TIDMJFJ
RNS Number : 1168H
JPMorgan Japanese Inv. Trust PLC
13 November 2018
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN JAPANESE INVESTMENT TRUST PLC
FINAL RESULTS FOR THE YEARED 30th SEPTEMBER 2018
Legal Entity Identifier: 549300JZW3TSSO464R15
Information disclosed in accordance with the DTR 4.1.3
CHAIRMAN'S STATEMENT
Investment Performance
I am pleased to report that your Company has had a successful
year. For the year to 30th September 2018 your Company produced a
return on net assets of +26.8%, outperforming its benchmark index
by some 14.2%. Once again, I would like to congratulate our
Investment Managers for this excellent performance.
Further information on performance and stocks is included in the
Investment Managers' Report on pages 9 to 15 of the Annual
Report.
On 26th March 2018 the Company's market capitalisation had
reached a sufficient size (GBP712.7 million) for it to become a
constituent of the FTSE 250 Index at 31st March 2018. We very much
hope that this will enhance the profile of your Company and improve
demand for the shares.
Over recent years, while the investment objective of the Company
has remained unchanged, the portfolio has evolved, with the active
encouragement of the Board, to take advantage of the market
opportunities that the Manager sees. In particular, the Investment
Manager has reduced the number of holdings in the portfolio, has
increasingly divested from larger capitalisation 'core' stocks and
invested instead in companies outside the largest constituents of
the TOPIX Index (where the Manager sees the most interesting
investment opportunities) and also increased the holding periods of
the investments made. In previous Chairman's Statements I have
referred, in particular, to the opportunities among the newer
companies and business models that have evolved in Japan in recent
years.
To formalise this approach, the Board, having consulted with
shareholders, has agreed that the Manager can in future hold
investments up to 7.5% (previously 5%) in excess of the benchmark
weighting, a level that is in line with many of the Manager's other
portfolios. This will give the Investment Manager increased
flexibility in managing the portfolio and in particular ensure that
strongly performing investments can continue to be held for longer
if the Investment Manager believes this is in the best interests of
shareholders. It is not intended, however, that the Investment
Manager will add further to any holding that, through market
appreciation, rises to more than 5% in excess of the benchmark.
In addition, the Board has agreed that the Manager can make
greater use of the Company's closed end structure in support of the
current investment approach and invest in a limited number of more
illiquid stocks.
To be clear the Company will continue to invest on a
research-driven basis in attractive companies across the full
market capitalisation range in Japan.
Revenue and Dividends
Income received during the year rose marginally, with earnings
per share for the full year increasing to 5.53p (2017: 5.52p). The
Board's dividend policy is to pay out the majority of the revenue
available each year. This is set against the Company's objective of
maximising capital growth and the dividend paid being a residual of
the portfolio structure. The Board proposes, subject to
shareholders' approval at the Annual General Meeting, to pay a
final dividend of 5.00p per share (2017: 5.00p) on 21st December
2018 to shareholders on the register at the close of business on
23rd November 2018 (ex-dividend date 22nd November 2018).
Gearing and Long Term Debt
The Board of Directors sets the overall strategic gearing policy
and guidelines, reviewing these at each meeting. In August the
Board was able to take advantage of market conditions which offered
the opportunity to secure long term debt financing in yen at rates
below that paid on the Company's then existing five year term loan
and completed the placing of Y13 billion of Senior Secured Notes
(the 'Notes') at an average annualised interest rate of 1.10%. The
net proceeds from the placing of the Notes were used to repay
elements of the Company's short term indebtedness, namely the Yen9
billion term loan and Yen4 billion of the Yen11 billion revolving
credit facility. Through these Notes your Company has been able to
achieve fixed rate borrowing of up to 30 years at little or no
additional coupon cost than the existing shorter term facilities we
were able to repay. There has been no change in the Investment
Managers' permitted gearing range, as previously set by the Board,
to limit gearing within the range of 5% net cash to 20% geared in
normal market conditions.
Management Fees
The Board has conducted its annual detailed review of management
fees. It concluded that the current Ongoing Charges rate of 0.67%
is extremely competitive compared to the Company's peer group,
having reduced from 0.69% for the same period in 2017.
PRIIPs/KID
You will be aware that the Regulator introduced new rules
(Packaged Retail and Insurance-based Investment Products Regulation
(the 'PRIIPs Regulation')) that require the Investment Manager, who
is deemed to be the 'Manufacturer' of the investment product, in
our case this company, to prepare a Key Information Document (KID).
The Company and Directors is/are not responsible for the
information contained in the KID and investors should note that the
procedures for calculating the risks, costs and potential returns
are prescribed by the law. The figures in the KID may not reflect
the returns the Company might eventually achieve and performance
returns cannot be guaranteed.
Stock Lending
We launched a stock lending programme for the Company during the
course of the year. The revenue from this will help to defray
expenses. We have made a relatively cautious start to the programme
and it is still too early to determine how successful, or otherwise
it has been. It will be reported on more fully in future
reports.
The Board
Having had the privilege of being a director of the Company for
nearly fifteen years, I will step down as chairman at the Annual
General Meeting ('AGM'). I am very pleased that Christopher Samuel
has agreed to replace me, and Stephen Cohen will replace
Christopher as chairman of the Audit Committee. I am also delighted
to report that Sally MacDonald will be joining the Board following
the AGM as a result of a recruitment process that involved an
independent consultant to identify candidates. Sally has a wealth
of experience in investment management and I am sure she will make
a strong contribution to your Company's Board. All the Directors of
the JPMorgan Japanese Investment Trust will, therefore, have been
appointed in or since 2013 and they will be in a strong position,
led by Christopher, to build on the excellent investment process
and performance record that has been established particularly since
the management of the investment portfolio was moved to Tokyo. I
would like to thank all our shareholders for their support of the
Board while I have been a director. I wish Christopher, the
directors, Nicholas Weindling and the Tokyo-based investment team
all success in the future.
Annual General Meeting
This year's Annual General Meeting will be held on Thursday,
13th December 2018 at 12 noon 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
Managers who will answer questions on the portfolio and
performance. There will also be an opportunity to meet the Board
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
AGM 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.
Outlook
There are three particularly important developments that are
likely to impact the outlook for Japanese quoted companies: the
first is the continuing general improvement in Japanese corporate
return on equity; the second is the scale of the Bank of Japan's
quantitative easing ('QE') programme which now stands out globally
in scale and reach and the third is Japan's exposure to global
trade in general and the Chinese economy and supply chain in
particular.
Japanese quoted company operating margins and returns on equity
are now on average the highest for 30 years with the latter, for
example, having risen in aggregate to over 10%. Similarly, the
ratio of current profits to sales is the highest for 30 years.
Foreign investors, fixated as they have been by returns from US
companies in recent years, have been very large sellers of Japanese
equities so there is the real potential for these flows to reverse
if these improvements in performance can be maintained. The second
important positive for Japanese equities has been the Bank of
Japan's (BoJ) bond and asset-purchase programme. The bond-purchase
programme has been adjusted to maintain long-term interest rates
effectively at zero, and the equity purchases continue on a huge
scale albeit to buy into market falls rather than the earlier more
indiscriminate buying programme. The BoJ now owns approximately
half the government bond market, and nearly three quarters of
equity ETFs and is now a top ten shareholder in over 40% of
TSE-listed companies.
The big risk for Japanese equities is the potential for a
slowdown in global growth and /or the dislocation of global trade
flows through greater protectionism. In both respects it is worth
noting that Japanese companies now trade more with China then they
do with the United States.
Your Company's Tokyo-based research and portfolio management
team has been able in recent years to identify many fast growing
attractive companies often based on new business models. The Board
believes that this approach will continue to serve the Company's
shareholders well over the medium term and particularly so while
there are continuing signs of subtle positive changes in the
behaviour of Japanese corporate management in their attitude
towards returns to shareholders.
Andrew Fleming
Chairman 12th November 2018
INVESTMENT MANAGERS' REPORT
Performance
In the 12 months to 30th September 2018 the Company produced a
total return to shareholders of +24.6% and a total return on net
assets of +26.8%, in sterling terms. These compare with a total
return of +12.6% from the Company's benchmark index, the TOPIX
Index, in sterling terms. Over the last three and five years the
Company has returned +89.1% and +107.3% respectively versus +66.6%
and +78.2% for the benchmark, also all in sterling, with a share
price return of +83.9% and +103.4% over three and five years. The
average level of gearing over the 12 month period was around 15%,
which enhanced returns in a rising market.
Investment Philosophy and Process
Our investment approach emphasizes individual stock selection to
build a portfolio of quality growth stocks with strong future
growth prospects. This means that, within some broad portfolio risk
limits, the Company's portfolio is likely to differ materially from
the benchmark index as we will avoid companies and sectors that
face structural issues even if they are a large constituent of the
benchmark index.
The opportunity to find attractive opportunities is assisted by
the fact that the Japanese market is under-researched when compared
with other developed equity markets. With well over 50% of the
constituents of the Company's benchmark index being covered by no
more than one provider of broker research, there are significant
opportunities to uncover hidden sources of return from Japanese
equities.
Against the background of a market with poor sell-side coverage,
we have the resources in Japan to carry out our own research and
identify attractive investment themes and companies. Our
Tokyo-based investment team consists of 24 investment professionals
who have carried out over 2,000 company visits in the past
year.
A combination of desk-based research and company meetings
contribute to our rating of a company. We consider the growth
opportunity for the industry overall before considering the
company's competitive positioning and management. This allows us to
assess the company's potential for growth. We then look at
financial metrics with a focus on cash flow and balance sheet
strength to assess the overall economics of the business. We also
consider governance issues such as shareholder returns, management
strength and the track record on environmental and social issues.
Only then do we consider valuations - we do not buy a company where
the short term valuation looks low unless it has a strong long term
growth outlook.
This work carried out in looking through the under-researched
parts of the market helps us build portfolios that are comprised of
a number of high conviction holdings which we expect to hold for
long periods of time.
Several points evidence this philosophy. The portfolio has long
had a bias towards mid cap and small cap stocks. At the year end
the portfolio held 61 different stocks, down from 70 over the
period. And 16 of the stocks in the portfolio have been held
continuously for more than three years.
Investment Performance
The themes to which the portfolio is exposed have not changed
during the year under review. The financial characteristics of the
portfolio are also unchanged: balance sheets and free cash flows
are stronger; earnings growth faster and return on equity higher
than the market as a whole. For example, as at 30th September 2018
the holdings in the portfolio generated an average return on equity
of 15.8%, compared to the benchmark return on equity of 11.8%. The
portfolio valuation, as measured by the price earnings ratio, is
higher than the market average but we believe the strong long-term
growth prospects of the companies we own more than justify
this.
We also have a bias to mid and smaller sized companies
reflecting the fact that coverage by analysts is poor. This
provides us with the opportunity to identify investments overlooked
by the broader market. These companies also tend to have more
focused business models. Investors should expect to see these
characteristics in the portfolio over the economic cycle.
Over the year under review, we made some changes to the
portfolio, reducing the number of holdings from seventy to sixty
one. We also increased the gearing level from 13.6% to 14.7%.
The largest purchases were Hikari Tsushin and SBI, with
additions to our holdings in Shiseido, Recruit and M3.
The most significant sales were Sumitomo Mitsui Financial, Orix,
NTT, and Sanwa Holdings, with a reduction in our holding in
Mitsubishi UFJ.
During the year the top contributing stocks included Shiseido,
CyberAgent and M3 which we comment on above.
The other top contributing stocks were:
-- MonotaRO - operator of an e-commerce website that sells to
businesses. It is growing sales, with revenues growing in excess of
20% a year, and rapidly winning new customers; and
-- Recruit - a recruitment company. It operates several websites
including the company Indeed, the world's largest employment
website. Recruit is expected to benefit from the tight labour
market and take market share from existing employment agencies.
The largest negative contributors to performance were Mercari,
Suruga Bank, Komatsu, Square Enix and Nexon. Except for Suruga
Bank, which had a compliance failure and we have sold, we have
continued belief in the long term investment cases for these stocks
and therefore remain holders of these positions.
At the end of September 2018, the largest overweight positions
compared to the TOPIX were in Recruit, Keyence, M3, Shiseido and
CyberAgent.
Investment outlook
The Japanese market is more cyclical than other developed
markets and can be impacted by global economic developments, both
positively and negatively. Currently there are concerns about a
potential trade war between the United States and China. In
addition, Chinese macro data is weaker than recent years and
negotiations for a new trade deal between the United States and
Japan are at an early stage. However, we continue to see robust
corporate earnings growth, progress on corporate governance reform
and good economic activity in Japan.
The JPMorgan Japanese Investment Trust focuses on individual
stocks rather than attempting to predict global economic growth.
The companies we have invested in have strong structural growth
outlooks, competitive positions and balance sheets and we believe
they will perform well in the long-term regardless of the
performance of the wider global economy. Their competitive
positions and balance sheets are strong enough to withstand such
issues. The high level of gearing currently deployed reflects our
conviction in the companies that we own.
Nicholas Weindling
Shoichi Mizusawa
Investment Managers
Tokyo 12th November 2018
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 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 sector
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 employ 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 sector 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 61 and 62 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 Portfolio Manager
A sudden departure of a Portfolio 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 risk arising from 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 asset management
and investment trust business.
-- 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
Management of the Company on page 25. 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, Market
Abuse Regulation ('MAR'), Disclosure Guidance 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, MAR 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 29 to 32 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 32 of the
Annual Report.
-- Cyber Crime
The threat of cyber attack, in all guises, is regarded as at
least as important as more traditional physical threats to business
continuity and security. The Company benefits directly and/or
indirectly from all elements of JPMorgan's Cyber Security
programme. The information technology controls around physical
security of JPMorgan's data centres, security of its networks and
security of its trading applications, are tested by independent
auditors and reported every six months against the AAF
Standard.
-- 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 60 to 66 of the Annual Report.
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
Details of the management contract are set out in the Directors'
Report on pages 25 to 26. The management fee payable to the Manager
for the year was GBP4,527,000 (2017: GBP3,874,000) of which GBPnil
(2017: GBPnil) was outstanding at the year end.
Included in administration expenses in note 6 on page 53 are
safe custody fees amounting to GBP111,000 (2017: GBP50,000) payable
to JPMorgan Chase Bank, N.A., of which GBP19,000 (2017: GBP17,000)
was outstanding at the year end.
The Manager may carry out some of its dealing transactions
through group subsidiaries. These transactions are carried out at
arm's length. The commission payable to JPMorgan Securities for the
year was GBP11,000 (2017: GBP13,000) of which GBPnil (2017: GBPnil)
was outstanding at the year end.
Handling charges on dealing transactions amounting to GBP1,000
(2017: GBP3,000) were payable to JPMorgan Chase Bank N.A. during
the year of which GBPnil (2017: GBPnil) was outstanding at the year
end.
At the year end, total cash of GBP7,278,000 (2017: GBP3,551,000)
was held with JPMorgan Chase. A net amount of interest of GBPnil
(2017: GBP117) was receivable by the Company during the year from
JPMorgan Chase of which GBPnil (2017: GBPnil) was outstanding at
the year end.
Stock lending income amounting to GBP293,000 (2017: GBPnil) was
receivable by the Company during the year. JPMAM commissions in
respect of such transactions amounted to GBP52,000 (2017:
GBPnil).
Full details of Directors' remuneration and shareholdings can be
found on page 38 and in note 6 on pages 35 and 36 of the Annual
Report.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the annual report
and financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law, the Directors
have elected to prepare the financial statements in accordance with
United Kingdom generally accepted accounting practice (United
Kingdom Accounting Standards) including FRS 102 'The Financial
Reporting Standards applicable in the UK and Republic of Ireland'
and applicable laws. Under company law the Directors must not
approve the financial statements unless they are satisfied that,
taken as a whole, the annual report and financial statements are
fair, balanced and understandable, provide the information
necessary for shareholders to assess the Company's position and
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
page 24, confirms that, to the best of their knowledge:
-- the financial statements, which have been prepared in
accordance with United Kingdom Accounting Standards, and applicable
law), (United Kingdom Generally Accepted Accounting Practice) give
a true and fair view of the assets, liabilities, financial position
and net 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 the Company faces.
The Board confirms that it is satisfied that the annual report
and financial statements taken as a whole are fair, balanced and
understandable and provide the information necessary for
shareholders to assess the Company's position and 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.
For and on behalf of the Board
Andrew Fleming
Chairman
12th November 2018
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30TH SEPTEMBER 2018
2018 2017
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- -------- -------- --------- -------- --------- ---------
Gains on investments held at
fair
value through profit or loss - 179,515 179,515 - 44,397 44,397
Net foreign currency (losses)/gains - (2,915) (2,915) - 10,514 10,514
Income from investments 11,665 - 11,665 11,640 - 11,640
Other interest receivable and
similar income 293 - 293 - - -
------------------------------------- -------- -------- --------- -------- --------- ---------
Gross return 11,958 176,600 188,558 11,640 54,911 66,551
Management fee (905) (3,622) (4,527) (775) (3,099) (3,874)
Other administrative expenses (690) - (690) (613) - (613)
------------------------------------- -------- -------- --------- -------- --------- ---------
Net return on ordinary activities
before finance costs and taxation 10,363 172,978 183,341 10,252 51,812 62,064
Finance costs (282) (1,127) (1,409) (189) (755) (944)
------------------------------------- -------- -------- --------- -------- --------- ---------
Net return on ordinary activities
before taxation 10,081 171,851 181,932 10,063 51,057 61,120
Taxation (1,168) - (1,168) (1,161) - (1,161)
------------------------------------- -------- -------- --------- -------- --------- ---------
Net return on ordinary activities
after taxation 8,913 171,851 180,764 8,902 51,057 59,959
------------------------------------- -------- -------- --------- -------- --------- ---------
Return per share 5.53p 106.58p 112.11p 5.52p 31.66p 37.18p
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30TH SEPTEMBER 2018
Called Capital
up
share redemption Other Capital Revenue
capital reserve reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- ----------- --------- --------- --------- ----------
At 30th September 2016 40,312 8,650 166,791 400,299 8,713 624,765
Net return on ordinary activities - - - 51,057 8,902 59,959
Dividend paid in the year
(note 3) - - - - (5,886) (5,886)
----------------------------------- -------- ----------- --------- --------- --------- ----------
At 30th September 2017 40,312 8,650 166,791 451,356 11,729 678,838
Net return on ordinary activities - - - 171,851 8,913 180,764
Dividend paid in the year
(note 3) - - - - (8,062) (8,062)
----------------------------------- -------- ----------- --------- --------- --------- ----------
At 30th September 2018 40,312 8,650 166,791 623,207 12,580 851,540
----------------------------------- -------- ----------- --------- --------- --------- ----------
This reserve forms the distributable reserve of the Company and
may be used to fund distribution of profits to investors via
dividend payments.
STATEMENT OF FINANCIAL POSITION
AT 30TH SEPTEMBER 2018
2018 2017
GBP'000 GBP'000
--------------------------------------------------------- ---------- ---------
Fixed assets
Investments held at fair value through profit or loss 976,724 771,143
Current assets
Debtors 7,001 3,852
Cash and cash equivalents 7,278 3,551
--------------------------------------------------------- ---------- ---------
14,279 7,403
Current liabilities
Creditors: amounts falling due within one year (4,951) (385)
--------------------------------------------------------- ---------- ---------
Net current assets 9,328 7,018
--------------------------------------------------------- ---------- ---------
Total assets less current liabilities 986,052 778,161
--------------------------------------------------------- ---------- ---------
Creditors: amounts falling due after more than one year (134,512) (99,323)
--------------------------------------------------------- ---------- ---------
Net assets 851,540 678,838
--------------------------------------------------------- ---------- ---------
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 623,207 451,356
Revenue reserve 12,580 11,729
--------------------------------------------------------- ---------- ---------
Total shareholders' funds 851,540 678,838
--------------------------------------------------------- ---------- ---------
Net asset value per share 528.1p 421.0p
STATEMENT OF CASH FLOWS
FOR THE YEARED 30 SEPTEMBER 2018
2018 2017
GBP'000 GBP'000
------------------------------------------------------- ---------- ----------
Net cash outflow from operations before dividends and
interest (4,461) (4,442)
Dividends received 10,902 9,648
Interest paid (1,262) (1,037)
------------------------------------------------------- ---------- ----------
Net cash inflow from operating activities 5,179 4,169
------------------------------------------------------- ---------- ----------
Purchases of investments (404,862) (250,200)
Sales of investments 379,693 207,947
Settlement of foreign currency contracts 15 5
------------------------------------------------------- ---------- ----------
Net cash outflow from investing activities (25,154) (42,248)
------------------------------------------------------- ---------- ----------
Dividend paid (8,062) (5,886)
Drawdown of bank loan 32,990 41,442
Drawdown of senior secured loan note 88,967 -
Repayment of bank loan (90,235) -
------------------------------------------------------- ---------- ----------
Net cash inflow from financing activities 23,660 35,556
------------------------------------------------------- ---------- ----------
Increase/(decrease) in cash and cash equivalents 3,685 (2,523)
------------------------------------------------------- ---------- ----------
Cash and cash equivalents at start of year 3,551 6,118
Exchange movements 42 (44)
Cash and cash equivalents at end of year 7,278 3,551
------------------------------------------------------- ---------- ----------
Increase/(decrease) in cash and cash equivalents 3,685 (2,523)
------------------------------------------------------- ---------- ----------
Cash and cash equivalents consist of:
Cash and short term deposits 7,278 3,551
------------------------------------------------------- ---------- ----------
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
Basis of accounting
The financial statements are prepared under the historical cost
convention, modified to include fixed asset investments at fair
value, in accordance with the Companies Act 2006, United Kingdom
Generally Accepted Accounting Practice ('UK GAAP'), including FRS
102 'The Financial Reporting Standard applicable in the UK and
Republic of Ireland' and with the Statement of Recommended Practice
'Financial Statements of Investment Trust Companies and Venture
Capital Trusts' (the 'SORP') issued by the Association of
Investment Companies in November 2014 and updated in February
2018.
All of the Company's operations are of a continuing nature.
The financial statements have been prepared on a going concern
basis. The disclosures on going concern on page 33 of the Annual
Report form part of these financial statements.
The policies applied in these financial statements are
consistent with those applied in the preceding year.
2. Return per share
2018 2017
GBP'000 GBP'000
--------------------------------------------------- ------------ ------------
Revenue return 8,913 8,902
Capital return 171,851 51,057
--------------------------------------------------- ------------ ------------
Total return 180,764 59,959
--------------------------------------------------- ------------ ------------
Weighted average number of shares in issue during
the year 161,248,078 161,248,078
Revenue return per share 5.53p 5.52p
Capital return per share 106.58p 31.66p
--------------------------------------------------- ------------ ------------
Total return per share 112.11p 37.18p
--------------------------------------------------- ------------ ------------
3. Dividends
(a) Dividends paid and proposed
2018 2017
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Dividend paid
2017 final dividend paid of 5.00p (2016: 3.65p) per
share 8,062 5,886
----------------------------------------------------- -------- --------
Dividend proposed
2018 final dividend proposed of 5.00p (2017: 5.00p)
per share 8,062 8,062
----------------------------------------------------- -------- --------
All dividends paid and proposed in the year are and will be
funded from the revenue reserve.
The dividend proposed in respect of the year ended 30th
September 2018 is subject to shareholder approval at the
forthcoming Annual General Meeting. In accordance with the
accounting policy of the Company, this dividend will be reflected
in the financial statements for the year ending 30th September
2019.
(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010 ('Section 1158')
The requirements of Section 1158 are considered on the basis of
the dividend proposed in respect of the financial year, shown
below. The revenue available for distribution by way of dividend
for the year is GBP8,913,000 (2017: GBP8,902,000). The revenue
reserve after payment of the final dividend will amount to
GBP4,518,000.
2018 2017
GBP'000 GBP'000
------------------------------------------------ -------- --------
Final dividend proposed of 5.00p (2017: 5.00p)
per share 8,062 8,062
------------------------------------------------ -------- --------
4. Net asset value per share
2018 2017
--------------------------- ------------ ------------
Net assets (GBP'000) 851,540 678,838
Number of shares in issue 161,248,078 161,248,078
--------------------------- ------------ ------------
Net asset value per share 528.1p 421.0p
--------------------------- ------------ ------------
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
12th November 2018
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR LLFFTLSLFLIT
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