Annual Financial Report

RNS Number : 8687B

JPMorgan Glb Emerging Mkts Inc Tst

09 October 2015

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN GLOBAL EMERGING MARKETS INCOME TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED
31^st JULY 2015

The Directors of JPMorgan Global Emerging Markets Income Trust plc announce the Company's results for the year ended 31^st July 2015.

Chairman's Statement

Performance

The last financial year has been tough, particularly in the second half. For the year ended 31st July 2015 the Company recorded a total return on net assets of -7.8%. This compares with a return on the benchmark index, the MSCI Emerging Markets Index with net dividends reinvested (in sterling), of -6.3%. The total return to shareholders including dividends was -14.4%, as the Company's share price decreased from 122.0p to 100.3p over the financial year. Since year-end the share price has fallen further to new lows.

The facts don't make great reading but they are simple:-

1.  The currencies of these developing economies have depreciated relative to sterling.

2.  Emerging equity markets have fallen.

3.  Investment performance has lagged the benchmark index.

4.  The share price has moved from a premium to the cum income net asset value of +2.3% at 31st July 2014 to a discount of -4.9% at 31st July 2015.

The Investment Managers' Report reviews these issues at some length and explains how they have combined to produce a poor year for shareholders. It is important that I add that the Company's income objective means that the composition of the portfolio is very different to the composition of the benchmark index. This means that the pattern of returns will, in any given period, vary meaningfully from the benchmark index, which the Board understands and accepts. This has been the case in terms of the long term returns for the Company since 1st August 2010, where the compound total return on net assets has been +30.7% compared to the return of the benchmark index of +3.3%.

Revenue and Dividends

The better news is that the Board has been able to maintain the dividend. Gross return for the year amounted to £21.4 million (2014: £17.4 million) and net revenue return £17.0 million (2014: £13.9 million). Net revenue return per ordinary share for the year, calculated on the average number of shares in issue, was 5.85p (2014: 5.41p).

In the current financial year the Board paid three interim dividends of 1.0p per share and has announced the payment of a fourth interim dividend of 1.9p per share. This brings the total dividend for the year to 4.9p, unchanged from last year. The Board continues the approach of paying four interim dividends, reflecting the support we have received from shareholders for a regular and timely income stream.

As shareholders are aware, the Company receives dividends in the currencies of developing countries and US dollars, but pays dividends in sterling. It has not been the Company's policy to hedge currency risk as that is expensive, impracticable in some currencies and considered unnecessary in the longer term. That policy inevitably means that the Company's asset values and cash flows will be buffeted by adverse currency movements and flattered by favourable ones. During the year, the pound strengthened against emerging market currencies which was unhelpful from a total return perspective in sterling terms.

Share Capital

During the year, the Company issued a total of 15.8 million new shares at an average premium to the cum income net asset value of 2.4% to cover issuance expenses. For the year ended 31st July 2015, the impact of share issuances on the NAV has been +0.21p. Since the year end, the Company has not issued any shares.

The Board is seeking shareholder authority at the forthcoming Annual General Meeting to issue up to a further 10% of the Company's issued share capital. The intention is to use this authority to meet demand for the Company's shares when they trade at a premium to net asset value.

Key Performance Indicators ('KPIs')

The Board tracks a series of KPIs. Further details may be found on pages 18 and 19 of the Annual Report and Accounts for the year ended 31^st July 2015. The Board pays particular attention to performance, share price premium or discount to NAV, ongoing charges, income available to pay dividends and the investment risk of the portfolio.

Management and Performance Fees

Following a review of the fee arrangements the Board has agreed with JPMF to remove the performance fee element from its fee arrangements and to change the basis of the management fee from the end of the Company's current financial year, being 31st July 2015.

With effect from 1st August 2015 the Company's fee arrangements comprise only a management fee, which is charged at the rate of 1.0% per annum on the Company's total assets less current liabilities. Loans that are drawn down under a loan facility with an original maturity date of one year or more are not classified as current liabilities for the purposes of the management fee calculation.

Gearing

The Company has recently renewed one of its US$20 million loan facilities with National Australia Bank at its maturity in October 2015. Loans with National Australia Bank total US$40 million. As at 31st July 2015, gearing stood at 6.6%.

Corporate Governance

In accordance with corporate governance best practice, all Directors except Paul Wallace, who will retire from the Board, will seek reappointment at this year's Annual General Meeting. Shareholders who wish to contact the Chairman or other members of the Board may do so through the Company Secretary or the Company's website, details of which appear below. Shareholders are assured that these communications are forwarded to the Chairman accordingly.

Board Changes

Paul Wallace, a Director since the launch of the Company, will retire from the Board on 19th November 2015. I would like to thank Paul for his energy, commitment and insight since - and indeed even before - the Company was launched in 2010.

It is proposed that Caroline Gulliver will assume the role of Audit Committee Chairman. The role of Senior Independent Director will be assumed by Sarah Fromson.

Auditor

During the year the Audit Committee conducted a formal review of audit services. Following a competitive tender process it was resolved to continue with Ernst & Young LLP as the Company's Auditor.

Annual General Meeting

The Annual General Meeting will be held on Thursday, 19th November 2015 at 2.00 p.m. at The Honourable Society of the Inner Temple, Treasury Office, Inner Temple, London EC4Y 7HL. The meeting will include a presentation from the Investment Managers on investment policy and performance. There will also be an opportunity for shareholders to meet the Board and representatives of J.P.Morgan after the meeting. It would be helpful if shareholders seeking answers to detailed questions put them in writing beforehand, addressed to the Company Secretary at JPMorgan Funds Limited, 60 Victoria Embankment, London EC4Y 0JP. Alternatively, questions may be submitted via the Company's website (www.jpmglobalemergingmarketsincome.co.uk) and I am pleased that a number of shareholders took the opportunity to do so last year. Shareholders who are unable to attend the Annual General Meeting in person are encouraged to use their proxy votes. Proxy votes may be lodged electronically, whether shares are held through CREST or in certificate form and full details are set out on the form of proxy.

Continuation Vote

In accordance with the Company's articles of association, an ordinary resolution will be put to shareholders at the forthcoming Annual General Meeting that the Company continue in existence as an investment trust for a further three year period.

The Board believes that the long term outlook for global emerging markets is favourable, despite the current headwinds. Equally, it believes that J.P.Morgan has the resources and process to deliver better results for shareholders. Accordingly, the Board believes that the continuation of the Company is in the best interests of all shareholders and strongly recommends that shareholders vote in favour of the resolution.

Outlook

Shareholders will be disappointed by the Company's performance last year and concerned by the continuing stream of bad news associated with the emerging markets.

The hazards are real and not to be underestimated or downplayed. Low growth in China, abrupt currency adjustments, political tensions, weak commodity prices, capital outflows and the risks of policy error - all these are current and they are ugly. The spectres of weak growth and deflation are especially worrisome. An extended period of low growth - or no growth - in these economies would weigh heavily, but not just on developing markets: developed markets would also suffer.

In the Board's view, however, the prospects for the Company are actually improving. If we look through the negative narrative we see a number of positive factors:-

1.  We have been here before. No two cycles are quite the same but in emerging markets they tend to follow patterns. These markets are volatile - never for the faint-hearted - and have proven time and time again that they can recover after a beating.

2.  Weaker currencies improve economic competitiveness in the medium term and are of real benefit to certain exporting businesses.

3.  These markets now look undervalued. On the basis of the ratio of price to book value, the valuation of these markets is now in the cheapest decile of its historical range. History also suggests that from these levels, subsequent returns have been strongly positive. This is not to say these markets can not get cheaper. They can. But it does suggest that the upside is interesting.

4.  J.P.Morgan is a first class firm with a long and distinguished history of managing money in emerging markets through the cycles. The Board is confident in the Manager's ability to navigate the Company through this latest cycle.

5.  This is becoming a "target-rich" environment. The Managers are now seeing plenty of stocks that trade at attractive valuations with healthy balance sheets and reasonable long term growth prospects.

The Managers sensibly balance opportunities against the risks involved; but they are positioning the portfolio, incrementally, for a recovery in these markets while maintaining the centrality of income generation.

Andrew Hutton

Chairman                                                                                                                                                  

9th October 2015

Investment Managers' Report

Introduction

In the 12 months to 31st July 2015, the Company's return on net assets was -7.8%, while the total return to shareholders was -14.4% including dividends. The return to shareholders was worse than the return on net assets due to the share price moving from a premium to a discount to the Net Asset Value. The Company lagged its benchmark, the MSCI Emerging Markets Index, which was down 6.3% (on a total return (net) basis, in sterling terms). In a challenging year for emerging market profits and dividends, it was comforting that the Company was able to maintain the total dividend. However, it was disappointing that the Company's performance lagged the benchmark. We would have generally expected the portfolio to have performed in a more defensive manner, considering the type of companies we tend to favour from an income perspective. Our performance was dragged down by negative stock selection in China and Taiwan, two key markets for the Company. We describe these challenges in more detail below.

Market review

Emerging market equities had a difficult 12 months, hit by currency weakness, worries over the outlook for Chinese growth and uncertainty over the timing of the first interest rate rise in the US.

Fears over the impact of higher US interest rates were perhaps the biggest influence on emerging market returns. As US interest rates start to rise, international investors would be expected to move some of their capital back to the US and out of higher-yielding, riskier assets like emerging market equities. The impact was felt in weaker stock markets and weaker emerging market currencies, providing an unhelpful environment for emerging market dividends.

Concerns over the outlook for Chinese growth also damaged sentiment. China's government has been implementing policies to rebalance growth away from fixed asset investment and towards consumption, but consistently weaker-than-expected GDP growth has raised concerns that China's economy may not contribute as much to global growth as hoped.

China is the largest constituent of the MSCI Emerging Markets Index and a major trading partner for other emerging markets. Therefore, changes in the outlook for the Chinese economy and Chinese companies had a major impact on expectations for emerging market growth and corporate profits. Chinese growth issues also contributed to another steep fall in commodity prices in the year, which meant that emerging market commodity producers had a particularly tough time. Meanwhile, a precipitous rise in the domestic A share market, followed by a sharp and significant sell-off towards the end of the year under review, caused further nervousness.

Performance review

In a challenging 12 months for emerging market equities, the Company's net asset value underperformed the benchmark, while the share price underperformed to a greater degree. One negative factor contributing to performance was the use of gearing. Gearing, where the Company borrows money to increase its exposure to emerging market equities, would be expected to boost returns when markets rise, but can increase underperformance when markets fall.

The absolute performance of the Company was impacted in particular by weakness in emerging market currencies vs. sterling, as investors positioned themselves for higher US interest rates. Our view is that emerging market currencies are currently at cheap levels, but we are uncertain about when the depreciating trend will come to an end. In an income-producing portfolio, currency weakness presents particular challenges, as the value of the dividends received is reduced when they are converted into sterling.

In terms of country allocations, our underweight exposure and conservative positioning in the Chinese market was the biggest negative contributor to relative performance. The decision to avoid low quality cyclical stocks and property companies was detrimental as the Chinese market was lifted by a sharp upswing in domestic A shares through most of the year under review. However, the correction later in the year helped from a relative performance angle and began to reverse some of the earlier underperformance.

We expect the Chinese market to remain volatile and therefore maintain our cautious positioning. The shift in China's economic model, from investment-led to consumption-led growth, is something that we still believe is happening, but the transition will not be smooth. We have seen short-term policy measures to help growth, including the depreciation of the renminbi in August, and we expect further stimulus ahead.

The Company's underweight position in Korea was the biggest positive contributor from a country allocation perspective, as Korea significantly underperformed the broader market. As an income-focused portfolio, it can be difficult to find attractive dividend stocks in Korea, so we have tended to avoid the market. Nevertheless, the Company did benefit from holdings in three Korean stocks that do meet our investment criteria, offering decent returns, good free cash flow and attractive dividend policies, as these stocks significantly outperformed both Korea and the broader market.

Our positioning in Brazil also contributed positively in an environment of continued political uncertainty and deteriorating economic news. Investors reacted negatively to the re-election of president Dilma Rousseff due to worries over a lack of economic reform. A slump in commodity prices, a slowdown in China, political scandal and disappointing GDP growth all added to downward pressure on Brazilian stocks. In this environment, our Brazilian stock selection was positive. We avoided many of the larger index stocks, which declined significantly, and were rewarded by our focus on mid cap opportunities, which performed better than the market and therefore helped relative performance.

An overweight position in Taiwan detracted from relative performance. We have a large exposure to Taiwan due to its established dividend culture, particularly among the market's large technology sector, where we believe the outlook for long-term return on capital is positive. Taiwan's technology sector struggled in the year under review due to an inventory correction, as global demand for computer equipment, smartphones and semiconductors fell. We see this as a short-term issue and have used share price weakness to add to our positions. The dividend streams from these companies remain strong, which is supportive of our investment case.

Dividends

Despite a particularly tough period for emerging market dividends, the Company has been able to hold its dividend for the financial year. However, emerging market dividends remain under pressure, as emerging market companies struggle to grow their payouts against a challenging growth backdrop, combined with the continued currency weakness against sterling. Even if payout ratios are held steady, company dividends ultimately depend on the company's ability to deliver profits. In a weak environment, as company profits face headwinds, this naturally has a knock-on impact on dividends and warrants caution when thinking about near-term dividend receipts from the Company's holdings.

Portfolio changes

Portfolio changes over the year have been modest. This is consistent with our desire to invest for the long term and benefit from the continued dividend streams from the companies that we invest in.

Sales (whether outright or position size reduction) in the year can generally be divided into three types:

1.  Dividend payout disappointments

An example of this was Industries Qatar, as the payout was lower than expected. Although the payout was still significantly higher than the average emerging market company, we did not like the sudden shift in dividend policy.

2.  Stocks where our fundamental view on dividend sustainability or growth deteriorated relative to other opportunities

For example Perusahaan Gas, an Indonesian utility, where we had concern over potential government interference in gas pricing that could materially affect the company's return on capital.

3.  Stocks where our view on dividends remained positive but valuations had increased to the extent that the stocks looked less attractive

For example South African retailer Foschini, whose share price rose, taking its prospective dividend yield below 3% - a level at which we felt total returns were not attractive enough to hold the stock.

New stocks added to the portfolio include:

Banco Santander Chile: a highly profitable bank with a steady and attractive dividend.

Vanguard: a good example of a Taiwanese technology company that we like, operating in a profitable niche area of semiconductor production, with a strong management team and a firm commitment to paying dividends to shareholders.

China Resources Power: a utility that offers an attractive and relatively stable yield, which we believe can grow over time.

Outlook

Emerging markets may finally be approaching valuation levels that compel long-term investors to reallocate to the asset class. On several measures, emerging market equities appear to be pricing in a much more negative outlook for growth and corporate profits than is perhaps justified. Although emerging markets are slowing, these economies overall are still growing, while today's much more flexible exchange rate regimes should provide greater support.

Nevertheless, the outlook for emerging market profits has become cloudier, and this continues to provide a challenging backdrop for income-seeking investors. In particular, the recent declines in currencies across emerging markets are putting near-term pressure on profit and dividend streams from emerging market companies, from a sterling viewpoint.

Even in this environment, we are still finding many opportunities in stocks with attractive dividend yields. We intend to stick to our philosophy and disciplined approach, looking for dividend-paying stocks with decent profitability, strong cash generation, and clear and understandable dividend policies. Over the long term, we are confident this approach will deliver attractive returns for shareholders.

Richard Titherington

Omar Negyal

Investment Managers                                                                                                                                 

9th October 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 into the following categories:

• Investment Strategy: an inappropriate investment strategy, for example asset allocation or the level of gearing, may lead to underperformance against the Company's benchmark index and peer companies, resulting in the Company's shares trading on a narrower premium or a wider discount. The Board manages these risks by diversification of investments through its 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 Managers, who attend Board meetings, and reviews data which show statistical measures of the Company's risk profile. The Investment Managers employ the Company's gearing strategically, within a range set by the Board.

• Income: insufficient income generation leading to a cut in the dividend. The Board regularly reviews the Company's income statement and receives forecasts prepared by the Manager on future dividends of investments in the portfolio. The Investment Managers monitor continuously the Company's level of income.

• Foreign Currency: the majority of the Company's assets, liabilities and income are denominated in currencies other than sterling (the Company's functional currency and the currency in which it reports). As a result, movements in exchange rates may affect the sterling value of these items. Cash assets are mainly held in US dollars, the currency of the loans held by the Company. Therefore, there is an inherent risk from movements in the exchange rates between US dollars and other currencies. No foreign currency hedging is undertaken and this is kept under review by the Board. Further details about the foreign currency risk may be found in note 22 to the Accounts.

• Going concern: pursuant to the Sharman Report, Boards are now advised to consider going concern as a potential risk, whether or not there is an apparent issue arising in relation thereto. Going concern is considered on an ongoing basis including the continuation vote to be held at the forthcoming AGM and the Board's statement on going concern is detailed in the Annual Report and Accounts.

• Financial: the financial risks faced by the Company include market price risk, interest rate risk, liquidity risk and credit risk. Further details are disclosed in note 22 to the Accounts.

• Accounting, Legal and Regulatory: in order to qualify as an investment trust, the Company must comply with Section 1158 of the Corporation Tax 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 would lose its 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 the Manager and the results reported to the Board each month. The Company must also comply with the provisions of the Companies Act and, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules and the Disclosure & 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, the Manager and its professional advisers to ensure compliance with the Companies Act, the UKLA Listing Rules, DTRs and the Alternative Investment Fund Managers Directive.

Related Party 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.

Each of the Directors, whose names and functions are listed in the Directors' Report, confirms that, to the best of their knowledge:

(a)  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;

(b)  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;

(c)  the Strategic Report and Directors' Report in the Annual Report, to be published shortly, include 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 it faces.

For and on behalf of the Board

Andrew Hutton

Chairman                                                                                                                                                  

9th October 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.

The accounts are published on the www.jpmglobalemergingmarketsincome.co.uk website, which is maintained by the Manager.  The maintenance and integrity of the website maintained by the Manager is, so far as it relates to the Company, the responsibility of the Manager.  The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and, accordingly, the Auditor accepts no responsibility for any changes that have occurred to the accounts since they were initially presented on the website.  The accounts are prepared in accordance with UK legislation, which may differ from legislation in other jurisdictions.

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.

The Board also confirms that it is satisfied that the Strategic Report and Directors' Report include 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 the Company faces.

For and on behalf of the Board

Andrew Hutton 

Chairman

9^th October 2015

Income Statement

for the year ended 31st July 2015

	2015			2014
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Losses on investments held at fair
value through profit or loss	-	(39,147)	(39,147)	-	(9,342)	(9,342)
Net foreign currency (losses)/gains	-	(1,857)	(1,857)	-	2,617	2,617
Income from investments	21,351	-	21,351	17,359	-	17,359
Other interest receivable and similar income	4	-	4	2	-	2
Gross return/(loss)	21,355	(41,004)	(19,649)	17,361	(6,725)	10,636
Management fee	(1,025)	(2,391)	(3,416)	(878)	(2,048)	(2,926)
Other administrative expenses	(799)	-	(799)	(673)	-	(673)
Net return/(loss) on ordinary activities before
finance costs and taxation	19,531	(43,395)	(23,864)	15,810	(8,773)	7,037
Finance costs	(242)	(565)	(807)	(246)	(573)	(819)
Net return/(loss) on ordinary activities
before taxation	19,289	(43,960)	(24,671)	15,564	(9,346)	6,218
Taxation	(2,316)	373	(1,943)	(1,622)	75	(1,547)
Net return/(loss) on ordinary activities
after taxation	16,973	(43,587)	(26,614)	13,942	(9,271)	4,671
Net return/(loss) per share (Note 3)	5.85p	(15.01)p	(9.16)p	5.41p	(3.60)p	1.81p

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

Statement of Total Recognised Gains and Losses

for the year ended 31st July 2015

	2015			2014
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Movement in fair value of the cash flow hedge	-	-	-	-	50	50
Net return/(loss) on ordinary activities	16,973	(43,587)	(26,614)	13,942	(9,271)	4,671
Total recognised gains/(losses) for the year	16,973	(43,587)	(26,614)	13,942	(9,221)	4,721

Reconciliation of Movements in Shareholders' Funds

for the year ended 31st July 2015

	Called up	Capital
	share	redemption	Share	Other	Capital	Revenue
	capital	reserve	premium	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 31st July 2013	2,344	13	148,189	101,276	30,450	6,255	288,527
Issue of Ordinary shares	441	-	51,554	-	-	-	51,995
Expenses of new share issue	-	-	(150)	-	-	-	(150)
Net (loss)/return from ordinary activities	-	-	-	-	(9,271)	13,942	4,671
Movement in fair value of the cash
flow hedge	-	-	-	-	50	-	50
Dividends appropriated in the year	-	-	-	-	-	(12,876)	(12,876)
At 31st July 2014	2,785	13	199,593	101,276	21,229	7,321	332,217
Issue of Ordinary shares	158	-	18,956	-	-	-	19,114
Expenses of new share issue	-	-	(52)	-	-	-	(52)
Net (loss)/return from ordinary activities	-	-	-	-	(43,587)	16,973	(26,614)
Dividends appropriated in the year	-	-	-	-	-	(14,129)	(14,129)
At 31st July 2015	2,943	13	218,497	101,276	(22,358)	10,165	310,536

Balance Sheet

at 31st July 2015

	2015	2014
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	327,817	348,174
Investment in Liquidity Fund held at fair value through profit or loss	2,806	136
	330,623	348,310
Current assets
Debtors	3,476	2,830
Cash and short term deposits	2,400	5,559
	5,876	8,389
Creditors: amounts falling due within one year	(13,145)	(788)
Financial liability: derivative financial instrument	(1)	(1)
Net current (liabilities)/assets	(7,270)	7,600
Total assets less current liabilities	323,353	355,910
Creditors: amounts falling due after more than one year	(12,817)	(23,693)
Net assets	310,536	332,217
Capital and reserves
Called up share capital	2,943	2,785
Capital redemption reserve	13	13
Share premium	218,497	199,593
Other reserve	101,276	101,276
Capital reserves	(22,358)	21,229
Revenue reserve	10,165	7,321
Total equity shareholders' funds	310,536	332,217
Net asset value per share (Note 4)	105.5p	119.3p

Andrew Hutton

Director

Company registration number: 7273382

Cash Flow Statement

for the year ended 31st July 2015

	2015	2014
	£'000	£'000
Net cash inflow from operating activities	14,070	8,860
Returns on investments and servicing of finance
Interest paid	(789)	(873)
Net cash outflow from returns on investments and servicing of finance	(789)	(873)
Taxation
Overseas tax recovered	157	94
Total tax recovered	157	94
Capital expenditure and financial investment
Purchases of investments	(157,982)	(169,587)
Sales of investments	136,017	124,098
Other capital charges	(17)	(37)
Net cash outflow from capital expenditure and financial investment	(21,982)	(45,526)
Dividends paid	(14,129)	(12,876)
Net cash outflow before financing	(22,673)	(50,321)
Financing
Proceeds of issue of Ordinary shares	19,483	52,246
Expenses of new share issue	(52)	(166)
Repayment of bank loans	-	(12,415)
Drawdown of bank loans	-	12,556
Net cash inflow from financing	19,431	52,221
(Decrease)/increase in cash for the year	(3,242)	1,900

Notes to the Financial Statements

for the year ended 31st July 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 AIC 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.

2.   Dividends

      Dividends paid and declared

	2015	2014
	£'000	£'000
2014 Fourth interim dividend paid of 1.90p (2013: 2.10p)	5,324	5,005
First interim dividend paid of 1.00p (2014: 1.00p)	2,919	2,544
Second interim dividend paid of 1.00p (2014: 1.00p)	2,943	2,603
Third interim dividend paid of 1.00p (2014: 1.00p)	2,943	2,724
Total dividends paid in the year	14,129	12,876
Fourth interim dividend declared of 1.90p (2014: 1.90p)	5,592	5,292

The fourth interim dividend declared in respect of the year ended 31st July 2014 amounted to £5,292,000. However, the actual payment amounted to £5,324,000 due to share issuances after the balance sheet date, but prior to the share register Record Date.

3.   Net return/(loss) per share

Return/(loss) per share is based on the following:

	2015	2014
	£'000	£'000
Revenue return	16,973	13,942
Capital loss	(43,587)	(9,271)
Total (loss)/return	(26,614)	4,671
Weighted average number of Ordinary shares in issue during the year	290,335,671	257,623,359
Revenue return per share	5.85p	5.41p
Capital loss per share	(15.01)p	(3.60)p
Total (loss)/return per share	(9.16)p	1.81p

4.   Net asset value per share

The net asset value per share is based on the net assets attributable to the Ordinary shareholders of £310,536,000 (2014: £332,217,000) and on the 294,339,438  (2014: 278,514,438) Ordinary shares outstanding at 31st July 2015.

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 31^st July 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 31^st July 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.jpmglobalemergingmarketsincome.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

 

 

FR FSSFIUFISEES