JESC.L Regulatory News (JESC)

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN EUROPEAN SMALLER COMPANIES TRUST PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED

30TH SEPTEMBER 2017

Legal Entity Identifier: 54930049CEWDI46Y3U28

Information disclosed in accordance with DTR 4.2.2

CHAIRMAN'S STATEMENT

Dear Shareholder,

I am pleased to present the Company's results for the six months ended 30th September 2017.

Performance

Net asset value total return of +14.5% in the six months to 30th September 2017 compared with a return of +12.2% over the same period for the Company's benchmark index, the European Smaller Companies (Ex UK) index, an out-performance of 2.3%. The share price return was +19.0%, leading to a narrowing of the discount over the period. As at 30th September 2017 the Company's discount was 10.6% compared to 13.9% at 31st March 2017.

This is another positive result from our Investment Managers and the main contributor to performance was stock selection, with country allocation merely being a consequence of the bottom-up investment process. Their report below reviews the market and provides more detail on the performance drivers within the portfolio and the stocks and countries in which the Company is invested.

Revenue and Dividends

Gross revenue return for the six months to 30th September 2017 was higher than the corresponding period in 2016 at £11.5 million (2016: £7.9 million) and was the result of an increase in dividend receipts. The Board has decided to pay an interim dividend of 1.2 pence (2016: 1.2 pence) per share which will be paid on 19th January 2018 to shareholders on the register as at 22nd December 2017 (the ex-dividend date will be 21st December 2017).

Share Repurchases

The Board continues to monitor the level of the discount carefully and seeks to use its ability to repurchase shares to minimise the short term volatility and the absolute level of the discount. However, no shares were repurchased in the six month period.

Investment Manager

Further to the announcement in March this year Jim Campbell, the Company's co-portfolio manager, remains on personal leave from J.P. Morgan Asset Management and therefore he is not currently a named investment manager. Francesco Conte and Edward Greaves, and the broader investment team, continue to manage the portfolio.

Outlook

As the managers comment in their report the economic backdrop for Europe is supportive and profit forecasts have been rising through the year. This positive outlook is attracting asset flows into European equities but European Equity markets have already been strong so some correction would not be unexpected.

Carolan Dobson

Chairman 11th December 2017

INVESTMENT MANAGERS' REPORT

Review

The economic backdrop was positive for European smaller companies over the period, driven by continued synchronised global economic expansion, supportive central banks and strong forecast earnings growth. This was reflected in companies generating better than expected profits through the year, with the 2017 first quarter European earnings season one of the strongest on record. Moderating political risks following the election of centralist parties in Holland and France were reflected in declining stock market volatility and a narrowing of bond spreads within Europe.

Smaller companies outperformed larger companies with the MSCI Europe (ex UK) Index rising by +8.6% and the Company's benchmark index the Euromoney Smaller European Companies (ex UK) Index rising by +12.2%.

Portfolio

With a net asset value total return of +14.5% for the six months to 30th September 2017, the portfolio outperformed its benchmark index.

Top performers included German industrial automation specialist, Aumann, due to strong orders from customers manufacturing electric powered cars, French recreational vehicle manufacturer, Trigano, supported by market growth, market share gains and the company's accretive acquisition strategy and French computer games publisher, Ubisoft, as the sales mix continued to improve due to the strong growth in high margin digital revenues.

Detractors from performance included Norwegian oil services provider, Aker Solutions, as a result of weakness in the sector which was caused by uncertainties around the future outlook for the oil price. In addition, Swedish cosmetics retailer Oriflame underperformed as investors worried about its exposure to emerging markets currency risk and Italian premium apparel retailer, Tod's, as continued weak sales momentum raised questions around management's ability to successfully execute the turnaround strategy.

With equity markets rising ever higher, we added companies to the portfolio that have business models somewhat divorced from the economic cycle. By way of example, we bought into the Finnish company, Huhtamaki, a global leader in the manufacturing of consumer packaging products such as coffee cups and egg cartons. Huhtamaki's valuation had become more attractive following a period of underperformance. Following careful analysis we concluded that the company remained attractively exposed to the mega-trends of the growing middle class in emerging markets and a stronger focus on environmentally friendly products. We also added Belgium semiconductor designer, Melexis, which is benefitting from increasing semiconductor content in automotives, Italian IT consultant, Reply, due to its exposure to structurally growing themes such as big data analytics, cloud computing, and cybersecurity, and Norwegian industrial, Tomra, which is a machine vision innovator with clear global market leadership positions in structurally growing niche markets such as bottle recycling and food safety.

We financed these purchases by reducing our exposure to more cyclically exposed companies with what we consider to be poor earnings momentum. We reduced our holdings in oil exposed companies such as Swiss industrial, Sulzer, and Norwegian oil services companies, TGS-Nopec, Aker Solutions and Subsea 7. We also reduced our exposure to the financial sector including Danish banks, Jyske Bank and Spar Nord, Swedish lender, Nordax, and Italian asset manager, Banca Generali. Underperforming retailer, Tod's, mentioned above was also sold.

The overall portfolio remained generally pro-cyclical with Industrial Engineering and Automobiles & Parts the two largest sector overweights, and Real Estate the largest underweight sector. France and Italy continued to be the countries where we found the highest number of investment opportunities. At 30th September 2017 the portfolio was slightly geared at 2.4%, versus 5.3% gearing at the end of March 2017.

Outlook

The supportive economic backdrop was illustrated by the fact that, unlike previous years, 2017 forecast profits have actually risen throughout the year. The valuation of European equities remains approximately in line with its long term average and at a significant discount to the US, with meaningful growth potential. Central bank policies are supportive; while the Fed is set to begin reducing its balance sheet, the ECB continues its quantitative easing policy with Mario Draghi reiterating the ECB's commitment to keeping rates low until their bond buying is done. While political risks have increased in Spain and Germany, they nevertheless appear to be contained and do not pose systemic risks as in neither case is the sentiment anti-EU. In Spain, the national government has taken control of Catalonia and has called for new elections in the region. In Germany, while Chancellor Merkel has yet to form a government, the most likely outcomes are either a grand coalition with the socialists or renewed elections which would likely result in another pro-EU centrist government.

We believe that concerns around the impact of the strengthening euro on European manufacturing are overblown. With production spread throughout the world, revenues and costs for many European companies are generally well matched, reducing any foreign exchange impact on profits. As a result, the historic relationship between the euro and the performance of European manufacturers has been poor.

This positive outlook is attracting asset flows into European equities. Overall we are continuing our policy of selectively adding gearing on stock-specific pull-backs, although we are cognisant of the fact that the market has not had a significant correction for some time.

Francesco Conte

Edward Greaves

Investment Managers 11th December 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 underperformance and strategy; market and currency; accounting, legal and regulatory; corporate governance and shareholder relations; operational; cyber crime and financial. Information on each of these areas is given in the Business Review within the Annual Report and Accounts for the year ended 31st March 2017.

Related Party 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.

Going Concern

The Directors believe that, having considered the Company's investment objective, risk management policies, capital management policies and procedures, the nature of the portfolio and expenditure and cashflow projections, the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future. More specifically, they believe that there are no material uncertainties pertaining to the Company that would prevent its ability to continue in such operational existence for at least twelve months from the date of the approval of this half yearly financial report. For these reasons, they consider 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 Reports' and gives a true and fair view of the state of 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 Guidance and Transparency Rules 4.2.4R; and

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

Carolan Dobson

Chairman 11th December 2017

STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30th September 2017

1. For the year ended 31 March 2017 negative interest paid on the liquidity fund was included within 'interest receivable and similar income', this has been reclassified under 'other administration expenses' in the current year', with retrospective amendments to comparatives.

2. For the year ended 31 March 2017, a one-off reclaim of £416,000 was received, reducing the full year tax charge from £644,000 to £228,000.

STATEMENT OF CHANGES IN EQUITY

for the six months ended 30th September 2017

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

STATEMENT OF FINANCIAL POSITION AT 30TH SEPTEMBER 2017

STATEMENT OF CASH FLOWS 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

4. Dividends paid

All dividends paid in the period have been funded from the revenue reserve.

An interim dividend of 1.2p (2017: 1.2p) has been declared in respect of the six months ended 30th September 2017, amounting to £1,920,000.

5. Net asset value per share

For further information, please contact:

Faith Pengelly

For and on behalf of

JPMorgan Funds Limited, Secretary 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.

JPMORGAN FUNDS LIMITED

ENDS

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

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