Source - RNS
RNS Number : 7528M
JPMorgan Smaller Cos IT PLC
17 October 2016
 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN SMALLER COMPANIES INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 31ST JULY 2016

 

 

Chairman's Statement

Investment Performance

During the financial year to 31st July 2016, equity markets were volatile, impacted by concerns relating to global growth, commodity prices and politics. The lead up to the referendum on the UK's membership of the European Union and the unexpected decision to leave resulted in unusually difficult domestic conditions in the last weeks of the financial year. Unfortunately, the Company underperformed during this period, resulting in returns for the year that fell short of the benchmark.

The total return on net assets before dilution was -7.7% (-6.4% after dilution), which compares with +2.1% for the benchmark index. The return to Ordinary shareholders was -10.1% reflecting a widening of the share price discount to diluted net asset value from 17.0% to 20.5%.

As set out in the following table, the Company retains its strong long-term performance record, however recent performance has been disappointing. During the year the Board had detailed discussions and challenged the Manager about the underperformance. The Board concluded that it resulted principally from the focus on high quality companies with strong momentum at a time when lower quality, value company stocks have outperformed. Despite this, the Board believes that the Manager's style should deliver improved returns for shareholders in the future.

It is encouraging to note that since the year end, smaller company shares have recovered, with the Company's net asset value per share (before dilution) increasing 8.2% to 1,026.3p, and the share price 6.0% to 795.0p at 13th October 2016. By comparison, the Company's benchmark has risen 4.3%. The current level of discount is 22.5%.

In their report, the Investment Managers have provided further detail on portfolio performance and attribution, together with a commentary on markets.

Investment Restrictions and Strategy of the Company

The Board, in conjunction with the Manager, has conducted a review of the strategy for the Company and the market environment in which we operate. The Board believes that it is in shareholders' best interests to retain the Company's clear focus on smaller companies. However, there has been a significant contraction in the number of constituents of the benchmark index. This has fallen by 70% from 476 in 1995 to 143 today. By contrast, The AIM market has grown considerably in both size and quality, and is now larger than the benchmark index. The overall market capitalisation of the AIM index is now £70 billion, compared to £45 billion for FTSE Small Cap Index (excluding investment trusts). In order to retain our focus on smaller companies and provide a greater range of investment opportunities for the Manager, the Board has proposed that the Company's overall investment limit on stocks admitted to trading on the AIM market should be increased from 20% to 50%. The benchmark for the Company will remain the same, but will be reviewed periodically to ensure that it remains appropriate.

Therefore, a resolution to amend the Company's investment restrictions to permit the Company to invest up to 50% of its gross assets in AIM listed stocks will be proposed at the forthcoming AGM and the Board recommends shareholders vote in favour of this resolution. The change in the Company's investment policy is detailed in an appendix to the Annual Report and Accounts. Subject to approval of the resolution by shareholders, the intention is that the proposed change in the Company's investment restrictions will take effect following the AGM on 29th November 2016.

Revenue and Dividends

Good dividend growth and a number of special dividends, combined with the reduction in the proportion of management fee charged to income from 50% to 30% resulted in a strong increase in net revenue. The revenue return per share, calculated on the average number of shares in issue, was 18.31p (2015: 12.20p). The Directors are recommending a final dividend of 18.3p per share, 66.4% higher& Gr than the 11.0p paid last year. If approved, the dividend will be paid on 9th December 2016 to shareholders on the register at close of business on 11th November 2016.

The level of income received each year varies according to the Company's gearing, its investment stance and economic conditions. It is the Company's policy to distribute substantially all the available income each year, and shareholders should note that the Company's 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 2017. This is highly flexible and is used with the aim of enhancing long-term returns. There is a further option to increase borrowings to £35 million subject to certain conditions. At the year end, £19 million was drawn on the facility with the gearing level of 5.7% of net assets. Since the year-end gearing has increased, and as of 13th October 2016 was 8.1%.

Share Repurchases and Issuance

At last year's Annual General Meeting, shareholders granted the Directors authority to repurchase the Company's shares for cancellation. During the financial year the Company repurchased a total of 359,194 Ordinary shares for a total consideration of £2,936,000, representing 2.1% of the issued Ordinary share capital at the beginning of the year.

The Board's objective remains to use this 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 for cancellation be renewed.

During the year, 5,863 Ordinary shares were issued upon exercise of Subscription shares. A decision to convert Subscription shares should only be made after careful consideration of the prevailing market price of the Ordinary shares, particularly if they are trading below the exercise price of 915 pence. At the year end there were 3,555,679 Subscription shares in issue. Details of how to exercise the Subscription shares are given on page 67 of the Annual Report.

Board of Directors and Corporate Governance

Richard Fitzalan Howard will retire from the Board immediately after the forthcoming Annual General Meeting ('AGM'). Accordingly, he will not stand for reappointment at that meeting. Richard has served as a non-executive Director of the Company since 1997 and the Board is very grateful to him for his valuable contribution to the Company over the period.

As part of the Board's succession planning, the Nomination Committee carried out a recruitment process which has led to the appointment of Alice Ryder as an independent non-executive Director with effect from 1st February 2017. Alice has more than 25 years of investment experience, a good part of which included the management of smaller UK companies and we look forward to the contribution that she will make to the Board.

The Board supports annual reappointment for all Directors in accordance with corporate governance best practice, and therefore all of the remaining 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.

Annual General Meeting

The Company's twenty sixth AGM will be held on Tuesday, 29th November 2016 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

We are in a period of significant economic and political uncertainty. Unprecedented levels of central bank support have failed to bring strong economic growth to many countries, and the absence of growth has resulted in political upsets both domestically and internationally. In this environment, we should expect markets to remain volatile, although very low interest rates help support the valuation of equities. The Board believes that investment in smaller UK companies is attractive, and that the Manager's focus on high quality growing smaller companies should deliver good long-term returns.

 

Michael Quicke OBE

Chairman                                                                                                                                                                                                

17th October 2016



 

Investment Managers' Report

Performance & Market Background

It is disappointing to have to report the performance figures for your Company this year to 31st July. The benchmark FTSE Smaller Companies (ex Investment Trusts) Index rebounded from a decline at the half year to end the year up 2.1%. By contrast, your company provided a total return on net assets (after dilution) of -6.4%.

We explain below in detail what led to this underperformance, but a significant part was due to the outcome of the EU Referendum on June 23rd. On the two days subsequent to the vote, the index fell more than 10%, and your Company fell significantly further. Following this rapid decline in June, the index (and fund) rebounded somewhat in July, and as we report in the Outlook below, moved higher again post the year end. However, uncertainty over the outlook has led to an increase in discounts across the board among investment trusts. The widening of your Company's discount led to a total share price return for the year -10.1%

Portfolio

As we have stated over the last few years, your Company's portfolio has been positioned to benefit from the strength of the UK economy and in particular the resurgence of the UK consumer. This positioning was reflected in the strong outperformance by your Company in the prior year. As we approached the EU Referendum, we continued to be largely consumer facing, as we deliberately chose to retain the majority of our large and high conviction positions. We did a significant amount of work in preparation for the changes that might be needed, dependent on the outcome of the vote. We also made certain changes before the vote, including increasing our investment in a number of more international businesses such as James Fisher (specialist services provider to the marine industry), Tyman (an international supplier of building products), De La Rue (the bank note printer), and Quarto (a publishing business), in addition to reducing our gearing level. These changes were not sufficient to avoid a significant, and in our view excessive, hit to share prices in a number of our consumer facing holdings in the immediate aftermath of the vote. However, it should be noted that subsequently there has been a significant rebound in many of these companies' share prices.

In addition to the hit to performance from the referendum outcome, over the second half of the year our style-based approach to stock selection struggled. As a reminder to investors of the process by which we manage money, we focus on three key factors when we make our stock selection decisions. These are valuation, including the free cash flow a company produces after all essential costs; momentum, focusing in particular on companies which consistently beat market expectations; and quality, which focuses on a number of measures such as the return a company makes from the net assets it employs. We also consider the state of the balance sheet.

We have utilised this investment process for many years and the long term performance of the Company has been built upon this process. In the first four months of 2016, none of these metrics worked. Over the course of 2015 and early 2016, approximately one third of our portfolio holdings were promoted through share price rises into the FTSE 250 Index. They were replaced in the Small Cap index by a number of distressed commodity and oil exploration companies. We use the word distressed advisedly - these were in the main highly indebted companies with little or no free cash flow, and declining earnings. One example was the demotion of Lonmin, a platinum miner, which not so long ago was a constituent of the FTSE 100 index. These are the types of investment we actively seek to avoid; but in the first half of 2016 there was a huge rebound in the share prices of a number of these companies - and by not owning a number of them we underperformed relative to the index.

Outlook

After the dramatic decline at the end of June, immediately after the EU Referendum result, the UK stock market rallied somewhat in July. Post our July year end, the UK stock market has bounced strongly - as of 13th October 2016, the FTSE Small Cap Index is up 4.3%, having rebounded 17.4% since the post-Referendum low. While part of this has been due to a recovery in some over-sold share prices post the vote, we have also seen a welcome return to a greater focus on company fundamentals, rather than the global macro concerns that dominated stock markets in the first half of 2016, and this has been reflected in our performance post the year end versus the benchmark.

There are three clear reasons for this rally. First, the Bank of England acted rapidly in August to counteract the potential damage to growth that the referendum outcome may cause. It cut interest rates to 0.25%, while leaving the possibility of further cuts to come and also expanded its asset purchase scheme. Secondly, the resignation of the Prime Minister, and the ensuing political instability within the Conservative party that followed, were swiftly and decisively resolved with the appointment of Theresa May as the new Prime Minister. Thirdly, while it is only three months since the EU vote, so far, fears of an immediate collapse in both consumer confidence and economic activity have not materialised.

The forecasts for growth both this year and particularly in 2017 have been cut, but both the Bank of England and the majority of economists now forecast that the UK will not enter a recession. Consensus GDP growth estimates are now 1.7% for 2016 and an anaemic, but positive 0.7% for 2017. This is due to the improvement seen in the economic data in August post the immediate collapse in a number of industry and consumer surveys in July.

Following the more encouraging recent economic data, our concern is less with the short term issues facing the UK, but rather focuses on the longer term. What will Brexit look like? When will it take place? What effect will this have on employment levels and hence consumer confidence? If sterling stays at the current level, how strong will the inflationary impact be? We are also concerned that the companies we invest in face a period of uncertainty which may last for many years. This may have an impact on their future investment plans, and hence future growth.



 

This knowledge vacuum makes our job of constructing a portfolio to suit the economic environment substantially harder. This uncertain backdrop has led us to redouble our focus on high quality and cash generative companies, despite this not having worked in the short term. The volatility in share prices following the Brexit vote led to some buying opportunities and we believe we have constructed a diverse portfolio of strong high quality companies that are able to continue to deliver, despite all the economic and political uncertainties that currently prevail.

 

Georgina Brittain

Katen Patel

Investment Managers                                                                                                                                                                          

17th October 2016



 

Principal Risks

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. These key risks remain unchanged since last year and fall broadly under the following categories:

•           Investment and Strategy: An inappropriate investment strategy, for example asset allocation or the 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, liquidity reports and shareholder analyses. The Board monitors the implementation and results of the investment process with the Investment Manager, who attend all 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. The Board usually holds a separate meeting devoted to strategy each year.

•         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 lack of liquidity in some 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.

•         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 on pages 26 to 29 of the Annual Report. The Board receives regular reports from the Manager and the Company's broker about shareholder communications, their views and their activity.

•         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.

•         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 BNY Mellon Trust & Depositary (UK) 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 on pages 28 and 29 of 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 by Deloitte and reported every six months against the AAF 01/06 standard.

•         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 on pages 56 and 60 of the Annual Report.



 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the annual report and the accounts 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 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 order to provide these confirmations, and in preparing these financial statements, the Directors are required to:

•         select suitable accounting policies and then apply them consistently;

•         make judgements and estimates that are reasonable and prudent;

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

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

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 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 Directors' Report, Strategic Report and Directors' Remuneration Report that comply with that law and those regulations.

Each of the Directors, whose names and functions are listed on pages 22 and 23 of the Annual Report confirm that, to the best of their knowledge:

•         the financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland', and applicable law (United Kingdom Generally Accepted Accounting Practice) give a true and fair view of the assets, liabilities, financial position and return or loss of the Company; and

•         the Strategic 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 Board confirms that it is satisfied that the annual report and accounts taken as a whole are fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy of the Company.

 

For and on behalf of the Board

Michael Quicke OBE

Chairman

17th October 2016



 

Financial Statements

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31ST JULY 2016


2016

2015



Revenue

Capital

Total

Revenue

Capital

Total

 



£'000

£'000

£'000

£'000

£'000

£'000

 

(Losses)/gains on investments held








 

  at fair value through profit or loss


-

 (16,063)

 (16,063)

-

 22,012

 22,012

 

Net foreign currency gains


-

 5

 5

-

 13

 13

 

Income from investments


 4,263

-

 4,263

 3,586

-

 3,586

 

Interest receivable and similar income


 21

-

 21

 20

-

 20

 

Gross return/(loss)


 4,284

 (16,058)

 (11,774)

 3,606

 22,025

 25,631

 

Management fee


 (463)

 (1,081)

 (1,544)

 (733)

 (733)

 (1,466)

 

Other administrative expenses


 (487)

 -

 (487)

 (486)

 -

 (486)

 

Net return/(loss) on ordinary activities








 

  before finance costs and taxation


 3,334

 (17,139)

 (13,805)

 2,387

 21,292

 23,679

 

Finance costs


 (82)

 (192)

 (274)

 (140)

 (140)

 (280)

 

Net return/(loss) on ordinary activities








 

  before taxation


 3,252

 (17,331)

 (14,079)

 2,247

 21,152

 23,399

 

Taxation


 (114)

 -

 (114)

 (79)

 -

 (79)

 

Net return/(loss) on ordinary activities








 

  after taxation


 3,138

 (17,331)

 (14,193)

 2,168

 21,152

 23,320

 

Return/(loss) per share - undiluted (note 3)


18.31p

(101.14)p

(82.83)p

12.20p

119.02p

131.22p

 

Return/(loss) per share - diluted1, 2 (note 3)


18.31p

(101.14)p

(82.83)p

12.20p

119.02p

131.22p

 

1         The Subscription shares have no dilutive effect as the conversion price for these shares exceeded the average market price of the Ordinary shares from the date of issue to 31st July 2016.

2         The return/(loss) per share represents the profit/(loss) per share for the year and also the total comprehensive income per share.

A final dividend of 18.3p per share (2015: 11.0p per share) is proposed in respect of the year ended 31st July 2016 amounting to £3,098,000 (2015: £1,901,000). Further information on dividends is given in note 9(a) on page 49 of the Annual Report.

All revenue and capital items in the above statement derive from continuing operations.

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

 



 

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31ST JULY 2016


Called up


Capital





share

Share

redemption

Capital

Revenue



capital

premium

reserve

reserves

reserve1

Total


£'000

£'000

£'000

£'000

£'000

£'000

At 31st July 2014

4,549

18,360

2,117

137,187

3,016

165,229

Repurchase and cancellation of the







  Company's own shares

(230)

-

230

(7,053)

-

(7,053)

Bonus Issue of Subscription shares

4

(4)

-

-

-

-

Issue of Ordinary shares on exercise of







  Subscription shares

1

54

-

-

-

55

Subscription share issue costs

-

(220)

-

-

-

(220)

Net return on ordinary activities

-

-

-

21,152

2,168

23,320

Dividend paid in the year

-

-

-

-

(1,734)

(1,734)

At 31st July 2015

4,324

18,190

2,347

151,286

3,450

179,597

Repurchase and cancellation of the







  Company's own shares

 (90)

-

 90

 (2,936)

-

 (2,936)

Issue of Ordinary shares on exercise of







  Subscription shares

 2

 52

-

-

-

 54

Net (loss)/return on ordinary activities

-

-

-

 (17,331)

 3,138

 (14,193)

Dividend paid in the year

-

-

-

-

 (1,889)

 (1,889)

At 31st July 2016

 4,236

 18,242

 2,437

 131,019

 4,699

 160,633

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 FINANCIAL POSITION AT 31ST JULY 2016



2016

2015



£'000

£'000

Fixed assets




Investments held at fair value through profit or loss


169,806

196,292

Current assets




Debtors


485

231

Cash and cash equivalents1


10,575

3,832



11,060

4,063

Current liabilities




Creditors: amounts falling due within one year


(20,233)

(20,758)

Net current liabilities


(9,173)

(16,695)

Total assets less current liabilities


160,633

179,597

Net assets


160,633

179,597

Capital and reserves




Called up share capital


4,236

4,324

Share premium


18,242

18,190

Capital redemption reserve


2,437

2,347

Capital reserves


131,019

151,286

Revenue reserve


4,699

3,450

Total shareholders' funds


160,633

179,597

Net asset value per Ordinary share - undiluted (note 4)


948.8p

1,039.1p

Net asset value per Ordinary share - diluted (note 4)


942.9p

1,017.9p

1               This line item combines the two lines of 'Investment in liquidity fund held at fair value through profit or loss' and 'Cash and short term deposits' in the financial statements for the year ended 31st July 2015.

 

 



 

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31ST JULY 2016



2016

2015



£'000

£'000

Net cash outflow from operations before dividends and interest


(2,041)

(1,917)

Dividends received


 3,902

 3,127

Interest received


 17

 18

Interest paid


 (278)

 (279)

Taxation


 1

-

Net cash inflow from operating activities


 1,601

 949

Purchases of investments


 (78,352)

 (67,153)

Sales of investments


 87,897

 75,546

Settlement of foreign currency contracts


 6

 1

Net cash inflow from investing activities


 9,551

 8,394

Dividends paid


 (1,889)

 (1,734)

Subscription share issue costs


-

 (220)

Issue of Ordinary shares on exercise of Subscription shares


 54

 55

Repurchase and cancellation of the Company's own shares


 (2,574)

 (7,226)

Net cash outflow from financing activities


 (4,409)

 (9,125)

Increase in cash and cash equivalents


 6,743

 218

Cash and cash equivalents at start of year


 3,832

 3,614

Cash and cash equivalents at end of year


 10,575

 3,832

Increase in cash and cash equivalents


 6,743

 218

Cash and cash equivalents consist of:




Cash and short term deposits


 249

 1,293

Cash held in JPMorgan Sterling Liquidity Fund


 10,326

 2,539

Total


 10,575

 3,832

 



 

Notes to the Financial Statements for the year ended 31st July 2016

1.     Accounting policies

(a)     Basis of accounting

The financial statements are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ('UK GAAP'), including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' 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.

The Company is registered in England and Wales (no. 2515996).

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

The financial statements have been prepared on a going concern basis, and were prepared under the historical cost convention as modified by financial instruments recognised at fair value. The disclosures on going concern on page 28 of the Directors' Report in the Annual Report form part of these financial statements.

2.    Dividends

(a)     Dividends paid and proposed


2016

2015


£'000

£'000

Dividend paid



2015 final dividend of 11.0p (2014: 9.6p) per share

1,889

1,734

Dividend proposed



2016 final dividend proposed of 18.3p (2015: 11.0p) per share

3,098

1,901

The dividend proposed in respect of the year ended 31st July 2015 amounted to £1,901,000. However the amount paid amounted to £1,889,000 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 2016 is subject to shareholder approval at the forthcoming Annual General Meeting. In accordance with the accounting policy of the Company, this dividend will be reflected in the financial statements for the year ending 31st July 2017.

(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 £3,138,000 (2015: £2,168,000).


2016

2015


£'000

£'000

Final dividend of 18.3p (2015: 11.0p) per share

3,098

1,901

The revenue reserve after payment of the final dividend will amount to £1,601,000 (2015: £1,549,000).

 

3.    Return/(loss) per share


2016

2015


£'000

£'000

Revenue return

3,138

2,168

Capital (loss)/return

(17,331)

21,152

Total (loss)/return

(14,193)

23,320

Weighted average number of shares in issue during the year used for the purposes



  of the undiluted calculation

17,136,321

17,772,488

Weighted average number of shares in issue during the year used for the purposes



  of the diluted calculation

17,136,321

17,772,488

Undiluted



Revenue return per share

18.31p

12.20p

Capital (loss)/return per share

(101.14)p

119.02p

Total (loss)/return per share

(82.83)p

131.22p

Diluted1



Revenue return per share

18.31p

12.20p

Capital (loss)/return per share

(101.14)p

119.02p

Total (loss)/return per share

(82.83)p

131.22p

1     There is no dilutive effect as the conversion price for these shares exceeded the average market price of the Ordinary shares from the date of issue to 31st July 2016.

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

 

4.    Net asset value per share


2016

2015

Undiluted



Net assets (£'000)

160,633

179,597

Number of shares in issue

16,930,024

17,283,355

Net asset value per ordinary share

948.8p

1,039.1p

Diluted



Net assets (£'000)

193,168

212,184

Number of potential Ordinary shares in issue

20,485,703

20,844,807

Net asset value per ordinary share

942.9p

1,017.9p

 

 

5.   Status of results announcement

2015 Financial Information

The figures and financial information for 2015 are extracted from the Annual Report and Accounts for the year ended 31st July 2015 and do not constitute the statutory accounts for the year. The Annual Report and Accounts 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 Accounts will be delivered to the Registrar of Companies in due course.

2016 Financial Information

The figures and financial information for 2016 are extracted from the Annual Report and Accounts for the year ended 31st July 2016 and do not constitute the statutory accounts for the year. The Annual Report and Accounts 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 Accounts 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.

 

 

JPMORGAN FUND LIMITED

17th October 2016

For further information please contact:

Divya Amin

For and on behalf of

JPMorgan Funds Limited, Secretary

020 7742 4000

 

ENDS

 

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

 

The annual report is also 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.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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