Final Results
JPMorgan Fleming Overseas IT PLC
28 September 2006
STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN FLEMING OVERSEAS INVESTMENT TRUST PLC
PRELIMINARY ANNOUNCEMENT OF FINAL RESULTS
The Company today announces its results for the year to 30 June 2006.
Performance
The Company has had an extremely good year and delivered a 25.0% return to the
shareholders. The return on net assets of 17.6% was 4.3% ahead of the benchmark
and reflects great credit on Ed Walker, the investment manager. At the
portfolio level, asset allocation, stock selection and currency all contributed
positively to this outperformance. The cost of cash was a small negative and
the good result did, of course, give rise to a performance fee for the Manager.
Dividends
In light of this performance, the Directors are recommending an increase of 0.5
pence in the final dividend, thereby raising it to 8.5 pence per share. In
addition, the tender offer process resulted in a surplus of distributable cash
and the Directors are obliged to pay this to shareholders in the form of a
special dividend of 4.0 pence per share. These dividends are to be paid on 1st
December 2006 to shareholders on the register at close of business on 27th
October 2006. It should be noted that the principal aim of the Company is to
maximise shareholder returns through capital growth and fulfilling this aim can
lead to fluctuating levels of dividend income. The Board has considered the
current balance on the revenue reserve of £17.9 million and has agreed to use
this reserve, if required, to underpin the dividend going forward.
Tender Offer and Share Buybacks
During the year, the Company announced a tender offer which resulted in the
repurchase of 32,574,617 shares for cancellation. This represented 46.7% of the
shares then outstanding. The Board has subsequently agreed to endeavour to
maintain the discount at which the share price trades relative to its net asset
value at around 5% by means of repurchases of the Company's shares in the
market. At the year end, the Company had repurchased 910,000 shares at an
average discount of 5.2%. The total cost of these repurchases was £5.5 million
and this activity enhanced the net asset value by 0.2% in performance terms. A
resolution to renew the authority to permit the Company to repurchase shares
will be submitted to the Annual General Meeting.
Investment Process
The Investment Manager's Report mentions the changes to the investment process
that were approved by the Board and introduced by Ed Walker, the investment
manager, during the year. These included a smaller number of investments in the
portfolio and a higher conviction investment style. The Board has been
encouraged by the early positive effects that these changes are having on
performance and is confident that, over time, they will continue to prove
increasingly beneficial to shareholders' interests.
New Zealand Tax Position
We are proud of the substantial number of New Zealand shareholders that we have
on the Company's register and we consistently take their interests into account
in formulating policy and strategic decisions. It is with some satisfaction,
therefore, that I can report that, following some active lobbying from the
Company and others through local representatives, the New Zealand tax
authorities appear to have relented on earlier proposals to impose a tax on
certain unrealised capital gains on share portfolios outside New Zealand and
Australia. The latest proposals, although still not finally approved at time of
writing, would remove, to a significant degree, the Board's concerns that the
impact of the original proposals would have had on the continuing viability of
the Company in providing a cost effective and tax efficient vehicle for New
Zealand investors.
Total Expense Ratio
The Board gives considerable attention to ensuring that the costs of operating
the Company are kept as low as possible while ensuring that a high quality
service is received from its providers. It is pleasing to be able to report
that the Company's Total Expense Ratio, (the proportion that its management
expenses represent of its market capitalisation) is one of the lowest in its
peer group. This of course has a direct beneficial impact on the net asset value
total return performance of the Company.
Gearing
Since the year end, we have negotiated a £20 million revolving loan facility
with Lloyds TSB. It is intended that this flexible facility will be used
tactically as investment opportunities present themselves, with the aim of
enhancing returns only when it can be seen that this is likely.
Change of Name
The Manager changed its name to JPMorgan Asset Management (UK) Limited in 2005.
In the light of this, the Board considers it appropriate to change the name of
the Company to JPMorgan Overseas Investment Trust plc and we will be asking
shareholders to approve this at the AGM.
Annual General Meeting
My fellow Directors and I invite shareholders to attend the Company's Annual
General Meeting which will be held at Trinity House, Tower Hill, London EC3N 4DH
on Friday 24th November 2006 at 12 noon.
George Paul
Chairman
28th September 2006
For further information:
Philip Jones
For and on behalf of
JPMorgan Asset Management (UK) Limited - Secretary
020 7742 6000
JPMorgan Fleming Overseas Investment Trust plc
Unaudited figures for the year ended 30th June 2006
Income Statement
2005
2006 (Restated)*
Revenue Capital Total Revenue Capital Total
return return return return return return
£'000 £'000 £'000 £'000 £'000 £'000
Gains from investments held at fair value
through profit or loss - 69,765 69,765 - 35,444 35,444
Income from investments 6,982 - 6,982 7,623 - 7,623
Other interest receivable and similar
income 422 - 422 462 - 462
_______ ________ _______ _______ ________ _______
Gross return 7,404 69,765 77,169 8,085 35,444 43,529
Management fee (755) (755) (1,510) (732) (732) (1,464)
Performance fee - (2,147) (2,147) - (438) (438)
Other administrative expenses (525) - (525) (506) - (506)
_______ ________ _______ _______ ________ _______
Net return on ordinary activities before
finance costs and taxation 6,124 66,863 72,987 6,847 34,274 41,121
Finance costs (28) (27) (55) (284) (284) (568)
_______ _______ _______ _______ _______ _______
Net return on ordinary activities before
taxation 6,096 66,836 72,932 6,563 33,990 40,553
Taxation (639) - (639) (787) - (787)
_______ _______ _______ _______ _______ _______
Net return on ordinary activities after
taxation 5,457 66,836 72,293 5,776 33,990 39,766
_______ _______ _______ _______ _______ _______
Return per share 8.88p 108.75p 117.63p 8.27p 48.66p 56.93p
* The results for the year ended 30th June 2005 have been restated in accordance
with Financial Reporting standard 21.
JPMorgan Fleming Overseas Investment Trust plc
Unaudited figures for the year ended 30th June 2006
Reconciliation of Movements in Shareholders' Funds
Called up Capital
redemption
share reserve Capital Revenue
capital reserve reserve Total
£'000 £'000 £'000 £'000 £'000
At 30th June 2004 (restated)* 17,540 16,405 291,601 17,136 342,682
Shares bought back and cancelled (105) 105 (1,713) - (1,713)
Net return on ordinary activities 33,990 5,776 39,766
- -
Dividends appropriated in the year - - - (4,882) (4,882)
_______ ________ ________ _______ _______
At 30th June 2005 (restated)* 17,435 16,510 323,878 18,030 375,853
Adjustment to opening shareholders'
funds at 1st July 2005 to reflect the
adoption of bid prices - - (301) - (301)
Shares bought back and cancelled (8,371) 8,371 (214,720) - (214,720)
Net return on ordinary activities - - 66,836 5,457 72,293
Dividends appropriated in the year - - - (5,546) (5,546)
_______ ________ ________ _______ ________
At 30th June 2006 9,064 24,881 175,693 17,941 227,579
*The results for the year ended 30 June 2005 and 30th June 2004 have been
restated in accordance with Financial Reporting Standard 21.
JPMorgan Fleming Overseas Investment Trust plc
Unaudited figures for the year ended 30th June 2006
Balance Sheet
2005
2006 (Restated)*
£'000 £'000
Fixed Assets
Investments at fair value through profit or loss 226,520 365,243
Net current assets 2,976 11,003
Creditors: Amounts falling due after more than one year (278) (200)
Provision for liabilities and charges (1,639) (193)
_______ _______
Total net assets 227,579 375,853
===== =====
Net asset value per share 627.7p 538.9p
*The results for the year ended 30th June 2005 have been restated
in accordance with FRS21.
Cash Flow Statement
For the year ended 30th June 2006 2006 2005
£'000 £'000
Net cash inflow from operating activities 4,213 2,666
Net cash outflow from returns on investments and servicing of
finance (55) (701)
Taxation recovered 42 75
Net cash inflow from capital expenditure and financial
investment 208,327 34,523
Dividends paid (5,546) (4,882)
_______ _______
Net cash flow before financing 206,981 31,681
Financing
Repayment of short-term loans - (30,065)
Repurchase of shares (214,277) (1,713)
_______ _______
Net cash outflow from financing (214,277) (31,778)
_______ _______
Decrease in cash and cash equivalents (7,296) (97)
===== ====
Notes
1. Accounting policies
The Company has adopted certain new accounting policies following the issue of
new financial reporting standards (FRSs) and the Statement of Recommended
Practice 'Financial statements of investment trust companies' as issued by the
AITC in December 2005. The material changes to the accounts are
as follows:
Investments are designated as held at fair value through profit or loss in
accordance with FRS 26: 'Financial Instruments: Measurement'. Listed investments
are valued at bid market prices. This represents a change in accounting policy,
however, in accordance with the exemption conferred by paragraph 108D of FRS26,
comparatives have not been restated. In prior years, listed investments were
valued using last trade prices. The adoption of bid prices on 1st July 2005
decreased the value of investments by £301,000.
In accordance with FRS21 'Events after the Balance Sheet date', final dividends
declared but not approved are not accrued in the accounts, since their payment
only becomes certain once shareholder approval has been obtained. Comparative
figures have been restated and this has led to an increase in net assets of
£5,579,000 at 30th June 2005.
2. Dividends
2006 2005
£'000 £'000
Final dividend of 8.0p (2004; 7.0p) 5,546* 4,882*
---------- ----------
Total dividends paid in the year 5,546 4,882
===== =====
Final dividend payable of 8.5p (2005: 8.0p) 3,082 5,546*
Special dividend payable of 4.0p (2005: Nil) 1,450 -
---------- ----------
Total dividends paid in the year 4,532 5,546
===== =====
*The Company declared a dividend of £5,579,000 (2005: £4,911,000) but the
dividend paid amounted to £5,546,000 (2005: £ 4,882,000) as a result of share
buybacks.
The final dividend has been proposed in respect of the year ended 30th June 2006
and is subject to approval at the Annual General Meeting. In accordance with
the revised accounting policy of the Company, this dividend will be reflected in
the accounts for the year ended 30th June 2007.
3. Comparative figures
The above financial information does not constitute statutory accounts as
defined in Section 240 of the Companies Act 1985. The comparative financial
information is an extract from the statutory accounts for the year ended 30th
June 2005 (as restated). Those accounts, upon which the auditors issued an
unqualified opinion, have been delivered to the Registrar of Companies.
JPMORGAN ASSET MANAGEMENT (UK) LIMITED
28th September 2006
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