Final Results
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN US SMALLER COMPANIES INVESTMENT TRUST PLC
FINAL RESULTS FOR THE YEAR ENDED
31ST DECEMBER 2014
The Directors of JPMorgan US Smaller Companies Investment Trust plc announce the Company's results for the year ended 31st December 2014.
Chairman's Statement
Performance
2014 was a tricky one for small cap managers in the US as domestic investors turned their attention to the large cap companies that had significantly lagged their smaller company counterparts in the previous year. It is therefore very pleasing to report to shareholders that the Company's net asset value ('NAV') rose by 12.8% reflecting both good stock selection and a rise in the US dollar against sterling. Our return on net assets also compared favourably with the Russell 2000 (in sterling terms) which increased by 11.1%. The Company's share price total return at 5.6% was disappointing, lagging the rise in the NAV and as a consequence the shares moved from a small premium at the end of 2013 to a narrow discount at the end of 2014.
Discount and Premium
As commented above, our shares moved to a small discount to the NAV during the middle part of 2014. Whilst this move is disappointing to the Board, given the background to stock markets which saw investors flee from riskier and more volatile assets, we believe Don San Jose and his team's disciplined investment process, as well as recent performance, is being recognised by investors and helped to underpin sentiment in the shares. As I have mentioned in past statements US smaller companies are volatile and trying to align our share price movement with the change in the NAV is always going to be a challenge. During the year we experienced both sides of the equation as we were able to issue shares at a premium to investors in the early part of the year and then we exercised our authority to repurchase shares and bought in 930,000 shares to be held in Treasury. Since the year-end the Company has issued 135,000 shares from Treasury.
The Board recognises the importance of keeping a tight discount and therefore seeks the authority to repurchase up to 14.99% of the Company's issued share capital at the forthcoming AGM. In addition, the Board will seek authority to issue up to 20% of the Company's issued share capital.
Board Changes
As mentioned in the Half Year Report & Accounts Alan Kemp is retiring at the forthcoming AGM. Alan has made an outstanding contribution to the Company during his time as a Director, Chairman of the Audit Committee and particularly when the Company went through a turbulent period in 2008. His vast experience, knowledge and input will be much missed and the Board would like to place on record their thanks to him. In order to maintain the right balance of skills and ensure an orderly succession, Webster Partners, a specialist head-hunter, was retained and some outstanding candidates were provided. Following this process the Board is pleased to announce the appointment of David Ross as an independent non-executive Director with effect from 1st March 2015. David started his investment career at Ivory & Sime and in 1990 became one of the founding partners of Aberforth Partners, the specialist UK small cap investment manager. The Board is delighted to welcome such an experienced investment professional, with considerable knowledge of both investment trusts and the small cap sector.
Capital Structure, Revenue and Dividend
Shareholders should be reminded that at the Company's General Meeting on 4th March 2014, shareholders approved a resolution to sub-divide each existing ordinary share into 10 new ordinary shares. This share split did not affect shareholders' proportionate interest. The new shares were admitted to the Official List of the UK Listing Authority and to trading on the main market for listed securities of the London Stock Exchange on 6th March 2014.
The revenue return for the year, after taxation, was £647,000 (2013: £526,000). Despite the Company generating positive current year revenue, it still has a revenue reserve deficit, and therefore Directors are not proposing payments of a dividend this year. The Board will not consider paying a dividend until the revenue deficit is cleared. Shareholders should note the Company's objective remains that of capital growth.
Gearing
In April 2014 our revolving credit facility with Scotiabank was renewed at US$15 million with an option to draw a further US$5 million. At the end of 2014, US$15 million was drawn on the facility and the portfolio was 6.5% geared. This facility matures on 7th April 2015 and the Board will consider another gearing facility at this point.
Currency Hedging
Our portfolio is denominated in US dollars but is converted into sterling on a daily basis for calculating the NAV which exposes the assets to fluctuations in the US dollar/sterling exchange rate. The Board has the authority to reduce or eliminate the exposure to fluctuating currencies through the use of currency hedging. We review our policy on currency hedging regularly but to date we have not carried out any hedging and have no plans to do so in the immediate future.
Alternative Investment Fund Managers' Directive ('AIFMD')
As mentioned at the interim stage, all the arrangements are now in place to comply with the new regulation from the AIFMD. JPMorgan Funds Limited (a subsidiary of JPMAM) has been appointed as our Alternative Investment Fund Manager and Company Secretary to the Company and BNY Mellon Trust & Depositary (UK) Limited has been appointed as the Company's Depositary.
Annual General Meeting
We are holding our AGM at 60 Victoria Embankment, London EC4Y 0JP on Wednesday, 29th April 2015 at 2.30 p.m. As in previous years, there will be a presentation by one of the investment management team which will cover a review of 2014 as well as the outlook for the current year. Following the meeting some refreshments will be served which will provide shareholders with the opportunity to meet the Directors and the representatives from JPMAM and ask any questions on the portfolio and performance. If you have any detailed or technical questions, it would be helpful if you could raise them in advance of the meeting by writing to the Company Secretary at 60 Victoria Embankment, London EC4Y 0JP.
Included in the agenda for this year's AGM is a resolution to continue the Company's existence as an investment trust for a further five years. The past five years, since the last vote was taken, have marked an extraordinary period of outstanding returns for investors as markets recovered from the lows of March 2009. In our case the Company's NAV rose by 137% and the share price rose by 145%. Whilst these returns should not be used as a guide for the next five years, I would urge shareholders to vote in favour of this resolution as the US smaller companies sector has proved to be more rewarding over the longer term than the large cap sector as it always offers exciting growth opportunities that are less dependent on the economy.
Outlook
The past few years have produced many examples of why it is impossible to make short term forecasts as there will always be events or factors that catch out investors and the small cap sector cannot escape the ensuing volatility as it is seen as a riskier asset class. I really do believe, though, that our Company has in place the key ingredients that an investor should look for in any potential investment, you could call them the five 'Ps': people, philosophy, process, proprietor and performance, and performance is deliberately the last 'P' as it is based on the past whereas the other factors will be there in the future. 'People' is definitely the most important factor and with Don San Jose the Company has an experienced and disciplined US small cap manager who has built a strong team culture around him within the New York based group. Of the other 'Ps' the team have a clearly defined investment philosophy, a disciplined investment process and last, but maybe not least, JPMAM has, by way of proprietor, one of the strongest financial institutions which has enabled the business to become one of the best resourced asset managers. Over the long term the US economy has demonstrated its ability to create exciting growth prospects in the small cap sector and our Company should continue to take advantage of these opportunities for the reasons set out above.
Davina Walter
Chairman
19th March 2015
Investment Manager's Report
Market Review
2014 was another good year of returns from the US equity market, although a difficult year for many active managers. While many correctly anticipated a positive 2014 for the US stock market, few could have predicted the way it played out. The S&P 500 Index returned 20% (GBP) significantly outpacing small cap stocks, as measured by the Russell 2000 Index, which gained 11% (GBP). However, probably the biggest surprises were the 120 basis points rally in US 30-year bonds, equating to a total return of 29.4%, and the 45% slump in oil.
Of course all was not smooth sailing as the US equity market experienced three major pullbacks in 2014, although overall volatility levels were fairly low. However, the market rebounded strongly each time on improving economic growth, lower unemployment levels, and continued easy monetary policy by the Fed.
There was significant focus on Federal Reserve (Fed) during the year and most of their actions were in line with expectations. One highlight was Fed Chair, Janet Yellen's remark during her March press conference, when she stated that rate hikes could commence six months after the end of asset purchases, implying a liftoff sometime during the second quarter of 2015. This reminder to investors that the punchbowl will be removed at some point in the not too distant future and that no party can go on forever, may have refocused the market on more defensive stocks, with lower valuations, more modest growth expectations, higher profitability and more attractive dividend yields.
Investors were quite perplexed when after an April Employment Report that significantly exceeded expectations, bond yields continued to fall. Geopolitical tensions in Ukraine, unrest in Iraq, and concerns over US growth were cited, particularly after the poor showing of Q1 US GDP, which experienced a -2.9% contraction. Clearly, the low yield environment is less of a reflection of poor growth prospects for the US, but more indicative of a global flight to safety. Moreover, with low yields in developed countries such as Japan, Germany and France, yields in the US look far more attractive.
The year's deepest sell-off began in mid September as the possibility of another recession in Europe rose to the forefront as weakness began to spread to Germany. As expected in October, the Fed ended its quantitative easing programme. The final bout with volatility came in early December amidst concerns over the fierce decline in crude oil prices, the collapse of Russian equity markets and its currency, and increasing political uncertainty in Greece. Nevertheless, markets rebounded from the sell-off on improving US economic data. The current strength of the US economy was also confirmed as the final estimate of Q3 US GDP came in at an annualised rate of 5.0%, higher than the second estimate of 3.9%.
Investment Performance
For the year to 31st December 2014, the Company's total return on net assets was +12.8%, ahead of our benchmark, the Russell 2000 Index, which rose 11.1%. We remain pleased with the Company's performance in 2014 and the value we added through strong stock selection across a number of sectors. Additionally, in a rising equity market the Company's gearing also proved beneficial.
As we mentioned earlier, 2014 was another challenging year for investors, with only 44% of active small cap core managers beating their benchmark. Within the Russell 2000, the top performing sectors over the year were health care, aided by a strong rally in biotechnology names, consumer staples and utilities. The worst performing sectors were energy, producer durables and materials & processing. It is always problematic to generalise about the results of so many individual portfolio managers and the thousands of decisions that they take, but the strong rally in biotechnology, utilities, and REITS were likely headwinds to most active managers.
Thankfully, we were able to navigate through these issues through our disciplined approach to portfolio construction combined with strong stock selection particularly in the financials and materials & processing sectors. Within financials, our real estate exposure added value as names such as Marcus & Millichap, HFF and Zillow proved beneficial.
Marcus & Millichap is a commercial real estate brokerage firm that derives its revenues from the representation of buyers and sellers within investment sales transactions. Almost entirely all of the company's revenues are transaction-based and it is the only national brokerage company focused almost exclusively on the private segment of the commercial sales market, with transactions valued between $1 million to $10 million. The company's share price rallied during the year as its earnings exceeded expectations each quarter, and the company benefited from a fertile commercial real estate transaction environment (aided by persistently low interest rates), market share gains, and increased brand recognition from the initial public offering that has enabled the company to recruit productive new agents.
HFF, a provider of commercial real estate and capital markets services, also reported strong earnings throughout the year. Like Marcus & Millichap, HFF continues to generate strong transaction activity, with market share gains allowing the company to outperform solid industry growth trends. Moreover, we continue to like management's thoughtful approach to the business, balancing investments for headcount growth and share gains against their commitment to capital return.
Finally, online real-estate information provider Zillow enjoyed a strong year with robust growth in its core premier agent business and a rental market that is making significant progress. The company merged with key competitor Trulia during the year, after which we exited the position. Within the materials & processing space Taminco was a strong contributor. Taminco produces alkylamines, which are a key ingredient for agricultural chemicals, animal feed additives, personal care and water treatment products. The company was acquired by Eastman Chemical before year end.
On a stock specific basis, our position in Knight Transportation also added value. The trucking concern reported strong earnings and multiple expansion driven by a strong truckload pricing environment and increased productivity. Though we trimmed some of our position in Knight on the strong stock price movement, we continue to believe Knight is a core position as it operates one of the most efficient truckload businesses, with industry-best operating margins and a strong, disciplined management team.
In contrast, the portfolio's health care positioning disappointed and was the only sector to detract from our relative performance over the period. Health care was the best performing sector in the Russell 2000 in 2014, with the biotechnology segment performing well. Our health care performance was hindered predominately by our lack of exposure to biotechnology names. We find it difficult to find compelling investment ideas within the space that meet our investment criteria and this has resulted in the portfolio being underweight in the health care sector. In terms of names we hold, Hanger detracted during the period as the provider of orthotic and prosthetic patient-care services suffered some weakness in earnings during the period which drove its shares lower. We continue to hold the name as the underlying long term positive industry macros remain in place including an aging population and rising incidence of diabetes. Additionally, Hanger continues to trade at a very compelling valuation.
On a stock specific basis, our position in retail concern Quiksilver also detracted. Shares of Quiksilver declined after the designer and distributor of youth lifestyle apparel reported weak earnings, which dampened investors' expectations of a turnaround. Sales across all of its major wholesale channels declined, leading to a shift in strategy by management that was not well received by the market. We evaluated the position in light of management's shift in strategy around price points and distribution, which increases execution risk at Quiksilver. As a result, we exited our position before year end.
Portfolio Positioning
With regards to our portfolio positioning, there were some minor adjustments during the year but no major changes. Our main allocations remain in the consumer discretionary, financial services and producer durables sectors. We continue to find investment ideas in the consumer space and retain a sizable overweight in this sector relative to the benchmark. With regards to financials, we have maintained a similar weight to our benchmark in terms of overall allocation, and we continue to favour those names that in our opinion are best positioned to navigate the interest rate and regulatory challenges in the sector. While we are overweight the producer durables sector, we did trim our exposure during the year due to profit taking and to control our sector bet.
Conversely, we have less exposure in the health care and technology sectors than our benchmark. Our underweight exposure in health care narrowed during the year as we have gained further conviction in our holdings and found some new ideas in the space. With regards to technology sector we continue to be challenged to find companies that meet our investment criteria in this area.
Market Outlook
So where do we go from here? We have always been somewhat reluctant to make specific predictions about the market, as we think our talents lie in analysing and selecting specific stocks and building a portfolio from the bottom up, rather than making macroeconomic forecasts. However, we believe US equities can deliver reasonably good returns, although probably accompanied by rising volatility as equity valuations are higher now and the transition to more normal interest rates that lies ahead may result in periodic turbulence for equity investors. There are two reasons for our positive view on equities. Firstly that profits are very strong and likely to rise more before this cycle ends, and secondly the comparison of values between equities and bonds is still somewhat favorable for equities as an asset class.
Current consensus earnings expectations for US small caps is growth of 18% in 2015, which seems too high to us given that expectations for the S&P 500 have come down to about 5%. Even if earnings growth for small caps comes down, at a fundamental level profits are exceptionally strong, with margins at records and still rising. Strong profits and cash flows should encourage continued stock buybacks, higher dividends and acquisitions too.
In terms of valuations, despite the relative underperformance of US small caps in 2014, the relative valuation spread on forward P/E is still above the historical average, suggesting small caps are slightly expensive versus large caps. However, investors may overlook valuations in the search for more domestic exposure and less exposure to USD strength, both factors which favour small caps.
Given our expectations for a more muted return environment, we believe stock selection will be key. We will stick to our investment process and judge the investment merits of each individual company and stock. We will remain disciplined with regards to our investment strategy: identifying companies with a sustainable competitive advantage, durable business models, and solid management teams who have a track record of value creation. We will buy stakes in these companies at valuations that we believe are below their intrinsic value and offer a margin of safety. Our sector weights will continue to reflect our bottom-up investment analysis and disciplined approach to portfolio construction.
Don San Jose
Dan Percella
Investment Managers
19th March 2015
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:
• Investment and Strategy: an inappropriate investment strategy, for example excessive concentration of sector selection or the level of gearing, may lead to underperformance against the Company's benchmark index and peer companies, which may result in the Company's shares trading on a wider discount. The Board manages these risks by diversification of investments through its investment restrictions and guidelines which are monitored and reported on. The Manager provides the Directors with timely and accurate management information, including performance data and attribution analyses, revenue estimates, liquidity reports and shareholder analyses. The Board monitors the implementation and results of the investment process with the Investment Manager, who participates at all Board meetings, and reviews data which show 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. In addition to regular Board reviews of investment strategy, the Board holds a separate meeting devoted to strategy each year.
• Loss of Investment Team or Investment Manager: a sudden departure of the 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.
• Discount: a disproportionate widening of the discount could result in a loss of value for Shareholders. In order to manage the Company's discount, which can be volatile, the Company operates a share repurchase programme.
• 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 implementation and results of the investment process with the Manager.
• Political and Economic: changes in financial or tax legislation, including in the European Union and the US, may adversely affect the Company. The Manager makes recommendations to the Board on accounting, dividend and tax policies and the Board seeks external advice where appropriate. In addition, the Company is subject to 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.
• 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 'Structure of the Company' above. Should the Company breach Section 1158, it may lose investment trust status and, as a consequence, gains within the Company's portfolio could be subject to Capital Gains Tax. The Section 1158 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, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules and Disclosure and Transparency Rules ('DTRs'). A breach of the Companies Act 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 and the UKLA Listing Rules and DTRs.
• 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 report in the Annual Report.
• Operational: disruption to, or failure of, the Manager's accounting, dealing or payments systems or the depositary's or custodian's records could prevent accurate reporting and monitoring of the Company's financial position. On 1st July 2014, the Company appointed BNY Mellon Trust & Depositary (UK) Limited to act as its depositary, responsible for overseeing the operations of the custodian, JPMorgan Chase Bank, N.A., and the Company's cash flows. Details of how the Board monitors the services provided by the Manager and its associates and the key elements designed to provide effective internal control are included within the Risk Management and Internal Control section of the Corporate Governance report in the Annual Report.
• Foreign currency: the Company has exposure to foreign currency as part of the risk reward inherent in a company that invests overseas. The income and capital value of the Company's investments can be affected by exchange rate movements as the majority of the Company's assets and income are denominated in currencies other than sterling which is the reporting currency. The Company's loan facility is denominated in US dollars.
The Board has the authority to reduce or eliminate the exposure to fluctuating currencies through the use of currency hedging. It reviews its policy on this matter regularly; to date no hedging has been carried out and there are no plans to do so in the immediate future.
• Going concern: Pursuant to the Sharman Report, Boards are now 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 in the Annual Report.
• Financial: the financial risks faced by the Company include market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. Further details are disclosed in note 21 to the accounts in the Annual Report.
Related Parties Transactions
During the year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company.
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 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.jpmussmallercompanies.co.uk website, which is maintained by the Company's Manager. The maintenance and integrity of the website maintained by the Manager is, so far as it relates to the Company, the responsibility of the Manager. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and, accordingly, the Auditor accepts no responsibility for any changes that have occurred to the accounts since they were initially presented on the website. The accounts are prepared in accordance with UK legislation, which may differ from legislation in other jurisdictions.
Under applicable law and regulations the Directors are also responsible for preparing a Directors' Report, Strategic Report, 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 in 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 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 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 performance, strategy and business model of the Company.
For and on behalf of the Board
Davina Walter,
Chairman
19th March 2015
Income Statement
for the year ended 31st December 2014
|
|
2014 |
2013 |
|||||
|
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Gains on investments held at fair |
|
|
|
|
|
|
|
|
value through profit or loss |
|
- |
12,132 |
12,132 |
- |
23,204 |
23,204 |
|
Net foreign currency (losses)/gains |
|
- |
(371) |
(371) |
- |
178 |
178 |
|
Income from investments |
|
1,390 |
- |
1,390 |
1,172 |
- |
1,172 |
|
Gross return |
|
1,390 |
11,761 |
13,151 |
1,172 |
23,382 |
24,554 |
|
Management fee |
|
(114) |
(1,027) |
(1,141) |
(96) |
(866) |
(962) |
|
Other administrative expenses |
|
(402) |
- |
(402) |
(368) |
- |
(368) |
|
Net return on ordinary activities |
|
|
|
|
|
|
|
|
before finance costs and taxation |
|
874 |
10,734 |
11,608 |
708 |
22,516 |
23,224 |
|
Finance costs |
|
(9) |
(68) |
(77) |
(8) |
(72) |
(80) |
|
Net return on ordinary activities |
|
|
|
|
|
|
|
|
before taxation |
|
865 |
10,666 |
11,531 |
700 |
22,444 |
23,144 |
|
Taxation |
|
(218) |
- |
(218) |
(174) |
- |
(174) |
|
Net return on ordinary activities |
|
|
|
|
|
|
|
|
after taxation |
|
647 |
10,666 |
11,313 |
526 |
22,444 |
22,970 |
|
Return per share1 (note 3) |
|
1.15p |
18.96p |
20.11p |
1.00p |
42.85p |
43.85p |
1Comparative figures for the year ended 31st December 2013 have been restated following the sub-division of each existing ordinary share of 25p into ten ordinary shares of 2.5p each on 6th March 2014.
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 |
Share |
redemption |
Capital |
Revenue |
|
|
|
capital |
premium |
reserve |
reserves |
reserve |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
At 31st December 2012 |
1,291 |
- |
1,851 |
59,579 |
(3,507) |
59,214 |
|
Shares issued |
75 |
4,550 |
- |
- |
- |
4,625 |
|
Net return on ordinary activities |
- |
- |
- |
22,444 |
526 |
22,970 |
|
Dividends appropriated in the year |
- |
- |
- |
(470) |
- |
(470) |
|
At 31st December 2013 |
1,366 |
4,550 |
1,851 |
81,553 |
(2,981) |
86,339 |
|
Shares issued |
58 |
3,643 |
- |
- |
- |
3,701 |
|
Repurchase of shares into Treasury |
- |
- |
- |
(1,350) |
- |
(1,350) |
|
Costs of placing |
- |
(257) |
- |
- |
- |
(257) |
|
Net return on ordinary activities |
- |
- |
- |
10,666 |
647 |
11,313 |
|
Dividends appropriated in the year (Note 2a) |
- |
- |
- |
(398) |
- |
(398) |
|
At 31st December 2014 |
1,424 |
7,936 |
1,851 |
90,471 |
(2,334) |
99,348 |
Balance Sheet
at 31st December 2014
|
|
2014 |
2013 |
|
|
£'000 |
£'000 |
|
Fixed assets |
|
|
|
Investments held at fair value through profit or loss |
105,663 |
90,867 |
|
Investments in liquidity funds held at fair value through profit or loss |
2,264 |
1,381 |
|
|
107,927 |
92,248 |
|
Current assets |
|
|
|
Debtors |
216 |
238 |
|
Cash and short term deposits |
907 |
1 |
|
|
1,123 |
239 |
|
Creditors: amounts falling due within one year |
(9,702) |
(6,148) |
|
Net current liabilities |
(8,579) |
(5,909) |
|
Total assets less current liabilities |
99,348 |
86,339 |
|
Net assets |
99,348 |
86,339 |
|
Capital and reserves |
|
|
|
Called up share capital |
1,424 |
1,366 |
|
Share premium |
7,936 |
4,550 |
|
Capital redemption reserve |
1,851 |
1,851 |
|
Capital reserves |
90,471 |
81,553 |
|
Revenue reserve |
(2,334) |
(2,981) |
|
Total equity shareholders' funds |
99,348 |
86,339 |
|
Net asset value per share1 (note 4) |
177.3p |
158.0p |
1Comparative figures for the year ended 31st December 2013 have been restated following the sub-division of each existing ordinary share of 25p into ten ordinary shares of 2.5p each on 6th March 2014.
The Company's registration number is 552775.
Cash Flow Statement
for the year ended 31st December 2014
|
|
2014 |
2013 |
|
|
£'000 |
£'000 |
|
Net cash outflow from operating activities |
(364) |
(760) |
|
Returns on investments and servicing of finance |
|
|
|
Interest paid |
(71) |
(83) |
|
Net cash outflow from returns on investments and servicing of finance |
(71) |
(83) |
|
Taxation |
|
|
|
Overseas tax recovered |
23 |
5 |
|
Total tax recovered |
23 |
5 |
|
Capital expenditure and financial investment |
|
|
|
Purchases of investments |
(52,986) |
(50,465) |
|
Sales of investments |
49,403 |
45,560 |
|
Other capital charges |
(5) |
(16) |
|
Net cash outflow from capital expenditure and financial investment |
(3,588) |
(4,921) |
|
Net cash outflow before management of liquid resources and financing |
(4,000) |
(5,759) |
|
Management of liquid resources |
|
|
|
Sale of Time Deposits |
- |
1,633 |
|
Net cash inflow from management of liquid resources |
- |
1,633 |
|
Dividend paid |
(398) |
(470) |
|
Net cash outflow before financing |
(4,398) |
(4,596) |
|
Financing |
|
|
|
Repayment of short term bank loan |
(6,013) |
- |
|
Draw down of short term bank loan |
9,197 |
- |
|
Costs of placing |
(257) |
- |
|
Issue of ordinary shares |
3,701 |
4,625 |
|
Repurchase of the Company's own shares into Treasury |
(1,350) |
- |
|
Net cash inflow from financing activity |
5,278 |
4,625 |
|
Increase in cash |
880 |
29 |
Notes to the Accounts
for the year ended 31st December 2014
1. Accounting policies
(a) Basis of accounting
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 and Venture Capital Trusts', issued by the Association of Investment Companies in January 2009.
All of the Company's operations are of a continuing nature.
The accounts have been prepared on a going concern.
The policies applied in these accounts are consistent with those applied in the preceding year.
2. Dividends
(a) Dividend paid
|
|
2014 |
2013 |
|
|
£'000 |
£'000 |
|
2013 Final dividend of 0.7p1,2 (2012: 0.9p1) |
398 |
470 |
|
Total dividend paid in the year |
398 |
470 |
1Dividend rate has been restated following the sub-division of each existing ordinary share of 25p into 2.5p each on 6th March 2014.
2The final dividend proposed in respect of the year ended 31st December 2013 amounted to £383,000. However, the actual payment amounted to £398,000 due to shares issued after the balance sheet date but prior to the final dividend record date. This distribution was paid from capital reserves in accordance with the Company's Articles of Association.
(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010 ('Section 1158')
The requirements of section 1158 of the Income and Corporation Taxes Act 1988 are considered on the basis of dividends proposed in respect of the financial year, as follows:
|
|
2014 |
2013 |
|
|
£'000 |
£'000 |
|
2014 Final dividend of nil (2013: 0.7p1) |
- |
383 |
|
Total dividend for s1158 purposes2 |
- |
383 |
1Dividend rate has been restated following the sub-division of each existing ordinary share of 25p into 2.5p each on 6th March 2014.
2Despite the Company generating positive current year revenue, it still has a revenue reserve deficit, and therefore Directors are not proposing payment of a dividend this year.
3. Return per share
The revenue return per share is based on the earnings attributable to the ordinary shares of £647,000 (2013: £526,000) and on the weighted average number of shares in issue during the year of 56,265,899 (2013: 52,385,920)1.
The capital return per share is based on the capital return attributable to the ordinary shares of £10,666,000 (2013: £22,444,000) and on the weighted average number of shares in issue during the year of 56,265,899 (2013: 52,385,920)1.
The total return per share is based on the total return attributable to the ordinary shares of £11,313,000 (2013: £22,970,000) and on the weighted average number of shares in issue during the year of 56,265,899 (2013: 52,385,920)1.
1Comparative figures for the year ended 31st December 2013 have been restated following the sub-division of each existing ordinary share of 25p into ten ordinary shares of 2.5p each on 6th March 2014.
4. Net asset value per share
|
|
Net asset value per share |
Net assets attributable |
||
|
|
2014 |
2013 |
2014 |
2013 |
|
|
pence |
pence |
£'000 |
£'000 |
|
|
|
|
|
|
|
Ordinary shares |
177.3 |
158.0 |
99,348 |
86,339 |
The net asset value per share is based on the net assets attributable to the ordinary shareholders of £99,348,000 (2013: £86,339,000) and on the 56,040,928 (2013: 54,657,800) shares in issue at the year end, excluding shares held in Treasury.
Comparative figures for the year ended 31st December 2013 have been restated due to the sub-division of each existing ordinary share of 25p into ten ordinary shares of 2.5p each on 6th March 2014.
5. Status of announcement
2013 Financial Information
The figures and financial information for 2013 are extracted from the published Annual Report and Accounts for the year ended 31st December 2013 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.
2014 Financial Information
The figures and financial information for 2014 are extracted from the Annual Report and Accounts for the year ended 31st December 2014 and do not constitute the statutory accounts for the year. The Annual Report and Accounts includes the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The Annual Report and Accounts will be delivered to the Registrar of Companies in due course.
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.
JPMORGAN FUNDS LIMITED
19th March 2015
For further information:
Lucy Dina
JPMorgan Funds Limited 020 7742 4000
ENDS
A copy of the Annual Report will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM
The Annual Report will also shortly be available on the Company's website at www.jpmussmallercompanies.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
This information is provided by RNS
Latest directors dealings
- 21 hours ago Mattioli Woods
- 21 hours ago Morgan Advanced Materials
- 21 hours ago Capita
- 21 hours ago Judges Scientific
- 22 hours ago Me Group International