15 Oct 2018 14:31
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN SMALLER COMPANIES INVETMENT TRUST PLC
(the 'Company')
FINAL RESULTS FOR THE YEAR ENDED 31ST JULY 2018
Legal Entity Identifier: 549300PXALXKUMU9JM18
Information disclosed in accordance with DTR 4.2.2
The Directors announce the Company's results for the year ended 31st July 2018
CHAIRMAN'S STATEMENT
Investment Performance
Shareholders enjoyed very strong returns in the financial year to 31st July 2018, with significant outperformance against the benchmark being combined with a tightening of the discount to net asset value. This second consecutive year of outperformance has more than compensated for earlier periods of underperformance, demonstrating the importance of a longer-term perspective when investing in smaller companies. The Company's total return on net assets was +19.7%, compared with +2.1% recorded by the benchmark index. The return to Ordinary shareholders was +31.8% reflecting a narrowing of the share price discount to net asset value from 22.3% to 14.7%.
Unfortunately, the Company has given up some of these gains since the year end. As at 11th October 2018, net asset value per share has decreased by 11.0% compared with a 6.6% reduction in the benchmark. As a result of a widening of the discount to 17.2%, the share price has fallen by 13.6% to 1,050.0p.
The experience over the last two years has resulted in the Company delivering very attractive absolute returns as well as outperforming its benchmark over the 3, 5 and 10 year periods.
In their report, the Investment Managers have provided further detail on portfolio performance and attribution, together with a commentary on markets.
Revenue and Dividends
The revenue return per share, calculated on the average number of shares in issue, increased significantly to 30.69p (2017: 24.24p). This improvement is a combination of companies increasing their dividends, a higher level of special dividends and changes in the composition of the portfolio. The Directors are recommending a final dividend of 27.0p per share, 17.4% higher than the 23.0p paid last year. If approved, the dividend will be paid on 7th December 2018 to shareholders on the register at close of business on 9th November 2018.
The level of income received each year varies according to economic conditions, the Company's investment stance and gearing. It is our policy to distribute substantially all the available income each year, and shareholders should note that dividends may vary accordingly.
Gearing
Gearing is regularly discussed between the Board and the Manager. A borrowing facility of £25 million with Scotiabank is in place until April 2019. This is highly flexible and is used with the aim of enhancing long-term returns at the cost of a small increase in volatility. There is a further option to increase borrowings to £35 million subject to certain conditions. At the year end, £25 million (2017: £22 million) was drawn on the facility with the gearing level of 9.1% (2017: 8.1%) of net assets. Since the year-end gearing has increased, and as of 11th October 2018 was 9.9%.
Shareholders will note that on the 20th September 2018 we announced that we were considering the possibility of issuing convertible unsecured loan stock in order to provide the Company with structural, long term gearing and the potential to grow the Company in future upon conversion into ordinary shares.
We will consult with shareholders on the matter and will make a further announcement in due course based on their responses. If a convertible unsecured loan stock is issued, part of the proceeds will be used to repay our current borrowing facility.
Share Repurchases and Issuance
At last year's Annual General Meeting ('AGM'), shareholders granted the Directors authority to repurchase the Company's shares for cancellation. During the financial year the Company repurchased 1,161,205 Ordinary shares for a total consideration of £12,007,000 representing 6.8% of the issued Ordinary share capital at the beginning of the year. Going forward, any shares repurchased will either be cancelled or held in Treasury for possible re-issue. Treasury shares or new Ordinary shares will only be sold or issued respectively at a premium to net asset value.
The Board's objective remains to use the repurchase authority to manage imbalances between the supply and demand of the Company's shares, with the intention of reducing the volatility of the discount. To date the Board believes this mechanism has been helpful and therefore proposes and recommends that powers to repurchase up to 14.99% of the Company's shares (less shares held in Treasury) be renewed.
Since the year end, and as at the date of this report, an additional 11,319 shares were repurchased for cancellation. The Company's issued share capital now comprises 15,927,282 Ordinary Shares.
Board of Directors and Corporate Governance
During the year, the Board employed Lintstock to facilitate an evaluation of the Board and its Committees including a review of chair succession. Following consideration of the results of this review, the Nomination Committee recommended to the Board that Andrew Impey take over from me as Chairman of the Company following my retirement at the AGM in 2019. It is pleasing that the Board has been able to select the new Chairman from its existing membership which will provide welcome continuity in the future.
In accordance with corporate governance best practice, all Directors will stand for reappointment at the forthcoming AGM. Shareholders who wish to contact the Chairman or other members of the Board directly may do so through the Company Secretary or the Company's website.
Sub-division of the Company's share capital
The Company has a relatively large share price which can present difficulties for those who wish to make small or regular investments and in relation to dividend reinvestment. In order to address these difficulties and potentially increase market liquidity, the Board is proposing a sub-division of the Company's share capital on a five for one basis. I would like to reassure existing shareholders that this sub-division of shares will not affect the overall value of their holdings in the Company as each Shareholder will hold the same proportionate interest in the Company following the completion of the share split as before.
Under the share split proposal, each existing share will be sub-divided into five new shares, each of which should be valued at one-fifth of the price before the share split. The share split proposal requires the approval of Shareholders at the forthcoming AGM, and the Board recommends that Shareholders vote in favour of this resolution.
Proposed Change to Benchmark and Amendments to Investment Objective and Policy
Following the change in investment guidelines in 2016, which increased the ability of the Company to invest up to 50% in AIM listed companies, the Board, in conjunction with the Manager, has conducted a review of the Company's benchmark. The existing benchmark, the FTSE Small Cap Index (excluding investment trusts), has changed its composition considerably over the past few decades, with the number of constituents more than halving partly due to an increasing number of companies opting to list on the AIM market.
We therefore propose that the Company adopts the Numis Smaller Companies plus AIM (excluding Investment Companies) Index as its benchmark, which is more suitably aligned with the Company's Investment Objectives. In conjunction with this change, the Board also proposes to delete the market capitalisation limit from the Investment Policy.
The Board is therefore seeking shareholder approval at the AGM to amend the Company's Investment Objective and Policy to incorporate these changes, which if approved will take effect from the 1st January 2019. The Board recommends shareholders vote in favour of this resolution.
Annual General Meeting
The Company's twent-eighth AGM will be held on Wednesday 28th November 2018 at 3.00 p.m. at 60 Victoria Embankment, London EC4Y 0JP. In addition to the formal part of the meeting, there will be a presentation from the Investment Manager who will answer questions on the portfolio and performance. Shareholders who are unable to attend the AGM in person are encouraged to use their proxy votes.
Outlook
Shareholders have made considerable gains over the last two years despite significant domestic and international political and economic concerns. This demonstrates that strongly placed and well managed smaller companies are able to grow their businesses and create value even under difficult circumstances. It also shows the importance of a robust investment process and strong execution. I am sure that Shareholders would wish to join the Board in congratulating Georgina and Katen for delivering this outperformance.
After a period of strong absolute performance, it would not be surprising if the future was a little more difficult. It is certainly the case that there are many significant challenges ahead, some the result of political problems, but others the symptoms of a long period of economic and stock market performance.
Every period has its challenges, and experience shows that whilst short-term performance is difficult to predict, well managed smaller company investment can deliver good long-term returns for patient investors.
Michael Quicke OBE
Chairman 15th October 2018
INVESTMENT MANAGERS' REPORT
Performance and Market Background
The strength of global growth was the focus for investors in 2017, but in 2018 an increase in geopolitical concerns, the threat of a US trade war with China and the imminent departure of the UK from the EU have dominated investor sentiment. In the UK, the economic backdrop to the year saw the first interest rate rise in a decade in November 2017, followed by a second rise this August post our year end. On the positive side, unemployment is at a multi-year low of 4%, and wage growth which has recently been above inflation has led to nascent growth in disposable income for consumers.
The FTSE Small Cap (ex Investment Trusts) Index had a pedestrian year. It underperformed both the FTSE 100 and the FTSE 250 indices, and returned only 2.1% over the twelve months to the end of July 2018. Against this, we are delighted to report that the Company enjoyed a very strong year and produced a total return on net assets of 19.7%. The discount also narrowed, which meant that the share price return was an impressive 31.8%.
Portfolio
The outperformance of the Company over the last financial year was primarily achieved through stock selection. No fewer than five of our largest positions produced incredibly strong returns, and four of these remain in the portfolio, namely Plus500, Games Workshop, Victoria and Fevertree. The fifth, Fenner, was the subject of a bid at a significant premium and is now part of the French company, Michelin. Fenner aside, there were many less take-overs during the year than we have come to expect in recent years. Indeed the last year saw more take-overs of large FTSE 250 companies (and one in the FTSE 100, GKN). Conversely, the smaller companies arena saw a significant number of IPOs, or new companies coming to the market. While we remain highly selective in our approach to IPOs, we have participated in a significant number of exciting new investment opportunities this year. Included among them are a trio of companies in the gaming space, Sumo, Codemasters and Team 17, Alpha Financial Markets Consulting, an asset management consultancy, and two B2B platform providers for IFAs, Integrafin and Nucleus Financial.
Other new additions to the portfolio include FairFX, an international payments provider, and Future, a niche media business which owns magazine and on-line assets. On the other side, we have sold a number of holdings where our view on trading prospects has been revised. These include Eddie Stobart, Character Group, Amerisur and Renold. Sector positioning remains largely unchanged over the year. We have significant overweights in both Industrials and Consumer Goods, but remain very underweight in Consumer Services and Financials, in particular exposure to UK real estate. This positioning reflects our Brexit strategy for the portfolio, which we put in place two years ago and which we continue to believe will leave us well-positioned post the exit from the EU.
Outlook
For UK investors, the dominant issue for this financial year is Brexit. It is (almost) without doubt that the UK will leave the EU within the year, but despite the deadline set by Article 50 being only six months away, we still do not know what that exit will look like. The Bank of England assumes that economic sanity will prevail and therefore that the most likely outcome will be a gradual transition to new trading arrangements within the EU. The Prime Minister's recent Chequers speech on Brexit signalled a very soft exit. However, in our view the increased political uncertainty post that speech, the heightened divisions within the political parties, and the currently stalled negotiations mean that the tail risk of the UK exiting without any deal at all has risen materially.
This leads to a huge lack of clarity for companies, consumers and investors. Add to this the looming threat of global trade wars and it would be easy to become very pessimistic on the short term outlook. However, despite this, the IMF is forecasting UK GDP growth of 1.4% in 2018 and 1.5% in 2019. In the UK the all-important PMI data (purchasing managers' indices) are still indicating expansion, and lowered inflation expectations are positive for the consumer. While business confidence metrics have slipped, business investment remains low but positive, currently growing at 2-3%.
Despite this backdrop, we strongly believe it is wrong to be too pessimistic. The message from our companies, and the underlying macro-economic data, remain positive. Our experience during the depths of the global financial crisis a decade ago has taught us of the resilience of the UK's smaller companies. Current forecasts are for earnings growth of over 13% for the FTSE Small Cap Index over the next year, versus sub 8% for the FTSE All Share. Operating as a large number of our investments do in niche structural growth markets, they tend to be much less linked to the overall performance of the UK economy, and can grow significantly faster. We believe that the Company has invested in a portfolio of such companies, and we intend to utilise any market volatility over the next several months to add to a number of our key positions.
Georgina Brittain
Katen Patel
Investment Managers 15th October 2018
PRINCIPAL RISKS
The Directors confirm that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity.
With the assistance of the Manager, the Board has completed a robust risk assessment and drawn up a risk matrix, which identifies the key risks to the Company. In assessing the risks and how they can be mitigated, the Board has given particular attention to those issues that threaten the viability of the Company. These key risks remain unchanged since last year and fall broadly under the following categories:
• Corporate Strategy
The corporate strategy, including the investment objectives and policies, may not be of sufficient interest to current or prospective shareholders. Other factors, such as the size of the Company and level of liquidity in its shares, may also deter shareholder interest, resulting in the shares trading at an increased discount to net asset value. The Board regularly reviews its strategy, and assesses, with its brokers, shareholder views.
• Investment and Performance
Poor investment performance, for example due to poor stock selection, asset allocation or an inappropriate level of gearing, may lead to under-performance against the Company's benchmark index and peer companies, resulting in the Company's shares trading on a wider discount. The Board manages these risks by diversification of investments through its investment restrictions and guidelines which are monitored and reported on. The Manager provides the Directors with timely and accurate management information, including performance data and attribution analyses, revenue estimates and liquidity reports. The Board monitors the implementation and results of the investment process with the Investment Manager, who attend Board meetings, and reviews data which shows statistical measures of the Company's risk profile. The Investment Manager employs the Company's gearing, within a strategic range set by the Board.
• Discount
A disproportionate widening of the discount relative to the Company's peers could result in loss of value for shareholders. The Board regularly discusses discount management policy and has set parameters for the Manager and the Company's broker to follow.
• Smaller Company Investment
Investing in smaller companies is inherently more risky and volatile, partly due to a lack of liquidity in the shares, plus AIM stocks are less regulated. The Board discusses these risk factors regularly at each Board meeting with the Investment Managers. The Board has placed investment restrictions and guidelines to limit these risks.
• Political and Economic
Changes in financial or tax legislation, including in the European Union, and the impact of the EU Referendum result, may adversely affect the Company. The Manager makes recommendations to the Board on accounting, dividend and tax policies, and seeks external advice where appropriate.
• Investment Management Team
Investment performance may suffer if the designated investment managers were to leave. The Board considers that, though there may be short-term disruption, the risk would be mitigated by the substantial investment management resources of JPMorgan, and the use of an established investment methodology.
• Market
Market risk arises from uncertainty about the future prices of the Company's investments. It represents the potential loss that 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 the Manager. The Board monitors the implication and results of the investment process with the Manager.
• Accounting, Legal and Regulatory
In order to qualify as an investment trust, the Company must comply with Section 1158 of the Income and Corporation Tax Act 2010 ('Section 1158'). Details of the Company's approval are given under 'Business of the Company' above. Should the Company breach Section 1158, it may lose its investment trust status and as a consequence capital gains within the Company's portfolio would be subject to Capital Gains Tax. The Section 1158 qualification criteria are continually monitored by the Manager and the results reported to the Board each month. The Company must also comply with the provisions of The Companies Act 2006 and, as its shares are listed on the London Stock Exchange, the UKLA Listing Rules and Disclosure and Transparency Rules ('DTRs'). A breach of the Companies Act 2006 could result in the Company and/or the Directors being fined or the subject of criminal proceedings. Breach of the UKLA Listing Rules or DTRs may result in the Company's shares being suspended from listing which in turn would breach Section 1158. The Board relies on the services of its Company Secretary, JPMorgan Funds Limited, and its professional advisers to monitor compliance with all relevant requirements.
• Corporate Governance and Shareholder Relations
Details of the Company's compliance with Corporate Governance best practice, including information on relations with shareholders, are set out in the Corporate Governance Statement in the Annual Report. The Board receives regular reports from the Manager and the Company's broker about shareholder communications, their views and their activity.
• Operational and Cybercrime
Disruption to, or failure of, the Manager's accounting, dealing or payments systems or the depositary's or custodian's records may prevent accurate reporting and monitoring of the Company's financial position. On 1st July 2014, the Company appointed Bank of New York Mellon (International) Limited to act as the depositary, responsible for overseeing the operations of the custodian, JPMorgan Chase Bank, N.A., and the Company's cash flows. Details of how the Board monitors the services provided by the Manager, its associates and depositary and the key elements designed to provide effective internal control are included within the Risk Management and Internal Control section of the Directors' Report in the Annual Report. The threat of cyber attack, in all its guises, is regarded as at least as important as more traditional physical threats to business continuity and security. 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 security of its trading applications are tested independently.
• Financial
The financial risks faced by the Company include market price risk, interest rate risk, liquidity risk and credit risk. Counterparties are subject to daily credit analysis by the Manager and regular consideration at meetings of the Board. In addition the Board receives reports on the Manager's monitoring and mitigation of credit risks on share transactions carried out by the Company. Further details are disclosed in note 21 in the Annual Report and Financial Statements.
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
Details of the management contract are set out in the Directors' Report section in the 2018 Annual Report. The management fee payable to the Manager for the year was £1,861,000 (2017: £1,580,000) of which £nil (2017: £nil) was outstanding at the year end.
During the year £3,000 was refunded by (2017: £54,000 including VAT, was paid to) the Manager for the administration of savings scheme products, of which £6,000 (2017: £16,000) was outstanding at the year end.
Included in administration expenses in note 6 in the 2018 Annual Report and Financial Statements are safe custody fees amounting to £4,000 (2017: £3,000) payable to JPMorgan Chase of which £1,000 (2017: £1,000) 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. The commission payable to JPMorgan Securities Limited for the year was £1,000 (2017: £3,000) of which £nil (2017: £nil) was outstanding at the year end.
The Company also holds cash in the JPMorgan Sterling Liquidity Fund, which is managed by JPMorgan. At the year end this was valued at £3.6 million (2017: £8.3 million). Interest amounting to £25,000 (2017: £16,000) was receivable during the year of which £nil (2017: £nil) was outstanding at the year end.
Handling charges on dealing transactions amounting to £10,000 (2017: £14,000) were payable to JPMorgan Chase during the year of which £3,000 (2017: £3,000) was outstanding at the year end.
At the year end, total cash of £250,000 (2017: £370,000) was held with JPMorgan Chase. A net amount of interest of £49 (2017: £167) was receivable by the Company during the year from JPMorgan Chase of which £6 (2017: £85) was outstanding at the year end.
Full details of Directors' remuneration and shareholdings can be found in the 2018 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), comprising 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, taken as a whole, the annual report and accounts are fair balanced and understandable, provide the information necessary, for shareholders to assess the Company's performance, business model and strategy, and that they give a true and fair view of the state of affairs of the Company and of the total return 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 judgments 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 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 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 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 accounts are published on the www.jpmsmallercompanies.co.uk website, which is maintained by the Company's Manager. 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 auditor does not involve consideration of the maintenance and integrity of this website and, accordingly, the auditor accepts no responsibility for any changes that have occurred to the accounts since they were initially presented on the website. The accounts 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 in Directors' Report confirm that, to the best of their knowledge:
• the Company's financial statements, which have been prepared 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), give a true and fair view of the assets, liabilities, financial position and profit of the Company; 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.
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 performance, business model and strategy.
For and on behalf of the Board
Michael Quicke OBE
Chairman 15th October 2018
FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31ST JULY 2018
2018 | 2017 | |||||
Revenue | Capital | Total | Revenue 1 | Capital | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Gains on investments held at fair | ||||||
value through profit or loss | - | 32,282 | 32,282 | - | 44,934 | 44,934 |
Net foreign currency (losses)/gains | - | (17) | (17) | - | 22 | 22 |
Income from investments | 6,219 | - | 6,219 | 5,133 | - | 5,133 |
Interest receivable and similar income | 25 | - | 25 | 50 | - | 50 |
Gross return | 6,244 | 32,265 | 38,509 | 5,183 | 44,956 | 50,139 |
Management fee | (558) | (1,303) | (1,861) | (474) | (1,106) | (1,580) |
Other administrative expenses | (354) | - | (354) | (452) | - | (452) |
Net return on ordinary activities | ||||||
before finance costs and taxation | 5,332 | 30,962 | 36,294 | 4,257 | 43,850 | 48,107 |
Finance costs | (94) | (220) | (314) | (66) | (154) | (220) |
Net return on ordinary activities | ||||||
before taxation | 5,238 | 30,742 | 35,980 | 4,191 | 43,696 | 47,887 |
Taxation | (233) | - | (233) | (141) | - | (141) |
Net return on ordinary activities | ||||||
after taxation | 5,005 | 30,742 | 35,747 | 4,050 | 43,696 | 47,746 |
Return per share (note 2) | 30.69p | 188.53p | 219.22p | 24.24p | 261.48p | 285.72p |
1 This reserve forms the distributable reserve of the Company and may be used to fund distribution of profits to investors via dividend payments.
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31ST JULY 2018
Called up | Capital | |||||
share | Share | redemption | Capital | Revenue | ||
capital | premium | reserve | reserves | reserve | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
At 31st July 2016 | 4,236 | 18,242 | 2,437 | 131,019 | 4,699 | 160,633 |
Repurchase and cancellation of the | ||||||
Company's own shares | (172) | - | 172 | (5,906) | - | (5,906) |
Conversion of Subscription shares | ||||||
into Ordinary shares | (1) | 1 | - | - | - | - |
Issue of Ordinary shares on exercise | ||||||
of Subscription shares | 215 | 7,652 | - | - | - | 7,867 |
Cancellation of Subscription shares | (3) | - | - | 3 | - | - |
Net return on ordinary activities | - | - | - | 43,696 | 4,050 | 47,746 |
Dividends paid in the year (note 3) | - | - | - | - | (3,055) | (3,055) |
At 31st July 2017 | 4,275 | 25,895 | 2,609 | 168,812 | 5,694 | 207,285 |
Repurchase and cancellation of the | ||||||
Company's own shares | (290) | - | 290 | (12,007) | - | (12,007) |
Net return on ordinary activities | - | - | - | 30,742 | 5,005 | 35,747 |
Dividends paid in the year (note 3) | - | - | - | - | (3,917) | (3,917) |
At 31st July 2018 | 3,985 | 25,895 | 2,899 | 187,547 | 6,782 | 227,108 |
STATEMENT OF FINANCIAL POSITION AT 31ST JULY 2018
2018 | 2017 | |
£'000 | £'000 | |
Fixed assets | ||
Investments held at fair value through profit or loss | 247,785 | 224,092 |
Current assets | ||
Debtors | 1,941 | 738 |
Cash and cash equivalents | 3,817 | 8,649 |
5,758 | 9,387 | |
Current liabilities | ||
Creditors: amounts falling due within one year | (26,435) | (26,194) |
Net current liabilities | (20,677) | (16,807) |
Total assets less current liabilities | 227,108 | 207,285 |
Net assets | 227,108 | 207,285 |
Capital and reserves | ||
Called up share capital | 3,985 | 4,275 |
Share premium | 25,895 | 25,895 |
Capital redemption reserve | 2,899 | 2,609 |
Capital reserves | 187,547 | 168,812 |
Revenue reserve | 6,782 | 5,694 |
Total shareholders' funds | 227,108 | 207,285 |
Net asset value per Ordinary share (note 4) | 1,424.9p | 1,212.2p |
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31ST JULY 2018
2018 | 2017 | |
£'000 | £'000 | |
Net cash outflow from operations before dividends and interest | (2,309) | (1,956) |
Dividends received | 5,907 | 4,696 |
Interest received | 96 | 21 |
Interest paid | (305) | (220) |
Taxation recovered | - | 2 |
Net cash inflow from operating activities | 3,389 | 2,543 |
Purchases of investments | (80,826) | (77,062) |
Sales of investments | 85,868 | 70,724 |
Settlement of foreign currency contracts | (12) | (2) |
Net cash inflow/(outflow) from investing activities | 5,030 | (6,340) |
Dividends paid | (3,917) | (3,055) |
Repurchase and cancellation of the Company's own shares | (12,334) | (5,941) |
Issue of Ordinary shares on exercise of Subscription shares | - | 7,867 |
Drawdown of loans | 3,000 | 3,000 |
Net cash (outflow)/inflow from financing activities | (13,251) | 1,871 |
Decrease in cash and cash equivalents | (4,832) | (1,926) |
Cash and cash equivalents at start of year | 8,649 | 10,575 |
Cash and cash equivalents at end of year | 3,817 | 8,649 |
Decrease in cash and cash equivalents | (4,832) | (1,926) |
Cash and cash equivalents consist of: | ||
Cash and short-term deposits | 250 | 370 |
Cash held in JPMorgan Sterling Liquidity Fund | 3,567 | 8,279 |
Total | 3,817 | 8,649 |
NOTES TO THE FINANCIAL STATEMENTS
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 November 2014 and updated in February 2018.
All of the Company's operations are of a continuing nature.
The financial statements have been prepared on a going concern basis. The disclosures on going concern in the Audit Committee Report of the Annual Report form part of these financial statements.
The policies applied in these financial statements are consistent with those applied in the preceding year.
2. Return per share
2018 | 2017 | |
£'000 | £'000 | |
Revenue return | 5,005 | 4,050 |
Capital return | 30,742 | 43,696 |
Total return | 35,747 | 47,746 |
Weighted average number of shares in issue during the year | 16,306,641 | 16,710,754 |
Revenue return per share | 30.69p | 24.24p |
Capital return per share | 188.53p | 261.48p |
Total return per share | 219.22p | 285.72p |
3. Dividends
(a) Dividends paid and proposed
2018 | 2017 | |
£'000 | £'000 | |
Dividend paid | ||
2017 final dividend of 23.0p (2016: 18.3p) per share | 3,917 | 3,055 |
Dividend proposed | ||
2018 final dividend proposed of 27.0p (2017: 23.0p) per share | 4,303 | 3,933 |
All dividends paid and proposed in the period have been and will be funded from the revenue reserve.
The dividend proposed in respect of the year ended 31st July 2017 amounted to £3,933,000. However the amount paid amounted to £3,917,000 due to shares repurchased after the balance sheet date but prior to the share register record date.
The dividend proposed in respect of the year ended 31st July 2018 is subject to shareholder approval at the forthcoming AGM. In accordance with the accounting policy of the Company, this dividend will be reflected in the financial statements for the year ending 31st July 2019.
(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, shown below. The revenue available for distribution by way of dividend for the year is £5,005,000 (2017: £4,050,000). The revenue reserve after payment of the final dividend will amount to £2,479,000 (2017: £1,761,000).
2018 | 2017 | |
£'000 | £'000 | |
2018 final dividend of 27.0p (2017: 23.0p) per share | 4,303 | 3,933 |
4. Net asset value per share
2018 | 2017 | |
Net assets (£'000) | 227,108 | 207,285 |
Number of shares in issue | 15,938,601 | 17,099,806 |
Net asset value per Ordinary share | 1,424.9p | 1,212.2p |
5. Status of results announcement
2017 Financial Information
The figures and financial information for 2017 are extracted from the Annual Report and Financial Statements for the year ended 31st July 2017 and do not constitute the statutory accounts for the year. The Annual Report and Financial Statements include 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 Register of Companies in due course.
2018 Financial Information
The figures and financial information for 2018 are extracted from the published Annual Report and Financial Statements for the year ended 31st July 2018 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.
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.
15th October 2018
For further information, please contact:
Lucy Dina
For and on behalf of
JPMorgan Funds Limited
020 7742 4000
ENDS
A copy of the half year will be submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM
The half year will also shortly be available on the Company's website at www.jpmsmallercompanies.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.
JPMORGAN FUNDS LIMITED