Annual Financial Report

RNS Number : 7111A

JPMorgan Asian Investment Tst PLC

24 December 2014

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN ASIAN INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 30th SEPTEMBER 2014

The Directors of JPMorgan Asian Investment Trust plc announce the Company's results for the year ended 30th September 2014.

Chairman's Statement

Performance

In the year to 30th September 2014 the Company's return on net assets was 6.0% and the return to Ordinary shareholders was 5.2%, reflecting a slight widening of the Company's discount from 10.7% to 11.4%. The Company underperformed its benchmark, the MSCI Asia ex Japan Index, which returned 8.1% and thereby gave back slightly more than its outperformance in 2013.

Continuing appointment of the Manager

In the light of disappointing performance the Board has again held detailed discussions with senior management at JPMorgan Asset Management (JPMAM) as to the effectiveness of the investment process for the Company and the justification for their continuing appointment as the Company's investment managers. The Board, the Manager and, as we know from consultation conducted by our broker, our major Shareholders are all in accord that we must now see significant performance improvement in 2015.

The Board has resolved that JPMAM remain as the Company's Manager for 2015, but will introduce a new and additional Continuation Vote at the 2016 Annual General Meeting. Its recommendation at that vote will largely depend on the Manager's ability to deliver the required outperformance this year. It is encouraging to note that, since the period end, the Company's relative performance has markedly improved and its discount has narrowed.

Company's Fee Structure

The Manager has for many years been remunerated by a management and performance fee structure, but at the Board's request has now agreed to remove the performance fee element. This change, which also reflects a move by many other investment trusts to simplify their management fee structures, took effect from 1st October 2014. There is no increase in the base management fee, which remains at a rate of 0.6% per annum based on market capitalisation.

Discount Management

The Company's discount widened over the year and the Board is cognisant that, whilst an improvement in performance and thence demand for the Company's shares would help to reduce the discount, there are times when, subject to market conditions, the Board should also consider buying back shares. Over the year ended 30th September 2014 the Company repurchased 760,000 shares, as well as a further 5,041,946 shares bought back and cancelled in the December 2013 tender. In normal market conditions, the Board's objective is to stabilize the discount at no wider than between 8% and 10%. It is intended that this will be the Board's policy for the year ahead and the Directors will therefore propose a resolution at the forthcoming Annual General Meeting to authorise the Company to repurchase its Ordinary shares.

Revenue and Dividends

Revenue per share for the year amounted to 2.23p and the Board is recommending a final dividend of 2.20p which, if approved by shareholders, will be payable on 3rd February 2015 to shareholders on the register at the close of business on 9th January 2015.

Gearing

The Company has a £25 million three year multi currency loan facility with Scotiabank in place which will expire in December 2016. The investment managers utilise draw downs from this loan facility to gear the portfolio. At the time of writing the Company was 0.3% geared.

Board of Directors

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

In accordance with corporate governance best practice, all Directors will be retiring and seeking re election at the Company's forthcoming Annual General Meeting. The Nomination Committee met formally to evaluate the effectiveness of the Board as a whole and of each individual Director and is satisfied that all retiring Directors possess the knowledge and attributes required of a Director for this Company. Accordingly, the re-elections of all Directors at the forthcoming Annual General Meeting are recommended to shareholders.

The Company recently announced the appointment of Mr Dean Buckley as a non executive Director with effect from 18th September 2014 and he has already proved to be a highly effective Board colleague. He was appointed following the retirement of Mr Andrew Sykes from the Board on 20th June 2014. Mr Sykes had made an outstanding contribution to the Board during his tenure and we thank him most warmly. Details of Mr Buckley's experience and qualifications can be found in the Company's Annual Report. Mr Buckley will be standing for election at the Annual General Meeting and his fellow Directors strongly recommend that shareholders vote in favour of the resolution for his appointment. Going forward, we shall continue to refresh the Board and to ensure that we have Directors with impressive recent and relevant experience, particularly in the fund management area.

Alternative Investment Fund Management Directive ('AIFMD')

I reported in my half year 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 Depositary in addition to its existing custodian.

Taking into account legal advice received by the Company, 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 with effect from 1st July 2014. This change of entity does not in any way affect the actual management of the portfolio which will continue to be managed by Ted Pulling and Sonia Yu from their base in Hong Kong. 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 ('BNY'). BNY will be paid a fee of approximately £50,000, or 0.017% of the Company's gross assets per annum.

Annual General Meeting

This year's Meeting will be held at 60 Victoria Embankment, London EC4Y 0JP on Wednesday, 28th January 2015 at 12.00 noon. In addition to the formal proceedings, there will be a presentation by Ted Pulling, one of the Company's investment managers and the Chief Investment Officer for JPMAM in Asia, who will also be available to respond to questions on the Company's portfolio, the investment team's strategy and the outlook for Asian markets. Following the Meeting there will be an opportunity for shareholders to meet the Board, Mr Pulling and other Company advisers and I look forward to seeing as many of you as possible.

Conclusion

Clearly this is an extremely important year for the Company. I very much hope that I shall be able to report again at the interim stage that the encouraging start to the year has been maintained and built upon.

James M Long

Chairman                                                                                                                                     24th December 2014

Investment Managers' Report

Summary

During the year under review, the Company's return on net assets was 6.0%, representing an underperformance against the Asian stock market, as measured by the MSCI AC Asia ex Japan Index, which delivered an 8.1% return in sterling terms. In this report, we will examine the underperformance, discuss the market backdrop and then consider the outlook for Asian stock markets in 2015.

Performance

After outperforming in the Company's financial and calendar 2013, this year's performance outcome was disappointing. Attribution analysis clearly indicated that the crux of the problem was stock selection in Greater China and Korea. In terms of the former, the portfolio's large position in Macau casinos, which added value in 2013, detracted from performance in 2014. Numerous policies were enacted by China and Macau - many being part of the anti corruption campaign - that diminished gambling revenues and resulted in earnings forecasts coming under steady pressure. We reduced exposure to the sector, but in hindsight the positions should have been entirely sold earlier in the year. However at the time of writing, the Company still holds Macau casino stocks, as valuation and cash flow profile within this sector remain attractive.

In Korea, the Company held numerous heavy industry stocks which had been trading on abnormally low valuations. These are generally world class companies which would normally benefit in an improving global economic scenario, but as China's economic growth slows, oversupply of chemicals and steel and refining capacity has become more acute. The share prices of these companies fell even further as their earnings disappointed market expectations. Again, the Company has reduced exposure to these Korean heavy industry stocks.

On a positive note, the Company's holdings in India performed well, in most cases comfortably outperforming the overall market. In particular, the Company has a large position in Indian private sector banks, such as HDFC Bank. This is a high growth sector with excellent management and a structural opportunity to take market share from the less efficient government owned banks. Elsewhere in India, the Company's auto sector holdings did well, though for different reasons. Tata Motors owns Jaguar Land Rover, where volumes have accelerated in line with luxury spending in China and America. Elsewhere, Mahindra & Mahindra ('M&M') is India's largest manufacturer of tractors and utility vehicles, and has investments in various other areas. The shares of both Tata and M&M increased in value as investors appreciate the growth prospects and the top quality management.

Two other areas are worth mentioning. The Company has meaningful thematic positions in China internet and environmental companies. In both cases, stock selection delivered positive returns. These themes are structural by nature and high growth. The internet stocks are largely beyond government policy whereas the environmental stocks directly benefit from the government's 'Beautiful China' policy. Toward the end of the financial year, the Company participated in the Alibaba IPO, thereby increasing exposure to China's high growth e-commerce sector. The large position in Tencent, the Company's other internet holding, remains.

We continue to believe that our alpha generation will come via our bottom-up stock driven process and our unique country specialists' approach to managing money in Asia. We have the right resources and individuals to drive that process going forward. Since the summer months, we have increased the active positions in the portfolio and reduced the number of stocks, both moves contributing to performance since the beginning of this 2014/2015 financial year.

Review

The year ended September 2014 was characterised by periods of tranquility and then sharp volatility. By August, Asian stock markets had finally managed to trade above the previous high level set in the second quarter of 2011, prior to the Eurozone Crisis. Continuously improving economic data from the United States, and to a lesser extent Europe, provided a tailwind, but the real propellant was a belief that political change across Asia would lead to much needed economic reform.

From India to Japan to Indonesia, the prevalence of simultaneous political change is unprecedented in recent Asian history. India, which has been the best performing stock market in Asia year to date benefited from the unprecedented landslide victory of Narendra Modi. After a questionable start, PM Modi seems to be hitting his stride. He has reduced the subsidy burden by floating diesel prices, attacked government bureaucracy and lethargy with vim. He is implementing method and transparency to policy and implementation. Overall, he is setting the stage for a long overdue resurgence in investment, especially in infrastructure, which the Indian economy desperately needs. In terms of asset allocation, the Company's largest overweight allocation is to Indian equities.

In the interim statement to shareholders, we discussed the economic programme outlined at the Plenum meeting in China in October 2013. The results have been mixed, but no one can doubt the determination of President Xi Jinping and Premier Li Keqieng to reinvigorate reforms in China. On the social front, the anti corruption campaign has been executed with unprecedented zeal, even targeting past members of the State Council. Hukou reform should deliver more healthcare, property and land rights to China's lower classes, especially migrant workers. Even the One Child policy has largely been abandoned, which is important when considering China's challenging longer term demographics. Economically, Xi and Li are trying to rebalance the Mainland economy more towards consumption and away from credit intensive investment. Achieving this objective is particularly difficult given the lack of external demand, which means that exports are growing well below potential. An additional objective is the reform of the state owned enterprises, which have been riddled with corruption and have invested money unwisely for many years, thereby generating low returns. Overall, by trying to wean the economy off its addiction to credit, Xi and Li are almost guaranteeing a lower rate of economic growth. Ironically, the stock market would reward that outcome in the long term, but in the short term, the risks of lower growth and the concomitant effects on employment are unnerving.

In Asean, in particular, Indonesia and Thailand, political regime changes were also driving reforms. In the former, a hard fought but clean democratic election resulted in Joko Widowo becoming president with a strong popular mandate. The Indonesian economy is bedeviled with high energy subsidies and woeful infrastructure. Growth is decelerating and the current account deficit is worrisome. 'Jokowi' was expected to be a decisive leader willing to tackle these thorny issues. Alas, his presidency so far has met with considerable and unexpected opposition from his political foes. Meanwhile, in Thailand, the military coup removed a democratically elected leader, much to the dismay of international partners like America. That opprobrium has not dissuaded the new Prime Minister, General Prayuth, from outlining an aggressive nine point programme to revitalise investment, reform state owned companies, attack corruption, and compose a durable constitution. The stock market driven by local institutions is responding positively to his decisive style of management.

Toward the end of the reporting year, stock markets unfortunately declined sharply. They are recovering at the time of writing, but it is important for investors to understand the cause of the correction. After years of coordinated central bank policy around the world, the US economy is on much firmer footing. Europe and Japan, though, remain mired in a lower growth existence, with the threat of deflation constantly looming. Consequently, the Federal Reserve is ending its stimulus programmes while the ECB and Bank of Japan are intensifying their stimulus programmes, with the result being that the US Dollar is conspicuously strong. Rightly or wrongly, a strong USD is associated with higher interest costs globally, and also indicates that capital will flow toward America and away from riskier destinations, such as emerging markets. Many object to this facile interpretation, but the fact is that the strong Dollar caused the recent stock market correction. Looking ahead into 2015, a robust American economy is unambiguously good news for the global economy and corporate earnings.

Outlook

The single most important determinant when discussing the outlook for Asian equities is earnings growth. As 2015 approaches, the analyst community is yet again forecasting region wide earnings growth of approximately 12-14% for the year ahead. That rate of growth seems slightly optimistic, probably by about 2-3% points, and is subpar by historic standards. In fact, it is reminiscent of the years 2011-2014, during which calendar earnings growth has been 2-10%. Our job is to locate the stocks and themes which will deliver stronger earnings growth. As mentioned above, understanding economic reform and the effect it has on investment and consumption patterns is essential. Presently, there is no evidence to suggest that trade will accelerate above of its low growth plane.

The good news is valuations remain undemanding, both in absolute terms and relative to US and European stock markets. Asian balance sheets are generally sound. Historically, Asian stock markets have traded in a price/book value range of 1.5-1.8x, but we need to see higher earnings growth and a higher return on equity to propel current markets higher.

Currency could be a key factor in 2015 also. So far in 2014, Asian currencies have been gratifying stable after depreciating in 2013. Weaker commodity prices are generally good for Asian economies and currencies. Indonesia is the exception as it is a major exporter of iron ore and palm oil. The question is will a strong Dollar vs. the Euro and Yen exert pressure on Asian currencies too?

Finally, the direction of the mainland China economy will play a major role in determining the outlook for Asia in 2015. Globally, investors are concerned about China's property market and the level of debt. Both subjects have been discussed in previous reports. Presently, transaction activity in the property sector is improving, buoyed by accommodative government policies, but prices are still gently falling. Overall, the slowdown is orderly and does not seem to pose a risk to the banking sector. The same can be said for the overall debt levels in China. Deleveraging will occur in the future, and it will be a headwind to growth, but a debt crisis is not expected. As risk attitudes toward China improve, so too sentiment will improve toward Asia overall.

The Company is fully invested. Given the valuation environment and the growth opportunities, the Company will remain fully invested and frequently geared. Even if the macro outlook is not clear, the fact remains that there are plenty of exciting stocks and themes across Asia. With that opportunistic attitude, we enter 2015 determined to do better. Results so far in the new year show a gratifying improvement in both absolute and relative performance, a pattern that we are working hard to maintain.

Ted Pulling

Sonia Yu

Jeff Roskell

Investment Managers                                                                                                                     24th December 2014

Principal Risks

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 decision, in areas such as asset allocation or the level of gearing, may lead to underperformance against the Company's benchmark index and peer companies, and may result in the Company's shares trading on a wider discount. The Board seeks to mitigate these risks by diversification of investments through its investment restrictions and guidelines which are monitored and reported on by the Manager. The Manager provides the Directors with timely and accurate management information, including performance data and attribution analysis, revenue estimates and shareholder analysis. The Board monitors the implementation and results of the investment process with the investment managers, who attend all Board meetings, and reviews data which show statistical measures of the Company's risk profile. The Manager employs the Company's gearing tactically, within a strategic range set by the Board. The Board holds a separate meeting devoted to strategy each year.

•    Market: Market risk arises from uncertainty about the future prices of the Company's investments. It represents the potential loss that the Company might suffer through holding investments in the face of negative market movements. 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 the Manager. The Board monitors the implementation and results of the investment process with the Manager.

•    Operational and Cybercrime: Disruption to, or failure of, the Manager'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 the Manager and its associates and the key elements designed to provide effective internal control are included with the Internal Control section of the Corporate Governance report within the annual report. The threat of cyber attack, in all its guises, is regarded as at least as important as more traditional physical threats to business continuity and security. The Company benefits directly or indirectly from all elements of JPMorgan's Cyber Security programme. The information technology controls around the physical security of JPMorgan's data centres, security of its networks and security of its trading applications are tested by Deloitte and reported every six months against the AAF Standard.

•    Loss of Investment Team: A sudden departure of several members of the investment management team could result in a deterioration in investment performance. The Manager takes steps to reduce the likelihood of such an event by ensuring appropriate succession planning and the adoption of a team-based approach.

•    Change of Corporate Control of the Manager: The Board holds regular meetings with senior representatives of JPMAM in order to obtain assurance that the Manager continues to demonstrate a high degree of commitment to its investment trusts business through the provision of significant resources.

•    Financial: The financial risks faced by the Company include market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk, credit risk and the failure of any counterparty. Further details are disclosed in note 22 to the accounts.

•    Political and Economic: Changes in financial or tax legislation, including in the European Union, may adversely effect the Company. The Manager makes recommendations to the Board on accounting, dividend and tax policies and the Board seeks external advice where appropriate. In addition, the Company is subject to political risks, such as the imposition of restrictions on the free movement of capital.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements, and the Directors' Remuneration Report 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 prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards 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 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 order to provide these confirmations, and in preparing these financial statements, the Directors must be 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 performance, business model and strategy of the Company; and 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. The Board confirms that it is satisfied that the annual report and accounts taken as a whole are fair, balanced and understandable and provide the information necessary for shareholders to assess the strategy and business model of the Company.

The Directors are responsible for keeping proper 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 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.

Under applicable law and regulations the Directors are also responsible for preparing a Strategic Report, a Directors' Report and Directors' Remuneration Report that comply with that law and those regulations.

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

Each of the Directors, whose names and functions are listed in the Directors' Report, confirms that, to the best of their knowledge:

•    the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards) and applicable law, give a fair, balanced and understandable view of the assets, liabilities, financial position and return or loss of the Company; and

•    the Directors' 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.

For and on behalf of the Board

James M Long

Chairman

24th December 2014

Income Statement

for the year ended 30th September 2014

		2014			2013
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at
fair value through profit or loss		-	9,101	9,101	-	12,349	12,349
Net foreign currency losses		-	(272)	(272)	-	(984)	(984)
Income from investments		4,794	-	4,794	5,704	-	5,704
Other interest receivable and similar
income		5	-	5	2	-	2
Gross return		4,799	8,829	13,628	5,706	11,365	17,071
Management fee		(1,194)	-	(1,194)	(1,382)	-	(1,382)
Management fee contribution		-	-	-	-	1,135	1,135
Other administrative expenses		(739)	-	(739)	(729)	-	(729)
Net return on ordinary activities
before finance costs and taxation		2,866	8,829	11,695	3,595	12,500	16,095
Finance costs		(292)	-	(292)	(355)	-	(355)
Net return on ordinary activities
before taxation		2,574	8,829	11,403	3,240	12,500	15,740
Taxation		(418)	-	(418)	(291)	(251)	(542)
Net return on ordinary activities
after taxation		2,156	8,829	10,985	2,949	12,249	15,198
Return per Ordinary share (Note 3)
- diluted		2.23p	9.13p	11.36p	2.63p	10.94p	13.57p
- undiluted		2.23p	9.13p	11.36p	2.64p	10.96p	13.60p

Details of dividends paid and proposed are given in note 2 below.

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

	Called up		Exercised	Capital
	share	Share	warrant	redemption	Other	Capital	Revenue
	capital	premium	reserve	reserve	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2012	37,337	31,503	977	11,622	34,499	203,905	4,453	324,296
Repurchase of Ordinary shares for
cancellation	(12,048)	-	-	12,048	(34,499)	(69,822)	-	(104,321)
Repurchase of Subscription shares
for cancellation	(12)	12	-	-	-	(339)	-	(339)
Issue of Ordinary shares on exercise
of Subscription shares	3	24	-	-	-	-	-	27
Expenses in relation to tender offers	-	-	-	-	-	(337)	-	(337)
Net return from ordinary activities	-	-	-	-	-	12,249	2,949	15,198
Dividends appropriated in the year	-	-	-	-	-	-	(3,068)	(3,068)
At 30th September 2013	25,280	31,539	977	23,670	-	145,656	4,334	231,456
Repurchase of Ordinary shares for
cancellation	(1,326)	-	-	1,326	-	(11,876)	-	(11,876)
Repurchase of Subscription shares
for cancellation	(72)	72	-	-	-	-	-	-
Issue of Ordinary shares on exercise
of Subscription shares	5	35	-	-	-	-	-	40
Expenses in relation to tender offers	-	-	-	-	-	(69)	-	(69)
Net return from ordinary activities	-	-	-	-	-	8,829	2,156	10,985
Dividends appropriated in the year	-	-	-	-	-	-	(2,491)	(2,491)
At 30th September 2014	23,887	31,646	977	24,996	-	142,540	3,999	228,045

Balance Sheet

at 30th September 2014

		2014	2013
		£'000	£'000
Fixed assets
Investments held at fair value through profit or loss		238,059	230,588
Current assets
Debtors		982	1,573
Cash and short term deposits		5,438	6,829
		6,420	8,402
Creditors: amounts falling due within one year		(1,434)	(7,534)
Net current assets		4,986	868
Total assets less current liabilities		243,045	231,456
Creditors: amounts falling due after more than one year		(15,000)	-
Net assets		228,045	231,456
Capital and reserves
Called up share capital		23,887	25,280
Share premium		31,646	31,539
Exercised warrant reserve		977	977
Capital redemption reserve		24,996	23,670
Capital reserves		142,540	145,656
Revenue reserve		3,999	4,334
Total equity shareholders' funds		228,045	231,456
Net asset value per Ordinary share (Note 4)
Diluted		238.7p	227.8p
Undiluted		238.7p	229.6p

Company registration number: 3374850.

Cash Flow Statement

for the year ended 30th September 2014

		2014	2013
		£'000	£'000
Net cash inflow from operating activities		2,571	3,866
Returns on investments and servicing of finance
Interest paid		(245)	(348)
Taxation recovered		-	40
Capital expenditure and financial investment
Purchases of investments		(152,299)	(247,274)
Sales of investments		154,477	343,082
Settlement of futures contracts		-	839
Other capital charges		(52)	(41)
Net cash inflow from capital expenditure and
financial investment		2,126	96,606
Dividends paid		(2,491)	(3,068)
Net cash inflow before financing		1,961	97,096
Financing
Bank loan drawdown		15,000	6,966
Bank loan repayment		(6,262)	-
Issue of Ordinary shares on exercise of Subscription shares		40	27
Repurchase of Ordinary shares for cancellation		(11,945)	(107,207)
Repurchase of Subscription shares for cancellation		-	(339)
Net cash outflow from financing		(3,167)	(100,553)
Decrease in cash in the year		(1,206)	(3,457)

Notes to the Accounts

for the year ended 30th September 2014

1.    Accounting policies

(a)  Basis of accounting

The accounts are prepared in accordance with the Companies Act 2006, 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' (the 'SORP') issued by the AIC in January 2009.

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

The accounts have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of investments at fair value.

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

2.   Dividends

      Dividends paid and proposed

	2014	2013
	£'000	£'000
Dividend paid
2013 final dividend of 2.6p (2012: 2.4p)1	2,491	2,564
2013 special dividend of nil (2012: 0.5p)2	-	504
Total dividends paid in the year	2,491	3,068
Dividend proposed
2014 final dividend proposed of 2.2p (2013: 2.6p)	2,102	2,622
Total dividends proposed for the year	2,102	2,622

¹The final dividend disclosed for the year ended 30th September 2013 was £2,622,000, however, the actual payment amounted to £2,491,000 due to share buybacks after the balance sheet date but prior to the share register record date.

²Due to the reduction of the Company's share capital, following a 24.99% Tender Offer in November 2012, and the subsequent reduction in the amount distributed to Shareholders, Directors declared an additional dividend of 0.5 pence per share in respect of the Company's financial year ended 30th September 2012.

The final dividend proposed in respect of the year ended 30th September 2014 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 30th September 2015.

	2014	2013
	£'000	£'000
3. Return per Ordinary share
Return per Ordinary share is based on the following:
Revenue return	2,156	2,949
Capital return	8,829	12,249
Total return	10,985	15,198
Weighted average number of Ordinary shares in issue during the year used
for the purpose of the diluted calculation	96,703,852	111,939,781
Weighted average number of Ordinary shares in issue during the year used
for the purpose of the undiluted calculation	96,703,852	111,745,277
Diluted1
Revenue return per Ordinary share	2.23p	2.63p
Capital return per Ordinary share	9.13p	10.94p
Total return per Ordinary share	11.36p	13.57p
Undiluted
Revenue return per Ordinary share	2.23p	2.64p
Capital return per Ordinary share	9.13p	10.96p
Total return per Ordinary share	11.36p	13.60p

¹The Company's Subscription shares expired and the rights lapsed on 31st March 2014.

The diluted return per Ordinary share represents the return on ordinary activities after taxation divided by the weighted average number of Ordinary shares in issue during the year as adjusted in accordance with Financial Reporting Standard 22 'Earnings per share'.

	2014	2013
4.   Net asset value per Ordinary share
Diluted1
Ordinary shareholders' funds assuming exercise of Subscription shares (£'000)	228,045	246,180
Number of potential Ordinary shares in issue	95,546,993	108,082,485
Net asset value per Ordinary share (pence)	238.7	227.8
Undiluted
Ordinary shareholders' funds (£'000)	228,045	231,456
Number of Ordinary shares in issue	95,546,993	100,829,335
Net asset value per Ordinary share (pence)	238.7	229.6

¹The diluted net asset value per Ordinary share, which assumed that all outstanding Subscription shares were converted into Ordinary shares at the 2013 year end. The Company's Subscription shares expired and their rights lapsed on 31st March 2014.

5.   Status of announcement

2013 Financial Information

      The figures and financial information for 2013 are extracted from the published Annual Report and Accounts for the year ended 30th September 2013 and do not constitute the statutory accounts for that year. The Annual Report and Accounts 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.

2014 Financial Information

      The figures and financial information for 2014 are extracted from the Annual Report and Accounts for the year ended 30th September 2014 and do not constitute the statutory accounts for the year. The Annual Report and Accounts 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 Accounts will be delivered to the Registrar 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

JPMORGAN FUNDS LIMITED

ENDS

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

The annual report will shortly be available on the Company's website at www.jpmasian.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

24th December 2014

 

END

 

 

FR USOKRSVAUURA