. Having completed the process this year, the Nomination and Remuneration Committee is satisfied that all Directors possess the experience and attributes required of a Director for this Company. Accordingly, the re-elections of all Directors at the forthcoming Annual General Meeting ('AGM') are recommended to shareholders.

The Board continues to manage succession so that it has the appropriate balance of skills and knowledge and to have regard to the new Code of Corporate Governance for UK public companies. To this end we plan to continue with our staged succession policy for the next two years. Having served as a Director since 2008, Margaret Littlejohns will retire from the Board at the AGM in 2019. The Board will shortly commence the process of recruiting a new non-executive Director to chair the Audit & Risk Committee upon Margaret's retirement. Having chaired the Board since 2016 and having been appointed to the Board in 2008, I plan to step down from the Board at the 2020 AGM, with my successor being confirmed ahead of this time. A further new non-executive director will be appointed in 2020. It is our intention to keep the number of board members to five over the medium term but this will temporarily increase to six during this succession period.

Annual General Meeting and Shareholder Contact

This year's Annual General Meeting will be held on Tuesday, 30th October 2018 at 2.30 p.m. at 60 Victoria Embankment, London EC4Y 0JP. In addition to the formal part of the meeting, there will be a presentation from Georgina Brittain and Katen Patel, who will also answer questions on the portfolio and performance. There will be an opportunity to meet the Board, the Investment Managers and representatives of JPMorgan after the meeting. I look forward to welcoming as many of you as possible to this meeting. I am pleased to hear from shareholders, and can be contacted through our Company Secretary, whose details are set out on page 75 of the 2018 Annual Report.

If you have any detailed or technical questions, it would be helpful if you could raise these in advance of the meeting with the Company Secretary at 60 Victoria Embankment, London EC4Y 0JP. Shareholders who are unable to attend the Annual General Meeting are encouraged to use their proxy votes.

Prospects

The flexibility of UK mid-cap companies, and in particular their ability to respond rapidly to changing markets and technological developments, has been reflected in earnings growth in excess of the growth of the economy over the last five years. We are therefore hopeful that whatever the outcome of the Brexit negotiations, these companies will continue to thrive by identifying opportunities to grow their businesses in both existing and new markets.

Given this, it could be argued that the markets are underplaying the growth prospects of many mid cap companies in a post-Brexit era. The notable merger and acquisition activity in the mid cap universe would support this view, as well as suggesting that valuations remain attractive on a long-term view.

We therefore continue to believe that the risk/return trade-off from your Company will provide attractive total returns to both existing and new investors.

Michael Hughes

Chairman

27th September 2018

INVESTMENT MANAGERS' REPORT

Performance & Market Background

The first six months of your Company's financial year (the second half of 2017) saw strong stock market performance, aided by the strength of global growth. 2018 has been more pedestrian, as investors fretted - wrongly in our view - over the sustainability of that growth. In addition, geopolitical concerns have increased, and most notably President Trump has introduced the significant threat of trade wars against both China and the EU.

In the UK, the economic backdrop to the year saw the first interest rate rise in a decade in November 2017, unemployment at a multi-year low of 4.0 %, inflation subdued to around 2.5% and wage growth (ex-bonuses) of 2.7%, leaving the consumer with growing disposable income.

The FTSE 250 Index continued its longer term trend of outperformance, rising more than both the FTSE 100 and the Small Cap indices over the year, producing a total return of 11.2%. It is pleasing to report that your Company outperformed the Index, producing a total return on net assets of 16.4%. Over the year the discount narrowed substantially from 13.3% to 5.2%, so the share price return was an impressive 27.4%.

Portfolio

The outperformance of your Company over the last financial year was achieved through stock selection. Key positives included our large and long-term holdings in Ashtead, Plus500, Electrocomponents and NMC Health. On the negative side, the most significant detractor from relative performance was not owning Ocado (a loss-making business which has now been promoted into the FTSE 100). In addition, there were a number of take-overs in the FTSE 250 of companies which we did not own.

We have discussed the prevalence of mergers & acquisitions in the FTSE 250 for several years now. Last year saw this activity increase yet further. While we benefitted from the take-overs of Fenner, Aldermore and PaySafe in the year, there were many more within the Index, including Fidessa, NEX, UBM, and ZPG, with more in the offing. A significant number of these UK companies have been bought by overseas acquirers - strongly suggesting both that valuations are attractive, and that the acquirers believe on a long term view, fears of any potential Brexit impact have been over-played.

Two years ago, in the immediate aftermath of the Brexit Referendum, we described clearly how we had repositioned the portfolio. We chose at that time to structure the portfolio for a "hard" Brexit outcome, and have maintained that stance ever since. This included an increased emphasis within your Company on overseas earners and on exporters, and a significant move to reduce our exposure to domestically focussed companies. Careful analysis went into each individual stock decision, and we chose to retain a number of pure UK holdings such as two challenger banks, OneSavings and Aldermore, Softcat, a UK IT reseller, and JD Sports Fashion, one of the UK High Street's winners.

During the financial year we exited a number of companies. These included Greencore, TP ICAP and Playtech, all of which had disappointing trading. On valuation grounds we also sold out of Micro Focus (before the profit warnings) and Melrose Industries. New additions included two IPOs, Amigo Loans, a provider of guarantor loans and Avast, a global leader in consumer cyber security, Integrafin (a B2B platform for financial advisors), and Hunting and Rotork as we sought to benefit from the rise in the oil price.

Outlook

As we write this Annual Report in September 2018, a crystal ball would be a very useful accessory. It is (almost) without doubt that the UK will leave the EU within the next financial year, but despite the deadline set by Article 50 being less than seven months away, we still do not know what that exit will look like. The Bank of England assumes that the most likely outcome will be a gradual transition to new trading arrangements with the EU. The Prime Minister's recent Chequers speech on Brexit signalled a very soft exit. However, in our view the increased political uncertainty post that speech and the currently stalled negotiations mean that the tail risk of the UK exiting without any deal at all has materially risen. Indeed Liam Fox, the International Trade Secretary, very recently put the chance of no trade deal at 60%.

All of this leads to a huge lack of clarity for both companies and consumers. Add to this the looming threat of global trade wars and it would be easy to become very pessimistic on the short term outlook. However, despite this, the IMF is forecasting UK GDP growth of 1.4% in 2018 and 1.5% in 2019. In the UK, the all-important PMI data (purchasing managers' indices) are still indicating expansion, and lowered inflation expectations are positive for the consumer. While business confidence metrics have slipped, business investment remains low but positive, currently growing at 2-3%.

Recent history, and many years of experience in managing money, teaches us that, despite this backdrop, it is wrong to be too gloomy. The message we hear from companies within our portfolio remains positive. The forecast earnings growth for the companies we own is a striking 16%. As we have argued many times before, it is possible to find some high quality long term winners within the FTSE 250 Index. These are the companies, found in diverse sectors, which have embraced the data-driven modern world and adapted accordingly. These are the companies which are increasing productivity and will prove to be adept at positioning themselves for the future. We believe we have identified a number of these, and hold them as large positions within the portfolio. While the current political backdrop has led us to reduce gearing in the short term, we continue to back these investments and expect your Company to benefit from owning them.

Georgina Brittain
Katen Patel

Investment Managers

27th September 2018

Principal Risks

With the assistance of the Manager, the Board has completed a robust risk assessment and drawn up a risk matrix which identifies the key risks to the Company. These key risks fall broadly under the following categories:

Investment and Strategy: An inappropriate investment strategy, for example stock selection or the level of gearing, may lead to under-performance against the Company's benchmark index and peer companies, resulting in the Company's shares trading on a wider discount. The Board manages these risks through its investment restrictions and guidelines which are monitored and reported monthly. 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 shows statistical measures of the Company's risk profile. The Investment Managers employ the Company's gearing tactically, within a strategic range set by the Board.

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. A change of corporate control could also negatively impact the Company. The Board holds regular meetings with senior representatives of JPMAM in order to obtain assurance that the Manager continues to demonstrate a high degree of commitment to its investment trusts business through the provision of significant resources.

Poor performance may lead to a widening of the discount. The Board monitors the Company's premium/discount level and will seek, where deemed prudent, to address imbalances in the supply and demand of the Company's shares through a programme of share buybacks.

The Board holds a separate meeting devoted to strategy each year.

Financial: The Company is exposed to market risk, liquidity risk and credit risk. The principal financial risk facing the Company is market risk arising from uncertainty about the future prices of the Company's investments. It represents the potential loss the Company might suffer through holding investments that could fall in value either due to general market movements or stock specific events. The latter is mitigated through diversification of investments in the portfolio. The Board reviews the portfolio and its gearing on a regular basis and has set investment restrictions and guidelines for the Manager. JPMF reports its adherence to these limits once a month to the Board. Financial risks faced by the Company are further disclosed in note 22 within the 2018 Annual Report.

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 'Structure and Objective of the Company' above. Should the Company breach Section 1158, it may lose investment trust status and as a consequence capital 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, as its shares are listed on the London Stock Exchange, the UKLA Listing Rules. A breach of the Companies Act could result in the Company and/or the Directors being fined or the subject of criminal proceedings. A breach of the UKLA Listing Rules may result in the Company's shares being suspended from listing which in turn would breach Section 1158. The Board relies on the services of its Company Secretary, JPMF, and its professional advisers to ensure compliance with the Companies Act 2006 and the UKLA Listing Rules.

Changes to the regulatory, legislative or taxation framework within which the Company operates may adversely affect the Company, either directly or indirectly. The Board receives regular updates about such changes affecting the investment industry from the Company's Manager and advisors and also trade associations and seeks external advice where appropriate.

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 within the 2018 Annual Report.

Operational and Cyber Crime: Disruption to, or failure of, the Manager's accounting, dealing or payments systems or the custodian's or depositary's records could prevent accurate reporting and monitoring of the Company's financial position. The Company has appointed The Bank of New York Mellon (International) Limited to act as its depositary, responsible for overseeing the operations of the custodian, JPMorgan Chase Bank N.A., and the Company's cash flows. Details of how the Board monitors the services provided by the Manager and its associates and the key elements designed to provide effective internal control are included in the Risk Management and Internal Control section of the Corporate Governance report on pages 27 to 30 within the 2018 Annual Report. 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 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 by independent auditors and reported every six months against the AAF Standard.

TRANSACTIONS WITH THE MANAGER AND RELATED PARTY TRANSACTIONS

Details of the management contract are set out in the Directors' Report on page 25 within the 2018 Annual Report. The management fee payable to the Manager for the year was £1,979,000 (2017: £1,655,000) of which £nil (2017: £46,000) was outstanding at the year end.

During the year £52,000 (2017: £74,000), including VAT, was payable to the Manager for administration of savings scheme products, of which £30,000 (2017: £13,000) was outstanding at the year end.

Included in administration expenses in note 6 on page 51 within the 2018 Annual Report are safe custody fees amounting to £5,000 (2017: £4,000) payable to JPMorgan Chase, N.A. of which £2,000 (2017: £1,000) 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. The commission payable to JPMorgan Securities Limited for the year was £32,000 (2017: £38,000) of which £nil (2017: £nil) was outstanding at the year end.

The Company also holds cash in the JPMorgan Sterling Liquidity Fund, which is managed by JPMorgan. At the year end this was valued at £10,655,000 (2017: £10,404,000). Interest amounting to £31,000 (2017: £24,000) was receivable during the year of which £4,000 (2017: £nil) was outstanding at the year end.

Handling charges on dealing transactions amounting to £5,000 (2017: £6,000) were payable to JPMorgan Chase, N.A. during the year of which £2,000 (2017: £1,000) was outstanding at the year end.

At the year end, total cash of £251,000 (2017: £30,000) was held with JPMorgan Chase, N.A. A net amount of interest of £nil (2017: £nil) was receivable by the Company during the year from JPMorgan Chase, N.A. of which £nil (2017: £nil) was outstanding at the year end.

The Directors are related parties and full details of their remuneration and shareholdings can be found on pages 33 and 34 and in note 6 on page 51 within the 2018 Annual Report.

STATEMENT of directors' Responsibilities

The Directors are responsible for preparing the Annual Report and 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 the 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, and the Directors confirm that they have done so.

The Directors are 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 Directors 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 Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

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

Each of the Directors, whose names and functions are listed in the Directors' 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.

The Directors' 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 Financial Statements taken as a whole is fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

For and on behalf of the Board
Michael Hughes

Chairman

27th September 2018

Statement of Comprehensive income

for the year ended 30th June 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	-	38,395	38,395	-	59,181	59,181
Net foreign currency (losses)/gains	-	(2)	(2)	-	7	7
Income from investments	9,238	-	9,238	8,433	-	8,433
Interest receivable and similar income	37	-	37	141	-	141
Gross return	9,275	38,393	47,668	8,574	59,188	67,762
Management fee	(593)	(1,386)	(1,979)	(497)	(1,158)	(1,655)
Other administrative expenses	(490)	-	(490)	(520)	-	(520)
Net return on ordinary activities before finance costs and taxation	8,192	37,007	45,199	7,557	58,030	65,587
Finance costs	(107)	(250)	(357)	(75)	(175)	(250)
Net return on ordinary activities before taxation	8,085	36,757	44,842	7,482	57,855	65,337
Taxation	(197)	-	(197)	(91)	-	(91)
Net return on ordinary activities after taxation	7,888	36,757	44,645	7,391	57,855	65,246
Return per share (note 3)	33.12p	154.35p	187.47p	30.88p	241.75p	272.63p

All revenue and capital items in the above statement derive from continuing operations.

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 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 30th June 2018

	Called up	Capital
	share	redemption	Capital	Revenue
	capital	reserve	reserves	reserve1	Total
	£'000	£'000	£'000	£'000	£'000
At 30th June 2016	6,350	3,650	198,298	9,976	218,274
Repurchase of shares into Treasury	-	-	(1,477)	-	(1,477)
Net return on ordinary activities	-	-	57,855	7,391	65,246
Dividends paid in the year (note 2)	-	-	-	(6,107)	(6,107)
At 30th June 2017	6,350	3,650	254,676	11,260	275,936
Repurchase of shares into Treasury	-	-	(260)	-	(260)
Net return on ordinary activities	-	-	36,757	7,888	44,645
Dividends paid in the year (note 2)	-	-	-	(6,191)	(6,191)
At 30th June 2018	6,350	3,650	291,173	12,957	314,130

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

statement of FINANCIAL POSITION

at 30th june 2018

	2018	2017
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	328,569	282,318
Current assets
Debtors	4,399	1,347
Cash and cash equivalents	10,906	10,434
	15,305	11,781
Current liabilities
Creditors: amounts falling due within one year	(29,744)	(163)
Net current (liabilities)/assets	(14,439)	11,618
Total assets less current liabilities	314,130	293,936
Creditors: amounts falling due after more than one year	-	(18,000)
Net assets	314,130	275,936
Capital and reserves
Called up share capital	6,350	6,350
Capital redemption reserve	3,650	3,650
Capital reserves	291,173	254,676
Revenue reserve	12,957	11,260
Total shareholders' funds	314,130	275,936
Net asset value per share	1,319.2p	1,157.6p

statement of CASH FLOWS

for the year ended 30th june 2018

	2018	2017
	£'000	£'000
Net cash outflow from operations before dividends and interest	(2,514)	(1,957)
Dividends received	8,807	7,862
Interest received	27	24
Overseas tax recovered	-	42
Interest paid	(315)	(248)
Net cash inflow from operating activities	6,005	5,723
Purchases of investments	(124,434)	(105,072)
Sales of investments	118,351	98,426
Settlement of forward currency contracts	-	(3)
Net cash outflow from investing activities	(6,083)	(6,649)
Dividends paid	(6,191)	(6,107)
Repurchase of shares into Treasury	(260)	(1,477)
Net drawdown of bank loan	7,000	10,000
Net cash inflow from financing activities	549	2,416
Increase in cash and cash equivalents	471	1,490
Cash and cash equivalents at start of year	10,434	8,957
Exchange movements	1	(13)
Cash and cash equivalents at end of year	10,906	10,434
Increase in cash and cash equivalents	471	1,490
Cash and cash equivalents consist of:
Cash and short term deposits	251	30
Cash held in JPMorgan Sterling Liquidity Fund	10,655	10,404
Total	10,906	10,434

Notes to the financial statements

for the year ended 30th June 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 on page 31 of the Audit & Risk Committee Report within the 2018 Annual Report form part of these financial statements.

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

2.     Dividends

        Dividends paid and proposed

		2018	2017
		£'000	£'000
	Dividends paid
	2017 Final dividend of 15.0p (2016: 13.0p) per share	3,572	3,120
	2017 Special dividend 3.0p (2016: 4.5p) per share	714	1,080
	2018 Interim dividend of 8.0p (2017: 8.0p) per share	1,905	1,907
	Total dividends paid in the year	6,191	6,107
	Dividend proposed
	2018 Final dividend proposed of 18.5p (2017: 15.0p) per share	4,405	3,576
	2018 Special dividend proposed of 1.5p (2017: 3.0p) per share	357	715
	Total dividends proposed for year	4,762	4,291

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

The Final and Special dividends proposed in respect of the year ended 30th June 2017 amounted to £3,576,000 and £715,000 respectively. However the actual payments amounted to £3,572,000 and £714,000 due to share repurchases after the balance sheet date but prior to the share register record date.

The dividend proposed in respect of the year ended 30th June 2018 is subject to shareholder 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 30th June 2019.

3.     Return per share

		2018	2017
		£'000	£'000
	Revenue return	7,888	7,391
	Capital return	36,757	57,855
	Total return	44,645	65,246
	Weighted average number of shares in issue during the year	23,814,255	23,931,396
	Revenue return per share	33.12p	30.88p
	Capital return per share	154.35p	241.75p
	Total return per share	187.47p	272.63p

4.     Net asset value per share

		2018	2017
	Net assets (£'000)	314,130	275,936
	Number of shares in issue	23,812,680	23,837,680
	Net asset value per share	1,319.2p	1,157.6p

5.     Status of results announcement

2017 Financial Information

The figures and financial information for 2017 are extracted from the Annual Report and Accounts for the year ended 30th June 2017 and do not constitute the statutory accounts for the year. The Annual Report and Accounts include 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 Accounts will be delivered to the Register of Companies in due course.

2018 Financial Information

The figures and financial information for 2018 are extracted from the published Annual Report and Accounts for the year ended 30th June 2018 and do not constitute the statutory accounts for that year. The Annual Report and Accounts 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.

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.

27th September 2018

For further information:

Alison Vincent,

JPMorgan Funds Limited                                

020 7742 4000

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 shortly be available on the Company's website at www.jpmmidcap.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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