Half Year Results

RNS Number : 1704H

JPMorgan Emerging Mkts Invest Trust

15 February 2010

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN EMERGING MARKETS

INVESTMENT TRUST PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS

ENDED 31ST DECEMBER 2009

Chairman's Statement

Performance

In the first six months the undiluted total return on net assets was +36.6%, as compared to the total return from our benchmark index, the MSCI Emerging Markets Free Index (in sterling terms) of +33.9%. The diluted total return on net assets, which assumes that all of the Subscription shares were exercised at the price of 422 pence per share, was +31.5%. Over the same period, the return to Ordinary shareholders was +31.9%. The unit return to shareholders, which comprises the total return from five Ordinary shares and one Subscription share, was +33.2%. A review of the Company's performance for the first six months and the outlook for the remainder of the year is provided in the Investment Manager's Report.

Subscription shares

On 11th June 2009 the Company issued 22,059,783 Subscription shares to qualifying shareholders on the basis of one Subscription share for every five Ordinary shares held. Each Subscription share confers the right (but not the obligation) to subscribe for one Ordinary share on any business day during the period from 1st August 2009 to 31st July 2014 (both dates inclusive) when the rights under the Subscription shares will lapse.

During the six months to 31st December 2009 and up to the date of this report, the Company has issued a total of 445,990 Ordinary shares following the exercise of Subscription shares, amounting to proceeds of £1,882,078. Further details of the Subscription shares can be found on the Company's website at  ww.jpmemergingmarkets.co.uk

Board of Directors

At the conclusion of the AGM held on 30th October 2009, Roy Reynolds and Val Powell stepped down from the Board, as indicated in the last annual report. I would like to thank them both for their contributions. It is my privilege to take over as your Chairman. Nigel Kenny has been appointed Chairman of the Audit Committee and David Gamble Senior Independent Director.

Outlook

As the Investment Manager details in his report, we expect a period of more normal returns after the dramatic recovery of 2009. We believe we are well placed to perform in such a market environment.

Alan Saunders

Chairman

15th February 2010

Investment Manager's Report

During the six month period to the end of 2009 the net asset value per share of the Company, calculated on an undiluted basis, increased by 36.6%. The share price rose by 31.9%, evidence of a continued rapid recovery in the equity markets of developing countries. The benchmark index appreciated by 33.9%.

These numbers marked the continuation of a powerful rebound in emerging market equity prices which ran almost uninterrupted through 2009 and significantly outstripped that seen in developed countries. A simple narrative explains this

outcome: that the great crisis of 2008 was not really an emerging market crisis but a developed world problem caused by excess debt. With governments in reasonable financial shape around most of the developing world, stimulus packages could be financed without straining sovereign balance sheets unduly; nor was there the need for major bank rescues in most of the countries in which we invest. And therefore markets returned relatively rapidly to normal valuations, providing a huge one-off return to investors, particularly in those countries (Russia, for example) which had experienced the worst declines in the previous year. From now on we should expect investment returns to be more ordinary and more correlated to the underlying

financial performance of companies.

That is not to say that all is now straightforward. Some difficult choices await economic policy-makers. While developed world governments seem unlikely to raise interest rates quickly, for fear of stalling a weak recovery, countries in the developing world have to watch out for the dangers of incipient bubbles in asset prices in much the same way that they should have done in the mid-1990's. The next couple of years will be an interesting time for central bankers in the emerging world.

In your Company's portfolio these high-level considerations are not our primary focus; rather, we prefer to make a collection of individual decisions about businesses and their share prices. But we can clearly see in stock markets that the extreme

dispersion of valuations between strong and weak companies that prevailed a year ago has been almost entirely eliminated by subsequent price movements. And so our focus is increasingly on fundamental factors - companies able to compound their

profits, companies with durable competitive advantages - rather than on valuation discrepancies. The new names introduced into the portfolio in the last six months are typically ones which we hope will deliver good returns because their long term profit growth exceeds the average, rather than because they are sharply undervalued. They have been funded predominantly from much larger, more mature companies which in some cases have been held in the portfolio for many years.

This process of recycling, however, seems logical to us; if we seek the ability to compound profits for long periods, we must look either to industries with strong growth prospects, or to companies able to grow their share of an industry. Large

incumbents will find this difficult. But for every maturing company there are always new ones nipping at its heels. In the last few months we have added stocks in the Russian retail industry, the microfinance sector in several countries, the Indian

beverages sector (to take a few examples); so opportunities are not an issue. The challenge for us is to maintain a consistent investment approach in the face of the market's mood swings and thus to derive the greatest benefit from our resources

around the developing world, for the benefit of your Company's portfolio.

Austin Forey

Investment Manager

15th February 2010

Interim Management Report

The Company is now required to make the following disclosures in its half year report:

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Company fall into the following broad categories: investment

underperformance; political and economic; loss of investment team or investment manager; discount; change of corporate

control of the manager; accounting, legal and regulatory; corporate governance and shareholder relations; operational

and financial. Information on each of these areas is given in the Business Review within the Annual Report and Accounts for

the year ended 30th June 2009.

Related Parties Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have

materially affected the financial position or the performance of the Company during the period.

Going Concern

The Directors believe, having considered the Company's investment objectives, risk management policies, capital

management policies and procedures, nature of the portfolio and expenditure projections; that the Company has adequate

resources, an appropriate financial structure and suitable management arrangements in place to continue in operational

existence for the foreseeable future. For these reasons, they consider there is reasonable evidence to continue to adopt the

going concern basis in preparing the accounts.

Directors' Responsibilities

The Board of Directors confirms that, to the best of its knowledge:

(i) the condensed set of financial statements contained within the half yearly financial report has been prepared in

accordance with the Accounting Standards Board's Statement 'Half Yearly Financial Reports'; and

(ii) the half year management report includes a fair review of the information required by DTR 4.2.7R and 4.2.8R of the

UK Listing Authority Disclosure and Transparency Rules.

For and on behalf of the Board

Alan Saunders

Chairman

For further information, please contact:

Jonathan Latter

For and on behalf of

JPMorgan Asset Management (UK) Limited, Secretary

020 7742 6000

Please note that up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can be found at www.jpmemergingmarkets.co.uk

 Income Statement

for the six months ended 31st December 2009

	(Unaudited)			(Unaudited)			(Audited)
	Six months ended			Six months ended			Year ended
	31st December 2009			31st December 2008			30th June 2009
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments
held at fair value through
profit or loss	-	157,102	157,102	-	(141,755)	(141,755)	-	(73,264)	(73,264)
Net foreign currency losses	-	(216)	(216)	-	(123)	(123)	-	(316)	(316)
Income from investments	6,011	-	6,011	6,585	-	6,585	11,033	-	11,033
Other interest receivable and
similar income	1	-	1	304	-	304	311	-	311
Gross return/(loss)	6,012	156,886	162,898	6,889	(141,878)	(134,989)	11,344	(73,580)	(62,236)
Management fee	(2,592)	-	(2,592)	(2,179)	-	(2,179)	(4,106)	-	(4,106)
Other administrative expenses	(472)	-	(472)	(531)	-	(531)	(962)	-	(962)
VAT recoverable	-	-	-	38	(42)	(4)	38	(42)	(4)
Net return/(loss) on ordinary
activities before finance costs
and taxation	2,948	156,886	159,834	4,217	(141,920)	(137,703)	6,314	(73,622)	(67,308)
Finance costs	(1)	-	(1)	-	-	-	-	-	-
Net return/(loss) on ordinary
activities before taxation	2,947	156,886	159,833	4,217	(141,920)	(137,703)	6,314	(73,622)	(67,308)
Taxation (note 3)	(372)	-	(372)	(1,182)	906	(276)	(1,426)	922	(504)
Net return/(loss) on ordinary
activities after taxation	2,575	156,886	159,461	3,035	(141,014)	(137,979)	4,888	(72,700)	(67,812)
Return/(loss) per Ordinary share
(note 4)
Dilulted	2.32p	141.33p	143.65p	2.75p	(127.84)p	(125.09)p	4.43p	(65.91)p	(61.48)p
Undilulted	2.33p	142.06p	144.39p	2.75p	(127.84)p	(125.09)p	4.43p	(65.91)p	(61.48)p

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

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

Reconciliation of Movements in Shareholders' Funds

	Called up		Capital
Six months ended	share	Share	redemption	Other	Capital	Revenue
31st December 2009	capital	premium	reserve	reserve	reserves	reserve	Total
(Unaudited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th June 2009	27,796	70,579	1,665	69,939	272,162	6,019	448,160
Exercise of Subscription shares into
Ordinary shares	(4)	4	-	-	-	-	-
Issue of Ordinary shares on  exercise
of Subscription shares	91	1,425	-	-	-	-	1,516
Subscription shares' issue costs	-	5	-	-	-	-	5
Net return on ordinary activities	-	-	-	-	156,886	2,575	159,461
Dividends appropriated in the period	-	-	-	-	-	(3,532)	(3,532)
At 31st December 2009	27,883	72,013	1,665	69,939	429,048	5,062	605,610
	Called up		Capital
Six months ended	share	Share	redemption	Other	Capital	Revenue
31st December 2008	capital	premium	reserve	reserve	reserves	reserve	Total
(Unaudited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th June 2008	27,575	71,052	1,665	69,939	344,862	3,337	518,430
Net (loss)/return on ordinary activities	-	-	-	-	(141,014)	3,035	(137,979)
Dividends appropriated in the period	-	-	-	-	-	(2,206)	(2,206)
At 31st December 2008	27,575	71,052	1,665	69,939	203,848	4,166	378,245
	Called up		Capital
Year ended	share	Share	redemption	Other	Capital	Revenue
30th June 2009	capital	premium	reserve	reserve	reserves	reserve	Total
(Audited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th June 2008	27,575	71,052	1,665	69,939	344,862	3,337	518,430
Bonus issue of Subscription shares	221	(221)	-	-	-	-	-
Subscription shares' issue costs	-	(252)	-	-	-	-	(252)
Net (loss)/return on ordinary activities	-	-	-	-	(72,700)	4,888	(67,812)
Dividends appropriated in the year	-	-	-	-	-	(2,206)	(2,206)
At 30th June 2009	27,796	70,579	1,665	69,939	272,162	6,019	448,160

Balance Sheet

at 31st December 2009

	(Unaudited)	(Unaudited)	(Audited)
	31st December	31st December	30th June
	2009	2008	2009
	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	595,602	357,980	444,352
Investments in liquidity funds held at fair value through
profit or loss	8,725	18,699	496
Total investments	604,327	376,679	444,848
Current assets
Debtors	952	2,015	10,064
Cash and short term deposits	482	936	364
	1,434	2,951	10,428
Creditors: amounts falling due within one year	(151)	(1,385)	(7,116)
Net current assets	1,283	1,566	3,312
Total assets less current liabilities	605,610	378,245	448,160
Total net assets	605,610	378,245	448,160
Capital and reserves
Called up share capital	27,883	27,575	27,796
Share premium	72,013	71,052	70,579
Capital redemption reserve	1,665	1,665	1,665
Other reserve	69,939	69,939	69,939
Capital reserves	429,048	203,848	272,162
Revenue reserve	5,062	4,166	6,019
Shareholders' funds	605,610	378,245	448,160
Net asset value per Ordinary share (note 5)
Diluted	526.7p	342.9p	406.3p
Undiluted	547.3p	342.9p	406.3p

Cash Flow Statement

for the six months ended 31st December 2009

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st December 2009	31st December 2008	30th June 2009
	£'000	£'000	£'000
Net cash inflow from operating activities (note 6)	3,158	4,166	6,017
Net cash outflow from returns on investments and
servicing of finance	(1)	-	-
Taxation recovered	8	5	6
Net cash outflow from capital expenditure and
financial investment	(609)	(915)	(3,111)
Dividends paid	(3,532)	(2,206)	(2,206)
Net cash (outflow)/inflow before financing	(976)	1,050	706
Net cash inflow/(outflow) from financing	1,316	-	(42)
Increase in cash for the period	340	1,050	664
Reconciliation of net cash flow to movement in
net funds
Net cash movement	340	1,050	664
Exchange movements	(222)	(121)	(307)
Movement in net funds in the period	118	929	357
Net funds at the beginning of the period	364	7	7
Net funds at the end of the period	482	936	364
Represented by:
Cash and short term deposits	482	936	364

Notes to the Accounts

for the six months ended 31st December 2009

1.          Financial statements

             The information contained within the financial statements in this half year report has not been audited or reviewed by the 

             Company's auditors.

             The figures and financial information for the year ended 30th June 2009 are extracted from the latest published accounts of the
             Company and do not constitute statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies
             and included the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or 498(3) of
             the Companies Act 2006.

2.          Accounting policies

             The accounts have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and
             with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' dated January 2009.

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

             The accounting policies applied to these interim accounts are consistent with those applied in the accounts for the year ended 30th
             June 2009.

3.         Taxation

             The taxation charge of £372,000 (31st December 2008: £276,000 and 30th June 2009: £504,000) relates to irrecoverable
             overseas taxation.

4.          Return/(loss) per Ordinary share

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st December 2009	31st December 2008	30th June 2009
	£'000	£'000	£'000
Return/(loss) per Ordinary share is based on the following:
Revenue return	2,575	3,035	4,888
Capital return/(loss)	156,886	(141,014)	(72,700)
Total return/(loss)	159,461	(137,979)	(67,812)
Weighted average number of Ordinary shares in issue
during the period used for the purpose of the
diluted calculation	111,007,606	110,303,742	110,303,742
Weighted average number of Ordinary shares in issue
during the period used for the purpose of the
undiluted calculation	110,434,706	110,303,742	110,303,742
Diluted
Revenue return per share	2.32p	2.75p	4.43p
Capital return/(loss) per share	141.33p	(127.84)p	(65.91)p
Total return/(loss) per share	143.65p	(125.09)p	(61.48)p
Undiluted
Revenue return per share	2.33p	2.75p	4.43p
Capital return/(loss) per share	142.06p	(127.84)p	(65.91)p
Total return/(loss) per share	144.39p	(125.09)p	(61.48)p

The diluted return/(loss) per Ordinary share represents the return/(loss) on ordinary activities after taxation divided by the weighted average number of Ordinary shares in issue during the period as adjusted for the conversion of all outstanding Subscription shares into Ordinary shares at the period end.

                There was no dilution to the returns for the six months ended 31st December 2008 or the year ended 30th June 2009.

5.             Net asset value per Ordinary share

	(Unaudited)	(Unaudited)	(Audited)
	31st December 2009	31st December 2008	30th June 2009
Diluted
Ordinary shareholders funds assuming exercise
of Subscription shares (£'000)	697,187	378,245	448,160
Number of potential Ordinary shares in issue	132,363,525	110,303,742	110,303,742
Net asset value per Ordinary share (pence)	526.7	342.9	406.3
Undiluted
Ordinary shareholders funds (£'000)	605,610	378,245	448,160
Number of Ordinary shares in issue	110,662,708	110,303,742	110,303,742
Net asset value per Ordinary share (pence)	547.3	342.9	406.3

                The diluted net asset value per Ordinary share assumes that all outstanding Subscription shares were converted into Ordinary shares at the period end. There was no dilution to the net asset values at 31st December 2008 or 30th June 2009.

6.            Reconciliation of total return/(loss) on ordinary activities before finance costs and taxation to net cash inflow from operating activties

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st December 2009	31st December 2008	30th June 2009
	£'000	£'000	£'000
Total return/(loss) on ordinary activities before finance
costs and taxation	159,834	(137,703)	(67,308)
Less capital (return)/loss on ordinary activities before
finance costs and taxation	(156,886)	141,920	73,622
Scrip dividends received as income	(25)	(99)	(221)
Decrease in VAT recoverable	-	1,103	1,103
VAT charged to capital	-	(42)	(42)
Decrease/(increase) in net debtors and accrued income	632	(732)	(633)
Tax on unfranked investment income	(397)	(281)	(504)
Net cash inflow from operating activities	3,158	4,166	6,017

JPMORGAN ASSET MANAGEMENT (UK) LIMITED

 

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