Final Results

JPMorgan Fleming Smaller Cos IT PLC 03 October 2006 STOCK EXCHANGE ANNOUNCEMENT JPMORGAN FLEMING SMALLER COMPANIES INVESTMENT TRUST PLC The Board of JPMorgan Fleming Smaller Companies Investment Trust plc announces its preliminary results for the year ended 31st July 2006. Investment Performance For the fourth year running I am delighted to report that the Company has continued to outperform its benchmark index. Over the year to 31st July 2006 the Company produced a total return on net assets of +32.5%, which compares favourably with the total return of the Company's benchmark, the FTSE Small Cap Index (excluding investment trusts) of +12.8%. The return to shareholders was better still at +38.3% as the discount narrowed from 18.6% to 14.3%. The excellent performance achieved by the investment managers has been recognised with the Company recently winning the prestigious 'Best Performing Smaller Company Fund 2005' at the PLC awards. Revenue and Dividends Net revenue after taxation for the year was £1,025,000 (2005: £903,000) and revenue return per share, calculated on the average number of shares in issue, was 4.37p (2005: 3.62p). The Directors are recommending a final dividend of 4.25p per share (2005: 3.75p), costing £979,000 (2005: £878,000). If approved, the dividend will be paid on 15th December 2006 to shareholders on the register on 3rd November 2006. Each year the level of income received varies according to the Company's gearing, its investment stance and market conditions and, whilst it is the Company's policy to distribute substantially all the available income each year, shareholders should note that the Company's dividends will vary accordingly. Investment Manager The Company's objective is to provide shareholders with capital growth from a portfolio of investments in UK smaller companies. The Board has once again reviewed the capabilities and services provided by the Investment Manager in order to assess whether JPMorgan Asset Management (UK) Limited remains the most appropriate manager of the Company's assets. We have concluded unanimously that the ongoing appointment of the existing Investment Manager is in the best interests of shareholders. Share Buybacks At last year's Annual General Meeting, shareholders granted the Directors authority to repurchase the Company's shares for cancellation, such authority to expire at the earlier of 27th May 2007 or the conclusion of the Annual General Meeting in 2006. During the year the Company repurchased a total of 916,000 shares, representing 3.8% of the issued share capital. This process has added 0.7% to the net asset value of the remaining shares. The Board's objective remains to use the share repurchase authority to manage any imbalance between the supply and demand of the Company's shares, thereby minimising the volatility of the discount. To date the Board believes this mechanism has been successful and therefore proposes and recommends that powers to repurchase up to 14.99% of the Company's shares for cancellation be renewed for a further period. Board of Directors I would like to thank David Thompson, who resigned as a Director on 31st March 2006, for his wise counsel during the four years he has served on the Board. Following David's retirement, the Board decided that Michael Quicke, Chief Executive of CCLA Investment Management Limited, would take over the role of Chairman of the Audit Committee. During the year, the Board carried out an evaluation of the Directors, the Chairman, the Board itself and its Committees. In accordance with the Company's Articles of Association, the Director retiring by rotation at this year's Annual General Meeting is Ivo Coulson. In view of the valuable contribution Ivo has made to the Board's deliberations since his appointment, I have no hesitation in recommending his re-election. In addition, having served as a Director for more than nine years, I am also standing for re-election. The Board does not believe that length of service in itself should disqualify a Director from seeking re-election and, in proposing my re-election, it has taken into account the ongoing requirements of the Combined Code, including the need to refresh the Board and its Committees. Continuation Vote I am pleased to report that the continuation vote at last year's Annual General Meeting ('AGM') was approved by a substantial majority, thereby enabling the Company to remain in existence for a further three years. Change of Company Name In light of the change of the Company's Manager's name from J.P. Morgan Fleming Asset Management (UK) Limited to JPMorgan Asset Management (UK) Limited on 3rd May 2005, the Board considers it appropriate that the Company's name be changed to JPMorgan Smaller Companies Investment Trust plc. The Board will therefore propose a resolution to change the Company's name at the forthcoming AGM. Annual General Meeting This year's Annual General Meeting will be held on 29th November 2005 at 3.30 pm at The Library, 60 Victoria Embankment, London EC4Y 0JP. Outlook Since the year end, the Company has outperformed its benchmark by 0.6%. The return on net assets was +4.6%, compared with a return of +4.0% on the benchmark. The outlook for the investment market has become much less clear over the past few months, and the Board is now inclined towards a more cautious stance. Strone Macpherson Chairman 3rd October 2006 For further information, please contact: Lucy Dina For and on behalf of JPMorgan Asset Management (UK) Limited - Secretary 020 7742 6000 JPMorgan Fleming Smaller Companies Investment Trust plc Unaudited figures for the year ended 31st July 2006 Income Statement 2006 2005 Revenue Capital Total Revenue Capital Total return return return return return return £'000 £'000 £'000 £'000 £'000 £'000 Gains from investments held at fair value through profit or loss - 29,718 29,718 - 25,609 25,609 Income from investments 2,034 - 2,034 1,722 - 1,722 Other interest receivable and similar 23 - 23 28 - 28 income _______ ________ _______ _______ ________ _______ Gross return 2,057 29,718 31,775 1,750 25,609 27,359 Management fee (552) (552) (1,104) (424) (424) (848) Other administrative expenses (277) - (277) (243) - (243) _______ ________ _______ _______ ________ _______ Net return on ordinary activities before finance costs and taxation 1,228 29,166 30,394 1,083 25,185 26,268 Finance costs (203) (203) (406) (180) (180) (360) _______ _______ _______ _______ _______ _______ Net return on ordinary activities before taxation 1,025 28,963 29,988 903 25,005 25,908 Taxation - - - - - - _______ _______ _______ _______ _______ _______ Net return on ordinary activities after taxation 1,025 28,963 29,988 903 25,005 25,908 _______ _______ _______ _______ _______ _______ Return per ordinary share 4.37p 123.54p 127.91p 3.62p 100.41p 104.03p JPMorgan Fleming Smaller Companies Investment Trust plc Unaudited figures for the year ended 31st July 2006 Reconciliation of Movements in Shareholders' Funds Capital Called up Share redemption share premium reserve Capital Revenue capital account £'000 reserve reserve Total £'000 £'000 £'000 £'000 £'000 At 31st July 2004 (restated)* 6,354 18,360 312 48,063 1,128 74,217 Shares bought back and cancelled (368) - 368 (4,419) - (4,419) Total return from ordinary activities - - - 25,005 903 25,908 Dividends appropriated in the year - - - - (953) (953) _______ ________ ________ _______ _______ _______ At 31st July 2005 (restated)* 5,986 18,360 680 68,649 1,078 94,753 Adjustment to opening shareholders funds at 1st August 2005 to reflect the adoption of bid prices - - - (1,991) - (1,991) Shares bought back and cancelled (229) - 229 (3,546) - (3,546) Total return from ordinary activities - - - 28,963 1,025 29,988 Dividends appropriated in the year - - - - (878) (878) _______ ________ ________ _______ _______ ________ At 31st July 2006 5,757 18,360 909 92,075 1,225 118,326 *The results for the year ended 31st July 2005 and 31st July 2004 have been restated in accordance with Financial Reporting Standard 21 (see note 1). JPMorgan Fleming Smaller Companies Investment Trust plc Unaudited figures for the year ended 31st July 2006 Balance Sheet 2005 2006 (Restated)* £'000 £'000 Fixed Assets Investments at fair value through profit or loss 125,529 100,882 Investments in liquidity funds at fair value through profit or loss 1,518 - _______ _______ Total portfolio 127,047 100,882 Current assets Debtors 676 1,123 Cash at bank and in hand 794 - _______ _______ 1,470 1,123 Creditors: amounts falling due within one year (10,191) (7,252) _______ _______ Net current liabilities (8,721) (6,129) _______ _______ Total assets less current liabilities 118,326 94,753 _______ _______ Total net assets 118,326 94,753 ===== ===== Equity shareholders' funds 118,326 94,753 ===== ===== Net asset value per share 513.8p 395.7p *The results for the year ended 31st July 2005 have been restated in accordance with FRS21 (see note 1). Cash Flow Statement Unaudited figures for the year ended 31st July 2006 2006 2005 £'000 £'000 Net cash inflow from operating activities 485 719 Net cash outflow from returns on investments and servicing of finance (347) (392) Net cash inflow from capital expenditure and financial investment 2,614 3,102 Dividends paid (878) (953) _______ _______ Net cash inflow before financing 1,874 2,476 Financing Net drawdown of loans 3,400 - Repurchase of shares (3,866) (4,099) _______ _______ Net cash outflow from financing (466) (4,099) _______ _______ Increase/(decrease) in cash for the year 1,408 (1,623) ===== ==== Notes 1. Accounting policies The Company has adopted certain new accounting policies following the issue of new Financial Reporting Standards (FRSs) and the issue of the revised Statement of Recommended Practice 'Financial statements of investment trust companies' by the AITC in December 2005. The material changes to the accounts are as follows: Investments are designated as held at fair value through profit or loss in accordance with FRS 26: 'Financial Instruments: Measurement'. Listed investments are valued at bid market prices. This represents a change in accounting policy, however, in accordance with the exemption conferred by paragraph 108D of FRS26, comparatives have not been restated. In prior years, listed investments were valued using last trade prices. The adoption of bid prices on 1st August 2005 decreased the value of investments by £1,991,000. In accordance with FRS21 'Events after the Balance Sheet date', final dividends declared but not approved are not accrued in the accounts, since their payment only becomes certain once shareholder approval has been obtained. Comparative figures have been restated and this has led to an increase in net assets at 31st July 2005 and 31st July 2004, of £898,000 and £953,000 respectively. 2. Dividends 2006 2005 £'000 £'000 Final dividend of 3.75p (2004; 3.75p) *878 953 ---------- ---------- Total dividends paid in the year 878 953 ===== ===== Final dividend payable of 4.25p (2005: 3.75p) 979 898 *The Company declared a dividend of £898,000 but the dividend paid amounted to £878,000 as a result of share buybacks. The final dividend has been proposed in respect of the year ended 31st July 2006 and is subject to approval at the Annual General Meeting. In accordance with the revised accounting policy of the Company, this dividend will be reflected in the accounts for the year ended 31st July 2007. 3. Comparative figures The above financial information does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985 for the years ended 31st July 2006 or 31st July 2005, but is derived from those accounts. The comparative financial information is an extract from the statutory accounts for the year ended 31st July 2005 (as restated). Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31st July 2006 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. JPMORGAN ASSET MANAGEMENT (UK) LIMITED This information is provided by RNS The company news service from the London Stock Exchange

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