Final Results

RNS Number : 0856P

JPMorgan American IT PLC

18 March 2009

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN AMERICAN INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2008

 

Chairman’s Statement

 

Investment Performance

Last year turned out to be an exceptionally depressing year for equity investors and the US markets proved to be no exception, with the S&P 500 Index falling by 37.2%, in Dollar terms, over the course of the year. Benefiting from strong relative investment performance and the weakness of sterling, your Company produced a total return on net assets in sterling terms of –7.3% for the year to 31st December 2008, outperforming the sterling total return of the S&P 500 Index (our benchmark) of –13.1%. The Company’s total return to shareholders was stronger still, at –4.1%, reflecting a narrowing of the discount from 8.4% to 3.9%.

 

As stated above, our benchmark fell by 37.2% (total return) in Dollar terms over the course of the year and, on the same basis, the Company’s net asset value fell by 33.0%. The Dollar, having begun 2008 at a rate of 1.99 to the pound, strengthened dramatically over the late summer and autumn, ending the year at 1.44. This weakness of sterling, has meant that UK based investors, saw their returns enhanced by 38.4%. In order to protect against currency fluctuations in respect of the Company’s existing £50 million debenture, a currency hedge was put in place on 3rd October, 2001 at a $/£ rate of 1.46.

 

The Company’s net asset value in sterling total return terms thus outperformed our benchmark index by 5.8 percentage points over the year. Performance attribution data shows that the larger companies’ portfolio outperformed by 9.0%, with the smaller companies’ portfolio underperforming by 0.2%. The investment management team has continued its policy of investing in larger, blue chip growth companies on attractive valuations. Full details of the activities of the investment managers are set out in their report below.

 

Shareholders may be aware that the Company, under its contract with JPMorgan Asset Management (UK) Limited, has a performance fee mechanism in place. The strong performance achieved by our investment managers over the last six years means that the targets in respect of outperforming the benchmark index have now been achieved and the investment managers have earned a performance fee of £1,257,000. The performance fee is calculated at the rate of 10% of the difference between the net asset value capital return and the capital return of the S&P 500 Index, expressed in sterling terms. The performance fee due in respect of any single year is divided into equal parts payable over three years.

 

Revenue Account and Dividends

Net revenue return after taxation for the year was £4,853,000 (2007: £4,605,000) and earnings per share were 11.36p (2007: 10.70p). Revenue this year was boosted modestly by the successful conclusion of the action brought by JPMorgan Claverhouse Investment Trust and the Association of Investment Companies, against HMRC, for the recovery of VAT previously charged on management fees. Following agreement with JPMorgan Asset Management (UK) Limited, the Company recovered £185,000 of VAT, which was allocated between income and capital on the basis on which it was expensed, and £66,000 of associated interest, all of which was taken to income.

 

The Company’s dividend policy has been to distribute all, or substantially all, of the available income in each year. In this instance, the Board is proposing to maintain last year’s dividend of 11.0p per share and, in doing so, will be taking around £153,000 to revenue reserves. Shareholders should note that income streams can vary significantly, and the Company’s dividend payouts are likely to reflect those variations. After accounting for the payment of the proposed final dividend, this leaves a balance in revenue reserves of £10.2m (equivalent to 23.8p per share). The dividend will be paid on 8th May 2009 to shareholders on the register on 3rd April 2009.

 

Gearing

The Board of Directors sets the overall gearing strategy and guidelines and reviews these at each meeting. The investment management team manages the gearing levels actively within these agreed guidelines. At present, there is an upper limit of 20% of shareholders’ funds and this can only be increased with Board consent. The £50 million debenture provides the potential to gear up to around 117%. As at the year end, the Company’s net gearing level (offsetting cash and near cash against our debenture) was 113% of shareholders’ funds, having ranged between 97% and 116% during the year.

 

Investment Manager

The Company’s objective is to provide shareholders with capital growth from a broad portfolio of North American investments. The Board has once again thoroughly reviewed the capabilities of the Investment Manager in order to assess whether JPMorgan Asset Management remains the most appropriate manager of the Company’s assets. In addition to scheduled Board Meetings, the Directors have undertaken additional strategy and investment meetings with the named investment managers, conducted comparisons with the peer group both in the UK and the US with regard to performance, fee rates and costs of management and spent time reviewing the investment management operation whilst in New York for a Board Meeting. We have concluded that the ongoing appointment of the existing Investment Manager is in the best interests of shareholders.

 

Management of the Discount

The Company’s discount narrowed by 4.5 percentage points over the course of the year, finishing at 3.9%. During the year the Company’s shares traded between a 9.0% discount and a 4.5% premium. Whilst the Company did not repurchase any shares during the year your Board believes that such a facility is an important tool in the management of discount volatility. A resolution to renew the authority to allow the Company to repurchase up to 14.99% of its share capital will be submitted to the Annual General Meeting.

 

The Board

The Board has put in place procedures to ensure that the Company complies fully with the revised Combined Code and the AIC Code on Corporate Governance.

 

In accordance with the Company’s Articles of Association, Kate Bolsover and myself will retire at this year’s Annual General Meeting. Kate Bolsover, who was appointed in July 2005, contributes significantly on a wide range of issues and will seek re-election from shareholders. The Board recommends her re-election. I am also retiring at this year’s Annual General Meeting and will stand for re-election.

 

Annual General Meeting

The Directors and I very much look forward to welcoming shareholders to the Annual General Meeting, which will be held at Trinity House, Tower Hill, London EC3N 4DH on Thursday 7th May 2009 at 2.30 p.m.

 

Outlook

The last eighteen months have seen the second largest decline in US stock market history. Economic growth numbers continue to look poor and, with the government more intertwined in the workings of the economy than at any time in the recent past, the near term outlook appears less than promising. However, such dark times often herald better prospects; equity valuations are looking much more attractive, especially when compared to US Government Bonds, and any recovery would be boosted by the substantial volume of cash that has built up on the sidelines. There are plenty of risks and the very bearish tone continues, but our Managers perceive value in the market and have increased the Company’s level of gearing accordingly.

 

Hamish Buchan

Chairman

18 March 2009

 

Investment Manager’s Report

 

Market Review

History will remember 2008 as one of the worst years of all time for US equity markets, with the S&P 500 Index down 37.2% in dollar terms and the small cap index declining by 38.5%. For the S&P 500, only 1931 and 1937 of the last hundred years had worse returns. Much has been written about the crisis of confidence that unfolded during the year as massive de-leveraging occurred, asset write-downs escalated and the creditworthiness of banks and other financial institutions was called seriously into question leading to the failure of two large investment banks, a government takeover of a multinational insurance conglomerate and numerous bank failures. The US Government also stepped in to takeover two government sponsored entities, Fannie Mae and Freddie Mac, as they were on the brink of failure. While the financial sector bore the brunt of the market’s collapse, down a staggering 55% in 2008, the second half of the year saw the crisis spread to the broader market. Energy and materials stocks, trading at record levels just weeks earlier, were aggressively sold off early in the third quarter in anticipation of a sharp decrease in demand. Similarly, sectors that had held up relatively well, due to their exposure to stronger non-US economies, began to feel the pain. Technology stocks, once heralded for their exposure to Europe and Asia, fell as investors began to fear a more global and severe economic slowdown. By the autumn, the turmoil that began in the financial sector had spread to the entire market. The National Bureau of Economic Research, the official arbiter of recession dates, declared the US economy to be in recession as of December 2007.

 

This deterioration in the equity markets only accelerated as we entered the fourth quarter. The quarter was by far the worst of the year, but it was almost entirely driven by October’s rout, with that month alone accounting for roughly half of the entire year’s decline. October began with a vicious sell-off, coupled with an extreme rise in volatility as the effects of the Lehman Brothers bankruptcy instilled fear in investors. Three of the eight largest one-day moves in the market since 1929 occurred during that one month (ironically, two of the three were market gains). Once again, the financial sector led the way and fell by over 37% during the quarter. In response, a barrage of governmental policy announcements and actions by the Federal Reserve (‘Fed’) and the US Treasury set the tone for the rest of the quarter. An array of fiscal spending plans was announced as the federal government sought to counteract further tightening in bank lending standards. The Fed moved into quantitative easing mode (printing money), cutting the Federal Funds Rate to practically zero and committing to purchase private sector assets. Stocks continued to lose ground well into November, although December finished with a flourish, resulting in one of the year’s better months as the market ended the year with the S&P 500 up nearly 17% from its November 20th low.

 

Overall Asset Allocation

The investment management team is responsible for managing the allocation between the two investment portfolios, together with the levels of cash and gearing. In recent years your investment team has worked closely with the Board of Directors to develop modelling tools to assist in both asset allocation and gearing decisions. In 2008, the Company’s gearing ranged between 97% and 116% of shareholders’ funds, with the level at the year end being 113%. The level of gearing is adjusted at regular intervals within the gearing guidelines laid down by the Board to reflect the outlook on risk and return for both equities and bonds. We began the year with 3% net cash as we had become increasingly worried about the risks in the market. By the end of September we had allocated more capital to the investment portfolio and gearing was 108%. As the equity market continued to fall we considered that it, backed up by our gearing asset allocation model, became more attractively priced and we thus increased gearing to near the maximum level. As I mentioned in last year’s report, we try to follow the investment maxim to buy on fear and sell on greed. In the second half of 2008 there was plenty of fear within the markets.

 

The weighting in the smaller companies portfolio ranged between 5.5% and 9.3% of the Company’s total assets less current liabilities and ended the year at 8.1%. We believe that our ability to move between the two enhances potential returns to shareholders. Attribution data for 2008 shows that it was the larger companies portfolio that gave the greatest contribution towards the outperformance of the benchmark index. This large cap outperformance was driven more by stock selection than by sector positioning.

 

In contrast, because of the fall in the market over the year, gearing proved to be a negative factor. This was due to the Company being increasingly geared into a falling market and the interest costs on the debenture. Detailed reports on the larger and smaller companies portfolios are shown below.

 

Large Companies Portfolio

Our investment methodology continues to focus on investing in high quality, reasonably valued companies. This style leads us to invest in companies that exhibit good growth characteristics with growing earnings, strong cash flows and reasonable valuations. It was extremely important last year to pay attention to the sustainability and viability of both earnings and dividends, especially as the economic environment deteriorated throughout the year.

 

The large companies portfolio provided negative absolute returns during the year, but significantly outperformed the S&P 500 Index. We are pleased with our results in a year that active managers found it very difficult to beat the benchmark. We remain confident that our portfolio of robust, large companies, offers an attractive investment proposition given the very attractive valuations that pertain at present.

 

Sector Weightings of Large Cap Portfolio versus S&P 500 as at 31st December 2008

	Large Company		Overweight/
Sector	Portfolio %	S&P 500 %	Underweight %
Financial Services	17.5	14.3	3.2
Technology	17.5	14.3	3.2
Health Care	17.2	15.2	2.0
Integrated Oils	12.1	9.2	2.9
Consumer Discretionary	10.0	10.8	–0.8
Utilities	7.5	8.0	–0.5
Consumer Staples	7.5	9.8	–2.2
Producer Durables	6.4	4.7	1.7
Other	1.7	3.5	–1.8
Other Energy	1.3	4.0	–2.8
Auto & Transportation	1.1	2.6	–1.5
Materials & Processing	0.2	3.6	–3.4

Source: Wilshire

 

We began the year significantly underweight in financials and, more specifically, the investment banks as we believed that they were, as a group, ‘over-earning’. Essentially these companies were very highly leveraged and the robust financial markets of previous years had significantly inflated earnings. All good things must come to an end and for those that rely on financial leverage and the confidence of their trading counterparties the end came very abruptly. During the year we increased our weighting in financials, mainly in those larger regional banks with astute management teams such as Wells Fargo and US Bancorp. We remained overweight in the insurance area as the valuations were reasonable and business trends remained generally positive throughout the year. Chubb was the outstanding performer as it maintained its discipline in pricing and has a more conservative investment portfolio. In times of turmoil, the strong companies often benefit if there is a flight to quality and Chubb was a beneficiary of this trend.

 

Our overweight position in technology served us well throughout the year, particularly our holdings in Mastercard, IBM, Oracle and Hewlett Packard, even though the sector as a whole underperformed the market. These companies all have very modest valuations, leadership positions in their sectors and very healthy balance sheets. Mastercard had a particularly strong start to the year as the growth of credit and debit transactions continued to gain share on other forms of payment. As the financial turmoil began to spread into the general economy and into the international markets however, the shares fell back. The most important metrics for Mastercard are the number of transactions on their network and their gross dollar volume; they do not have any exposure to the credit risk of the person using the credit or debit card.

 

We have remained underweight in the consumer discretionary sector. Consumer leverage, the continued fall in house prices and the deteriorating jobs market continued to weigh on spending and consumer confidence. Yet, the top stock contributor for 2008 came from this sector. McDonald’s continues to benefit on a global basis from their refocused efforts on their menu offerings, expanded store hours and the value of their products. Many other mid-tier restaurants are struggling, as the global consumer looks for ways to economise, and McDonald’s provides a quick and easy solution.

 

Our overweight position in health care and underweights in energy and consumer staples detracted from performance. Our holding in the managed care provider, WellPoint, demonstrates this as its share price fell, sparked by news that the company had cut its 2008 profit outlook due to unexpectedly high costs, disappointing enrollment and worsening economic conditions. Longer-term, we see value in the stock as it has a strong Blue Cross/Blue Shield franchise and is trading at a deep discount.

 

The table below shows the largest positive and negative stock contributors to portfolio performance:

Positive Contributors

		Price	Weighted
Stock	Action	Performance %	Contribution %
McDonald’s	I,D	8.5	1.0
MasterCard	I,D	–33.4	0.6
AIG *		–97.2	0.6
Lockheed Martin	I,D	–18.6	0.5
Chubb	I,D	–4.1	0.5

 

Negative Contributors

		Price	Weighted
Stock	Action	Performance %	Contribution%
Wal-Mart Stores *	B,I	20.0	–0.5
JPMorgan Chase #		–25.1	–0.5
WellPoint	I,D	–52.0	–0.3
Corning	I,D	–59.8	–0.3
Merck	I,D	–45.3	–0.3

I = Increased;  D = Decreased;  S = Sold;  B = Buy;

* Not held or underweighted in the portfolio at the year end.

# Not held as Company unable to to have position.

Source: Wilshire

 

Return in US$

 

Smaller Companies Portfolio

Last year was a challenging environment for small cap companies with the highest growth stocks suffering the greatest reduction in price earnings ratios, as investors began to focus more on the near-term economic slow-down than long-term growth potential. At the sector level, stock selection in the technology and consumer discretionary sectors negatively impacted results while stock selection in energy and a portfolio overweight to the health care sector aided returns. Amongst individual stocks, the selection of Pacific Sunwear of California Inc., a specialty retailer of casual apparel, and Thinkorswim Group Inc., a provider of on-line futures and options trading, were major detractors. Thoratec Corp., a medical device manufacturer, and Gentiva Health Services Inc., a home health care company, contributed to overall performance. Over the course of the year, our small cap holdings had a minor detrimental effect on the overall performance of the Company.

 

Outlook

2008 was the worst calendar year for the markets in more than 70 years and 2009 looks set up to be one of the worst for the global economy in decades. The urgency with which the fiscal stimulus needs to be enacted cannot be overstated, but it will likely be months before planning and political barriers are cleared and the money is deployed. In the meantime, private sector deleveraging will continue to savage economic growth and we expect GDP to contract in the first two quarters of the year, with only a mild recovery in the second half.

 

The good news is that financial markets tend to discount future economic problems well in advance and, after a year like 2008, we think that they have already gone a long way towards doing so. The relative resilience of markets in the last two months of the year, in the face of such grim economic data, is encouraging and, while we expect continued volatility, we believe that a bottoming process is now underway. As investors look forward to the impact of fiscal measures and as more areas of the secondary markets receive direct central bank support, a nervous recovery in risk assets is our base case for 2009.

 

Garrett Fish

Investment Manager

18 March 2009

 

Principal Risks

 

With the assistance of the Manager, the Board has drawn up a risk matrix, which identifies the key risks to the

Company. These key risks fall broadly under the following categories:

 

• Investment and Strategy: An inappropriate investment strategy, for example asset allocation or the level of gearing, may lead to underperformance against the Company’s benchmark index and peer companies, resulting in the Company’s shares trading on a wider discount. The Board manages this risk by diversification of investments through its investment restrictions and guidelines which are monitored and reported on regularly by the Managers. JPMorgan Asset Management (‘JPMAM’) provides the Directors with timely and accurate management information, including performance data and attribution analyses, revenue estimates, liquidity reports and shareholder analyses. The Board monitors the implementation and results of the investment process with the Investment Managers, who attend the majority of Board meetings, and reviews data which shows statistical measures of the Company’s risk profile. The Investment Managers employ the Company’s gearing tactically, within a strategic range set by the Board.

 

• Market: Market risk arises from uncertainty about the future prices of the Company’s investments. This market risk comprises three elements – currency risk, interest rate risk and other price risk. The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines, which are monitored and reported on by JPMAM. The Board monitors the implementation and results of the investment process with the Manager. However, the fortunes of the portfolio are significantly determined by market movements in US equities, the rate of exchange between US Dollars and Sterling pounds and interest rate changes.

 

• Accounting, Legal and Regulatory: The Company operates within a framework of legislation and regulation which determines its tax status and ability to continue in business as an investment trust. The Directors seek to comply with all relevant regulation and legislation both in the UK and the US and rely on the services of its Company Secretary and Manager to monitor compliance with all relevant requirements.

 

 

 

 

• Corporate Governance and Shareholder Relations: Details of the Company’s compliance with corporate governance best practice, including information on relations with shareholders, are set out in the Corporate Governance report.

 

• Operational: Disruption to, or failure of, JPMAM’s accounting, dealing or payments systems or the custodian’s records could prevent accurate reporting and monitoring of the Company’s financial position. Details of how the Board monitors the services provided by JPMAM and its associates and the key elements designed to provide effective internal control are included within the Internal Control section of the Corporate Governance.

 

• Financial: The financial risks faced by the Company include market price risk, interest rate risk, foreign currency risk, liquidity risk and credit risk.

 

                   Directors’ Responsibilities

 

                  The Directors each confirm to the best of their knowledge that:

 

a)         the accounts,  prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

 

b)         the Annual Report, to be published shortly, 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 they face.

 

Hamish Buchan

Chairman

18 March 2009

 

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.jpmamerican.co.uk

 

For further information please contact:

 

                   Andrew Norman

                   For and on behalf of

                   JPMorgan Asset Management (UK) Limited, Secretary

                   020 7742 6000

 

 

  

Income Statement

for the year ended 31st December 2008

 

		(Audited)			(Audited)
			2008			2007
		Revenue	Capital	Total	Revenue	Capital	Total
		£’000	£’000	£’000	£’000	£’000	£’000
(Losses)/gains from investments held at
fair value through profit or loss		—	( 10,732)	( 10,732)	—	16,742	16,742
Net foreign currency losses		—	(12,726)*	(12,726)	—	(275)*	(275)
Income from investments		7,846	—	7,846	7,098	—	7,098
Other interest receivable and similar income (note 3)		310	—	310	968	—	968
Gross return/(loss)		8,156	( 23,458)	( 15,302)	8,066	16,467	24,533
Management fee		(351)	(1,406)	(1,757)	(345)	(1,378)	(1,723)
Performance fee		—	( 1,257)	(1,257)	—	—	—
VAT recovered		100	85	185	—	—	—
Other administrative expenses		(423)	—	(423)	(450)	—	(450)
Net return/(loss) on ordinary activities before
finance costs and taxation		7,482	(26,036)	(18,554)	7,271	15,089	22,360
Finance costs		(694)	(2,774)	(3,468)	(692)	(2,768)	(3,460)
Net return/(loss) on ordinary activities before
taxation		6,788	(28,810)	(22,022)	6,579	12,321	18,900
Taxation		(1,935)	870	(1,065)	(1,974)	1,101	(873)
Net return/(loss) on ordinary activities after
taxation		4,853	(27,940)	(23,087)	4,605	13,422	18,027
Return/(loss) per share		11.36p	(65.40)p	(54.04)p	10.70p	31.18p	41.88p

 

*Includes £14,182,000 loss (2007: £311,000 loss) on forward FX contract.

 

Dividends proposed in respect of the year ended 31st December 2008 total 11.0p per share (2007: 11.0p per share) costing £4,700,000 (2007: £4,700,000).

 

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

 

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

for the year ended 31st December 2008 (Audited)

 

 

	Called up		Capital
	share	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserves	reserve	Total
	£’000	£’000	£’000	£’000	£’000	£’000
At 31st December 2006	10,820	18,906	8,013	259,381	14,867	311,987
Repurchase and cancellation of shares	(138)	—	138	(3,783)	—	(3,783)
Net return from ordinary activities	—	—	—	13,422	4,605	18,027
Dividends appropriated in the year	—	—	—	—	(4,761)	(4,761)
At 31st December 2007	10,682	18,906	8,151	269,020	14,711	321,470
Repurchase and cancellation of shares 1	—	—	—	(5)	—	(5)
Net (loss)/return from ordinary activities	—	—	—	(27,940)	4,853	(23,087)
Dividends appropriated in the year	—	—	—	—	(4,700)	(4,700)
At 31st December 2008	10,682	18,906	8,151	241,075	14,864	293,678

 

 

1 Comprises stamp duty on shares repurchased for cancellation.

 

 

Balance Sheet

at 31st December 2008

 

                                                                                                                                                                                  (Audited)

		(Audited)	(Audited)
		2008	2007
		£’000	£’000
Fixed assets
Investments at fair value through profit or loss		331,144	312,297
Investment in liquidity fund at fair value through profit or loss		14,369	21,926
		345,513	334,223
Current assets
Derivative instrument		—	11,863
Debtors		627	2,393
Cash and short term deposits		2,899	23,748
.		3,526	38,004
Current liabilities
Creditors: amounts falling due within one year		(2,480)	(1,062)
Derivative instrument		(2,319)	—
Net current (liabilities)/assets		(1,273)	36,942
Total assets less current liabilities		344,240	371,165
Creditors: amounts falling due after more than one year		(49,724)	(49,695)
Provisions for liabilities and charges		(838)	—
Total net assets		293,678	321,470
Capital and reserves
Called up share capital		10,682	10,682
Share premium		18,906	18,906
Capital redemption reserve		8,151	8,151
Capital reserves		241,075	269,020
Revenue reserve		14,864	14,711
Shareholders’ funds		293,678	321,470
Net asset value per share (note 4)		687.4p	752.4p

 

 

 

Cash Flow Statement

for the year ended 31st December 2008

 

		(Audited)	(Audited)
		2008	2007
		£’000	£’000
Net cash inflow from operating activities		4,982	5,008
Returns on investments and servicing of finance
Interest paid		(3,439)	(3,452)
Capital expenditure and financial investment
Purchases of investments		(98,970)	(84,586)
Sales of investments		80,500	113,299
Other capital charges		(7)	(26)
Net cash (outflow)/inflow from capital expenditure
and financial investment		(18,477)	28,687
Dividends paid		(4,700)	(4,761)
Net cash (outflow)/inflow before financing		(21,634)	25,482
Financing
Repurchase and cancellation of the Company’s shares		(671)	(3,117)
Net cash outflow from financing		(671)	(3,117)
(Decrease)/increase in cash for the year		(22,305)	22,365

 

Notes to the Accounts

 

1. Accounting policies

The accounts have been prepared in accordance with the Companies Act 1985, United Kingdom Generally Accepted Accounting Practice (‘UK GAAP’) and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies’ (the ‘SORP’) issued by the AIC in January 2009.

 

The Directors believe, having considered the Company’s investment objectives, risk management policies, capital management policies and procedures, nature of the portfolio and expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future. For these reasons, they consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts. 

 

 

2. Dividends paid and proposed                                                                                                      

	2008	2007
	£’000	£’000
2007 final dividend paid of 11.0p (2006: 11.0p)	4,700	4,761
Final dividend proposed of 11.0p (2007: 11.0p)	4,700	4,700

 

The final dividend has been proposed in respect of the year ended 31st December 2008 and is subject to approval at the forthcoming Annual General Meeting. In accordance with the accounting policy of the Company, this dividend will be reflected in the accounts for the year ending 31st December 2009.

 

 

	2008	2007
	£’000	£’000
3. Income
Income from investments
Dividends from listed overseas investments	7,222	5,823
Dividends from liquidity funds	577	1,151
Interest from unlisted overseas investments	47	124
	7,846	7,098
Other interest receivable and similar income
Interest on VAT recovered 1	66	—
Deposit interest	239	800
Stock lending fees	5	168
	310	968
Total income	8,156	8,066

 

1 This represents interest on VAT recovered during the year.

 

 

 

4. Net asset value per share              

                               

 

	Net asset value per share		Net assets attributable
	2008 pence	2007 pence	2008 £’000	2007 £’000
Ordinary shares	687.4	752.4	293,678	321,470

 

Net asset value per share is based on the net assets attributable to the ordinary shareholders of £293,678,000 (2007: £321,470,000) and on the 42,725,949 (2007: 42,725,949) shares in issue at the year end.

 

 

 

5. Status of preliminary announcement

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2008 or 2007, but is derived from those accounts. Statutory accounts for 2007 have been delivered to the Registrar of Companies and those for 2008 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention any matters by way of emphasis without qualifying their report and did not contain statements under s237(2) or (3) Companies Act 1985.

 

 

JPMORGAN ASSET MANAGEMENT (UK) LIMITED

 

 

 

 

 

END

 

 

FR SFIFIASUSEID