Final Results

JPMorgan Chinese Inv Tst PLC 08 November 2007 LONDON STOCK EXCHANGE ANNOUNCEMENT JPMORGAN CHINESE INVESTMENT TRUST PLC UNAUDITED FINAL RESULTS FOR THE YEAR ENDED 30TH SEPTEMBER 2007 Chairman's Statement I am delighted to report that the Company saw continued strong performance over the year to 30th September 2007 with a total return on net assets (the percentage change in net asset value ('NAV') with the net dividend reinvested) of +85.7%, which significantly outperformed the total return of +55.5% on the Company's benchmark, the MSCI Golden Dragon Index. The total return to shareholders (the percentage change in share price with the net dividend reinvested) for the financial year was slightly lower at +80.8% but nevertheless a very pleasing result. The slightly lower total return to shareholders takes into account the widening of the discount of the Company's share price to the underlying NAV per share from 4.6% to 6.7%. Revenue and Dividends Revenue for the year, after taxation, was £386,000 (2006: £535,000) and earnings per share, calculated on the average number of shares in issue during the year, was 0.52 pence (2006: 0.74 pence). Given the Company's surplus on its Revenue Account, the Board is recommending a dividend of 0.50 pence (2006: 0.70 pence) per share in respect of the financial year. Subject to shareholders' approval at the Annual General Meeting ('AGM'), the dividend will be paid on 21st December 2007 to shareholders on the register at close of business on 16th November 2007. Whilst it is the Company's policy to distribute substantially all the available income each year, the Company's objective remains that of long term capital growth and dividends will vary accordingly. Share Issues and Repurchases The Directors consider it to be in the interests of shareholders that the Company's share price reflects, as closely as possible, the NAV per share. At an Extraordinary General Meeting in August 2006, shareholders gave the Board authority to issue up to approximately 22 million new shares in the Company. In January 2007 the Company's shares traded at a modest premium to their NAV and 1,475,000 new ordinary shares were issued at an average premium to NAV of 3.9%. As this authority is valid until August 2011, the Board does not consider it appropriate to put an additional resolution to shareholders at the forthcoming AGM to renew this authority. At last year's AGM, shareholders granted the Directors authority to repurchase the Company's shares. During the year a total of 4,116,000 ordinary shares were repurchased to hold in Treasury at an average discount of 11.1%. The Board has undertaken to reissue shares held in Treasury only at a premium to the prevailing NAV at that time. The Board believes that its active policy of share issuance and share buybacks has helped to reduce discount volatility and recommends that the repurchase authority be kept in place. Accordingly we are seeking approval from shareholders to renew the buyback authority at the forthcoming AGM. Corporate Governance The Company operates in accordance with corporate governance best practice and the Board is committed to the highest standards of corporate governance applicable under the Combined Code and the 'Association of Investment Companies' ('AIC') Code of Corporate Governance for Investment Trusts. At the start of November, the Nomination Committee of the Board met and carried out an evaluation of the Directors, the Chairman, the Board itself and its committees, the results of which were satisfactory. The Board takes this review seriously and views it as an effective means of evaluating the continuing efficacy of the Board. Review of services provided by the Manager The Board carried out a thorough review of the services provided by the Manager, noting in particular the outperformance against the benchmark both in the past year and over the longer term. Following this review, the Board has concluded that the continued appointment of the Manager on the terms agreed is in the interests of the shareholders as a whole. The fees payable to the Manager comprise a fixed basic management fee of 1% of total assets per annum and a performance related fee of 15% of the outperformance of the NAV total return over the benchmark. The amount of the latter fee actually payable to the Manager is capped at 1% in any one year, with any excess being carried forward and either paid out (subject to the 1% cap) or absorbed by any underperformance in subsequent years. The outstanding outperformance in this financial year has earned the Manager a performance fee of £4,485,000 of which, under the cap arrangement, £872,000 is payable now and £3,613,000 is carried forward. The Board is pleased with this outcome which is of great benefit to shareholders and hopes that the Manager will continue to deliver outperformance and earn substantial performance fees in future years as a result. The Company's expenses for the financial year as a percentage of the average of the opening and closing net assets (the 'Total Expense Ratio') was 1.34% before accounting for the performance fee and 2.39% after doing so. These ratios compare favourably with those of similar funds. Board of Directors In accordance with the Company's Articles of Association, the Directors retiring by rotation at this year's Annual General Meeting will be Irving Koo and Madam Yujiang Zhao. In addition, having served as a Director for more than nine years, I offer myself for re-election on an annual basis. The Board does not believe that length of service in itself should disqualify a Director from seeking re-election and, in proposing my re-election, it has taken into account the ongoing requirements of the Combined Code, including the need to refresh the Board and its Committees. The Nomination Committee has met to consider the attributes and contributions of the individuals concerned and, following this review, has no hesitation in recommending their re-elections at the Annual General Meeting. Annual General Meeting This year's Annual General Meeting will be held on Tuesday 11th December 2007 at 10.30 am at the Armourers' Hall, 81 Coleman Street, London EC2R 5BJ. Investment Managers I am delighted to introduce two additional members of JPMorgan's Greater China team, which is based in Hong Kong and has responsibility for the day to day management of the Company's investment portfolio. Shumin Huang, who has been a member of the team since early 2006, was previously with Goldman Sachs where she was a managing director and head of the Asia-Pacific energy and chemicals team. She is a China country specialist and, together with Howard Wang, is responsible for the management of JF China Pioneer 'A' Share Fund - the Company's single largest investment. Kevin Chan joined JPMorgan earlier this year from Morgan Stanley, where he was an executive director in the institutional equities division. Outlook After the outstanding performance over the past financial year, it would be unrealistic to expect a similar performance in the current financial year. Nevertheless, the continuing development of the Chinese capital markets should result in the valuation of the shares in the Company's investment portfolio better reflecting overall economic growth. The Board remains confident that over the longer term investment in Greater China will deliver strong capital growth. Nigel Melville Chairman 8th November 2007 Investment Managers' Report The Company achieved a total return on net assets of +85.7% against a benchmark return of +55.5% for the 12 months ended 30th September 2007. The Company performed very well in all three markets in terms of both stock selection and asset allocation. China Market Performance China markets posted a stellar performance over the period with the MSCI China Index up 114.9% (in sterling terms). Exceptionally strong corporate results, robust economic growth, ample liquidity and continued expectations of Renminbi revaluation continued to be the market drivers. Over the year, the Chinese stock markets experienced high volatility, triggered by a number of local and global events such as the policy tightening in February, the decision by the Chinese government to raise stamp duty on stock trading in May and the sub-prime fall-out in August. Nonetheless, the markets showed great resilience and generally rallied soon after the uncertainties were cleared. Materials and industrial stocks performed well over the year, primarily due to the global demand for commodities as well as to the spectacular growth of the Chinese economy. Hong Kong-listed 'H' Shares, which were at a deep discount to their 'A' Share peers, also performed strongly in expectation that Chinese onshore liquidity would take advantage of the valuation disparity. Market Outlook China's tightening measures announced and implemented so far have been moderate and incremental. With China's strong economic data released year-to-date and the potential risk to growth on the upside, there are lingering concerns about further tightening measures and potential changes in policy tones post the 17th Party Congress. We believe that government policies will remain accommodating given its ' pro-growth' stance and that overall economic growth should remain promising, despite some moderating in 2008. Fundamentally, we remain comfortable about the growth prospects of the financial and property sectors as well as selective retailers, and will view corrections, if any, as a buying opportunity to increase our exposure to quality companies in these sectors. While the financial jitters triggered by sub-prime fall-out have been calmed by the coordinated actions of developed economy central banks, the real economic impact has yet to be seen. Global growth downgrades are likely, especially in the US. That said, China stands out in terms of relative insulation from a global growth slowdown, having ample excess liquidity (in contrast to most other markets where liquidity is tightening). The staggering response to the recently launched Qualified Domestic International Investor ('QDII') equity funds in China suggests greater liquidity support for Hong Kong/China stocks given that most of these funds are likely to target Hong Kong/China stocks. However, market volatility could also increase given the trading-oriented nature of mainland Chinese investors. Our core strategy remains unchanged with an overweight position in domestic positions and added exposure to domestically driven cyclicals. Hong Kong Market Performance The Hong Kong stock market achieved an impressive return during the year with the Hang Seng Index up 46.7% (in sterling terms). Concerns over US sub-prime mortgages led to panic selling reaching its height around mid August before a 50 basis point cut in the US Federal Reserve discount rate drove a sharp short-covering driven rebound. Even more encouraging was the news on the Chinese QDII and individual investor programmes. These provided an impelling force to push Hong Kong stock price indices to new highs. The Hong Kong property market and property stocks turned more vibrant after a dull performance in 2006 and performed strongly towards the end of the period, thanks to positive wealth effects and possible further interest rate cuts later in the year. Other factors that boosted sentiment include a greater demand for properties from mainland Chinese investors. Market Outlook The Hang Seng Index is likely to reach new highs, supported by a strong liquidity environment. Economic growth and corporate earnings are also boosting share prices despite more expensive valuations. After the increase in the volume of property transactions, the gradual decline in unemployment and increase in inflation should enable developers to gain more pricing power, especially when land supply remains restrictive. However, we can see property stock prices running ahead of fundamentals. While domestic demand is well supported by an improving labour market and the consequent positive wealth effect, total exports will also be stronger into the fourth quarter as usual. However, worries relating to demand from the US are building up. The Renminbi appreciation will also have a negative impact on export-related counters. Taiwan Market Performance Taiwan's TWSE Index gained 31.5% (in sterling terms) over the reporting period, with materials performing the best while financials continued to be weak. The sub-prime fall-out spurred a broad-based and violent correction in global equity markets in August, with the technology sector being seen as vulnerable to a slowdown in the US economy. We consequently saw investors moving away from technology, switching into the materials sector which has more favourable visibility of earnings growth over the banking sector. Taiwan's central bank raised its discount rate from 2.63% to 3.25% over the period to retain liquidity in the domestic market. In fact, the central bank has been maintaining its current gradual, modest rate-hike cycle since the first quarter of 2004. The government may increasingly move to monitoring inflation more closely but this is yet to materialise. We believe that the moves from the central bank can help keep liquidity in the Taiwanese stock market. Market Outlook The Democratic Progressive Party (DPP) and Kuomintang (KMT) held rallies in Taiwan to support their separate proposals on a referendum related to the Island's bid to join the United Nations. The US and China have given their comments on this issue. The impact is so far limited but it is worthy of further attention should there be any new developments in the future. We also expect the upcoming Presidential election season to feature more over time with potential economic-boosting measures coming on the horizon, including further improvement in cross-straits relations. We have also seen the Taiwanese government pension fund increasing its equity allocation which has given support to the market. Meanwhile, the central bank could strengthen the New Taiwan Dollar to attract further liquidity to the stock market. We believe the stock market will perform in line with its underlying fundamentals and therefore have diversified the portfolio by holding leading companies amongst the cement, plastics, steel, banking and technology sectors. Howard Wang Emerson Yip Kevin Chan Shumin Huang Investment Managers 8th November 2007 For further information please contact: Lucy Dina, JPMorgan Asset Management (UK) Limited ............... 020 7742 6000 JPMorgan Chinese 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 - 53,523 53,523 - 6,076 6,076 Net foreign currency gains/(losses) - 194 194 - (32) (32) Income from investments 1,880 - 1,880 1,538 - 1,538 Other interest receivable and similar 7 - 7 24 - 24 income _______ ________ _______ _______ ________ _______ Gross return 1,887 53,717 55,604 1,562 6,044 7,606 Management fee (740) - (740) (554) - (554) Performance fee - (4,533) (4,533) - (59) (59) Other administrative expenses (379) - (379) (298) - (298) _______ _______ _______ _______ _______ _______ Net return on ordinary activities before finance costs and taxation 768 49,184 49,952 710 5,985 6,695 Finance costs (232) - (232) (10) - (10) _______ _______ _______ _______ _______ _______ Net return on ordinary activities before taxation 536 49,184 49,720 700 5,985 6,685 Taxation (150) - (150) (165) 19 (146) _______ _______ _______ _______ _______ _______ Net return on ordinary activities after taxation 386 49,184 49,570 535 6,004 6,539 ===== ===== ====== ===== ===== ====== Return per share (basic and diluted) 0.52p 66.67p 67.19p 0.74p 8.34p 9.08p A final dividend of 0.50p per share (2006: 0.70p per share) is proposed in respect of the year ended 30th September 2007, costing £357,000 (2006: £518,000). 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 Chinese Investment Trust plc Unaudited figures for the year ended 30th September 2007 Reconciliation of Movements in Shareholders' Funds Called Exercised Capital up share Share warrant redemption Other Capital Revenue capital premium reserve reserve reserve reserve reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 30th September 2005 17,103 4,404 3 581 37,476 (10,425) 1,013 50,155 Adjustment to opening shareholders' funds at 1st October 2005 to reflect the adoption of bid prices - - - - - (116) - (116) Shares issued 1,394 3,156 - - - - - 4,550 Net return from ordinary - - - - - 6,004 535 6,539 activities Dividends appropriated in the - - - - - - (620) (620) year _______ ________ ________ ________ _______ _______ _______ ________ At 30th September 2006 18,497 7,560 3 581 37,476 (4,537) 928 60,508 Shares issued 369 1,152 - - - - - 1,521 Repurchase of shares into Treasury - - - - (4,112) - - (4,112) Net return from ordinary - - - - - 49,184 386 49,570 activities Dividends appropriated in the - - - - - - (518) (518) year _______ ________ ________ ________ _______ _______ ______ ________ At 30th September 2007 18,866 8,712 3 581 33,364 44,647 796 106,969 JPMorgan Chinese 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 114,016 62,115 Current assets Debtors 523 650 Cash and short term deposits 787 1,216 _______ _______ 1,310 1,866 Creditors: amounts falling due within one year (4,705) (3,452) _______ _______ Net current liabilities (3,395) (1,586) Total assets less current liabilities 110,621 60,529 _______ _______ Provisions for liabilities and charges Deferred tax - (21) Performance fee (3,652) - _______ _______ Total net assets 106,969 60,508 ===== ===== Net asset value per share 149.9p 81.8p Cash Flow Statement Unaudited figures for the year ended 30th September 2007 2007 2006 £'000 £'000 Net cash inflow from operating activities 380 341 Net cash outflow from returns on investments and servicing of finance (222) (10) Taxation paid (66) (11) Net cash inflow/(outflow) from capital expenditure and financial investment 685 (6,527) Dividends paid (518) (620) Net cash (outflow)/inflow from financing (768) 6,473 _______ _______ Decrease in cash in the year (509) (354) ===== ===== Notes to the Accounts 1. Accounting policies The accounts are prepared in accordance with the Companies Act 1985 and 2006, 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 Final dividend of 0.70p paid (2005: 0.90p) 518 620 ===== ===== _______ _______ Final dividend payable of 0.50p (2006: 0.70p) 357 518 ===== ===== 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 ending 30th September 2008. 3. Return per share (basic and diluted) (Unaudited) (Audited) 30th September 30th September 2007 2006 £'000 £'000 Return per share is based on the following: Revenue return 386 535 Capital return 49,184 6,004 _______ _______ Total return 49,570 6,539 ===== ===== Weighted average number of shares in issue 73,770,886 71,968,636 Revenue return per ordinary share 0.52p 0.74p Capital return per ordinary share 66.67p 8.34p _______ _______ Total return per ordinary share 67.19p 9.08p ===== ===== 4. Net asset value per share Net asset value per share is based on the net assets attributable to the ordinary shareholders of £106,969,000 (2006: £60,508,000) and on the 71,346,001 (2006: 73,987,001) shares in issue at the year end, excluding shares held in treasury. 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 This information is provided by RNS The company news service from the London Stock Exchange

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