Half-year Report

RNS Number : 8862W

JPMorgan Japan Smaller Co Tst PLC

17 November 2017

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN JAPAN SMALLER COMPANIES TRUST PLC

(the 'Company')

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED
30 SEPTEMBER 2017

Legal Entity Identifier: 549300KP3CRHPQ4RF811

Information disclosed in accordance with DTR 4.2.2

CHAIRMAN'S STATEMENT

Investment Performance

I am pleased to report that the Company has outperformed its benchmark in the first half of the current financial year. In the six months to 30th September 2017, the total return on net assets per share (net of fees and expenses) and in sterling terms was +12.3%. This compares favourably with the total return from the Company's benchmark, the S&P Japan SmallCap Net Return Index in sterling terms, of +7.5%. The return to Ordinary shareholders per share and in sterling terms was +10.5%, reflecting a small widening of the Company's discount to net asset value per share ('NAV') at which it traded at the end of the period.

Performance was mainly driven by good stock selection, supported by sector allocation positioning and gearing over the six months period. A market review, summary of portfolio activity, a performance appraisal and portfolio positioning, together with their outlook, can be found in the accompanying investment managers' report.

Discount Management

Over the period, the Company's discount increased from 10.7% to 12.1%. The Company repurchased 320,321 shares during the six months. The Board continues to monitor the discount closely with its advisers and is prepared to repurchase shares when it feels that it is appropriate, taking into account market conditions. At the time of writing, the discount is 9.5%.

Borrowing

After the period end, the Company replaced its one-year fixed rate Yen 3.0 billion loan facility with Scotiabank, with a revolving credit facility for the increased amount of Yen 4.0 billion, also with Scotiabank, extending its maturity date to October 2019. The loan renewal was secured on favourable terms and allows the Company to repay the loan as and when required without the penalties associated with a fixed rate loan.

The investment managers use this facility to gear the portfolio in periods when they believe this leverage will enhance shareholder returns, whilst its flexibility allows the Company to hold cash as and when required. The Company's investment policy permits gearing within a range of 10% net cash to 25% geared. However, the Board requires the Company, in normal market conditions, to operate in the range of 5% net cash to 15% geared.

The level of gearing is reviewed by the Directors at each Board meeting. During the half year the Company's gearing level, based on month end data, ranged between 5.5% and 7.3% and finished the half year at the higher level.

Outlook

On 22nd October 2017, voters handed a majority win to incumbent Japanese Prime Minister Shinzo Abe's Liberal Democratic Party (LDP) and their Komeito partners in a snap election. The LDP-Komeito ruling coalition managed to secure two-thirds of the seats in the lower house in a strong result. Four more years of the 'three arrows' of Abenomics (monetary easing, fiscal stimulus and structural/corporate reforms) ensures that the outlook for Japanese stocks remains attractive and stable for investors. Overall, there is likely to be more upside in Japanese equities from the continuation of current policies, rising earnings and the increasing profitability of Japanese companies. The Board has confidence in the investment managers' ability to continue to find companies with strong financial and economic characteristics in which to invest.

Alan Clifton

Chairman                                                                                                                                   

17th November 2017

INVESTMENT MANAGERS' REPORT

Market Review

The Company's net asset value ('NAV') gained 12.3% in sterling terms during the six-month period to the end of September 2017. This is 4.8 percentage points above the benchmark return of 7.5%. Over the same period, the TOPIX Index, the bellwether for the Japanese equity market, returned 11.8% and 3.4% in yen and sterling terms, respectively.

Global equities performed strongly, buoyed by synchronized growth in both economic output and corporate earnings. Equity valuations were supported by the benign outlook for inflation. Geopolitical tensions rose in North Korea as the regime launched a series of missiles; however, concerns did not have a lasting impact on financial markets.

Japanese companies reported better than expected results for the year to March 2017. Although aggregate operating profit fell from the previous year, the magnitude was smaller than expected and the underlying trend was strong, excluding the negative impact of yen appreciation. Guidance for the new fiscal year in aggregate is for single-digit growth in operating profits. While this was below market consensus, we believe it reflects the usual conservatism of management. The April-June quarter results announced during the summer confirmed this thesis and listed companies in aggregate reported pre-tax profit growth in excess of 20% over the previous year.

The 10-year government bond yield in Japan moved in a tight range of 0.0%-0.1% in response to the Bank of Japan's yield-curve control policy. In the currency market, US dollar weakness was the most notable change from last year. The US dollar index fell by over 10% from the peak in December 2016. The yen was virtually flat against the weak dollar but fell from circa ¥140 to ¥150 against sterling in the period.

On 22nd October, the ruling coalition won a sweeping victory in the Lower House election. Prime Minister Abe's Liberal Democratic Party and its partner Komeito secured a two-thirds majority. This means the continuation of Abenomics for the foreseeable future, which is centred around economic stimulus supported by an aggressively loose monetary policy.

Portfolio Activity

There has been little change in the overall structure of the portfolio, and relatively low turnover. We maintained our focus on companies that we believe will be able to compound earnings growth over the long term, favouring strong management teams and healthy cash flow. We avoided companies that operate in industries plagued by excess supply; many, but not all, stocks in the regional banking and materials sector fall into this category.

Over the period, the portfolio's largest overweight positions were in information technology and industrial sectors. This represents a shift from the start of the period, when the largest underweights were in the materials and financials sectors. We selectively increased our weighting in materials, favouring companies with pricing power, high earnings growth potential and attractive valuations, as described below.

Three of the largest purchases were:

•   Mitsui Chemical, a materials stock, is a petrochemical company that has changed its business portfolio away from commodity chemicals towards high value-added products; these include auto parts, spectacle lens monomers, nappies and food packaging materials. We believe the high-value added products will continue to drive profit growth over the medium term, and that the downside risk in the commodity elements of the business is significantly smaller than the valuation discount suggests.

•   Taiyo Nippon Sanso (materials) is the largest industrial gas supplier in Japan. It is expanding in overseas markets, particularly in the US where the firm is trying to increase its presence in higher margin on-site supply contracts. The merger of Air Liquide and Air Gas, as well as the pending merger of Linde and Praxair, will we think present opportunities to acquire assets which will drive both revenue growth and margin improvement. The shares trade at a substantial discount to peers and we find the balance of risks and rewards very attractive.

•   The investment rationale for Kureha (materials) lies in its high value-added polyglycolic acid (PGA) resins, used in shale gas extraction. Thanks to PGA's biodegradability and resilience to high pressure, it is capable of substantially reducing costs, production time, and the environmental impact of extraction. The company started to market the product directly to local gas producers in the US from early this year. Another growth driver is anode binders for lithium-ion batteries where the company commands some 50% of the global market.

Three of our largest divestments were Anicom (insurance), Pola Orbis (household & personal products) and Shimamura (retailing). We sold all three following strong share price performance.

•   We first initiated a position in Anicom in December 2012 and it was one of our largest positions until recently. The company is a leader in pet insurance in Japan and has doubled premium income in the last five years. Based on recent discussions with management, we concluded that the pet insurance market was approaching saturation far more quickly than we had anticipated. In the meantime, competitive pressure is rising and Anicom is being forced to increase promotional spending in order to win new customers.

•   We sold Pola Orbis and Shimamura on valuation grounds.

The Company's gearing level rose from 6.3% to 7.3% over the six months to 30th September 2017.

Performance review

Over the six months to September, the Company outperformed the benchmark S&P Japan Small Cap Net Return Index by 4.8 percentage points, delivering a return on net assets of 12.3% in sterling terms. The Company is ahead of the benchmark by 5.3 percentage points over three years and by 29.1 percentage points over five years.

During the six months under review, both sector allocation and stock selection added value. Of the excess return, slightly over 50% was attributable to stock selection. Stocks that contributed most to the excess return include Nittoku Engineering (capital goods), IRISO Electronics (technology hardware & equipment), Misumi Group (capital goods), Harmonic Drive Systems (capital goods) and Sumitomo Densetsu (capital goods). All performed well thanks to strong earnings growth. Gearing of the portfolio also had a positive impact.

•   Nittoku Engineering is the global leader in coil-winding machines for a variety of motors used in smartphones, home appliances and sensors. Its growth driver is the automobiles industry as the number of motors per vehicle continues to grow. In the long run, we think the company is very well positioned to benefit from the proliferation of the 'internet of things', as this emerging technology requires a large number of sensors.

•   IRISO Electronics is a manufacturer of miniature connectors, generating over 80% of its revenue from automobiles. The company has steadily increased its value content per vehicle on the back of the increasing use of electric vehicles and hybrid electric vehicles as well as of advanced driver-assistance systems.

•   Misumi Group sells factory automation and metal die components. Its competitive advantage lies in its ability to stock a very large number of items which can be delivered to customers in small lots within a short space of time. It has grown strongly in overseas markets, which now account for half of group revenues. Another growth driver is VONA, its e-commerce business, which also carries third-party brands.

•   Harmonic Drive Systems is the global leader in miniature reduction gear parts, used in the arm joints of small robots. It is benefiting from an increasing use of robots as manufacturers attempt to counter rising wages in emerging markets and improve efficiency through automation.

•   Sumitomo Densetsu specialises in engineering solutions for electric power transmission networks. It also provides installation and maintenance of power management, air-conditioning, and communication network systems in office buildings and manufacturing plants. We believe the company will grow earnings as the demand for upgrading and maintaining the ageing power infrastructure increases.

Yonex (consumer durables & apparel), Daifuku (capital goods) and Kewpie (food beverage & tobacco) were among stocks which negatively contributed to relative performance.

•   Yonex is a global leader in badminton equipment and is growing strongly in China, ASEAN and India, where the sport is very popular. Growth accelerated in China after the company established a direct distribution channel in 2015. The stock fell because its 2016 results and profit guidance for 2017 were below market expectations. Although the pace of growth in recent quarters has been slower than we originally anticipated, this does not alter the long-term investment case and so we are maintaining our position.

•   Daifuku is a stock we do not have strong confidence in and therefore do not hold in the portfolio. It performed strongly during the period, thereby harming our relative performance. It is a global supplier of material handling systems and benefits from increasing automation in manufacturing and e-commerce.

•   Kewpie is the dominant supplier of mayonnaise and dressings in Japan. The investment case for Kewpie is the opportunity in overseas markets, in particular in China where consumption of the products has just started to grow, notably in Beijing and Shanghai. The share price has been trading in a fairly narrow range due to the lack of a new catalyst.

With respect to sector allocation, top contributors include semiconductors and semiconductor equipment (overweight) and banks (underweight).

•   The semiconductors and semiconductor equipment sectors performed strongly globally, driven by strong earnings across the board including in memory chips, power devices and logic chips.

•   Banks gave back their outperformance of the preceding period on profit taking. Lack of inflationary pressure, despite a tight labour market and low interest rates, weighed on sentiment towards the sector.

Portfolio strategy and outlook

There is no change to our investment strategy. We aim to achieve superior long-term performance by investing in strong companies with a durable competitive advantage. These companies grow their intrinsic value in a compounding manner over time and, combined with a proper governance structure, we believe they will reward minority shareholders. This means the portfolio has a bias towards quality and growth companies with both strong balance sheets and cash flow.

We continued to allocate a large part of the capital to our favourite long-standing investment themes, including healthcare, factory automation, e-commerce/mobile internet and infrastructure. Within healthcare, we own stocks that offer growth through innovation. Although the ageing population presents a positive backdrop for the sector, fiscal constraints mean that most pharmaceutical companies face severe pricing pressure from governments. Factory automation benefits from rising wages in emerging countries as well as from a falling working population in Japan. The internet continues to disrupt established incumbents in many areas globally; Japan is a fertile market for entrepreneurs in this area as the country lags the US, UK and China in terms of internet penetration.

We continue to be overweight semiconductor-related companies, in response to the exponential growth in demand for data as 'cloud' and the 'internet of things' become integral to society. Staffing service is another sector in which we find opportunities as the falling and ageing population means employers are finding it increasingly difficult to hire and retain people.

Corporate governance reform in terms of better capital management and shareholder returns, combined with the unwinding of cross-shareholding, are slowly but steadily taking hold. Listed companies in general have healthy balance sheets and can afford higher payout ratios. We will continue to engage with companies in order to establish constructive dialogue on this topic.

We believe that global economic growth will continue to expand at a healthy rate. The lack of inflationary pressure suggests that the risk of aggressive tightening in monetary policies around the world is low. Although the Japanese equity market has performed well, this is largely attributable to earnings growth, and so valuations as measured by the price-earnings ratio have remained virtually unchanged. According to consensus estimates, aggregate earnings of TOPIX Index constituents are expected to grow by 5% in 2017 and 8% in 2018. Based on the 2017 consensus forecast, the Index trades on a PE ratio of 15.3 times.

Shoichi Mizusawa

Nicholas Weindling

Eiji Saito

Investment Managers                                                                                                                

17th November 2017

INTERIM MANAGEMENT REPORT

The Company is required to make the following disclosures in its half year report.

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Company have not changed and fall into the following broad categories: investment and strategy; discount; operational; loss of investment team; and political and economic. Information on each of these areas is given in the Business Review within the Annual Report and Financial Statements for the year ended 31st March 2017.

Related Parties Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company during the period.

Going Concern

The Directors believe, having considered the Company's investment objectives, risk management policies, capital management policies and procedures, nature of the portfolio and expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future and, more specifically, that there are no material uncertainties pertaining to the Company that would prevent its ability to continue in such operation existence for at least twelve months from the date of the approval of this half yearly financial report. For these reasons, they consider that there is reasonable evidence to continue to adopt the going concern basis in preparing the financial statements.

Directors' Responsibilities

The Board of Directors confirms that, to the best of its knowledge:

(i) the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with FRS 104 'Interim Financial Reporting' and gives a true and fair view of the state of the affairs of the Company and of the assets, liabilities, financial position and net return of the Company as at 30th September 2017, as required by the UK Listing Authority Disclosure and Transparency Rule 4.2.4R; and

(ii)     the interim management report includes a fair review of the information required by DTRs 4.2.7R and 4.2.8R of the UK Listing Authority Disclosure and Transparency Rules.

In order to provide these confirmations, and in preparing these financial statements, the Directors are required to:

•   select suitable accounting policies and then apply them consistently;

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

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

•   prepare the financial statements on 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.

For and on behalf of the Board

Alan Clifton

Chairman

17th November 2017

 

STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2017

	(Unaudited)			(Unaudited)			(Audited)
	Six months ended			Six months ended			Year ended
	30th September 2017			30th September 2016			31st March 2017
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held
at fair value through
profit or loss	-	23,824	23,824	-	26,852	26,852	-	36,931	36,931
Net foreign currency
gains/(losses)	-	1,385	1,385	-	(2,482)	(2,482)	-	(1,544)	(1,544)
Income from investments	1,484	-	1,484	1,592	-	1,592	3,528	-	3,528
Gross return	1,484	25,209	26,693	1,592	24,370	25,962	3,528	35,387	38,915
Management fee	(1,025)	-	(1,025)	(921)	-	(921)	(1,928)	-	(1,928)
Other administrative expenses	(202)	-	(202)	(242)	-	(242)	(447)	-	(447)
Net return on ordinary
activities before finance
costs and taxation	257	25,209	25,466	429	24,370	24,799	1,153	35,387	36,540
Finance costs	(78)	-	(78)	(184)	-	(184)	(275)	-	(275)
Net return on ordinary
activities before taxation	179	25,209	25,388	245	24,370	24,615	878	35,387	36,265
Taxation	(148)	-	(148)	(162)	-	(162)	(355)	-	(355)
Net return on ordinary
activities after taxation	31	25,209	25,240	83	24,370	24,453	523	35,387	35,910
Return per share (note 3)
- undiluted	0.06p	46.01p	46.07p	0.18p	51.50p	51.68p	1.04p	70.69p	71.73p
- diluted1	0.06p	46.01p	46.07p	0.17p	50.18p	50.35p	1.01p	68.67p	69.68p

¹The Subscription shares expired on 30th November 2016.

STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2017

	Called up		Capital
	share	Share	redemption	Other	Capital	Revenue
	capital	premium	reserve	reserve	reserves	reserve1	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Six months ended 30th September 2017 (Unaudited)
At 31st March 2017	5,595	33,978	1,836	313,004	(133,782)	(12,835)	207,796
Repurchase of shares into Treasury	-	-	-	(1,130)	-	-	(1,130)
Net return on ordinary activities	-	-	-	-	25,209	31	25,240
At 30th September 2017	5,595	33,978	1,836	311,874	(108,573)	(12,804)	231,906
Six months ended 30th September 2016 (Unaudited)
At 31st March 2016	4,741	13,889	1,836	314,775	(169,169)	(13,358)	152,714
Repurchase of shares into Treasury	-	-	-	(355)	-	-	(355)
Conversion of Subscription shares into
Ordinary shares	(1)	1	-	-	-	-	-
Issue of Ordinary shares on exercise of
Subscription shares	82	1,918	-	-	-	-	2,000
Net return on ordinary activities	-	-	-	-	24,370	83	24,453
At 30th September 2016	4,822	15,808	1,836	314,420	(144,799)	(13,275)	178,812
Year ended 31st March 2017 (Audited)
At 31st March 2016	4,741	13,889	1,836	314,775	(169,169)	(13,358)	152,714
Repurchase of shares into Treasury	-	-	-	(1,771)	-	-	(1,771)
Conversion of Subscription shares into
Ordinary shares	(8)	8	-	-	-	-	-
Issue of Ordinary shares on exercise of
Subscription shares	862	20,081	-	-	-	-	20,943
Net return on ordinary activities	-	-	-	-	35,387	523	35,910
At 31st March 2017	5,595	33,978	1,836	313,004	(133,782)	(12,835)	207,796

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

STATEMENT OF FINANCIAL POSITION AT 30TH SEPTEMBER 2017

	(Unaudited)	(Unaudited)	(Audited)
	30th September 2017	30th September 2016	31st March 2017
	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	248,743	186,509	220,785
Current assets
Derivative financial instruments	-	-	4
Debtors	1,022	1,660	1,461
Cash and cash equivalents	2,271	14,422	4,895
	3,293	16,082	6,360
Creditors: amounts falling due within one year	(20,130)	(23,779)	(19,349)
Net current liabilities	(16,837)	(7,697)	(12,989)
Total assets less current liabilities	231,906	178,812	207,796
Net assets	231,906	178,812	207,796
Capital and reserves
Called up share capital	5,595	4,822	5,595
Share premium	33,978	15,808	33,978
Capital redemption reserve	1,836	1,836	1,836
Other reserve	311,874	314,420	313,004
Capital reserves	(108,573)	(144,799)	(133,782)
Revenue reserve	(12,804)	(13,275)	(12,835)
Total shareholders' funds	231,906	178,812	207,796
Net asset value per share (note 4)
- undiluted	424.3p	375.5p	377.9p
- diluted1	424.3p	356.8p	377.9p

¹The Subscription shares expired on 30th November 2016

STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2017

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	30th September 2017	30th September 2016	31st March 2017
	£'000	£'000	£'000
Net cash outflow from operations before
dividends and interest (note 5)	(1,345)	(288)	(848)
Dividends received	1,757	1,431	2,647
Interest paid	(76)	(157)	(371)
Net cash inflow from operating activities	336	986	1,428
Purchases of investments	(22,188)	(22,812)	(62,298)
Sales of investments	16,949	22,953	40,244
Settlement of forward currency contracts	22	(3)	(78)
Net cash (outflow)/inflow from investing activities	(5,217)	138	(22,132)
Issue of Ordinary shares on exercise of
Subscription shares (net of costs)	-	2,000	20,943
Repurchase of shares into Treasury	(972)	(91)	(1,771)
Repayment of bank loan	-	-	(23,208)
Drawdown of bank loans	3,243	-	18,993
Net cash inflow from financing activities	2,271	1,909	14,957
(Decrease)/increase in cash and cash equivalents	(2,610)	3,033	(5,747)
Cash and cash equivalents at start of the period	4,895	10,643	10,643
Exchange movements	(14)	746	(1)
Cash and cash equivalents at end of the period	2,271	14,422	4,895
(Decrease)/increase in cash and cash equivalents	(2,610)	3,033	(5,747)
Cash and cash equivalents consist of:
Cash and short term deposits	2,271	14,422	4,895
Total	2,271	14,422	4,895

 

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2017

1.  Financial statements

The information contained within the financial statements in this half year report has not been audited or reviewed by the Company's auditors.

The figures and financial information for the year ended 31st March 2017 are extracted from the latest published financial statements of the Company and do not constitute statutory accounts for that year. Those financial statements have been delivered to the Registrar of Companies, including the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

2.  Accounting policies

The financial statements have been prepared in accordance with the Companies Act 2006, FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' of the United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the revised 'SORP') issued by the Association of Investment Companies in November 2014 and updated in January 2017.

FRS 104, 'Interim Financial Reporting', issued by the Financial Reporting Council ('FRC') in March 2015 has been applied in preparing this condensed set of financial statements for the six months ended 30th September 2017.

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

The accounting policies applied to this condensed set of financial statements are consistent with those applied in the financial statements for the year ended 31st March 2017.

3.  Return per share

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	30th September 2017	30th September 2016	31st March 2017
	£'000	£'000	£'000
Return per Ordinary share is based on the
following:
Revenue return	31	83	523
Capital return	25,209	24,370	35,387
Total return	25,240	24,453	35,910
Weighted average number of Ordinary shares
in issue during the period used for the purpose
of the undiluted calculation	54,787,042	47,321,220	50,056,102
Weighted average number of Ordinary shares
in issue during the period used for the purpose
of the diluted calculation1	-	48,564,858	51,532,925
Undiluted
Revenue return per share	0.06p	0.18p	1.04p
Capital return per share	46.01p	51.50p	70.69p
Total return per share	46.07p	51.68p	71.73p
Diluted
Revenue return per share	0.06p	0.17p	1.01p
Capital return per share	46.01p	50.18p	68.67p
Total return per share	46.07p	50.35p	69.68p

¹    The Subscription shares expired on 30th November 2016.

The diluted return per share represents the return on ordinary activities after taxation divided by the weighted average number of Ordinary shares in issue during the period, as adjusted in accordance with IAS 33, as required by FRS 102.

4. Net asset value per share

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	30th September 2017	30th September 2016	31st March 2017
Undiluted
Net assets (£'000)	231,906	178,812	207,796
Number of Ordinary shares in issue	54,660,239	47,624,571	54,980,560
Net asset value per share	424.3p	375.5p	377.9p
Diluted1
Net assets assuming exercise of dilutive
Subscription shares (£'000)	231,906	197,755	207,796
Number of potential Ordinary shares in issue	54,660,239	55,420,060	54,980,560
Net asset value per share	424.3p	356.8p	377.9p

¹    The Subscription shares expired on 30th November 2016.

5.  Reconciliation of net return on ordinary activities before finance costs and taxation to net cash outflow from operations before dividends and interest

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	30th September 2017	30th September 2016	31st March 2017
	£'000	£'000	£'000
Net return on ordinary activities before finance
costs and taxation	25,466	24,799	36,540
Less capital return on ordinary activities before
finance costs and taxation	(25,209)	(24,370)	(35,387)
Decrease/(increase) in accrued income and
other debtors	439	9	(524)
Decrease in accrued expenses	(20)	(144)	(107)
Overseas withholding tax	(148)	(162)	(355)
Dividends received	(1,757)	(1,431)	(2,647)
Realised (losses)/gains on foreign currency
transactions	(116)	1,011	1,632
Net cash outflow from operations before
dividends and interest	(1,345)	(288)	(848)

JPMORGAN FUNDS LIMITED

17th November 2017

For further information, please contact:

Divya Amin

For and on behalf of

JPMorgan Funds Limited

020 7742 4000

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.

ENDS

A copy of the half year will be submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM

The half year will also shortly be available on the Company's website at www.jpmjapansmallercompanies.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

 

END

 

 

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