TIDMJSGI TIDMJPSS
RNS Number : 8033D
JPMorgan Japan Small Cap G&I PLC
26 June 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN JAPAN SMALL CAP GROWTH & INCOME PLC
FINAL RESULTS FOR THE YEARED 31st MARCH 2023
Chairman's Statement
Investment Performance
Fears of inflation and rapidly rising interest rates generated
significant volatility in major financial markets in the early part
of the Company's financial year ended 31st March 2023. However,
subsequent signs of an easing in inflation pressures led to hopes
that rates would soon peak, and this resulted in a rebound in
global markets. The performance of the Japanese market was
similarly mixed. It ended the six months to end September 2022
almost flat, before recovering in the following six months. In
addition to the tailwinds provided by the improvement in global
market sentiment, the Japanese market was also supported in the
past six months by the lifting of Japan's final Covid--19 related
restrictions and China's surprise abandonment of its crippling
zero-Covid policies. Despite the Bank of Japan's announcement in
December 2022 that it was going to adjust the yield curve control
range, which triggered speculation about the possibility that it
would begin to reverse its ultra-easy monetary stance, the
Company's benchmark ended the financial year up 5.0%.
The Company underperformed its benchmark, returning -5.7% on a
NAV basis for the full year, while the return to shareholders was
-7.8% over the same period. This disappointing result was in part
due to the Company's bias towards quality and growth stocks. This
preference means the portfolio usually differs significantly from
the benchmark, which comprises many low-quality companies with
unappealing growth characteristics. It is therefore inevitable that
the Company's performance will often differ substantially from the
benchmark return. While the Company's NAV total returns lagged the
benchmark over one, three and five-year periods to 31st March 2023,
the Annual total return table on page 26 of the Annual Report shows
that the Company outperformed the benchmark in six of the last 10
financial years. Shareholders will be all too aware of the market
volatility over recent years and therefore the Board has extended
the NAV performance Key Performance Indicator ('KPI') to 10 years
as shown on page 28 of the Annual Report.
Over the past year, technology and other growth stocks came
under pressure in all major markets, including Japan. A series of
aggressive interest rate hikes by the US Federal Reserve, the Bank
of England and the ECB, accompanied by hawkish rhetoric about
additional tightening, adversely impacted growth stocks whose
valuations are based on discounted future cash flows which diminish
as rates rise. The Company's exposure to many such stocks saw
performance suffer accordingly. There were also a number of
specific stocks which contributed to the underperformance during
the year which are covered in the Investment Managers' report.
However, the Board shares the Managers' conviction that good
quality companies with strong growth prospects will always
outperform in the long run. The Company's investment record and
recent portfolio activity are explained in more depth in the
Investment Managers' Report. The Managers also outline the reasons
for their optimism about Japan's very favourable long-term
prospects, and the positive implications this has for the Company's
ability to rebuild strong performance.
Dividend Policy and Discount Management
The Company's dividend policy aims to pay, in the absence of
unforeseen circumstances, a regular dividend equal to 1% of the
Company's NAV on the last business day of the preceding financial
quarter, being the end of March, June, September and December. Over
the year, this would approximate to 4% of the average NAV, paid
from other reserves. This dividend policy has now been in place for
five years. For the year ended 31st March 2023, quarterly dividends
paid totalled 14.2p per share (2022: 20.3p).
The Company's discount widened over the review period with an
average discount of 8.2%, and ending the year at 9.8%, moderately
higher than the 7.4% level at the same time last year. This
widening is broadly in line with the experience of many other
investment trusts over this period. The Company did not repurchase
any shares during the year. However, the Board continues to monitor
the discount closely and is prepared to repurchase shares in an
effort to narrow the discount, when it considers this is
appropriate, taking account of market conditions. At the time of
writing, the discount is 9.9%.
A resolution to approve the Company's dividend policy will be
submitted to shareholders at the forthcoming Annual General Meeting
('AGM').
Gearing/Borrowing
The Managers seek, at times, to enhance investment returns for
shareholders by borrowing money to buy more assets ('gearing'),
subject to their view on prevailing market conditions. The
Company's gearing is discussed regularly by the Board and the
Managers, and the gearing level is reviewed by the Directors at
each Board meeting.
The Company's Yen 4.0 billion revolving credit facility with
Scotiabank expired during the year and was replaced with a Yen 4.0
billion two-year revolving credit facility with ING Bank. This
facility has a maturity date of December 2024 and the Manager will
seek to renew or replace this facility, at the best available
terms, on expiry.
Access to a credit facility provides the Managers with the
ability to gear tactically within the set guidelines. The Company's
investment policy permits gearing within a range of 10% net cash to
25% geared. However, the Board requires the Managers to operate in
the narrower range of 5% net cash to 15% geared, in normal market
conditions. During the past 12 months the Company's gearing level
ranged between 4.5% and 7.6%, ending the financial year at 5.6%
(2022: 6.1%).
Environmental, Social and Governance Considerations
As discussed in the Investment Managers' Report, environmental,
social and governance ('ESG') considerations are integral to the
Managers' investment process. The Board shares the Managers' view
of the importance of ESG when making investments that are
sustainable over the long term and the necessity of continual
engagement with investee companies throughout the duration of the
investment. The Managers use their regular company meetings with
potential and existing portfolio companies to discuss and challenge
management on their adherence to ESG principles and best practice.
The Board believes that effective stewardship of this kind can help
to create sustainable value for shareholders.
Further information on the Managers' ESG process and engagement
is set out in the ESG Report on pages 16 to 21 of the Annual
Report, and in the JPMorgan Asset Management 2022 Investment
Stewardship Report, which can be accessed at
https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/sustainable-investing/investment-stewardship-report.pdf
.
Reporting under the Task Force on Climate Related Financial
Disclosures
In accordance with the requirements of the Taskforce on Climate
Related Financial Disclosures ('TCFD'), JPMAM will provide product
level reports for the investment trusts it manages, including your
Company, in late June 2023 and annually thereafter. The report will
be made available on the Company's website.
Key elements of the report will include Scope 1 and 2 greenhouse
gas ('GHG') emissions (i.e. emissions that are owned or controlled
by the Company), total carbon footprint, weighted average carbon
intensity ('WACI') and, from June 2024, Scope 3 GHG emissions (i.e.
emissions generated as a consequence of the activities of the
Company but which occur from sources not owned or controlled by
it). The report will also include a scenario analysis of how
climate change is likely to impact the Company's assets under
orderly, disorderly and hothouse world scenarios, and discussion of
the most significant drivers of performance under those
scenarios.
The Board and Corporate Governance
There has been no change to the composition of the Board during
the reporting period.
Yuuichiro Nakajima, a member of the Board since April 2014, will
retire from the Board following the conclusion of the forthcoming
AGM in July 2023. The Board has benefited immensely from
Yuuichiro's contribution, especially his knowledge of the Japanese
economy and investment environment. On behalf of the Board and the
shareholders, I would like to thank Yuuichiro for his commitment to
the Company since his appointment. The Board has a plan to refresh
its membership in an orderly manner over time, and will, as part of
its long-term succession planning, seek to recruit new
non-executive Directors when appropriate.
In accordance with good corporate governance practice, all
Directors, with the exception of Yuuichiro Nakajima, will stand for
re-election at the forthcoming AGM.
Shareholders who wish to contact the Chairman or other members
of the Board may do so through the Company Secretary or the
Company's website, details of which appear below.
Annual General Meeting
The Company's AGM will be held on Thursday, 27th July 2023 at
12.00 noon at 60 Victoria Embankment, London EC4Y 0JP.
We are delighted that this year we will once again be able to
invite shareholders to join us in person for the Company's AGM, to
hear from the Investment Managers, who will present at the meeting
via video link from Tokyo. Their presentation will be followed by a
live question and answer session. Shareholders wishing to follow
the AGM proceedings but who choose not to attend in person will be
able to view them live and ask questions (but not vote) through
conferencing software. Details on how to register, together with
access details, will be available shortly on the Company's website
at www.jpmjapansmallcapgrowthandincome.co.uk or by contacting the
Company Secretary at invtrusts.cosec@jpmorgan.com .
My fellow Board members, representatives of JPMorgan and I look
forward to the opportunity to meet and speak with shareholders
after the formalities of the meeting have been concluded.
Shareholders who are unable to attend the AGM are strongly
encouraged to submit their proxy votes in advance of the meeting,
so 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
the AGM on pages 90 to 93 of the Annual Report.
If there are any changes to the above AGM arrangements, the
Company will update shareholders through an announcement to the
London Stock Exchange and on the Company's website.
Outlook
Despite the persistently uncertain global investment climate,
unsettling geopolitical tensions and the near-term volatility these
continue to generate, the Board shares the Investment Managers'
conviction that the long term outlook for Japan's small cap
companies remains positive. Japan is undergoing significant
technological and structural changes and its innovative,
entrepreneurial small cap companies are ideally placed to
capitalise on the opportunities these changes generate. Small cap
companies are already leading the way in a variety of niche
markets. The Company's Managers are extremely well-supported in
their search for such success stories by JPMorgan's extensive
global and Tokyo-based research resources. The Board is therefore
optimistic about the Company's prospects, and we share the
Managers' confidence in its ability to continue delivering
attractive levels of capital growth to shareholders over the long
term.
Alexa Henderson
Chairman
23rd June 2023
Investment Managers' Report
Performance and Market Review
Over the 12 months to March 2023, the Company's benchmark, the
MSCI Japan Small Cap Index (in sterling terms), produced a total
return of +5.0%. The Company's net assets underperformed the index
by -10.7 percentage points over the same period, delivering a
return of -5.7%.
Early in the year, the market performance was weak on the back
of continued concerns over inflation and rising interest rates in
major economies. These rate increases had an especially adverse
impact on the valuations of technology and other high growth stocks
in all major markets, as higher rates reduce the value of these
companies' future cash flows. Japanese technology-related and
growth stocks were caught up in the rout, despite the fact that
Japanese inflation remained relatively subdued.
The market started to rebound on anticipation of a peak in rate
hikes following slower than expected inflation figures in the US.
But this rally partially reversed as the Bank of Japan (BoJ)
announced an adjustment in the yield curve control range in
December, which came sooner than expected, and raised speculation
about an eventual tightening of the BoJ's ultra-easy monetary
policy. Global concerns over the financial system were triggered by
the collapse of Silicon Valley Bank in March this year, leading to
a fresh bout of volatility. However, markets recovered towards the
end of the reporting period following government and central bank
interventions to support other struggling institutions and protect
deposits. During the same period, the Japanese yen weakened against
the US dollar and sterling. The Company's underperformance over the
year is in part the result of its bias towards quality and growth
stocks, which were the stocks worst hit by last year's market
sell-off. This performance is very disappointing. However, our
investment strategy looks beyond short-term market fluctuations and
adopts a long-term perspective, based on the view that excess
returns take time to accumulate, especially for smaller cap stocks.
While the past year's performance has dragged down average
annualised performance over the past few years, over the 10 years
to the end of March 2023, the Company has made an average annual
return of +7.8% in NAV terms, outperforming the benchmark by +0.9
percentage points.
Performance attribution
Year ended 31st March 2023
% %
-------------------------------- ----- -----
Contributions to total returns
-------------------------------- ----- -----
Benchmark return 5.0
-------------------------------- ----- -----
Sector allocation -3.7
-------------------------------- ----- -----
Stock selection -6.3
-------------------------------- ----- -----
Gearing/cash 0.5
-------------------------------- ----- -----
Return relative to benchmark -9.5
-------------------------------- ----- -----
Portfolio return -4.5
-------------------------------- ----- -----
Management fee/other expenses -1.2
-------------------------------- ----- -----
Return on net assets(A) -5.7
-------------------------------- ----- -----
Return to shareholders(A) -7.8
-------------------------------- ----- -----
Source: Factset, 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').
A glossary of terms and APMs is provided on pages 94 and 95 of
the Annual Report.
Spotlight on sectors and stocks
During the 12 months under review, both sector allocation and
stock selection had a negative impact on performance.
The portfolio differs substantially from the benchmark, and this
will, by definition, often lead to significant volatility in
performance relative to the benchmark, as it has done over the past
year. The most significant detractors at the sector level included
our overweights to software & services and media &
entertainment, sectors which came under particular pressure during
last year's sell-off. However, we believe that the trend towards
digitalisation will remain a source of significant potential growth
in Japan, considering the relatively low penetration of digital
services such as e-commerce and cashless payments, so we remain
overweight in these sectors. Our underweight to retailing also
detracted, as this sector has done well due to the favourable
impact of Japan's re-opening. The main sector level contributors to
performance included our underweight to real estate and food
beverage & tobacco, and an overweight to consumer services. We
maintained underweight in real estate and food beverage &
tobacco due to a relatively lower level of conviction surrounding
the long-term growth potential in both sectors' companies. On the
other hand, we continue to have an overweight in consumer services
as we see market share gain potential amid domestic consolidation
over the long term within the sector's names. At the stock level,
several names made significant positive contributions to returns,
including Capcom , Yamato Kogyo and Medley :
-- Capcom develops and publishes video game software, including
Street Fighter, Monster Hunter, and Resident Evil (Biohazard). The
earnings of gaming software companies have stabilised over the past
few years, especially for those with strong intellectual property.
This is due to the consistent rise in the digital download ratio,
which measures the download of games as a percentage of total sales
from all sources, including via retail outlets. Digital downloads
have higher per unit profitability thanks to the ease of
distribution, and companies such as Capcom, with multiple popular
titles, are benefitting from this shift.
-- Yamato Kogyo is an electric arc furnace (EAF) steelmaker
producing construction steel using electricity to smelt scrap
steel. Electric arc furnaces emit only around one sixth to a
quarter of the greenhouse gases produced by conventional blast
furnaces, and Yamato Kogyo is one of the largest Japanese
steelmakers using this technology. Outside Japan, the company also
has a globally well diversified business portfolio. It owns market
leading operations in the US, and South-East Asia, including
Thailand and Vietnam, through subsidiaries and joint ventures. We
expect the shift towards more environmentally friendly methods of
steel production to ensure the company enjoys a tailwind generated
by strong global demand over the medium term.
-- Medley is a healthcare staffing platform and software
solution provider. Given Japan's aging population, the economy is
experiencing a structural shortage of workers in healthcare, as
well as in many other sectors. The ratios of job openings to job
applicants for healthcare workers is significantly higher than the
all-industry average, making healthcare staffing an attractive
secular growth space. Within the industry, Medley differentiates
its staffing service by charging a low, success-based fee which
compares favourably with traditional players who charge either a
20-30% commission per hiring or a fixed posting fee levied
regardless of the application or hiring outcome.
Unfortunately, the positive effect of these stock selection
decisions was more than offset by the adverse impact of other stock
positions. The largest detractors from performance over the period
included Tosho , MEC and Benefit One .
-- Tosho is a gym operator mainly targeting clients new to gym
attendance. Before Covid-19, Tosho enjoyed the highest margin
within the gym industry, thanks to its unique customer targeting
and highly efficient operation. The company suffered a loss of gym
memberships following the onset of the pandemic but has since
streamlined its operations further and is currently in a recovery
phase. Despite Tosho's recent challenging period, we continue to
hold this name, due to our confidence in the company's long-term
growth potential.
-- MEC manufactures advanced adhesion enhancer products used to
produce printed circuit boards. The company is a global leader in
this niche market. Its products improve adhesion between the wiring
and insulating materials in semiconductors, preventing abrasion
after long exposure to heat. This is an especially desirable
characteristic in the production of miniature semiconductors. We
anticipate MEC's adhesion enhancers will enjoy rising demand and
revenue growth as the trend towards semiconductor miniaturisation
continues. MEC was the top positive contributor in the previous
financial period, though its share price corrected during the
global semiconductor cyclical downturn. Despite the correction, we
still see great long-term potential for MEC, and we have maintained
our holding.
-- Benefit One is Japan's number one fringe benefit outsourcing
service provider, following its recent acquisition of its
competitor, the third largest provider, JTB Benefit. Japan's
structural labour shortage is encouraging companies to use fringe
benefits as a means of attracting talent. Benefit One boasts close
to 9 million members, but currently, less than 40% of the working
population receives fringe benefits, so there is great potential
for further growth in this market. Benefit One's share price
corrected in response to a longer than expected slowdown in topline
growth due to the impact of the pandemic, but we continue to hold
this name given its long-term growth potential.
Gearing stood at 5.6% at the end of the financial year.
About our investment philosophy
The Company aims to provide shareholders with access to the
innovative and fast-growing smaller companies' universe at the core
of the Japanese economy. Our portfolio favours quality and growth,
and we target companies (other than Japan's largest 200) which we
believe can compound earnings growth over the long term, supported
by sustainable competitive advantages and good management teams. We
especially like businesses that reinvest to capitalise on their
growth potential. We believe the strong and durable market
positioning of such companies will allow them to substantially
increase their intrinsic value over time. At the same time, we
avoid stocks that have no clear differentiation from competitors
and that operate in industries plagued by structural decline and
excess supply.
Our stock selection is based on fundamental analysis, local
'on-the-ground' knowledge and extensive contact with the management
teams of prospective and current portfolio companies. The Company
is managed by a team of three, supported by over 20 Tokyo-based
investment professionals who possess an in-depth understanding of
small cap businesses, which is a very under-researched and
under-appreciated part of the market. This local knowledge thus
provides us with a significant strength in identifying investment
opportunities overlooked by many investors.
Within our bottom-up investment process, the starting point is
the Strategic Classification framework, where we address the key
question "Is this a business that we want to own?". Through this
process we assign a rating of Premium, Quality or Trading to each
stock, based on the economics, competitive sustainability and
governance practices of the business. We aim to maximise exposure
to Premium and Quality companies, where we are most confident in
the long-term outlook, and where possible, we aim to invest from an
early stage, in order to benefit fully as companies realise their
growth potential.
When investing in smaller companies, we believe it is important
to adopt a long-term perspective, to give these companies the time
they need to generate excess returns. Consistency on this point is
key, so we continue to focus on quality companies with structural
growth opportunities, despite the fact that the portfolio may
struggle at times when value stocks are in favour. Having said
that, the Company is not a 'growth at any price' strategy, and we
always strive to invest at a reasonable price. To this end, we use
a five-year expected return framework to consider whether a stock's
price is at an attractive level. It is also important to construct
a well-balanced portfolio to minimise unintended risks, so the
portfolio is invested in a wide range of sectors, including not
only software services and technology hardware, but also materials,
chemicals, construction, machinery, retail and restaurants, and
consumer goods and services.
Trends and themes
While our decisions are based on company-specific factors, there
are also structural, long-term trends and themes that underlie much
of our stock selection.
Our investment themes include:
-- Demographic Change: It is no secret that Japan's population
is ageing and shrinking. While this is a difficult environment for
the economy overall, there are areas that can profit from this
trend. For example, staffing companies or businesses focused on
improving labour productivity are benefitting from tight labour
market conditions. The owners of family-run businesses looking to
divest as they approach retirement provide opportunities for more
M&A and consolidation, which can benefit larger industry
players.
-- Digital Innovation: Although Japan is an advanced industrial
economy, it lags other markets in the adoption of digitalisation.
For example the penetration of cashless payments, e-commerce, and
cloud software services remains relatively low. However, the
direction of travel is as clear as it is around the world, and we
anticipate sustained growth in the adoption of digital technologies
over the medium to long term.
-- Industry Niches: Japanese manufacturing is world class, and
the country is a leading global supplier of factory automation
equipment, robots, electronics parts and materials. These present
attractive investment opportunities for companies specialising in
niche products and technology segments.
-- World Class Consumer Brands: Japanese businesses operating
beyond Japan's shores are in a very strong position to capture new
customers in Asia's dynamic, fast-growing economies. Demand for
high quality Japanese goods and brands is likely to be particularly
strong.
-- De-carbonisation: The environment is the subject of much
attention in Japan, thanks to the government's commitment to reduce
carbon emissions to net zero by 2050. Japanese smaller companies
have unique technologies capable of reducing emissions in many
industries, including electric vehicles, solar and wind power
generation, and other clean energy sources. We continue our efforts
to identify companies well positioned to benefit from efforts to
reduce emissions, and those with the ability to transform their
business models to meet the government's net zero target.
-- Corporate Governance: Japanese companies are making a
concerted effort to improve governance standards via the
appointment of more independent, external board directors and the
adoption of other beneficial policies. These include enhanced
shareholder returns, tighter internal controls and stronger
disclosure rules to boost transparency. There is room for further
improvement in the quality of corporate governance, and the market
is likely to reward companies that upgrade their governance
standards. We will therefore maintain an ongoing constructive
dialogue with companies on this broad theme.
Portfolio Activity
Key new purchases during the reporting period included Sangetsu
, Paltac and Kyushu Railway .
-- Sangetsu is Japan's number one wallpaper producer. This is a
mature market, dominated by an oligopoly of three companies, where
the top player, Sangetsu, has been consistently expanding market
share, and currently supplies over 50% of the market. The pricing
environment has been improving recently, with the number two player
following Sangetsu's lead in raising prices. Sangetsu has a solid
balance sheet with a net cash position, and a strong commitment to
shareholder returns.
-- Paltac is the top wholesaler for cosmetics and other everyday
items sold in drugstores, discount stores and other outlets. The
market is fragmented, but Paltac has been consistently gaining
market share, which currently stands at over 30%, with scope to
rise further thanks to the company's overwhelming scale and
constant efficiency gains it is realising from the introduction of
automation. Paltac has a solid balance sheet, with a net cash
position, and we also sense an overall improvement in capital
allocation.
-- Kyushu Railway is a railway operator in the Kyushu region.
The company also has non-railway businesses such as real estate
leasing and hotels. Railway companies were negatively impacted by
Covid-19, although we anticipate steady growth over the
mid-to-long-term, supported by the return of inbound tourism.
Enhanced shareholder returns should also underpin the share price,
while valuations are not demanding.
To fund these and other acquisitions, our largest divestments
over the past year included SUMCO , Iriso Electronics , Money
Forward and S-Pool . We sold SUMCO , which produces silicon wafers
for use in semiconductors, and Iriso Electronics , another
electronic components manufacturer, in favour of higher conviction
ideas within hardware technology, including the acquisition of
Fujimi and Japan Material . We also exited Money Forward , one of
the top cloud accounting service providers for mid and small-cap
enterprises. Competition in this industry is increasing, leading to
higher-than-expected upfront marketing and R&D costs and less
certainty about Money Forward's financial prospects over the long
term. A position in S-Pool , an employment agency focused on
services for people with disabilities, was also closed due to the
risk of regulatory pressures.
Our bias towards quality and growth means the portfolio
continues to have a higher return on equity (ROE) and stronger
earnings per share (EPS) growth than its benchmark.
Outlook and strategy
The external environment is uncertain, pervaded by geopolitical
tensions, the risk of a global recession, and persistent concerns
about inflation and interest rate hikes. Japan is also seeing signs
of inflation, as rising commodity prices and a weaker yen have
imported inflationary pressures although inflation levels are lower
than in other major markets. However, as one response to Japan's
tight labour market conditions, some large corporates have started
to announce generous wage increases, to attract and retain workers.
These increases follow decades of stagnant wages, so this is very
encouraging for the Japanese economy. On the monetary policy front,
following the BoJ's monetary policy tweak in December 2022,
financial markets are awaiting further policy guidance from the
BoJ's new governor.
Regardless of these external and domestic events, we remain
optimistic about the long-term outlook for Japanese small cap
companies, and your Company, for several reasons. The average
valuations of Japanese companies remain reasonable, and lower than
both historical averages and valuations in most other major
markets. Furthermore, Japanese equity markets will draw near-term
support from Japan's belated lifting of Covid -19 restrictions.
Japan reopened its borders in October 2022, much later than most
other developed nations, and just before China's surprise decision
to abandon its zero Covid -19 policies. So inbound tourism and a
general reopening of the Japanese economy have only just gained
traction in recent months. China's reopening is also supportive for
many Japanese companies.
However, in our view, the most important structural support for
Japan's equity market over the medium to longer term will be the
ongoing improvement in corporate governance. The past few years
have seen clear progress on this front, in large part thanks to the
Corporate Governance Code introduced in 2015. We have seen notable
improvement in areas such as board independence, and we expect more
positive developments ahead, especially increased shareholder
returns. Half of Japan's listed non-financial companies still have
net cash positions, so there is significant scope for this cash to
be returned to shareholders over the longer term.
The pandemic has given added impetus to some other positive
structural changes underway in Japan, especially the application of
technology and digitalisation in many areas of economic activity.
These trends will underpin growth, productivity and corporate
earnings for years to come. In sharp contrast to other developed
economies, Japan's smaller companies are at the forefront of this
innovation and change making them ideally positioned to prosper
over the long term. However, the sell side coverage for such
exciting mid- and small-cap companies tends to be thin, so many
investors overlook the compelling opportunities available in this
sector of the market.
In contrast, we have the support of a large team of Japanese
equity analysts and fund managers on the ground in Tokyo, to help
us identify these hidden gems. This puts the Company in a
favourable position to capitalise on the long-term structural
changes playing out in Japan. This, combined with our long-term
performance track record, underpins our conviction that our
investment approach is sound, and capable of weathering bouts of
short-term volatility such as we are currently experiencing, just
as it has done in the past. We are therefore confident the Company
will deliver positive and sustained returns to our shareholders
over the medium and long term.
Miyako Urabe
Xuming Tao
Naohiro Ozawa
Investment Managers
23rd June 2023
Principal and Emerging Risks
The Board has overall responsibility for reviewing the
effectiveness of the Company's system of risk management and
internal control.
The Board is supported by the Audit Committee in the management
of risk. The risk management process is designed to identify,
evaluate, manage, and mitigate risks faced.
Although the Board believes that it has a robust framework of
internal controls in place this can provide only reasonable, and
not absolute, assurance against material financial misstatement or
loss and is designed to manage, not eliminate, risk.
The Directors confirm that they have carried out a robust
assessment of the principal and emerging risks facing the Company,
including those that would threaten its business model, future
performance, solvency or liquidity. The risks identified and the
ways in which they are managed or mitigated are summarised
below.
With the assistance of JPMF, the Audit Committee has drawn up a
risk matrix, which identifies the principal and emerging risks to
the Company. These are reviewed and discussed on a regular basis by
the Board, through the Audit Committee. These risks fall broadly
into the following categories:
Movement
from
Principal Description Mitigation/Control
risk Prior Year
----------------- -------------------------------- ------------------------------- --------------------------------
Investment An inappropriate investment The Company has a clearly
and Strategy strategy, poor asset defined
allocation or the strategy and investment remit,
level of gearing, which is reviewed annually.
may lead to underperformance The Risk has been
against the Company's portfolio is managed by a heightened
benchmark index and highly by the Company's
its peer companies, experienced Investment underperformance
resulting in the Company's Manager, during the
shares trading on with a defined investment year.
a wider discount. appraisal
process. The Board relies on
the Investment Manager's
skills
and judgment to make
investment
decisions based on research
and
analysis of individual stocks
and sectors. To aid
appropriate
investment decisions, the
Board
has set investment guidelines
and parameters for the
portfolio
managers to follow. The AIFM
also monitors the Investment
Manager against the Company's
investment guidelines.
The Board reviews the
performance
of the portfolio against the
Company's benchmark index,
that
of its competitors and the
outlook
for the markets on a regular
basis, with the portfolio
managers
who attend Board meetings.
Where
necessary the portfolio
managers
will take action following a
review of the performance.
The Board also reviews the
level
of premium/discount to NAV at
which the Company's shares
trade
and movements in the share
register.
The Board regularly seeks the
views of its investors.
----------------- -------------------------------- ------------------------------- --------------------------------
Market Market risk arises The Board considers the split
from uncertainty about in the portfolio between small
the future prices and large companies, sector
of the Company's investments. and
This market risk comprises stock selection and levels of Risk has been
three elements - equity gearing on a regular basis and heightened
market risk, currency has set investment by inflationary
risk and interest restrictions pressures
rate risk. and guidelines, which are due to an
monitored adjustment
and reported on by JPMF. The in the yield
Board monitors the curve control
implementation range announced
and results of the investment by the Bank
process with the Manager. of Japan in
However, December and
the fortunes of the portfolio market volatility
are significantly determined caused by
by market movements in global concerns
Japanese over the financial
equities, the rate of exchange system.
between the Japanese yen and
sterling and interest rate
changes.
This is a risk that investors
take having invested into a
single
country fund. The Board
recognises
the benefits of a closed-end
fund structure in extremely
volatile
markets. During times of
elevated
market stress, the ability of
a closed-ended fund structure
to remain invested for the
long
term enables the Manager to
adhere
to disciplined fundamental
analysis
from a bottom-up approach and
be ready to respond to
dislocations
in the market as opportunities
present themselves.
----------------- -------------------------------- ------------------------------- --------------------------------
Operational Disruption to, or On 1st July 2014, the Company (R)
and Cybercrime failure of, the Manager's appointed Bank of New York Risk remains
accounting, dealing Mellon relatively
or payments systems (International) Limited to act unchanged.
or the custodian's as its depositary, responsible The operational
or depositary's records for overseeing the operations requirements
could prevent accurate of the custodian, JPMorgan of the Company,
reporting and monitoring Chase including
of the Company's financial Bank, N.A., and the Company's from its key
position. cash flows. Details of how the third-party
Board monitors the services service providers,
provided have been
by the Manager and its subject to
associates rigorous testing.
and the key elements designed To date the
to provide effective internal operational
control are included in the arrangements
Risk have proven
Management and Internal robust and
Control key third-party
section of the Corporate service providers
Governance have not experienced
Report on pages 49 and 50 of significant
the Annual Report. operational
As an externally managed difficulties.
investment
trust, there is a continued
reliance
on the Manager and other
third-party
service providers.
The Board reviews the overall
performance of the Manager and
other key third-party service
providers and compliance with
the investment management
agreement
on a regular basis to ensure
their continued
competitiveness
and effectiveness, which
includes
assessment of the providers'
control systems,
whistle-blowing,
anti-bribery and corruption
policies
and business continuity plans.
The Manager's internal control
processes are monitored
throughout
the year and are evidenced
through
its Service Organisation
Control
(SOC 1) reports, prepared by
an independent auditor. The
SOC
1 reports, which are reviewed
annually by the Audit
Committee,
provide assurance in respect
of the effective operation of
internal controls.
Service providers are
appointed
with clearly-documented
contractual
arrangements detailing service
expectations. The Audit
Committee
receives assurance and
internal
controls reports from key
service
providers on an annual basis.
The threat of cyber-attack, in
all its guises, is regarded as
at least as important as more
traditional physical threats
to business continuity and
security.
The Board has received the
cyber
security policies for its key
third party service providers
and JPMF has assured the
Directors
that the Company benefits
directly
or indirectly from all
elements
of JPMorgan's Cyber Security
programme. The information
technology
controls around the physical
security of JPMorgan's data
centres,
security of its networks and
security of its trading
applications
are tested by independent
reporting
accountants and reported every
six months against the Audit
and Assurance Faculty
Standard.
----------------- -------------------------------- ------------------------------- --------------------------------
Loss of The sudden departure The Manager takes steps to (R)
Investment of the investment reduce The Manager
Team or managers or several the likelihood of such an has ensured
Investment members of the wider event the portfolio
Managers investment management by ensuring appropriate is managed
team could result succession by a robust
in a short-term deterioration planning and the adoption of portfolio
in investment performance. a team based approach. management
team i.e.
the portfolio
is co-managed
by three portfolio
managers who
are supported
by a number
of on-the-ground
investment
professionals.
----------------- -------------------------------- ------------------------------- --------------------------------
Share Price If the share price The Board monitors the (R)
Relative of an investment trust Company's Risk remains
to NAV per is lower than the premium/discount level and, relatively
Share NAV per share, the although unchanged.
shares are said to the rating largely depends The Board
be trading at a discount. upon regularly
the relative attractiveness of reviews and
the trust, the Board has monitors the
authority Company's
to issue new shares or buy objective
backs and investment
its existing shares when policy and
deemed strategy,
by the Board to be in the best the investment
interests of the Company and portfolio
its shareholders. The Board is and its performance,
committed to consider buying the level
back the Company's shares of discount/
when/if premium to
they stand at anything more net asset
than value at which
a small discount to enhance the shares
the trade and
NAV per share for remaining movements
shareholders. in the share
register.
----------------- -------------------------------- ------------------------------- --------------------------------
Accounting, In order to qualify Were the Company to breach (R)
Legal and as an investment trust, Section Risk remains
Regulatory the Company must comply 1158, it might lose its relatively
with Section 1158 investment unchanged.
of the Corporation trust status and, as a Compliance
Tax Act 2010 ('Section consequence, with relevant
1158'). Details of gains within the Company's regulations
the Company's approval portfolio is monitored
are given on page would be subject to Capital on an ongoing
27. Section 1158 requires, Gains basis by the
among other matters, Tax. The Section 1158 Company Secretary
that the Company does qualification and Manager
not retain more than criteria are continually who report
15% of its investment monitored regularly
income, can demonstrate by JPMF and the results to the Board.
an appropriate diversification reported
of risk and is not to the Board each month. The
a close company. Company must also comply with
the provisions of the
Companies
Act 2006 and, as its shares
are
listed on the London Stock
Exchange,
the UKLA Listing Rules and
Disclosure
Guidance and Transparency
Rules
('DTRs'). A breach of the
Companies
Act 2006 could result in the
Company and/or the Directors
being fined or the subject of
criminal proceedings. Breach
of the UKLA Listing Rules or
DTRs could result in the
Company's
shares being suspended from
listing,
which in turn would breach
Section
1158. The Directors seek to
comply
with all relevant regulation
and legislation in the UK,
Europe
and the US and rely on the
services
of its Company Secretary,
JPMF,
and its professional advisers
to monitor compliance with all
relevant requirements.
----------------- -------------------------------- ------------------------------- --------------------------------
Political Political changes The Company is at risk from (R)
and Economic in Japan and the resulting changes Risk remains
economic uncertainty to the regulatory, legislative relatively
may affect the Company, and taxation framework within unchanged.
the value of its investments which it operates, whether Political
in Japan and capital such risks have
allocation decision changes were designed to always been
making. Changes in affect part of the
legislation, including it or not. The Board monitors investment
in Japan, the US, and receives advice from the process.
UK and the European Manager and other advisors on
Union, may adversely political and economic risks.
affect the Company
either directly or
because of restrictions
or enforced changes
on the operations
of the Manager. JPMF
makes recommendations
to the Board on accounting,
dividend and tax policies
and the Board seeks
external advice where
appropriate. Significant
political events could
impact the health
of the Japanese or
UK economy, resulting
in the imposition
of restrictions on
the free movement
of capital.
----------------- -------------------------------- ------------------------------- --------------------------------
Global Pandemics The emergence of COVID-19 The Board receives reports on (R)
has highlighted the the business continuity plans Risk remains
speed and extent of of the Manager and other key relatively
economic damage that service providers. The unchanged.
can arise from a pandemic. effectiveness The economic
Evidence suggests of these measures has been impact of
that the likelihood assessed the COVID-19
of pandemics has increased throughout the course of the pandemic has
over the past century COVID-19 pandemic and the been considered.
due to increased global Board There are
travel and integration, will continue to monitor always exogenous
urbanisation, changes developments risks and
in land use, and greater as they occur and seek to consequences,
exploitation of the learn which are
natural environment. lessons which may be of use in difficult
The response to the the event of future pandemics. to predict
Pandemic by the Japanese To date the portfolio's and plan for
and other governments holdings in advance.
may potentially fail have not exhibited a long-term The Company
to mitigate the economic negative impact and have does what
damage created by recovered it can to
the Pandemic and public as the containment measures address these
health responses to eased. risks when
it, or may create The Board is mindful that they emerge,
new risks in their implications not least
own right. arising from future pandemics operationally
will vary and hence the and in trying
ability to meet its
to assess mitigation investment
activities objective.
is limited. But the Board
seeks
to manage these risks through:
a broadly diversified equity
portfolio, appropriate asset
allocation, reviewing key
economic
and political events and
regulatory
changes, active management of
risk and the application of
relevant
policies on gearing and
liquidity.
----------------- -------------------------------- ------------------------------- --------------------------------
Geopolitical Geopolitical Risk There is little direct control
instability is the potential for of this risk possible. The
political, socio-economic Company
and cultural events addresses these global
and developments to developments Although geopolitical
have an adverse effect through regular questioning of risks are
on the value of the the Manager and will continue part of the
Company's assets. to monitor these issues as investment
The Company and its they process, this
assets may be impacted develop. risk has been
by geopolitical instability, The Board has the ability, heightened
in particular concerns with by the recent
over global economic shareholder approval, to amend Russia-Ukraine
growth. The crisis the policy and objectives of invasion.
in Ukraine has affected the Company to mitigate the
energy and commodity risks
markets and may cause arising from geopolitical
further damage to concerns.
the global economy.
The ongoing conflict
between Russia and
Ukraine has heightened
the possibility that
tensions will spill
over and intensify
geo-political unrest
between other countries
sharing a common border.
----------------- -------------------------------- ------------------------------- --------------------------------
Climate Climate change has The Board receives ESG reports
Change become one of the from the Manager on the
most critical issues portfolio
confronting companies and the way ESG considerations
and their investors. are integrated into the Risk has been
Climate change can investment heightened
have a significant decision-making, so as to by rising
impact on the business mitigate temperatures
models, sustainability risk at the level of stock fueling environmental
and even viability selection degradation,
of individual companies, and portfolio construction. As natural disasters,
whole sectors and extreme weather events become weather extremes,
even asset classes. more common, the resiliency, food and water
business continuity planning insecurity
and the location strategies of and economic
the Company's services disruption.
providers
will come under greater
scrutiny.
----------------- -------------------------------- ------------------------------- --------------------------------
Emerging Risks
The Board is cognisant of emerging risks, which are
characterised by a high degree of uncertainty in terms of
probability of occurrence and possible effects on the Company.
Emerging risks are considered as they are identified and are
incorporated into the Company's risk matrix. The Board, through the
Audit Committee, will continue to assess these risks on an ongoing
basis. The following have been identified as emerging risks:
Emerging risk Description Mitigation/Control
----------------------------- ------------------------------------------- ------------------------------------------
Artificial Intelligence (AI) While it might equally be deemed a great The Board will work with the Manager to
opportunity and force for good, there monitor developments concerning AI as its
appears also use evolves
to be an increasing risk to business and and consider how it might threaten the
society more widely from AI. Advances in Company's activities, which may, for
computing example, include
power means that AI has become a powerful a heightened threat to cybersecurity. The
tool that will impact a huge range of Board will work closely with the Manager
areas and in identifying
with a wide range of applications that these threats and, in addition, monitor
include the potential to disrupt and even the strategies of our service providers.
to harm. Furthermore,
In addition the use of AI could be a the Company's investment process includes
significant disrupter to business consideration of technological
processes and whole advancement and the
companies leading to added uncertainty in resultant potential to disrupt both
corporate valuations. individual companies and the wider
markets.
----------------------------- ------------------------------------------- ------------------------------------------
Transactions with related parties
Full details of Directors' remuneration and shareholdings can be
found on pages 55 and 56 and in note 6 on page 74 of the Annual
Report.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 102 'The Financial Reporting
Standard applicable in the UK and Republic of Ireland' and
applicable law). Under company law the Directors must not approve
the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of
the profit or loss of the Company for that period. In preparing the
financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them
consistently;
-- state whether applicable United Kingdom Accounting Standards,
comprising FRS 102, have been followed, subject to any material
departures disclosed and explained in the financial statements;
-- make judgements and accounting estimates that are reasonable
and prudent; and
-- prepare the financial statements on the 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 adequate 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.
The Directors 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 Directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
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 the law and
those regulations.
Each of the Directors, whose names and functions are listed in
Directors' Report confirm that, to the best of their knowledge:
-- the Company's financial statements, which have been prepared
in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 102
'The Financial Reporting Standard applicable in the UK and Republic
of Ireland', and applicable law), give a true and fair view of the
assets, liabilities, financial position and profit of the Company;
and
-- the Directors' 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 Directors consider 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 position and performance, business model and
strategy.
For and on behalf of the Board
Alexa Henderson
Chairman
23rd June 2023
Statement of Comprehensive Income
For the year ended 31st March
2023 2022
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------------- -------- --------- --------- -------- ---------- ----------
Losses on investments held at fair value through
profit or loss - (15,007) (15,007) - (72,449) (72,449)
Net foreign currency gains - 619 619 - 920 920
Income from investments 4,736 41 4,777 3,855 - 3,855
Other interest receivable 3 - 3 - - -
---------------------------------------------------- -------- --------- --------- -------- ---------- ----------
Gross return/(loss) 4,739 (14,347) (9,608) 3,855 (71,529) (67,674)
Management fee (1,856) - (1,856) (2,498) - (2,498)
Other administrative expenses (472) - (472) (454) - (454)
---------------------------------------------------- -------- --------- --------- -------- ---------- ----------
Net return/(loss) before finance costs and taxation 2,411 (14,347) (11,936) 903 (71,529) (70,626)
Finance costs (321) - (321) (215) - (215)
---------------------------------------------------- -------- --------- --------- -------- ---------- ----------
Net return/(loss) before taxation 2,090 (14,347) (12,257) 688 (71,529) (70,841)
Taxation (500) - (500) (357) - (357)
---------------------------------------------------- -------- --------- --------- -------- ---------- ----------
Net return/(loss) after taxation 1,590 (14,347) (12,757) 331 (71,529) (71,198)
---------------------------------------------------- -------- --------- --------- -------- ---------- ----------
Return/(loss) per share (note 2) 2.92p (26.32)p (23.40)p 0.61p (131.22)p (130.61)p
---------------------------------------------------- -------- --------- --------- -------- ---------- ----------
Statement of Changes in Equity
Called up Capital
share Share redemption Other Capital Revenue
capital premium reserve reserve(1,2) reserves(2) reserve(2) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ---------- -------- ----------- ------------- ------------ ----------- ----------
At 31st March 2021 5,595 33,978 1,836 282,835 (13,231) (11,195) 299,818
Net (loss)/return - - - - (71,529) 331 (71,198)
Dividends paid in the year
(note 3) - - - (11,883) - - (11,883)
----------------------------- ---------- -------- ----------- ------------- ------------ ----------- ----------
At 31st March 2022 5,595 33,978 1,836 270,952 (84,760) (10,864) 216,737
Net (loss)/return - - - - (14,347) 1,590 (12,757)
Dividends paid in the year
(note 3) - - - (7,958) - - (7,958)
----------------------------- ---------- -------- ----------- ------------- ------------ ----------- ----------
At 31st March 2023 5,595 33,978 1,836 262,994 (99,107) (9,274) 196,022
----------------------------- ---------- -------- ----------- ------------- ------------ ----------- ----------
(1) The share premium was cancelled in the period ended 31st
March 2001 and redesignated as 'other reserve'.
(2) These reserves form the distributable reserves of the
Company and may be used to fund distributions to investors via
dividend payments.
Statement of Financial Position
At 31st March
2023 2022
GBP'000 GBP'000
------------------------------------------------------- ---------- ----------
Fixed assets
Investments held at fair value through profit or loss 206,931 229,912
------------------------------------------------------- ---------- ----------
Current assets
Debtors 3,412 2,672
Cash and cash equivalents 7,446 10,143
------------------------------------------------------- ---------- ----------
10,858 12,815
Creditors: amounts falling due within one year (21,767) (25,990)
------------------------------------------------------- ---------- ----------
Net current liabilities (10,909) (13,175)
------------------------------------------------------- ---------- ----------
Total assets less current liabilities 196,022 216,737
------------------------------------------------------- ---------- ----------
Net assets 196,022 216,737
------------------------------------------------------- ---------- ----------
Capital and reserves
Called up share capital 5,595 5,595
Share premium 33,978 33,978
Capital redemption reserve 1,836 1,836
Other reserve 262,994 270,952
Capital reserves (99,107) (84,760)
Revenue reserve (9,274) (10,864)
------------------------------------------------------- ---------- ----------
Total shareholders' funds 196,022 216,737
------------------------------------------------------- ---------- ----------
Net asset value per share (note 4) 359.6p 397.6p
------------------------------------------------------- ---------- ----------
Statement of Cash Flows
For the year ended 31st March
2023 2022(1)
GBP'000 GBP'000
------------------------------------------------------------------- ---------- ----------
Cash flows from operating activities
Net loss before finance costs and taxation (11,936) (70,626)
Adjustment for:
Net loss on investments held at fair value through profit or loss 15,007 72,449
Net foreign currency gains (619) (920)
Dividend income (4,736) (3,855)
Interest income (3) -
Realised loss/(gain) on foreign exchange transactions 25 (154)
Decrease/(Increase) in accrued income and other debtors 92 (105)
Decrease/(Increase) in accrued expenses 15 (35)
------------------------------------------------------------------- ---------- ----------
Net cash used in operating activities (2,155) (3,246)
Dividends received 4,355 3,231
Interest received 3 -
Overseas tax paid ( 473) -
------------------------------------------------------------------- ---------- ----------
Net cash inflow/(outflow) from operating activities 1,730 (15)
------------------------------------------------------------------- ---------- ----------
Purchases of investments (46,467) (67,865)
Sales of investments 55,328 89,635
Settlement of foreign currency contracts - 45
------------------------------------------------------------------- ---------- ----------
Net cash inflow from investing activities 8,861 21,815
------------------------------------------------------------------- ---------- ----------
Dividends paid (7,958) (11,883)
Repayment of bank loan (4,844) -
Interest paid (340) (223)
------------------------------------------------------------------- ---------- ----------
Net cash outflow from financing activities (13,142) (12,106)
------------------------------------------------------------------- ---------- ----------
(Decrease)/increase in cash and cash equivalents (2,551) 9,694
------------------------------------------------------------------- ---------- ----------
Cash and cash equivalents at start of year 10,143 627
Unrealised loss on foreign currency cash and cash equivalents (146) (178)
------------------------------------------------------------------- ---------- ----------
Cash and cash equivalents at end of year 7,446 10,143
------------------------------------------------------------------- ---------- ----------
Cash and cash equivalents consist of:
Cash and short-term deposits 7,446 10,143
------------------------------------------------------------------- ---------- ----------
Total 7,446 10,143
------------------------------------------------------------------- ---------- ----------
(1) The presentation of the Cash Flow Statement, as permitted
under FRS 102, has been changed so as to present the reconciliation
of 'net return/(loss) before finance costs and taxation' to 'cash
used in operating activities' on the face of the Cash Flow
Statement. Previously, this was shown by way of note to the Cash
Flow Statement. Other than consequential changes in presentation of
the certain cash flow items, there is no change to the cash flows
as presented in previous periods.
RECONCILIATION OF NET DEBT
As at Other non-cash As at
31st March 2022 Cash flows charges 31st March 2023
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------------- ----------- --------------- ----------------
Cash and cash equivalents
Cash 10,143 (2,551) (146) 7,446
--------------------------- ---------------- ----------- --------------- ----------------
10,143 (2,551) (146) 7,446
Borrowings
Debt due within one year (25,030) 4,844 740 (19,446)
--------------------------- ---------------- ----------- --------------- ----------------
(25,030) 4,844 740 (19,446)
--------------------------- ---------------- ----------- --------------- ----------------
Net debt (14,887) 2,293 594 (12,000)
--------------------------- ---------------- ----------- --------------- ----------------
Notes to the Financial Statements
For the year ended 31st March 2023
1. Accounting policies
(a) Basis of accounting
The financial statements are prepared under the historical cost
convention, modified to include the revaluation of fixed asset
investments which are recorded 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 July 2022.
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 pages 52 and 53 in 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/(loss) per share
2023 2022
GBP'000 GBP'000
------------------------------------------------------- ----------- -----------
Return per share is based on the following:
Revenue return 1,590 331
Capital loss (14,347) (71,529)
------------------------------------------------------- ----------- -----------
Total loss (12,757) (71,198)
------------------------------------------------------- ----------- -----------
Weighted average number of shares in issue during the
year (excluding Treasury shares) 54,510,339 54,510,339
Revenue return per share 2.92p 0.61p
Capital loss per share (26.32)p (131.22)p
------------------------------------------------------- ----------- -----------
Total loss per share (23.40)p (130.61)p
------------------------------------------------------- ----------- -----------
3. Dividends
(a) Dividends paid and declared
2023 2022
GBP'000 GBP'000
-------------------------------------------------------------------------------------- -------- --------
Dividends paid
2022 fourth quarterly dividend of 4.0p (2021: 5.5p) paid to shareholders in May 2,180 2,998
2023 first quarterly dividend of 3.4p (2022: 5.5p) paid to shareholders in August 1,854 2,998
2023 second quarterly dividend of 3.6p (2022: 5.8p) paid to shareholders in November 1,962 3,162
2023 third quarterly dividend of 3.6p (2022: 5.0p) paid to shareholders in February 1,962 2,725
-------------------------------------------------------------------------------------- -------- --------
Total dividends paid in the year 7,958 11,883
-------------------------------------------------------------------------------------- -------- --------
2023 2022
GBP'000 GBP'000
------------------------------------------------------------------------------------ -------- --------
Dividend declared
2023 fourth quarterly dividend of 3.6p (2022: 4.0p) payable to shareholders in May 1,962 2,180
------------------------------------------------------------------------------------ -------- --------
All dividends paid and declared in the year have been funded
from the other reserve.
The fourth quarterly dividend has been declared in respect of
the year ended 31st March 2023. In accordance with the accounting
policy of the Company, this dividend will be reflected in the
financial statements for the year ending 31st March 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.
2023 2022
GBP'000 GBP'000
------------------------------------------------------------- -------- --------
2023 first quarterly dividend of 3.4p (2022: 5.5p) 1,854 2,998
2023 second quarterly dividend of 3.6p (2022: 5.8p) 1,962 3,162
2023 third quarterly dividend of 3.6p (2022: 5.0p) 1,962 2,725
2023 fourth quarterly dividend payable of 3.6p (2022: 4.0p) 1,962 2,180
------------------------------------------------------------- -------- --------
Total 7,740 11,065
------------------------------------------------------------- -------- --------
4. Net asset value per share
2023 2022
-------------------------------------------------------------- ----------- -----------
Net assets (GBP'000) 196,022 216,737
Number of shares in issue, excluding shares held in Treasury 54,510,339 54,510,339
-------------------------------------------------------------- ----------- -----------
Net asset value per share 359.6p 397.6p
-------------------------------------------------------------- ----------- -----------
5. Status of results announcement
2023 Financial Information
The figures and financial information for 2023 are extracted
from the published Annual Report and Accounts for the year ended
31st March 2023 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.
2022 Financial Information
The figures and financial information for 2022 are extracted
from the Annual Report and Accounts for the year ended 31st March
2022 and do not constitute the statutory accounts for the year. The
Annual Report and Accounts include the Report of the Independent
Auditors which is unqualified and does not contain a statement
under either section 498(2) or section 498(3) of the Companies Act
2006. The Annual Report and Accounts will be delivered to the
Register of Companies in due course.
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of, this
announcement
JPMORGAN FUNDS LIMITED
S
A copy of the annual report will shortly be submitted to the
National Storage Mechanism and will be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
The annual report will shortly be available on the Company's
website at www.jpmjapansmallcapgrowthandincome.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
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(END) Dow Jones Newswires
June 26, 2023 02:00 ET (06:00 GMT)
Grafico Azioni JPMorgan Japan Small Cap... (AQSE:JPS.GB)
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Da Apr 2024 a Mag 2024
Grafico Azioni JPMorgan Japan Small Cap... (AQSE:JPS.GB)
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Da Mag 2023 a Mag 2024
