JPMorgan European Smaller Companies Trust plc · European Smaller Companies HY pp01_04.qxp...

JPMorgan European Smaller CompaniesTrust plc Half Year Report & Financial Statements for the six months ended 30th September 2019

European Smaller Companies HY Cover A4.qxp 03/12/2019 14:25 Page FC1

K E Y F E A T U R E S

Objective

Capital growth from smaller European companies (excluding the United Kingdom).

Investment Policies

• To invest in a diversified portfolio of smaller companies in Europe, excluding the United Kingdom. • To emphasise capital growth rather than income. Therefore shareholders should expect the dividend to vary from year to year.• To manage liquidity and borrowings to increase potential returns to shareholders. The Board’s current gearing policy is to be

between 20% net cash and 20% geared. • To invest no more than 15% of gross assets in other UK listed investment companies (including investment trusts).

Risk

It should be noted that the Company invests in the shares of smaller companies, which tend to be more volatile than those of largercompanies. The Company also employs gearing to generate greater returns. The Company’s shares should therefore be regarded ascarrying greater than average risk.

Benchmark

Euromoney Smaller European Companies (ex UK) Total Return Index in sterling terms.

Capital Structure

At 30th September 2019, the Company’s share capital comprised 159,462,885 ordinary shares of 5p each.

Management Company and Company Secretary

The Company employs JPMorgan Funds Limited (‘JPMF’ or the ‘Manager’) as its Alternative Investment Fund Manager and CompanySecretary. JPMF delegates the management of the Company’s portfolio to JPMorgan Asset Management (UK) Limited (‘JPMAM’).

Association of Investment Companies (‘AIC’)

The Company is a member of the AIC.

Website

The Company’s website, which can be found at www.jpmeuropeansmallercompanies.co.uk, includes useful information on the Company,such as daily prices, factsheets and current and historic half year and annual reports.

J P M O R G A N E U R O P E A N S M A L L E R C O M PA N I E S T R U S T P L C . H A L F Y E A R R E P O R T & F I N A N C I A L S TAT E M E N T S 2 0 1 9

European Smaller Companies HY Cover A4.qxp 03/12/2019 14:25 Page IFC2

C O N T E N T S

Half Year Performance 3 Financial Highlights

Chairman’s Statement 6 Chairman’s Statement

Investment Review 8 Investment Managers’ Report

10 Portfolio Information

10 List of Investments

Financial Statements 14 Statement of Comprehensive Income

15 Statement of Changes in Equity 16 Statement of Financial Position

17 Statement of Cash Flows 18 Notes to the Financial Statements

Interim Management 22 Report

Shareholder Information 24 Glossary of Terms and Alternative

Performance Measures (‘APMs’) (Unaudited)

26 Where to buy J.P. Morgan Investment Trusts

29 Information about the Company

European Smaller Companies HY pp01_04.qxp 03/12/2019 13:28 Page 1

Half Year Performance

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F I N A N C I A L H I G H L I G H T S

H A L F Y E A R P E R F O R M A N C E | 3

TOTAL RETURNS (INCLUDING DIVIDENDS REINVESTED) TO 30TH SEPTEMBER 2019

3 years 5 years 10 years 6 months cumulative cumulative cumulative

Return to shareholders1,A

Return on net assets2,A

Benchmark return3

Shareholders return(under)/overperformancecompared tobenchmark return

Net assets return (under)/over performancecompared to benchmark return3

Interim dividend

+4.1% +24.3% +97.1% +198.7%

+20.8% +99.1% +185.0%

+6.3% +25.2% +72.4% +134.9%

–2.2% –0.9% +24.7% +63.8%

1.2p

1 Source: Morningstar.2 Source: Morningstar/J.P. Morgan, using net asset value per share.3 Source: Euromoney. The Company’s benchmark is the Euromoney Smaller European Companies (ex UK) Total Return Index in sterling terms.AAlternative Performance Measure (‘APM’).

A glossary of terms and APMs is provided on pages 24 and 25.

+6.0%

–0.3% –4.4% +26.7% +50.1%


F I N A N C I A L H I G H L I G H T S

4 | J PMORGAN EUROPEAN SMAL L ER COMPAN I E S T RUS T P L C . HA L F Y EAR R E PORT & F I NANC I A L S TA T EMENTS 2 0 1 9

SUMMARY OF RESULTS

30th September 31st March 2019 2019 % change

Shareholders’ funds (£’000) 667,401 637,808 +4.6

Number of shares in issue 159,462,885 159,462,885

Net asset value per share 418.5p 400.0p +4.61

Share price 358.0p 349.0p +2.62

Share price discount to net asset value per shareA 14.5% 12.8%

Gearing/(net cash)A 0.4% (5.2)%

Ongoing chargesA 1.04% 1.04%

1 % change, excluding dividends paid. Including dividend the return is +6.0%.2 % change, excluding dividends paid. Including dividends the return is +4.1%.A Alternative Performance Measure (‘APM’).

A glossary of terms and APMs is provided on pages 24 and 25.


Chairman’s Statement


C H A I R M A N ’ S S T A T E M E N T

6 | J PMORGAN EUROPEAN SMALLER COMPAN IES TRUST PLC . HALF YEAR REPORT & F INANC IAL S TATEMENTS 20 19

Dear Shareholder,

This is my first statement to you since becoming Chairman of your Company in July this year.

PerformanceNet asset value total return was +6.0% in the six months to 30th September 2019. Whilst this is a positiveresult from our Investment Managers in challenging equity market conditions, it is a little disappointingwhen compared with the Company’s benchmark index total return of +6.3% over the same period (theEuromoney Smaller Companies (ex UK) index). The share price return of +4.1%, was positive, but resultedin a widening of the discount over the period.

I would emphasise the Trust’s long term performance. Over the five and ten year period to 30th September2019 total return on net assets rose by +99.1% and +185.0%, respectively, outperforming the benchmarkindex total return by +26.7% and 50.1%, respectively.

The investment managers’ report on pages 8 and 9 reviews the markets and provides more detail on theperformance drivers within the portfolio and the stocks and countries in which the Company is invested.

Revenue and DividendsGross revenue return for the six months to 30th September 2019 was marginally lower than thecorresponding period in 2018 at £13.8 million (2018: £13.9 million). The Board has decided to pay an interimdividend of 1.2 pence (2018: 1.2 pence) per share which will be paid on 17th January 2020 to shareholderson the register as at 13th December 2019 (the ex-dividend date will be 12th December 2019).

Change in BenchmarkWith effect from 1st April 2020 the benchmark will change from the Euromoney Smaller EuropeanCompanies (ex UK) total return index to the MSCI Europe ex UK small cap net total return index. This indexbetter reflects the underlying portfolio constituents.

Discount Management and Share RepurchasesThe discount of the Company’s share price to net asset value widened over the period from 12.6% to 14.5%.The Board continues to monitor the level of the discount carefully and seeks to use its ability to repurchaseshares to minimise the short term volatility and the absolute level of the discount. No shares wererepurchased in the six months to 30th September 2019.

The BoardCarolan Dobson stepped down as Chairman and a Director at the AGM in July and I would like to welcomeTanya Cordrey as a new member of the Board. Tanya joined at the beginning of July and has a strongbackground in the digital environment.

Environmental, Social and Governance (‘ESG’)As highlighted in the Half Year Report environmental, social and governance issues have been rigorouslyintegrated into the investment managers’ investment processes and as a result ESG issues are consideredat every stage of the decision making process.

OutlookThe prospects for European equity markets remain unpredictable given the continuing global politicaluncertainty. Despite this background our investment managers continue to believe that the long termgrowth outlook for European companies remains positive.

Marc van GelderChairman 4th December 2019

Marc van GelderChairman

Over the fiveand ten yearperiod totalreturn on netassets rose by99.1% and185.0%,respectively


Investment Review


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I N V E S T M E N T M A N A G E R S ’ R E P O R T


Francesco ConteInvestment Manager

Central bankshave provideda supportiveenvironment forfinancialmarkets

Edward GreavesInvestment Manager

Review

The six month period to 30th September 2019, saw difficult and volatile markets due to conflictingmessages surrounding the US-China trade war. In May, President Trump unexpectedly escalated the disputeby announcing additional tariffs on Chinese products before de-escalating it following the June G20 summitwhere he agreed with President Xi to restart trade negotiations. With companies increasingly unwilling toinvest in such an uncertain climate and with the Purchasing Managers Indices (PMIs) falling sharply aroundthe world, central banks stepped in to support global growth by loosening monetary policy – effectivelyproviding a supportive environment for financial markets.

The MSCI Europe (ex UK) Index rose by 10.2% during the period, outperforming our benchmark EuromoneySmaller European Companies (ex UK) Index which rose by 6.3%.

Portfolio

With a return of 6.0% over the six months to September 2019, the portfolio slightly underperformed itsbenchmark. Detractors from performance included Danish IT consultant, NNIT, after the companyannounced pricing pressure and the loss of several key contracts, German optical systems manufacturer,Jenoptik, as weaker industrial end markets led to management lowering expectations for 2019, and Swiss3D vision semiconductor provider, AMS, after management launched a hostile takeover bid for German LEDlighting manufacturer, Osram, which would require a capital increase if successful. Top performers includedGerman lithium-ion battery manufacturer, Varta, as the company increased guidance a number of timesdue to very strong end market growth for wireless in-ear headphones, French R&D consultant, Altran, afterthe company received a takeover bid from the French IT services consultant, Capgemini, and Frenchpayment systems provider, Ingenico, after the new management team’s initiatives to accelerate growth intheir payment terminals business started to gain traction.

During the period we selectively invested in a number of opportunities with attractive valuations andimproving operational momentum. For instance, we increased our exposure to the renewable energysector by adding German listed Encavis, Italian listed ERG and Spanish listed Solaria. These companies arebenefitting from increasing demand for clean energy and rapidly falling technology costs. We also investedin two high voltage cable manufactures, the Italian listed Prysmian and French listed Nexans. Both aresuccessfully recovering from previous operational issues and are set to benefit from the increasinginvestment in energy infrastructure which is required to integrate new renewable energy sources intonational energy grids.

We participated in two IPOs: German speciality packaging company, Aluflexpack, which is benefitting fromthe trend towards flexible aluminium packaging due to its premium branding opportunities and recyclingease versus paper based packaging, and Swedish private equity house, EQT, on the expectations of strongassets under management growth due to their ability to up-size future fund raising rounds.

To fund these investments, we divested from companies with deteriorating operational momentumincluding the Italian manufacturer of barcode readers and handheld computers, Datalogic, as weak endmarkets led to management lowering guidance, Portuguese telecommunication company, NOS, after itreported slower than expected network rollout numbers leading to market maturity worries, Danishhearing aid and headphone manufacturer, GN Store Nord, on concerns that the company was seeingincreasing levels of competition in the headphone space from rivals with better known brands, and Swissmanufacturer of agricultural and municipal equipment, Bucher, as agricultural end markets continued to beimpacted by soft commodity prices. We also divested entirely from two recipients of takeover bids, theaforementioned French R&D consultant, Altran, and Dutch optician, GrandVision.


I N V E S T M E N T M A N A G E R S ’ R E P O R T

I N V E S T M E N T R E V I E W | 9

While economiesremain weak,markets havebeen resilient

As a result of these changes, Support Services became the largest sector overweight as Health CareEquipment & Services fell to second largest overweight. Financial Services remained the largest sectorunderweight, followed by the Real Estate sector. Switzerland and Italy became the largest countryoverweights with the Netherlands dropping to third largest country overweight. Spain remained theportfolio’s largest country underweight. The portfolio ended the period with a net geared position of 0.4%,having begun with a 5.2% net cash position.

Outlook

While economies remain weak, due to elevated trade uncertainty, markets have been resilient believingthat central banks’ aggressive loosening of monetary policy should suffice to stem the increasingly negativeeconomic newsflow. Whether this really turns out to be the case will only be evident next year, but for nowthe glass appears half full. As such, post the end of the six months we have reintroduced gearing in ourportfolio, which currently stands at circa 4%.

Francesco ConteEdward GreavesInvestment Managers 4th December 2019


P O R T F O L I O I N F O R M A T I O N


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ValuationCompany £’000



SWITZERLANDSIG Combibloc 15,808

Helvetia 14,904

Tecan 13,066

Flughafen Zurich 13,049

Landis+Gyr 11,930

BKW 11,907

Cembra Money Bank 11,427

Siegfried 10,514

Belimo 10,315

Emmi 9,436

ams 8,523

Aluflexpack 6,822

dormakab 6,147

143,848

ITALYPrysmian 16,562

ERG 14,016

Falck Renewables 13,053

ASTM 12,831

Infrastrutture Wireless Italiane 12,449

IMA Industria Macchine Automatiche 12,073

Amplifon 10,584

Enav 10,042

Italgas 10,022

Reply 8,821

De’ Longhi 6,509

126,962

FRANCESPIE 16,583

IPSOS 13,911

Sopra Steria 13,250

Ingenico 12,995

Virbac 12,588

Trigano 10,908

Alten 9,564

Nexans 8,140

Korian 7,425

105,364

SWEDENBravida 14,121

AF POYRY 11,823

Coor Service Management 11,152

AAK 10,314

AcadeMedia 8,233

Fabege 8,162

Munters 7,930

Hufvudstaden 7,822

Sweco 7,164

Thule 5,789

Husqvarna 2,559

95,069

GERMANYStroeer 14,762

CANCOM 13,501

Gerresheimer 12,119

Varta 10,817

CTS Eventim 10,611

Encavis 9,864

Elmos Semiconductor 7,164

78,838

NETHERLANDSIMCD 16,846

Intertrust 16,334

Arcadis 13,526

Aalberts 11,663

TKH 5,750

64,119

NORWAYSalmar 13,061

Fjordkraft 7,232

SpareBank 1 3,483

23,776

BELGIUMWarehouses De Pauw, CVA 8,249

Shurgard Self Storage 6,941

15,190

SPAINSolaria Energia y Medio Ambiente 7,509

7,509

FINLANDHuhtamaki 6,652

6,652

DENMARKNNIT 2,760

2,760

TOTAL INVESTMENTS 670,087

LIST OF INVESTMENTS

AT 30TH SEPTEMBER 2019



I N V E S T M E N T R E V I E W | 1 1

GEOGRAPHICAL ANALYSIS

at 30th September 2019 at 31st March 2019 Portfolio Benchmark Portfolio Benchmark %1 % %1 %

Switzerland 21.5 11.8 11.0 11.4

Italy 18.9 10.4 10.5 10.6

France 15.7 12.1 9.5 12.7

Sweden 14.2 13.3 15.9 12.2

Germany 11.8 14.6 9.6 14.9

Netherlands 9.6 4.9 16.5 5.5

Norway 3.5 5.0 7.2 5.6

Belgium 2.3 5.5 4.6 5.3

Spain 1.1 5.8 1.0 6.7

Finland 1.0 4.5 1.1 4.8

Denmark 0.4 4.0 4.4 3.4

Austria — 4.3 4.8 3.8

Ireland — 1.2 1.9 1.3

Portugal — 1.1 2.0 1.3

United States — 1.0 — —

United Kingdom — 0.5 — 0.5

Total 100.0 100.0 100.0 100.0

1 Based on total investments of £670.1m (31st March 2019: £604.4m).




SECTOR ANALYSIS

at 30th September 2019 at 31st March 2019 Portfolio Benchmark Portfolio Benchmark %1 % %1 %

Industrials 34.7 23.0 25.4 23.5

Information Technology 12.8 7.6 13.8 8.0

Utilities 11.0 3.9 3.7 3.8

Health Care 10.3 8.0 14.3 8.6

Communication Services 7.7 6.4 2.3 5.6

Consumer Discretionary 5.1 9.7 9.6 9.6

Consumer Staples 4.9 6.3 5.1 6.4

Real Estate 4.7 12.0 9.8 10.6

Financials 4.4 13.4 8.5 14.3

Materials 4.4 7.0 2.1 6.6

Energy — 2.7 5.4 3.0

Total 100.0 100.0 100.0 100.0

1 Based on total investments of £670.1m (31st March 2019: £604.4m).


Financial Statements


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1 4 | J PMORGAN EUROPEAN SMALLER COMPAN IES TRUST PLC . HALF YEAR REPORT & F INANC IAL S TATEMENTS 20 19

S T A T E M E N T O F C O M P R E H E N S I V E I N C O M E

FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2019

(Unaudited) (Unaudited) (Audited)Six months ended Six months ended Year ended

30th September 2019 30th September 2018 31st March 2019Revenue Capital Total Revenue Capital Total Revenue Capital Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Gains/(losses) on investments held at fair value through profit or loss — 29,815 29,815 — 34,781 34,781 — (57,332) (57,332)

(Losses)/gains on liquidity fund1 — (102) (102) — 720 720 — (946) (946)

Net foreign currency losses — (103) (103) — (454) (454) — (248) (248)Income from investments 13,642 — 13,642 13,798 — 13,798 15,717 — 15,717Interest receivable and similar income 117 — 117 88 — 88 120 — 120

Gross return/(loss) 13,759 29,610 43,369 13,886 35,047 48,933 15,837 (58,526) (42,689)Management fee (937) (2,186) (3,123) (1,013) (2,364) (3,377) (1,938) (4,520) (6,458)Other administrative expenses1 (358) — (358) (409) — (409) (863) — (863)

Net return/(loss) beforefinance costs and taxation 12,464 27,424 39,888 12,464 32,683 45,147 13,036 (63,046) (50,010)

Finance costs (31) (72) (103) (130) (305) (435) (183) (428) (611)

Net return/(loss)before taxation 12,433 27,352 39,785 12,334 32,378 44,712 12,853 (63,474) (50,621)

Taxation (1,421) — (1,421) (1,065) — (1,065) (1,173) — (1,173)

Net return/(loss)after taxation 11,012 27,352 38,364 11,269 32,378 43,647 11,680 (63,474) (51,794)

Return/(loss) per share (note 3) 6.91p 17.15p 24.06p 7.04p 20.24p 27.28p 7.31p (39.71)p (32.40)p

1 JPMorgan Euro Liquidity Fund: Due to change in EU Money Market Fund Regulations, effective from 18th March 2019, negative interest is no longer charged explicity.Instead, it causes the NAV per share to fall. Therefore for the six months ended 30th September 2019, negative interest was included under (losses)/gains on liquidity fund.In the comparative period/year, this was included in other administrative expenses.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinuedin the period.

The ‘Total’ column of this statement is the profit and loss account of the Company and the ‘Revenue’ and ‘Capital’ columns representsupplementary information prepared under guidance issued by the Association of Investment Companies.

The net return after taxation represents the profit for the period/year and also the total comprehensive income.


F I N A N C I A L S T A T E M E N T S | 1 5

S T A T E M E N T O F C H A N G E S I N E Q U I T Y


Called up Capitalshare Share redemption Capital Revenuecapital premium reserve reserves reserve1 Total£’000 £’000 £’000 £’000 £’000 £’000

Six months ended 30th September 2019 (Unaudited)At 31st March 2019 7,974 1,312 7,662 608,269 12,591 637,808Net return — — — 27,352 11,012 38,364Dividend paid in the period (note 4) — — — — (8,771) (8,771)

At 30th September 2019 7,974 1,312 7,662 635,621 14,832 667,401

Six months ended 30th September 2018 (Unaudited)At 31st March 2018 8,000 1,312 7,636 673,600 11,627 702,175 Net return — — — 32,378 11,269 43,647 Dividend paid in the period (note 4) — — — — (8,799) (8,799)

At 30th September 2018 8,000 1,312 7,636 705,978 14,097 737,023

Year ended 31st March 2019 (Audited)At 31st March 2018 8,000 1,312 7,636 673,600 11,627 702,175Repurchase and cancellation of theCompany’s own shares (26) — 26 (1,857) — (1,857)

Net (loss)/return — — — (63,474) 11,680 (51,794)Dividends paid in the year (note 4) — — — — (10,716) (10,716)

At 31st March 2019 7,974 1,312 7,662 608,269 12,591 637,808

1 This reserve forms the distributable reserve of the Company and may be used to fund the distribution to investors via dividend payments.


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S T A T E M E N T O F F I N A N C I A L P O S I T I O N

AT 30TH SEPTEMBER 2019

(Unaudited) (Unaudited) (Audited)30th September 2019 30th September 2018 31st March 2019

£’000 £’000 £’000

Fixed assetsInvestments held at fair value through profit or loss 670,087 719,228 604,429

Current assetsDerivative financial assets — 6 —Debtors 1,748 13,087 7,871Cash and cash equivalents 18,214 37,615 28,596

19,962 50,708 36,467Current liabilitiesCreditors: amounts falling due within one year (22,647) (8,864) (3,084)Derivative financial liabilities (1) — (4)

Net current (liabilities)/assets (2,686) 41,844 33,379

Total assets less current liabilities 667,401 761,072 637,808

Creditors: amounts falling due after more than one year — (24,049) —

Net assets 667,401 737,023 637,808

Capital and reservesCalled up share capital 7,974 8,000 7,974Share premium 1,312 1,312 1,312Capital redemption reserve 7,662 7,636 7,662Capital reserves 635,621 705,978 608,269Revenue reserve 14,832 14,097 12,591

Total shareholders’ funds 667,401 737,023 637,808

Net asset value per share (note 5) 418.5p 460.7p 400.0p



S T A T E M E N T O F C A S H F L O W S



30th September 2019 30th September 2018 31st March 2019£’000 £’000 £’000

Net cash outflow from operations before dividends and interest (note 6) (3,901) (2,365) (6,805)

Dividends received 11,892 11,448 12,613 Interest received 1 — —Overseas tax recovered 455 80 168 Interest paid (158) (372) (659)

Net cash inflow from operating activities 8,289 8,791 5,317

Purchases of investments and derivatives (493,898) (451,295) (1,035,910)Sales of investments and derivatives 470,427 536,093 1,143,506 Settlement of forward currency contracts 197 (204) (133)

Net cash (outflow)/inflow from investing activities (23,274) 84,594 107,463

Dividends paid (8,771) (8,799) (10,716)Repurchase and cancellation of the Company’s own shares — — (1,857)Drawdown of bank loans 13,377 — 66,704 Repayment of bank loans — (68,969) (160,313)

Net cash inflow/(outflow) from financing activities 4,606 (77,768) (106,182)

(Decrease)/increase in cash and cash equivalents (10,379) 15,617 6,598

Cash and cash equivalents at start of period 28,596 21,998 21,998 Exchange movements (3) — —Cash and cash equivalents at end of period 18,214 37,615 28,596

(Decrease)/increase in cash and cash equivalents (10,379) 15,617 6,598

Cash and cash equivalents consist of:Cash and short term deposits 926 285 266 Cash held in JPMorgan Euro Liquidity Fund 17,288 37,330 28,330

Total 18,214 37,615 28,596


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N O T E S T O T H E F I N A N C I A L S T A T E M E N T S


1. Financial statements

The information contained within the financial statements in this half year report has not been audited or reviewed by theCompany’s auditors.

The figures and financial information for the year ended 31st March 2019 are extracted from the latest published financialstatements of the Company and do not constitute statutory accounts for that year. Those financial statements have beendelivered to the Registrar of Companies, including the report of the auditors which was unqualified and did not containa statement under either section 498(2) or 498(3) of the Companies Act 2006.

2. Accounting policies

The financial statements have been prepared in accordance with the Companies Act 2006, FRS 102 ‘The Financial ReportingStandard applicable in the UK and Republic of Ireland’ of the United Kingdom Generally Accepted Accounting Practice(‘UK GAAP’) and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies and VentureCapital Trusts’ (the revised ‘SORP’) issued by the Association of Investment Companies in November 2014 and updated inOctober 2019.

FRS 104, ‘Interim Financial Reporting’, issued by the Financial Reporting Council (‘FRC’) in March 2015 has been applied inpreparing this condensed set of financial statements for the six months ended 30th September 2019.

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

The accounting policies applied to this condensed set of financial statements are consistent with those applied in the financialstatements for the year ended 31st March 2019.

3. Return/(loss) per share

(Unaudit ed) (Unaudited) (Audited)Six months ended Six months ended Year ended


Return/(loss) per share is based on the following:Revenue return 11,012 11,269 11,680Capital return/(loss) 27,352 32,378 (63,474)

Total return/(loss) 38,364 43,647 (51,794)

Weighted average number of shares in issue 159,462,885 159,987,885 159,839,186Revenue return per share 6.91p 7.04p 7.31pCapital return/(loss) per share 17.15p 20.24p (39.71)p

Total return/(loss) per share 24.06p 27.28p (32.40)p




4. Dividends paid



2019 final dividend of 5.5p (2018: 5.5p) per share 8,771 8,799 8,7992019 interim dividend of 1.2p per share — — 1,917

Total dividends paid in the period/year 8,771 8,799 10,716

All dividends paid in the period/year have been funded from the revenue reserve.

An interim dividend of 1.2p (2019: 1.2p) has been declared in respect of the six months ended 30th September 2019, amountingto £1,917,000.

5. Net asset value per share


30th September 2019 30th September 2018 31st March 2019

Net assets (£’000) 667,401 737,023 637,808Number of shares in issue 159,462,885 159,987,885 159,462,885

Net asset value per share 418.5p 460.7p 400.0p

6. Reconciliation of net return/(loss) before finance costs and taxation to net cash outflow fromoperations before dividends and interest



Net return/(loss) before finance costs and taxation 39,888 45,147 (50,010)(Less capital return)/add capital loss before finance costs and taxation (27,424) (32,683) 63,046

Scrip dividends received as income (916) (828) (828)Decrease/(increase) in accrued income and other debtors 654 — (648)

Decrease in accrued expenses (44) (84) (79)Management fee allocated to capital (2,186) (2,364) (4,520)Overseas withholding tax (1,471) (1,522) (1,639)Dividends received (11,892) (11,448) (12,613)Interest received (1) — —Realised (loss)/gain on foreign exchange transactions (407) 697 1,432(Loss)/gain on liquidity fund (102) 720 (946)

Net cash outflow from operations before dividends and interest (3,901) (2,365) (6,805)




7. Fair valuation of investments

The fair value hierarchy analysis for financial instruments held at fair value at the period end is as follows:


30th September 2019 30th September 2018 31st March 2019Assets Liabilities Assets Liabilities Assets Liabilities£’000 £’000 £’000 £’000 £’000 £’000

Level 1 670,087 — 719,228 — 604,429 —Level 2¹ — (1) 6 — — (4)

Total 670,087 (1) 719,234 — 604,429 (4)

1 Includes forward foreign currency contracts.


Interim Management Report

European Smaller Companies HY pp21-22.qxp 03/12/2019 13:28 Page 21

2 2 | J PMORGAN EUROPEAN SMALLER COMPAN IES TRUST PLC . HALF YEAR REPORT & F INANC IAL STATEMENTS 20 19

I N T E R I M M A N A G E M E N T R E P O R T

The Company is required to make the following disclosures in its half year report:

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Company have not changed and fall into the following broad categories: investmentunderperformance and strategy; market and currency; accounting, legal and regulatory; operational; cyber crime, financial andcorporate governance and shareholder relations. Information on each of these areas is given in the Business Review within the AnnualReport and Accounts for the year ended 31st March 2019.

Related Party Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have materiallyaffected the financial position or the performance of the Company.

Going Concern

The Directors believe that, having considered the Company’s investment objective, risk management policies, capital managementpolicies and procedures, the nature of the portfolio and expenditure and cashflow projections, the Company has adequate resources,an appropriate financial structure and suitable management arrangements in place to continue in operational existence for theforeseeable future. More specifically, they believe that there are no material uncertainties pertaining to the Company that wouldprevent its ability to continue in such operational existence for at least twelve months from the date of the approval of this half yearlyfinancial report. For these reasons, they consider there is reasonable evidence to continue to adopt the going concern basis inpreparing the financial statements.

Directors’ Responsibilities

The Board of Directors confirms that, to the best of its knowledge:

(i) the condensed set of financial statements contained within the half-yearly financial report has been prepared in accordance withFRS 104 ‘Interim Financial Reports’ and gives a true and fair view of the state of affairs of the Company and of the assets,liabilities, financial position and net return of the Company, as at 30th September 2019, as required by the UK Listing AuthorityDisclosure Guidance and Transparency Rules 4.2.4R; and

(ii) the interim management report includes a fair review of the information required by 4.2.7R and 4.2.8R of the UK ListingAuthority Disclosure Guidance and Transparency Rules.

In order to provide these confirmations, and in preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

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

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continuein business;

and the Directors confirm that they have done so.

For and on behalf of the BoardMarc van GelderChairman 4th December 2019


Shareholder Information


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GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES (‘APMs’) (UNAUDITED)

Return to Shareholders (APM)

Total return to the shareholders, on a last traded price to last traded price basis, assuming that all dividends received were reinvested,without transaction costs, into the shares of the Company at the time the shares were quoted ex-dividend.

Six months endedTotal return calculation Page 30th September 2019

Opening share price (p) 4 349.0 (a)Closing share price (p) 4 358.0 (b)Total dividend adjustment factor1 1.015235 (c)Adjusted closing share price (d = b x c) 363.5 (d)

Total return to shareholders (e = d / a – 1) 4.1% (e)

1 The dividend adjustment factor is calculated on the assumption that the dividends paid out by the Company are reinvested into the shares of the Company at the last tradedprice quoted at the ex-dividend date.

Return on Net Assets (APM)

Total return on net asset value (‘NAV’) per share, on a bid value to bid value basis, assuming that all dividends paid out by the Companywere reinvested, without transaction costs, into the shares of the Company at the NAV per share at the time the shares were quotedex-dividend.

Six months endedTotal return calculation Page 30th September 2019

Opening NAV per share (p) 4 400.0 (a)Closing NAV per share (p) 4 418.5 (b)Total dividend adjustment factor2 1.013183 (c)Adjusted closing NAV per share (d = b x c) 424.0 (d)

Total return on net assets (e = d / a – 1) 6.0% (e)

2 The dividend adjustment factor is calculated on the assumption that the dividends paid out by the Company are reinvested into the shares of the Company at the NAV at theex-dividend date.

In accordance with industry practice, dividends payable which have been declared but which are unpaid at the balance sheet date arededucted from the NAV per share when calculating the total return on net assets.

Benchmark total return

Total return on the benchmark, on a closing-market value to closing-market value basis, assuming that all dividends received werereinvested, without transaction costs, in the shares of the underlying companies at the time the shares were quoted ex-dividend.

The benchmark is a recognised index of stocks which should not be taken as wholly representative of the Company’s investmentuniverse. The Company’s investment strategy does not follow or ‘track’ this index and consequently, there may be some divergencebetween the Company’s performance and that of the benchmark.


S H A R E H O L D E R I N F O R M A T I O N | 2 5

GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES (‘APMs’) (UNAUDITED)

Gearing/(Net Cash) (APM)

Gearing represents the excess amount above shareholders’ funds of total investments, expressed as a percentage of the shareholders’funds. If the amount calculated is negative, this is shown as a ‘net cash’ position.

30th September 31st March 2019 2019Gearing calculation Page £’000 £’000

Investments held at fair value through profit or loss 16 670,087 604,429 (a)

Net assets 16 667,401 637,808 (b)

Gearing/(net cash) (c = a / b – 1) 0.4% (5.2)% (c)

Ongoing charges (APM)

The ongoing charges represent the Company’s management fee and all other operating expenses excluding finance costs payable,expressed as a percentage of the average of the daily cum-income net assets during the year and is calculated in accordance withguidance issued by the Association of Investment Companies.

The figure as at 30th September 2019 is an estimated annualised figure based on the numbers for the six months ended30th September 2019.

30th September 31st March 2019 2018Ongoing charges calculation Page £’000 £’000

Management fee 14 6,246 6,458Other administrative expenses1 14 716 703

Total management fee and other administrative expenses 6,962 7,161 (a)

Average daily cum-income net assets 667,848 687,188 (b)

Ongoing charges (c = a / b) 1.04% 1.04% (c)

1 The 31st March 2018 figure was revised. Negative interest charged by JPM Euro Liquidity Fund of £160,000 is now excluded from other administrative expenses.

Share Price Discount/Premium to Net Asset Value (‘NAV’) per Share (APM)

If the share price of an investment trust is lower than the NAV per share, the shares are said to be trading at a discount. The discount isshown as a percentage of the NAV per share.

The opposite of a discount is a premium. It is more common for an investment trust’s shares to trade at a discount than at a premium.


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W H E R E T O B U Y J . P . M O R G A N I N V E S T M E N T T R U S T S

J.P. Morgan investment trusts are eligible investments withina stocks & shares individual savings account (ISA) and Junior ISA.For the 2019/20 tax year, from 6th April 2019 and ending5th April 2020, the annual ISA allowance is £20,000 and theJunior ISA annual allowance is £4,368.

You can invest in J.P. Morgan investment trusts through thefollowing;

1. Via a third party provider

Third party providers include:

Please note this list is not exhaustive and the availability of theCompany’s shares may vary depending on the provider. Thesewebsites are third party sites and the Company does not endorseor recommend any. Please observe each site’s privacy and cookiepolicies as well as their platform charges structure.

2. Through a professional adviser

Professional advisers are usually able to access the products of allthe companies in the market and can help you find an investmentthat suits your individual circumstances. An adviser will let youknow the fee for their service before you go ahead. You can findan adviser at unbiased.co.uk

You may also buy J.P. Morgan investment trusts throughstockbrokers, wealth managers and banks.

To familiarise yourself with the Financial Conduct Authority (FCA)adviser charging and commission rules, visit fca.org.uk

Information for J.P. Morgan Investment Account,Stock & Shares ISA account holders

From 28th September 2019 J.P. Morgan Asset Managementceased offering investment accounts and stocks & shares ISAsavings products. Investors were able to remain invested inJ.P. Morgan managed investment trusts by transferring to anotherservice provider. For full details of all the options available toinvestors, please refer to correspondence sent by J.P. Morgan on8th April 2019 or contact your financial adviser.

The Board continues to encourage all of its shareholders toexercise their rights and notes that many specialist platforms,to include the default options offered by JPMorgan, provideshareholders with the ability to continue to receive Companydocumentation, to vote their shares and to attend generalmeetings, at no cost. Please refer to your investment platformfor more details, or visit the AIC’s website atwww.theaic.co.uk/aic/shareholder-voting-consumer-platforms forinformation on which platforms support these services and howto utilise them.

AJ BellAlliance Trust SavingsBarclays Smart InvestorCharles Stanley DirectFundsNetwork

Hargreaves LansdownInteractive InvestorSelftradeThe Share Centre


S H A R E H O L D E R I N F O R M A T I O N | 2 7

S H A R E H O L D E R I N F O R M A T I O N

Avoid investment fraud1 Reject cold calls

If you’ve received unsolicited contact about an investment opportunity, chances are it’s a high risk investment or a scam. You should treat the call with extreme caution. The safest thing to do is to hang up.

2 Check the FCA Warning List The FCA Warning List is a list of �rms and individuals we know are operating without our authorisation.

3 Get impartial advice Think about getting impartial �nancial advice before you hand over any money. Seek advice from someone unconnected to the �rm that has approached you.

Report a ScamIf you suspect that you have been approached by fraudsters please tell the FCA using the reporting form at www.fca.org.uk/consumers/report-scam-unauthorised-�rm. You can also call the FCA Consumer Helpline on 0800 111 6768

If you have lost money to investment fraud, you should report it to Action Fraud on 0300 123 2040 or online at www.actionfraud.police.uk

Find out more at www.fca.org.uk/scamsmart

Investment scams are designed to look like genuine investmentsSpot the warning signs

Have you been:

• contacted out of the blue• promised tempting returns

and told the investment is safe• called repeatedly, or• told the offer is only available

for a limited time?

If so, you might have been contacted by fraudsters. Remember: if it sounds too good to be true,

it probably is!

Be ScamSmart


I N F O R M AT I O N A B O U T T H E C O M PA N Y

S H A R E H O L D E R I N F O R M AT I O N | 2 9

HistoryOn 24th April 1990, the Company acquired the undertaking and assets of FlemingEuropean Fledgeling Fund Limited (the ‘Fund’) in exchange for the issue of itsshares and warrants. The Fund was an open-ended, unquoted investment companybased in Jersey and formed in June 1987 with the same objectives and investmentpolicies as the Company. The Company adopted its present name in July 2010.

DirectorsMarc van Gelder (Chairman) Tanya CordreyAshok GuptaNicholas SmithStephen White

Company NumbersCompany registration number: 2431143 London Stock Exchange number: 0341969 ISIN: GB00BMTS0Z37 Bloomberg code: JESC LN LEI: 54930049CEWDI46Y3U28

Market InformationThe Company’s net asset value (‘NAV’) per share is published daily, via theLondon Stock Exchange. The Company’s shares are listed on the London StockExchange. The market price is shown daily in the Financial Times, The Times,The Daily Telegraph, The Scotsman and on the Company’s website atwww.jpmeuropeansmallercompanies.co.uk, where the share price is updatedevery 15 minutes during trading hours.

Websitewww.jpmeuropeansmallercompanies.co.uk

Share TransactionsThe Company’s shares may be dealt in directly through a stockbroker orprofessional adviser acting on an investor’s behalf.

Manager and Company SecretaryJPMorgan Funds Limited

Company’s Registered Office60 Victoria EmbankmentLondon EC4Y 0JPTelephone: 020 7742 4000

For company secretarial issues and administrative matters, please contactFaith Pengelly.

Depositary The Bank of New York Mellon (International) Limited1 Canada SquareLondon E14 5AL

The Depositary has appointed JPMorgan Chase Bank, N.A. as the Company’scustodian.

RegistrarsEquiniti LimitedReference 1083Aspect HouseSpencer RoadLancingWest Sussex BN99 6DATelephone number: 0371 384 2325

Lines open 8.30 a.m. to 5.30 p.m. Monday to Friday. Calls to the helpline will costno more than a national rate call to a 01 or 02 number. Callers from overseasshould dial +44 121 415 0225.

Notifications of changes of address and enquiries regarding share certificates ordividend cheques should be made in writing to the Registrar quoting reference1083.

Registered shareholders can obtain further details on their holdings on theinternet by visiting www.shareview.co.uk

Independent AuditorsErnst & Young LLP Chartered Accountants and Statutory Auditors25 Churchill Place, Canary WharfLondon E14 5EY

BrokersCenkos Securities plc 6.7.8 Tokenhouse Yard London EC2R 7AS

FCA regulation of ‘non-mainstream pooled investments’ and‘Complex Instruments’The Company currently conducts its affairs so that the shares it issues can berecommended by Independent Financial Advisers to ordinary retail investors inaccordance with the rules of the Financial Conduct Authority (‘FCA’) in relation tonon-mainstream investment products and intends to continue to do so for theforeseeable future.

The shares are excluded from the FCA’s restrictions which apply to non-mainstreaminvestment products because they are shares in an investment trust.

The Company’s ordinary shares are not considered to be ‘complex instruments’under the FCA’s ‘Appropriateness’ rules and guidance in the Conduct of Businesssourcebook.

FINANCIAL CALENDAR

Financial year end 31st March

Final results announced May/June

Half year end 30th September

Half year results announced November

Annual General Meeting July

Dividend July/November

A member of the AIC

European Smaller Companies HY Cover A4.qxp 03/12/2019 14:25 Page IBC1

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CONTACT

60 Victoria EmbankmentLondon EC4Y 0JPTel +44 (0) 20 7742 4000Website www.jpmeuropeansmallercompanies.co.uk

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