JPMorgan Jap Smllr JPS Half Year Results

  JPMorgan Jap Smllr (JPS) - Half Year Results

RNS Number : 4382R
JPMorgan Japan Smaller Co Tst PLC
19 November 2012




                      LONDON STOCK EXCHANGE ANNOUNCEMENT

                  JPMORGAN JAPAN SMALLER COMPANIES TRUST PLC

             UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED
                             30TH SEPTEMBER 2012





Chairman's Statement



Performance

The Japanese smaller companies market continued to be very challenging  during 
the first half of our current  financial year. Concern over the prospects  for 
the global  economy, the  ongoing uncertainty  surrounding the  Eurozone,  the 
recent US Presidential elections and the strength of the yen were all  factors 
which weighed on sentiment. Positively, the Company outperformed its benchmark
index, the S&P/Citigroup Japan Extended Market Index (total return net),  with 
its undiluted net  asset value  falling by  0.8% compared  to the  benchmark's 
decline of 6.1%. The  diluted total return on  net assets, which assumes  that 
all of the Subscription shares were exercised at the current rate of 174 pence
per share,  on  the other  hand,  rose by  1.1%.  Over the  same  period,  the 
Company's Ordinary share price  fell by 7.5%, reflecting  the widening of  the 
discount from 10.4% to 18.0%. Subsequent  to the period end, the discount  has 
tightened somewhat and, as at the time of writing, stood at 15.8%.

In my year end statement, I highlighted  the measures your Board had taken  to 
address the  poor  performance  delivered  in  recent  years,  not  least  the 
appointment of a new management team based in Tokyo. It is pleasing to see  an 
immediate marked  upturn  in  relative performance  following  these  changes, 
albeit in  a dull  market, and  the Board  will continue  to monitor  progress 
carefully. A more detailed review of the Company's performance is given in the
Investment Manager's report below.

Gearing

The Company has a ¥2.0 billion secured credit facility with Scotiabank  Europe 
plc, which  gives the  Investment  Managers the  ability to  gear  tactically. 
During the six  months to 30th  September 2012, the  Company's gearing  ranged 
from net cash of 2% to 5% geared. At the time of writing, the company was  99% 
invested.

Subscription Shares

During the six months  to 30th September 2012,  the Company issued 33,417  new 
Ordinary shares following valid applications to exercise Subscription  shares. 
At the time of  writing, the Company's  shares were trading  at 136 pence  per 
share, somewhat  below the  current exercise  price of  174 pence  per  share. 
Further details  of the  Subscription shares  can be  found on  the  Company's 
website at www.jpmjapansmallercompanies.co.uk

Outlook

Our Managers remain cautious regarding the near term outlook for the  Japanese 
economy, but are confident of continuing to identify companies with attractive
positioning. The Portfolio  is focused  on high quality  Japanese stocks  with 
good earnings progression, strong balance sheets and, in many cases,  exposure 
to the faster growing economies of Asia. We believe a Portfolio of such stocks
offers considerable promise.





Alan Clifton

Chairman
19th November 2012



Investment Managers' Report



Market review

The Japanese  market  fell  during  the  review  period,  and  the  return  on 
S&P/Citigroup Japan  Extended Market  Index (total  return net)  was -6.1%  in 
sterling terms. Investors became increasingly  risk averse as the outlook  for 
both  global  and  domestic  economies  deteriorated,  the  yen  continued  to 
strengthen against most other currencies  and tensions rose between Japan  and 
China over the disputed Senkaku Islands.

During the three months to end June, the market focused on news emanating from
Europe with elections in Greece and France, as well as soaring borrowing costs
for Spain  and  Italy at  centre  stage.  In addition,  the  economic  outlook 
deteriorated for the  US and China,  the two largest  economies in the  world. 
Employment data in the US, bellweather  for the health of the economy,  showed 
that the pace of  the recovery has  been painfully slow.  In China, the  local 
Shanghai Composite index  fell to a  new post  February 2009 low  due to  poor 
economic data and lack of decisive policy response.

Although investor sentiment improved markedly in the July to September period,
thanks to aggressive monetary easing in  Europe, the US and Japan among  other 
countries, the Japanese market  failed to participate in  the global rally.  A 
stronger yen, rising tensions with China, the failure of the domestic  economy 
to rebound strongly from the adverse shocks of the earthquake and tsunami,  as 
well as  the floods  in Thailand  that  disrupted the  supply chain  for  many 
Japanese exporters in 2011, are all to blame for the underperformance of Japan
relative to other markets.

Performance review

The key  focus  of  the  Company's holdings  was  little  changed  -  Japanese 
companies that  have  an  opportunity  to grow  in  Asia  and  other  emerging 
economies, those  that are  restructuring  and those  that are  in  structural 
growth  niches  within  the  domestic  economy.  We  focus  on  companies  and 
industries that are able to show  sustained business expansion and that  trade 
at attractive valuations.  Typically the  balance sheet  is strong,  operating 
margins are high, as are returns on assets and equity. Overall there is a very
strong focus on business quality.

Over the six months to  September, the Company produced  a return of -0.8%  in 
sterling terms, while the return of the benchmark S&P/Citigroup Japan Extended
Market Index  (total  return  net)  was -6.1%.  The  outperformance  over  the 
benchmark  is  attributable  largely  to  stock  selection,  although   sector 
allocation also contributed positively. The positive contribution was achieved
in a range of sectors, in each of  which our focus on quality of earnings  and 
quality of  balance sheet  helped produce  superior returns  than the  broader 
market.

The top contributors to the outperformance were Ship Healthcare Holdings which
operates dispensing pharmacies and consulting services to hospitals, an online
medical portal operator M3, Seven Bank which is an ATM network operator mainly
through Seven Eleven convenience  stores, Sho-Bond Holdings which  specialises 
in the maintenance and repair of bridges and other social infrastructure,  and 
Sysmex, a  medical equipment  company. All  of them  are core  holdings  whose 
medium-term growth  potential is,  we believe,  not fully  appreciated by  the 
market. In  addition, all  of them  have robust  balance sheets  and  generate 
strong cash flow. On the other hand, our holdings in cyclical sectors, such as
Daido  Metal,   Skymark  Airlines   and  Eagle   Industries,  detracted   from 
performance.

With respect to sector allocation, our  focus on quality of balance sheet  and 
long-term, as  opposed  to  cyclical,  growth potential  has  resulted  in  an 
overweight stance in sectors  such as healthcare and  internet and a  cautious 
stance towards materials, capital goods and technology. The Company was  fully 
invested at the end of September and the turnover was less than 20% during the
six months, down significantly from the same period a year ago.

Outlook and portfolio strategy

We  believe  that  equity   market  volatility  will   remain  high,  due   to 
uncertainties related to the outlook for  the economy as well as policy  risks 
around the world. It is our view  that global economic growth will be  subdued 
for a protracted  period, and  the risks  are skewed  to the  downside due  to 
deflationary forces arising  from de-leveraging.  The Bank of  Japan does  not 
appear to  be prepared  to engage  itself  in aggressive  easing, nor  is  the 
government any  closer than  before  to addressing  the structural  issues  of 
budget deficit, declining working population and deflation. It is likely  that 
there will  be another  general  election before  spring  next year,  and  the 
consensus view is  that the  ruling Democratic Party  of Japan  will lose  its 
majority and a new coalition government centred around the Liberal  Democratic 
Party will succeed.

Under such circumstances, we do not intend to change our strategy. In the last
report, we wrote the following:

'There are many  long-term trends  in Japan,  both positive  and negative.  We 
believe that the  differences between  those companies that  will succeed  and 
those that will not are set to become ever greater. Our local presence on  the 
ground in  Tokyo  should be  a  strong competitive  advantage  in  identifying 
long-term country, sector and stock  specific themes. Although there are  many 
macro-economic headwinds  we are  positive on  the outlook  for the  Company's 
holdings in the long-term view.'

Indeed, the  Japanese  equity market  has  played  out almost  exactly  as  we 
anticipated above.  Those companies  that are  expected to  deliver  long-term 
growth have generally performed  strongly. On the  other hand, companies  that 
lack clear competitive advantage and companies whose balance sheets are highly
geared, have seen their share prices fall significantly.

Some of the themes  that we have  focused on include  the internet, an  ageing 
population in Japan and  the rise of the  middle class in emerging  economies. 
Although we are cautious on the  long-term trend for overall domestic  demand, 
we believe we can identify clear  winners and losers. The Portfolio  comprises 
stocks which are  well positioned to  prosper, notwithstanding the  challenges 
facing the Japanese economy.





Shoichi Mizusawa-

Nicholas Weindling

Naohiro Ozawa

Investment
Managers
19th November 2012



Interim Management Report



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 fall  into  the 
following broad categories: investment and strategy; market; accounting, legal
and regulatory; corporate governance  and shareholder relations;  operational; 
foreign currency; and financial (including  credit risk). Information on  each 
of these areas is given  in the Business Review  within the Annual Report  and 
Accounts for the year ended 31st March 2012.

Related Parties Transactions

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



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 with the Accounting Standards
Board's Statement 'Half-Yearly Financial Reports'; and

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

For and on behalf of the Board





Alan Clifton

Chairman
19th November 2012



For further information, please contact:

Andrew Norman

For and on behalf of

JPMorgan Asset Management (UK) Limited, Secretary

020 7742 6000

Please note that up to date information on the Company, including daily NAV
and share prices, factsheets and portfolio information can be found at
www.jpmjapansmallercompanies.co.uk



Income Statement

for the six months ended 30th September 2012



                     (Unaudited)            (Unaudited)             (Audited)
                  Six months ended       Six months ended          Year ended
                 30th September 2012    30th September 2011      31st March 2012
               Revenue Capital   Total Revenue Capital Total Revenue Capital Total 
                 £'000   £'000   £'000   £'000   £'000 £'000   £'000   £'000 £'000 
(Losses)/gains                                                                     
on investments
  held at fair                                                                     
value through
  profit or          -   (478)   (478)       -   4,495 4,495       -     936   936 
loss
Net foreign          -    (91)    (91)       -   (441) (441)       -   (411) (411)
currency                                                                           
losses
Income from        636       -     636     555       -   555   1,295       - 1,295 
investments
Other interest                                                                     
receivable and
  similar            -       -       -       -       -     -       1       -     1 
income
Gross              636   (569)      67     555   4,054 4,609   1,296     525 1,821 
return/(loss)
Management fee   (349)       -   (349)   (494)       - (494)   (873)       - (873) 
Other            (188)       -   (188)   (188)       - (188)   (372)       - (372)
administrative                                                                     
expenses
Net
return/(loss)                                                                      
on
  ordinary
activities                                                                         
before
  finance           99   (569)   (470)   (127)   4,054 3,927      51     525   576
costs and                                                                          
taxation
Finance costs     (49)       -    (49)    (97)       -  (97)   (124)       - (124) 
Net
return/(loss)                                                                      
on ordinary
  activities        50   (569)   (519)   (224)   4,054 3,830    (73)     525   452
before                                                                             
taxation
Taxation          (45)       -    (45)    (39)       -  (39)    (91)       -  (91) 
Net
return/(loss)                                                                      
on ordinary
  activities         5   (569)   (564)   (263)   4,054 3,791   (164)     525   361 
after taxation
Return/(loss)
per Ordinary                                                                       
share
  (note 3)                                                                         
  - undiluted    0.01p (1.44)p (1.43)p (0.67)p  10.27p 9.60p (0.42)p   1.33p 0.91p 
  - diluted      0.01p (1.51)p (1.50)p (0.67)p  10.32p 9.65p (0.42)p   1.34p 0.92p 



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

The 'Total' column of this statement is the profit and loss account of the
Company and the 'Revenue' and 'Capital' columns represent supplementary
information prepared under guidance issued by The Association of Investment
Companies. The Total column represents all the information that is required to
be disclosed in a Statement of Total Recognised Gains and Losses ('STRGL').
For this reason a STRGL has not been presented.



Reconciliation of Movements in Shareholders' Funds



                   Called                    Capital
                       up
Six months ended    share   Share   Other redemption   Capital  Revenue
30th September    capital premium reserve    reserve  reserves  reserve  Total
2012
(Unaudited)         £'000   £'000   £'000      £'000     £'000    £'000  £'000
At 31st March       4,017     716 314,775      1,836 (243,203) (12,263) 65,878
2012
Repurchase of
shares held
  in Treasury           -       -   (310)          -         -        -  (310)
Issue of Ordinary
shares on
exercise
  of Subscription       3      46       -          -         -        -     49
shares
Net (loss)/return       -       -       -          -     (569)        5  (564)
on ordinary
activities
At 30th September   4,020     762 314,465      1,836 (243,772) (12,258) 65,053
2012



                   Called                    Capital
                       up
Six months ended    share   Share   Other redemption   Capital  Revenue
30th September    capital premium reserve    reserve  reserves  reserve  Total
2011
(Unaudited)         £'000   £'000   £'000      £'000     £'000    £'000  £'000
At 31st March       4,058     710 314,823      1,794 (243,728) (12,099) 65,558
2011
Cancellation of
shares held
  in Treasury        (42)       -       -         42         -        -      -
Issue of Ordinary
shares on
exercise
  of Subscription       -       6       -          -         -        -      6
shares
Net return/(loss)       -       -       -          -     4,054    (263)  3,791
on ordinary
activities
At 30th September   4,016     716 314,823      1,836 (239,674) (12,362) 69,355
2011



                   Called                    Capital
                       up
Year ended          share   Share   Other redemption   Capital  Revenue
31st March 2012   capital premium reserve    reserve  reserves  reserve  Total
(Audited)           £'000   £'000   £'000      £'000     £'000    £'000  £'000
At 31st March       4,058     710 314,823      1,794 (243,728) (12,099) 65,558
2011
Repurchase of           -       -    (48)          -         -        -   (48)
shares into
Treasury
Cancellation of      (42)       -       -         42         -        -      -
shares in
Treasury
Issue of Ordinary
shares on
exercise of
  Subscription          1       6       -          -         -        -      7
shares
Net return/(loss)       -       -       -          -       525    (164)    361
on ordinary
activities
At 31st March       4,017     716 314,775      1,836 (243,203) (12,263) 65,878
2012





Balance Sheet

at 30th September 2012



                                         (Unaudited)    (Unaudited)  (Audited)
                                      30th September 30th September 31st March
                                                2012           2011       2012
                                               £'000          £'000      £'000
Fixed assets
Investments held at fair value                64,330         66,263     69,273
through profit or loss
Current assets
Debtors                                          493          1,432      1,490
Cash and short term deposits                   5,073         10,305        554
                                               5,566         11,737      2,044
Creditors: amounts falling due within           (67)        (8,645)    (5,439)
one year
Net current assets/(liabilities)               5,499          3,092    (3,395)
Total assets less current liabilities         69,829         69,355     65,878
Creditors: amounts falling due after
  more than one year                         (4,776)              -          -
Net assets                                    65,053         69,355     65,878
Capital and reserves
Called up share capital                        4,020          4,016      4,017
Share premium                                    762            716        716
Other reserve                                314,465        314,823    314,775
Capital redemption reserve                     1,836          1,836      1,836
Capital reserves                           (243,772)      (239,674)  (243,203)
Revenue reserve                             (12,258)       (12,362)   (12,263)
Total equity shareholders' funds              65,053         69,355     65,878
Net asset value per Ordinary share
(note 4)
  - undiluted                                 165.8p         175.8p     167.1p
  - diluted                                   165.8p         171.3p     164.0p









The Company's registration number is 3916716



Cash Flow Statement

for the six months ended 30th September 2012



                                       (Unaudited)      (Unaudited)  (Audited)
                                  Six months ended Six months ended Year ended
                                    30th September   30th September 31st March
                                              2012             2011       2012
                                             £'000            £'000      £'000
Net cash inflow/(outflow) from
operating
  activities (note 5)                          190              (1)       (59)
Net cash outflow from return on
investments
  and servicing of finance                    (53)            (101)      (125)
Net cash inflow from capital
expenditure
  and financial investment                   4,521           10,294      2,325
Net cash outflow from financing              (261)          (6,233)    (7,928)
Increase/(decrease) in cash in               4,397            3,959    (5,787)
the period
Reconciliation of net cash flow
to movement in
  net funds/debt
Net cash movement                            4,397            3,959    (5,787)
Net loans repaid                                 -            6,239      7,887
Exchange movements                            (91)            (441)      (411)
Movement in net funds in the                 4,306            9,757      1,689
period
Net debt at the beginning of the           (4,009)          (5,698)    (5,698)
period
Net funds/(debt) at the end of                 297            4,059    (4,009)
the period
Represented by:
Cash and short term deposits                 5,073           10,305        554
Debt falling due after more than           (4,776)          (6,246)    (4,563)
one year
Net funds/(debt) at the end of                 297            4,059    (4,009)
the period





Notes to the Accounts

for the six months ended 30th September 2012



1. Financial statements

 The information contained within the Financial Statements in this half
year report has not been audited or reviewed by the Company's auditors.

 The figures and financial information for the year ended 31st March 2012
are extracted from the latest published accounts of the Company and do not
constitute statutory accounts for that year. Those accounts have been
delivered to the Registrar of Companies and included the report of the
auditors which was unqualified and did not contain a statement under either
section 498(2) or 498(3) of the Companies Act 2006.

2. Accounting policies

 The accounts have been prepared in accordance with United Kingdom
Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of
Recommended Practice 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts' issued in January 2009.

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

 The accounting policies applied in these half year accounts are
consistent with those applied in the accounts for the year ended 31st March
2012.

3. Return/(loss) per Ordinary share

                                  (Unaudited)      (Unaudited)       (Audited)
                             Six months ended Six months ended      Year ended
                               30th September   30th September 31st March 2012
                                         2012             2011
                                        £'000            £'000           £'000
Return/(loss) per Ordinary
share is based on the
following:
Revenue return/(loss)                       5            (263)           (164)
Capital (loss)/return                   (569)            4,054             525
Total (loss)/return                     (564)            3,791             361
Weighted average number of
Ordinary shares in issue
   during the period used
for the purpose of the basic
  (undiluted) calculation          39,379,850       39,455,653      39,446,389
Weighted average number of
Ordinary shares in issue
   during the period used
for the purpose of the
diluted
  calculation                      37,514,172       39,267,442      39,134,213
Basic (undiluted)
Revenue return/(loss) per               0.01p          (0.67)p         (0.42)p
Ordinary share
Capital (loss)/return per             (1.44)p           10.27p           1.33p
Ordinary share
Total (loss)/return per               (1.43)p            9.60p           0.91p
Ordinary share
Diluted
Revenue return/(loss) per               0.01p          (0.67)p         (0.42)p
Ordinary share
Capital (loss)/return per             (1.51)p           10.32p           1.34p
Ordinary share
Total (loss)/return per               (1.50)p            9.65p           0.92p
Ordinary share



 The diluted return/(loss) per Ordinary share represents the
return/(loss) on ordinary activities after taxation for the period divided by
the weighted average number of Ordinary shares in issue during the period, as
adjusted in accordance with the requirements of Financial Reporting Standard
22 'Earnings per share'.

4.  Net asset value per Ordinary share

                                  (Unaudited)      (Unaudited)       (Audited)
                             Six months ended Six months ended      Year ended
                               30th September   30th September 31st March 2012
                                         2012             2011
Undiluted
Ordinary shareholders' funds           65,053           69,355          65,878
(£'000)
Number of Ordinary shares in       39,229,318       39,456,287      39,421,401
issue
Net asset value per Ordinary           165.8p           175.8p          167.1p
share
Diluted
Ordinary shareholders' funds
assuming exercise of
  dilutive Subscription
shares and reissuance of
  any Treasury shares                  65,053           79,987          76,510
(£'000)
Number of potential Ordinary       39,229,318       46,688,796      46,653,796
shares in issue
Net asset value per Ordinary           165.8p           171.3p          164.0p
share



 The diluted net asset value per Ordinary share assumes that all
outstanding dilutive Subscription shares were converted into Ordinary shares
at the period end and any shares held in Treasury at the period end were
reissued in accordance with the Board's policy on the reissuance of Treasury
shares. At 30th September 2012, the Subscription and Treasury shares have no
dilutive effect, as the Ordinary share price was below the Subscriptions share
conversion price and the Treasury shares will only be reissued at a premium to
net asset value per share.

5. Reconciliation of net (loss)/return on ordinary activities before finance
costs and taxation to net cash inflow/(outflow) from operating activities

                                       (Unaudited)      (Unaudited)  (Audited)
                                  Six months ended Six months ended Year ended
                                    30th September   30th September 31st March
                                              2012             2011       2012
                                             £'000            £'000      £'000
Total (loss)/return on ordinary
activities before finance
  costs and taxation                         (470)            3,927        576
Less capital loss/(return) before              569          (4,054)      (525)
finance costs and taxation
Decrease/(increase) in accrued                 164              182       (66)
income
Decrease in other debtors                        2               20          9
(Decrease)/increase in other                  (30)             (37)         38
creditors
Overseas withholding tax                      (45)             (39)       (91)
Net cash inflow/outflow from                   190              (1)       (59)
operating activities



JPMORGAN ASSET MANAGEMENT (UK) LIMITED



ENDS





A copy of the half year has  been submitted to the National Storage  Mechanism 
and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM





The half  year will  also shortly  be available  on the  Company's website  at 
www.jpmjapansmallercompanies.co.ukwhere  up  to   date  information  on   the 
Company, including  daily  NAV  and share  prices,  factsheets  and  portfolio 
information can also be found.





-

                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


IR BKLFFLFFEFBQ -0- Nov/19/2012 10:59 GMT
 
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