Final Results

JPMorgan Asian Investment Tst PLC 29 November 2007 STOCK EXCHANGE ANNOUNCEMENT JPMORGAN ASIAN INVESTMENT TRUST PLC PRELIMINARY ANNOUNCEMENT OF FINAL RESULTS Chairman's Statement Performance I am pleased to be able to report that the Company delivered an excellent investment performance for the year ended 30th September 2007. Our performance in recent years has been respectable and broadly in line with our benchmark index, the MSCI AC Asia ex Japan Index with dividends reinvested in sterling terms. As previously stated, however, the Board was determined to improve this general level of performance. A number of changes were introduced, not the least of which being the addition of a new investment manager to the team, who brought with him more of a ' conviction approach' to stock picking; a concentration of the portfolio on fewer stocks; a less benchmark constrained approach to country asset allocation and a nimbler and more flexible attitude to gearing. In addition, the basis of our Manager's remuneration was renegotiated and a performance fee introduced that rewards outperformance in excess of a hurdle level above our benchmark index. The total return on net assets was +57.5%. This compares with an increase of +47.4% in the benchmark index, an outperformance of +10.1 percentage points. The share price return was even better at +58.8% reflecting a small narrowing of the discount at which the Company's shares trade to their net asset value. The performance fee payable to the Manager is £4.9m, of which £2.4m is payable immediately and the balance is carried forward. We are delighted that our Manager's investment performance in absolute terms, relative to our benchmark index and relative to our peer group of investment companies in the Asia ex-Japan sector, was of such a high level as to have earned it this additional fee. Shareholders have benefited to a much greater degree from its efforts. The performance fee is equivalent to 1.5% of net assets at the year end and is fully reflected in the performance figures and financial data. Revenue and Dividends Revenue per share for the year amounted to 1.33p and the Directors are recommending a final dividend of 1.30p which, if approved by shareholders, will be payable on 15th February 2008 to shareholders on the register at the close of business on 11th January 2008. Share Repurchases Your Board has continued to monitor the levels of discount at which the Company's shares trade to net asset value and, during the year, authorised the repurchase of 1,450,000 shares for cancellation, amounting to 0.9% of the shares in issue at the date of the last Annual General Meeting. A resolution to renew the authority to permit the Company to repurchase shares will be put to shareholders at the forthcoming Annual General Meeting. Board The Directors recently carried out their annual evaluation of the Board and its Committees, the Directors and the Chairman. The evaluation is carried out by a candid self-assessment, which the Board deems to be an effective method of evaluating the continuing efficiency of the Board. However the Directors believe that it is appropriate to engage an outside agency to conduct the evaluation approximately every three to five years. The last external evaluation took place in 2004 and, accordingly, the Board will be looking to invite an external review within the next two years. Mr Christopher Penn, a founder Director of the Company in 1997 and currently Chairman of the Audit Committee, retires from the Board at the conclusion of the forthcoming Annual General Meeting. During his tenure he has been a tireless, passionate and highly effective champion of shareholders' interests and an excellent colleague. We will recruit another Director in due course. Manager The Board has carried out a formal review of the investment management, company secretarial and marketing services provided to the Company by JPMAM. This review encompassed their performance record, management processes, investment style, resources and risk control mechanisms. After full consideration, the Board concluded that the continued appointment of JPMAM for provision of these services on the terms agreed is in the interests of shareholders as a whole. Continuation Vote The Articles of Association of the Company provide that the Directors propose an Ordinary resolution for the continuation of the Company in its current form at the forthcoming Annual General Meeting. The Board has confidence in the Company's ability to continue generating superior returns to shareholders and, having also consulted a number of its larger shareholders, has no hesitation in recommending that shareholders vote in favour of the resolution, as the Directors intend to do with their own shares. This will enable the Company to continue as an investment trust for a further three years until the Annual General Meeting to be held in 2011. VAT on Management Fees Following a ruling by the European Court of Justice, HM Revenue & Customs has recently accepted that VAT will no longer be charged on investment trust management fees. The Board has been advised that the change will have no significant financial impact on the Company as, in past years, it has been able to recover most of the VAT suffered on management fees paid. Annual General Meeting This year's Annual General Meeting will be held at The Salters' Hall, 4 Fore Street, London EC2Y 5DE on Friday, 1st February 2008 at 12.00 noon. In addition to the formal proceedings, there will be a presentation by Joshua Tay, one of the investment managers, who will also be available to respond to questions on the Company's portfolio and investment strategy. Following the Meeting, there will also be an opportunity for shareholders to meet the Board and the investment manager over a buffet lunch and I look forward to seeing as many of you as possible. Outlook Satisfaction with the year's results must be tempered to some degree by an appreciation that we have embraced greater volatility in pursuit of that outperformance. Global stockmarkets show little sign of becoming calmer in the months ahead and Asian markets have been especially volatile over the recent past. Our conviction approach therefore - effectively taking bigger bets - is likely to mean that we will see greater deviations from the benchmark index, both positively and negatively, within any given time periods. In this volatile climate, the Board has authorised the investment managers to take a number of steps to protect shareholders' interests if they expect any sharp correction in Asian markets in the near to medium term. We are therefore braced for uncertain times ahead but remain confident that the investment managers' conviction approach is the right way to achieve outperformance over the longer term. James M Long Chairman 29th November 2007 Investment Managers' Report Market Review Equity markets in Asia (excluding Japan) performed extremely well over the review period, gaining +47.4% (in sterling terms). The review period was characterised by extreme volatility for the equity market. There were fears of higher inflation (from higher oil and commodity prices) leading to more interest rate increases and potential credit defaults. Further, the debacle in the US credit and sub-prime mortgage market reduced investors' risk appetite, leading to some dislocation in the overall capital markets. On the other hand, the emerging BRIC (Brazil, Russia, India and China) economies continued to show strong growth which defused some of the fears of a US recession. North Asia markets maintained their upward bias over the year, with Hong Kong and China leading the pack. China was the star performer, gaining 114.9% in sterling terms on very strong macro undertones, robust corporate earnings and strong liquidity flows as well as moves to liberalise capital markets. That said, we do note concerns from China policy makers about both inflation as well as an overheating A-share market. This is evident from the various tightening measures which include increasing transaction costs of trading and several interest rate increases. For Korea, it was a year of clear bifurcation in earnings growth and price performance across the sectors. Sectors that outperformed were largely old economy cyclicals like steel, chemical, shipbuilders and transportation. On the other hand, exporters (tech and auto) with heavy US consumer exposure generally underperformed. It is interesting to note that, while foreign ownership of this market dropped from a peak of 44% in 2004 to 32% currently, strong domestic inflows have helped hold up the market. Singapore and Taiwan were the two laggard markets during the year, both suffering from the contagion effect of the credit problems in the US. Relatively high exposure to the export sector for both countries did not help sentiment either. The property sector in Singapore suffered a minor setback after the government stepped in to curb speculation activities in the high-end residential market. Thailand performed relatively well for the period after lagging the markets of other Asian countries in past years. Aside from energy related stocks, which led the way in Thailand, optimism of a year end election, which might have ended the current military rule, also fuelled optimism in the market. That said, the market is now moving towards the view that the best an election can yield is a coalition government, with little in the way of reforms or initiatives expected. Consumer demand turnaround and falling interest rates continued to be the central theme for the Indonesia market. With over 40% growth in market earnings, banks and consumer discretionary stocks (like auto) significantly outperformed the broader market. India continued to benefit from strong foreign inflows, with US$18 billion of foreign money flowing into the Indian stock market in the first nine months of 2007. It is worth noting that the government regulator expressed concern about the amount of hot money flowing into India and has proposed measures to monitor/ limit flows into India through the Participation Note structure. Portfolio Activity In the year under review, the main focus was on increasing exposure to the domestic consumption sector and on reducing stocks that were highly exposed to the US economy; hence the increase in weightings for China and India by 11% and 3.5% respectively while reducing Korea and Taiwan by about 15% collectively. Consumer related stocks saw the biggest increase at about 13% while we reduced technology related stocks by about 9% during the period. Stocks that were sold included TSMC in Taiwan and Samsung Electronics in Korea. Performance Review For the 12 months ended 30th September 2007, the portfolio outperformed the benchmark index by +14.4%. The biggest contributor to this outperformance was gearing - on average, the Company borrowed around 7.7% of the net asset value during the period under review. In country allocation, we were spot on with our aggressive overweight in China and Hong Kong. That said, stock selection there was disappointing given our underweight in energy and oil related stocks. Overall, the two markets contributed around 2.7% to performance. For the financial year, the portfolio generated the most value from Taiwan, where contributions from asset allocation and stock selection were positive at 1.1% and 3.6% respectively. In particular, our selective overweight on stocks such as Mediatek and Innolux turned out to be correct decisions in spite of the lacklustre performance of the broader market. The other market that did well for us was Singapore. Again, stock selection was key to performance with about a 2.0% contribution. Property names such as Keppel Land and Capitaland generated good returns for the portfolio during the period. Indonesia was the main disappointment with a negative contribution of 0.9%. Despite the 43% market increase, the portfolio's performance was dragged by its holdings in stocks such as Kalbe Farma, Bank Rakyat, and United Tractors. We continue to hold these stocks in our portfolio as we believe they will deliver performance in due course. Outlook While valuations across Asia remain generally inexpensive relative to growth, there is sporadic evidence of the emergence of an asset bubble, especially in China. On its own, the rise and fall of the A-share market should not have major implications to investors outside China as it is largely closed to foreign investors. However, as we have witnessed on several occasions this year, the linkage of markets inside and outside China is much stronger than we had previously thought. Given the spectacular market performance during the year under review, one might feel that there is a requirement to be prudent, but we must also be aware that asset bubbles can potentially continue for sustained periods of time before they actually burst. When Alan Greenspan referred to 'irrational exuberance' in December 1996, amid concerns that stock prices were getting too high, prices continued to rise for four more years, and the Nasdaq quadrupled in value, before the bubble burst in the year 2000. Hence, 2008 is likely to prove extremely challenging. While it will be desirable to protect the capital gains we have generated in the last few years, we do want to participate in the great bull market that we are in today. There is no scientific formula that we know today that can tell us the right exit point. However, over a long term period, the safest and surest way to ensure success is to invest in companies that are leaders in their respective fields and have strong management teams and reasonable valuations. As Warren Buffett once said: 'Only in the low tide will we know who is swimming naked'. We certainly do not want to be caught naked should China's stockmarkets suffer a major setback. We believe we have a portfolio of great companies that will endure the increasingly high volatility of Asian equity markets. With the enhanced resources within the JPMorgan group that we can tap into, we are certain that more good valuable companies can be found in Asia in 2008 in spite of an increasingly difficult environment. Joshua Tay Michael Koh Investment Managers 29th November 2007 For further information: Philip Jones 020 7742 6000 For and on behalf of JPMorgan Asset Management (UK) Limited JPMorgan Asian Investment Trust plc Unaudited figures for the year ended 30th September 2007 Income Statement (Unaudited) (Audited) 30th September 2007 30th September 2006 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gains from investments held at fair value through profit or loss - 137,955 137,955 - 25,657 25,657 Net foreign currency gains - 1,040 1,040 - 753 753 Income from investments 6,557 - 6,557 5,460 - 5,460 Other interest receivable and similar 229 - 229 - 180 income 180 _______ ________ _______ _______ ________ _______ Gross return 6,786 138,995 145,781 5,640 26,410 32,050 Management fee (1,799) - (1,799) (1,601) - (1,601) Performance fee - (4,893) (4,893) - - - Other administrative expenses (560) - (560) (637) - (637) _______ _______ _______ _______ _______ _______ Net return on ordinary activities before finance costs and taxation 4,427 134,102 138,529 3,402 26,410 29,812 Finance costs (1,526) - (1,526) (852) - (852) _______ _______ _______ _______ _______ _______ Net return on ordinary activities before taxation 2,901 134,102 137,003 2,550 26.410 28,960 Taxation (755) 317 (438) (474) - (474) _______ _______ _______ _______ _______ _______ Net return on ordinary activities after taxation 2,146 134,419 136,565 2,076 26,410 28,486 ===== ===== ====== ===== ===== ====== Return per share 1.33p 83.40p 84.73p 1.27p 16.17p 17.44p A final dividend of 1.30p per share (2006: 1.25p per share) is proposed in respect of the year ended 30th September 2007, costing £2,080,000 (2006: £2,018,000). 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. 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. JPMorgan Asian Investment Trust plc Unaudited figures for the year ended 30th September 2007 Reconciliation of Movements in Shareholders' Funds Exercised Capital Called up warrant redemption share Share reserve reserve Other Capital Revenue capital premium reserve reserve reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 30th September 2005 41,900 4,347 977 1,111 112,463 56,935 3,175 220,908 Adjustment to opening shareholders' funds at 1st October 2005 to reflect the adoption of bid prices - - - - - (680) - (680) Repurchase of shares for (686) - - 686 (3,561) - - (3,561) cancellation Cancellation of shares held in (850) - - 850 - - - - treasury - Total return from ordinary - - - 26,410 2,076 28,486 activities - Dividends appropriated in the - - - - - - (2,873) (2,873) year _______ ________ ________ ________ _______ _______ _______ ________ At 30th September 2006 40,364 4,347 977 2,647 108,902 82,665 2,378 242,280 Repurchase of shares for (362) - - 362 (2,421) - - (2,421) cancellation - - - - - 134,419 2,146 136,565 Total return from ordinary activities Dividends appropriated in the - - - - - - (2,018) (2,018) year _______ ________ ________ ________ _______ _______ ______ ________ At 30th September 2007 40,002 4,347 977 3,009 106,481 217,084 2,506 374,406 JPMorgan Asian Investment Trust plc Unaudited figures for the year ended 30th September 2007 Balance sheet (Unaudited) (Audited) 30th September 2007 30th September 2006 £'000 £'000 Fixed assets Investments at fair value through profit or loss 407,137 252,742 Current assets Debtors 644 490 Cash at bank and in hand 20,283 1,386 _______ _______ 20,927 1,876 Creditors: amounts falling due within one year (26,447) (255) Derivative financial instruments (1) - _______ _______ Net current (liabilities)/assets (5,521) 1,621 Total assets less current liabilities 401,616 254,363 Creditors: amounts falling due after more than one year Bank loans (24,709) (12,045) Provisions for liabilities and charges Deferred tax - (38) Performance fee (2,501) - _______ _______ Total net assets 374,406 242,280 ===== ===== Net asset value per share 234.0p 150.1p Cash Flow Statement 2007 2006 £'000 £'000 Net cash inflow from operating activities 3,474 2,619 Returns on investments and servicing of finance (1,500) (831) Taxation recovered/(paid) 195 (305) Net cash outflow from capital expenditure and financial investment (8,755) (17,643) Dividend paid (2,018) (2,873) Net cash inflow from financing 28,369 9,262 _______ _______ Increase/(decrease) in cash for the year 19,765 (9,771) ===== ===== Notes to the Accounts 1. Accounting policies The accounts are prepared in accordance with the Companies Act 1985 and 2006 where applicable, 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 December 2005. All of the Company's operations are of a continuing nature. 2. Dividends (Unaudited) (Audited) 30th September 30th September 2007 2006 £'000 £'000 2006 final dividend paid of 1.25p (2005: 1.75p) 2,018 2,873 _______ _______ 2007 final dividend proposed of 1.30p (2006: 1.25p) 2,080 2,018 ===== ===== The final dividend has been proposed in respect of the year ended 30th September 2007 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 ended 30th September 2008. 3. Return per share (Unaudited) (Audited) 30th September 30th September 2007 2006 £'000 £'000 Return per share is based on the following: Revenue return 2,146 2,076 Capital return 134,419 26,410 _______ _______ Total return 136,565 28,486 ===== ===== Weighted average number of shares in issue 161,181,192 163,352,731 Revenue return per ordinary share 1.33p 1.27p Capital return per ordinary share 83.40p 16.17p _______ _______ Total return per ordinary share 84.73p 17.44p ===== ===== 4. Net asset value per share The net asset value per share is based on the net funds attributable to the ordinary shareholders of £374,406,000 (2006: £242,280,000) and on the 160,007,154 (2006: 161,457,154) shares in issue at the year end. 5. Status of preliminary announcement The financial information set out in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 30th September 2007 or 2006. The statutory accounts for the year ended 30th September 2007 have not been delivered to the Registrar of Companies, nor have the auditors yet reported on them. The statutory accounts for the year ended 30th September 2007 will be finalised on the basis of the information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the approval of the accounts by the Board of Directors. JPMORGAN ASSET MANAGEMENT (UK) LIMITED 28th NOVEMBER 2007 This information is provided by RNS The company news service from the London Stock Exchange

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