Final Results

JPMorgan European Grwth & Inc PLC

03 June 2024

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN EUROPEAN GROWTH & INCOME PLC

FINAL RESULTS FOR THE YEAR ENDED
31ST MARCH 2024

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

for the year ended 31^st March 2024

HIGHLIGHTS

-     Total return to shareholders 15.6% (Benchmark 12.7%)

-     Return on net assets 16.8% (Benchmark 12.7%)

-     Dividends per share 4.2p (2023:4.0p)

Legal Entity Identifier: 549300D8SPJFHBDGXS57

Information disclosed in accordance with DTR 4.1

Chair's Statement

Introduction

In this 12-month reporting period to 31st March 2024, I am delighted to report the Company continued to outperform its benchmark. In what remains a tricky backdrop of evolving inflation expectations and geopolitical difficulties, the Board believes the proposition of the Company is robust and effectively implemented, allowing the Investment Managers the freedom to navigate European markets, whilst delivering to our shareholders the best of capital growth combined with a consistent income.

During the reporting period the devastating conflicts in Ukraine and Gaza raged on engaging hearts and minds across the globe, either without an obvious long term solution on the horizon. Although neither war seems likely to engulf other nations, it is not impossible to create a scenario where both escalate quickly.

In Europe, muted economic growth has been the backdrop of this reporting period, which is unsurprising given the sharp increases in the level of interest rates in 2022 and 2023. But this has had the desired effect on inflation, with rapid declines observed during the last 12 months. The worries early in the reporting period regarding a wider fallout from the failure of Credit Suisse and of a 'hard landing' for global economies seem to have eased. However, Germany, Europe's largest economy, has been particularly affected by the economic slow down of China and continuing trade tensions with China, which is an important market for many European companies, lurks in the background. Despite this melting pot of machinations, European stock markets have shrugged off these issues producing healthy returns over the period.

Performance

Return on net assets (NAV) and return to shareholders

For the Company's financial year ended 31st March 2024 the total return on net assets was +16.8% (debt at fair value). This was an outperformance of 4.1% over its benchmark, which returned +12.7%. Strong relative stock selection was the main reason for this. In their Report on page 12 of the Company's annual report and financial statements, the Investment Managers review in more detail some of the factors underlying the performance of the Company as well as commenting on the economic and market background over the period in question.

The total return to shareholders, which takes into account the movement of the share price, over the 12 months delivered a return of +15.6%, which was also an outperformance of the benchmark although by a smaller margin than the net assets performance.

For an explanation of the calculation of the Company's total return on net assets and the total return to shareholders, please see the Glossary of Terms and Alternative Performance Measures on page 99 of the Company's annual report and financial statements.

The Company's restructuring in February 2022 has resulted in some of the performance and dividend data for periods prior to this reporting period being calculated on a transitional basis as detailed in various footnotes throughout this report.

Revenue and Dividends

During the 12 months to 31st March 2024, the Company's net revenue attributable to shareholders (net return after taxation) was 10.8% higher at £13,683,000 (2023: £12,354,000) following the trajectory of the Company's performance.

As detailed in the Company's previous annual report, an aim of the Company's restructuring was to provide shareholders with a predictable dividend income at a level that is consistent and frequent, based on 4% of the preceding year end net asset value per share. The Company pays quarterly dividends in July, October, January and March. In line with the above aim, in respect of the year ending 31st March 2024, the Company's dividend was 4.2 pence per share, amounting to £18.1 million. This represents an increase from the £17.4 million paid in 2023, as illustrated in note 10(b) on page 75 of the Company's annual report and financial statements.

For the Company's financial year ending 31st March 2025 the Board is expecting to adopt the same approach with 4% of the net asset value per share as at 31st March 2024 being paid as dividend for the year ending 31st March 2025.

On 21st May 2024, the Board declared a first interim dividend of 1.2 pence per share in respect of the financial year ending 31st March 2025, payable on 5th July 2024. As was the case for the Company's dividends in respect of the year ended 31st March 2024, to the extent that brought forward revenue reserves are not sufficient, dividends will be paid from distributable capital reserves for the financial year ending 31st March 2025, as permitted by the Company's Articles.

Gearing

There has been no change in the Investment Manager's permitted gearing range, as previously set by the Board, of between 10% net cash to 20% geared. At 31st March 2024 the Company was 4.5% geared (31st March 2023: 3.1%).

Discounts, Share Issuance and Repurchase

During the period under review, the average discount across the Investment Trust sector has remained at gaping levels. Although the initial widening was indiscriminate, particular signs of stress is evident in those Trusts with significant alternative investments with worries over liquidity, realisation and valuation of the underlying positions. The Board remain confident in the liquidity and transparency of the markets in which your Company invests, however we remain alive to dislocations beyond our comfort levels, addressing imbalances in the supply of and demand for the Company's shares through a buy-back of shares. The Board does not wish to see the discount widen beyond 10% under normal market conditions (using the cum-income NAV with debt at fair) on an ongoing basis. The precise level and timing of repurchases is dependent on a range of factors including prevailing market conditions. In the period under review, 5,268,397 Ordinary shares were bought into Treasury. From 1st April 2024 to 29th May 2024, 200,000 Ordinary shares were bought into Treasury. No Ordinary shares were issued.

The Company's Ordinary share discount as at 31st March 2024 was 12.1% to NAV with debt at fair value. The average discount of a peer group of six companies as at the same date was 10.0%. On 29th May, 2024, the Company's Ordinary share discount was 10.3%, which compares to an average discount of the same peer group of 8.7% as at the same date, though this hides variation in strategy and performance across the sector. It also masks the corporate activity that has occurred in the sector this past year which your Board is conscious of monitoring thoughtfully for any implications for the Company.

Marketing and Shareholder Interaction

The Company continues to raise its profile with shareholders and potential investors. It is the Board's view that enhancing the Company's profile will benefit all shareholders, by creating sustained demand for its shares, thereby improving liquidity and scale. Our range of activity is broad seeking to showcase the Company to as wide a relevant audience as possible. The Manager follows an established marketing and investor relations programme targeting institutions, private client stockbrokers and platforms via video conferences, podcasts and in-person meetings. Additionally, we have on-going interaction with national and investment industry journalists demonstrating the knowledge and insight of our managers.

We are careful to undertake this promotional activity in the most effective and controlled manner.

The Board and the Investment Managers maintain a dialogue with the Company's shareholders via regular email updates, which deliver news and views, and discuss the latest performance. If you have not already signed up to receive these communications and you wish to do so, you can opt in via https://tinyurl.com/JEGI-Sign-Up or by scanning the QR code in the margin.

It is the Board's hope that these initiatives will give many more of the Company's investors and potential shareholders the opportunity to interact with the Board and Investment Managers.

As referred to in my report included in the Company's half year report released in November 2023, I am delighted that the Company was voted the best investment company in the European sector at the annual AIC Investment Week Award ceremony held during the year. The judges commended the Company's performance and the benefits provided by its simplified and shareholder focused structure.

Board of Directors

The Board are delighted that, as previously announced, Andrew Robson was appointed as an independent Non-executive Director of the Company on 6th February 2024. The intention is that Andrew will be appointed as the Company's Audit Committee Chair when Jutta af Rosenborg, the current incumbent, retires at the Company's next Annual General Meeting, scheduled for 3rd July 2024.

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

Environmental, Social and Governance

The Board shares the Investment Managers' view of the importance of taking into account the financial impact of ESG considerations in their investment process and of the necessity of continued engagement with investee companies throughout the duration of the investment.

Investment Managers

The performance of the Investment Managers is formally evaluated by the Board annually. The evaluation of the Manager was undertaken in January 2024 and based on the data available at that time; the Board concluded that the performance of the Manager was of a high standard and that their services in the new restructured format should be retained.

Annual General Meeting

The Company's ninety fifth Annual General Meeting (AGM) will be held at 60 Victoria Embankment, London EC4Y 0JP at 2.30 p.m. on Wednesday, 3rd July 2024. We are pleased to invite shareholders to join us in-person for the Company's AGM, hear from the Investment Managers and ask questions. Shareholders wishing to follow the AGM proceedings but choosing not to attend in person will be able to view proceedings live and ask questions (but not vote) through conferencing software. Details on how to register, together with access details, will be available shortly on the Company's website at www.jpmeuropeangrowthandincome.com or by contacting the Company Secretary at [e-mail]

If you hold your shares via an online platform, for further details of how to vote your shares and/or attend the Company's AGM, please see the 'Investing in JPMorgan European Growth & Income plc' on page 103 of the Company's annual report and financial statements.

My fellow Board members, representatives of JPMorgan and I look forward to the opportunity to meet and speak with shareholders after the formalities of the meeting have been concluded. Shareholders who are unable to attend the AGM are strongly encouraged to submit their proxy votes in advance of the meeting, so that they are registered and recorded at the AGM. Proxy votes can be lodged in advance of the AGM either by post or electronically: detailed instructions are included in the Notes to the Notice of Annual General Meeting on pages 95 to 98 of the Company's annual report and financial statements.

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

Outlook

Despite the backdrop of geopolitical conflicts and uncertainty over the trajectory of inflation, the Euro zone has remained relatively resilient. For the first quarter of 2024 economic growth in the Euro zone was higher than expected helped by an improved performance from the economies of Germany and some of the zone's southern European countries. Inflation has fallen rapidly, though the rate of decline has eased somewhat with a resilient labour market and rising consumer sentiment, suggesting interest rate reductions by the ECB are likely to be later than expected. With an unprecedented number of elections around the world this year, the near term could hold significant regime change. Throw in the emergence of generative AI impacting corporate business models and there is a lot to be mindful of.

It is your Board's belief the merits of investing in European stock markets are yet to be fully realised. Europe has truly world class companies attractively valued particularly in relation to the US equity market. This continues to present an exciting opportunity on which our Investment managers remain focussed. As always dedication to delivering good returns through careful stock selection and a diversified portfolio remain core to the approach. The Board remain confident in the abilities of the Investment Managers to do so.

For and on behalf of the Board
Rita Dhut
Chair

31st May 2024

Investment Managers' Report

Market Background

Following a somewhat muted first half performance from Continental European equities as economic growth slowed in the face of a series of interest rate hikes, the market bottomed in late October and ended the Company's financial year up 12.7% in Sterling terms. Investors started to believe inflation was back on a downward trend due to a series of softer inflation prints. This boosted market expectation in the ECB potentially reducing interest rates sooner than expected. The ECB's last hike was in September, by December its outlook statement was more nuanced and by April this year the market was expecting the ECB to be the first Central bank to start cutting rates again. At the same time, it started to look possible the tightening cycle would not tip the economy into recession. As real wages have turned positive consumer confidence has improved which has been reflected in stronger PMI releases from the service side of the economy. Meanwhile it appears as though manufacturing destocking has run its course and new orders have shown signs of picking up again. With this backdrop, investors began to hope Central Banks were on track to successfully lower inflation while engineering a soft landing.

Portfolio positioning

Our investment process focuses on identifying companies with improving operational momentum, higher quality characteristics, and lower valuations. Not every company in the portfolio ticks all three boxes but the portfolio as a whole does. During the year under review this has resulted in a clear tilt towards cyclicals and financials. Within retailers we increased the position in Industria de Diseno Textil (Inditex), the fashion retailer which owns brands such as Zara and Massimo Dutti. Inditex's sourcing model and ongoing reinvestment in its stores and technology has allowed it to steadily compound growth and free cash flow despite the emergence of more competition from online and discount players.

The Company remains exposed to the technology sectors. Within semiconductors it has a position in ASML which manufactures tools to produce the chips required, for example, in the emerging Artificial Intelligence market. ASML's order intake continues to beat expectations and gives some visibility on future earnings. Within software we increased the holding in SAP which has seen clients accelerate their migration to its S4/HANA enterprise resource planning software as well as a more widespread move towards the Cloud. SAP specifically cites clients' demand for AI as a key development.

We also increased exposure to the bank sector by adding names such as Danske Bank and BAWAG. Many bank stocks have been trading at low valuations but at the same time have well capitalised balance sheets delivering steadily rising earnings estimates and generating double digit returns on tangible equity. This has allowed the sector to return significant amounts of capital to shareholders through both dividends and share buybacks.

To view the graph of MSCI Europe Banks vs MSCI Europe exUK Total Return please see the Company's annual report and financial statements, which will be available to view on the Company's website shortly after release of this announcement.

The Company's biggest underweight is to the healthcare sector. Many of the equipment and services names have seen estimates downgraded quite dramatically and also trade on expensive valuations. Within the pharmaceutical sector we have focused on those companies where the operational momentum continues to improve, Novo Nordisk and Novartis in particular, and avoiding those with relentless downgrades such as Bayer and Lonza.

To view the graph of Novo Nordisk vs MSCI Europe exUK Total Return please see the Company's annual report and financial statements, which will be available to view on the Company's website shortly after release of this announcement.

One of the advantages of using both quantitative and fundamental analysis in our investment process is that it allows us to consider a wide range of potential investments before determining which companies to investigate in more fundamental detail. It is noticeable certain smaller companies are gathering interest after a prolonged period of underperformance. We have added a number of names in this area such as Danieli which manufactures machines for steel production including electric arc furnaces which are more eco-friendly, and Bilfinger which has focused its business away from construction projects towards buildings and facilities management and services.

To view the bar chart of the Company's active and absolute sector positions relative to benchmark please see the Company's annual report and financial statements, which will be available to view on the Company's website shortly after release of this announcement.

Portfolio performance and attribution

The portfolio outperformed its benchmark index by 4.1% with the NAV rising 16.8% (with debt valued at fair) with most of this coming from stock selection. Novo Nordisk was again the top contributor to performance as it continued to deliver growth ahead of expectations driven by its diabetes and obesity franchise. The potential market for its weight loss drug Wegovy is enormous, particularly as the product appears to have a beneficial impact on related conditions such as cardio-vascular problems. In the short term there are concerns about Novo Nordisk's ability to fill that demand but the company has taken steps to expand its manufacturing capacity to address that issue.

The biggest detractor from performance last year was RWE, a German utility, which underperformed as power prices pulled back faster than we expected earlier this year. Nestle, another stock traditionally seen as defensive, also detracted from performance as it reported disappointing results with lower volumes than expected. Elsewhere the portfolio's holdings in LVMH and Richemont also performed poorly as earnings expectations struggled in the face of weaker news from China.

On a more positive note, Unicredit, an Italian bank, was the portfolio's stand out holding in financials, almost doubling during the year. It has consistently beaten analysts' estimates and raised guidance throughout the year confounding concerns that these upgrades would tail off when interest rates stopped rising. Despite the increase in the share price the stock's valuation has hardly rerated because earnings have risen almost as much. Given the strong returns that Unicredit is making and its robust balance sheet the company is returning significant amounts of excess capital to shareholders through both dividends and share buybacks.

Portfolio Performance

Year ended 31st March 2024

	%	%
Contributions to total returns
Benchmark total return		12.7
Asset Selection (stock/sector/currency)		4.7
Gearing contribution1	0.5
Return on cash	0.1
Cost of gearing2	-0.3
Cash/Gearing impact		0.3
Portfolio return		17.7
Management fee/Other expenses	-0.7
Share buyback/Issuance	0.1
Other effects		-0.6
Return on net assets with debt at par valueA		17.1
Impact of debt at fair value3		-0.3
Return on net assets with debt at fair valueA		16.8
Effect of movement in discount		-1.2
Return to shareholdersA		15.6

Source: JPMAM and MorningStar. All figures are on a total return basis.

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

¹  Gearing contribution is the aggregated effect of daily gearing on the daily benchmark return during the period.

²  Cost of Gearing calculation is based on finance costs in the annual accounts and includes the amortisation of private placement issue costs.

³  See note 17 on page 79 of the Company's annual report and financial statements for reference to fair value of debt.

^A Alternative Performance Measure ('APM').

A glossary of terms and APMs is provided on page 99 of the Company's annual report and financial statements.

Outlook

Looking ahead, equity returns will likely hinge on whether the economy can continue to deliver steady growth and slowly declining inflation. At the moment we remain cautiously optimistic as consumer confidence in Europe continues to improve. Meanwhile it looks as though the manufacturing inventory correction has run its course and new orders have started to show signs of picking up again. At the time of writing the Q1 reporting season has only just started so it is too early to see if this optimism is reflected in quarterly reports.

Inflation continues to moderate as expected. Given the recent stronger inflation prints from both the US and the UK it now looks likely that the ECB will be the first central bank to cut rates, assuming of course that there isn't a similar hotter blip in Europe too. An unexpected and meaningful rise in inflation is perhaps the biggest threat to this soft/no landing scenario.

Numerous political and geopolitical uncertainties do remain a concern - but for now the market seems to shrug them off. While the gold price hit new highs recently, the oil price, despite rising in the first quarter, remains well below the levels seen in early 2022 at the time of the Russian invasion of Ukraine.

Lastly European equities continue to trade on an extreme discount to US equities, a discount that has grown following the strong performance from technology stocks in the United States during 2023. This argument may not be new to prospective investors; however, the European equity market today can offer comparable levels of quality and growth potential. This valuation support is however recognised by European companies, who are buying back more stock than ever before. Your investment managers continue to believe there are opportunities to create value through stock selection.

Alexander Fitzalan Howard

Zenah Shuhaiber

Tim Lewis

Investment Managers

31st May 2024

 

Principal and Emerging Risks

			Movement from
Principal risk	Description	Mitigation/Control	Prior Year
Investment	The Board recognises that performance of the Company's investment portfolio is fundamental to the success of the Company. Investment includes market risk and this arises from uncertainty about the future prices of the Company's investments. It represents the potential loss the Company might suffer through holding investments in the face of negative market movements. Market risk is currently heightened due to various factors highlighted in the Chair and Investment Managers' report, these include interest rates rises, geopolitical conflicts and sustained inflation. Geopolitical concerns will also impact the market; the current conflict in Ukraine and tensions with China are causing increased volatility in the markets.	In order to achieve the objectives given the risks inherent in investment such as market, gearing, currency and interest rates, investment guidelines, policies and processes are in place which aim to mitigate these risks. They are designed to ensure that the portfolios are managed in a way which is aimed at identifying the best stocks and diversifying risk. Regular reports are received by the Board from the Manager on stock selection, asset allocation, gearing, hedging and costs of running the Company and these are reviewed at each Board meeting in detail. Compliance with investment guidelines and policies are reviewed by the Manager and the Board, and discussed at each board meeting in detail together with an analysis of market parameters affecting the business. The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set Investment Restrictions and Guidelines which are monitored and reported on by JPMF. The Board monitors the implementation and results of the investment process with the Manager. Further details regarding financial instruments are disclosed in note 21 on pages 81 to 87 of the Company's annual report and financial statements.	No movement
Operational	In common with most investment trusts the Board delegates the operation of the business to third parties, the principal delegate being the Manager JPMF. Disruption to, failure of, or fraud in JPMF's accounting, dealing or payments systems or the Depositary or Custodian's records could prevent timely implementation of investment decisions, and potentially shortfalls in the accuracy of reporting and monitoring of the Company's financial position and loss. Cyber crime is a threat to businesses continuity and security.	Details of how the Board monitors the services provided by JPMF and its associates and the Depositary and Custodian and the key elements designed to provide effective internal control are included within the Internal Control section of the Audit Committee report on page 47 of the Company's annual report and financial statements. The Board has received the cyber security policies of its key third party service providers and JPMF has provided assurance to the Directors that the Company benefits directly or indirectly from all elements of JPMorgan's cyber security programme. The information technology controls around the physical security of JPMorgan's data centres, security of its networks and trading applications are tested and reported on every six months against the AAF standard.	No movement
Regulatory	The Company operates in an environment with significant regulation including the FCA Listing Rules, The UK Companies Act, the Corporation Taxes Act, Market Abuse Regulation, Disclosure Guidance and Transparency Regulations and the Alternative Investment Fund Managers Directive (AIFMD). There has been no significant change to this risk during the year though the environment as a whole is considered to be one of increasing costs for compliance. The Company also operates under the requirements of the Bribery Act 2010 as referred to in the Directors Report on page 40 of the Company's annual report and financial statements.	The Board relies on the services of its Company Secretary, the Manager and its professional advisers to ensure compliance with the Companies Act 2006, the FCA Prospectus Rules, Listing Rules, DTRs and the Alternative Investment Fund Managers Directive.	No movement
Discount premium to NAV	Share price discount or premium to net asset value per share could lead to high levels of uncertainty and reduced shareholder confidence.	The Board monitors the Company's discount level and seeks, where deemed prudent, to address imbalances in the supply and demand of the Company's shares through share buybacks. For details of the Performance related Tender Offer and Discount Control arrangements, including recent updates, see Key Features at the front of this document.	No movement
Strategy	An inappropriate investment strategy, for example asset allocation may lead to underperformance against the Company's benchmark index and peer companies.	The Board reviews the overall strategy and structure of the Company in comparison to performance against benchmark, peer group and share activity. The Board holds a separate meeting devoted to strategy each year which includes consideration of whether the Company's objectives and structures are appropriate for the long term interests of shareholders.	No movement
	Significant hostile action by shareholder/s - arbitrageurs diverts attention from normal business.	The Board and Manager regularly monitor the Company's share register and receipts of formal disclosures of significant transactions. Regular discussions are held with the Company's Brokers.	Up
Pandemic Risk	Whilst noting that in May 2023 the World Health Organization announced that Covid-19 no longer qualified as a global emergency, the outbreak and spread of Covid-19 demonstrated the risk of global pandemics, in whatever form a pandemic takes. Should a new variant of the virus spread more aggressively or become more virulent, it may present risks to the operations of the Company, its Manager and other major service providers.	The Board monitors effectiveness and efficiency of service providers' processes through ongoing compliance and operational reporting and there were no disruptions to the services provided to the Company in the year under review. The Company's service providers are capable of implementing business continuity plans which include working almost entirely remotely. The Board continues to receive regular reporting on operations from the Company's major service providers and would not anticipate a fall in the level of service in the event of a reemergence of a pandemic.	Down
Climate Change	The recent trade tensions between western economies and China, Russia's invasion of Ukraine in February 2022 and conflict in Gaza may cause long term changes in global trade and technology. This may challenge future growth potential and increased frictions in accessing global markets. Changes in financial or tax legislation in the UK or in some of the countries in which the Company invests may impact the operating model of the Company. In addition policies adopted by Governments/Central banks in response to the issues being seen in markets (e.g. inflation and interest rates) may lead to adverse movements in asset prices and could result in concerns for the ongoing exposure to specific investee markets.	The Company addresses these global developments in regular questioning of the Manager and with external expertise as required will continue to monitor these issues, should they develop. The Manager regularly monitors the Company's portfolio holdings to ensure compliance with any applicable sanctions.	Up
Geopolitical and Economic concerns	The recent trade tensions between western economies and China, Russia's invasion of Ukraine in February 2022 and conflict in Gaza may cause long term changes in global trade and technology. This may challenge future growth potential and increased frictions in accessing global markets. Changes in financial or tax legislation in the UK or in some of the countries in which the Company invests may impact the operating model of the Company. In addition policies adopted by Governments/Central banks in response to the issues being seen in markets (e.g. inflation and interest rates) may lead to adverse movements in asset prices and could result in concerns for the ongoing exposure to specific investee markets.	The Company addresses these global developments in regular questioning of the Manager and with external expertise as required will continue to monitor these issues, should they develop. The Manager regularly monitors the Company's portfolio holdings to ensure compliance with any applicable sanctions.	Up
Emerging risk	Description	Mitigation/Control	Movement from Prior Year
Artificial Intelligence (AI)	While it might equally be deemed a great opportunity and force for good, there appears also to be an increasing risk to business and society more widely from AI. Advances in computing power means that AI has become a powerful tool that will impact a huge range of areas. AI could be a significant driver for new business as well as a disrupter to current business and processes leading to added uncertainty in corporate valuations.	The Board will work with the Manager to monitor the developments concerning AI and its potential impact on the portfolio, our service providers and the wider market.	Up

Transactions with the Manager and related parties

Details of the management contract are set out in the Directors' Report on page 40 of the Company's annual report and financial statements. The management fee payable to the Manager for the year was £2,381,000 (2023: £2,228,000), of which £nil (2023: £nil) was outstanding at the year end.

Included in administration expenses in note 6 on page 72 of the Company's annual report and financial statements are safe custody fees amounting to £51,000 (2023: £46,000) payable to JPMorgan Chase Bank, N.A of which £13,000 (2023: £16,000) was outstanding at the year end.

The Manager may carry out some of its dealing transactions through group subsidiaries. These transactions are carried out at arm's length. Commission amounting to £26,000 (2023: £21,000) was payable to JPMorgan Securities Limited for the year of which £nil (2023: £nil) was outstanding at the year end.

The Company holds investments in funds managed by JPMAM. At 31st March 2024 these were valued at £11.7 million (2023: £10.6 million) and represented 2.2% (2023: 2.3%) of the Company's investment portfolio. During the year the Company made £nil purchases of such investments (2023: £nil) and sales with a total value of £nil (2023: £nil).

Income amounting to £259,000 (2023: £168,000) was receivable from these investments during the year of which £nil (2023: £nil) was outstanding at the year end.

The Company also holds cash in the JPMorgan EUR Liquidity Fund, managed by JPMF. At the year end this was valued at £10.4 million (2023: £25.2 million). Interest amounting to £490,000 (2023: £nil) was payable during the year of which £nil (2023: £nil) was outstanding at the year end.

Stock lending income amounting to £30,000 (2023: £46,000) was receivable by the Company during the year. JPMAM commissions in respect of such transactions amounted to £3,000 (2023: £5,000).

Handling charges on dealing transactions amounting to £10,000 (2023: £13,000) were payable to JPMorgan Chase Bank N.A. during the year of which £1,000 (2023: £5,000) was outstanding at the year end.

At the year end, total cash of £4.7 million (2023: £0.3 million) was held with JPMorgan Chase Bank N.A. A net amount of interest of £3,000 (2023: £2,000) was receivable by the Company during the year from JPMorgan Chase Bank, N.A of which £nil (2023: £nil) was outstanding at the year end.

Full details of Directors' remuneration and shareholdings can be found on pages 51 to 53 and in note 6 on page 72 of the Company's annual report and financial statements.

Statement of Directors' Responsibilities in Respect of the Financial Statements

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

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

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

•  select suitable accounting policies and then apply them consistently;

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

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

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

The Directors are responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006.

The maintenance and integrity of the website maintained by the Manager is, so far as it relates to the Company, the responsibility of the Manager. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' confirmations

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

Each of the Directors, whose names and functions are listed in page 39 of the Company's annual report and financial statements confirm that, to the best of their knowledge:

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

•  The Strategic Report and the Directors' Report includes a fair review of the development and performance of the business and the position of the company, together with a description of the principal risks and uncertainties that it faces.

For and on behalf of the Board
Rita Dhut
Chair

31st May 2024

Statement of Comprehensive Income

For the year ended 31st March 2024

	2024			2023
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments and derivatives held at fair value through profit or loss	-	62,285	62,285	-	32,295	32,295
Foreign exchange (losses)/gains on JPMorgan Liquidity Fund	-	(355)	(355)	-	1,141	1,141
Net foreign currency gains/(losses)	-	716	716	-	(2,795)	(2,795)
Income from investments	16,572	129	16,701	15,138	-	15,138
Interest receivable and similar income	523	-	523	48	-	48
Gross return	17,095	62,775	79,870	15,186	30,641	45,827
Management fee	(714)	(1,667)	(2,381)	(668)	(1,560)	(2,228)
Other administrative expenses	(640)	-	(640)	(557)	-	(557)
Net return before finance costs and taxation	15,741	61,108	76,849	13,961	29,081	43,042
Finance costs	(345)	(814)	(1,159)	(359)	(837)	(1,196)
Net return before taxation	15,396	60,294	75,690	13,602	28,244	41,846
Taxation	(1,713)	-	(1,713)	(1,248)	-	(1,248)
Net return after taxation	13,683	60,294	73,977	12,354	28,244	40,598
Return per share	3.17p	13.97p	17.14p	2.83p	6.48p	9.31p

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year.

The 'Total' column of this statement is the profit and loss account of the Company and the 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies.

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

Statement of Changes in Equity

	Called up	Share	Capital
	share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31st March 2022	4,605	131,163	15,853	273,876	13,837	439,334
Reclassification of shares cancelled in respect of the restructure in the prior year	(2,418)	-	2,418	-	-	-
Repurchase and cancellation of the Company's own shares	(2)	-	2	(258)	-	(258)
Repurchase of shares into Treasury	-	-	-	(2,183)	-	(2,183)
Net return	-	-	-	28,244	12,354	40,598
Dividends paid in the year	-	-	-	-	(22,245)	(22,245)
At 31st March 2023	2,185	131,163	18,273	299,679	3,946	455,246
Repurchase of shares into Treasury	-	-	-	(4,934)	-	(4,934)
Net return	-	-	-	60,294	13,683	73,977
Dividends paid in the year	-	-	-	-	(13,598)	(13,598)
At 31st March 2024	2,185	131,163	18,273	355,039	4,031	510,691

Statement of Financial Position

At 31st March 2024

	2024	2023
	£'000	£'000
Non current assets
Investments held at fair value through profit or loss	533,691	469,173
Current assets
Derivative financial assets	218	12
Debtors	5,541	4,782
Cash and cash equivalents	15,074	25,523
	20,833	30,317
Current liabilities
Creditors: amounts falling due within one year	(392)	(364)
Derivative financial liabilities	(833)	(101)
Net current assets	19,608	29,852
Total assets less current liabilities	553,299	499,025
Non current liabilities
Creditors: amounts falling due after more than one year	(42,608)	(43,779)
Net assets	510,691	455,246
Capital and reserves
Called up share capital	2,185	2,185
Share premium account	131,163	131,163
Capital redemption reserve	18,273	18,273
Capital reserves	355,039	299,679
Revenue reserve	4,031	3,946
Total shareholders' funds	510,691	455,246
Net asset value per share	119.0p	104.8p

For the 2024 year end, the 'Fixed Assets' sub-heading was changed to 'Non-Current Assets' to align to the adapted format under FRS 102. This change did not result in any measurement changes.

Statement of Cash Flows

For the year ended 31st March 2024

	2024	2023
	£'000	£'000
Cash flows from operating activities
Net return before finance costs and taxation	76,849	43,042
Adjustment for:
Net gains on investments held at fair value through profit or loss	(62,285)	(32,295)
Foreign exchange losses/(gains) on JPMorgan EUR Liquidity Fund	355	(1,141)
Net foreign currency (gains)/losses	(716)	2,795
Dividend income	(16,701)	(15,138)
Interest income	(493)	(2)
Realised losses on foreign exchange transactions	25	494
Realised exchange gains on Liquidity	155	648
Decrease in accrued income and other debtors	2	27
Increase/(decrease) in accrued expenses	33	(41)
Net cash outflow from operations before dividends and interest	(2,776)	(1,611)
Dividends received	13,858	12,264
Interest received	493	2
Overseas withholding tax recovered	370	661
Net cash inflow from operating activities	11,945	11,316
Purchases of investments and derivatives	(129,717)	(120,395)
Sales of investments	127,480	131,716
Settlement of forward foreign currency contracts	33	(1,531)
Net cash (outflow)/inflow from investing activities	(2,204)	9,790
Equity dividends paid	(13,598)	(22,245)
Repurchase of shares for Cancellation	-	(258)
Repurchase of shares into Treasury	(4,924)	(2,089)
Interest paid	(1,159)	(1,170)
Net cash outflow from financing activities	(19,681)	(25,762)
Decrease in cash and cash equivalents	(9,940)	(4,656)
Cash and cash equivalents at start of year	25,523	29,685
Exchange movements	(509)	494
Cash and cash equivalents at end of year	15,074	25,523
Cash and cash equivalents consist of:
Cash and short term deposits	4,698	280
Cash held in JPMorgan EUR Liquidity Fund	10,376	25,243
Total	15,074	25,523

Notes to the Financial Statements

For the year ended 31st March 2024

1.     Accounting policies

(a)   Basis of accounting

The financial statements are prepared under the historical cost convention, modified to include fixed asset investments and derivatives at fair value, and in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ('UK GAAP'), including 'the Financial Reporting Standard applicable in the UK and Republic of Ireland' ('FRS 102') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies in July 2022.

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

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

The Directors believe that, having considered the Company's investment objectives, future cash flow projections, risk management policies, liquidity risk, principal and emerging risks, capital management policies and procedures, nature of the portfolios and expenditure projections, the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence to 31st May 2025, being at least 12 months from approving this annual report and financial statements.

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

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

2.     Return per share

		2024	2023
		£'000	£'000
	Return per share is based on the following:
	Revenue return	13,683	12,354
	Capital return	60,294	28,244
	Total return	73,977	40,598
	Weighted average number of shares in issue during the year	431,452,567	435,967,427
	Revenue return per share	3.17p	2.83p
	Capital return per share	13.97p	6.48p
	Total return per share	17.14p	9.31p

3.     Dividends

(a)   Dividends paid and declared

		2024	2023
		£'000	£'000
	Dividends paid
	Growth & Income first interim dividend for 2022 of 1.10p	-	4,812
	Growth & Income first interim dividend for 2024 of 1.05p (2023: 1.00p)	4,556	4,369
	Growth & Income second interim dividend for 2024 of 1.05p (2023: 1.00p)	4,529	4,358
	Growth & Income third interim dividend for 2024 of 1.05p (2023: 1.00p)	4,513	4,354
	Growth & Income fourth interim dividend for 2023 of 1.00p	-	4,352
	Total dividends paid in the year	13,598	22,245
	Dividends declared
	Growth & Income fourth interim dividend for 2024 of 1.05p	4,510	-
	Total dividends declared1	4,510	-

¹  In accordance with the accounting policy of the Company, these dividends will be reflected in the financial statements of the following year.

The fourth quarterly dividend of 1.05 was paid on 2nd April 2024 for the financial year ended 31st March 2024. In accordance with the accounting policy of the Company, this dividend will be reflected in the financial statements for the year ending 31st March 2025.

The first interim dividend of 1.20 pence per share in respect of the Company's financial year ending 31st March 2025 was declared on 21st May 2024 for shareholders on the register on 31st May 2024 with payment on 5th July 2024.

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

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

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

The revenue available for distribution by way of dividend for the year is £13,683,000 (2023: £12,354,000).

		2024	2023
		£'000	£'000
	2024 Growth & Income first interim dividend of 1.05p (2023: 1.00) per share	4,556	4,369
	2024 Growth & Income second interim dividend of 1.05p (2023: 1.00) per share	4,529	4,358
	2024 Growth & Income third interim dividend of 1.05p (2023: 1.00) per share	4,513	4,354
	2024 Growth & Income fourth interim dividend of 1.05p (2023: 1.00) per share	4,510	4,352
	Total	18,108	17,433

The revenue reserve after payment of the fourth interim dividend amounts to nil, with the excess dividend of £479,000 (2023: nil) to be funded out of Capital Reserves of £303,625,000 as detailed in the 2023 table of note 16. (2023: revenue reserve of £3,946,000 after payment of the fourth interim dividend).

4.     Net asset value per share

		2024 Net asset value attributable		2023 Net asset value attributable
		£'000	pence	£'000	pence
	Net asset value - debt at par	510,691	119.0	455,246	104.8
	Add: amortised cost of the Euro 50 million 2.69% Private Placement Note with Metlife, repayable on 26th August 2035	42,608	9.9	43,779	10.1
	Less: Fair Value of the Euro 50 million 2.69% Private Placement Note with Metlife, repayable on 26th August 2035	(41,110)	(9.6)	(41,579)	(9.6)
	Net asset value - debt at fair value	512,189	119.3	457,446	105.3

2023 Financial Information

The figures and financial information for 2023 are extracted from the published Annual Report and Financial Statements for the year ended 31st March 2023 and do not constitute the statutory accounts for that year.  The Annual Report and Financial Statements has been delivered to the Registrar of Companies and included the Report of the Independent Auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

2024 Financial Information

The figures and financial information for 2024 are extracted from the Annual Report and Financial Statements for the year ended 31st March 2024 and do not constitute the statutory accounts for the year. The Annual Report and Financial Statements includes the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The Annual Report and Financial Statements will be delivered to the Registrar of Companies in due course.

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement

Annual Report and Financial Statements 

The Annual Report and Financial Statements will be posted to shareholders soon after the release of this report and will shortly be available on the Company's website www.jpmeuropeangrowthandincome.com or in hard copy format from the Company's Registered Office, 60 Victoria Embankment London EC4Y 0JP.

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

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

For further information:

Paul Winship

JPMorgan Funds Limited, Secretary - 020 7742 4000

3rd June 2024 

 

END