Half Yearly Results

RNS Number : 4707O

JPMorgan American IT PLC

07 August 2014

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN AMERICAN INVESTMENT TRUST PLC

UNAUDITED HALF YEAR RESULTS

FOR THE SIX MONTHS ENDED 30TH JUNE 2014

Chairman's Statement

Results for the six month period

The six months to 30th June 2014 saw a further rise in US stock markets, following a very strong 2013. This provided a further gain, in addition to those seen since the dark days of early 2009, taking the Company's net asset value ('NAV') with debt at par to 247.5 pence per share.

Your Company outperformed the broad US equity market, providing a NAV total return per share with debt at par (in sterling terms) of 4.1%, and a share price total return of 4.2%, compared with the equivalent return of 3.6% from the S&P 500 Index, our benchmark. The large company portfolio provided a positive contribution to relative performance over the period, whilst the small company portfolio underperformed the S&P 500. Our modest level of gearing also helped a little. Your manager has underperformed the market over three and five years of the rather dramatic bull run, but has outperformed both over the longer ten year period as well as since his taking over the mandate in 2002. He has also outperformed over the last year and the current year to date.

Dividend

The income account continues on an upwards trajectory. The Company will be paying 1.0 pence per share for the first six months of this year. Given the sub-division of shares mentioned below, this is the equivalent distribution to the 5.0 pence per share paid for the six months to the end of June 2013. This interim dividend will be payable on 8th October 2014 to shareholders on the register on 5th September 2014. Your Board will consider the rate of the final dividend when it knows the revenue for the full year. The Board has to balance the correct level of distribution with ensuring that the Company's income reserves can be maintained to support dividend payments when corporate payouts are less healthy.

Gearing

Gearing has remained within the Board's strategic gearing level of 10%, plus or minus 2% over the reporting period. Our fund manager's ability to hold cash of up to 5% of net assets remains if he feels there is a real risk of capital loss.

Five for One Sub-division of the Company's Share Capital

Following approval at the Company's Annual General Meeting held in May, the Company's shares were sub-divided into five ordinary shares for every one share held. That means for every one share you held previously, you now hold five. This sub-division took effect on 8th May 2014. We hope and expect that this sub-division will reduce dealing costs slightly, hence increasing the attractiveness of the shares to new investors and increasing the liquidity of the market for the Company's shares. The share split did not affect the overall value of your holding in the Company as the reduction in the price per share was offset by a commensurate increase in the number of shares you hold in the Company.

Share Issuance and Repurchases

Over the period, the Company has issued the equivalent of 9,625,000 shares, adjusted for the stock split mentioned above, raising £21.8 million net of expenses. The shares were issued at a premium to estimated NAV (calculated on a with income basis with debt at fair value). As I always stipulate in my statements, the Board does understand that having issued shares, it has an obligation not to let the discount widen significantly.

The Company issued a Prospectus in March 2014, which allows the Company to issue more than 10% of its shares in issue in any 12 month period. Unfortunately despite a majority of shareholders being in favour of a resolution to grant authority to disapply pre-emption rights on the allotment of Ordinary shares for up to 15% of the Company's then issued share capital, the 75% majority required was only achieved by the Board giving an undertaking to shareholders able to vote that the Company would only utilise 10% of the suggested 15% authority. Instead the Company will go back to shareholders to seek further authority as and when 10% of the authority has been exhausted.

The Board

Dr Kevin Carter was appointed to the Board as an independent non-executive director from 1st July 2014. Through his various roles within the investment industry, Dr Carter is well qualified to join the Board, having wide experience and technical understanding of both fund management and the management of fund managers. He has also been involved with closed-end funds for a number of years and currently sits on two other investment trust boards, of one of which he is chairman.

Alternative Investment Fund Managers Directive ('AIFMD')

I reported in my year end statement that in order to comply with the AIFMD, the Company would be appointing a different JPMorgan entity as its Manager and Company Secretary and was further required to appoint a Depository in addition to its existing custodian.

Further to legal advice received by the Company from Dickson Minto WS, I can report that JPMorgan Funds Limited, which has been approved by the Financial Conduct Authority as an Alternative Investment Fund Manager, has been appointed as Manager and Company Secretary to the Company. This change of entity does not in any way affect the actual management of the portfolio which will continue to be managed from the US by Garrett Fish and his support team. The Company Secretarial and administration support will also continue to be conducted by the same individuals from the Company's registered office in London. No extra fees are being charged by any JPMorgan entity as a result of the Company's AIFMD obligations.

Although JPMorgan Chase Bank, N.A. will continue as the Company's custodian, the new requirements of a depositary function will be undertaken by Bank of New York Mellon ('BNYM'). BNYM will be paid a fee of approximately £130,000, or 0.017% of the Company's gross assets per annum.

Outlook

I have been saying for a while that the US corporate sector is reasonably robust and the US economy is growing. The US stock markets have risen a long way and valuations are no longer cheap. After some concern last year, markets seem to be more sanguine about the tapering of quantitative easing. So far they have also taken in their stride the severe geopolitical tensions in the Ukraine and the tragedy of the Middle East. The magic carpet on which markets are floating may well hit some turbulence over the next few months, but trying to time such setbacks is difficult. Over the longer term, the US corporate sector seems relatively well placed and our manager has been successful in choosing how to invest in it.

Sarah Bates

Chairman

7th August 2014

Investment Manager's Report

Market Review

Over the six month review period, the US equity market has provided investors with further gains. The S&P 500 Index added 3.6% in the first six months of the year, returning 10.2% over the last year and almost 18% annualised over the past five years, all in sterling terms.

Financial market conditions were reasonably calm. Volatility across asset classes dropped below even the levels seen during the so-called 'Great Moderation' of 2005/06. Volatility was not just low at the level of the overall indices; within the market the dispersion of returns between different stocks was the lowest that we have seen in almost thirty years.

However, grabbing most of the economic headlines was the final estimate of a 2.9% decline in Q1 GDP. While a decline of this magnitude can be difficult for investors to digest, the weather blame game helped offset any fears that it was a lasting trend rather than a short term issue. This was supported by unmistakable signs of a re-acceleration in the US economy, with both macro data points and anecdotal evidence from a host of company management teams all confirming the trend. One notable area of recent strength, has been the housing market, as both existing and new home sales for May exceeded economists' forecasts. Following an earlier slump in which sales declined in seven of the eight months reported through to March, existing home sales have now increased in two consecutive months.

Profit expectations did not move much, with very little in the way of major shocks and surprises. However, deal making is back, with global mergers and acquisitions so far in 2014 at the highest level for many years. Interestingly the stock prices of both the target and the acquirer have typically been rising of late, underscoring the earnings enhancing nature of cash financed deals in a very low interest rate environment. Interest rates have stayed very low, with Treasury yields actually inching down during the period. All in all, a very pleasing period for investors in the US stock market.

Within the market, value is ahead of growth year-to-date as the highest priced growth names have struggled since March. Surprisingly, looking over longer time periods, the difference between Russell's large cap growth and value indices annualised returns over the past five years is a single basis point. Smaller stocks also did less well after a multi year run of exceptional performance left valuations looking a little stretched, and indeed the better performance of the largest companies has been the most notable factor return of late. Sector returns were surprising over the period. The outliers on the upside were utilities and energy. Utility names continue to garner investor attention for those seeking higher yields, while energy names rallied as crude oil prices responded to more unrest in the Middle East. While on the downside, consumer discretionary stocks struggled as investors queried whether brick and mortar retailers were reaching the tipping point in relation to the online threat.

Performance

The Company's net asset value rose by 4.1% in total return terms over the first six months of 2014. The return was ahead of the benchmark, the S&P 500 Index, which rose by 3.6% in sterling terms. When reviewing the portfolio's performance, the majority of the performance was driven by our stock selection in the large cap segment which is highlighted in more detail in the following paragraphs. We have maintained our valuation bias and this was rewarded in the first half as most earnings and cash flow metrics performed better than the market as a whole. Also, we have maintained a gearing position around 9% for the first half and with the rise in the markets this has also benefitted performance. Our exposure to small cap growth detracted slightly over the time period as investors became more critical in terms of valuation multiples that they were willing to apply to the highest growth securities. Late last year we significantly reduced our exposure to the small cap growth area as our valuation models starting to highlight the widening disparity between the two.

Overall, the portfolio benefited from strong stock selection in the information technology and consumer staples sectors. Within technology our exposure to SanDisk and Apple proved beneficial. Apple's share price rallied following the announcement of its acquisition of Beats Music and Beats Electronics, a streaming music service and a headphones maker, respectively, for USD 3 billion. Given its current valuation and the company's initiatives for creative cash use, we still see room for additional value creation and have added incrementally to our position. Investors reacted positively to SanDisk's announcement that it is acquiring Fusion-io, a data storage company. The acquisition will be an all-cash transaction valued at approximately USD 1.1 billion. The transaction, which has been approved by the boards of directors of both companies, is expected to close in Q3. The deal will allow SanDisk, a flash-memory maker, to help companies better manage increasingly heavy data workloads at a lower total cost of ownership. SanDisk, known primarily for its thumb drives and other small-storage devices, has looked to boost sales of its enterprise solid-state devices. It has reported recent results that have marked a continued rebound from a year earlier, when weak pricing and cyclical changes weighed on results. Our performance in the consumer staples segment was rewarded by our lack of exposure to Procter & Gamble coupled with an overweight position in Walgreen. Shares of Procter & Gamble declined over the period as the consumer products behemoth struggled in a challenging sales environment. In contrast, Walgreen rallied on the strength of its strategic partnership with European pharmacy group Alliance Boots. Our exposure to ConocoPhillips also added value. Its share price rallied on the heels of strong quarterly results and management reiterated full year and quarterly production targets. We continue to be optimistic on the company's outlook given their US oil growth, which outstrips peers by a strong margin.

In contrast, the portfolio's health care and consumer discretionary positioning disappointed. Our health care performance was hindered by what we did not own, including Johnson & Johnson and Allergen, both of which rallied strongly over the period and outperformed their benchmark peer group. Additionally, our position in Pfizer and Merck also weighed on performance. Shares of Pfizer declined following its unsuccessful attempt to acquire AstraZeneca, as well as first quarter top-line results which came in short of expectations. However, Pfizer managed the quarter well through lower spending and a lower tax rate, leading to higher gross margins. We continue to view Pfizer as a multi-year restructuring story with an improving pipeline and shareholder friendly capital allocation practices. Within consumer discretionary, overweight positions in Best Buy and General Motors weighed on performance. Electronics retailer Best Buy reported an unexpected decline in US comparable sales. The company said its price matching and other promotions to stay competitive also came with a higher-than-expected cost. The company's priority this year is to cut costs and to grow its online sales at an accelerated pace. The company is working on personalised marketing messages to better compete with the likes of Amazon. It has outfitted its big box stores with the ability to fulfil and ship online orders, which will be a big competitive advantage. Multiple rounds of recalls negatively impacted General Motors performance this year. We do however believe we are at the tail end of the heavy recalls and we feel good about the company's fundamentals. This includes regional profitability tracking better than expected as well as market share gain despite the recent headline pressure.

Our position in Citigroup also detracted from performance. The financial concern came under pressure after the Federal Reserve rejected its capital plan in March, due to capital spending weaknesses. Citigroup has until January 2015 to resubmit its capital plan. Our longer term investment thesis for Citigroup remains intact and we believe the company will benefit from a continued reduction in costs as well as loan growth. We do expect Citigroup to be in a position to buy back shares next year.

With regards to our portfolio positioning, our main allocation and also our largest overweight remains in the information technology sector. We find technology to be a fertile ground for stock picking, supported by its valuation and free cash flow. We are overall optimistic on the technology sector, with a broadly diversified exposure to semiconductors, semi cap equipment, data processing and computer hardware. We continue to have significant overweight exposure to the energy sector. We hold positions in the super majors as well as the US based exploration and production companies since they are very profitable with the current price levels of oil and natural gas. Our main underweights remain consumer staples and materials, as we are less excited about the long term growth prospects of both sectors as well as their unappealing valuation levels relative to other sectors.

The Company's level of gearing at 9.3% as of 30th June 2014, is relatively unchanged from six months ago. As always, we will look to add or trim our gearing on an opportunistic basis.

Market Outlook

We continue to believe that US stocks are a reasonable investment, with the remarkable strength in corporate profits and continuing attractive valuations compared to bonds, there is evidence to support this constructive view.

On profits, expectations for 2014 are holding firm at an 8% gain and, longer term, we believe that the current level of profitability is sustainable for years to come. At the time of writing this statement, the second quarter earnings season is about to begin and operating earnings for the S&P 500 are expected to set a new quarterly record. If current estimates hold, trailing 12-month operating earnings will have grown 12.5% compared to the same 12-month period a year ago.

In that context, a price of around 16x forward earnings seems fair to the market, although more demanding than the valuations prevailing over most of the last five years. The most attractive aspect of the market is still the comparison with current interest rates and bond yields. As well as companies borrowing to buy back stock, this gap is now also being arbitraged with a higher level merger and acquisition activity. This trend looks likely to continue.

Of course, there are potential risks to our outlook. Given May's higher than expected inflation readings, many investors fear the Fed could raise interest rates earlier than expected. While Fed Chair Janet Yellen talked down these concerns, continued strength in economic data and corresponding higher bond yields could reignite them.  With control of the US Congress unclear and mid-term elections a few months away, policy risk could reappear as a source of volatility. In fact, more volatility is a certainty at some point. However, we do not believe it will bring an end to the current cycle of profits growth, nor seriously undermine the case for equity investing.

With expectations that the Fed's short-term interest rates are likely to remain on hold until mid 2015, economic growth gradually improving, and continued growth in corporate profits, we believe the fundamentals are supportive for US equity markets in the near-term.

Garrett Fish

Investment Manager

7th August 2014

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 remain unchanged and fall into the following broad categories: investment and strategy; market; accounting, legal and regulatory; corporate governance and shareholder relations; operational; financial; political and economic. Information on each of these areas is given in the Business Review within the Annual Report and Accounts for the year ended 31st December 2013.

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.

Going Concern

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.

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 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 June 2014, as required by the UK Listing Authority Disclosure 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 Listing Authority Disclosure 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 and explained in the financial statements; and

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

and the Directors confirm that they have done so.

For and on behalf of the Board

Sarah Bates

Chairman

7th August 2014

Income Statement

for the six months ended 30th June 2014

	(Unaudited)			(Unaudited)			(Audited)
	Six months ended			Six months ended			Year ended
	30th June 2014			30th June 2013			31st December 2013
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at
fair value through profit or loss	-	23,586	23,586	-	97,792	97,792	-	140,791	140,791
Net foreign currency gains/(losses)1	-	2,168	2,168	-	(1,784)	(1,784)	-	3,346	3,346
Income from investments	7,131	-	7,131	5,261	-	5,261	11,241	-	11,241
Other interest receivable
and similar income	-	-	-	28	-	28	27	-	27
Gross return	7,131	25,754	32,885	5,289	96,008	101,297	11,268	144,137	155,405
Management fee	(353)	(1,412)	(1,765)	(287)	(1,148)	(1,435)	(611)	(2,446)	(3,057)
Performance fee2	-	(469)	(469)	-	-	-	-	(426)	(426)
Other administrative expenses	(233)	-	(233)	(271)	-	(271)	(558)	-	(558)
Net return on ordinary activities
before finance costs and
taxation	6,545	23,873	30,418	4,731	94,860	99,591	10,099	141,265	151,364
Finance costs	(361)	(1,444)	(1,805)	(343)	(1,374)	(1,717)	(704)	(2,814)	(3,518)
Net return on ordinary activities
before taxation	6,184	22,429	28,613	4,388	93,486	97,874	9,395	138,451	147,846
Taxation	(1,195)	-	(1,195)	(742)	-	(742)	(1,632)	-	(1,632)
Net return on ordinary activities
after taxation	4,989	22,429	27,418	3,646	93,486	97,132	7,763	138,451	146,214
Return per share3 (note 4)	1.82p	8.18p	10.00p	1.44p	36.94p	38.38p	3.00p	53.58p	56.58p

¹Includes gains and losses on forward foreign currency contracts which are used to hedge the currency risk in respect of some of the geared portion of the portfolio. Details of the hedging contracts can be found in note 5.

² During the period ended 30th June 2014, the Company's net asset value capital return outperformed the capital return of the S&P 500 Index, expressed in sterling terms, by 2.5 percentage points. This resulted in a positive performance fee calculation accrual of £469,000. Further details on the fee are given on the features page at the front of the report.

³Comparative figures for the six months ended 30th June 2013 and year ended 31st December 2013 have been restated due to the sub-division of each existing Ordinary share of 25p into five Ordinary shares of 5p each on 8th May 2014.

The interim dividend declared in respect of the six months ended 30th June 2014 amounts to 1.0p (2013: 1.0p) per share, costing £2,768,000.

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 up		Capital
Six months ended	share	Share	redemption	Capital	Revenue
30th June 2014	capital	premium	reserve	reserves	reserve	Total
(Unaudited)	£'000	£'000	£'000	£'000	£'000	£'000
At 31st December 2013	13,411	119,791	8,151	485,676	15,184	642,213
Issue of ordinary shares to the market	430	19,729	-	-	-	20,159
Net return on ordinary activities	-	-	-	22,429	4,989	27,418
Dividends appropriated in the period	-	-	-	-	(4,676)	(4,676)
At 30th June 2014	13,841	139,520	8,151	508,105	15,497	685,114
	Called up		Capital
Six months ended	share	Share	redemption	Capital	Revenue
30th June 2013	capital	premium	reserve	reserves	reserve	Total
(Unaudited)	£'000	£'000	£'000	£'000	£'000	£'000
At 31st December 2012	12,560	82,996	8,151	347,225	13,802	464,734
Issue of ordinary shares to the market	214	8,699	-	-	-	8,913
Net return on ordinary activities	-	-	-	93,486	3,646	97,132
Dividends appropriated in the period	-	-	-	-	(3,784)	(3,784)
At 30th June 2013	12,774	91,695	8,151	440,711	13,664	566,995
	Called up		Capital
Year ended	share	Share	redemption	Capital	Revenue
31st December 2013	capital	premium	reserve	reserves	reserve	Total
(Audited)	£'000	£'000	£'000	£'000	£'000	£'000
At 31st December 2012	12,560	82,996	8,151	347,225	13,802	464,734
Issue of ordinary shares to the market	851	36,795	-	-	-	37,646
Net return on ordinary activities	-	-	-	138,451	7,763	146,214
Dividends appropriated in the year	-	-	-	-	(6,381)	(6,381)
At 31st December 2013	13,411	119,791	8,151	485,676	15,184	642,213

Balance Sheet

at 30th June 2014

	(Unaudited)	(Unaudited)	(Audited)
	30th June 2014	30th June 2013	31st December 2013
	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	747,015	592,954	702,067
Investments in liquidity funds held at fair value through
profit or loss	10,280	15,466	8,494
Total investments	757,295	608,420	710,561
Current assets
Derivative financial instruments (note 5)	1,078	-	1,920
Debtors	1,140	4,739	782
Cash and short term deposits	23	16,501	10
	2,241	21,240	2,712
Creditors: amounts falling due within one year	(24,083)	(12,350)	(20,907)
Derivative financial instruments (note 5)	-	(461)	-
Net current (liabilities)/assets	(21,842)	8,429	(18,195)
Total assets less current liabilities	735,453	616,849	692,366
Creditors: amounts falling due after more than one year	(49,884)	(49,854)	(49,869)
Performance fees	(455)	-	(284)
Net assets	685,114	566,995	642,213
Capital and reserves
Called up share capital	13,841	12,774	13,411
Share premium	139,520	91,695	119,791
Capital redemption reserve	8,151	8,151	8,151
Capital reserves	508,105	440,711	485,676
Revenue reserve	15,497	13,664	15,184
Shareholders' funds	685,114	566,995	642,213
Net asset value per share1 (note 6)	247.5p	221.9p	239.4p

¹Comparative figures for the six months ended 30th June 2013 and year ended 31st December 2013 have been restated due to the sub-division of each existing Ordinary share of 25p into five Ordinary shares of 5p each on 8th May 2014.

Cash Flow Statement

for the six months ended 30th June 2014

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	30th June 2014	30th June 2013	31st December 2013
	£'000	£'000	£'000
Net cash inflow from operating activities (note 7)	3,896	2,565	5,794
Returns on investments and servicing of finance
Interest paid	(1,837)	(1,721)	(3,440)
Taxation
Overseas tax recovered	11	2	2
Capital expenditure and financial investment
Purchases of equity investments	(152,583)	(173,514)	(365,193)
Purchases of liquidity fund	(53,493)	(101,394)	(216,686)
Sales of equity investments	127,942	145,210	268,522
Sales of liquidity fund	51,356	128,417	248,273
Other capital charges	(4)	(4)	(10)
Net cash outflow from capital expenditure
and financial investment	(26,782)	(1,285)	(65,094)
Management of liquid resources
Net (purchase)/sales of Time Deposits	(5)	(14,713)	2,085
Dividends paid (note 3)	(4,676)	(3,784)	(6,381)
Net cash outflow before financing	(29,393)	(18,936)	(67,034)
Financing
Increase in short term loans	7,036	-	17,045
Issue of ordinary shares to the market	19,889	8,913	37,664
Decrease in cash for the period	(2,468)	(10,023)	(12,325)
Reconciliation of net cash flow to movement in net debt
Net cash movement	(2,468)	(10,023)	(12,325)
Net loans drawn down in the period	(7,041)	-	(14,960)
Management of liquid resources	5	14,713	(2,085)
Other movements	(15)	(14)	(29)
Exchange movements	3,029	(528)	135
Movement in net debt in the period	(6,490)	4,148	(29,264)
Net debt at the beginning of the period	(66,765)	(37,501)	(37,501)
Net debt at the end of the period	(73,255)	(33,353)	(66,765)
Represented by:
Cash and short term deposits	23	16,501	10
Debt falling due within one year	(23,394)	-	(16,906)
Debt falling due after more than one year	(49,884)	(49,854)	(49,869)
Net debt at the end of the period	(73,255)	(33,353)	(66,765)

Notes to the Accounts

for the six months ended 30th June 2014

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 December 2013 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 to these half year accounts are consistent with those applied in the accounts for the year ended 31st December 2013.

3.   Dividends

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	30th June 2014	30th June 2013	31st December 2013
	£'000	£'000	£'000
Final dividend paid in respect of the year ended
31st December 2013 of 1.5p (2012: 1.5p)1	4,676	3,784	3,784
Interim dividend paid in respect of the six months ended
30th June 2013 of 1.0p (2012: 1.0p)1	-	-	2,597
	4,676	3,784	6,381

      ¹Dividend rates have been restated due to the sub-division of each existing Ordinary share of 25p into 5p each on 8th May 2014.

      An interim dividend of 1.0p has been declared in respect of the six months ended 30th June 2014, costing £2,768,000.

4.   Return per share

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	30th June 2014	30th June 2013	31st December 2013
	£'000	£'000	£'000
Return per share is based on the following:
Revenue return	4,989	3,646	7,763
Capital return	22,429	93,486	138,451
Total return	27,418	97,132	146,214
Weighted average number of shares in issue1	274,256,822	253,080,570	258,411,335
Revenue return per share1	1.82p	1.44p	3.00p
Capital return per share1	8.18p	36.94p	53.58p
Total return per share1	10.00p	38.38p	56.58p

       ¹Comparative figures for the six months ended 30th June 2013 and year ended 31st December 2013 have been restated due to the sub-division of each existing Ordinary share of 25p into five Ordinary shares of 5p each on 8th May 2014.

5.   Derivative financial instrument

      The Company has hedged against the currency risk arising from its £50 million debenture liability. The forward currency contracts settled on 15th January 2014 and were for the purpose of hedging the risk of fluctuation in the £/US$ exchange rate. Upon maturity, these contracts were rolled over with the same counterparties and the settlement date of these new contracts is 11th July 2014.

6.   Net asset value per share

      Net asset value per share is calculated by dividing the funds attributable to ordinary shareholders by the number of ordinary shares in issue at 30th June 2014 of 276,818,910 (30th June 2013: 255,482,210 and 31st December 2013: 268,218,911). Comparative figure for the six months ended 30th June 2013 and year ended 31st December 2013 have been restated due to the sub-division of each existing Ordinary share of 25p into five Ordinary shares of 5p each as 8th May 2014.

7.   Reconciliation of total return on ordinary activities before finance costs and taxation to net cash inflow from operating activities

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	30th June 2014	30th June 2013	31st December 2013
	£'000	£'000	£'000
Net return on ordinary activities before finance
costs and taxation	30,418	99,591	151,364
Less capital return before finance costs
and taxation	(23,873)	(94,860)	(141,265)
Scrip dividends received as income	(4)	-	-
Increase in net debtors and accrued income	(22)	(174)	(192)
(Decrease)/increase in accrued expenses	(20)	(87)	386
Overseas withholding tax	(1,049)	(757)	(1,627)
Management fee charged to capital	(1,412)	(1,148)	(2,872)
Performance fee paid	(142)	-	-
Net cash inflow from operating activities	3,896	2,565	5,794

JPMORGAN ASSET MANAGEMENT (UK) LIMITED

A copy of the Half Year Report 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 Report will also shortly be available on the Company's website at www.jpmamerican.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

Ends

Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on the Manager's website (or any other website) is incorporated into, or forms part of, this announcement.

 

END

 

 

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