Final Results

RNS Number : 4419A

JPMorgan Emerging Mkts Invest Trust

28 September 2015

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN EMERGING MARKETS INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED
30th JUNE 2015

The Directors of JPMorgan Emerging Markets Investment Trust plc announce the Company's results for the year ended 30th June 2015.

Chairman's Statement

Performance

While emerging markets continue to struggle, I am pleased to report that the Company produced a strong relative performance against its benchmark. In the year to 30th June 2015, the return on net assets was +7.4%. This compares with the benchmark index, the MSCI Emerging Markets Index (in sterling terms), which returned +3.2%. The return to ordinary shareholders was +6.6%, reflecting a marginal widening of the discount over the year, from 10.1% to 10.7%.

The Company's objective is to achieve capital growth from emerging markets worldwide and its performance is measured against the MSCI Emerging Markets Index, in sterling terms, on a total return basis. It is very pleasing to report this outperformance of the benchmark index for the latest financial year, after a disappointing performance the year before. This serves to enhance the Company's long term performance record. The Company is ahead of the benchmark over three, five and ten years. Our Manager's investment process focuses on bottom-up stock selection rather than a top-down asset allocation across markets. This has served the Company well over the long term and added value during the year.

Fees

No performance fee was paid this year. The outperformance has reduced the negative performance fee accrual from £3.6 million to £1.6 million. In prior years this would have been carried forward to be offset against any future outperformance before any performance fee became payable. However, I stated last year that the Board was aware of pressure in the industry to lower fees and that it wished the Company to remain competitive. As announced in June this year the performance fee arrangement has been removed.

The management fee basis remains unchanged and accordingly, with effect from 1st July 2015 the Company's fee arrangements comprise only a management fee, which continues to be charged at the rate of 1.0% per annum on the Company's total assets less current liabilities on assets of up to £800 million and at a rate of 0.75% on assets above that level. The Board believes that the Company's fee arrangements are now the most competitive in its immediate peer group of global emerging markets equity investment trusts, but it will continue to monitor developments in the investment trust and open ended funds universe.

Discount Management

We continue to monitor closely the share price and therefore the discount of our share price to the net asset value. The Ordinary share price rose 5.6% over the year, from 556.0p to 587.0p at the year end. The discount ranged between 7.7% and 13.0%, averaging 10.3% through the year. During the year, a total of 10,155,432 new Ordinary shares were issued, as a result of the conversion of the remaining subscription shares, for a total consideration of £55.1 million. A total of 799,027 shares were repurchased into Treasury during the year. No further shares have been repurchased since the year end. The discount narrowed after the overhang of subscription shares was removed at the beginning of the year but unfortunately concerns over emerging markets as an asset class have meant continuing pressure on the discount.

The Board's policy on discount management remains unchanged - it is prepared to take action to ensure that the fully diluted discount does not exceed 10% for an extended period, but only if the discount is out of line with our peer group and market conditions are orderly. As we have done in the past, we are prepared to buy shares in at discounts of between 8% and 10% in order to achieve this, subject to those caveats. Over the year under review, whilst the average discount was marginally above 10%, we believe our actions continued to be effective in reducing the volatility of the discount and it was in line with our immediate peers.

Revenue and Dividends

Income after expenses rose by some 40% this year and earnings per share from 5.12p to 6.68p. We propose to increase the dividend from 5.5p to 6.0p, still covered by earnings. Our investment policy is aimed at maximising capital growth and does not focus on income though we have embarked on a more progressive approach to the dividend in recent years. However, given that the Company's objective is to achieve capital growth, it remains the case that dividends may fluctuate from year to year according to our income position.

The Board

Percy Mistry will retire from the Board on 31st December 2015. He joined the Board in 2009 and, on behalf of the Board, I would like to thank him for his sterling contribution to the Board's deliberations, in particular his insights into events in India. In order to ensure appropriate succession planning and continuity, Richard Laing and Andrew Page were appointed in January 2015. Nigel Kenny has indicated his intention to step down from the Board at the conclusion of the 2016 AGM.

The Board currently comprises seven Directors, though that will reduce to six at the end of the half year. Directors' fees have not increased in three years and in order to allow for future fee increases and the temporary increase in board size, we are requesting that shareholders approve at the forthcoming AGM an increase in the maximum aggregate that can be paid each year from £175,000 to £225,000.

The Manager

The Board monitors the performance of our Manager through the Management Engagement Committee. Last year was something of a return to form and continues the strong long term performance record. Thus we remain satisfied with the Manager's overall performance, not only in terms of investment performance but also in terms of risk management, administration, controls and compliance, where we continue to be well served.

AGM

This year's AGM will be held at Holborn Bars, 138-142 Holborn, London EC1N 2NQ on Tuesday, 17th November 2015 at 3.00 p.m. Austin Forey will give a presentation to shareholders, reviewing the past year and giving his view on the outlook for emerging markets for the current year.

Outlook

The last year or two have been a troubled time for investors in emerging markets. Markets have struggled to recapture the strong relative performance of the years leading up to the crash of 2008 and indeed the immediate recovery from that. Unquestionably risks have increased in many countries in recent years. There is a strong case for saying however that these risks have been priced into valuations that are now on a significant discount to developed markets. Sentiment is still fragile but taking a long term view, the Board feels that emerging markets should outperform developed markets.

Alan Saunders

Chairman

28th September 2015

Investment Manager's Report

Results

Over the Company's financial year, emerging markets as a whole appreciated modestly: our benchmark index ended the year 3.2% higher than at the outset, in sterling terms. But this subdued result masks a very eventful year, during which the portfolio's performance diverged sharply from the index, in both directions. It is pleasing therefore that by the end of the year to June 2015 we ended on the positive side, with the return from net assets at 7.4% in sterling, and the return to shareholders, which represents the change in the share price with the dividend reinvested, at 6.6%, net of all costs. The difference between the index return and the portfolio's return derived both from asset allocation (being invested more in the right countries) and stock selection (being invested in the right stocks within countries); but I would remind readers that we base all our investment decisions on our views about individual companies and this is really how all successes and failures are generated.

The year that passed

There has been no shortage of things to think about in the last year. Just over a year ago, investors were wondering how long it would be before the USA raised interest rates; that it still has not happened hints at some of the uncertainties that, if anything, have grown over the last twelve months. During the summer of 2014 we saw an escalation of the conflict in Ukraine and the consequent worsening of Russia's relations with the West; in the autumn, the oil price dropped sharply, almost halving between September and the year end; other commodities followed suit. The Chinese government began to ease monetary policy, catching markets by surprise; the domestic Chinese equity market surged in response, rising 60% between March and June this year, stoked by a stampede of individual investors and a boom in margin lending; meanwhile, the Chinese economy seemed to be slowing noticeably and experiencing real deflationary pressures. Eventually Chinese stocks succumbed, losing all their gains in a sharp fall that lasted through June and July this year in spite of increasingly clumsy efforts by the authorities to support the stock market. To add further confusion to the mix, the Chinese government appeared, for two days in August this year, to allow the exchange rate to float more freely. This led to a modest 4% change decline in the renminbi/dollar exchange rate, but created much greater uncertainty about policy priorities.

Throughout all this, the US economy looked relatively robust and the US dollar continued to strengthen against most other currencies: the Japanese yen slid significantly, as did the euro, in part because of Greece's continued economic problems; significant weakness was observed also in many emerging market currencies, especially those, like the Brazilian real and the Russian rouble, that have a large dependence on commodity exports. Both the strength of the dollar and the fall in commodity prices acted as deflationary influences on the American economy, which made it easier for the Federal Reserve to keep interest rates at historic lows.

But very low interest rates produce other, maybe unintended consequences; not surprisingly, if you make debt very cheap, people use more of it; so a policy designed to deal with a build up of debt and avoid a depression produces… more debt. Low interest rates may well have been appropriate for the developed world, but that does not mean that they should apply everywhere and the last year has seen markets force policy choices on some emerging countries that, for a while, appeared to be having their cake and eating it by experiencing historically low interest rates and relatively stable currencies at the same time. The extent of recent volatility, especially in currencies, suggests to me that markets are now attempting to correct imbalances and mispricing regardless of governments' policy priorities. If emerging markets do not raise interest rates, their currencies will depreciate; even if the US does not raise interest rates, the relative strength of its economy will make its currency appreciate, a trend that will be extended if US rates ever do rise. All of this means that we reach the end of the Company's financial year with plenty of uncertainty and this has led to declines in markets in the most recent weeks. It would be a mistake, though, to become more pessimistic at the same time; stocks are getting cheaper and opportunities are forming.

The portfolio

Throughout the last year the Company's portfolio has performed in ways that have been quite different to the overall index. After a couple of negative months at the start of the financial year, the portfolio recovered by over 10% relative to the benchmark between September 2014 and March 2015; it then underperformed sharply in April before recovering in May and June to end the twelve months in positive territory. Put like that, it sounds as if performance has been extremely volatile, though in fact the portfolio rose less than the benchmark in April and fell less thereafter. I would make two observations about this pattern of performance. First, we are active managers intent on pursuing returns as a primary objective, rather than worrying about replicating the index; therefore divergences in performance are inevitable and will sometimes be on the negative side. This is never welcome, but it is unavoidable. Second, the degree to which performance will diverge from the index is a function of how we do as investors, but is also dependent on the way that markets behave; in a year in which markets are more volatile, our relative performance is likely also to vary more widely. The biggest swings in performance this year have been driven by China; the portfolio underperformed when Chinese stocks rose strongly, but benefitted from their reversal; over the course of the year as a whole, it was our investments in India which made the largest contribution.

Although I began this commentary with observations on currencies and other macroeconomic factors, this is not what I concentrate on most of the time. In fact, quite the opposite is true. I take decisions about the shares of individual companies. None of them exist in an economic vacuum, so of course I must be aware of the context within which they carry out their business, but my ideal investment is one whose results in the long term are idiosyncratic; that is to say, driven much more by what the company does rather than by the environment around it. A look at the leading positive contributors to the portfolio's results during the past year shows some good examples of this in practice.

We have several clusters of investments in the portfolio in industries where we hope to have found the kind of company-specific trends referred to above. One of these is IT services; the portfolio has held investments in two large established Indian firms, Tata Consultancy and Infosys, for some time. This year we complemented these with three new holdings in more specialist firms, EPAM Systems, Luxoft and Globant, the first two based in Eastern Europe and the latter in Argentina, which carry out high end, sophisticated software development for leading Western clients, including very well-known internet giants. As the ability to gather, analyse and understand data becomes ever more crucial to businesses, many are having to re-engineer their whole operation to cope with the change; this is not a matter of building an internal system in isolation, but of connecting it at the same time to the customers' own experience via digital communication, as well as developing data analytics which allow firms to understand better their customers' behaviour and preferences. Firms that can build complex systems to do this have a very large potential market to address.

More prosaically, we own banks in India and South Africa which, even though they do what all banks do, taking deposits and making loans, have been gaining market share rapidly; in part because they started small and in part because they are disrupting established incumbents by using technology to achieve lower costs and passing those savings to the customer. These investments are not new to the portfolio this year, but like the IT developers mentioned above, these banks - Capitec and Indusind - were among the leading contributors to portfolio performance during the last year.

And finally, we have seen several examples of firms whose superior skill in execution appears to be paying off even more as conditions become tougher. There is nothing to link Lojas Renner, a Brazilian fashion retailer, with AIA, a pan-Asian insurance company, except for the fact that in challenging markets, they are extending their lead over competitors, growing market share at a time when others are struggling; Renner has seen its sales expand when others' are contracting, while AIA has been increasing its market share strongly in China, a market that still represents a very big opportunity for a business that already has a large regional presence across Asia. These are the kind of outcomes that we like to see in the portfolio's investments.

The year ahead

It is never dull in emerging markets; everyday, there is something that one could react to as an investor. In spite of this, I try not to make too many decisions: I do not start the day expecting to change the portfolio, but try instead to concentrate on the decisions which the market forces on my attention by moving share prices in an extreme way. I suspect that over the next year, there will be more of these.

Much will depend on what happens in China, where the authorities are probably fighting a secular transition to lower economic growth as if it were a cyclical slowdown. Real, far-reaching reforms will have to involve a redrawing of the state's role in the commercial sector and an acceptance of the primacy of market forces in determining outcomes, rather than government policy. That remains a very large step and not one that can be achieved without some disruption; perhaps because of that, the government seems to be moving tentatively and sometimes in contradictory ways, hoping perhaps that the cycle will recover and the difficult decisions will not be necessary; I suspect they will be disappointed. If I am right, however, China could become a very interesting investment destination indeed and a place where we could have much more money invested on shareholders' behalf than we have today. This is made all the more likely by the gradual opening of the 'A' share market, hitherto accessible only to domestic investors, to foreign capital. The kinds of companies that we like to own - private enterprises motivated by the creation of value for shareholders - should be easier to find there than in the 'H' share market of companies listed in Hong Kong, which is dominated by very large firms in industries essentially owned by the state, like banking, energy and telecommunications. So we are devoting increased resources to researching Chinese companies in a variety of industries, from healthcare to manufacturing, hopeful that if the current sell-off continues, good Chinese companies will be available at bargain prices.

In general, prospects for emerging markets look quite challenging at the moment, though history teaches us that when pessimism abounds and valuations have fallen, one should in fact become more positive rather than the reverse. We know what kinds of businesses we are looking for and we also know that share prices do not decline without a reason; so the essential task is to identify those companies whose long term opportunity and competitiveness is not really affected at all by short term developments, even if the market thinks the opposite. Many of these are in the portfolio already and if their share prices decline, you should expect to see us increase our investment in them; confidence and conviction should come first in the things you know the best.

I might close this commentary by repeating something that remains right at the centre of our approach to investment: more than anything, it is about businesses and their managers and our readiness to let companies generate returns for us through their activities over the long term. This can lead us to destinations we had not necessarily anticipated: I did not start this past year with any view about Belarus, or at least, certainly not with any view that would have enticed me to invest there; and I did not form any such view as the year progressed either. That is even truer of the Ukraine, a country that has been in the news for all the wrong reasons. Yet during the year, I invested almost fifteen million pounds in two companies whose principal operations are based in these two countries, so far with good results. That amount is more than a tenth of all the purchases made for the portfolio during the year. Of course, it helps that both these companies are export businesses, not tied to their domestic economies; but only by looking at the companies, their capabilities and their prospects, could I have made these decisions. With the support of a large team of analysts and portfolio managers, I hope to find more of these kinds of opportunities for the portfolio in the year ahead.

Austin Forey

Investment Manager

28th September 2015

Principal Risks

With the assistance of the Manager, the Board has drawn up a risk matrix, which identifies the key risks to the Company. These key risks fall broadly under the following categories:

•    Investment Underperformance: An inappropriate investment strategy, for example asset allocation, the level of gearing or the degree of portfolio risk, could lead to underperformance against the Company's benchmark index and peer companies, resulting in the Company's shares trading on a wider discount. The Board manages these risks by diversification of investments and through a set of 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 analyses, revenue estimates, liquidity reports and shareholder analyses. The Board monitors the implementation and results of the investment process with the Investment Manager, who attends all Board meetings, and reviews data which show statistical measures of the Company's risk profile.

•    Political, Economic and Governance: Administrative risks, such as the imposition of restrictions on the free movement of capital. These risks are discussed by the Board on a regular basis.

•    Loss of Investment Team or Investment Manager: A sudden departure of the investment manager or several members of the investment management team could result in a short-term 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, as well as special efforts to retain key personnel.

•    Share Price Discount: A disproportionate widening of the share price discount relative to the Company's peers could result in loss of value for shareholders. The Board regularly discusses discount policy and has set parameters for the Manager and the Company's broker to follow.

•    Change of Corporate Control of the Manager: The Board holds regular meetings with senior representatives of JPMF 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.

•    Legal and Regulatory: In order to qualify as an investment trust, the Company must comply with Section 1158. Details of the Company's approval are given under 'Structure and Objective of the Company' on page l. Should the Company breach Section 1158, it might lose investment trust status and, as a consequence, gains within the Company's portfolio would be subject to Capital Gains Tax. The Section 1158 qualification criteria are continually monitored by the Manager and the results reported to the Board each month. The Company must also comply with the provisions of the Companies Act 2006 and, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules and Disclosure and Transparency Rules ('DTRs'). A breach of the Companies Act could result in the Company and/or the Directors being fined or the subject of criminal proceedings. Breach of the UKLA Listing Rules or DTRs could result in the Company's shares being suspended from listing which in turn would breach Section 1158. The Board relies on the services of its Company Secretary and its professional advisers to ensure compliance with the Companies Act and the UKLA Listing Rules and DTRs.

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

•    Operational: 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 within the Risk Management and Internal Control section of the Corporate Governance report within the annual report.

•    Financial: The financial risks faced by the Company include market price risk, interest rate risk and credit risk. Further details are disclosed in note 21 to the accounts within the annual report.

Related Parties Transactions

During the financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company during the year.

Directors' Responsibilities

Each of the Directors 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 true and fair view of the assets, liabilities, financial position and return or loss of the Company.

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.

For and on behalf of the Board

Alan Saunders

Chairman

28th September 2015

Statement of Directors' Responsibilities

The Directors are responsible for preparing the annual report and the accounts 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 elected to prepare 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 they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

•    select suitable accounting policies and then apply them consistently;

•    make judgements and 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 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 to 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.

Each of the Directors confirm 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 true and fair view of the assets, liabilities, financial position and return or loss of the Company.

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.

For and on behalf of the Board

Alan Saunders,

Chairman

28th September 2015

Income Statement

for the year ended 30th June 2015

		2015			2014
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments held at fair value   through profit or loss	-	50,378	50,378	-	(32,118)	(32,118)
Net foreign currency losses	-	(124)	(124)	-	(1,179)	(1,179)
Income from investments	19,801	-	19,801	16,067	-	16,067
Other interest receivable and similar income	4	-	4	4	-	4
Gross return/(loss)	19,805	50,254	70,059	16,071	(33,297)	(17,226)
Management fee	(8,372)	-	(8,372)	(7,449)	-	(7,449)
Other administrative expenses	(1,368)	-	(1,368)	(1,235)	-	(1,235)
Net return/(loss) on ordinary activities   before taxation	10,065	50,254	60,319	7,387	(33,297)	(25,910)
Taxation	(1,538)	-	(1,538)	(1,282)	-	(1,282)
Net return/(loss) on ordinary activities   after taxation	8,527	50,254	58,781	6,105	(33,297)	(27,192)
Return/(loss) per Ordinary share - undiluted (note 3)	6.68p	39.35p	46.03p	5.12p	(27.93)p	(22.81)p
Return/(loss) per Ordinary share - diluted (note 3)	6.68p	39.35p	46.03p	5.12p	(27.90)p	(22.78)p

A dividend of 6.0p (2014: 5.5p) per Ordinary share has been proposed in respect of the year ended 30th June 2015, totaling £7,707,000 (2014: £6,550,000). 

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

The 'Total' column of this statement is the Profit and Loss Account of the Company, and the 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies. The Total column represents all the information that is required to be disclosed in a Statement of Total Recognised Gains and Losses ('STRGL'). For this reason a STRGL has not been presented.

Reconciliation of Movement in Shareholders' Funds

	Called up		Capital
	share	Share	redemption	Other	Capital	Revenue
	capital	premium	reserve	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th June 2013	30,650	120,933	1,665	69,939	546,591	16,000	785,778
Repurchase of shares into Treasury	-	-	-	-	(1,512)	-	(1,512)
Issue of Ordinary shares on exercise   of Subscription shares	4	77	-	-	-	-	81
Net (loss)/return on ordinary activities	-	-	-	-	(33,297)	6,105	(27,192)
Dividend appropriated in the year	-	-	-	-	-	(6,562)	(6,562)
At 30th June 2014	30,654	121,010	1,665	69,939	511,782	15,543	750,593
Repurchase of shares into Treasury	-	-	-	-	(4,691)	-	(4,691)
Exercise of Subscription shares into   Ordinary shares	(102)	102	-	-	-	-	-
Issue of Ordinary shares on exercise   of Subscription shares	2,539	52,605	-	-	-	-	55,144
Costs in relation to issue of shares	-	(60)	-	-	-	-	(60)
Net return on ordinary activities	-	-	-	-	50,254	8,527	58,781
Dividend appropriated in the year	-	-	-	-	-	(7,078)	(7,078)
At 30th June 2015	33,091	173,657	1,665	69,939	557,345	16,992	852,689

Balance Sheet

at 30th June 2015

	2015	2014
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	822,495	714,278
Investment in liquidity fund held at fair value through profit or loss	30,014	31,596
	852,509	745,874
Current assets
Derivative financial assets	-	5
Debtors	5,063	2,177
Cash and short term deposits	2,205	2,792
	7,268	4,974
Creditors: amounts falling due within one year	(7,088)	(255)
Net current assets	180	4,719
Total assets less current liabilities	852,689	750,593
Net assets	852,689	750,593
Capital and reserves
Called up share capital	33,091	30,654
Share premium	173,657	121,010
Capital redemption reserve	1,665	1,665
Other reserve	69,939	69,939
Capital reserves	557,345	511,782
Revenue reserve	16,992	15,543
Total shareholders' funds	852,689	750,593
Net asset value per Ordinary share (note 4)
Undiluted	663.8p	630.3p
Diluted	663.8p	623.4p

Company registration number: 2618994.

 

Cash Flow Statement

for the year ended 30th June 2015

 

	2015	2014
	£'000	£'000
Net cash inflow from operating activities	6,435	2,001
Taxation
Taxation recovered	154	149
Capital expenditure and financial  investment
Purchases of investments	(217,668)	(177,973)
Sales of investments	167,370	182,803
Other capital charges	(18)	(16)
Net cash (outflow)/inflow from capital expenditure and   financial investment	(50,316)	4,814
Dividend paid	(7,078)	(6,562)
Net cash (outflow)/inflow before financing	(50,805)	402
Financing
Issue of Ordinary shares on exercise of Subscription shares	55,144	81
Repurchase of shares into Treasury	(4,746)	(1,457)
Costs in relation to issue of shares	(60)	-
Net cash inflow/(outflow) from financing	50,338	(1,376)
Decrease in cash in the year	(467)	(974)

Notes to the Financial Statements

for the year ended 30th June 2015

1.    Accounting policies

(a)    Basis of accounting

The financial statements 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 Association of Investment Companies in January 2009.

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

The financial statements have been prepared on a going concern basis under the historical cost convention as modified by the revaluation of investments at fair value through profit or loss.

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

2.   Dividends

(a)    Dividends paid and proposed

	2015	2014
	£'000	£'000
Dividend paid
2014 Final dividend of 5.5p (2013: 5.5p)1	7,078	6,562
Dividend proposed
2015 Final dividend proposed of 6.0p (2014: 5.5p)	7,707	6,550

1The final dividend declared in respect of the year ended 30th June 2014 amounted to £6,550,000. However, the amount paid amounted to £7,078,000 due to shares issued after the balance sheet date but prior to the share register record date.

The final dividend proposed in respect of the year ended 30th June 2015 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 June 2016.

(b)    Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010 ('Section 1158')

The requirements of Section 1158 are considered on the basis of the dividend proposed in respect of the financial year, as follows:

	2015	2014
	£'000	£'000
Final dividend proposed of 6.0p (2014: 5.5p)	7,707	6,550

The revenue available for distribution by way of dividend for the year is £8,527,000 (2014: £6,105,000).

3.   Return/(loss) per Ordinary share

	2015	2014
	£'000	£'000
Revenue return	8,527	6,105
Capital return/(loss)	50,254	(33,297)
Total return/(loss)	58,781	(27,192)
Weighted average number of Ordinary shares in issue during the year   used for the purpose of the undiluted calculation	127,724,204	119,235,135
Weighted average number of Ordinary shares in issue during the year   used for the purpose of the diluted calculation	127,724,204	119,340,784
Undiluted
Revenue return per share	6.68p	5.12p
Capital return/(loss) per share	39.35p	(27.93)p
Total return/(loss) per share	46.03p	(22.81)p
Diluted1
Revenue return per share	6.68p	5.12p
Capital return/(loss) per share	39.35p	(27.90)p
Total return/(loss) per share	46.03p	(22.78)p

1As at 30th June 2015 there was no dilution effect as the rights attached to the Subscription shares lapsed on 31st July 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 the requirements of Financial Reporting Standard 22 'Earnings per share'.

4.   Net asset value per Ordinary share

	2015	2014
Undiluted
Ordinary shareholders funds (£'000)	852,689	750,593
Number of Ordinary shares in issue	128,448,376	119,091,971
Net asset value per Ordinary share (pence)	663.8	630.3
Diluted1
Ordinary shareholders funds assuming exercise of Subscription shares (£'000)	852,689	805,737
Number of potential Ordinary shares in issue	128,448,376	129,247,403
Net asset value per Ordinary share (pence)	663.8	623.4

1As at 30th June 2015 there was no dilution effect as the rights attached to the Subscription shares lapsed on 31st July 2014.

5. Status of results announcement

2014 Financial Information

The figures and financial information for 2014 are extracted from the published Annual Report and Accounts for the year ended 30th June 2014 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.

2015 Financial Information

The figures and financial information for 2015 are extracted from the Annual Report and Accounts for the year ended 30th June 2015 and do not constitute the statutory accounts for the year.  The Annual Report and Accounts include 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 Register 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.jpmemergingmarkets.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

 

END

 

 

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