Half Yearly Report

RNS Number : 3064Y

JPMorgan Emerging Mkts Invest Trust

28 February 2012

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN EMERGING MARKETS INVESTMENT TRUST PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS

ENDED 31ST DECEMBER 2011

Chairman's Statement

Performance

Following the strong returns in the year to 30th June 2011, equity markets suffered a sharp correction in the first half of the Company's financial year. In the six months to 31st December 2011, the portfolio return net of fees and expenses was -15.4%, as compared to the total return from our benchmark index, the MSCI Emerging Markets Free Index (in sterling terms) of -16.5%. The diluted total return on net assets, which assumes that all of the Company's Subscription shares were exercised at the price of 460 pence per share, was -13.6%. Over the same period, the return to Ordinary shareholders was -12.7%. 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.

Discount

During the first six months of this financial year, the discount on the Company's Ordinary shares to their diluted net asset value ('NAV') ranged between 6.0% and 11.2%, averaging 8.6%. As I explained in the last annual report, the Board would like the Company's Ordinary shares to continue to trade at a discount of less than 10% to the diluted NAV and is therefore prepared to buy in shares at discounts of between 8% and 10% to achieve this, but only if the discount is out of line with our peer group and market conditions are orderly. During the period the Company repurchased 70,000 Ordinary shares into Treasury at a 9.3% discount to NAV.

Subscription shares

During the six months to 31st December 2011 and up to the date of this report, the Company has issued a total of 55,404 Ordinary shares following the exercise of Subscription shares, amounting to proceeds of £255,000. Further details of the Subscription shares can be found on page 14 of the half year report and on the Company's website at www.jpmemergingmarkets.co.uk

Outlook

The second half of 2011 was disappointing for emerging markets equities, as a number of factors increased the risks to global growth. Those factors, such as the risk of continued inflationary pressures and uncertainty in the Eurozone, are unlikely to be resolved quickly but equity valuations are attractive and we remain confident that our Investment Manager will continue to add value over the long term.

Alan Saunders

Chairman, 28th February 2012

Investment Manager's Report

The last six months of 2011 was not a happy period for equity investors in general, nor, more specifically, for investors in emerging markets; the benchmark index for the Company declined by 16.5% during the first six months of the Company's financial year, while the net asset value per share, net of fees and expenses, fell by 15.4% on an undiluted basis and by 13.6% once dilution is taken into account.

Three major factors conspired to depress equity prices. The first, which led to a sharp sell-off in July and August, was the gamesmanship in American politics which led the USA dangerously close to a position of technical default. At a time of economic fragility, this was not the example of political leadership that the world was looking for. The second was the ever-darkening sky over the Eurozone. Markets continued to press the harsh realities of debt and deficits on a political structure and a group of leaders which seemed ill-designed and ill-equipped to cope. Again, political leadership seemed in short supply, and the ability to overcome vested interests and press for a resolution appeared as elusive as ever. Against this background, emerging markets look economically robust, but they are suffering from a third factor: some cyclical pressures, mostly in the form of inflation, which are requiring a tightening of policy and in consequence an economic slowing. This in itself is not a serious development and should prove temporary.

In the long run, emerging markets still offer great potential for the patient and thorough investor. Over the longest periods, returns from equities should be a function of the valuation of stocks and the underlying ability of companies to generate and grow profits and dividends over time. Economic cycles influence these, but do not really alter the long term trend of returns and our investing horizon, which sets out to be as long as possible and tries to look through cycles rather than become fixated by them. Valuations in general look reasonable or better after last year's decline, which means one less risk to worry about. Accordingly, we spend most of our time trying to find and understand good, sustainable businesses and act only when prices look acceptable. Market cycles do not change this and our efforts in the rest of this year and beyond will continue to pursue investment opportunities using this approach.

Austin Forey

Investment Manager, 28th February 2012

Interim Management Report

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

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Company have not changed and 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 2011.

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, 28th February 2012

Income Statement

for the six months ended 31st December 2011

	(Unaudited) Six months ended 31st December 2011			(Unaudited) Six months ended 31st December 2011			(Audited) Year ended 30th June 2011
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments   held at fair value through   profit or loss	-	(123,422)	(123,422)	-	165,660	165,660	-	138,790	138,790
Net foreign currency   (losses)/gains	-	(589)	(589)	-	308	308	-	372	372
Income from investments	6,849	-	6,849	6,701	-	6,701	15,905	-	15,905
Other interest receivable   and similar income	1	-	1	1	-	1	7	-	7
Gross return/(loss)	6,850	(124,011)	(117,161)	6,702	165,968	172,670	15,912	139,162	155,074
Management fee	(3,535)	-	(3,535)	(3,548)	-	(3,548)	(7,394)	-	(7,394)
Performance fee	-	(659)	(659)	-	(3,068)	(3,068)	-	(1,941)	(1,941)
Other administrative   expenses	(589)	-	(589)	(595)	-	(595)	(1,182)	-	(1,182)
Net return/(loss) on   ordinary activities   before finance costs   and taxation	2,726	(124,670)	(121,944)	2,559	162,900	165,459	7,336	137,221	144,557
Finance costs	(3)	-	(3)	(5)	-	(5)	(6)	-	(6)
Net return/(loss) on   ordinary activities   before taxation	2,723	(124,670)	(121,947)	2,554	162,900	165,454	7,330	137,221	144,551
Taxation (note 3)	(324)	-	(324)	(417)	-	(417)	(1,132)	-	(1,132)
Net return/(loss) on   ordinary activities after   taxation	2,399	(124,670)	(122,271)	2,137	162,900	165,037	6,198	137,221	143,419
Return/(loss) per   Ordinary share   (note 4)
Undiluted	2.10p	(109.00)p	(106.90)p	1.88p	143.09p	144.97p	5.43p	120.28p	125.71p
Diluted	2.06p	(106.82)p	(104.76)p	1.82p	138.76p	140.58p	5.26p	116.52p	121.78p

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 2011	capital	premium	reserve	reserve	reserves	reserve	Total
(Unaudited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th June 2011	28,771	86,781	1,665	69,939	587,825	10,079	785,060
Repurchase of shares into Treasury	-	-	-	-	(363)	-	(363)
Issue of Ordinary shares on  exercise
of Subscription shares	9	149	-	-	-	-	158
Net (loss)/return on ordinary activities	-	-	-	-	(124,670)	2,399	(122,271)
Dividends appropriated in the period	-	-	-	-	-	(4,004)	(4,004)
At 31st December 2011	28,780	86,930	1,665	69,939	462,792	8,474	658,580

	Called up		Capital
Six months ended	share	Share	redemption	Other	Capital	Revenue
31st December 2010	capital	premium	reserve	reserve	reserves	reserve	Total
(Unaudited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th June 2010	28,010	74,138	1,665	69,939	450,604	7,539	631,895
Exercise of Subscription shares into
Ordinary shares	(31)	31	-	-	-	-	-
Issue of Ordinary shares on  exercise
of Subscription shares	780	12,384	-	-	-	-	13,164
Net return on ordinary activities	-	-	-	-	162,900	2,137	165,037
Dividends appropriated in the period	-	-	-	-	-	(3,657)	(3,657)
At 31st December 2010	28,759	86,553	1,665	69,939	613,504	6,019	806,439

	Called up		Capital
Year ended	share	Share	redemption	Other	Capital	Revenue
30th June 2011	capital	premium	reserve	reserve	reserves	reserve	Total
(Audited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th June 2010	28,010	74,138	1,665	69,939	450,604	7,539	631,895
Exercise of Subscription shares into
Ordinary shares	(32)	32	-	-	-	-	-
Issue of Ordinary shares on exercise of
Subscription shares	793	12,611	-	-	-	-	13,404
Net return on ordinary activities	-	-	-	-	137,221	6,198	143,419
Dividends appropriated in the year	-	-	-	-	-	(3,658)	(3,658)
At 30th June 2011	28,771	86,781	1,665	69,939	587,825	10,079	785,060

Balance Sheet

at 31st December 2011

	(Unaudited)	(Unaudited)	(Audited)
	31st December	31st December	30th June
	2011	2010	2011
	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	634,675	802,055	744,489
Investments in liquidity funds held at fair value through
profit or loss	21,572	511	22,439
Total investments	656,247	802,566	766,928
Current assets
Debtors	580	961	2,294
Cash and short term deposits	3,698	6,171	18,350
	4,278	7,132	20,644
Creditors: amounts falling due within one year	(1,945)	(3,259)	(2,512)
Net current assets	2,333	3,873	18,132
Total assets less current liabilities	658,580	806,439	785,060
Net assets	658,580	806,439	785,060
Capital and reserves
Called up share capital	28,780	28,759	28,771
Share premium	86,930	86,553	86,781
Capital redemption reserve	1,665	1,665	1,665
Other reserve	69,939	69,939	69,939
Capital reserves	462,792	613,504	587,825
Revenue reserve	8,474	6,019	10,079
Total equity shareholders' funds	658,580	806,439	785,060
Net asset value per Ordinary share (note 5)
Undiluted	576.0p	705.5p	686.4p
Diluted	560.3p	672.0p	655.7p

Cash Flow Statement

for the six months ended 31st December 2011

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st December 2011	31st December 2010	30th June 2011
	£'000	£'000	£'000
Net cash inflow from operating activities (note 6)	2,016	1,591	4,452
Net cash outflow from returns on investments and
servicing of finance	(3)	(5)	(6)
Net cash( outflow)/inflow  from capital expenditure and
financial investment	(11,865)	(5,699)	3,317
Dividend paid	(4,004)	(3,657)	(3,658)
Net cash (outflow)/inflow before financing	(13,856)	(7,770)	4,105
Net cash (outflow)/inflow from financing	(205)	13,163	13,404
(Decrease)/increase in cash in the period	(14,061)	5,393	17,509
Reconciliation of net cash flow to movement in
net funds
Net cash movement	(14,061)	5,393	17,509
Exchange movements	(591)	309	372
Movement in net funds in the period	(14,652)	5,702	17,881
Net funds at the beginning of the period	18,350	469	469
Net funds at the end of the period	3,698	6,171	18,350
Represented by:
Cash and short term deposits	3,698	6,171	18,350

Notes to the Accounts

for the six months ended 31st December 2011

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 2011 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 and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in 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 2011.

3.   Taxation

      The taxation charge of £324,000 (31st December 2010: £417,000 and 30th June 2011: £1,132,000) comprises irrecoverable overseas withholding tax.

4.   Return/(loss) per Ordinary share

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st December 2011	31st December 2010	30th June 2011
	£'000	£'000	£'000
Return per Ordinary share is based on the following:
Revenue return	2,399	2,137	6,198
Capital (loss)/return	(124,670)	162,900	137,221
Total (loss)/return	(122,271)	165,037	143,419
Weighted average number of Ordinary shares in issue
during the period used for the purpose of the
undiluted calculation	114,373,142	113,846,394	114,086,175
Weighted average number of Ordinary shares in issue
during the period used for the purpose of the
diluted calculation	116,708,841	117,393,377	117,768,751
Undiluted
Revenue return per share	2.10p	1.88p	5.43p
Capital (loss)/return per share	(109.00)p	143.09p	120.28p
Total (loss)/return per share	(106.90)p	144.97p	125.71p
Diluted
Revenue return per share	2.06p	1.82p	5.26p
Capital (loss)/return per share	(106.82)p	138.76p	116.52p
Total (loss)/return per share	(104.76)p	140.58p	121.78p

      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 in accordance with the requirements of Financial Reporting Standard 22 'Earnings per share'.

5.   Net asset value per Ordinary share

	(Unaudited)	(Unaudited)	(Audited)
	31st December 2011	31st December 2010	30th June 2011
Undiluted
Ordinary shareholders' funds (£'000)	658,580	806,439	785,060
Number of Ordinary shares in issue (excluding shares
held in Treasury)	114,329,875	114,313,321	114,365,583
Net asset value per Ordinary share (pence)	576.0	705.5	686.4
Diluted
Ordinary shareholders' funds assuming exercise
of Subscription shares (£'000)	741,213	889,469	867,851
Number of potential Ordinary shares in issue	132,293,525	132,363,525	132,363,525
Net asset value per Ordinary share (pence)	560.3	672.0	655.7

      The diluted net asset value per Ordinary share assumes that all outstanding Subscription shares were converted into Ordinary shares at the period end. The Company will only re-issue shares held in Treasury at a premium and therefore, these shares have no dilutive potential.

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

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st December 2011	31st December 2010	30th June 2011
	£'000	£'000	£'000
Total (loss)/return on ordinary activities before finance
costs and taxation	(121,944)	165,459	144,557
Less capital loss/(return) on ordinary activities before
finance costs and taxation	124,670	(162,900)	(137,221)
Scrip dividends received as income	(106)	(121)	(121)
Decrease/(increase) in net debtors and accrued income	1,661	305	(921)
Overseas withholding tax	(324)	(440)	(1,130)
Performance fee paid	(1,941)	(712)	(712)
Net cash inflow from operating activities	2,016	1,591	4,452

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 ASSET MANAGEMENT (UK) LIMITED

ENDS

A copy of the half year report has been submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do

The half year report will also 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.

 

END

 

 

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