Source - RNS
RNS Number : 8611H
JPMorgan European Invest Tst PLC
12 June 2017
 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN EUROPEAN INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED
31ST MARCH 2017

CHAIRMAN'S STATEMENT

Performance

The improvement in European markets and corporate earnings growth was reflected in the Company's positive performance for the year to 31st March 2017. The Company experienced increases in its Growth and Income share prices of 23.6% and 18.5% respectively (see pages 10 and 20 of the Company's Annual Report and Accounts). With net dividends re-invested, the total returns to the Company's Growth and Income shareholders were 27.1% and 23.2% respectively (see pages 2 and 3 of the Company's Annual Report and Accounts).

The return to shareholders on the Company's Growth shares of 27.1% was 0.5% more than the return on net assets of 26.6%, reflecting a slight narrowing of the discount on the Growth shares. In contrast, the difference between the return to shareholders of 23.2% and return on net assets of 28.2% on the Income shares was -5.0%, reflecting a widening discount on the Income shares. This can be explained largely by the general trend of increasing discounts in the investment trust sector and investors issues over the political uncertainty in Europe. Although, in recent months the political concerns in Europe have subsided to some degree following the victory of Emmanuel Macron in the French presidential election and the positive regional state elections for Chancellor Merkel in Germany.

In their report on pages 7 and 9 of the Company's Annual Report and Accounts, the Investment Managers comment on some of the factors underlying the performance of the two portfolios including performance against the benchmark (the MSCI Europe ex UK Index in sterling) over the Company's financial year, as well as commenting on the economic and market background.

Revenue and Dividends

On the Growth shares the Board's aim is that annual dividend payments continue to be broadly in line with revenues received on the underlying portfolio.

Revenue per share on the Growth portfolio for the year to 31st March 2017 (calculated by reference to the average number of shares in issue over the period) amounted to 6.75 pence per share (2016: 5.37 pence per share). On the year-end share price of 285.0p (2016: 230.5p), this represents a yield of 2.4% (2016: 2.5%).

As regards the 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.

Revenue per share on the Income portfolio for the year (again, calculated by reference to the average number of shares in issue over the period) amounted to 5.94 pence per share (2016: 4.67 pence per share). On the year-end share price of 150.5p (2016: 127.0p) this represents an increased dividend yield of 3.9% (2016: 3.7%).

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.

Gearing

There has been no change in the Investment Manager's permitted gearing range, as previously set by the Board, of 10% net cash to 20% geared. At 31st March 2017 the Growth portfolio was 5.9% geared and the Income portfolio was 8.2% geared.

Conversions

The Company's annual share conversion on the 15th March 2017 resulted in a very small net decrease in the Growth issued share capital of 39,106 shares and a small increase in the Income share issued share capital of 70,451 shares.

Share Repurchase

At the forthcoming Annual General Meeting on the 17th July 2017 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 and demand for its shares, subject to the requirements and conditions as detailed in the Notice to the Annual General Meeting on page 86 of the Company's Annual Report and Accounts. 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 repurchase powers. It 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 minimise thereby the volatility and absolute level of the discount to net asset value at which the Company's shares trade. The Board do not wish to see the discounts widen beyond 10% 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 10.7% for the Growth shares and 10.7% for Income Shares (at fair value). During the year, the Board was active in implementing its buyback policy and purchased a total of 574,212 Growth shares and 185,748 Income shares. Since the year end 30,116 Growth shares have been repurchased. On the 9th June 2017 the discount on the Growth and Income Shares was 11.0% and 7.3% respectively (at fair value).

Board of Directors

Throughout the period the Board consisted of five Directors with currently no plans to change the composition of the Board.

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 offer themselves for re-election.

There has been no increase in the Directors remuneration since the increase effective on 1st April 2016. Detail of this increase was included in my Chairman's Statement for the Company's Annual Report and Accounts to 31st March 2016.

Investment Managers

As referred to my Chairman's Statement for the Company's Half year Report and Accounts to 30th September 2016, Thomas Buckingham, a Portfolio Manager in the J.P. Morgan Asset Management European Equity Team, is now identified as an Investment Manager in the Company's Report and Accounts. This is in order to reflect the importance of the role that Thomas undertakes and illustrate the depth of support provided to the Company by the Manager.

Adoption of New Articles of Association

The Company proposes to adopt new articles of association (the 'New Articles'). The principal changes proposed to be introduced in the New Articles and their effects are set out below.

Your Board is recommending an amendment to the Company's current Articles of Association (the 'Existing Articles') in order to give the Board the power to transfer revenue reserves from the Growth pool (JETG) to the Income pool (JETI) in exchange for an equivalent amount of capital reserves transferring from JETI to JETG (the Proposals). The brought forward revenue reserve that accrues in JETG's balance sheet is not required in order to maintain JETG's dividend since JETG's investment objective is to provide capital appreciation and the level of dividend in any year simply reflects the net income earned in that year. This results in fluctuating levels of dividend pay-outs to shareholders, which is what investors expect. Therefore, the revenue reserve in JETG does little to add value to shareholders of JETG since it is never distributed. Conversely, JETI's approach is to pay-out a constant, ideally growing, dividend. Thus, revenue reserves are significantly more useful to JETI as they can be drawn from in order to maintain dividend levels in years when dividend receipts fall. If shareholders approve the special resolutions required to give effect to the Proposals, as set out below, it would be the Board's intention to transfer retained revenue reserves of £2.925 million (at 31st March 2017 see page 57 of the Company's Annual Report and Accounts) standing to the account of JETG (which have been accumulated over preceding years) to JETI and to make a corresponding transfer of capital reserves standing to the account of JETI to JETG. Further, it is the Board's intention on an ongoing basis to effect similar transfers between JETI and JETG for the reasons set out above

The Proposals require approval by the Company's shareholders by way of a special resolution in a general meeting of the Company, which will be subject to the passing of special resolutions at separate class meetings of both the JETG and JETI shareholders. The special resolution required to be passed in a general meeting of the Company will be put to shareholders at the Company's forthcoming Annual General Meeting (AGM) (see below for details of the venue, date and time of the AGM). The separate class meetings of the JETG and JETI shareholders to approve their respective special resolutions will be at the same venue and date as the AGM and follow immediately after the conclusion of the AGM. Notices of the AGM and the separate class meetings are included in this Annual Report and Accounts.

It is proposed that whilst undertaking the above exercise, the opportunity be taken to amend the Existing Articles with some updates as detailed on page 40 and in the Appendix on page 93 of the Company's Annual Report and Accounts.

Annual General Meeting

The Company's eighty eighth AGM will take place at J.P. Morgan's offices at 60 Victoria Embankment, London EC4Y 0JP on Monday, 17th July 2017 at 2.30 p.m. In addition to the formal proceedings there will, as usual, be a presentation by the Investment Managers, followed by tea when shareholders, who are always most welcome, can meet the Directors and the Investment Managers for more informal discussions.

It would be helpful if shareholders seeking answers to detailed questions put them in writing beforehand, addressed to the Company Secretary at 60 Victoria Embankment, London EC4Y 0JP. Alternatively, questions may be submitted via the Company's website (www.jpmeuropean.co.uk).

Outlook

Our Investment Managers will continue to pursue their current strategy and use their stock selection skills and management of gearing to best manage the portfolio. While remaining aware of the ever-present uncertainties, your Board is confident that the portfolio is well positioned to negotiate the current variable market conditions.

 

For and on behalf of the Board

Andrew Adcock

Chairman                                                                                                                                         12th June 2017

 

INVESTMENT MANAGERS' REPORT

The year under review was dominated by political events, which rather overshadowed the steady underlying improvement in the European economy as it continues its recovery from the 2008 Financial Crisis and its aftermath. The most important political event from the perspective of the fund was the UK's decision to vote in a referendum to leave the European Union. In the short term this was the catalyst for a dramatic fall in the value of Sterling against the Euro and other European currencies, which meant that the return for shareholders in the fund was boosted by just under 10%. In the medium term it will mean a recasting of the UK's trade relationship with the EU, the details of which will have to be thrashed out over negotiations which will start after the forthcoming general election. Our base expectation is that an agreement will be arrived at for goods, but not for services. We also expect that, as is normally the case with EU negotiations, the path to an agreement will be volatile, with plenty of flashpoints along the way. Nonetheless we also expect that the impact on European financial markets and on the Euro will be less than on UK financial markets and on Sterling, not least because UK exports to the EU account for around 14% of UK GDP, whereas EU exports to the UK account for around 4% of EU GDP.

At an underlying economic level the year in review was an encouraging one for Europe. The completion of the banking union in 2014 was the catalyst for a recovery in credit, which is a good indicator of underlying health in the economy. Real GDP growth is recovering, although the rate of growth is pedestrian. Scares about deflation became particularly acute when a fall in the oil price in early 2016 took headline inflation into negative territory, and a large proportion of European government bonds saw yields fall into negative territory, propelled there both by fears of deflation and also by large-scale bond buying by the European Central Bank1. The bounce in the oil price in the second and third quarter dispelled many of those fears, and we saw a fairly dramatic change in the behaviour of bond markets in the second half of calendar 2016 as yield curves steepened on both sides of the Atlantic. We pay a lot of attention to yield curves as an indicator of economic health, because they have a good track record in signalling turning points. The theory is that lenders should expect to pay an increasing term premium as they lend for longer periods, given the uncertainty about future prospects. If this term premium is negative (in other words if the yield curve inverts), it is often a sign that lenders see trouble ahead. Steepening yield curves are therefore a sign that investors are gaining confidence about the future, and in the year under review this sparked a reflation trade, in which investors started to move back towards the more cyclically-sensitive areas of the market, and to move away from interest-rate sensitive sectors.

This meant a dramatic difference in sector performance, with Materials, for instance, which had been under huge pressure when commodities prices were falling in 2015, transformed to become the highest-performing sector in Europe, whereas Real Estate, which had prospered in the era of falling or very low interest rates, lagged the market and saw prices barely change over the year. This theme of rotation was very consistent across sectors, with the other four under-performing areas also being interest-rate sensitives - Telecoms, Healthcare, Consumer Staples, and Utilities. Out-performing sectors apart from Materials were Energy, Consumer Discretionary (including Autos), Financials, Industrials, and Information Technology.

To our mind the logic behind this recovery in confidence was the inverse of what we had seen in previous years. European corporate earnings have been under huge pressure since the crisis - indeed 2017 is forecast to be the first year to see a significant rise in earnings since 2010. This serial disappointment, though, was not as much to do with domestic European issues as it was to do with more global problems. Initially, bank earnings had come under huge pressure as banks attempted to clean up their loan books ahead of banking union. In 2015 and 2016, though, downward pressure on earnings had come from Materials and Energy, and there was a further negative impact that accrued from these price falls on the economies of emerging markets, many of which are commodity-intensive. Pressure on emerging market currencies reduced purchasing power, and in sectors as diverse as Luxury Goods and Food & Beverages we saw consequent pressure on margins. In the second half of 2016 a lot of these factors went into reverse, and this has led to a lot of optimism about 2017 and 2018 earnings - optimism which we would fully endorse.

Conversations with companies indicated that there was sound fundamental backing for this increased confidence in the strength of the cycle, with dramatic increases in earnings expected in the Materials and Energy sectors. We are also seeing the magic of operating leverage working to the benefit of European companies: after years of fighting to contain costs and defend margins we are seeing an increase in revenues flow through to much better profits.

At the tail end of 2016 there was a great deal of nervousness among global investors about the significant elections in Europe in 2017: the Netherlands, France, and Germany were all due to have elections in the year, and populist parties were making a good showing in opinion polls. We always thought, however, that it would be a very tall order for populist parties to break through, and so far in France and the Netherlands our confidence has proven well-founded. We also see the election in Germany as returning a market-friendly outcome in November, and we believe that this reassessment of political risk will reassure foreign investors who have either shunned Europe in recent years or actively removed investments.

GROWTH PERFORMANCE ATTRIBUTION FOR THE YEAR ENDED 31ST MARCH 2017


%

%

Contributions to total returns



Benchmark total return


27.2

  Asset allocation

-0.5


  Stock selection

1.5


  Gearing/cash

-0.5


  Currency

-0.2


Investment manager contribution


0.3

Portfolio total return


27.5

  Management fee/other expenses

-1.0


  Share buyback

0.1


Other effects


-0.9

Net asset value total return


26.6

Share price total return


27.1

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.

A glossary of terms and definitions is provided on page 95 of the Company's Annual Report and Accounts.

Valuations do not look like a significant obstacle: earnings multiples look in line with long run averages, with the following wind of rising earnings. Dividend yield looks fairly attractive in outright terms, but compared to bonds or cash appears very tempting, and as with earnings we are expecting growth in dividends both this year and next.

INCOME PERFORMANCE ATTRIBUTION FOR THE YEAR ENDED 31ST MARCH 2017


%

%

Contributions to total returns



Benchmark total return


27.2

  Asset allocation

0.9


  Stock selection

0.5


  Gearing/cash

0.8


  Currency

-0.1


Investment manager contribution


2.1

Portfolio total return


29.3

  Management fee/other expenses

-1.1


Other effects


-1.1

Net asset value total return


28.2

Share price total return


23.2

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.

A glossary of terms and definitions is provided on page 95 of the Company's Annual Report and Accounts.

All in all the picture looks fairly compelling in our view, and we expect that our disciplined approach to investing in both the Growth and the Income share classes will repay investors.

 

Stephen Macklow-Smith

Alexander Fitzalan Howard

Michael Barakos

Thomas Buckingham

Investment Managers                                                                                                                      12th June 2017

 

PRINCIPAL RISKS

The Directors have carried out a robust assessment of the principal risks facing the Company. With the assistance of the Manager, the Board has drawn up a risk matrix, which identifies the 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 effecting the business. Further details are disclosed in note 22 on pages 74 to 79 of the Company's Annual Report and Accounts.

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.

 

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. 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 40 of the Company's Annual Report and Accounts.

Regulatory

The Company operates in an environment with significant regulation including UKLA Listing Rules, The UK Companies Act, the Corporation Taxes Act, Market Abuse Regulation, Disclosure and Transparency Regulations and the Alternative Investment Fund Managers Directive (AIFMD).

There has been no significant change to this risk during the year though the environment as a whole is considered to be one of increasing costs for compliance.

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 Repurchase section of the Chairman's Statement on page 4 of the Company's Annual Report and Accounts.

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 and include consideration of whether the Company's objectives and structures are appropriate for the long term interests of shareholders. Please see the Outlook section of the Chairman's Statement on page 4 of the Company's Annual Report and Accounts for further details.

 

RELATED PARTY TRANSACTIONS

Details of the management contract are set out in the Directors' Report on page 40 of the Company's Annual Report and Accounts. The management fee payable to the Manager for the year was £2,994,000 (2016: £2,684,000), of which £nil (2016: £nil) was outstanding at the year end.

During the year £156,000 (2016: £174,000) was payable to the Manager for the marketing and administration of savings scheme products, of which £16,000 (2016: £nil) was outstanding at the year end.

Included in administration expenses in note 6 on page 63 of the Company's Annual Report and Accounts are safe custody fees amounting to £47,000 (2016: £46,000) payable to JPMorgan Chase of which £9,000 (2016: £8,000) 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 £35,000 (2016: £62,000) was payable to JPMorgan Securities Limited for the year of which £nil (2016: £nil) was outstanding at the year end.

The Company holds investments in funds managed by JPMAM. At 31st March 2017 these were valued at £14.2 million (2016: £15.0 million) and represented 3.3% (2016: 4.1%) of the Company's investment portfolio. During the year the Company made £nil purchases of such investments (2016: £nil) and sales with a total value of £3.3 million (2016: £nil). Income amounting to £168,000 (2016: £178,000) was receivable from these investments during the year of which £nil (2016: £nil) was outstanding at the year end.

The Company also holds cash in the JPMorgan Euro Liquidity Fund, managed by JPMAM. At the year end this was valued at £20.0 million (2016: £12.3 million). Interest amounting to £66,000 (2016: £13,000) was payable during the year of which £nil (2016: £nil) was outstanding at the year end.

Stock lending income amounting to £101,000 (2016: £146,000) was receivable by the Company during the year. JPMAM commissions in respect of such transactions amounted to £18,000 (2016: £26,000).

Handling charges on dealing transactions amounting to £73,000 (2016: £52,000) were payable to JPMorgan Chase during the year of which £12,000 (2016: £6,000) was outstanding at the year end.

At the year end, total cash of £6.0 million (2016: £4.2 million) was held with JPMorgan Chase. A net amount of interest of £2,000 (2016: £1,000) was receivable by the Company during the year from JPMorgan Chase of which £nil (2016: £nil) was outstanding at the year end.

Full details of Directors' remuneration and shareholdings can be found on page 46 and in note 6 on page 63 of the Company's Annual Report and Accounts.

 

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the annual report and 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) 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 accounts 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 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 on pages 36 and 37 of the Company's Annual Report and Accounts 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 accounts 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

Andrew Adcock

Chairman

12th June 2017

 



 

GROWTH SHARES

 

STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE YEAR ENDED 31ST MARCH 2017


2017

2016

 


Revenue

Capital

Total

Revenue

Capital

Total


£'000

£'000

£'000

£'000

£'000

£'000

Gains/(losses) on investments and derivatives







  held at fair value through profit or loss

-

 49,029

 49,029

-

 (5,728)

 (5,728)

Net foreign currency gains/(losses)

-

 224

 224

-

 (1,810)

 (1,810)

Income from investments

 7,626

-

 7,626

 6,407

-

 6,407

Interest receivable and similar income

52

-

52

77

-

77

Gross return/(loss)

 7,678

 49,253

 56,931

 6,484

 (7,538)

 (1,054)

Management fee

 (538)

 (1,255)

 (1,793)

 (530)

 (1,237)

 (1,767)

Other administrative expenses

 (506)

-

 (506)

 (547)

-

 (547)

Net return/(loss) on ordinary activities before







  finance costs and taxation

 6,634

 47,998

 54,632

 5,407

 (8,775)

 (3,368)

Finance costs

 (255)

 (595)

 (850)

 (157)

 (366)

 (523)

Net return/(loss) on ordinary activities before







  taxation

 6,379

 47,403

 53,782

 5,250

 (9,141)

 (3,891)

Taxation

 (1,137)

-

 (1,137)

 (689)

-

 (689)

Net return/(loss) on ordinary activities







  after taxation

 5,242

 47,403

 52,645

 4,561

 (9,141)

 (4,580)

Return/(loss) per Growth share

6.75p

61.08p

67.83p

5.37p

(10.77)p

(5.40)p

 

STATEMENT OF FINANCIAL POSITION (UNAUDITED) AT 31ST MARCH 2017


2017

2016


£'000

£'000

Fixed assets



Investments held at fair value through profit or loss

263,321

 224,449

Current assets



Derivative financial assets

56

487

Debtors

764

863

Cash and cash equivalents

18,765

11,038


19,585

12,388

Current liabilities



Creditors: amounts falling due within one year

(8,279)

(8,082)

Derivative financial liabilities

(12)

(298)

Net current assets

11,294

4,008

Total assets less current liabilities

274,615

228,457

Creditors: amounts falling due after more than one year

(26,014)

(26,292)

Net assets

248,601

202,165

Net asset value per Growth share

321.9p

259.7p

 



 

INCOME SHARES

 

STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE YEAR ENDED 31ST MARCH 2017


2017

2016

 


Revenue

Capital

Total

Revenue

Capital

Total


£'000

£'000

£'000

£'000

£'000

£'000

Gains/(losses) on investments and derivatives







  held at fair value through profit or loss

-

 30,765

 30,765

-

 (3,049)

 (3,049)

Net foreign currency losses

-

 (275)

 (275)

-

 (609)

 (609)

Income from investments

 7,207

-

 7,207

4,812

-

 4,812

Interest receivable and similar income

 51

-

 51

70

-

70

Gross return/(loss)

 7,258

 30,490

 37,748

4,882

 (3,658)

 1,224

Management fee

 (480)

 (721)

 (1,201)

(367)

 (550)

 (917)

Other administrative expenses

 (308)

-

 (308)

(261)

-

 (261)

Net return/(loss) on ordinary activities before







  finance costs and taxation

 6,470

 29,769

 36,239

4,254

 (4,208)

 46

Finance costs

 (201)

 (301)

 (502)

(102)

 (153)

 (255)

Net return/(loss) on ordinary activities







  before taxation

 6,269

 29,468

 35,737

4,152

 (4,361)

 (209)

Taxation

 (696)

-

 (696)

(395)

-

 (395)

Net return/(loss) on ordinary activities







  after taxation

 5,573

 29,468

 35,041

3,757

 (4,361)

 (604)

Return/(loss) per Income share

5.94p

31.40p

37.34p

4.67p

(5.42)p

  (0.75)p

 

STATEMENT OF FINANCIAL POSITION (UNAUDITED) AT 31ST MARCH 2017


2017

2016


£'000

£'000

Fixed assets



Investments held at fair value through profit or loss

172,493

139,182

Current assets



Derivative financial assets

338

256

Debtors

1,046

1,223

Cash and cash equivalents

7,155

5,545


8,539

7,024

Current liabilities



Creditors: amounts falling due within one year

(5,142)

(4,101)

Derivative financial liabilities

(6)

(271)

Net current assets

3,391

2,652

Total assets less current liabilities

175,884

141,834

Creditors: amounts falling due after more than one year

(16,530)

(13,132)

Net assets

159,354

128,702

Net asset value per Income share

169.9p

137.1p

 



 

THE COMPANY

 

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31ST MARCH 2017


2017

2016


Revenue

Capital

Total

Revenue

Capital

Total


£'000

£'000

£'000

£'000

£'000

£'000

Gains/(losses) on investments and







  derivatives held at fair value







  through profit or loss

-

 79,794

 79,794

-

 (8,777)

 (8,777)

Net foreign currency losses

-

 (51)

 (51)

-

 (2,419)

 (2,419)

Income from investments

 14,833

-

 14,833

 11,219

-

 11,219

Interest receivable and similar income

103

-

103

147

-

147

Gross return/(loss)

 14,936

 79,743

 94,679

 11,366

 (11,196)

170

Management fee

 (1,018)

 (1,976)

 (2,994)

 (897)

 (1,787)

 (2,684)

Other administrative expenses

 (814)

-

 (814)

 (808)

-

 (808)

Net return/(loss) on ordinary activities







  before finance costs and taxation

 13,104

 77,767

 90,871

 9,661

 (12,983)

 (3,322)

Finance costs

 (456)

 (896)

 (1,352)

 (259)

 (519)

 (778)

Net return/(loss) on ordinary activities







  before taxation

 12,648

 76,871

 89,519

 9,402

 (13,502)

 (4,100)

Taxation

 (1,833)

-

 (1,833)

 (1,084)

-

 (1,084)

Net return/(loss) on ordinary activities







  after taxation

 10,815

 76,871

 87,686

 8,318

 (13,502)

 (5,184)

Return/(loss) per share:







Growth share

6.75p

61.08p

67.83p

5.37p

(10.77)p

(5.40)p

Income share

5.94p

31.40p

37.34p

4.67p

(5.42)p

(0.75)p

 

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31ST MARCH 2017


Called up


Capital





share

Share

redemption

Capital

Revenue



capital

premium

reserve

Reserves1

Reserve 1

Total


£'000

£'000

£'000

£'000

£'000

£'000

At 31st March 2015

6,280

63,686

13,279

257,206

4,555

345,006

Share conversions during the year

 (1)

 19,087

 312

 (19,398)

-

-

Expense in relation to new shares

-

 (12)

-

-

-

 (12)

Net (loss)/return on ordinary activities

-

-

-

 (13,502)

 8,318

 (5,184)

Dividends paid in the year

-

-

-

-

 (8,943)

 (8,943)

At 31st March 2016

 6,279

 82,761

 13,591

 224,306

 3,930

 330,867

Repurchase and cancellation of the Company's







  own shares

 (34)

-

 34

 (1,724)

-

 (1,724)

Share conversions during the year

-

 1,353

 18

 (1,371)

-

-

Adjustment on repurchase of deferred shares







  issued arising from share conversion

(1,221)

-

1,221

-

-

-

Net return on ordinary activities

-

-

-

 76,871

 10,815

 87,686

Dividends paid in the year

-

-

-

-

 (8,874)

 (8,874)

At 31st March 2017

 5,024

 84,114

 14,864

 298,082

 5,871

 407,955

 

1 These reserves form 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 MARCH 2017


2017



Growth

Income


2016


(unaudited)

(unaudited)

Total

Total


£'000

£'000

£'000

£'000

Fixed assets





Investments held at fair value through profit or loss

263,321

 172,493

 435,814

 363,631

Current assets





Derivative financial assets

 56

 338

 394

 743

Debtors

 764

 1,046

 1,810

 2,086

Cash and cash equivalents

 18,765

 7,155

 25,920

 16,583


 19,585

 8,539

 28,124

 19,412

Current liabilities





Creditors: amounts falling due within one year

 (8,279)

 (5,142)

 (13,421)

 (12,183)

Derivative financial liabilities

 (12)

 (6)

 (18)

 (569)

Net current assets

 11,294

 3,391

 14,685

 6,660

Total assets less current liabilities

 274,615

 175,884

 450,499

 370,291

Creditors: amounts falling due after more than one year

 (26,014)

 (16,530)

 (42,544)

 (39,424)

Net assets

 248,601

 159,354

 407,955

 330,867

Capital and reserves





Called up share capital

 3,066

1,958

5,024

 6,279

Share premium

 11,448

 72,666

 84,114

 82,761

Capital redemption reserve

13,499

 1,365

14,864

 13,591

Capital reserves

 217,663

 80,419

 298,082

224,306

Revenue reserve

 2,925

 2,946

 5,871

3,930

Total equity shareholders' funds

 248,601

 159,354

 407,955

330,867

Net asset values





Net asset value per Growth share



321.9p

259.7p

Net asset value per Income share



169.9p

137.1p

 

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31ST MARCH 2017


2017

2016


£'000

£'000

Net cash inflow/(outflow) from operations before dividends and interest

222

 (1,608)

Dividends received

11,612

9,827

Interest (paid)/received on cash and cash equivalents

2

104

Overseas tax recovered

524

818

Net cash inflow from operating activities

12,360

9,141

Purchases of investments

(289,356)

 (212,728)

Sales of investments

297,400

209,341

Settlement of futures contracts

1,014

(822)

Settlement of foreign currency contracts

(384)

645

Net cash inflow/(outflow) from investing activities

8,674

(3,564)

Dividends paid

(8,874)

 (8,943)

Repayment of bank loans

-

 (22,145)

Drawdown of bank loans

-

36,505

Interest paid

(1,327)

 (681)

Expenses in relation to new shares

-

 (12)

Repurchase and cancellation of the Company's own shares

(1,461)

-

Net cash (outflow)/inflow from financing activities

(11,662)

4,724

Increase in cash and cash equivalents

9,372

10,301

Cash and cash equivalents at the start of the year

16,583

6,265

Exchange movements

(35)

17

Cash and cash equivalents at the end of the year

25,920

16,583

Increase in cash and cash equivalents

9,372

10,301

Cash and cash equivalents consist of:



Cash and short term deposits

5,953

4,247

JPMorgan Euro Liquidity Fund

19,967

12,336

Total

25,920

16,583

 



 

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2017

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 and updated in January 2017.

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 on page 38 of the Directors' Report of the Company's Annual Report and Accounts form part of these financial statements.

2.       Dividends

(a)     Dividend paid and declared


2017

2016


£'000

£'000

Dividends paid



Unclaimed Growth dividends refunded to the Company

(2)

(1)

Growth 2016 second interim dividend of 1.00p (2015: 1.25p) per share

852

1,108

Growth first interim dividend of 4.85p (2016: 4.85p) per share

3,767

4,134

Income 2016 fourth quarterly dividend of 1.45p (2015: 1.45p) per share

1,158

1,068

Income first quarterly dividend of 1.10p (2016: 1.10p) per share

1,033

878

Income second quarterly dividend of 1.10p (2016: 1.10p) per share

1,033

878

Income third quarterly dividend of 1.10p (2016: 1.10p) per share

1,033

878

Total dividends paid in the year

8,874

8,943

Dividends declared



Growth second interim dividend of 2.00p (2016: 1.00p) per share

1,549

852

Income fourth quarterly dividend of 1.70p (2016: 1.45p) per share

1,593

1,158

Total dividends payable1

3,142

2,010

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

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

(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 £10,814,000 (2016: £8,318,000).


2017

2016


£'000

£'000

Growth first interim dividend of 4.85p (2016: 4.85p) per share

3,767

4,134

Growth second interim dividend of 2.00p (2016: 1.00p) per share

1,549

852

Income first quarterly dividend of 1.10p (2016: 1.10p) per share

1,033

878

Income second quarterly dividend of 1.10p (2016: 1.10p) per share

1,033

878

Income third quarterly dividend of 1.10p (2016: 1.10p) per share

1,033

878

Income fourth quarterly dividend of 1.70p (2016: 1.45p) per share

1,593

1,158

Total

10,008

8,778

 



 

3.  Return/(loss) per share


2017

2016


£'000

£'000

Growth share



Return per share is based on the following:



Revenue

5,242

4,561

Capital return/(loss)

47,403

(9,141)

Total return/(loss)

52,645

(4,580)

Weighted average number of shares in issue

77,612,534

84,900,623

Revenue per share

6.75p

5.37p

Capital return/(loss) per share

61.08p

(10.77)p

Total return/(loss) per share

67.83p

(5.40)p

Income share



Return per share is based on the following:



Revenue

5,573

3,757

Capital return/(loss)

29,468

(4,361)

Total return/(loss)

35,041

(604)

Weighted average number of shares in issue

93,837,413

80,505,803

Revenue per share

5.94p

4.67p

Capital return/(loss) per share

31.40p

(5.42)p

Total return/(loss) per share

37.34p

(0.75)p

4.  Net asset value per share


2017

2016

Growth share



Ordinary shareholders' funds (£'000)

248,601

202,165

Number of shares in issue

77,220,608

77,833,926

Net asset value per share

321.9p

259.7p

Income share



Ordinary shareholders' funds (£'000)

 159,354

128,702

Number of shares in issue

 93,769,494

93,884,791

Net asset value per share

169.9p

137.1p

 

5.  Status of announcement

2016 Financial Information

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

2017 Financial Information

     The figures and financial information for 2017 are extracted from the Annual Report and Accounts for the year ended 31st March 2017 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

 

Annual Report and Accounts

The Annual Report and Accounts will be posted to shareholders on or around 16th June 2017 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 also be shortly submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM

 

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

 

12th  June 2017 

 


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