Annual Financial Report

RNS Number : 5015A

JPMorgan Smaller Cos IT PLC

08 October 2009

 



STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN SMALLER COMPANIES INVESTMENT TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31ST JULY 2009 

AND PROPOSED NEW ARTICLES OF ASSOCIATION 

The Directors of JPMorgan Smaller Companies Investment Trust plc announce the Company's results for the year ended 31st July 2009. The following comprises extracts from the Company's Annual Financial Report for the year ended 31st July 2009. The full Annual Report and Accounts, including the Notice of the Annual General Meeting will be available to be viewed on or downloaded from the Company's website at www.jpmsmallercompanies.co.uk shortly. 

Chairman's Statement

Investment Performance

During the year ended 31st July 2009, equity markets witnessed extreme levels of volatility as the turmoil in the financial markets continued to dominate the scene. Stock markets fell severely in the first eight months of the reporting period before recovering sharply, as a result of a number of factors including unprecedented government intervention in March. Despite this rebound in the latter part of the year, overall performance was not good for smaller companies. Over the year to 31st July 2009, the Company recorded a total return on net assets of -20.3%, which compares unfavourably with the total return of the benchmark, the FTSE Small Cap Index (excluding investment trusts) of -11.0%. The total return to shareholders was -23.2%. 

Although it is regrettable to report that the Company has significantly underperformed its benchmark index for the first time in its last ten years, it is very pleasing and extremely reassuring to note that markets have continued to rise in recent months and the Company's performance since the year-end has been very strong. As at 5th October 2009 the net asset value per share was 461.3p, the share price 379.0p and the discount 17.8%.

A detailed commentary is provided in the Investment Manager's report on the investment strategy, challenges faced during the year and how the portfolio has been rebalanced. The Board remains very supportive of the high conviction approach that is adopted to manage the Company's assets. A high quality portfolio has been maintained for long term growth, although the risk profile has been increased slightly.

Revenue and Dividends

Net revenue after taxation for the year was £2,261,000 (2008: £1,785,000) and revenue return per share, calculated on the average number of shares in issue, was 11.43p (2008: 8.67p). 

The Directors are recommending an increased final dividend this year of 8.0p per share (2008: 7.0p), costing £1,569,000 (2008: £1,402,000). This will give a total of 11.0p per share for the year including the special interim dividend of 3.0p per share paid on 31st January 2009. If approved, the dividend will be paid on 11th December 2009 to shareholders on the register on 13th November 2009, having an ex-dividend date. 

Each year the level of income received varies according to the Company's gearing, its investment stance and market conditions and, whilst it is the Company's policy to distribute substantially all the available income each year, shareholders should note that the Company's dividends will vary accordingly.

Investment Manager

The Company's objective is to provide shareholders with capital growth from a portfolio of investments in UK smaller companies. The Board carried out a further formal review of the capabilities and services of the Manager during the year. This covered the investment management, company secretarial, administrative and marketing services provided to the Company by JPMorgan Asset Management (UK) Limited ('JPMAM') and also included their investment performance record, management processes, investment style and resources. We have concluded that JPMorgan Asset Management (UK) Limited remains the most appropriate manager of the Company's assets and that the ongoing appointment of the existing Investment Manager is in the best interests of shareholders.

Share Buy backs

At last year's Annual General Meeting, shareholders granted the Directors authority to repurchase the Company's shares for cancellation, such authority to expire at the earlier of 27th May 2010 or the conclusion of the Annual General Meeting in 2009. During the financial year the Company repurchased a total of 413,100 ordinary shares for cancellation for a total consideration of £1,014,000, representing 2.1% of the issued share capital at the beginning of the year. 

The Board's objective remains to use the share repurchase authority to manage imbalances between the supply and demand of the Company's shares, thereby 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 for a further period.

Gearing

The Board and the Investment Manager regularly discuss gearing and the surrounding issues. A £8 million borrowing facility was put in place with ING Bank N.V. in April 2009 when the previous facility expired. This facility is flexible and can be used tactically as investment opportunities present themselves, with the aim of enhancing returns. As investment opportunities arose in rising markets towards the end of the period, the full £7 million had been drawn on the facility at the year end to enhance the potential gains. This represented a gearing level of 7% of net assets at 31st July 2009.

Board of Directors

At the Nomination Committee held earlier this year, the Board carried out an evaluation of the Directors, the Chairman, the Board itself and its Committees. The Board takes this review seriously and views it as an effective means of evaluating the continuing efficacy of the Board. In accordance with the Company's Articles of Association, Ivo Coulson will retire by rotation at this year's AGM and will offer himself for re-election. The Nomination Committee having considered his qualifications, performance and contribution to the Board and its committees, confirm that he continues to be effective and demonstrates commitment to his role and the Board recommends to the shareholders that he be re-elected. In accordance with the Company's Articles of Association, and having served as Directors for more than nine years, both Richard Fitzalan Howard and I offer ourselves for re-election on an annual basis. The Board does not believe that length of service in itself should disqualify a Director from seeking re-election and, in proposing our re-elections, it has taken into account the ongoing requirements of the Combined Code, including the need to refresh the Board and its Committees. The Nomination Committee recommends to shareholders that we should therefore be re-elected. 

Corporate Governance

The Board believes that the Company operates in accordance with best practice in corporate governance. The Board has put in place procedures to monitor the Company's compliance with the Combined Code and the AIC Code on Corporate Governance.

Annual General Meeting

The Company's nineteenth Annual General Meeting will be held on Friday 27th November 2009 at 12.00 noon at The Armourers Hall, 81 Coleman Street, London EC2R 5BJ. In addition to the formal part of the meeting, there will be a presentation from the Investment Managers 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

The equity markets have staged a sharp recovery from the lows reached in March and there is now some new emerging evidence of the level of activity in some areas of the economy improving. Your Board remains concerned about the level of consumer and government indebtedness and rising unemployment both in the private and the public sectors all of which factors are likely to restrain the strength and sustainability of any recovery. Despite these issues, the Board and the Investment Manager remain confident that investment opportunities in the higher quality smaller company stocks remain interesting. The Board will continue to focus on good long term returns for your Company.

Strone Macpherson

Chairman    

8th October 2009

Investment Managers' Report

Market Background

The financial year has encompassed extraordinary gyrations for your company. This was the year that saw the financial crisis migrate into the everyday economy - from Wall Street to Main Street. As the Company's year started in summer 2008, many thought that the worst of the credit crisis was over, but the collapse of Lehman Brothers in September proved that false.

The so-called Lehman effect brought the financial world to a standstill. Banks refused to lend to each other for fear of counterparty risk, and because they feared for their own capital strength as conditions worsened in the credit markets. The effect of this on equity markets was threefold; first, as the reality of the tightening credit regime became manifest, exposure to any indebted companies was heavily reduced. Second, as investors panicked, they withdrew money arbitrarily, wherever they could, and the equity market was awash with sellers. Third, it became evident that the financial crisis was going to lead to recession, and equities and in particular cyclical equities were sold off on that basis.

The Bank of England took action during this period, reducing rates to 0.5%, part-nationalising a number of banks, and introducing quantitative easing, in an effort to re-introduce some sort of stability into the markets and some sort of liquidity into the economy.

In mid-March, with the UK economy still deep in recession, and equities on a rating of 8x price/earnings (and less than 6x for UK smaller companies), stockmarkets rebounded, and continued to rise through the summer. The causes of this were multiple; cheap valuations, visibility of the end of the financial crisis, the willingness of investors to recapitalise over-indebted companies, banks and lenders renegotiating companies' debt. The majority of investors were positioned too defensively going into the rally, and once the rally began they found themselves helping to stoke it by buying into the more cyclical stocks.

Portfolio Construction

Despite the very strong recent rally, last year was a poor one for smaller companies, and a worse one for your company, which significantly underperformed its benchmark. The key reason for this underperformance was the defensive nature of the portfolio as we entered the stockmarket rally. Prior to this rally, the primary focus of your fund managers was on protecting capital in a falling market. While we did begin to reduce the highly defensive nature of the portfolio at the start of 2009, buying into some more cyclical companies that had been desperately oversold, we made the decision to maintain a quality threshold and therefore largely continued to avoid extremely over-indebted companies. With hindsight, we failed to make this move into cyclicals quickly enough and underestimated investors' desire for very high risk companies and therefore were still too cautiously positioned at the beginning of April. When the turn came, the portfolio was still too risk-averse, and market liquidity was such that it took us too long to buy into the more cyclical stocks.

All of your Company's underperformance came in the single month of April. In that one month. The FTSE Small Cap Index rebounded from its low, rising by 32%. A large number of stocks which were perceived as defensive did not move at all in this rebound - and this caught us out sharply.

Unsurprisingly, given this market backdrop, a number of significant changes were made to the portfolio over the year. At the start of the year, the notable sector overweight positives were in sectors such as Support Services and Aerospace & Defense and a very large underweight in Real Estate. The defensive nature of the portfolio stood us in good stead in the first eight months of the year. By the year end, both of these overweight positions had been more than halved, and Real Estate had moved from a 10% underweight position at its peak to close to neutral. 

The underweight and subsequent buying of Real Estate stocks produced the most positive sectoral benefit. The other key positive in terms of sector weights was in Software, while the overweight position in Support Services detracted from performance. More significant was stock selection. Notable gains were made from positive stock selection - Pace, Micro-Focus, Healthcare Locums and Intec in particular. In addition, your company benefited from bids for Axon, Concateno, Imperial Energy and Emerald Energy during the year. However, these positives were significantly outweighed by not owning Imagination Technologies, by the savage deratings of Senior and Hyder Consulting, and by the huge bounces in over-indebted stocks such as Punch and Yell, which fell into the Small Cap index at the market low in March. Stock selection was therefore the largest contributor to the underperformance of the portfolio.

As it became clear that the market perception had changed, we persevered in the rebalancing of the portfolio through the spring and summer, aiming to ensure that the requisite balance was introduced into the portfolio. We put more emphasis on valuation, selling out of some of the more expensive companies and buying into the riskier stocks, and through the summer we frequently participated in placings and rights issue to shore up these companies and ensure their balance sheets were repaired.

Performance attribution

	12 months to		12 months to		12 months to
	31st July 2009		31st July 2008		31st July 2007
Contributions to Total Return	%	%	%	%	%	%
Benchmark total return		-11.0		-35.5		18.7
Asset allocation	-2.6		5.3		3.6
Stock selection	-6.4		3.9		9.6
Gearing/cash	0.1		-1.9		1.1
Currency	-		-		-0.1
Investment Manager contribution		-8.9		7.3		14.2
Portfolio total return		-19.9		-28.2		32.9
Management fees/other expenses	-1.1		-1.1		-1.6
Repurchase of shares for cancellation	0.2		0.8		1.4
VAT Recovery	0.5		-		-
Residual*	-		-0.6		-
Other effects		-0.4		-0.9		-0.2
Net asset value total return		-20.3		-29.1		32.7
Impact of increase in discount		-2.9		-0.6		-4.1
Share price total return		-23.2		-29.7		28.6

Source: Xamin/JPMAM/Morningstar. All figures are on a total return basis.

* The residual arises principally from timing differences in the treatment of income flows. 

The Xamin attribution system accounts for income on a received (on the ex-dividend date) basis whereas Morningstar calculates the Company's NAV Total Return using the actual dividends(s) paid by the Company (on the ex-dividend date).

Market Outlook

There is a distinct lack of clarity on the outlook. Commentators and investors are deeply divided into the so-called bulls, who are focussing on the positive global macro-economic factors, and those who are negative, citing a number of fears - fear of a global dip back into recession, fear of inflation, fear of deflation, or, in the case of the UK, fear of the dire state of the economy and of the consumer.

On the positive side, it is clear that the USA and most economies in Western Europe are rapidly exiting recession. The recovery in the UK has been slower, but it seems likely that the country should be in positive growth territory by the end of 2009. Globally, the economic data has grown more positive over the summer and a number of surveys and indices are starting to indicate expansion, rather than a decline in the rate of contraction. Furthermore, the IMF global growth forecast for 2010 has been upgraded to 2.5%.

Turning to the UK, the negatives are readily apparent. These include a huge and growing budget deficit, high and rising unemployment, impending tax hikes and public sector spending cuts. So why has the UK stockmarket continued to rally? In part, the answer is due to economic factors. While unemployment is still rising, it is rising less than was anticipated. House prices appear to have plateaued, and consumer confidence is slowly improving, explaining the surprisingly resilient retail figures of recent months. In part, however, the rally is due to company-specific factors. The majority of companies have taken strong pre-emptive action on their costs, balance sheets have largely been restored, and the recent results season has demonstrated that company earnings have been better than expected, in the main. All of these factors remain in place post the summer rally, and these are the reasons for remaining positive on the outlook. One final positive factor remains the likely re-emergence of mergers and acquisitions. According to the Office for National Statistics, merger and acquisition spending fell to a forty year low in the second quarter of 2009, and it is our view that there will be a marked increase in corporate activity in the coming year.

In the interim report we discussed the compelling valuations of smaller companies. Since their extreme low point in March, they have rebounded by 50% to the year end. Clearly the radical undervaluation has corrected, but we are still able to buy good quality stocks which have single digit price/earnings multiples and are yielding upwards of 5%. The gearing effect of on-going ratings improvements, margin benefits as the cost cutting comes through, and the eventual revenue improvements should ensure that there is good value in the portfolio.

Georgina Brittain

Kent Kwan

Investment Managers    

8th October 2009

Adoption of new Articles of Association

The Company proposes to adopt new Articles of Association. These incorporate amendments to the current Articles of Association to reflect the changes in company law brought about by the 2006 Companies Act (the 'Act') which came into effect on 1st October 2009 and changes made to the 2006 Act in August 2009 to implement the EU Shareholder Rights Directive in the UK, as well as some minor technical or clarifying changes.

The principal changes in the new Articles of Association proposed to be adopted at the 2009 Annual General Meeting relate to shareholder meetings and resolutions, the Company's constitution and share capital.

In August 2009, changes were made to the provisions in the 2006 Act on company meetings by The Companies (Shareholders' Rights) Regulations 2009 ("Shareholders' Rights Regulations") to implement the EU Shareholder Rights Directive in the UK. The new articles incorporate amendments in relation to meetings to ensure consistency with the 2006 Act (as amended by the Shareholders' Rights Regulations). 

Under the 2006 Act all provisions of the Company's memorandum, but most significantly the objects clause, are deemed to form part of the Company's articles from 1st October 2009. It is possible for the objects clause to be removed or amended by amending the articles by special resolution. It is not necessary under the 2006 Act for a company to set out its objects. The 2006 Act provides that, unless the articles state otherwise, a company's objects will be unrestricted.

One of the other key provisions of the memorandum which is deemed to form part of the Company's articles from 1st October 2009 is the restriction created by the existing authorised share capital statement. The 2006 Act removes the requirement for a company to place limits on its authorised share capital.

By adopting the new Articles which do not contain the objects clause or the authorised share capital statement, the Company will remove these provisions, which would otherwise be deemed to form part of the Company's articles under section 28 of the 2006 Act, from its articles.

For a more detailed explanation of these and other amendments please refer to the Notice of Annual General Meeting and the Appendix in the Annual Report and Accounts. Copies of the new Articles of Association will be available for inspection at the offices of JPMAM, Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ from the date of this report up until the close of the Annual General Meeting.

Principal Risks

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:

These key risks 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. JPMorgan Asset Management (UK) Limited (JPMAM) 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, 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 tactically, 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 policy and has set parameters for the Manager and the Company's broker to follow.

• Political: Changes in financial or tax legislation, including in the European Union, may adversely  effect 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 section in the Annual Report and Accounts.

• 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 JPMAM. 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 842 of the Income and Corporation Taxes Act 1988 ('Section 842'). Details of the Company's approval are given under 'Business of the Company' above. Should the Company breach Section 842, 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 842 qualification criteria are continually monitored by JPMAM 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. 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 may result in the Company's shares being suspended from listing which in turn would breach Section 842. The Board relies on the services of its Company Secretary, JPMAM, and its professional advisers to ensure compliance with the Companies Acts and the UKLA Listing Rules.

• Operational: Disruption to, or failure of, JPMAM's accounting, dealing or payments systems or the

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 JPMAM and its associates and the key elements designed to provide effective internal control are included within the Internal Control section of the Corporate Governance section in the Annual Report and Accounts.

• Financial: The financial risks faced by the Company include market price risk, interest rate risk, liquidity risk and credit risk. Bank counterparties are subject to daily credit analysis by the Manager and regular consideration at meetings of the Board. In addition the Board receives regular 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 20 of the Notes to the Accounts in the Annual Report and Accounts.

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 period.

Directors' Responsibilities

The Directors each confirm to the best of their knowledge that: 

a) the accounts have been prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

b) the Annual Report and Accounts, to be published shortly, 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 they face.

For and on behalf of the Board

Strone Macpherson

Chairman    

8th October 2009

Income Statement

For the year ended 31st July 2009

			2009			2008
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Losses on investments held at fair value through profit or loss		-	(22,301)	(22,301)	-	(41,818)	(41,818)
Net foreign currency gains		-	-	-	-	1	1
Income from investments		2,403	-	2,403	2,943	-	2,943
Other interest receivable and similar income		176	-	176	34	-	34
Gross return/(loss)		2,579	(22,301)	(19,722)	2,977	(41,817)	(38,840)
Management fee		(299)	(299)	(598)	(533)	(533)	(1,066)
VAT recoverable		488	466	954	-	-	-
Other administrative expenses		(361)	-	(361)	(314)	-	(314)
Net return/(loss) on ordinary activities before finance costs and taxation		2,407	(22,134)	(19,727)	2,130	(42,350)	(40,220)
Finance costs		(141)	(141)	(282)	(335)	(335)	(670)
Net return/(loss) on ordinary activities before taxation		2,266	(22,275)	(20,009)	1,795	(42,685)	(40,890)
Taxation		(5)	-	(5)	(10)	-	(10)
Net return/(loss) on ordinary activities after taxation		2,261	(22,275)	(20,014)	1,785	(42,685)	(40,900)
Return/(loss) per share (note 3)		11.43p	(112.61)p	(101.18)p	8.67p	(207.22)p	(198.55)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

for the year ended 31st July 2009

	Called up		Capital
	share	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31st July 2007	5,312	18,360	1,354	117,213	1,418	143,657
Repurchase and cancellation of the Company's own shares	(306)	-	306	(5,675)	-	(5,675)
Net (loss)/return on ordinary activities	-	-	-	(42,685)	1,785	(40,900)
Dividends appropriated in the year	-	-	-	-	(1,047)	(1,047)
At 31st July 2008	5,006	18,360	1,660	68,853	2,156	96,035
Repurchase and cancellation of the Company's own shares	(103)	-	103	(1,014)	-	(1,014)
Net (loss)/return on ordinary activities	-	-	-	(22,275)	2,261	(20,014)
Dividends appropriated in the year	-	-	-	-	(1,991)	(1,991)
At 31st July 2009	4,903	18,360	1,763	45,564	2,426	73,016

Balance Sheet

at 31st July 2009

		2009	2008
		£'000	£'000
Fixed assets
Investments held at fair value through profit or loss		78,143	101,394
Investment in liquidity fund held at fair value through profit or loss		1,290	4,535
Total investments		79,433	105,929
Current assets
Debtors		1,536	237
Cash and short term deposits		100	99
		1,636	336
Creditors: amounts falling due within one year		(8,053)	(10,230)
Net current liabilities		(6,417)	(9,894)
Total assets less current liabilities		73,016	96,035
Total net assets		73,016	96,035
Capital and reserves
Share capital		4,903	5,006
Share premium		18,360	18,360
Capital redemption reserve		1,763	1,660
Capital reserves		45,564	68,853
Revenue reserve		2,426	2,156
Shareholders' funds		73,016	96,035
Net asset value per share (note 4)		372.3p	479.6p

Cash Flow Statement

for the year ended 31st July 2009

		2009	2008
		£'000	£'000
Net cash inflow from operating activities		2,569	1,443
Returns on investments and servicing of finance
Interest paid		(303)	(788)
Net cash outflow from returns on investments and servicing of finance		(303)	(788)
Capital expenditure and financial investment
Purchases of investments		(76,939)	(101,301)
Sales of investments		80,741	108,539
Other capital charges		(21)	(13)
Net cash inflow from capital expenditure and financial investment		3,781	7,225
Dividends paid		(1,991)	(1,047)
Net cash inflow before financing		4,056	6,833
Financing
Net repayment of loans		(3,000)	(1,000)
Repurchase of the Company's own shares		(1,055)	(5,578)
Net cash outflow from financing		(4,055)	(6,578)
Increase in cash and cash equivalents		1	255

Notes to the Accounts

For the year ended 31st July 2009

1.     Accounting policies 

The accounts 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' (the 'SORP') issued by the AIC in January 2009.

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

The accounts 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. 

2.    Dividends

    Dividends paid and proposed

	2009	2008
	£'000	£'000
2008 final dividend of 7.0p (2007: 5.0p)	1,400	1,047
Special interim dividend in respect of the year ended 31st July 2009 of 3.0p (2008: nil)	591	-
Total dividends paid in the year	1,991	1,047
Final dividend proposed of 8.0p (2008: 7.0p)	1,569	1,402

For the year ended 31st July 2008, the Company declared a dividend of £1,402,000 but the dividend paid amounted to £1,400,000 as a result of share buybacks after the balance sheet date but prior to the record date. 

The final dividend has been proposed in respect of the year ended 31st July 2009 and 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 ended 31st July 2010. 

3.    Return/(loss) per share

The revenue return per share is based on the earnings attributable to the ordinary shares of £2,261,000 (2008; £1,785,000) and on the weighted average number of shares in issue during the year of 19,780,588 (2008: 20,598,483).

The capital loss per share is based on the capital loss attributable to the ordinary shares of £22,275,000 (2008: loss of £42,685,000) and on the weighted average number of shares in issue during the year of 19,780,588 (2008: 20,598,483).

Total loss per share is based on the total loss attributable to the ordinary shares of £20,014,000 (2008: loss of £40,900,000) and on the weighted average number of shares in issue during the year of 19,780,588 (2008: 20,598,483).

4.    Net asset value per share

Net asset value per share is based on the funds attributable to ordinary shareholders and on 19,612,222 (2008: 20,025,322) ordinary shares in issue at the year end.

Status of announcement

2008 Financial Information

The figures and financial information for 2008 are extracted from the published Annual Report and Accounts for the year ended 31st July 2008 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 237(2) or section 237(3) of the Companies Act 1985.

2009 Financial Information

The figures and financial information for 2009 are extracted from the Annual Report and Accounts for the year ended 31st July 2009 and do not constitute the statutory accounts for the year.  The Annual Report and Financial Statements includes the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The Annual Report and Accounts will be delivered to the Register of Companies in due course.

Annual Report and Accounts

The Annual Report and Accounts will be posted to shareholders on 14th October 2009 and will shortly be available on the Company's website (www.jpmsmallercompanies.co.uk ) or in hard copy format from the Company's Registered Office, Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ. 

Please note that up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can be found at the Company's website, www.jpmsmallercompanies.co.uk

For further information please contact:

Divya Amin

For and on behalf of

JPMorgan Asset Management (UK) Limited, Secretary                                      020 7742 6000

 

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