Annual Financial Report

RNS Number : 3560F

JPMorgan Japanese Inv. Trust PLC

11 November 2015

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN JAPANESE INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED
30TH SEPTEMBER 2015

Chairman's Statement

Investment Performance

In the year to 30th September 2015, the Company's net assets rose by 14.7% in sterling terms, compared with the Tokyo Stock Exchange First Section (TOPIX) Index (our benchmark), which rose by 6.0%. The returns are calculated on a total return basis and were modestly increased by the movement in the yen/sterling rate from ¥177.8 at the beginning of the year to ¥181.4 at its conclusion. The share price of your Company rose by 19.5% during the year, assuming the reinvestment of the dividend. I am very pleased to report that the portfolio has now outperformed the benchmark in sterling terms over two, three and five years ended 30th September 2015. Over five years the share price has risen by 63.1% against 35.7% for the TOPIX Index in sterling terms.

Revenue and Dividends

Income received during the year rose, with earnings per share for the full year increasing to 3.06p (2014: 2.46p). The Board proposes, subject to shareholders' approval at the Annual General Meeting, to pay a final dividend of 2.80p per share (2014: same) on 29th December 2015 to shareholders on the register at the close of business on 27th November 2015 (ex‑dividend date 26th November 2015). The objective of the Company is capital growth, any dividend paid being a residual of the portfolio structure. Income received by the Company is subject to certain distribution requirements that must be met in order to retain the Company's investment trust status. The Board was prepared to propose the payment of a slightly "uncovered" dividend last year on the basis that Japanese companies are structurally looking to increase dividend payments and payment ratios. It is, therefore, encouraging to see an increase in dividends received from the companies in the portfolio over the year under review.

Gearing

The Board of Directors sets the overall strategic gearing policy and guidelines, reviewing these at each meeting. The Investment Manager then manages the gearing within these agreed levels. On 30th September 2015, the Company had a gearing level of 7.7%. The management of gearing has been active during the year with the level ranging between geared positions of 13.5% and 6.4% (month end figures).

The funds available to be drawn down by the Company are ¥15 billion, comprised of a five year term loan for ¥9 billion plus a one year revolving credit facility for ¥6 billion. The Board found it attractive to lock in some longer term borrowing, the five year facility paying interest at a rate of 1.14% per annum.

Management Fees and Other Costs

The Board has recently conducted a detailed review of its management fees, other costs and the services provided by the Manager. This included a review of the management fee in the context of both the Company's investment trust and open‑ended fund peers and a detailed review of the significant other costs borne by your Company, reviewing both the absolute cost and value for money received from service providers. The Board has concluded that the current Ongoing Charges ratio of 0.77% is very competitive compared with the Company's peer group but will continue to monitor the cost base on a regular basis.

Investment Managers

Your Company's assets continue to be managed by Nicholas Weindling as the primary named Investment Manager. In a change from last year, shareholders will note that the Investment Managers' report also carries the name of Shoichi Mizusawa, the Head of the Tokyo-based Japanese Equity Team of which Nicholas is a part. This is in recognition of the contribution of the team to the management of investments in your Company's portfolio.

The Company's objective is to provide shareholders with capital growth from a portfolio of investments in Japanese companies and your Investment Managers achieved outperformance against our benchmark, through asset allocation and stock selection. These results can be seen from the performance attribution data shown on page 8 of the Annual Report & Accounts for the year ended 30^th September 2015 (the "Annual Report").

Board of Directors

In accordance with the Company's Articles of Association, Keith Percy, Alan Barber and myself, having served on the Board for more than nine years, will retire and seek reappointment as Directors of the Company at the forthcoming Annual General Meeting. Sir Stephen Gomersall will also retire and seek reappointment to comply with the Company's Articles of Association which requires a third of the Board to retire by rotation (excluding those with tenure in excess of nine years). Christopher Samuel will also retire and seek reappointment by the shareholders, as it will be his first AGM as a Director of the Company. All Directors, therefore, are seeking reappointment at the AGM.

Alan Barber and Keith Percy intend to resign as Directors of the Company during 2016. No effective dates have been fixed yet. A recruitment process will be held in due course.

Authority to Repurchase the Company's Shares

At last year's Annual General Meeting, shareholders granted the Directors authority to repurchase up to 14.99% of the Company's shares. No shares have been repurchased for cancellation during the year (2014: none). The Directors continue to believe that the power to repurchase shares is of ongoing benefit to shareholders and therefore propose that the authority be renewed for a further period. Share repurchases continue to be a useful tool for managing discount volatility and this approach will be used when considered to be appropriate by the Board.

Auditors

These accounts are the second to be audited by PricewaterhouseCoopers LLP. You will find their report to shareholders on pages 36 to 41 of the Annual Report.

Annual General Meeting

This year's Annual General Meeting will be held on Friday, 18th December 2015 at 2.00 p.m. at 60 Victoria Embankment, London EC4Y 0JP. As in previous years, 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. There will also be an opportunity to meet the Board, the Investment Manager and representatives of JPMorgan after the meeting. I look forward to welcoming as many of you as possible to this meeting.

If you have any detailed or technical questions, it would be helpful if you could raise these in advance of the meeting with the Company Secretary at 60 Victoria Embankment, London EC4Y 0JP. Alternatively, questions may be submitted via the Company's website (www.jpmjapanese.co.uk). Shareholders who are unable to attend the Annual General Meeting are encouraged to use their proxy votes. Proxy votes may be lodged electronically, whether shares are held through CREST or in certificate form, and full details are set out on the form of proxy.

Prospects

Japan faces a number of structural 'headwinds' including an ageing, and now falling, population and very high levels of government debt relative to the size of the economy. Prime Minister Abe, supported by the Bank of Japan, has gone to enormous lengths to break the deflationary forces that had gripped the economy since the bursting of Japan's financial bubble in the early 1990s. The weaker yen, for example, has given a big boost to competitiveness to Japan's exporting companies. The global growth outlook is highly uncertain and emerging economies are showing particular signs of weakness. If this weakness develops into another downturn or recession, Japan's economy will not be immune, although Japanese companies have generally stronger financial positions than they did in 2008.

The big medium term political challenge remains implementation of reform plans to improve prospects in the domestic economy - the third of Mr Abe's 'three arrows' strategy agenda.

However, your Company's Investment Managers have been finding many more interesting opportunities, at reasonable valuations, to invest in companies operating in the local economy. This, along with investments in competitive exporting companies, has been reflected in the much improved relative and absolute investment performance achieved by your Company in recent years. The Board is very encouraged by the opportunities we continue to see for active stock selection in companies, that are showing an increasing interest in external shareholders, from a research-intensive Japan-based investment team.

Andrew Fleming

Chairman

11th November 2015

Investment Managers' Report

The benchmark TOPIX index rose by 6.0% in sterling terms during the year ended 30th September 2015 with the company's NAV rising 14.7%. Over three years the Company has returned 60% versus 39.4% for the index. Over five years it has returned 63.1% versus 35.7% for the index.

Review

Much progress has been made this year in the area of corporate governance with Japan introducing both a stewardship code last year and a corporate governance code in June. Although the pace of change may be slow we believe that it will be long-lasting in nature. Already the percentage of companies with an outside director has increased from under 50% five years ago to over 90% now. Some companies which we thought unlikely to alter shareholder policies have been at the forefront announcing significant changes. For example, robot company Fanuc, which continues to be a sizeable holding for the Company, announced this year that it would set up a shareholder relations department, cancel the majority of its treasury stock, change its dividend payout ratio from 30% to 60% and appoint two outside directors. We believe change may be more forthcoming in the future as much of the pressure today is coming from domestic Japanese investors who are themselves bound by the new stewardship code.

Prime Minister Abe won an election at the end of 2014 and although his popularity fell as he pushed through a controversial security bill it has since recovered. Stability in Japanese politics is positive and represents a change from the previous revolving door of Japanese leaders. It is also encouraging that the Bank of Japan is continuing with its aggressive stimulatory monetary policies, as it pursues its 2% inflation target. Although 'Abenomics' is frequently criticized for its lack of headway in structural reform, we think this judgement is too harsh. It is true that there has been little movement in immigration and labour policies but in other areas significant progress has been made. For example, at the beginning of October 2015 Japan signed up to the Trans Pacific Partnership which is the largest global trade deal in two decades and covers 40% of global GDP. Although it is not yet ratified and may have little or no impact on most company earnings for many years it is the clearest evidence yet that the government can take on vested interests such as agriculture and achieve results. Previous administrations have failed even to get Japan to the negotiating table.

Another positive has been the increase in the number of tourists visiting Japan. Originally the government targeted twenty million by 2020, the year when Tokyo will hold the Olympics but it is likely it that this target will be achieved next year. This has happened for three reasons. First, the government relaxed visa restriction for visitors from some countries. Second, wages have increased across much of Asia with this emerging middle class wanting to travel more. Third, the depreciation of the yen has made it significantly less expensive to visit Japan. On a recent trip to Fukuoka on the southern island of Kyushu we were interested to note this effect extending beyond Tokyo. In June 2013 just one cruise ship called at Fukuoka port, in June 2015 this number hit 28.

Despite these positive developments, economic data was mixed. On the one hand the labour market is as tight as at any point in the last twenty years. There is some evidence of rising wages, and falling commodity prices should eventually feed through to higher disposable incomes. On the other hand GDP data has been disappointing largely due to poor export performance. This is particularly striking if one considers how far the yen has weakened over the past couple of years.

Finally, corporate performance has continued to be strong with Japanese companies posting record profits for fiscal year 2014. Profits are likely to hit another new high this year while dividends also continue to rise.

Portfolio Performance

The outperformance versus the benchmark was due to sector allocation and, primarily, stock selection. Performance was further enhanced through the decision to gear the Company. At the sector allocation level the overweight position in services was particularly helpful. The main sectoral detractor from performance was the overweight position in electric appliances although stock selection within this sector more than offset the negative effect.

The top performing stock was Sohgo Security Services which operates the Alsok brand of home security. It is benefitting from steady revenue growth which is substantially boosting profitability as its costs are relatively fixed. Margins still substantially lag those of the industry leader Secom suggesting a further source for improved profitability. Among the other substantial contributors we would highlight MonotaRo, a business-to-business e‑commerce company that is challenging the traditional Japanese business model of supplying goods via trading companies. We believe that it has many years of growth ahead as it still has a very small share of this industry. Cookpad is an innovative internet company that started from a recipe website. The key point is that the site is used by the overwhelming majority of women aged 20-50. Access to this valuable demographic should allow it to expand into other areas. Finally, our long-standing holding in retailer Don Quijote and newer addition duty free store Laox both benefitted from the surge in tourists coming to Japan.

Stocks that detracted from performance included Hitachi, Minebea, Omron and SMC. Hitachi is an industrial conglomerate with a wide range of businesses from infrastructure to IT services. We still expect the company to deliver solid earnings growth over the medium term driven primarily by the growing revenues in its infrastructure business and the initiatives to improve efficiency. Minebea has a strong global position in miniature ball bearings. The bearings business has seen strong volume growth and we believe this trend will continue driven by their increased usage in automobiles, electric appliances and aircrafts. In the shorter-term, we are also positive on their LED backlights for smartphones where the company enjoys dominant technology and cost advantages. Omron is another conglomerate but our investment case is centered upon its strong position in the factory automation industry.

There are several companies in Japan that are global leaders in the field of factory automation such as Omron, Fanuc, Keyence and SMC, all of which are holdings of the Company. We believe they have an opportunity to grow strongly over the long-term as manufacturing companies in emerging counties will need to automate their production to cope with rising wages. All of these stocks have performed poorly since the summer in response to concerns about global, and in particular Chinese, growth. We continue own Hitachi, Minebea and SMC both because we see little change in their long-term positive outlook and because we believe their valuations already reflect the short-term risks. On the other hand, we sold Omron in August in response to the increasingly cautious views expressed by our investment colleagues in Asia regarding China and South-East Asian countries.

Current Portfolio

As we begin the Company's new financial year, the largest overweight positions are in MonotaRo, Keyence, Sohgo Security Services, Fuji Heavy Industries and Don Quijote. Fuji Heavy Industries is a car manufacturer under the 'Subaru' brand, and is our only holding amongst car assemblers. Fuji Heavy Industries has a high exposure to the US market where the demand is strong and Subaru has steadily gained market share. Its growth is currently constrained by capacity but the company plans to expand it 2016.

We do not own any other vehicle assemblers but instead own several parts suppliers such as Nifco, NIDEC, Murata Manufacturing, Minebea and TDK. Nifco manufactures plastic materials that help reduce the weight of automobiles and improve fuel efficiency. The others are electric component manufactures which all have strong presence in the auto industry. We believe automobiles will be equipped with an increasing number of electric components as ADAS (advanced driver assistance system) proliferates. What these holdings have in common is that they have increased both their market shares and also the revenue they generate per vehicle. As a result, their growth rates are much higher than the underlying growth for the auto industry.

We also retain an overweight position in Don Quijote, a retailer that is strongly differentiated from its competitors with a unique store format, merchandising and a flexible pricing strategy. This will allow the company, as it has done in the past, to grow through new store openings. More recently, Don Quijote has also been successful in capturing strong demand from the increasing number of inbound tourists.

Outlook

Japan is a cyclical market due to its large exposure to global manufacturing sectors relative to other major markets as well as relative to its own economy. Therefore increasing uncertainty over the global economic environment could weigh on the Japanese market in the near term. It is important to remember that Japan is heavily reliant on Asia as a destination for its exports. Over the last thirty years the percentage of exports destined for Asia has increased from around 25% to over 50% now. As such Japan will not be insulated from a slowdown in those markets. As a result of these concerns, we reduced the level of gearing in the Company towards the end of the review period.

However, the long-term outlook is positive: government policy is supportive, the economies of countries in developed markets are improving and, within Japan, companies are starting to emphasise increasing returns to shareholders. We continue to focus on companies benefitting from structural changes such as the increasing penetration of internet shopping, the aging population, factory automation, the increasing number of tourists visiting Japan and on companies that prioritise improved shareholder returns. We continue to find compelling investment opportunities in these sectors.

Active Management in Japan

We believe in active management and believe the case for doing so in Japan is particularly strong for a couple of reasons. First, it is a very under researched market. Of the roughly 1,700 companies listed on the TOPIX index more than half have two or fewer brokerage analysts covering them. Second, the industries in which Japan may be strong in the future may not be the same as in the past. For example, historically Japan has been famous for its consumer electronic and car companies but these areas are now highly competitive with a large number of global competitors. We believe that it is in other sectors where Japan will be strong, for example in consumer goods where Japanese products stand for reliability, quality and safety.

Our large team based on the ground in Tokyo, something which remains unusual, should be a source of continued competitive advantage as we seek the best companies for the portfolio.

Nicholas Weindling

Shoichi Mizusawa

JPMorgan Asset Management

Tokyo

11th November 2015

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. The risks identified have not changed over the year under review, and the ways in which they are managed or mitigated are summarised as follows.

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 Underperformance and Strategy: An inappropriate investment strategy, for example asset allocation, the level of gearing or the degree of portfolio risk, may lead to underperformance 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 and through its investment restrictions and guidelines, which are monitored and reported on by the Manager. 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 Managers, at least one of whom attends all Board meetings, and reviews data which show statistical measures of the Company's risk profile. The Investment Managers employs the Company's gearing tactically, within a strategic range set by the Board. The Board holds a separate meeting devoted to strategy each year.

•  Market and Currency: Market risk 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 the Manager. The Board monitors the implementation and results of the investment process with the Manager. The majority of the Company's assets, liabilities and income are denominated in yen rather than in the Company's functional currency of sterling (in which it reports). As a result, movements in the yen : sterling exchange rate may affect the sterling value of those items and therefore impact on reported results and/or financial position. Therefore, there is an inherent risk from these exchange rate movements. It is the Company's policy not to undertake foreign currency hedging. Further details about the foreign currency risk may be found in note 22 on pages 55 and 56 of the Annual Report.

•  Political, Economic and Governance: Administrative risks, such as the imposition of restrictions on the free movement of capital. These risks are discussed by the Board on a regular basis.

•  Loss of Investment Team or Investment Manager: A sudden departure of an Investment Manager or several members of the investment management team could result in a short term deterioration in investment performance. The Manager takes steps to reduce the likelihood of such an event by ensuring appropriate succession planning and the adoption of a team based approach, as well as special efforts to retain key personnel. The Board engages with the senior management of the Manager in order to mitigate this risk.

•  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 policy and has set parameters for the Manager and the Company's broker to follow.

•  Change of Corporate Control of the Manager: The Board holds regular meetings with senior representatives of the Manager in order to obtain assurance that the Manager continues to demonstrate a high degree of commitment to its investment trust business through the provision of significant resources.

•  Accounting, Legal and Regulatory: In order to qualify as an investment trust, the Company must comply with Section 1158 of the Corporation Tax Act 2010 ('Section 1158'). Details of the Company's approval are given under 'Business of the Company' above. Were the Company to breach Section 1158, it may lose investment trust status and, as a consequence, 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, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules, Disclosure and Transparency Rules ('DTRs') and, as an investment trust, the Alternative Investment Fund Managers Directive ('AIFMD'). A breach of the Companies Act 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 could 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, the Manager and its professional advisers to ensure compliance with the Companies Act 2006, the UKLA Listing Rules, DTRs and AIFMD.

•  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 31 of the Annual Report.

•  Operational: Disruption to, or failure of, the Manager's accounting, dealing or payments systems or the Depositary or Custodian's records may prevent accurate reporting and monitoring of the Company's financial position. Details of how the Board monitors the services provided by JPMF and its associates and the key elements designed to provide effective risk management and internal control are included within the Risk Management and Internal Controls section of the Corporate Governance Statement on pages 29 and 30 of the Annual Report.

•  Going concern: Boards are advised to consider going concern as a potential risk, whether or not there is an apparent issue arising in relation thereto. Going concern is considered rigorously on an ongoing basis and the Board's statement on going concern is detailed on page 24 of the Annual Report.

•  Financial: The financial risks faced by the Company include market price risk, liquidity risk and credit risk. Further details are disclosed in note 22 on pages 55 to 60 of the Annual Report.

Related Parties Transactions

During the financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company during the year.

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 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 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 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.jpmjapanese.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 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 Directors' Report, Strategic Report, Statement of Corporate Governance and Directors' Remuneration Report that comply with that law and those regulations.

Each of the Directors, whose names and functions are listed on pages 21 and 22 of the Annual Report, confirms 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; 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 provide the information necessary for shareholders to assess the strategy and business model of the Company.

The Board also confirms that it is satisfied that the Strategic Report and Directors' Report include 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 the Company faces.

For and on behalf of the Board
Andrew Fleming
Chairman

11th November 2015

Financial Statements

Income statement

for the year ended 30th September 2015

	2015			2014
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments held at fair value through profit or loss	-	55,125	55,125	-	(26,100)	(26,100)
Net foreign currency gains	-	2,587	2,587	-	5,933	5,933
Income from investments	6,970	-	6,970	5,715	-	5,715
Gross return/(loss)	6,970	57,712	64,682	5,715	(20,167)	(14,452)
Management fee	(606)	(2,423)	(3,029)	(525)	(2,099)	(2,624)
Other administrative expenses	(592)	-	(592)	(506)	-	(506)
Net return/(loss) on ordinary activities before finance costs and taxation	5,772	55,289	61,061	4,684	(22,266)	(17,582)
Finance costs	(147)	(587)	(734)	(149)	(596)	(745)
Net return/(loss) on ordinary activities before taxation	5,625	54,702	60,327	4,535	(22,862)	(18,327)
Taxation	(697)	-	(697)	(572)	-	(572)
Net return/(loss) on ordinary activities after taxation	4,928	54,702	59,630	3,963	(22,862)	(18,899)
Return/(loss) per share (Note 2)	3.06p	33.92p	36.98p	2.46p	(14.18)p	(11.72)p

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year.

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. The Total column represents all the information that is required to be disclosed in a Statement of Total Recognised Gains and Losses ('STRGL'). For this reason a STRGL has not been presented.

Reconciliation of Movements in Shareholders' Funds

	Called up	Capital
	share	redemption	Other	Capital	Revenue
	capital	reserve	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2013	40,312	8,650	166,791	209,162	6,961	431,876
Net (loss)/return on ordinary activities	-	-	-	(22,862)	3,963	(18,899)
Dividends paid in the year	-	-	-	-	(4,515)	(4,515)
At 30th September 2014	40,312	8,650	166,791	186,300	6,409	408,462
Net return on ordinary activities	-	-	-	54,702	4,928	59,630
Dividends paid in the year	-	-	-	-	(4,515)	(4,515)
At 30th September 2015	40,312	8,650	166,791	241,002	6,822	463,577

Balance Sheet

at 30th September 2015

	2015	2014
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	493,278	459,633
Current assets
Debtors	6,315	13,201
Cash and short term deposits	46,923	15,463
	53,238	28,664
Creditors: amounts falling due within one year	(33,329)	(79,835)
Net current assets/(liabilities)	19,909	(51,171)
Total assets less current liabilities	513,187	408,462
Creditors: amounts falling due after more than one year	(49,610)	-
Net assets	463,577	408,462
Capital and reserves
Called up share capital	40,312	40,312
Capital redemption reserve	8,650	8,650
Other reserve	166,791	166,791
Capital reserves	241,002	186,300
Revenue reserve	6,822	6,409
Total equity shareholders' funds	463,577	408,462
Net asset value per share (Note 4)	287.5p	253.3p

The accounts on pages 42 to 61 of the Annual Report were approved and authorised for issue by the Directors on 11th November 2015 and were signed on their behalf by:

Andrew Fleming

Chairman

Company registration number: 223583.

Cash Flow Statement

for the year ended 30th September 2015

	2015	2014
	£'000	£'000
Net cash inflow from operating activities	2,215	2,352
Returns on investments and servicing of finance
Interest paid	(619)	(735)
Capital expenditure and financial investment
Purchases of investments	(177,624)	(132,450)
Sales of investments	194,214	136,596
Other capital charges	(3)	(3)
Net cash inflow from capital expenditure and financial investment	16,587	4,143
Dividend paid	(4,515)	(4,515)
Net cash inflow before financing	13,668	1,245
Financing
Repayments of loans	(77,495)	-
Drawdown of loans	94,050	12,204
Net cash inflow from financing	16,555	12,204
Increase in cash and cash equivalents	30,223	13,449

Notes to the Financial Statements 

for the year ended 30th September 2015

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') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the AIC in January 2009. They have also been prepared on the assumption that approval as an investment trust will continue to be granted.

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

The financial statements have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of investments and derivative financial instruments at fair value. The Directors consider it appropriate to prepare the financial statements on a going concern basis. For more details see page 24 of the Annual Report.

The policies applied in these financial statements are consistent with those applied in the preceding year.

2.     Dividends

(a)     Dividends paid and proposed

		2015	2014
		£'000	£'000
	Dividend paid
	2014 final dividend of 2.80p (2013: 2.80p)	4,515	4,515
	Dividend proposed
	2015 final dividend of 2.80p (2014: 2.80p)	4,515	4,515

The final dividend proposed in respect of the year ended 30th September 2015 is subject to approval at the forthcoming Annual General Meeting. In accordance with the accounting policy of the Company, this dividend will be reflected in the accounts for the year ending 30th September 2016.

(b)     Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010 ('Section 1158')

The proposed dividend of £4,515,000 (2014: £4,515,000) is the amount on which the requirements of Section 1158 are considered. The revenue available for distribution by way of dividend is £4,928,000 (2014: £3,963,000).

3.     Return/(loss) per share

The revenue return per share is based on the revenue earnings attributable to the ordinary shares of £4,928,000 (2014: £3,963,000) and on the weighted average number of shares in issue throughout the year of 161,248,078 (2014: 161,248,078).

The capital return per share is based on the capital return attributable to the ordinary shares of £54,702,000 (2014: £22,862,000 loss) and on the weighted average number of shares in issue throughout the year of 161,248,078 (2014: 161,248,078).

The total return per share is based on the total return attributable to the ordinary shares of £59,630,000 (2014: £18,899,000 loss) and on the weighted average number of shares in issue throughout the year of 161,248,078 (2014: 161,248,078).

4.     Net asset value per share

The net asset value per share is based on the net assets attributable to the ordinary shareholders of £463,577,000 (2014: £408,462,000) and on the 161,248,078 (2014: 161,248,078) shares in issue at the year end.

5.   Status of results announcement

2014 Financial Information

The figures and financial information for 2014 are extracted from the published Annual Report and Accounts for the year ended 30th September 2014 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.

2015 Financial Information

The figures and financial information for 2015 are extracted from the Annual Report and Accounts for the year ended 30th September 2015 and do not constitute the statutory accounts for the year.  The Annual Report and Accounts 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 Accounts will be delivered to the Register 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 FUNDS LIMITED

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 will shortly be available on the Company's website at www.jpmjapanese.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

 

END

 

 

FR FFWFFFFISEEF