Final Results

RNS Number : 5152N

JPMorgan Overseas IT PLC

28 September 2012

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN OVERSEAS INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 30TH JUNE 2012

Chairman's Statement

During the year ended 30th June 2012 global markets remained volatile, driven by concerns over policy responses to the global financial crisis and increasing signs of a slowing global growth.

Having delivered good performance since taking over the management of the portfolio on 1st October 2008, this year presented a challenging environment for the Investment Manager's research driven investment process used to manage the Trust's assets. Over the year, the Company's net asset value produced a negative total return of 9.8%, while the share price produced a negative total return of 15.0%, reflecting the widening of the share price discount from 1.5% to 7.0% over the year. These compare with a negative total return of 4.3% produced by the benchmark index, the MSCI All Country World Index (in sterling terms) over the same period. The underperformance was concentrated in the first quarter of the Trust's financial year. Subsequently, some of that ground was recovered. The Board is encouraged that since the year-end, the trend of outperformance has been re-established.

While the Board is not complacent about performance, it believes the changes made in 2008 have worked, producing performance above the benchmark of 20% over the subsequent 15 quarters, even including the considerable re-organisation costs of the final quarter of 2008. Such outperformance can only be achieved by holding a portfolio which differs significantly from our benchmark, and this will lead to periods of both outperformance and underperformance. The volatility of the past year is consistent with the investment process and previous experience. The Investment Manager's Report provides a detailed commentary on the Company's investment strategy and performance.

Dividends

The Directors are proposing, subject to shareholders' approval at the Annual General Meeting ('AGM'), to pay a final dividend of 13.5p per share (2011: 13.5p) on 30th November 2012 to shareholders on the register at the close of business on 9th November 2012. The Company's principal aim is to maximise capital growth. The Board does however appreciate that many shareholders do like to receive a dividend rather than have to sell shares to obtain income.

Share Buybacks

The Company reissued 40,000 shares during the year from Treasury at a premium to the prevailing net asset value. The total proceeds amounted to £288,000.

Over the year, the share price to net asset value ranged between a premium of 7.5% and a discount of 8.6%. The Board will continue to manage the discount at which the share price trades relative to its net asset value at around 5% and should it become necessary, repurchase the Company's shares in the market to achieve this. The Company restarted repurchasing its shares in December 2011, following which 728,715 shares were bought into Treasury for a total consideration of £5,299,000, adding approximately 1.23p per share to the net asset value for continuing shareholders. At the year end, a total of 785,681 shares were held in Treasury.

A resolution to renew the authority to permit the Company to continue to repurchase shares will be submitted to the AGM. Resolutions renewing the authorities to issue shares from Treasury and to issue new shares at a premium to net asset value, and to disapply pre-emption rights over such issues, will also be submitted for approval at the AGM. Any shares held in Treasury will only be re-issued at a premium to net asset value.

Ongoing Charges

The Board continues to believe that the Company's Ongoing charges ratio of 0.63% for the year ended 30th June 2012 (2011 TER: 0.64%) represents very good value when compared to other trusts and savings products such as open ended funds actively investing in global equities.

Gearing

Gearing is regularly discussed between the Board and the Investment Manager. A borrowing facility of £25 million with Scotiabank is in place until July 2014. This facility is flexible and can be used tactically as investment opportunities present themselves. Although the gearing level had been reduced to zero from 14th July 2011 throughout the year, it was reintroduced on 7th August 2012 by drawing £20 million of the £25 million facility.

Currency Hedging

The Company continues its passive currency hedging strategy (implemented in late 2008) that aims to make stock selection the predominant driver of overall portfolio performance relative to the benchmark, the MSCI Word All Countries Index (in sterling terms). This is a risk reduction measure, designed to eliminate most of the differences between the portfolio's currency exposure and that of the Company's benchmark. As a result the returns derived from, and the portfolio's exposure to currencies may differ materially from that of the Company's competitors in the AIC Global Growth sector, who generally do not undertake such a strategy.

The Board           

As previously reported, John Rennocks will be retiring from the Board at the conclusion of the forthcoming AGM. He has served as a Director of the Company since 2001. We are very grateful to him for his valuable contribution to the Board over the period. Jonathan Carey will succeed John in his role as the Chairman of the Audit and Management Engagement Committee and Nigel Wightman will succeed him as the Senior Independent Director. John leaves with our best wishes for his retirement.

The Nomination Committee carried out a recruitment process which led to the recruitment of Gay Collins as a non-executive director with effect from 21st February 2012 as reported in my interim statement. Gay will therefore fall to be elected by shareholders at the forthcoming AGM. Her breadth of knowledge and experience will be of great value to the Board and I commend her election to you.

The Board supports annual re-election for all Directors, as recommended by the UK Corporate Governance Code, and therefore all of the other Directors will stand for re-election at the forthcoming AGM.

Annual General Meeting

My fellow Directors and I invite you to attend the Company's AGM which will be held at Trinity House, Tower Hill, London EC3N 4DH on Tuesday, 6th November 2012 at 12.00 noon. An investment presentation will be made at the meeting by Jeroen Huysinga. If you have any detailed or technical questions, please submit these in advance of the meeting in writing, or via the Company's website, to the Company Secretary whose contact details are shown on page 61 of the 2012 Annual Report. Shareholders who are unable to attend the AGM in person are encouraged to use their proxy votes.

The AGM will be followed by refreshments and there will be an opportunity for shareholders to meet the Directors and the Investment Manager. I hope to have the pleasure of meeting you then.

Outlook

In the short term, the direction of stock markets will be driven by economic conditions which are expected to remain challenging, with weak expectations for earnings and global growth accompanied by the continuing sovereign debt crisis in Europe. The Board looks to the Investment Manager to focus on delivering a superior performance over the long term investment horizon once the outlook for fundamentals and earnings improves.

Simon Davies

Chairman

28th September 2012

Investment Manager's Report

Market Review

Equity markets performed poorly over the 12 months to end of June 2012, with the MSCI All Country World Index falling 4.3% in sterling terms. On a sector basis, we are finding cheap stocks amongst the transportation, materials, industrials and automotive. Conversely, many of the stocks that have proved most defensive in the past couple of years now look very unappealing in our valuation work.

The period started very badly, with the index declining 8.6% in sterling terms during the second half of 2011. As we wrote at the interim stage, investors' fears escalated over sovereign debt concerns in Europe and the potential consequences of deteriorating global growth prospects.

After a brief flurry of optimism in the first few months of 2012, a more subdued mood again took hold of markets in the second quarter. At a macro level the principal negatives were actual and increasing signs of slower growth globally (Europe is especially weak, but China surprised too, and the US economy is still struggling to accelerate), and of course the unmistakable signs that the sovereign debt crisis in Europe is far from resolved. For equity investors, profits expectations started to slip again, weighed by slower growth, sharp falls in commodity prices, and, in the US, the impact of a stronger US Dollar.

Within the market, a preference for stocks with stable earnings and dividends was the most striking feature over the last 12 months. Larger stocks outpaced smaller ones, with the largest names (MSCI World Large Cap) beating the smallest (MSCI World Small Cap) by 4.4% over the year. Unlike the previous year, defensive sectors, such as healthcare and consumer non-durables, outperformed cyclical sectors, such as basic industries, financials and autos by a very considerable degree.

The better performing markets over the year were the US and the UK, while Europe and Emerging Markets lagged the index, in local currency terms.

Over the five years of debt crisis our benchmark is up 9.8% in sterling terms (perhaps not a bad result in the context of the worst recession in modern times and a 58% price decline in the financial sector) while the Company's NAV is up 26.4% and its share price is up 24.7%.

Portfolio Review

With a return on net assets of -9.8% over the year, this has been the first period of negative relative performance since I took over in October 2008.

We are going through an unusually testing market place for our global investment process. Our research driven approach has been challenged by the environment of the last 12 months, with returns from highly ranked stocks disappointing as investors continue to look for safety and yield rather than value based on long term and fundamental earnings projections.

Our portfolio suffered from underexposure to stocks and markets which benefitted most from this flight to safety. For example, North America is domicile to a number of very large and iconic consumer brand companies none of which we hold because they are not cheap. This group now account for almost 5% of the global index and our lack of exposure has hurt us in a relative sense.

Underperformance across actively held stocks arose principally in more cyclical sectors such as basic materials and financials and our overweight position in Europe.

Stocks which performed very well in the portfolio such as Japan Tobacco, Associated British Foods, United Health Group and ACE shared many of the 'safety' attributes while still being reasonably attractively valued with good long-term earnings potential relative to their global peers.

Reassuringly, there was some good performance from significant positions in stocks in more volatile and cyclical sectors. Capital One Financial, for example, has been a strong performer. It is a US credit card operator and bank which has recently strengthened its franchise with the acquisition of businesses from ING and HSBC. With associated equity raises complete the market has been underestimating asymmetric negotiating positions and the accretive nature of these deals. InterOil is a smaller capitalisation energy company with significant untapped exploration potential in Papua New Guinea. It has proven gas resources which are exploitable at costs which are significantly below industry average and is geographically positioned close to key potential markets such as Japan and South Korea. The stock has performed well as the expectations of new partners and project de-risking have increased.

Recent Markets

Since our interim comments, the most notable changes in the investment landscape have been a slowdown in economic activity around the world and a resurgence of sovereign debt troubles in Europe. Neither of these unwelcome trends look fully played out at this point and our research teams have been cutting near term earnings forecasts for the past six months, with energy and materials standing out as areas of weakness. Many companies have observed surprisingly weak trends in China and Europe's problems are obvious to all. But there are also areas of strength around the world; for example we are believers in the US housing market recovery now tentatively evident in the data. So overall our forecasts have declined slowly so far, and we still see global profits growing at around 8% this year. This puts the World at less than 12x forward earnings, hardly expensive by past standards, and with bond yields at almost unimaginably low levels, stocks look very attractive versus bonds. In the US this relationship is more stretched than has been the case over 98% of the time since 1960 according to analysis by JP Morgan's strategist David Kelly. This suggests that equity investment will reward the patient investor willing to look beyond weaker near term profits trends, continued angst over Europe, continued lower growth in China and a lack of immediate fiscal resolution in the US.

Within the market, the picture is similar, with risk looking cheap. Our research work suggests that the spread between stocks at the top of our value rankings and the average is wider than 80% of the time over the last 25 years and matches last summer's peak levels. Stocks with less predictable earnings and more volatile prices all look unusually cheap and higher beta names are at a discount which has seldom been this steep over the history of our research process. These are generous discounts for those investors willing to take risk, and have only been exceeded in the past during the chaos following the Lehman bankruptcy, or the mania for internet stocks in 1999. Could this be a new paradigm in which more cyclical stocks trade permanently at a big discount? Perhaps, but the strong recovery in US homebuilders and more recently in Chinese property companies suggests that once the fundamental outlook for earnings improves, the discount narrows very quickly. So we think that we are paid to keep the focus on long term value, even in a tepid period of growth.

Portfolio Positioning

Geographically, our focus on companies which are cheap relative to global peers continues to lead us away from North America and towards Europe and the UK.

Companies are not immune to the macroeconomic environment in which they operate, and we certainly incorporate this element into our bottom-up research process. Investors have been concerned about Europe (ex UK) and view it as a risky place to invest. We recognise the wide range of potential economic outcomes associated with the region but we do not view exposure as equivalent to domicile. Most recently, just under one third of our portfolio was invested in companies domiciled in developed Europe, of which around two thirds was represented by companies that have more than two thirds of their sales from outside Europe. Indeed, during acute spells of market weakness we have been happy to add to our exposure in this region. Electrolux, which is listed in Sweden, is a recent addition to the portfolio. We believe that the global appliance market is undergoing a fundamental shift as certain Asian players become significantly less aggressive and returns focussed. Electrolux has an excellent, new management team which has ambitious plans to build on a record of reasonably stable margin performance. We estimate that easing raw material costs and a US housing recovery will help their cause to a degree which we do not see matched in consensus forecasts. Western Europe currently accounts for less than one third of Electrolux sales - a figure which is expected to decline to closer to one quarter on a longer term view.

Most recently around 35% of the portfolio has been invested in North American stocks. Benchmark representation is 52%. As mentioned above there is obviously no scarcity of good quality companies in the region, it is simply an issue of relative value across many sectors of the market. A notable exception has been the media sector where investments in Amazon and CBS have recently been supplemented with the purchase of LinkedIn. While this stock appears expensive at first glance (170x 2012 earnings) it admirably illustrates the long term nature of our process as much greater emphasis is placed on the ultimate potential of a company than its current predicament. LinkedIn is a social media company in the early stages of growth which is surrounded by a nearly impassable professional networking 'moat' of more than 150 million global members. Unlike other social media companies, the sustainability of subscriber growth momentum and, crucially, the achievement of significant monetisation through Hiring and Marketing Solutions is very high.

Within Emerging Markets the last 12 months has seen sharp derating of many Chinese equities. Having described Ping An at the interim stage we have recently added to our Chinese exposure through purchase of China Merchants Bank, China Overseas Land and Investment and China Unicom. While the first two represent high quality exposure to areas of potential cyclical recovery, Unicom is based on a very strong longer term theme. We believe that 3G penetration will rise significantly in China over the next five years. The carrier which occupies a leading position in the 3G market is most likely to generate impressive growth in revenue and earnings. With competitive advantages across many aspects of the 3G chain in China secured, Unicom is very well positioned to replicate the enormous success enjoyed by KDDI in Japan between 2001 and 2006.

While much still lies in the balance, we are reassured by some visible progress towards containing the fiendishly complex European sovereign debt issues. We believe that over the longer-term individual companies' fundamentals will become relatively more important again and stocks with attractive valuations will outperform. Overall, our portfolio has a contrarian and higher beta bias, reflecting our view that the opportunities on offer are unusually attractive. Following our decision to remove gearing from the portfolio in July 2011 we reinstated a modest measure of gearing at the beginning of August 2012. This decision was driven by the extreme valuation signals which we see across a number of existing holdings and a sense of slightly greater systemic ease following ECB's Mario Draghi comments in July. As always, our ability to perform is determined by the quality of our research analysts and the interaction between them and the portfolio management team. Despite recent headwinds we remain committed to delivering strong long-term returns for our investors.

Jeroen Huysinga

Investment Manager

28th September 2012

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 and Strategy: An inappropriate investment strategy, for example asset allocation or the level of gearing, may lead to under-performance 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 through its investment restrictions and guidelines which are monitored and reported by the Manager. JPMAM 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. The Investment Manager employs the Company's gearing within a strategic range set by the Board. The Board may hold a separate meeting devoted to strategy each year.

•           Market: Market risk arises from uncertainty about the future prices of the Company's investments. It represents the potential loss that the Company might suffer through holding investments in the face of negative market movements. The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines, which are monitored and reported on by JPMAM. The Board monitors the implementation and results of the investment process with the Manager.

•           Accounting, Legal and Regulatory: In order to qualify as an investment trust, the Company must comply with Section 1158 of the Corporation Taxes Act 2010 ('Section 1158'). Details of the Company's approval are given under "Business of the Company" above. Were the Company to breach Section 1158, it might lose investment trust status and, as a consequence, gains within the Company's portfolio could be subject to Capital Gains Tax. The Section 1158 qualification criteria are continually monitored by JPMAM 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. A breach of the Companies Act 2006 could result in the Company and/or the Directors being fined or the subject of criminal proceedings. Breach of the UKLA Listing Rules 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, JPMAM to ensure compliance with the Companies Acts and The UKLA Listing Rules.

•           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 on pages 24 to 28 of the 2012 Annual Report.

•           Operational: Loss of key staff by JPMAM, such as the Investment Manager, could affect the performance of the Company. Disruption to, or failure of, JPMAM'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 JPMAM and its associates and the key elements designed to provide effective internal control are included with the Internal Control section of the Corporate Governance report on page 27 of the 2012 Annual Report.

•           Financial: The financial risks faced by the Company include market price risk, interest rate risk, liability risk and credit risk. Further details are disclosed in note 26 on pages 48 to 54 of the 2012 Annual Report.

Future Developments

Clearly, the future development of the Company is much dependent upon the success of the Company's investment strategy in the light of economic and equity market developments. The Investment Manager discusses the outlook in his report on page 8 of the 2012 Annual Report.

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.

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 Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The accounts are published on the www.jpmoverseas.co.uk website, which is maintained by the Company's Manager, J.P. Morgan Asset Management (UK) Limited ('JPMAM'). The maintenance and integrity of the website maintained by JPMAM is, so far as it relates to the Company, the responsibility of JPMAM.

Statement under the Disclosure & Transparency Rules 4.1.12

(a) the accounts, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

(b) this Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that they face.

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.jpmmidcap.co.uk.

For further information please contact:

Divya Amin

For and on behalf of

JPMorgan Asset Management (UK) Limited, Secretary

020 7742 4000

 

Income Statement

for the year ended 30th June 2012

		2012			2011
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments held at   fair value through profit or loss		-	(30,364)	(30,364)	-	45,596	45,596
Net foreign currency gains/(losses)		-	2,508	2,508	-	(3,243)	(3,243)
Income from investments		4,439	-	4,439	5,232	-	5,232
Other interest receivable and similar income		99	-	99	70	-	70
Gross return/(loss)		4,538	(27,856)	(23,318)	5,302	42,353	47,655
Management fee		(403)	(403)	(806)	(455)	(455)	(910)
Performance fee - writeback/(charge)		-	1,695	1,695	-	(262)	(262)
Other administrative expenses		(476)	-	(476)	(472)	-	(472)
Net return/(loss) on ordinary activities   before finance costs and taxation		3,659	(26,564)	(22,905)	4,375	41,636	46,011
Finance costs		(65)	(65)	(130)	(223)	(223)	(446)
Net return/(loss) on ordinary activities   before taxation		3,594	(26,629)	(23,107)	4,152	41,413	45,565
Taxation		(316)	-	(316)	(408)	-	(408)
Net return/(loss) on ordinary activities   after taxation		3,278	(26,629)	(23,351)	3,744	41,413	45,157
Return/(loss) per share (note 3)		12.64p	(102.68)p	(90.04)p	14.51p	160.52p	175.03p

Details of the proposed dividend are given in note 2.

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 Movements in Shareholders' Funds

	Called up		Capital
	share	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 30th June 2010	6,544	-	27,401	135,383	17,585	186,913
Re-issue of shares from   Treasury	-	970	-	2,130	-	3,100
Net return on ordinary   activities	-	-	-	41,413	3,744	45,157
Dividends appropriated in   the year	-	-	-	-	(3,343)	(3,343)
At 30th June 2011	6,544	970	27,401	178,926	17,986	231,827
Repurchase of shares into   Treasury	-	-	-	(5,299)	-	(5,299)
Re-issue of shares from   Treasury	-	45	-	243	-	288
Net (loss)/return on   ordinary activities	-	-	-	(26,629)	3,278	(23,351)
Dividends appropriated in   the year	-	-	-	-	(3,526)	(3,526)
At 30th June 2012	6,544	1,015	27,401	147,241	17,738	199,939

Balance Sheet

at 30th June 2012

		2012	2011
		£'000	£'000
Fixed assets
Investments held at fair value through profit or loss		198,584	248,913
Investment in liquidity fund held at fair value through profit or loss		390	3,430
Total investments		198,974	252,343
Current assets
Financial assets: Derivative financial instruments		1,567	3,027
Debtors		1,171	1,501
Cash and short term deposits		1,347	875
		4,085	5,403
Creditors: amounts falling due within one year		(2,298)	(21,989)
Financial liabilities: Derivative financial instruments		(558)	(1,846)
Net current assets/(liabilities)		1,229	(18,432)
Total assets less current liabilities		200,203	233,911
Creditors: amounts falling due after more than one year		(200)	(200)
Provisions for liabilities and charges
Performance fee payable		(64)	(1,884)
Net assets		199,939	231,827
Capital and reserves
Called up share capital		6,544	6,544
Share premium		1,015	970
Capital redemption reserve		27,401	27,401
Capital reserves		147,241	178,926
Revenue reserve		17,738	17,986
Total equity shareholders' funds		199,939	231,827
Net asset value per share (note 4)		787.5p	889.0p

Company registration number: 24299.

Cash Flow Statement

for the year ended 30th June 2012

		2012	2011
		£'000	£'000
Net cash inflow from operating activities		1,648	2,684
Returns on investments and servicing of finance
Interest paid		(224)	(351)
Net cash outflow from returns on investments and servicing of finance		(224)	(351)
Taxation
Taxation recovered		40	82
Capital expenditure and financial investment
Purchases of investments		(167,661)	(282,132)
Sales of investments		189,845	275,287
Other capital charges		(14)	(19)
Net cash inflow/(outflow) from capital expenditure and   financial investment		22,170	(6,864)
Dividend paid		(3,526)	(3,343)
Net cash inflow/(outflow) before financing		20,108	(7,792)
Financing
Re-issue of shares from Treasury		288	3,100
Repurchase of shares into Treasury		(4,804)	-
Drawdown of bank loan		17,800	7,800
Repayment of bank loan		(35,600)	-
Net cash (outflow)/inflow from financing		(22,316)	10,900
(Decrease)/increase in cash for the year		(2,208)	3,108

Notes to the Accounts

for the year ended 30th June 2012

1.          Accounting policies

             Basis of accounting

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

             The policies applied in the accounts are consistent with those applied in the preceding year.

2.          Dividends

(a)       Dividends paid and proposed

	2012	2011
	£'000	£'000
Dividend paid
Unclaimed dividends refunded to the Company	-	(1)
2011 final dividend of 13.5p (2010: 13.0p)	3,526	3,344
Total dividends paid in the year	3,526	3,343
Dividend proposed
2012 final dividend proposed of 13.5p (2011: 13.5p)	3,427	3,520

             For the year ended 30th July 2011, the Company declared a dividend of £3,520,000 but the final dividend paid amounted to £3,526,000 due to share issue 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 2012 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 2013.

(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 dividends declared in respect of the financial year, as follows:

	2012	2011
	£'000	£'000
Final dividend payable of 13.5p (2011: 13.5p)	3,427	3,520
Total dividends for Section 1158 purposes	3,427	3,520

             The revenue available for distribution by way of dividend for the year is £3,278,000 (2011: £3,744,000).

3.          Return/(loss) per share

             The revenue return per share is based on the earnings attributable to the ordinary shares of £3,278,000 (2011: £3,744,000) and on the weighted average number of shares in issue during the year of 25,935,640 (2011: 25,799,741).

             The capital loss per share is based on the capital loss attributable to the ordinary shares of £26,629,000 (2011: £41,413,000 return) and on the weighted average number of shares in issue during the year of 25,935,640 (2011: 25,799,741).

             The total loss per share is based on the total loss attributable to the ordinary shares of £23,351,000 (2011: £45,157,000 return) and on the weighted average number of shares in issue during the year of 25,935,640 (2011: 25,799,741).

4.          Net asset value per share

             The net asset value per share is based on funds attributable to ordinary shareholders and on 25,389,017 (2011: 26,077,732) shares in issue at the year end, excluding shares held in Treasury.

5.          Status of announcement

2011 Financial Information

The figures and financial information for 2011 are extracted from the Annual Report and Accounts for the year ended 30th June 2011 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.

2012 Financial Information

The figures and financial information for 2012 are extracted from the Annual Report and Accounts for the year ended 30th June 2012 and do not constitute the statutory accounts for that year.  The Annual Report and Accounts includes 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 Registrar 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 ASSET MANAGEMENT (UK) 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.hemscott.com/nsm.do

The annual report is also available on the Company's website at www.jpmoverseas.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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