LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN UK SMALLER COMPANIES INVESTMENT TRUST PLC

(the 'Company')

FINAL RESULTS FOR THE YEAR ENDED 31ST JULY 2021

Legal Entity Identifier: 549300PXALXKUMU9JM18

Information disclosed in accordance with DTR 4.2.2

The Directors announce the Company's results for the year ended 31st July 2021

CHAIRMAN'S STATEMENT

Investment Performance

I am most pleased to report that the company made sustained progress over the financial year to deliver a second consecutive year of strong performance. During the year the Company's total return on net assets (with net dividends reinvested) rose by 68.1% which compares very favourably to the return of +50.3% for the Company's benchmark, the Numis Smaller Companies plus AIM Index (excluding Investment Companies). The return to shareholders was +79.4% reflecting a narrowing of the discount level over the year as a whole from 13.8 % to 8.0%.

Since the year-end, the discount has widened to 10.0% as at 8th October 2021. The return on net assets was -3.4% compared to an increase in the benchmark of +0.1% and the return to shareholders was -5.6%.

The Investment Managers are to be congratulated as they have kept cool heads and negotiated the evolving pandemic with skill and an eye to opportunity. Their many years of experience and robust investment process have enabled them to capitalise on the strong recovery as lock-down restrictions have eased, fuelled by continued government and central bank stimulus. In their report they provide further detail on portfolio performance and attribution, together with a commentary on markets.

Revenue and Dividends

Despite a reasonable recovery, the level of dividends paid by companies in general remains considerably lower than two years ago. This means that the company has not produced enough income, after costs, to cover fully a maintained dividend. However, the company retains an amount of undistributed net income from previous years known as a Revenue Reserve which is also available for distribution. Consequently, the Directors are recommending a final dividend of 5.7p (2020: 5.5p) per share, an increase of 3.6%. If approved, the dividend will be paid on 6th December 2021 to shareholders on the register at close of business on 29th October 2021.

In arriving at this recommendation, the Directors considered the Manager's revenue projections which forecast a considerable recovery in revenue in the current financial year. Whilst the dividend will not be fully covered by income, after costs, the Directors have confidence in strong revenue growth and believe that the increase is an appropriate use of revenue reserves.

Gearing

The Board believes that a moderate level of gearing is an efficient way to enhance long-term shareholder returns, particularly in the current low interest rate environment, albeit at the cost of a small increase in short-term volatility. The level of gearing is regularly discussed with the Manager and is adjusted by them, to reflect short-term considerations, within parameters set by the Board.

Due the significant rise in the Company's assets, the borrowing facility with Scotiabank was increased during the financial year from £25 million to £40 million (with an option to increase the commitment by £10 million to £50 million) in order that the Managers could retain the flexibility to maintain gearing up to the maximum permitted level. On 1st October 2021, following the financial year-end and after continued growth in the Company's assets, the borrowing facility with Scotiabank was renewed and further increased to £50 million for a period of 24 months. The current facility will expire on 1st October 2023. There is a further option to increase borrowings to £60 million subject to certain conditions. At the year-end, £35 million (2020: £21 million) was drawn on the loan facility with the gearing level of 8.9% (2020: 8.6%) of net assets. As at 8th October 2021, gearing was 9.4%.

Share Repurchases and Issuance

At last year's Annual General Meeting ('AGM'), shareholders granted the Directors authority to allot new shares and to repurchase the Company's shares for cancellation or to be held in Treasury for possible re-sale. During the financial year the Company did not repurchase or allot any shares as the discount narrowed. Currently 1,559,741 shares are held in treasury and are available for reissuance. This amount represented 1.96% of the issued Ordinary share capital at the beginning of the year. Treasury shares will only be sold at a premium to net asset value thus enhancing shareholder value.

As in previous years, the Board's objective is to use the repurchase and allotment authorities to manage imbalances between the supply and demand of the Company's shares, with the intention of reducing the volatility of the discount. To date the Board believes this mechanism has been helpful and therefore proposes and recommends that powers to repurchase up to 14.99% of the Company's shares (less shares held in Treasury) and the allotment of new shares or sale of shares out of Treasury up to approximately 10% as at the date of the AGM be renewed.

Board of Directors and Succession Planning

During the year, the Board employed Lintstock to facilitate an evaluation of the Board and its Committees. At the most recent Nomination Committee meeting it was agreed that all the Directors will stand for reappointment at the forthcoming AGM, in accordance with good corporate governance practice. Next year, Frances Davies will retire from the Board at the AGM in 2022 having completed nine years of service as a Director. The Board, via the Nomination Committee, will shortly commence the search for a new candidate who will succeed her.

Looking further into the future, potential changes to regulation currently under discussion may, amongst other things, necessitate an increase in the number of Directors on the Board thus incurring increased costs. The Board believes that some of these changes are not appropriate for Investment Companies and is fully supportive of the AIC in its efforts to ensure that additional obligations are targeted appropriately.

Name Change

Following a Board review and consultation with the Managers and the Company's Broker, it was decided to change the Company's name to JPMorgan UK Smaller Companies Trust plc. This is intended to clarify its purpose and aid promotion of the Company.

Marketing and Promotion

In conjunction with the Manager, the Board has initiated an enhanced marketing programme. The objective is to benefit all shareholders by generating sustained new interest in the Company's shares, with a focus on retail investors, both directly and via platforms. We are encouraged by initial results, which have been supported by the Company's strong performance in 2021.

Since the year end, following a review, the Board has appointed Panmure Gordon as the Company's broker. The Board believes that they will bring an energetic and fresh approach.

Environmental, Social and Governance Statement ('ESG')

Last year an ESG statement by the Manager was included for the first time. This aspect of investment rightly deserves attention and is of growing importance to investors. The Board has reviewed the Manager's process and has concluded that it is appropriate for the Company. In particular, the Board strongly supports the Manager's policy of engagement with investee companies in order to educate and influence their behaviour. The Board believes that this is especially appropriate for smaller companies.

Annual General Meeting

Unfortunately, COVID-19 restrictions prevented the holding of the Company's AGM in 2020 in the usual format. The Directors were disappointed not to be able to have the usual interaction with shareholders at this forum. However, current indications are that a more traditional format for the AGM may be permissible in November this year and, to that end, the Company's thirty-first AGM is scheduled to be held on Tuesday, 23rd November 2021 at 3.00 p.m. at 60 Victoria Embankment, London EC4Y 0JP. The Board hopes to welcome as many shareholders as possible.

We do of course strongly advise all shareholders to consider their own personal circumstances before attending the AGM in person. For shareholders wishing to follow the AGM proceedings but choosing not to attend, we will be able to welcome you through conferencing software. Details on how to register together with access details can be found on the Company's website: www.jpmuksmallercompanies.co.uk, or by contacting the Company Secretary at [email protected].

As is normal practice, all voting on the resolutions will be conducted on a poll. Due to technological reasons, shareholders viewing the meeting via conferencing software will not be able to vote on the poll and we therefore encourage all shareholders, and particularly those who cannot attend physically, to exercise their votes in advance of the meeting by completing and submitting their form of proxy. Shareholders are encouraged to send any questions ahead of the AGM to the Board via the Company Secretary at the email address above. We will endeavour to answer relevant questions at the meeting or via the website depending on arrangements in place at the time.

The formal business of the AGM will include the adoption of new articles of association of the Company. The Company's Articles of Association, the document that specifies the regulations for a company's operations and defines a company's purpose, was last amended following shareholder approval in 2015. Resolution 13 within the Notice of Meeting, which will be proposed as a special resolution, seeks shareholder approval to adopt new Articles of Association (the 'New Articles') in order to update the Company's current Articles of Association (the 'Existing Articles').

A summary of the principal amendments being introduced in the New Articles is set out in the Appendix to the Annual General Meeting Notice within this 2021 Annual Report. One of the main proposed amendments, relates to the various formats of AGM that the Company may choose to use. This is a topic brought into stark focus by the social distancing rules introduced by the COVID-19 pandemic. Last year's AGM took place and was attended by the minimum requisite number of shareholders. The Directors are seeking permission to be able to hold, in extremis, a virtual AGM if the then situation makes that prudent to do so. Once again, there is no intention to hold such a meeting, but as the past 18 months have demonstrated, events can unfold in a wholly unpredictable manner and the Board would like to have maximum flexibility to deal with unexpected circumstances. Other amendments, which are of a minor, technical or clarifying nature, have not been summarised in the Appendix.

The Board would encourage shareholders to support these and the other more procedural changes that are proposed.

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

Outlook

The UK stock market has performed strongly in response to various measures including the success of the vaccination programme, financial stimuli and renewed consumer spending. Whilst such a strong recovery is unlikely to continue in a straight line the valuation of smaller companies, on current forecasts, remains attractive and points to the potential for further gains. Furthermore, smaller companies are attractively valued in relation to their larger counterparts. Against this, it is difficult to judge how strong economic growth will be once the catch-up phase has been completed. The huge debts amassed over the past two years will have to be reduced and the Government and Bank of England will need to tread a fine line in order not to kill the recovery.

As you will see in their report, the managers believe that there is good potential for continued strong performance. The portfolio has been positioned to take full advantage of the opportunities that they perceive and it is encouraging to note the renewed interest in smaller UK companies after some lean years.

Andrew Impey

Chairman                                                                                                                                    

12th October 2021

INVESTMENT MANAGERS' REPORT

Performance and Market Background

The Company's financial year to July 2021 was inevitably dominated by COVID-19. Further lock-downs post the initial one in the Spring of 2020 continued to wreak havoc on the UK economy, although they were notably less damaging than the first lock-down. The arrival of vaccines in November 2020 and the UK's subsequent success in its vaccination roll-out programme opened the path to recovery - and the stock market reacted accordingly. Further positive news on Christmas Eve was the signing of a trade deal with the EU, putting an end to five years of uncertainty. The Bank of England's recent forecasts are for UK GDP growth of 7.25% in 2021, followed by 6% in 2022, as the economy rebounds from the 10% GDP decline in 2020.

Against this backdrop, the Company produced a very pleasing total return on net asset value of +68.1% in the financial year, compared to a return of +50.3 % for the Numis Small Cap plus AIM (ex Investment Companies) Index. The share price total return was notably higher at +79.4%, as the wide discount of the share price relative to net assets was significantly reduced, due to renewed interest in the UK equity market, and in particular to the more domestically focused smaller companies arena.

Portfolio

Over the last 18 months we have described in detail our investment approach during the pandemic. We sought to maintain a balance within the portfolio between more defensive investments suffering minimal or no impact from COVID-19 and lock down measures, and those companies which were heavily affected by the pandemic, but which we believed would come out the other side as stronger companies with better competitive positions. This can be neatly seen in the broad spread of holdings that contributed to the very strong returns in the year. These included Future, a media company, Reach, a news publisher, Ergomed, a global provider of services to the pharmaceutical sector and Luceco, a manufacturer of wiring accessories and LED lighting products. Additional contributors included COVID-19 exposed holdings such as OSB (buy-to-let mortgages), Jet2 (a package holiday business) and Vistry (a housebuilder). Our decision to add to a number of these companies as share prices fell was validated through the year.

On the negative side, the only two notable holdings which detracted from performance were Dunelm and Serco, despite strong operational performance, and we retain both in the portfolio. In addition, the bid for William Hill, a company we did not own, also detracted from overall performance.

The last year saw a number of bids in the smaller companies arena, and we benefitted from three - Codemasters and Sumo, both video gaming companies, and Augean, a company dealing in hazardous waste management. It was also a notable year for IPOs. A large number of new companies came to the market, and after extensive due diligence we participated in several, including Victorian Plumbing (online bathroom retailer), Bytes (value-added tech reseller), Tinybuild (video gaming) and Big Technologies (a provider of technologies for the remote personal monitoring industry). We are excited by what we believe to be high quality and high growth new companies currently coming to the market. Other new additions to the portfolio over the year included Joules (retailer), Sanderson Design (maker of fabrics and wallpapers), Rank (casino company), and Norcros and Brickability (two companies benefitting from the building/DIY renaissance). Exits from the portfolio included Spirent due to its size, D4T4 on valuation grounds, and Avon Protection and Sabre Insurance on weaker than expected operational performance.

Outlook

At the start of 2021 we laid out in our Interim Report our reasons for being positive on the UK economy, and the more domestically biased smaller companies arena. To date the economic recovery has been even stronger than we expected, the vaccination roll-out has been impressive, and the British public have shown a willingness to return to a more normal way of life. Government support towards UK companies over the last 18 months has been well designed and we believe this has contributed to the pace of recovery. In addition, current unemployment levels are much lower than feared. Other positives include the strong purchasing managers' data (a good lead indicator), rock bottom interest rates, and the growing propensity of the stalwart UK consumer to spend again. Recent Barclaycard consumer spending data indicated that non-essential spending in August recorded its fourth consecutive month of growth, and was 16% ahead of spending in August 2019. This had been part of our thesis on the roadmap to recovery. UK households significantly increased their savings last year, to the tune of over £150 billion excess savings, and this led us to tilt the portfolio to a significant overweight to the UK domestic economy and the UK consumer in particular.

As a counter to this positivity, first and foremost in all of our minds are the mutating strains of COVID-19, which have seen case numbers rise again in the UK and elsewhere in recent months. However, the link between cases and hospitalisations has decoupled significantly compared to the peak in the UK, due to the 80% of the adult population that have been double-vaccinated. Looking at the most recent statistics, some of the euphoria post lockdowns and Freedom Day has waned, and there have been a few signs of the recovery in the UK economy slowing somewhat. It is our view that this was to be expected. Global and local headwinds are evident, ranging from the current inflationary pressures, both domestically and globally, semi-conductor chip shortages, other supply chain and logistics issues, to the magnitude of the UK's debt, and at some point the inevitable end of Central Banks' asset purchases and the normalisation of interest rates.

While we continue to take these risks into account, our thesis of a strong UK recovery remains intact. We continue to remain very positive on the outlook for our companies and the recent results season demonstrates the on-going strength in current trading that they are enjoying. It is our view that the smaller companies area of the market remains undervalued, despite the very strong rise in the index over the last year. The index is now on a P/E ratio of 14.1 x for 2022. However, median earnings are forecast to grow 18% this year and 19% next as the recovery continues to come through - and we believe this growth is not being fully valued.

Normality beckons, and is coming closer. A stronger economic rebound than expected, a consumer willing to spend, better than expected results from a large number of our portfolio companies, (largely) repaired balance sheets, all provide a strong platform for growth and we expect this to lead to continued strong performance from our companies.

Georgina Brittain

Katen Patel

Investment Managers                                                                                                                          

12th October 2021

PRINCIPAL AND EMERGING RISKS

Principal and Emerging Risks

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 the Manager, the Board has completed a robust risk assessment and drawn up a risk matrix, which identifies the key risks to the Company. The risks identified and the broad categories in which they fall, and the ways in which they are managed or mitigated are summarised below. The AIC Code of Corporate Governance requires the Audit Committee to put in place procedures to identify emerging risks. The key emerging risks identified are also summarised below.

TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES

Details of the management contract are set out in the Directors' Report on page 29 of the Annual Report. The management fee payable to the Manager for the year was £2,116,000 (2020: £1,735,000) of which £nil (2020: £nil) was outstanding at the year end.

During the year £nil, including VAT, was payable to (2020: £nil) the Manager for the administration of savings scheme products, of which £nil (2020: £nil) was outstanding at the year end.

Included in administration expenses in note 6 on page 60 of the Annual Report are safe custody fees amounting to £4,000 (2020: £4,000) payable to JPMorgan Chase of which £3,000 (2020: £1,000) was outstanding at the year end.

The Manager may carry out some of its dealing transactions through group subsidiaries. These transactions are carried out at arm's length. The commission payable to JPMorgan Securities Limited for the year was £2,000 (2020: £nil) of which £nil (2020: £nil) was outstanding at the year end.

The Company also holds cash in the JPMorgan Sterling Liquidity Fund, which is managed by JPMorgan. At the year end this was valued at £2.8 million (2020: £4.7 million). Interest amounting to £3,000 (2020: £40,000) was receivable during the year of which £nil (2020: £nil) was outstanding at the year end.

Handling charges on dealing transactions amounting to £13,000 (2020: £11,000) were payable to JPMorgan Chase during the year of which £10,000 (2020: £2,000) was outstanding at the year end.

At the year end, total cash of £250,000 (2020: £303,000) was held with JPMorgan Chase. A net amount of interest of £nil (2020: £nil) was receivable by the Company during the year from JPMorgan Chase of which £nil (2020: £nil) was outstanding at the year end.

Full details of Directors' remuneration and shareholdings can be found on page 40 and in note 6 on page 60 of the Annual Report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards), 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, taken as a whole, the annual report and accounts are fair balanced and understandable and provide the information necessary, for shareholders to assess the Company's performance, business model and strategy, and that they give a true and fair view of the state of affairs of the Company and of the total return or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

•        select suitable accounting policies and then apply them consistently;

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

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

•        prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

and the Directors confirm that they have done so.

The Directors are responsible for keeping 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. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The accounts are published on the www.jpmuksmallercompanies.co.uk website, which is maintained by the Company's Manager. The maintenance and integrity of the website maintained by the Manager is, so far as it relates to the Company, the responsibility of the Manager. The work carried out by the auditor does not involve consideration of the maintenance and integrity of this website and, accordingly, the auditor accepts no responsibility for any changes that have occurred to the Annual Report since it was initially presented on the website. The Annual Report is prepared in accordance with UK legislation, which may differ from legislation in other jurisdictions.

Under applicable law and regulations the Directors are also responsible for preparing a Strategic Report, a Directors' Report and a Directors' Remuneration Report that comply with that law and those regulations. The Strategic Report and the Directors' report include a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face.

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

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

For and on behalf of the Board

Andrew Impey

Chairman

12th October 2021

FINANCIAL STATEMENTS

STATEMENT OF COMPREHENSIVE INCOME 

FOR THE YEAR ENDED 31ST JULY 2021

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31ST JULY 2021

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

STATEMENT OF FINANCIAL POSITION

AT 31ST JULY 2021

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31ST JULY 2021

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31ST JULY 2021

1.       Accounting policies

Basis of accounting

The financial statements are prepared under the historical cost convention, modified to include fixed asset investments at fair value, and in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ('UK GAAP'), including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies in November 2014, and updated in October 2019.

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

The financial statements have been prepared on a going concern basis. In forming this opinion, the directors have considered the potential impact of COVID-19 pandemic on the going concern and viability of the Company, including the mitigation measures which key service providers, including the Manager, have in place to maintain operational resilience, particularly in light of COVID-19. The Directors have reviewed the compliance with loan covenants in assessing the going concern and viability of the Company. The Directors have reviewed income and expense projections and the liquidity of the investment portfolio in making their assessment.

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

2.       Return per share

3.       Dividends

(a)     Dividends paid and proposed

All dividends paid and proposed in the period have been and will be funded from the revenue reserve.

The dividend proposed in respect of the year ended 31st July 2021 is subject to shareholder approval at the forthcoming AGM. In accordance with the accounting policy of the Company, this dividend will be reflected in the financial statements for the year ending 31st July 2022.

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

The requirements of Section 1158 are considered on the basis of dividends declared in respect of the financial year, shown below. The revenue available for distribution by way of dividend for the year is £3,418,000 (2020: £2,965,000). The revenue reserve after payment of the final dividend will amount to £869,000 (2020: £1,891,000)

4.       Net asset value per share

5.     Status of results announcement

2020 Financial Information

The figures and financial information for 2020 are extracted from the Annual Report and Financial Statements for the year ended 31st July 2020 and do not constitute the statutory accounts for the year. The Annual Report and Financial Statements 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.

2021 Financial Information

The Figures and financial information for 2021 are extracted from the published Annual Report and Financial Statements for the year ended 31st July 2021 and do not constitute the statutory accounts for that year. The Annual Report and Financial Statements includes 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 Financial Statements 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.

12th October 2021

For further information:

Lucy Dina

JPMorgan Funds Limited

020 7742 4000

ENDS

A copy of the 2021 Annual Report will shortly be submitted to the FCA's National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

The 2021 Annual Report will shortly be available on the Company's website at www.jpmuksmallercompanies.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