JUGI Jpmorgan Uk Small Cap Growth & Income Plc

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN UK SMALL CAP GROWTH & INCOME PLC

FINAL RESULTS FOR THE YEAR ENDED 31ST JULY 2024

Legal Entity Identifier: 549300PXALXKUMU9JM18

Information disclosed in accordance with the DTR 4.1.3

JPMorgan UK Small Cap Growth & Income plc ('JUGI' or the 'Company') reports its annual results for the year to 31st July 2024.

Highlights:

·      NAV total return of +28.4% compared with benchmark* return of +13.2%.  Share price return to shareholders of +43.3%. 

·      For the five years ended 31st July 2024, NAV total return of +62.2% compared with +24.5% for the Benchmark. Share price return to shareholders of +88.2%.

·      Intention to pay total dividend of 15.04 pence per share for the financial year ending 31st July 2025 as a result of the introduction of an enhanced dividend policy, equivalent to a 49.5% increase on the previous year.  (2024: 10.06p).

·      Reduction in ongoing charges from 1.02% to 0.71%.

*Benchmark:  Numis Smaller Companies plus AIM index (excluding Investment Companies).

Key Developments:

·      Combination with JPMorgan Mid Cap Investment Trust plc (JMF): Successfully completed on 27th February 2024, resulting in the acquisition of approximately £192.8 million of net assets from JMF and the issuance of 59,529,867 new ordinary shares.

·      Enhanced Dividend Policy: Introduced following completion of the Combination, the intention to pay an annual dividend equivalent to 4% of the Company's NAV as at the previous year end, with dividends now paid quarterly. This does not change the Company's investment objective of achieving capital growth from the portfolio.

The Chairman of JUGI, Andrew Impey, commented:

 "It has been a momentous year for your Company. Following two challenging years, performance has been notably strong, endorsing the long-term, high-quality approach of your Portfolio Managers. The successful Combination with JPMorgan Mid Cap Investment Trust plc has brought considerable benefits including a significant reduction in the ongoing charges ratio and greater liquidity (both resulting from economies of scale) and an enhanced dividend."

"Whilst macroeconomic data and geopolitics will probably continue to dominate headlines, your Portfolio Managers will continue to follow their strategy of buying well financed companies with good management, a favourable market position and with an attractive valuation. The opportunity set is extensive, the pipeline of new ideas is exciting and your Board and Portfolio Managers retain a high level of conviction in their distinctive investment process."

JUGI's Portfolio Managers, Georgina Brittain and Katen Patel, commented:

"Our focus on high-quality companies with superior returns on equity and generally strong market positions and high margins should continue to aid the performance of your Company. We find it hard to over-emphasise the value we are still finding in the smaller end of the market. The prevailing gearing level of close to 10% reflects our view of the compelling opportunities currently available." 

Enquiries:

JPMorgan UK Small Cap Growth & Income plc

Press enquiries through Lansons PR

E-mail: consultancy@lansons.com

Investor Relations

Nick Allen-Perry, JPMorgan Funds Limited

E-mail: nick.w.allen-perry@jpmorgan.com

Tel: 02071348616

CHAIRMAN'S STATEMENT

Investment Comment & Performance

It has been a momentous year for the Company. Following two challenging years, performance has been notably strong, endorsing the long-term, high-quality approach of the Portfolio Managers. The successful Combination with JPMorgan Mid Cap Investment Trust plc ('JMF', the 'Transaction') has brought considerable benefits including a significant reduction in the ongoing charges ratio and greater liquidity (both resulting from economies of scale) and an enhanced dividend. Further details of the expected benefits of the Transaction can be found in the Annual Report. We are grateful to the Shareholders of both companies for their support and also to JPMorgan who made a significant financial contribution to the Transaction costs via a six-month fee waiver and, going forwards, a reduction in the management fee.

Over the period, global financial markets have focused on macro-economic data and its potential to influence central bank interest rate policy. Investors have continued to absorb a steady decline in the number of interest rate cuts expected for the US, UK and Europe this year as central banks have stuck to their data-dependent philosophy in the context of slower than expected reductions in inflation. Nevertheless, the UK domestic market backdrop has been more favourable as inflation has abated, interest rates have begun to fall and political uncertainty has been removed following the Election. This has encouraged investors to focus on the attractive valuations of many UK stocks and, in particular, small and mid-sized companies.

Against this background, I am pleased to report that over the reporting period ended 31st July 2024, the Company strongly outperformed its benchmark. The Company's total return on net assets (with net dividends reinvested) was +28.4% as compared to the Numis Smaller Companies plus AIM Index (excluding investment companies) which returned +13.2%. The Company's share price discount to NAV narrowed from 10.7% on 31st July 2023 to 1.1% on 31st July 2024 with a notable narrowing post the Transaction. As a result, the share price total return to Shareholders over the period was +43.3%.

Since the year-end, the discount has widened to 4.8%, as at 9th October 2024. The return on net assets was -8.0% compared to a decrease in the benchmark of -4.2% and the return to Shareholders was -11.4%.  While disappointing, this timeframe represents too short a period over which to judge prospects.

In their report, the Portfolio Managers provide a review of the Company's performance for the period and the outlook for the remainder of the year. As ever, the Board is grateful to them for their diligence and skill.

Revenue and Dividends

Net revenue increased strongly for the third year in a row, growing from £7,147,000 to £10,720,000 in the financial year to 31st July 2024, being substantially enhanced in the five months following the Transaction.

At the Company's Annual General Meeting ('AGM') in November 2023, Shareholders approved a final dividend of 7.7p per share which was paid on 7th December 2023.

As stated in the Company's circular for the Transaction, which completed on 28th February 2024, the Board paid a pre-completion dividend of 3.6p per share to the then existing Shareholders on 27th February 2024.

Following completion of the Transaction, the Company paid a second interim dividend of 6.46p to Shareholders on 1st July 2024 which was equivalent to 2% of the unaudited NAV of the enlarged Company as at the date of Admission (28th February 2024).

Furthermore, the Company introduced an enhanced dividend policy, targeting a 4% yield on the NAV per annum, calculated on the basis of 4% of unaudited NAV as at 31st July each year, being the end of the preceding financial year of the Company. As a result, the progression of the dividend will now be driven by the prior year end NAV rather than the income earned over the year. Any shortfall in annual net income to meet the 4% target will be met from distributable reserves. It is important to note that there will be no impact on the Company's existing investment approach. Under the enhanced dividend policy, the Company will move from paying a final annual dividend to four equal quarterly interim dividends, to be announced in August, November, February and May and expected to be paid in October, January, April and July each year. Accordingly, in line with the Company's new distribution policy, a first quarterly interim dividend of 3.76 pence per share for the year ending 31st July 2025 was paid to Shareholders on 1st October 2024.

Gearing

The Board believes that a moderate level of gearing is an efficient way to enhance long-term returns to Shareholders, albeit at the cost of a small increase in short-term volatility. The Board takes into consideration the cost of borrowing when arranging facilities available to the Portfolio Managers. The level of gearing is regularly discussed with the Portfolio Managers and is adjusted by them, to reflect short-term considerations, within parameters set by the Board.

To allow the Portfolio Managers to retain the flexibility to maintain gearing up to the maximum permitted level, on 29th September 2023, the Company's £50 million borrowing facility (with an option to increase the facility up to £60 million) was extended and then renewed in March 2024 with Scotiabank for a period of 364 days. The new facility includes an accordion option to increase the amount drawn to £90 million. More information on the Company's borrowing facilities can be found in the Annual Report. Inevitably the cost of debt has increased with rising interest rates though, after reviewing various options, the Board believes that the terms agreed remain competitive.

At the year-end, £55 million was drawn on the loan facility representing a gearing level of 8.7% (2023: 9.5%) of net assets. As at 9th October 2024, gearing was 7.9%.

Share Repurchases and Issuance

At last year's Annual General Meeting (AGM), Shareholders granted the Directors authority to allot new shares and to repurchase the Company's shares for cancellation or to be held in Treasury for possible re-sale. During the financial year the Company did not use the authority to allot any shares but bought 150,000 shares into Treasury. Prior to the Transaction, there were 79,611,410 shares in issue, including 1,709,741 shares held in Treasury. Following the issue of shares in connection with the Transaction, there are 139,141,277 shares in issue, including 1,709,741 shares which are held in Treasury and available for re-sale. Treasury shares will only be sold at a premium to net asset value thus enhancing Shareholder value.

As in previous years, the Board's objective is to use the repurchase and allotment authorities to manage imbalances between the supply of and demand for the Company's shares, with the intention of reducing the volatility of the discount or premium. The Company's broker and the Manager constantly review the Company's rating and utilise the authority, in consultation with the Board, in normal market conditions and when it is considered that it will be effective and in the interests of all Shareholders. The Board believes these mechanisms can be helpful and therefore proposes and recommends that powers to repurchase up to 14.99% of the Company's shares (less shares held in Treasury) and to allot new shares or re-sell shares out of Treasury up to approximately 10% as at the date of the AGM be renewed.

Board of Directors and Succession Planning

Following completion of the Transaction, three of the previous Directors of JMF, being Lisa Gordon, Richard Gubbins and Hannah Philp, were appointed as non-executive Directors of the Company. Therefore, the Board currently consists of seven Directors, comprising the four Directors from the existing Board and three Directors from the board of JMF. As indicated in my interim Chairman's statement, I will be retiring at the forthcoming AGM, having completed nine years as a non-executive Director and nearly five years as Chairman. It has been an honour to serve as the Chairman and also to have the opportunity to work with the Board, the investment team and others at JPMorgan Asset Management who help support the Company. Richard Gubbins will also be retiring from the Board at the AGM and we are grateful for his contribution to the combination process.

Alice Ryder, in her role as Senior Independent Director, led the review to find my successor and I am delighted to confirm that Katrina Hart will be taking over from me following the AGM. Following Richard's and my retirement, the Board will consist of five non-executive Directors, all with less than nine years' tenure, providing the Company with relevant and complementary skills. I am confident that I leave the Company in good health and in strong hands.

During the year, the Board, through its Nomination Committee, employed an independent board advisory consultant to facilitate a comprehensive evaluation of the Board, its committees, the individual Directors and the Chairman. The evaluation comprised an external on-line evaluation and the report confirmed the efficacy of the Board.

In accordance with the Financial Conduct Authority's ('FCA') policy on diversity, the Board complies with the gender recommendation and has had a good gender balance for many years. It is committed to increasing diversity and inclusion over time.

Annual General Meeting

The Company's thirty-fourth Annual General Meeting will be held at 60 Victoria Embankment, London EC4Y 0JP on Wednesday 27th November 2024 at 10.00 a.m. The Board cannot stress strongly enough the importance of all Shareholders exercising their right to vote, regardless of their size of holding, and hopes to welcome as many Shareholders as possible to the AGM.

As with previous years, you will have the opportunity to hear from the Portfolio Managers and their presentation will be followed by a question and answer session. Shareholders wishing to follow the AGM proceedings but choosing not to attend will be able to view them live and ask questions through conferencing software. Details on how to register, together with access details, can be found on the Company's website: www.jpmorganuksmallcapgrowthandincomeplc.com, or by contacting the Company Secretary at invtrusts.cosec@jpmorgan.com.

In accordance with normal practice, all voting on the resolutions will be conducted on a poll. For technological reasons, shareholders viewing the meeting via conferencing software will not be able to vote on the poll and we therefore encourage all Shareholders, and particularly those who cannot attend physically, to submit their proxy votes in advance of the meeting, so that they are registered and recorded at the AGM. Proxy votes can be lodged in advance of the AGM either by post or electronically: detailed instructions are included in the Notes to the Notice of Annual General Meeting in the Annual Report. In addition, Shareholders are encouraged to send any questions ahead of the AGM to the Board via the Company Secretary at the email address above. We will endeavour to answer relevant questions at the meeting or via the website depending on arrangements in place at the time.

If there are any changes to the above AGM arrangements, the Company will update Shareholders through the Company's website and, if appropriate, through an announcement on the London Stock Exchange.

Stay in Touch

The Board likes to ensure Shareholders have regular information about the Company's progress. Please consider signing up for our email updates featuring news and views, as well as the latest performance of the portfolio. You can opt in via the QR Code in the front of the Annual Report or via the following link tinyurl.com/JUGI-Subscribe.

Outlook

Encouragingly, inflation is moderating on both sides of the Atlantic, however, monetary policy lags are notoriously difficult to forecast and they may be beginning to bite. Concern that the Federal Reserve had been too slow to cut interest rates contributed to a short but sharp market correction in early August. Whilst this was a short lived reaction, it is perhaps indicative that investors remain particularly sensitive to central bank policy and, by association, critical data releases. Subsequently, the Federal Reserve Board reduced rates by a larger than expected 0.5%, following previous cuts by the Bank of England and the European Central Bank, and the US equity market has now made new all-time highs. Most commentators expect to see global GDP growth move back towards trend levels after the volatility of recent years which, if true, will be welcomed by investors. GDP forecasts for 2024 have been revised down in the near term for the US but expectations for the UK and Europe are improving, albeit still below the US and anaemic in real terms. Politics looms large as the US election approaches, European politics remains in the spotlight and we will soon learn the actual economic plans of the new UK Chancellor of the Exchequer. Once the outcome is known, investors should welcome the greater degree of certainty.

Whilst macroeconomic data and geopolitics will probably continue to dominate headlines, the Portfolio Managers will continue to follow their strategy of buying well financed companies with good management, a favourable market position and with an attractive valuation. The opportunity set is extensive, the pipeline of new ideas is exciting and the Board and Portfolio Managers retain a high level of conviction in their distinctive investment process.

Andrew Impey

Chairman                                                                                                                                    11th October 2024

INVESTMENT MANAGER'S REPORT

Performance and Market Background

The financial year to 31st July 2024 proved to be another turbulent one as geopolitical risks continued to escalate. The appalling war in Ukraine raged on, followed last Autumn by the atrocities in the Middle East and rising tension in that region. The United States continued to be the growth engine of the developed world. However, while the UK economy suffered a short and mild recession in the last two quarters of 2023, it has bounced back in 2024, proving to be the fastest growing economy in the G7. Political stability has been re-established in the UK following the July General Election when Labour was voted into power. Post our year end, after 14 consecutive rate rises, the Bank of England cut interest rates by 25 basis points to 5% as inflation cooled noticeably towards the target rate of 2%.

Against this backdrop, the Numis Smaller Companies plus AIM (ex Investment Trusts) Index produced a strong return of +13.2% for the financial year. It should be noted that almost all of this positive performance was in the Company's second half. The Company outperformed strongly and produced a total return on net asset value of +28.4% in the period, while the share price total return was +43.3%, as the share price discount to net asset value reduced considerably post the Company's Combination with JPMorgan Mid Cap Investment Trust plc at the end of February 2024.

Performance attribution (%)

Source: JPMAM/Morningstar.

All figures are on a total return basis.

Performance attribution analyses how the Company achieved its recorded performance relative to its benchmark.

^A Alternative Performance Measure ('APM')

Portfolio

In February 2024 the Company successfully completed the Combination with JPMorgan Mid Cap Investment Trust plc and was renamed JPMorgan UK Small Cap Growth & Income plc. In addition to the significant number of common holdings that were already owned in both portfolios, we transferred eight new names into the enlarged Company, as well as the proceeds from the disposals we made in JPMorgan Mid Cap Investment Trust prior to the Combination. New names included Bellway (a leading UK housebuilder), Shaftesbury Capital (central London focused REIT), Serco (global outsourcing service provider) and Virgin Money (a challenger bank), which subsequently received a bid from Nationwide. Following the Combination, we swiftly deployed the proceeds to align the combined portfolio with our strategy. We are now utilising the enlarged gearing facilities that were introduced post the Combination. Our smaller company strategy remains unchanged, but as investors you will now also benefit from reduced fees and an enhanced dividend policy, in addition to the other benefits of greater scale, such as improved liquidity, and lower costs as a percentage of assets.

Of the three largest positive contributors to performance over the year, two were also notable contributors to last year's performance. These were our sizeable positions in Ashtead Technology (subsea rental equipment into the oil and gas and renewables markets) and Bank of Georgia (one of the two dominant banks in the flourishing economy of Georgia). The third key contributor was Warpaint London (affordable cosmetics). All three companies have a substantial growth runway ahead of them, and continued to grow significantly and produce strong results ahead of market expectations. In addition, a number of our smaller positions produced outsized returns in the year. These included Keller (the world's largest geotechnical specialist contractor), XPS Pensions (pensions consultant and administrator) and the housebuilder Redrow. On the negative side, the main detractors were our holdings in Serica, Indivior and Watches of Switzerland. We exited the latter two positions but maintained a reduced holding in Serica, a North Sea oil & gas company, on valuation grounds.

In addition to the changes made during the Combination outlined above, the portfolio continued to evolve as we adapted to changes in the economic environment. New additions included Ascential, the events business, and the retailer Currys as the consumer outlook improved and inflationary pressures began to ease. We also bought a new position in Marston's, the pub company, to increase further our exposure to the domestic consumer, after its significant disposal of its brewing joint venture had removed concerns over the balance sheet. During the year we also sold out of certain holdings including Big Technologies and CAB Payments on concerns about current trading.

Environmental, Social, and Governance ('ESG') factors

Whilst the Company holds stocks based primarily on fundamentals, we also consider the potential impact of financially material ESG factors on a company's ability to deliver shareholder value. We assess each company's strategy for dealing with these important matters and the consequent risks arising from them. Our analysis helps determine whether relevant ESG factors are financially material and, if so, whether they are reflected in the valuation of the company. Such analysis may influence not only our decision to own a stock but also, if we do, the size of that position in the portfolio. Company meetings continue to be an important opportunity to engage with our portfolio companies on ESG issues. Examples of our engagement with companies during the year and details of our voting record are set out in the ESG Report in the Annual Report.

Outlook

In our interim report six months ago, we suggested that the outlook for the UK economy was much less gloomy than the prevailing narrative suggested. Excluding the UK's debt position, the economic data over recent months has been more encouraging. The Bank of England's GDP forecasts have recently been raised again and now expect 0.9% growth in 2024 and 1.75% for 2025. Inflation is now close to target. The recent interest rate cut is hopefully the first of many, as the current level is proving very restrictive. Unemployment remains low, business confidence is high, and the August Composite PMI (Purchasing Manager Indices) rose to an expansionary 53.8. The Gfk consumer data that we follow closely is also on a notable upward trend. In summary, UK wages are rising and UK balance sheets are strong. Household demand and confidence are key drivers for the UK economy and the smaller companies universe is the optimal way to benefit from domestic exposure.

Geopolitical risks aside, what are the key risks to this positive picture? Sir Keir Starmer has warned of a 'painful' Budget in October. Potential economic and market impacts from the Budget include changes to the capital gains tax regime, a reduction in pension savings from changes to pension tax relief, and a removal of the AIM market's tax reliefs. Other areas to monitor are proposed labour market reforms and their potential impact on companies, the economy and business confidence.

Our focus on high quality companies with superior returns on equity and generally strong market positions and high margins should continue to aid the performance of the Company. In addition, takeovers remain notable in their number and underline the value opportunity that remains firmly on offer in the UK market. In recent months the portfolio has benefitted from take-overs or approaches for several of our holdings - Redrow, Ascential, IQGeo, Virgin Money, Alpha FMC and Equals. We find it hard to over-emphasise the value we are still finding in the smaller end of the market. The prevailing gearing level of close to 10% reflects our view of the compelling opportunities currently available.

Georgina Brittain

Katen Patel

Portfolio Managers                                                                                                                     11th October 2024

PRINCIPAL AND EMERGING RISKS

The Directors confirm that they have carried out a robust assessment of the principal and emerging risks and uncertainties facing the Company, including those that would threaten its business model, future performance, solvency or liquidity.

With the assistance of the Manager, the Audit Committee maintains a risk matrix which identifies the principal risks to which the Company is exposed and methods of mitigating them as far as practicable. During the year under review, the Audit Committee decided to hold a third meeting every year dedicated to the review of the Company's risk matrix. The risks identified and the broad categories in which they fall, and the ways in which they are managed or mitigated are summarised below.

Emerging Risks

The AIC Code of Corporate Governance requires the Audit Committee to put in place procedures to identify emerging risks. At each meeting, the Board considers emerging risks which it defines as potential trends, sudden events or changing risks which are characterised by a high degree of uncertainty in terms of occurrence probability and possible effects on the Company. As the impact of emerging risks is understood, they may be entered on the Company's risk matrix and mitigating actions considered as necessary. The Board, through the Audit Committee, has not identified any emerging risks.

TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES

Details of the management contract are set out in the Directors' Report in the Annual Report. The management fee payable to the Manager for the year was £1,631,000 (2023: £1,937,000) of which £nil (2023: £nil) was outstanding at the year end.

Included in administration expenses in note 6 in the Annual Report are safe custody fees amounting to £6,000 (2023: £4,000) payable to JPMorgan Chase of which £3,000 (2023: £2,000) was outstanding at the year end.

The Company also holds cash in JPMorgan GBP Liquidity Fund, which is managed by JPMorgan. At the year end this was valued at £8.3 million (2023: £3.8 million). Interest income amounting to £314,000 (2023: £151,000) was receivable during the year of which £nil (2023: £nil) was outstanding at the year end.

Handling charges on dealing transactions amounting to £13,000 (2023: £10,000) were payable to JPMorgan Chase during the year of which £5,000 (2023: £3,000) was outstanding at the year end.

At the year end, total cash of £257,000 (2023: £265,000) was held with JPMorgan Chase. A net amount of interest of £4,000 (2023: £1,000) was receivable by the Company during the year from JPMorgan Chase of which £nil (2023: £nil) was outstanding at the year end.

Full details of Directors' remuneration and shareholdings can be found in the Directors' Remuneration Report and in note 6 in 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 Accounting Standards, comprising Financial Reporting Standard 102 the 'Financial Reporting Standard Applicable in the UK and Republic of Ireland' (FRS 102). 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 and 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 preparing these financial statements, the Directors are required to:

•   select suitable accounting policies and then apply them consistently;

•   state whether applicable UK Accounting Standards, comprising FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements;

•   make judgments and accounting estimates that are reasonable and prudent; 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 enable them to ensure that the financial statements and the Directors' Remuneration Report 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.jpmorganuksmallcapgrowthandincomeplc.com 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 Annual Report since it was initially presented on the website. The Annual Report is prepared in accordance with UK legislation, which may differ from legislation in other jurisdictions.

Under applicable law and regulations the Directors are also responsible for preparing a Strategic Report, a Directors' Report and a Directors' Remuneration Report that comply with that law and those regulations.

Each of the Directors, whose names and functions are listed in the Directors' Report confirm that, to the best of their knowledge:

•   the financial statements, which have been prepared in accordance with applicable law and United Kingdom Accounting Standards, comprising Financial Reporting Standard 102 the 'Financial Reporting Standard Applicable in the UK and Republic of Ireland' (FRS 102), give a true and fair view of the assets, liabilities, financial position and return or loss of the Company; and

•   the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

The Board confirms that it is satisfied that the Annual Report and Financial Statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

For and on behalf of the Board

Andrew Impey

Chairman

11th October 2024

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31st July 2024

Since the Company moved to paying quarterly dividends, a final dividend is no longer payable (2023: 7.7p per share) in respect of the year ended 31st July 2024. Further information on dividends is given in note 10(a) in the Annual Report.

All revenue and capital items in the above statement derive from continuing operations. During the period, the Company acquired the assets of JPMorgan Mid Cap Investment Trust plc (JMF) following the Combination. No other 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. Net return/(loss) after taxation represents the profit/(loss) for the year and also the Total Comprehensive income.

STATEMENT OF CHANGES IN EQUITY

For the year ended 31st July 2024

¹  These reserves form the distributable reserves of the Company and may be used to fund distribution of profits to investors. See note 15 in the Annual Report for more details on distributable reserves.

STATEMENT OF FINANCIAL POSITION

At 31st July 2024

STATEMENT OF CASH FLOWS

For the year ended 31st July 2024

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31st July 2024

1.       Accounting policies

(a)     Basis of accounting

The financial statements are prepared under the historical cost convention, modified to include fixed asset investments at fair value, and 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 July 2022. In preparing these financial statements the Directors have considered the impact of climate change risk as a principal risk as set out in the Annual Report, and have concluded that it does not have a material impact on the value of the Company's investments. In line with FRS 102 investments are valued at fair value, which for the Company are quoted bid prices for investments in active markets at 31st July 2024 and therefore reflect market participants' view of climate change risk.

The financial statements have been prepared on a going concern basis. In forming this opinion, the Directors have considered the impact of heightened market volatility since the Russian invasion of Ukraine, the escalating conflict in the Middle East, the persistent inflationary environment, high interest rates and other geopolitical risks on the going concern and viability of the Company. They have considered the operational resiliency of its key service providers, including the Manager. The Directors have also reviewed the Company's compliance with debt covenants in assessing the going concern and viability of the Company. The Directors have reviewed income and expense projections to 31st October 2025 and the liquidity of the investment portfolio in making their assessment and they believe that the Company has adequate financial resources to continue its operational existence for the foreseeable future, and for the period to 31st October 2025, which is at least 12 months from the date the financial statements are authorised for issue. Further details of Directors' considerations regarding this are given in the Chairman's Statement, Investment Manager's Report, Going Concern Statement, Viability Statement and Principal Risks Statement within this Annual Report.

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

(b)    Issue of Shares Pursuant to a Scheme of Reconstruction of JPMorgan Mid Cap Investment Trust plc (JMF) with the Company (the 'Combination')

On 27th February 2024, the Company issued new Ordinary shares to shareholders of JMF in consideration for the receipt by the Company of assets pursuant to the Combination with JMF (see the Annual Report for more information). The Directors have considered the substance of the assets and activities of JMF, determining whether these represent the acquisition of a business. The acquisition is not judged to be an acquisition of a business, and therefore has not been treated as a business Combination. Rather, the cost to acquire the assets and liabilities of JMF has been allocated between the acquired identifiable assets and liabilities based on their relative fair values on the acquisition date without attributing any amount to goodwill or to deferred taxes. Investments, cash and other assets were transferred from JMF. All assets were acquired at their fair value. The value of the assets received, in exchange for shares issued by the Company, have been recognised in share capital and share premium, as shown in the Statement of Changes in Equity. Direct costs in respect of the shares issued have been recognised in share premium, whereas other professional costs in relation to the Combination have been recognised as transaction costs included within gains and losses on investments held at fair value through profit or loss.

2.       Dividends

(a)     Dividends paid and proposed

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

(i)      As disclosed in the Prospectus dated 23rd January 2024, in respect of the Issue of Scheme Shares pursuant to a scheme of reconstruction of JPMorgan Mid Cap Investment Trust plc ('the Combination'), the Company paid a pre-completion dividend of 3.60 pence per share to Shareholders on 27th February 2024.

(ii)     Following the successful completion of the Combination and in lieu of any other interim or final dividend for the financial year of the Company ended 31st July 2024, the Company paid an interim dividend of 6.46p, based on 2% of the unaudited NAV of the enlarged Company as at the date of Admission (28th February 2024).

(iii)    The Company has introduced an enhanced dividend policy, targeting a 4% yield on the NAV per annum, calculated on the basis of 4% of NAV as at 31st July each year, being the end of the preceding financial year of the Company. Under the enhanced dividend policy, the Company has transitioned from paying a single annual dividend to distributing four equal quarterly interim dividends. These dividends will be announced in August, November, February and May and are expected to be paid in October, January, April and July each year. Consequently, no final dividend will be paid for the year ended 31st July 2024.

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

The requirements of Section 1158 are considered on the basis of dividends declared in respect of the financial year, shown below. The revenue available for distribution by way of dividend for the year is £10,720,000 (2023: £7,147,000).

¹     The interim dividend paid for 2024 is in lieu of any other interim dividend for the financial year. Following the transition to four equal quarterly interim dividends, no final dividend will be distributed for the year ended 31st July 2024 and in subsequent years.

3.       Return/(loss) per share

4.           Net asset value per share

5.       Status of results announcement

          2024 Financial Information

The figures and financial information for 2024 are extracted from the Annual Report and Financial Statements for the year ended 31st July 2024 and do not constitute the statutory accounts for that year. The Annual Report and Financial Statements include the Report of the Independent Auditor 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.

          2023 Financial Information

The figures and financial information for 2023 are extracted from the published Annual Report and Financial Statements for the year ended 31st July 2023 and do not constitute the statutory accounts for the year. The Annual Report and Financial Statements have been delivered to the Registrar of Companies and included the Report of the Independent Auditor which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

11th October 2024

For further information, please contact:

Lucy Dina

For and on behalf of

JPMorgan Funds Limited

Telephone: 0800 20 40 20

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 2024 Annual Report will shortly be submitted to the FCA's National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

The 2024 Annual Report will shortly be available on the Company's website at www.jpmorganuksmallcapgrowthandincomeplc.com, where up-to-date information on the Company, including daily NAV and share prices, factsheets and portfolio in formation can also be found.