Final Results

RNS Number : 6271N

JPMorgan Mid Cap Invest Trust PLC

25 September 2019

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN MID CAP INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 30TH JUNE 2019

Legal Entity Identifier: 549300QED7IGEP4UFN49

Information disclosed in accordance with the DTR 4.1.3

CHAIRMAN'S STATEMENT

Investment Performance

In a year of significant market volatility, the Company's total return on net assets was -6.8%, compared with the benchmark total return of -5.9%. The discount at which the Company's shares trade to net asset value widened over the year, and as a result, the Company's total return to shareholders was a disappointing -11.4%.

The market backdrop that I have been reporting on in recent years frustratingly continues. The Company is still impacted by the ongoing uncertainties surrounding the UK's exit from the European Union, which continues to keep investors wary of investing in UK equities. The rhetoric now coming from the new leader of the Government that the UK's future, in whatever shape that may take, will be determined by 31st October 2019 has led to heightened uncertainty. It is, however, at times like these when the benefits of active management should materialise. The investment management team is not in the business of trying to guess the outcome of the Brexit negotiations, nor does the Board want it to be. However, the team can and has positioned the portfolio to weather the worst of the storm by reducing the exposure to the domestic UK economy, whilst still maintaining positions in UK focussed companies which are well positioned to thrive over the longer term. Shareholders are likely to be rewarded over the medium to long term, if they can withstand the inevitable bumpy journey over the coming year.

In terms of longer term performance, the Investment Managers' record remains strong. Based upon this performance record and taking all factors into account, including other services provided to the Company and its shareholders, the Board is satisfied 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

I would like to emphasise again the case to shareholders for investing in the UK mid cap investment universe. The table below details the returns generated by the FTSE 250 indices compared with the FTSE 100 Index over one, three, five and 10 years to 30th June 2019. Given their strong correlation to the UK domestic consumer, the FTSE 250 constituents this year underperformed the FTSE 100 behemoths. However, an investment case for allocating a proportion of personal portfolios to funds investing in the FTSE 250, given their strong performance relative to the FTSE 100, remains over longer time periods and one would expect this to continue to be the case once the noise from Brexit is no longer a drag on sentiment.

	To 30th June 2019
	One Year	Three Year	Five Year	Ten Year
	Total	Total	Total	Total
Index	Return %	Return %	Return %	Return %
FTSE 250 (including investment trusts)	-3.8	29.9	41.9	245.0
FTSE 250 (excluding investment trusts)	-5.9	27.2	37.9	250.8
FTSE 100	1.6	29.1	34.3	154.6
JPM Mid Cap NAV	-6.8	41.4	62.7	335.3

In my statement last year, I further presented the case for investing in UK mid cap companies by highlighting the likely reasons why, over the last 25 years, the FTSE 250 Index (excluding investment trusts) - your Company's benchmark - has kept pace with the strong performance of the US market and significantly outperformed every other major equity index, in sterling terms, despite the headwind of Sterling weakness. The reasons for this outperformance are still relevant today and include the growth characteristics of mid cap companies, the diversity of companies within the benchmark, increased merger and acquisition opportunities and limited analyst coverage (investment specialists are skilled in finding under-researched, growth companies at attractive valuations of which others are not aware). JPMorgan Mid Cap Investment Trust continues to be one of the few closed ended companies which invests primarily in the UK mid cap universe.

Revenue and Dividends

Revenue earnings per share for the year to 30th June 2019 were 35.0 pence, an increase of nearly 6% on last year. The receipt of special dividends remains a factor in the Company's earnings. However, special dividends represented just over 11% of the Company's earnings, almost half in percentage terms of their contribution to revenue in the prior year. The Investment Managers believe that this is more a reflection of changes within the underlying portfolio rather than a decision by UK corporates to reduce their special dividend distributions.

The Board has decided to increase the dividend this year by 5.4%, by proposing a final dividend of 21.5 pence which, when added to the interim dividend paid in April of 8.0 pence, amounts to a total dividend payable of 29.5 pence (2018: 28.0 pence) for the full year, equivalent to a dividend yield of 2.7%. The final dividend will be paid on 14th November 2019 to shareholders on the register at the close of business on 11th October 2019.

Although too early to provide a firm projection, particularly with regard to the payment of special dividends which by their nature are difficult to predict, the significant revenue reserve that the Company has built up over the years will allow the Board to consider increasing next year's dividend by at least the rate of inflation.

Discount Management

As the fall in sterling and fears over a no-deal Brexit continue to affect sentiment towards the UK, demand for the Company's shares remains disappointing. This concern has resulted in the Company's discount widening over the year and at the time of writing is trading around a 9.6% discount to NAV versus a 12-month average of 6.3%. 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 share buybacks. The Company has repurchased 97,000 shares over the year for this purpose. 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.

Change of Broker

In June 2019, the Board appointed Investec Bank as its corporate broker. Alongside providing general brokerage services, Investec has been tasked with ongoing shareholder engagement and to support the Company's existing marketing efforts.

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. At the end of the Company's financial year the Company was 4.4% geared. Unless we take advantage of any specific opportunity, shareholders should expect gearing to remain low in the run-up to 31st October 2019.

The Company's gearing strategy is implemented through the use of bank borrowing facilities, with the Company currently having access to two loan facilities totalling £45 million, expiring in June 2020 and March 2024, with the option of further increasing the March 2024 facility by £15 million.

Liquidity considerations

Portfolio liquidity is a topical subject at the moment. Whilst the closed-end structure of an investment trust means that investor redemptions are not a feature, it is reassuring that the Company's investment portfolio is constructed from a diverse group of 68 listed UK equities, with a broadly equal allocation to domestic and international earners. Liquidity risk is not considered to be significant, as the Company's investments comprise mainly readily realisable securities. In the event it was required, the Manager's expectation is that the current portfolio could be liquidated to the extent of 95% within three trading days, based on a conservative set of assumptions. This measure is updated and reviewed regularly by the Manager.

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 the Directors standing for re-election at the forthcoming Annual General Meeting ('AGM') are recommended to shareholders.

Last year I reported upon the Company's plan for ensuring that the Board maintained an appropriate balance of skills and knowledge, while still complying with the retirement best practice guidelines as set out under the UK's Code of Corporate Governance for UK public companies and the AIC Code of Corporate Governance. To this end Margaret Payn was appointed to the Board on 1st March 2019. Margaret has extensive experience across the financial sector, most recently at AMP Capital Limited where she was CFO/COO. After qualifying as an accountant with KPMG, she worked for several organisations including nine years at Schroders (latterly as CFO/COO of the Asian business based in Hong Kong) and three years at ANZ in similar roles. Margaret will stand for reappointment at the AGM and I look forward to introducing her to shareholders at this event.

Having served as a Director since 2008, Margaret Littlejohns will retire from the Board at the AGM. On behalf of the Board, I would like to thank Margaret for the substantial contribution that she has made to the Company during her tenure. Margaret's clear thinking and ability to question all areas concerning the Company and its operations has added significantly to the Board's deliberations. We wish her well for the future. Margaret Payn will succeed Margaret Littlejohns as Chairman of the Audit & Risk Committee.

Having chaired the Board since 2016 and having been appointed to the Board in 2008, I will be standing down from the Board at the 2020 AGM, with my successor being determined ahead of this time and announced in February 2020. 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.

JPMorgan's Shareholder Savings Products

In April 2019, shareholders holding their shares through JPMorgan's savings products, received notification from JPMorgan that it was ceasing to offer shareholders the ability to hold their shares through the JPMorgan investor platform. Shareholders were given a number of options, with the default options of being automatically moved to either The Share Centre or Hargreaves Lansdown, depending on the nature of their investments. This decision has been taken by many of JPMorgan's peers and reflects the reality that specialist investment platforms are able to offer a better service and customer experience than investment houses or asset managers.

The Board continues to encourage all of its shareholders to utilise their shareholder rights and notes that many specialist investor platforms, including the default options offered by JPMorgan, provide shareholders with the ability to continue receiving Company documentation, to vote their shares and to attend general meetings, at no additional cost. Please refer to your investment platform for more details, or visit the AIC's website at www.theaic.co.uk/aic/shareholder-voting-consumer-platforms for information on which platforms support these services and how to utilise them.

Annual General Meeting and Shareholder Contact

This year's Annual General Meeting will be held on Wednesday, 30th October 2019 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 within the Company's Annual Report and Financial Statements for the year ended 30th June 2019 ('2019 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

Political uncertainty and a weakening of the global economy have depressed UK share prices and those of FTSE 250 shares in particular. However, the resulting low valuations relative to the rest of the world seem to be attracting overseas buyers of UK companies, continuing a trend which has been a notable feature of this section of the UK stockmarket over many years. The financial health of UK companies overall is also a reassuring feature which should help restore investor confidence quickly when political uncertainty subsides.

The diversification of investor risk is also a notable feature of the FTSE 250 universe and is particularly relevant during a period of cyclical weakness. Active fund management also provides the ability to adjust positions when economic conditions change over the cycle.

The Board has been particularly impressed by the Investment Managers' ability to react decisively and cut positions in companies which fail to meet expectations.

Although the current investment climate appears challenging and perhaps confusing, the steady management of a portfolio of companies which have sound financial credentials and good long term growth prospects, together with an attractive dividend yield, should provide reassurance to our investors.

Michael Hughes

Chairman    

25th September 2019

INVESTMENT MANAGERS' REPORT

Performance & Market Background

The financial year to June 2019 proved somewhat of a roller coaster ride. Stockmarkets declined significantly in the last quarter of 2018, but rebounded strongly in the first half of 2019. The recent strength of markets has come about against a backdrop of rising geopolitical tensions and President Trump's trade wars, which have led this year to a slowdown in global growth. The World Bank recently cut its 2019 world growth forecast from 2.9% to 2.6%, which compares unfavourably to 3.7% in 2018.

In the UK the positive factors include benign inflation at 1.7%, continuing very low unemployment at 3.8% and strong wage growth ahead of inflation, providing the 11th consecutive month of positive real wage growth, leading to rising discretionary income. On the negative side, however, we continue to endure the seemingly never-ending saga that is Brexit. After the 29th March exit date came and went, the impact of this continuing uncertainty became more evident, with slowing GDP, a fall-off in the important Purchasing Managers' Indices and (understandably) a marked decline in capital spending by companies. This led the Bank of England in August to reduce its GDP forecasts for both 2019 and 2020 to a lowly 1.3%. This difficult backdrop has led to a significant increase in the number of companies failing to achieve their targets - the number of profit warnings in Q2 2019 in the UK increased by 19% over the previous year with relevant companies being severely punished.

Against this background, over the financial year the FTSE 250 (ex Investment Trusts) Index declined by 5.9%. (This was split into -16.8% for the first half of the year, and +13.1 % in the second half). This led to a total return on the Company's net assets of -6.8 % for the full year.

	PERFORMANCE ATTRIBUTION
YEAR ENDED 30TH JUNE 2019
	%	%
Contributions to total returns
Benchmark return		-5.9
Stock & sector selection	+0.7
Gearing/net cash	-0.7
Investment Manager contribution		-
Portfolio return		-5.9
Fees/other expenses	-0.9
Share repurchases	-
Other effects		-0.9
Return on net assets		-6.8
Return to shareholders		-11.4

Source: JPMAM/Morningstar.

All figures are on a total return basis.

Performance attribution analyses how the Company achieved its recorded performance relative to its benchmark.

Portfolio

Your Company continued to benefit strongly from a number of the long-term winners in the portfolio. These included Games Workshop, Intermediate Capital Group, JD Sports and Marshalls. On the negative side, relative performance was hit by bids for two companies that we did not own, BTG and Jardine Lloyd Thompson. In addition, both Sophos and Plus500 were the key detractors to performance, and have subsequently been sold.

There have been notably fewer new companies coming to the stockmarket, and the quality of some of them has been questionable. We avoided a number of the disappointing new offerings. Two recent IPOs that we have added to the portfolio are Trainline and Network International. Other additions to the portfolio over the year included Ashmore, Future, Dunelm Group, Greene King and EI Group (the last two of which have just received well-priced bids). Disposals included Coats Group, Hunting, Renishaw and NMC, as well as RPC, due again to a bid. In the Outlook below we outline the portfolio construction rationale behind many of these decisions.

Outlook

For the last three years Brexit has dominated our thinking on the UK outlook, and in particular the outlook for the 50% of the FTSE 250 Index which is domestically-oriented. After the initial dramatic market reaction in 2016 post the referendum, both companies and investors became more sanguine and learned to cope with the uncertainty.

This has changed in 2019 as the looming deadline(s) appear, and it is clear that Brexit is currently creating a hiatus in business activity. This, combined with the slowdown in global growth seen this year, makes for a very difficult backdrop for companies to operate in. We believe that now, in particular, is the time when a fundamental stock-picking approach should be able to benefit shareholders, as the discrepancy in performance between the winners and the losers, the well-positioned and those which have lost their strategic way, is only growing.

Over the year we have chosen to rebalance the portfolio to ensure broadly equal exposure to domestic and international earners, since we cannot know or forecast the outcome of the Brexit negotiations. We undertook this repositioning in part due to the extreme valuations of UK-focussed companies and in part to reduce risk, whatever the Brexit outcome. We believe that we have compiled a balanced portfolio of well-invested, well-placed companies which will continue to grow, despite the tricky and opaque environment. This should leave us well-placed to reshape the portfolio when it finally becomes clear - hopefully on 31st October 2019, if not before - how Brexit will finally be resolved, and what our country's future position in the world will look like.

In the meantime, valuations currently evidence the lack of investor interest in the UK, and particularly the FTSE 250. While many investors are clearly shunning the UK at this time, others are seeing and seizing the opportunity. According to Dealogic, the value of private equity takeovers in the UK hit £13.6 billion for the year to date, the highest since 2007. At the time of writing, there have been five bids for FTSE 250 companies in the last couple of months alone, and we would expect M&A activity to remain a feature.

Georgina Brittain
Katen Patel

Investment Managers   

25th September 2019

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. The risks identified and the ways in which they are managed or mitigated are summarised below.

With the assistance of JPMF, the Audit & Risk Committee has drawn up a risk matrix, which identifies the key risks to the Company. These are reviewed and noted by the Board. These key risks fall broadly into 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, both absolute and relative against peers, and attribution analyses, revenue estimates 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. The terms on which the UK may withdraw from the European Union are not clear, and it is difficult to assess the implications for UK mid cap stocks until there is more clarity. This continuing uncertainty provides a difficult backdrop for companies to operate in, and NAV volatility is expected to remain a feature for the Company over the coming 12 months.

Financial risks faced by the Company are further disclosed in note 22 within the 2019 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.

•   Operational and cyber crime

Disruption to, or failure of, the Manager's accounting, dealing or payments systems or the custodian's, depositary's or registrar'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, its associates and any other third party suppliers 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 within the 2019 Annual Report. The threat of cyber attack, in all its guises on any of the Company's outsourced suppliers, 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 within the 2019 Annual Report. The management fee payable to the Manager for the year was £1,879,000 (2018: £1,979,000) of which £nil (2018: £nil) was outstanding at the year end.

During the year £62,000 (2018: £52,000), including VAT, was payable to the Manager for administration of savings scheme products, of which £25,000 (2018: £30,000) was outstanding at the year end.

Included in administration expenses in note 6 on page 49 are safe custody fees amounting to £5,000 (2018: £5,000) payable to JPMorgan Chase, N.A. of which £1,000 (2018: £2,000) 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 £nil (2018: £32,000) of which £nil (2018: £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 £1,466,000 (2018: £10,655,000). Interest amounting to £58,000 (2018: £31,000) was receivable during the year of which £2,000 (2018: £4,000) was outstanding at the year end.

Handling charges on dealing transactions amounting to £6,000 (2018: £5,000) were payable to JPMorgan Chase, N.A. during the year of which £1,000 (2018: £2,000) was outstanding at the year end.

At the year end, total cash of £287,000 (2018: £251,000) was held with JPMorgan Chase, N.A. A net amount of interest of £nil (2018: £nil) was receivable by the Company during the year from JPMorgan Chase, N.A. of which £nil (2018: £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 31 and 32 and in note 6 on page 49 within the 2019 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

25th September 2019

Statement of Comprehensive income

for the year ended 30th June 2019

	2019			2018
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments held at fair value through profit or loss	-	(28,603)	(28,603)	-	38,395	38,395
Net foreign currency gains/(losses)	-	18	18	-	(2)	(2)
Income from investments	9,785	-	9,785	9,238	-	9,238
Interest receivable and similar income	88	-	88	37	-	37
Gross return/(loss)	9,873	(28,585)	(18,712)	9,275	38,393	47,668
Management fee	(564)	(1,315)	(1,879)	(593)	(1,386)	(1,979)
Other administrative expenses	(568)	-	(568)	(490)	-	(490)
Net return/(loss) before finance costs and taxation	8,741	(29,900)	(21,159)	8,192	37,007	45,199
Finance costs	(118)	(275)	(393)	(107)	(250)	(357)
Net return/(loss) before taxation	8,623	(30,175)	(21,552)	8,085	36,757	44,842
Taxation	(303)	-	(303)	(197)	-	(197)
Net return/(loss) on ordinary activities after taxation	8,320	(30,175)	21,855)	7,888	36,757	44,645
Return/(loss) per share	35.01p	(126.96)p	(91.95)p	33.12p	154.35p	187.47p

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

STATEMENT OF CHANGES IN EQUITY

for the year ended 30th June 2019

	Called up	Capital
	share	redemption	Capital	Revenue
	capital	reserve	reserves	reserve1	Total
	£'000	£'000	£'000	£'000	£'000
At 30th June 2017	6,350	3,650	254,676	11,260	275,936
Repurchase of shares into Treasury	-	-	(260)	-	(260)
Net return	-	-	36,757	7,888	44,645
Dividends paid in the year (note 3)	-	-	-	(6,191)	(6,191)
At 30th June 2018	6,350	3,650	291,173	12,957	314,130
Repurchase of shares into Treasury	-	-	(1,068)	-	(1,068)
Net (loss)/return	-	-	(30,175)	8,320	(21,855)
Dividends paid in the year (note 3)	-	-	-	(6,653)	(6,653)
At 30th June 2019	6,350	3,650	259,930	14,624	284,554

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

statement of FINANCIAL POSITION

at 30th june 2019

	2019	2018
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	297,060	328,569
Current assets
Debtors	6,142	4,399
Cash and cash equivalents	1,753	10,906
	7,895	15,305
Current liabilities
Creditors: amounts falling due within one year	(10,401)	(29,744)
Net current liabilities	(2,506)	(14,439)
Total assets less current liabilities	294,554	314,130
Creditors: amounts falling due after more than one year	(10,000)	-
Net assets	284,554	314,130
Capital and reserves
Called up share capital	6,350	6,350
Capital redemption reserve	3,650	3,650
Capital reserves	259,930	291,173
Revenue reserve	14,624	12,957
Total shareholders' funds	284,554	314,130
Net asset value per share	1,199.9p	1,319.2p

statement of CASH FLOWS

for the year ended 30th june 2019

	2019	2018
	£'000	£'000
Net cash outflow from operations before dividends and interest	(2,377)	(2,514)
Dividends received	8,931	8,807
Interest received	60	27
Overseas tax recovered	52	-
Interest paid	(403)	(315)
Net cash inflow from operating activities	6,263	6,005
Purchases of investments	(109,813)	(124,434)
Sales of investments	107,119	118,351
Settlement of forward currency contracts	(2)	-
Net cash outflow from investing activities	(2,696)	(6,083)
Dividends paid	(6,653)	(6,191)
Repurchase of shares into Treasury	(1,068)	(260)
Drawdown of bank loan	10,000	7,000
Repayment of bank loan	(15,000)	-
Net cash (outflow)/inflow from financing activities	(12,721)	549
(Decrease)/increase in cash and cash equivalents	(9,154)	471
Cash and cash equivalents at start of year	10,906	10,434
Exchange movements	1	1
Cash and cash equivalents at end of year	1,753	10,906
(Decrease)/increase in cash and cash equivalents	(9,154)	471
Cash and cash equivalents consist of:
Cash and short term deposits	287	251
Cash held in JPMorgan Sterling Liquidity Fund	1,466	10,655
Total	1,753	10,906

Notes to the financial statements

for the year ended 30th June 2019

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 29 of the Audit & Risk Committee Report within the 2019 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.     Return/(loss) per share

	2019	2018
	£'000	£'000
Revenue return	8,320	7,888
Capital (loss)/return	(30,175)	36,757
Total (loss)/return	(21,855)	44,645
Weighted average number of shares in issue during the year	23,766,861	23,814,255
Revenue return per share	35.01p	33.12p
Capital (loss)/return per share	(126.96)p	154.35p
Total (loss)/return per share	(91.95)p	187.47p

3.     Dividends

(a)   Dividends paid and proposed

	2019	2018
	£'000	£'000
Dividends paid
2018 Final dividend of 18.5p (2017: 15.0p) per share	4,396	3,572
2018 Special dividend 1.5p (2017: 3.0p) per share	356	714
2019 Interim dividend of 8.0p (2018: 8.0p) per share	1,901	1,905
Total dividends paid in the year	6,653	6,191
Dividend proposed
2019 Final dividend proposed of 21.5p (2018: 18.5p) per share	5,099	4,405
2019 Special dividend proposed of nil (2018: 1.5p) per share	-	357
Total dividends proposed for year	5,099	4,762

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 2018 amounted to £4,405,000 and £357,000 respectively. However the actual payments amounted to £4,396,000 and £356,000 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 2019 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 2020.

(b)  Dividends 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, shown below. The revenue available for distribution by way of dividend for the year is £8,320,000 (2018: £7,888,000). The revenue reserve after payment of the final dividend will amount to £9,525,000 (2018: £8,194,000).

	2019	2018
	£'000	£'000
Interim dividend of 8.0p (2018: 8.0p) per share	1,901	1,905
Final dividend of 21.5p (2018: 18.5p) per share	5,099	4,405
2019 Special dividend proposed of nil (2018: 1.5p) per share	-	357
	7,000	6,667

4.     Net asset value per share

	2019	2018
Net assets (£'000)	284,554	314,130
Number of shares in issue	23,715,680	23,812,680
Net asset value per share	1,199.9p	1,319.2p

5.     Status of results announcement

2018 Financial Information

The figures and financial information for 2018 are extracted from the Annual Report and Accounts for the year ended 30th June 2018 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.

2019 Financial Information

The figures and financial information for 2019 are extracted from the published Annual Report and Accounts for the year ended 30th June 2019 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.

25th September 2019

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 2019 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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