15 Jun 2020 07:27
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN EUROPEAN INVESTMENT TRUST PLC
FINAL RESULTS FOR THE YEAR ENDED31ST MARCH 2020
The Directors of JPMorgan European Investment Trust plc announce the Company's results
for the year ended 31st March 2020
Legal Entity Identifier: 549300D8SPJFHBDGXS57
Information disclosed in accordance with DTR 4.1.
CHAIRMAN'S STATEMENT
Introduction
We are living through an unprecedented time in history as a global pandemic has disrupted lives and economies around the globe. The markets your Company invests in have reflected this uncertainty. This unprecedented shock to markets hit income focused funds particularly hard as the threat of widespread cancellation of dividends loomed.
Your Company is facing several headwinds in achieving the objectives set out for each of the share classes. I am saddened to report that the recent results are disappointing and my aim is to explain why, and what steps your Company is taking to address the situation. Before the pandemic struck the negative sentiment towards investing in Europe post the Brexit vote was the headline, that is now dwarfed by the effects of the pandemic. The reality is that there are many good investing opportunities in Europe and your Company will strive in the long term to give shareholders a way of accessing these opportunities.
Throughout the year, and in particular during the Covid-19 period which is still ongoing, the operations and control environment of the Company have worked well despite the unprecedented change to working practices. Despite the disappointing results, as detailed below, dividend pay-out has been maintained for the financial year.
Performance
The Benchmark return for both share classes is the MSCI Europe ex UK Index in sterling terms and for the year under review this was -8.3%
Growth Portfolio
Return to shareholders and return on net assets
The total return to shareholders for the Company's Growth shares was -16.3%. This measurement of performance takes into account share price movements and income received by way of dividend.
The total return on net assets for the Company's Growth shares was -14.6%. (debt at fair value) -13.3% (debt at par). The main reason for lower performance than the benchmark is that the investment style for this share class is, and has been, for many years biased towards companies that demonstrate Value characteristics. This style of investing, for little discernible logic is 'out of favour' in the market even though the underlying economics of the investment decisions do not appear flawed. The shares have thus performed well below the index. The return to shareholders was also adversely affected by a widening of the discount.
Dividends
For the Company's Growth shares, the Board's aim is that annual dividend payments are sufficient to maintain the Company's investment trust status. In the period the dividend paid per Growth share was 8.85 pence (2019: 8.85 pence). On the year-end share price of 215.0 pence (2019: 265.0 pence), this represents a yield of 4.1% (2019: 3.3%). Revenue return per share on the Growth portfolio for the year to 31st March 2020 (calculated by reference to the average number of shares in issue over the period) amounted to 8.77 pence per share (2019: 10.68 pence per share).
Income Portfolio
Return to shareholders and return on net assets
The total return to shareholders for the Company's Income shares was a very disappointing -27.5%.
The total return on net assets for the Company's Income shares was -25.7% (debt at fair value) -24.0% (debt at par).
The Income style related to the Income portfolio has been severely hit by the market turmoil during the Covid-19 pandemic and the significant drop in performance reflects the market's initial shock reaction to both dividend cuts made by companies and in addition the possibility of future dividends being cancelled.
Dividends
For the Company's Income shares, the Board's aim is to provide a regular stream of dividend income on a quarterly basis, subject to the availability of distributable reserves. In the period under review, the dividend paid per Income share was 6.70 pence (2019: 6.25 pence). On the year-end share price of 99.8 pence (2019: 144.0 pence) this represents a yield of 6.7% (2019: 4.3%). Revenue return per share on the Income portfolio for the 12 months (again, calculated by reference to the average number of shares in issue over the period) amounted to 6.25 pence per share (2019: 6.79 pence per share).
General Performance
The particular timing of the year end, being 31st March, means that the snap shot taken of the portfolio on that date was very close to a low point in the global pandemic sell-off. Both the Income and the Growth shares have since recouped a fair amount of these losses. However, whilst we have seen markets rally since that date the prospect of further turmoil cannot be excluded. Looking through this market volatility the managers have adjusted, but not fundamentally changed, the portfolios and they discuss this in their report.
The Board remain supportive of the style of investing and the thoroughness of the approach taken in investing in both share classes. In the Growth shares the belief is that market sentiment against value investing will change at some point and when that happens this portfolio will be positioned to benefit. In the Income leg, the Managers will endeavour to protect dividends as far as possible and the Board will ensure that the structure of the Company is utilised to its full extent to assist in maintaining dividend flow to investors. Notwithstanding that support, the Board and the Manager cannot ignore that these results are very disappointing. In-depth discussions are taking place as to the best way forward to capitalise on the long term investment opportunities in Europe.
The timing of the dividend payments for both share classes are expected to be maintained with Growth shares dividends paid bi-annually in April and October and Income shares paid quarterly in April, July, October and January.
The Company's Articles permit the Company's dividends to the paid from distributable capital reserves.
In their Report on pages 10 to 14 of the Company's Annual Report and Financial Statements, the Investment Managers comment in more detail on some of the factors underlying the performance of the two portfolios including performance against the benchmark over the Company's financial year, as well as commenting on the economic and market background.
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 2020 the Growth portfolio was -3.7% geared and the Income portfolio was 7.2% geared. These levels of gearing as quoted in this Annual Report and Financial Statements are before the application of derivatives, such as futures, which can be used by the Investment Managers to either increase or decrease the effective rate of the Company's gearing, according to market conditions. The Company's net gearing including derivatives is included with the Company's daily published net asset value.
Conversions
Annually, the shareholders in either of the two Company's share classes are able to convert some or all of their shares into shares of the other class without such disposal being treated as a disposal for capital gains purposes.
The Company's annual share conversion on 15th March 2020 resulted in a relatively large shift out of Income shares and into Growth shares. See page 37 of the Company's Annual Report and Financial Statements for further details. The Company's next share conversion will be in March 2021 and details of the process will be posted on the Company's website in late January 2021.
Discounts, Share Issuance and Repurchase
At the forthcoming Annual General Meeting (AGM) on 15th July 2020 as referred to below, the Company will seek to renew its permission to allot new equity in order to manage the balance between the supply of and demand for its shares, subject to the requirements and conditions as detailed in the notice to the AGM on page 100 of the Company's Annual Report and Financial Statements. Such allotments benefit all shareholders not least by increasing the liquidity of the Company's shares. The Board has a proactive approach to the use of its share issuance and repurchase powers in normal markets.
The Board remains of the view that it is important to seek to address imbalances in the supply of and demand for the Company's shares and to thereby minimise the volatility and absolute level of the discount to net asset value at which the Company's shares currently trade. The Board does not wish to see the discounts widen beyond 10% under normal market conditions (using the cum-income NAV) on an ongoing basis. The precise level and timing of repurchases pursuant to this policy depend upon prevailing market conditions. Over the year under review the discount levels have averaged 12.5% for the Growth shares and 11.3% for the Income Shares (both at fair value and on a cum-income NAV basis). Accordingly, over the 12 month period the Company repurchased a total of 3,561,284 Growth shares and 987,502 Income shares.
The discount at which the Growth shares were trading below the prevailing net asset value increased during the financial year and remained high, reflecting continuing negative market sentiment towards Europe.
Board of Directors
As previously referred to in my Chairman's Statement for the Company's Half Year Report and Financial Statements, the Board was pleased to announce that Rita Dhut was appointed to the Board on 4th June 2019. Rita has 18 years' asset management experience in UK and continental European equities with roles including Director of European Equities at M&G and Head of Pan European Equity Value Investing at Aviva Investors.
During the year, the Board carried out its customary evaluation of the Directors, the Chairman, 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.
Following the AIC 2019 Code of Corporate Governance, endorsed by the Financial Reporting Council, the Company has established a separate Management Engagement Committee and appointed a Senior Independent Director, Stephen Russell, who will also chair the Company's Nomination Committee.
The Directors fees remain unchanged since they were last increased on 1st April 2018.
Investment Managers
The performance of the Investment Managers is formally evaluated by the Board annually. The evaluation of the Manager was undertaken in January 2020 and based on the data available at that time; the Board concluded that the performance of the Manager had been satisfactory and that their services should be retained.
The Board of JPMorgan European Investment Trust plc announced that, effective from 1st April 2020, the Company's investment management fee will be reduced to 0.65% on gross assets in excess of £500m, calculated by aggregating the gross assets of the Growth and Income portfolios. The existing management fee of 0.75% will remain applicable on the aggregated gross assets up to £500m.
Transfer of Reserves between the Growth and Income Portfolios
As previously referred to in my Chairman's Statement for the Company's Half Year Report and Financial Statements to 30th September 2019, the Board again exercised its power to approve transfers of retained revenue reserves from the Growth portfolio to the Income portfolio in exchange for the equivalent amount of capital reserves from the Income portfolio to the Growth portfolio. £1.348 million, being the amount of the Growth portfolio's retained revenue reserve as at 31st March 2019, after payment of the Growth portfolio's 4.00p dividend paid on 5th April 2019, was transferred to the Income portfolio in exchange for the equivalent amount of capital reserves from the Income portfolio to the Growth portfolio. This transfer is reflected in these Report and Financial Statements.
Annual General Meeting
The Company's ninety first AGM will take place at J.P.Morgan's offices at 60 Victoria Embankment, London EC4Y 0JP on Wednesday, 15th July 2020 at 2.30 p.m.
At the time of writing, the format of the Company's 2020 AGM has had to be changed so that it complies with both the existing Companies Act and the recently introduced legislation which the UK Government introduced to limit the impact of the Covid-19 pandemic, restricting travel and limiting gatherings to no more than two persons. Shareholders are asked to comply with the government's latest Covid-19 pandemic legislation restricting travel and public gatherings and not to attend the AGM. Arrangements will be made by the Company to ensure that the minimum number of two shareholders required to form a quorum for the AGM will attend the meeting in order that the meeting may proceed and the business be concluded. To ensure compliance with Covid-19 pandemic legislation restricting public gatherings, no shareholders (other than the two previously notified shareholders making up the quorum for the AGM) will be permitted to attend the meeting and entry to the building will not be allowed. There will be no presentation at the AGM from the Investment Managers, Stephen Macklow-Smith and Alexander Fitzalan Howard, and no refreshments will be provided.
Despite these legal restrictions, the Board is keen to ensure shareholders have the opportunity to hear from the Manager and accordingly, a presentation from the investment managers will be placed on the Company's website shortly after the AGM. In addition, shareholders are encouraged to raise any questions in advance of the meeting via the contact section of the Company's website www.jpmeuropean.co.uk.
The Board strongly encourages all shareholders to submit their votes in advance of the meeting, so that these 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 100 to 103 of the Company's Annual Report and Financial Statements and on the proxy form that accompanies it.
If there are any changes to the above AGM arrangements, the Company will update shareholders through the Company's website and, as appropriate, through an announcement on the London Stock Exchange.
The Board would like to thank shareholders for their understanding and co-operation at this difficult time.
We very much hope that you and your families are safe and well and look forward to meeting with you when, as we all hope, normality has returned.
Adoption of new Articles of Association
Resolution 14, which will be proposed as a special resolution, seeks shareholder approval to adopt new Articles of Association (the 'New Articles') in order to update the Company's current Articles of Association (the 'Existing Articles'). The proposed amendments being introduced in the New Articles primarily relate to changes in law and regulation and developments in market practice since the Existing Articles were adopted, and principally include:
(i) provisions enabling the Company to hold virtual shareholder meetings using electronic means (as well as physical shareholder meetings or hybrid meetings);
(ii) changes in response to the introduction of international tax regimes (notably to take into account the broader obligations under the Common Reporting Standard) requiring the exchange of information;
A summary of the principal amendments being introduced in the New Articles which the Board considers will be of most interest to shareholders is set out in the appendix to the AGM Notice (on page 103 of the Company's Annual Report and Financial Statements). Other amendments, which are of a minor, technical or clarifying nature, have not been summarised in the appendix.
While the New Articles (if adopted) would permit shareholder meetings to be conducted using electronic means, the Directors have no present intention of holding a virtual-only meeting. These provisions will only be used where the Directors consider it is in the best of interests of shareholders for hybrid or virtual-only meeting to be held. Nothing in the New Articles will prevent the Company from holding physical shareholder meetings.
A copy of the New Articles, together with a copy showing all of the proposed changes to the Existing Articles, will be available for inspection on the Company's website, www.jpmeuropean.co.uk and at the offices of J.P. Morgan Asset Management, 60 Victoria Embankment, London EC4Y 0JP between the hours of 9.00am and 5.00pm (Saturdays, Sundays and public holidays excepted), from the date of the AGM Notice until the close of the AGM, and will also be available for inspection at the venue of the AGM from 15 minutes before and during the AGM.
Outlook
The turmoil in financial markets caused by the Covid-19 pandemic is ongoing as the virus has not gone away. The US Federal Reserve, European Central Bank and authorities of other leading economies have introduced unprecedented levels of fiscal support to help mitigate the economic effects of this crisis. A global recession is forecast and so the investment challenges remain high. Despite the disappointing results, we remain of the view that an intelligent, rigorous investment process based on fundamental facts will prevail. Whilst we are in unchartered waters there remain significant investment opportunities in Europe and we support the manager's approach to address those in achieving our long term objectives.
For and on behalf of the Board
Josephine Dixon
Chairman
12th June 2020
INVESTMENT MANAGERS' REPORT
Introduction
The last ten years have seen an extraordinary period of turbulence in financial markets in the aftermath of the financial crisis of 2008/9, and the last three months of our financial year brought a hitherto unencountered threat in the shape of the coronavirus pandemic.
The world has had hints of new epidemics in the past few years with MERS and SARS, but these were largely contained. The novel coronavirus, referred to as Covid-19, spread globally at a frightening rate and was met with draconian government measures in most countries to restrict interactions between people and reduce the rate of infection. In economic terms this amounted to a dramatic hit to demand as the volume of transactions dropped at a precipitous rate. This demand shock created a supply shock as companies raced to cut capacity, shutting outlets and factories and taking advantage of government schemes to furlough staff. In the background there was a financial shock to contend with as companies and individuals sought to delay payment of rents, interest on debt, and short-term liabilities and this had knock-on effects in the banking system.
Governments and central banks responded with commendable swiftness to mitigate the damage, but the inevitable corollary was an expansion of government debt (in many cases by up to 15% or 20% of GDP) and of central bank balance sheets, and it is unclear how this debt will be serviced in the years to come. In the short term, rates of interest on government debt plunged as sovereign bonds played their role as a safe haven. In the equity world there was a very sharp sell-off - the Europe index took 16 days to fall 37% to an intraday low on the 16th March 2020. This was sparked by uncertainty about the scale of the problem and by fears that corporate profitability would be dramatically impacted by the external shock. At the same time we saw a positive oil price shock as tension between global producers sent the oil price tumbling to unheard-of lows (at one point the price was briefly negative) and while this is good news for consumers, it is very bad news for the Energy sector, which is a large source of dividend income.
Sector Performance
Performance in our financial year was dominated by defensive stocks, with Pharmaceuticals showing particular relative strength, along with Technology (especially companies which supply remote working solutions) and interest rate sensitive sectors such as Utilities. Laggard sectors have been Energy and Financials, with other cyclical sectors such as Autos also being hit. Our investment style is always to be overweight Value and Momentum in the Growth portfolio, while we are always overweight Dividend Yield (which is a Value sector) in the Income portfolio. This was a year in which our underlying process failed to deliver positive relative returns by virtue of the continual downdraft in Value. This continues a pattern that began in 2017, when valuations spreads (the gap between the valuation of expensive and of cheap stocks) were in the 50th percentile of their history. The previous peak in valuation spreads was the TMT bubble of 1999/2000. Most commentators thought at the time that we would never see such a disparity between cheap and expensive stocks again: in the event it took only 20 years to be surpassed.
Yield stocks were especially badly hit in the pandemic, and this emanated from a variety of causes. First is the fact that the higher-yielding areas of the market (Energy, Financials, Real Estate) were at the epicentre of the downturn. By contrast the sectors with lower yields (Pharmaceuticals, Food & Beverages, Semiconductors) were deemed beneficiaries of what happened, and this sector effect had a marked impact on the performance of both Value and Yield stocks. In addition the fact that interest rates continued to plumb new depths boosted the value of growth sectors, which tend to be highly correlated with falling yields on the basis that a lower cost of capital boosts the present value of their future cashflows.
When we talk about growth sectors it is important to be clear about the term we are using. Very broadly the stock market divides into financial sectors, growth sectors, and cyclical sectors. The term financial speaks for itself, but growth sectors are those industries where there is a secular growth dynamic in play which means they are growing faster than the economy as a whole. These sectors include technology, pharmaceuticals, and food manufacturing. Cyclical sectors are those areas where revenue growth is closely related to the vagaries of the economic cycle and include oil and gas, mining, temporary employment, auto production, engineering, and traditional retail. It was a feature of the coronavirus downturn that pharmaceuticals and food manufacturing prospered, while cyclical sectors took a beating as the twin demand and supply shocks outlined above hit economic growth.
This outperformance by growth sectors was in fact a continuation of a trend which has been in place more or less constantly since the financial crisis. The trend for long term interest rates during that period has been broadly uninterruptedly lower, leading to negative yields on government debt in many European countries. The direction of interest rates can be viewed as a proxy for sentiment about economic growth, although in recent years there has been the distorting factor of central banks purchasing government debt. When growth is sluggish the likelihood of rising rates is deemed lower and bond markets reflect that. This in turn means that companies with dependable earnings streams see their value rise, as those earnings are discounted at lower rates. By the same token, an environment in which growth is sluggish is tough for cyclical stocks, who need a certain amount of volume growth to derive the kind of operating leverage that can drive up their profitability.
As can be seen in the two charts below (available to view in the Company's Annual Report and Financial Statements), recent underperformance by Value has taken spreads past where they were in the TMT bubble. The reason for providing the two charts, the upper showing the market as a whole and the lower showing spreads on an industry-neutral effect, is to emphasise that this is not just about individual sectors such as Banks and Energy lagging the market. The divide between cheap and expensive stocks is at historic highs within as well as across sectors.
The other unpalatable piece of information within the charts (available to view in the Company's Annual Report and Financial Statements), is the trend in valuation spreads (and consequent underperformance of Value) since 2015. With one brief reversal in 2016/17 the trend has been for spreads to widen, meaning that Value (and Yield) has struggled as an investment style for five years, and this is a hill which we have had to climb in both share classes, since both keep an exposure to the cheaper end of the stock market.
We feel very strongly, however, that this is not the moment at which to give up on Value altogether. If we look at other markets where growth has been a challenge, in Japan, for instance, Value investing has actually done very well in the last three decades, and specifically between 1995 and 2008 it was Value which led the market rather than growth or momentum. The theoretical background to this is to think of growth stocks as having a low imputed cost of capital and value stocks as having a high imputed cost of capital. For growth to outperform value that gap between the two costs of capital has to continue to grow. If it stands still or narrows then arithmetically value stocks will outperform. In addition, there are specific areas of the market that have faced something of a perfect storm in the last ten years: Banks, with the challenges after the financial crisis, Energy, with two successive positive oil price shocks in 2014/15 and 2019/20, or Autos, with the diesel emissions scandal. These problems tend, though, to be self-healing, as failures in business models weed out the weaker players, and the consequent cut in capacity benefits the survivors.
growth Performance attribution
FOR THE YEAR ENDED 31ST MARCH 2020
|
| % | % |
Contributions to total returns |
|
| |
Benchmark return |
| -8.3 | |
Asset allocation | -1.6 |
| |
Stock selection | -2.4 |
| |
Gearing/cash | -0.6 |
| |
Investment manager contribution |
| -4.6 | |
Portfolio return |
| -12.9 | |
Management fee/other expenses | -1.0 |
| |
Share buyback | 0.6 |
| |
Other effects |
| -0.4 | |
Return on net assets with debt at par valueA |
| -0.4 | |
Impact of debt at fair value1 |
| -0.4 | |
Return on net assets with debt at fair valueA |
| -0.4 | |
Effect of movement in discount |
| -1.7 | |
Return to shareholdersA |
| -1.7 | |
Source: B-One/JPMAM/AIC/Morningstar.
All figures are on a total return basis. Performance attribution analyses how the Growth portfolio achieved its recorded performance relative to its benchmark.
1 See note 14 on page 80 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 104 of the Company's Annual Report and Financial Statements.
Stock Contributors - Growth
Within the growth portfolio some of the most successful holdings were in the healthcare sector. Despite correcting sharply in the Covid-19 sell off, Roche's share price ended the year up 26% as the market started to appreciate its new product launches and strong pipeline, while coming to terms with the ongoing threat to its oncology portfolio from biosimilars. Although it is too early to quantify the outcome the news that Actemra, a drug for treating rheumatoid arthritis, had entered Phase 3 trials for Covid-19 pneumonia gave further support to the share price. At the opposite end of the market cap spectrum Eckert & Ziegler operates in the radiopharmaceutical industry specializing in, for example, producing radio isotopes for prostate seed implants. Expectation of strong earnings growth led to the share price rising more than 90% during the year.
Technology stocks continued to perform well. The growth portfolio benefitted in particular from buying Teamviewer when it came to the market in September. The company specialises in global connectivity platforms and has seen demand for its technology accelerate during the lockdown period faster than was expected at the launch of its IPO. The stock was up more than 40% in the year under review and at the time of writing had appreciated 75%.
The severe correction caused by the Covid-19 pandemic hit the growth portfolio's holdings in cyclically sensitive companies. Airbus, which makes aeroplanes, saw demand for new planes virtually disappear as fleets were grounded around the world. Safran which makes aircraft engines and other systems fared little better despite its aftermarket and service business which should have been more defensive. The stocks fell 48% and 32% respectively. Anything auto or construction related was hit as badly with investors having no visibility on the severity or length of the global recession. For example Peugeot declined more than 40% and Heidelbergcement 36%.
INCOME Performance attribution
FOR THE YEAR ENDED 31ST MARCH 2020
| % | % |
Contributions to total returns |
|
|
Benchmark return |
| -8.3 |
Asset allocation | -6.6 |
|
Stock selection | -5.8 |
|
Gearing/cash | -2.4 |
|
Currency | - |
|
Investment manager contribution |
| -14.8 |
Portfolio return |
| -23.1 |
Management fee/other expenses | -1.0 |
|
Share buy-back/issuance | 0.1 |
|
Other effects |
| -0.9 |
Return on net assets with debt at par valueA |
| -24.0 |
Impact of debt at fair value1 |
| -1.7 |
Return on net assets with debt at fair valueA |
| -25.7 |
Effect of movement in discount |
| -1.8 |
Return to shareholders |
| -27.5 |
Source: B-One/JPMAM/AIC/Morningstar.
All figures are on a total return basis. Performance attribution analyses how the Income portfolio achieved its recorded performance relative to its benchmark.
1 See note 14 on page 80 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 104 of the Company's Annual Report and Financial Statements.
Stock Contributors - Income
Turning to the income portfolio the headwind of not owning or being underweight some of the mega-cap defensive stocks that did not yield enough to merit inclusion in the portfolio was highly detrimental to performance in the period under review. The worst offenders were Roche and Novo Nordisk in the pharmaceutical sector, Nestle, and ASML in the technology space. Taken together they accounted for 3.4% of the underperformance.
Holdings in the income portfolio that did well included Iberdrola, a Spanish electric utility, and Fjordkraft, a Norwegian electricity generator and distributor, which benefitted from declining interest rates, as did Elisa the Finnish Telecom company which rose 50% over the year. Elsewhere Galenica, a Swiss pharmaceutical retailer, saw analysts continually raise their earnings estimates throughout the year before extra demand from customers stockpiling as the Covid-19 virus took hold in February and March. The share price rose 50% over the year.
Outlook
While we can feel some comfort that the extraordinary effort to find a cure or a vaccine is likely to bear fruit we still have the after-effects of the shock to live through, notably to company business plans. The burden of enforcing social distancing is likely to fall on companies, and although transactions are likely to recover they will struggle for many months to get back to the levels they saw in 2019. There will also be longer-lasting effects on sectors such as Transportation (air traffic is down 90%), Energy (where companies need a $40 oil price to restart dividend payments), and Retail (online shopping and delivery is likely to have taken an unassailable lead over the High St and this has implications not only for retailers but also for Real Estate companies who act as retail landlords).
The scale of monetary expansion is likely to provide support for risk assets, as is valuation - even at reduced levels of dividend the yield attractions of equities over cash and fixed income are manifestly obvious. We have to take into account, though, an increased volume of issuance as companies seek to shore up their balance sheet - this means that where companies were net buyers of their own stock the flow will reverse for the foreseeable future. We also have to see just how bad the hit to profits will be, and given the levels of unemployment the purchasing power of the consumer will have been damaged. Furthermore we have the political threat of the US Presidential campaign, in which there is likely to be a lot of sabre-rattling about trade relations with China, and then the likelihood that if neither side in the EU/UK trade negotiation asks for an extension there will be disruption to trade flows.
For all our confidence about recovery in the medium term we are likely to have a volatile few months in prospect. In the medium term, however, the sell-off in equity markets has brought an end to one cycle and heralded the start of a new one. At the same time the fact that interest rates are at or near record lows means that investors looking for income are forced to take on more risk, either by buying corporate bonds or by buying equities. The end of the cycle also means that as growth recovers so will profits, and we are likely to see at least a few years of economic expansion. As confidence in growth recovers so will confidence among investors, and accordingly we feel that the next period may see equity returns which are markedly higher than the thin gruel of the last five years.
Stephen Macklow-Smith
Alexander Fitzalan Howard
Michael Barakos
Thomas Buckingham
Investment Managers
12th June 2020
Principal and Emerging Risks
The Directors have carried out a robust assessment of the principal and emerging risks facing the Company including the Covid-19 pandemic and those that would threaten its business model, future performance, solvency or liquidity. With the assistance of the Manager, the Board has drawn up a risk matrix, which identifies the emerging and key risks to the Company These key risks fall broadly under the following categories:
• Investment
The Board recognises that performance of the trust's investment portfolio is fundamental to the success of the Company. 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.
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. 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 22 on pages 84 to 90 of the Company's Annual Report and Financial Statements .
• Operational
In common with most investment trusts the Board delegates the operation of the business to third parties, the principal delegate being the Manager JPFM. 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. 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. 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 Corporate Governance report on page 47 of the Company's Annual Report and Financial Statements.
• Regulatory
The Company operates in an environment with significant regulation including the UKLA 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). Uncertainty continues regarding the impact of Brexit on the Company.
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 43 of the Company's Annual Report and Financial Statements.
• 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. For further details of the Company's action in addressing this risk and its buyback activity and discount, please see the Share Issuance and Repurchase section of the Chairman's Statement on page 5 of the Company's Annual Report and Financial Statements.
• Strategy
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.
• Pandemic Risk
Covid-19 has developed rapidly to become a pandemic which has delivered a major shock to the global economy and become a principal risk. The Company is exposed to the risk of market volatility and falling equity markets brought about by the pandemic. The resilience of the operational services to the Company could be reduced as a result of the effects of the pandemic, representing a risk to the Company. The Board regularly reviews the mitigation measures which JPMorgan Asset Management and other key service providers have in place to maintain operational resilience and is satisfied that these are appropriate even in the current conditions. Relevant business continuity plans have been invoked at those service providers and the Board had been given updates. Working from home arrangements have been implemented where appropriate and government guidance is being followed. The Board does not anticipate a fall in the level of service.
The pandemic has triggered a sharp fall in global stock markets and created uncertainty around future dividend income. Whilst the Board notes the fall in the Company's NAV per share and share price it also notes the Investment Managers' investment process is unaffected by the Covid-19 pandemic and they continue to focus on long-term company fundamentals and detailed analysis of current and future investments.
Further information on Covid-19 is set out in the Chairman's statement on page 5, the Investment Managers' report on page 10 and Note 1 (a) on page 71 of the Company's Annual Report and Financial Statements.
Transactions with the Manager and related parties
Details of the management contract are set out in the Directors' Report on page 43 of the Company's Annual Report and Financial Statements. The management fee payable to the Manager for the year was £3,402,000 (2019: £3,451,000), of which £nil (2019: £nil) was outstanding at the year end.
During the year £48,000 (2019: £68,000) was payable to the Manager for the administration of savings scheme products, of which £nil (2019: £nil) was outstanding at the year end.
Included in administration expenses in note 6 on page 75 of the Company's Annual Report and Financial Statements are safe custody fees amounting to £57,000 (2019: £64,000) payable to JPMorgan Chase of which £15,000 (2019: £9,000) 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 £nil (2019: £nil) was payable to JPMorgan Securities Limited for the year of which £nil (2019: £nil) was outstanding at the year end.
The Company holds investments in funds managed by JPMAM. At 31st March 2020 these were valued at £10.6 million (2019: £13.8 million) and represented 3.3% (2019: 3.2%) of the Company's investment portfolio. During the year the Company made £nil purchases of such investments (2019: £nil) and sales with a total value of £nil (2019: £nil).
Income amounting to £244,000 (2019: £205,000) was receivable from these investments during the year of which £nil (2019: £nil) was outstanding at the year end.
The Company also holds cash in the JPMorgan Euro Liquidity Fund, managed by JPMF. At the year end this was valued at £9.5 million (2019: £22.6 million). Interest amounting to £nil (2019: £89,000) was payable during the year of which £nil (2019: £nil) was outstanding at the year end.
Stock lending income amounting to £130,000 (2019: £116,000) was receivable by the Company during the year. JPMAM commissions in respect of such transactions amounted to £15,000 (2019: £20,000).
Handling charges on dealing transactions amounting to £59,000 (2019: £69,000) were payable to JPMorgan Chase Bank N.A. during the year of which £13,000 (2019: £8,000) was outstanding at the year end.
At the year end, total cash of £36.7 million (2019: £5.1 million) was held with JPMorgan Chase Bank N.A. A net amount of interest of £5,000 (2019: £4,000) was receivable by the Company during the year from JPMorgan Chase of which £nil (2019: £nil) was outstanding at the year end.
Full details of Directors' remuneration and shareholdings can be found on page 42 and in note 6 on page 75 of the Company's Annual Report and Financial Statements.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the annual report and financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards) including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and applicable law. Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and 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;
• prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business;
and the Directors confirm that they have done so.
The Directors are responsible for keeping proper 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 to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The annual report and financial statements are published on the www.jpmeuropean.co.uk website, which is maintained by the Company's Manager, JPMorgan Funds Limited. 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. The work carried out by the auditors does not involve consideration of the maintenance and integrity of this website and, accordingly, the auditors accept no responsibility for any changes that have occurred to the accounts since they were initially presented on the website. The annual report and financial statements are prepared in accordance with UK legislation, which may differ from legislation in other jurisdictions.
Under applicable law and regulations the Directors are also responsible for preparing a Strategic Report, a Directors' Report and a Directors' Remuneration Report that comply with that law. The Strategic Report and the Directors' report include a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face.
Each of the Directors, whose names and functions are listed on page 42 of the Company's Annual Report and Financial Statements confirm that, to the best of their knowledge the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and return or loss of the Company.
The Board confirms that it is satisfied that the annual report and financial statements taken as a whole are fair, balanced and understandable and provide the information necessary for shareholders to assess the strategy and business model of the Company.
For and on behalf of the Board
Josephine Dixon
Chairman
12th June 2020
statement of comprehensive income (unaudited) - growth
for the year ended 31st March 2020
| 2020 | 2019 | ||||
| Revenue | Capital | Total | Revenue | Capital | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Losses on investments and derivatives held at fair value through profit or loss | - | (35,487) | (35,487) | - | (12,016) | (12,016) |
Foreign exchange gains/(losses) on liquidity fund | - | 584 | 584 | - | (99) | (99) |
Net foreign currency (losses)/gains | - | (1,283) | (1,283) | - | 434 | 434 |
Income from investments | 7,887 | - | 7,887 | 9,158 | - | 9,158 |
Interest receivable and similar income | 45 | - | 45 | 50 | - | 50 |
Gross return/(loss) | 7,932 | (36,186) | (28,254) | 9,208 | (11,681) | (2,473) |
Management fee | (571) | (1,334) | (1,905) | (584) | (1,362) | (1,946) |
Other administrative expenses | (439) | - | (439) | (478) | - | (478) |
Net return/(loss) before finance costs and taxation | 6,922 | (37,520) | (30,598) | 8,146 | (13,043) | (4,897) |
Finance costs | (222) | (517) | (739) | (223) | (522) | (745) |
Net return/(loss) before taxation | 6,700 | (38,037) | (31,337) | 7,923 | (13,565) | (5,642) |
Taxation | (527) | - | (527) | (176) | - | (176) |
Net return/(loss) after taxation | 6,173 | (38,037) | (31,864) | 7,747 | (13,565) | (5,818) |
Return/(loss) per Growth share | 8.77p | (54.03)p | (45.26)p | 10.68p | (18.71)p | (8.03)p |
statement of financial position (unaudited) - growth
at 31st March 2020
| 2020 | 2019 |
| £'000 | £'000 |
Fixed assets |
|
|
Investments held at fair value through profit or loss | 196,186 | 252,446 |
Current assets |
|
|
Derivative financial assets | 345 | 99 |
Debtors | 1,957 | 1,416 |
Cash and cash equivalents | 42,155 | 13,408 |
| 44,457 | 14,923 |
Current liabilities |
|
|
Creditors: amounts falling due within one year | (8,676) | (7,669) |
Derivative financial liabilities | (120) | (419) |
Net current assets | 35,661 | 6,835 |
Total assets less current liabilities | 231,847 | 259,281 |
Creditors: amounts falling due after more than one year | (28,144) | (24,990) |
Net assets | 203,703 | 234,291 |
Net asset value per Growth share | 274.3p | 324.0p |
statement of comprehensive income (unaudited) - income
for the year ended 31st March 2020
|
| 2020 |
|
| 2019 |
|
| Revenue | Capital | Total | Revenue | Capital | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Losses on investments and derivatives held at fair value through profit or loss | - | (41,837) | (41,837) | - | (4,486) | (4,486) |
Foreign exchange gains/(losses) on liquidity fund | - | 43 | 43 | - | (227) | (227) |
Net foreign currency gains | - | 2,159 | 2,159 | - | 1,158 | 1,158 |
Income from investments | 7,853 | - | 7,853 | 8,706 | - | 8,706 |
Interest receivable and similar income | 90 | - | 90 | 70 | - | 70 |
Gross return/(loss) | 7,943 | (39,635) | (31,692) | 8,776 | (3,555) | 5,221 |
Management fee | (599) | (898) | (1,497) | (602) | (903) | (1,505) |
Other administrative expenses | (283) | - | (283) | (362) | - | (362) |
Net return/(loss) before finance costs and taxation | 7,061 | (40,533) | (33,472) | 7,812 | (4,458) | 3,354 |
Finance costs | (203) | (305) | (508) | (218) | (328) | (546) |
Net return/(loss) before taxation | 6,858 | (40,838) | (33,980) | 7,594 | (4,786) | 2,808 |
Taxation | (608) | - | (608) | (696) | - | (696) |
Net return/(loss) after taxation | 6,250 | (40,838) | (34,588) | 6,898 | (4,786) | 2,112 |
Return/(loss) per Income share | 6.25p | (40.86)p | (34.61)p | 6.79p | (4.71)p | 2.08p |
statement of financial position (unaudited) - income
at 31st March 2020
| 2020 | 2019 |
| £'000 | £'000 |
Fixed assets |
|
|
Investments held at fair value through profit or loss | 121,013 | 177,920 |
Current assets |
|
|
Derivative financial assets | 242 | 298 |
Debtors | 1,700 | 3,142 |
Cash and cash equivalents | 12,477 | 15,779 |
| 14,419 | 19,219 |
Current liabilities |
|
|
Creditors: amounts falling due within one year | (4,859) | (5,500) |
Derivative financial liabilities | (1,832) | (206) |
Net current assets | 7,728 | 13,513 |
Total assets less current liabilities | 128,741 | 191,433 |
Creditors: amounts falling due after more than one year | (15,907) | (17,894) |
Net assets | 112,834 | 173,539 |
Net asset value per Income share | 126.5p | 172.0p |
Statement of Comprehensive income
For the year ended 31st March 2020
| 2020 | 2019 | ||||
| Revenue | Capital | Total | Revenue | Capital | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Losses on investments and derivatives held at fair value through profit or loss | - | (77,324) | (77,324) | - | (16,502) | (16,502) |
Foreign exchange gains/(losses) on liquidity fund | - | 627 | 627 | - | (326) | (326) |
Net foreign currency gains | - | 876 | 876 | - | 1,592 | 1,592 |
Income from investments | 15,740 | - | 15,740 | 17,864 | - | 17,864 |
Interest receivable and similar income | 135 | - | 135 | 120 | - | 120 |
Gross return/(loss) | 15,875 | (75,821) | (59,946) | 17,984 | (15,236) | 2,748 |
Management fee | (1,170) | (2,232) | (3,402) | (1,186) | (2,265) | (3,451) |
Other administrative expenses | (722) | - | (722) | (840) | - | (840) |
Net return/(loss) before finance costs and taxation | 13,983 | (78,053) | (64,070) | 15,958 | (17,501) | (1,543) |
Finance costs | (425) | (822) | (1,247) | (441) | (850) | (1,291) |
Net return/(loss) before taxation | 13,558 | (78,875) | (65,317) | 15,517 | (18,351) | (2,834) |
Taxation | (1,135) | - | (1,135) | (872) | - | (872) |
Net return/(loss) after taxation | 12,423 | (78,875) | (66,452) | 14,645 | (18,351) | (3,706) |
Return/(loss) per share: |
|
|
|
|
|
|
Growth share | 8.77p | (54.03)p | (45.26)p | 10.68p | (18.71)p | (8.03)p |
Income share | 6.25p | (40.86)p | (34.61)p | 6.79p | (4.71)p | 2.08p |
statement of changes in equity
for the year ended 31st March 2020
| Called up |
| Capital |
|
|
|
| share | Share | redemption | Capital | Revenue |
|
| capital | premium | reserve | reserves1 | reserve1 | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
At 31st March 2018 | 5,023 | 100,773 | 15,062 | 296,538 | 8,741 | 426,137 |
Repurchase and cancellation of the Company's own shares | (48) | - | 48 | (3,381) | - | (3,381) |
Share conversions during the year | - | 3,053 | 39 | (3,092) | - | - |
Net (loss)/return | - | - | - | (18,351) | 14,645 | (3,706) |
Dividends paid in the year | - | - | - | - | (11,220) | (11,220) |
At 31st March 2019 | 4,975 | 103,826 | 15,149 | 271,714 | 12,166 | 407,830 |
Repurchase and cancellation of the Company's own shares | (164) | - | 164 | (11,807) | - | (11,807) |
Share conversions during the year | (7) | 24,001 | 300 | (24,294) | - | - |
Net (loss)/return | - | - | - | (78,875) | 12,423 | (66,452) |
Dividends paid in the year | - | - | - | - | (13,034) | (13,034) |
At 31st March 2020 | 4,804 | 127,827 | 15,613 | 156,738 | 11,555 | 316,537 |
1 These reserves form the distributable reserve of the Company and may be used to fund distribution of profits to investors.
statement of financial position
at 31st March 2020
| 2020 |
| ||
| Growth | Income |
| 2019 |
| (unaudited) | (unaudited) | Total | Total |
| £'000 | £'000 | £'000 | £'000 |
Fixed assets |
|
|
|
|
Investments held at fair value through profit or loss | 196,186 | 121,013 | 317,199 | 430,366 |
Current assets |
|
|
|
|
Derivative financial assets | 345 | 242 | 587 | 397 |
Debtors | 1,957 | 1,700 | 3,657 | 4,558 |
Cash and cash equivalents | 42,155 | 12,477 | 54,632 | 29,187 |
| 44,457 | 14,419 | 58,876 | 34,142 |
Current liabilities |
|
|
|
|
Creditors: amounts falling due within one year | (8,676) | (4,859) | (13,535) | (13,169) |
Derivative financial liabilities | (120) | (1,832) | (1,952) | (625) |
Net current assets | 35,661 | 7,728 | 43,389 | 20,348 |
Total assets less current liabilities | 231,847 | 128,741 | 360,588 | 450,714 |
Creditors: amounts falling due after more than one year | (28,144) | (15,907) | (44,051) | (42,884) |
Net assets | 203,703 | 112,834 | 316,537 | 407,830 |
Capital and reserves |
|
|
|
|
Called up share capital | 2,948 | 1,856 | 4,804 | 4,975 |
Share premium | 35,530 | 92,297 | 127,827 | 103,826 |
Capital redemption reserve | 13,912 | 1,701 | 15,613 | 15,149 |
Capital reserves | 148,535 | 8,203 | 156,738 | 271,714 |
Revenue reserve | 2,778 | 8,777 | 11,555 | 12,166 |
Total shareholders' funds | 203,703 | 112,834 | 316,537 | 407,830 |
Net asset values |
|
|
|
|
Net asset value per Growth share |
|
| 274.3p | 324.0p |
Net asset value per Income share |
|
| 126.5p | 172.0p |
statement of cash flows
for the year ended 31st March 2020
| 2020 | 2019 |
| £'000 | £'000 |
Net cash outflow from operations before dividends and interest | (3,663) | (4,526) |
Dividends received | 14,613 | 14,277 |
Interest received | 5 | 4 |
Overseas tax recovered | 988 | 1,388 |
Net cash inflow from operating activities | 11,943 | 11,143 |
Purchases of investments | (250,538) | (248,805) |
Sales of investments | 281,685 | 251,740 |
Settlement of future contracts | 5,696 | 424 |
Settlement of foreign currency contracts | 2,225 | 438 |
Net cash inflow from investing activities | 39,068 | 3,797 |
Dividends paid | (13,034) | (11,220) |
Repayment of bank loans | (3,354) | (13,477) |
Drawdown of bank loans | 3,354 | 13,528 |
Interest paid | (1,230) | (1,291) |
Repurchase and cancellation of the Company's own shares | (11,807) | (3,381) |
Net cash outflow from financing activities | (26,071) | (15,841) |
Increase/(decrease) in cash and cash equivalents | 24,940 | (901) |
Cash and cash equivalents at the start of the year | 29,187 | 30,078 |
Exchange movements | 505 | 10 |
Cash and cash equivalents at the end of the year | 54,632 | 29,187 |
Increase/(decrease) in cash and cash equivalents | 24,940 | (901) |
Cash and cash equivalents consist of: |
|
|
Cash and short term deposits | 45,155 | 6,547 |
JPMorgan Euro Liquidity Fund | 9,477 | 22,640 |
Total | 54,632 | 29,187 |
Notes to the financial statements
for the year ended 31st March 2020
1. Accounting policies
Basis of accounting
The financial statements are prepared under the historical cost convention, modified to include fixed asset investments at fair value, and in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ('UK GAAP'), including '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 October 2019.
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 any potential impact of Covid-19 pandemic on the going concern and viability of the Company. They have considered the potential impact of Covid-19 and the mitigation measures which key service providers, including the Manager, have in place to maintain operational resilience particularly in light of Covid-19. The Directors have reviewed income and expense projections and the liquidity of the investment portfolio in making their assessment.
2. (Loss)/return per share
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Growth share |
|
|
| Return per share is based on the following: |
|
|
| Revenue return | 6,173 | 7,747 |
| Capital loss | (38,037) | (13,565) |
| Total loss | (31,864) | (5,818) |
| Weighted average number of shares in issue | 70,394,443 | 72,515,547 |
| Revenue return per share | 8.77p | 10.68p |
| Capital loss per share | (54.03)p | (18.71)p |
| Total loss per share | (45.26)p | (8.03)p |
| Income share |
|
|
| Return per share is based on the following: |
|
|
| Revenue return | 6,250 | 6,898 |
| Capital loss | (40,838) | (4,786) |
| Total (loss)/return | (34,588) | 2,112 |
| Weighted average number of shares in issue | 99,944,665 | 101,651,495 |
| Revenue return per share | 6.25p | 6.79p |
| Capital loss per share | (40.86)p | (4.71)p |
| Total (loss)/return per share | (34.61)p | 2.08p |
3. Dividends
(a) Dividend paid and declared
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Dividends paid |
|
|
| Unclaimed Growth dividends refunded to the Company | (17) | (1) |
| Growth 2019 second interim dividend of 4.00p (2018: 2.00p) per share | 2,879 | 1,544 |
| Growth first interim dividend of 4.85p (2019: 4.85p) per share | 3,413 | 3,520 |
| Income 2019 fourth quarterly dividend of 2.50p (2018: 2.50p) per share | 2,538 | 2,344 |
| Income first quarterly dividend of 1.40p (2019: 1.25p) per share | 1,413 | 1,272 |
| Income second quarterly dividend of 1.40p (2019: 1.25p) per share | 1,409 | 1,271 |
| Income third quarterly dividend of 1.40p (2019: 1.25p) per share | 1,399 | 1,270 |
| Total dividends paid in the year | 13,034 | 11,220 |
| Dividends declared |
|
|
| Growth second interim dividend of 4.00p (2019: 4.00p) per share | 2,750 | 2,879 |
| Income fourth quarterly dividend of 2.50p (2019: 2.50p) per share | 2,498 | 2,538 |
| Total dividends declared1 | 5,248 | 5,417 |
1 In accordance with the accounting policy of the Company, these dividends will be reflected in the financial statements of the following year.
All dividends paid and declared in the period 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 £12,423,000 (2019: £14,645,000).
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Growth first interim dividend of 4.85p (2019: 4.85p) per share | 3,413 | 3,520 |
| Growth second interim dividend of 4.00p (2019: 4.00p) per share | 2,750 | 2,879 |
| Income first quarterly dividend of 1.40p (2019: 1.25p) per share | 1,413 | 1,272 |
| Income second quarterly dividend of 1.40p (2019: 1.25p) per share | 1,409 | 1,271 |
| Income third quarterly dividend of 1.40p (2019: 1.25p) per share | 1,399 | 1,270 |
| Income fourth quarterly dividend of 2.50p (2019 2.50p) per share | 2,498 | 2,538 |
| Total | 12,882 | 12,750 |
The revenue reserve after payment of the final dividend amount to £6,307,000 (2019: £6,749,000).
4. Net asset value per share
|
| 2020 | 2019 |
|
| £'000 | £'000 |
| Growth share |
|
|
| Net assets (£'000) | 203,703 | 234,291 |
| Number of shares in issue | 74,259,820 | 72,306,030 |
| Net asset value per share | 274.3p | 324.0p |
| Income share |
|
|
| Net assets (£'000) | 112,834 | 173,539 |
| Number of shares in issue | 89,181,557 | 100,914,066 |
| Net asset value per share | 126.5p | 172.0p |
5. Status of announcement
2019 Financial Information
The figures and financial information for 2019 are extracted from the published Annual Report and Financial Statements for the year ended 31st March 2019 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.
2020 Financial Information
The figures and financial information for 2020 are extracted from the Annual Report and Financial Statements for the year ended 31st March 2020 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 on or around 19th June 2020 and will shortly be available on the Company's website www.jpmeuropean.co.uk 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.jpmeuropean.co.uk
For further information:
Paul Winship,
JPMorgan Funds Limited, Secretary - 020 7742 4000
15th June 2020