Final Results

RNS Number : 4331U

JPMorgan Indian Invest Trust PLC

21 December 2011

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN INDIAN INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 30^TH SEPTEMBER 2011

Chairman's Statement

Year Under Review

The year to 30th September 2011 has been a poor one for investors in the Indian stockmarket. Despite the Company again outperforming its benchmark, the MSCI India Index (in sterling terms), which fell by 24.2%, the fall in the diluted net asset value of 20.9% is a disappointing outcome. The return to shareholders was -23.0%, reflecting a widening of the discount, from 7.6% to 10.1%, over the year.

While cautious about the short term prospects for a recovery, our investment managers remain confident about the long term prospects for the Indian market and have maintained the high quality bias within the portfolio that, to some extent, protected returns. For a full review of the year, an examination of the current portfolio and the prospects for the future, please see the Investment Managers' Report below.

Gearing

The Company has a one year floating rate US$50 million loan facility with ING Bank to provide the investment managers with the flexibility to gear the portfolio should it be deemed appropriate. As at the date of this report, the facility is undrawn.

Board of Directors

In my report last year, I detailed the programme of renewal the Board had put in place to refresh its membership. As the first phase of that process, Hugh Sandeman joined the Board on 1st October 2010 and Pierre Dinan retired as a Director at the 2011 Annual General Meeting. More recently, Nimi Patel, a leading corporate lawyer specialising in India, was appointed as a Director on 13th December 2011 and Vijay Joshi will retire as a Director at the January 2012 AGM. Vijay, who has been a Director for more than 16 years, has contributed strongly to the Company's success during that time and we wish him well in his retirement.

During the year, the Nomination Committee carried out evaluations of the Directors, the Chairman, the Board and its Committees. It concluded that all the Directors added significant value to the Company's deliberations. In accordance with corporate governance best practice, Richard Burns, Hugh Sandeman, Peter Sullivan and myself will retire by rotation at this year's Annual General Meeting and, being eligible, offer ourselves for reappointment, while Nimi Patel, our new Director, stands for appointment to the Board. I have no hesitation in recommending the respective reappointments and appointment.

Investment Manager

The Board has reviewed the investment management, secretarial and marketing services provided to the Company by JPMorgan Asset Management (UK) Limited ('JPMAM'). This annual review has included their performance record, management processes, investment style, resources and risk control mechanisms. The Board was satisfied with the results of the review and therefore in the opinion of the Directors, the continuing appointment of JPMAM for the provision of these services, on the terms agreed, is in the best interests of shareholders as a whole. Ted Pulling, one of the Company's co-managers, has recently been appointed as Chief Investment Officer of JF Asset Management in Hong Kong and will be stepping aside as a named manager in the new year.

Share Issues and Repurchases

At the Annual General Meeting in January 2011 shareholders granted the Directors authority to repurchase up to 14.99% of the Company's shares for cancellation or into Treasury. Whilst the Company did not repurchase any shares during the year, your Board believes that such a facility is an important tool in the management of discount volatility and is, therefore, seeking approval from shareholders to renew the authority at the forthcoming Annual General Meeting. Shares repurchased in this way might not be cancelled but rather held in Treasury. Purchases of shares to be held in Treasury will be made in accordance with the Listing Rules of the UK Listing Authority and the Companies (Acquisitions of Own Shares) (Treasury Shares) Regulations 2003 as amended and any reissue from Treasury would be at a premium to NAV.

Shareholders also granted the Directors authority to issue new ordinary shares. At times over recent years, the Company's Ordinary shares have traded at a premium to net asset value ('NAV'), which has enabled the issue of new Ordinary shares at various levels of premia. The Board has established guidelines relating to the issue of shares and if the conditions are met, this authority will be utilised to enhance the Company's NAV per share and therefore benefit existing shareholders. To supplement this authority, the Board proposes to reissue shares from Treasury when appropriate. Issuing shares out of Treasury would be cheaper since this avoids the necessity of the Company paying listing fees to the London Stock Exchange and the UK Listing Authority. The Board will only buy back shares at a discount to their prevailing net asset value, and issue new shares, or reissue Treasury shares, when they trade at a premium to their net asset value, so as not to prejudice remaining shareholders.

Bonus Issue of Subscription Shares

In November 2008, the Company issued 21,001,937 Subscription shares to shareholders on the basis of one Subscription share for every five Ordinary shares previously held. Each Subscription share confers the right (but not the obligation) to subscribe for one Ordinary share on any business day during the period from 2nd January 2009 to 2nd January 2014, after which the rights under the Subscription shares will lapse.

The Company's Ordinary share price has continued to trade above the current exercise price of 247p per Subscription share over the course of the year. Since their issue in November 2008, 13,115,843 Subscription shares (62.5% of those issued) have been converted, raising proceeds of more than £31.1 million. The next step-up in exercise price occurs on 3rd January 2012 when the price rises from 247p to 291p per Subscription share.

Further details of the Subscription shares, including the subscription periods and their respective prices and the bonus cost for the calculation of taxation, can be found in the annual report and on the Company's website at www.jpmindian.co.uk

Annual General Meeting

This year's Annual General Meeting will be held at Trinity House, Tower Hill, London EC3N 4DH at 12.00 noon on Tuesday, 31st January 2012. As in previous years, in addition to the formal part of the meeting, there will be a presentation from a representative of the Manager, who will answer questions on the portfolio and performance. There will also be an opportunity to meet the Board and representatives of JPMorgan.

If you have any detailed or technical questions, it would be helpful if you could raise them in advance with the Company Secretary at Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ. Shareholders who are unable to attend the AGM are encouraged to use their proxy votes.

Hugh Bolland

Chairman

21 December 2011

Investment Managers' Report

The Company's financial year was a brutal one for investors in the Indian stock market.  The outcome for shareholders in JPMorgan Indian was most disappointing, with the diluted return on net assets a negative 20.9%. This moderate outperformance relative to our benchmark provided cold comfort at best. Our report reviews the financial year, analyses the performance and then discusses the outlook as we see it today.

Review

The most consistent headwind buffeting the Indian stock market in 2011 was inflation.  Prices in India are rising by almost 10% year-on-year, mostly due to primary items, namely food and energy, but also as a result of wages which are increasing by 10-20% annually. The Reserve Bank of India has responded to this by raising interest rates 13 times in this monetary cycle, but the effect on inflation, so far, has been muted. The impact on the stock market and on investments in general however, has been much more pronounced. That said, the RBI has indicated that it will pause on the interest rate front and observe how inflation moves in early 2012.

The corruption scandal surrounding the Commonwealth Games in late 2010 was the first of many. Since then, housing in Mumbai, spectrum allocation in telecommunications, mining licences and environmental permits have all been high profile areas of alleged large scale corruption. The populist backlash peaked in the summer of 2011 with the hunger strike staged by the well known activist Anna Hazare. While the government and Mr Hazare may have reconciled, policy remains paralysed. Parliamentary sessions are unproductive and corporates have put investments on hold until clarity improves and approvals are granted. For India, which suffers from a chronic infrastructure deficit, these delays will result in widespread hardship, constrained logistics and embedded inflation.

During the course of the year, all forms of economic data have indicated that the economy is decelerating. GDP growth was expected to be in excess of 8.5%, but the latest official quarterly data reported 7.7% growth and most economists think the economy will grow by less than 7.0% in 2011. Growth in industrial production has dropped to less than 3%. Loan growth is also decelerating, as is demand for cement and steel. Of greater relevance to stock market investors, corporate earnings forecasts have been cut sharply, with the outlook now for 8-14% growth in earnings in fiscal years 2012 and 2013 against previous expectations of 18-22%.

As if domestic problems were not enough, the global environment has been persistently difficult. The European sovereign debt crises, the deceleration of the Chinese economy and ongoing questions about another recession in the US have all weighed heavily on risk appetite. At the time of writing, net foreign selling of Indian equities year-to-date is only slightly negative compared to the US$45 billion inflow in 2009 and 2010. There remains a risk that foreigners continue to reduce their exposure to India.

Performance

The Company's diluted return on net assets was 3.3% ahead of our benchmark over the financial year. The single biggest contribution to this outperformance was the quality bias embedded within the portfolio. Quite simply, we avoided infrastructure concept stocks, highly indebted companies, those with questionable management and also global cyclicals. Stocks with these attributes significantly underperformed the broader stock market. That said, performance would have been better if the portfolio had had even less exposure to the infrastructure sector. Even blue chip stocks supported by large order books and experienced management like Larsen & Toubro, Infrastructure Development Finance and Bharat Heavy Electricals have fallen sharply.

Within the portfolio, some of the best performing stocks were Bharti Airtel, ITC and Bajaj Auto. All three of these are consumer companies. Indeed, while investment has slowed to a standstill in India, consumption has remained robust, especially in the hinterlands. Strong wage growth, higher prices for agricultural products and government subsidies have all put money in the pockets of the Indian consumer. With hindsight, the portfolio should have had even greater exposure to consumer stocks. Within the all important financial sector, our bias towards well managed private sector banks was also beneficial. Stalwarts such as HDFC and HDFC Bank may have fallen 10-15% in 2011, but that was modest in comparison to the decline in the State Bank of India's shares, which the portfolio did not hold, which fell by more than 40%. In addition, the Company largely avoided the property sector, which has materially underperformed this year.

Unfortunately, there is very little one can do to protect investors from currency loss. The Indian rupee has been very weak this year and is now trading on the weak side of 51 versus the US dollar. This is an all time low. The high oil price is aggravating India's chronic fiscal and trade deficits, which stand in sharp contrast to the rest of Asia. There is evidence that the deleveraging of European banks is resulting in credit being withdrawn and assets being sold in India. As foreigners reduce their exposure to India, so too the Indian rupee weakens. But we should not forget that foreign exchange reserves are well above US$300 billion. In our view the currency will eventually stabilise.

Outlook

If this report reads as downbeat, it is because it narrates the past, whereas the outlook is arguably much better. At current levels, the shares of many Indian blue chip companies are trading at attractive levels. The weak Indian Rupee adds to this undervaluation. There are undeniable risks, but at a certain point investors are likely to adopt a longer term attitude.

Earnings forecasts have been cut more aggressively in India than elsewhere in Asia or the emerging market space overall, indicating that much of the pain has already been taken. Consequently, valuations in India are more attractive now, both on an absolute basis and relative to other markets. Margins have been pressured by higher interest rates and raw material inflation. We think these headwinds will abate.

The portfolio is still positioned cautiously, but we are very aware that a potential buying opportunity is in the offing. When appropriate, we expect to deploy our cash and rebuild positions in certain sectors, such as infrastructure and materials and cyclicals.

India's long term growth story remains intact; it is undergoing a painful period at present, but the essentials are still alive - dynamic entrepreneurial management, a young and vibrant population, low penetration of financial services and infrastructure and a huge pool of growing savings waiting to be deployed.

At the end of a most difficult year, we thank our shareholders for their patience and loyalty.

Ted Pulling

Rukhshad Shroff

Raj Nair

Investment Managers

21 December 2011

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 JPMorgan Asset Management (UK) Limited ("JPMAM"). 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 Managers, who attend all Board meetings, and review data which show statistical measures of the Company's risk profile. The Investment Managers employ the Company's gearing, within a strategic range set by the Board.

•     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 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 would 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 and, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules. 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 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 Act and the UKLA Listing Rules.

•     Any change in the taxation legislation or taxation regime applicable to the Mauritian Subsidiary could affect the value of the investments held by the Group, affect the Company's ability to provide returns to Shareholders or alter the post-tax returns to Shareholders. In particular, it is intended that the Mauritian Subsidiary will continue to benefit from the India/Mauritius Double Tax Treaty. Future changes to Mauritian or Indian law or to the India/Mauritius Double Tax Treaty, or the interpretations given to them by the regulatory authorities, could impose additional costs or obligations on the activities of the Mauritian Subsidiary, which in turn may have adverse effects on the performance of the Company. The terms of the India/Mauritius Double Tax Treaty were challenged in India but were upheld by the Supreme Court of India in October 2003. However, more recently, there have been discussions between the Indian and Mauritian authorities with regard to a re-negotiation of the Treaty. Adverse tax consequences would result if the Mauritian Subsidiary ceased to qualify for the benefits under the India/Mauritius Double Tax Treaty (for example, if it were held that the Mauritian Subsidiary was not a resident of Mauritius). There can be no assurance that the Mauritian Subsidiary will continue to qualify for or receive the benefits of the India/Mauritius Double Tax Treaty or that the terms of the India/Mauritius Double Tax Treaty will not be changed. Such an event may require the Mauritian Subsidiary to pay or provide for tax liabilities that would reduce the net asset value of the Ordinary Shares.

•     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.

•     Operational: Loss of key staff by JPMAM, such as the Investment Managers, 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.

•     Financial: The financial risks faced by the Company include market price risk, interest rate risk, liability risk and credit risk.

•     Political and Economic: Adminstrative risks, such as the imposition of restrictions on the free movement of capital.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements 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 are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and Article 4 of the IAS Regulation and have also chosen to prepare the Parent Company financial statements under IFRS as adopted by the EU. Under company law the Directors must not approve the accounts 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, International Accounting Standard 1 requires that the Directors:

•     properly select and apply accounting policies;

•     present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

•     provide additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

•     make an assessment of the Company's ability to continue as a going concern.

The Directors are responsible for keeping adequate 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 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.jpmindian.co.uk website, which is maintained by the Company's Manager, JPMorgan 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. The work carried out by the auditors does not involve consideration of the maintenance and integrity of this website and, accordingly, the auditors accept 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.

Responsibility statement

We confirm that to the best of our knowledge:

•     the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

•     the management report, which is incorporated into the Directors' Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

For and on behalf of the Board

Hugh Bolland

Chairman

21 December 2011

Group Income Statement

for the year ended 30th September 2011

		2011			2010
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Investment income		7,145	-	7,145	6,249	-	6,249
Other income		56	-	56	24	-	24
(Losses)/gains on investments held at fair value through profit or loss		-	(129,005)	(129,005)	-	152,711	152,711
Foreign exchange losses		-	(26)	(26)	-	(351)	(351)
Total income/(loss)		7,201	(129,031)	(121,830)	6,273	152,360	158,633
Management fee		(6,725)	-	(6,725)	(5,866)	-	(5,866)
Other administrative expenses		(1,533)	-	(1,533)	(1,615)	-	(1,615)
(Loss)/profit before finance costs and taxation		(1,057)	(129,031)	(130,088)	(1,208)	152,360	151,152
Finance costs		(508)	-	(508)	(312)	-	(312)
(Loss)/profit before taxation		(1,565)	(129,031)	(130,596)	(1,520)	152,360	150,840
Taxation		-	-	-	(172)	-	(172)
Net (loss)/profit		(1,565)	(129,031)	(130,596)	(1,692)	152,360	150,668
(Loss)/earnings per Ordinary share - undiluted (Note 3)		(1.36)p	(112.20)p	(113.56)p	(1.51)p	136.19p	134.68p
(Loss)/earnings per Ordinary share - diluted (Note 3)		(1.32)p	(108.85)p	(110.17)p	(1.46)p	131.66p	130.20p

The Group does not have any income or expense that is not included in the net profit for the year. Accordingly the 'Net (loss)/profit' for the year, is also the 'Total comprehensive income' for the year, as defined in IAS1 (revised) and no separate Statement of Comprehensive Income has been presented.

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 represents the Group's Income Statement, prepared in accordance with IFRS. The 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies and Venture Capital Trusts.

All income is attributable to the equity shareholders of JPMorgan Indian Investment Trust plc, the Company. There are no non-controlling interests.

Group and Company Statements of Changes in Equity

for the year ended 30th September 2011

	Group 2011
	Called up			Exercised		Capital
	share	Share	Other	warrant	Capital	redemption	Revenue
	capital	premium	reserve	reserve	reserves	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2010	29,051	72,861	41,929	5,886	456,651	6,362	(12,904)	599,836
Exercise of Subscription shares into Ordinary shares	(18)	18	-	-	-	-	-	-
Issue of Ordinary shares on conversion of Subscription shares	453	4,024	-	-	-	-	-	4,477
Loss for the year	-	-	-	-	(129,031)	-	(1,565)	(130,596)
At 30th September 2011	29,486	76,903	41,929	5,886	327,620	6,362	(14,469)	473,717

	Group 2010
	Called up			Exercised		Capital
	share	Share	Other	warrant	Capital	redemption	Revenue
	capital	premium	reserve	reserve	reserves	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2009	27,195	57,007	41,929	5,886	304,291	6,362	(11,212)	431,458
Exercise of Subscription shares into Ordinary shares	(77)	77	-	-	-	-	-	-
Issue of Ordinary shares on conversion of Subscription shares	1,933	15,777	-	-	-	-	-	17,710
Profit/(loss) for the year	-	-	-	-	152,360	-	(1,692)	150,668
At 30th September 2010	29,051	72,861	41,929	5,886	456,651	6,362	(12,904)	599,836

Group and Company Statements of Changes in Equity

for the year ended 30th September 2011

	Company 2011
	Called up			Exercised		Capital
	share	Share	Other	warrant	Capital	redemption	Revenue
	capital	premium	reserve	reserve	reserves	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2010	29,051	72,861	41,929	5,886	462,446	6,362	(18,699)	599,836
Exercise of Subscription shares into Ordinary shares	(18)	18	-	-	-	-	-	-
Issue of Ordinary shares on conversion of Subscription shares	453	4,024	-	-	-	-	-	4,477
Loss for the year	-	-	-	-	(129,957)	-	(639)	(130,596)
At 30th September 2011	29,486	76,903	41,929	5,886	332,489	6,362	(19,338)	473,717

	Company 2010
	Called up			Exercised		Capital
	share	Share	Other	warrant	Capital	redemption	Revenue
	capital	premium	reserve	reserve	reserves	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2009	27,195	57,007	41,929	5,886	308,276	6,362	(15,197)	431,458
Exercise of Subscription shares into Ordinary shares	(77)	77	-	-	-	-	-	-
Issue of Ordinary shares on conversion of Subscription shares	1,933	15,777	-	-	-	-	-	17,710
Profit/(loss) for the year	-	-	-	-	154,170	-	(3,502)	150,668
At 30th September 2010	29,051	72,861	41,929	5,886	462,446	6,362	(18,699)	599,836

Group and Company Balance Sheets

at 30th September 2011

		Group	Group	Company	Company
		2011	2010	2011	2010
		£'000	£'000	£'000	£'000
Non current assets
Investments held at fair value through profit or loss		460,324	594,834	468,493	598,467
Current assets
Other receivables		1,946	4,960	21	17
Cash and cash equivalents		11,768	4,195	5,302	1,493
		13,714	9,155	5,323	1,510
Current liabilities
Other payables		(321)	(4,153)	(99)	(141)
Net current assets		13,393	5,002	5,224	1,369
Total assets less current liabilities		473,717	599,836	473,717	599,836
Net assets		473,717	599,836	473,717	599,836
Equity attributable to equity holders
Called up share capital		29,486	29,051	29,486	29,051
Share premium		76,903	72,861	76,903	72,861
Other reserve		41,929	41,929	41,929	41,929
Exercised warrant reserve		5,886	5,886	5,886	5,886
Capital reserves		327,620	456,651	332,489	462,446
Capital redemption reserve		6,362	6,362	6,362	6,362
Revenue reserve		(14,469)	(12,904)	(19,338)	(18,699)
Total equity shareholders' funds		473,717	599,836	473,717	599,836
Net asset value per Ordinary share - undiluted (Note 4)		409.7p	527.0p	409.7p	527.0p
Net asset value per Ordinary share - diluted Note 4)		398.7p	504.0p	398.7p	504.0p

Peter Sullivan

Director

Company registration number: 2915926

Group and Company Cash Flow Statements

for the year ended 30th September 2011

	Group	Group	Company	Company
	2011	2010	2011	2010
	£'000	£'000	£'000	£'000
Operating activities
(Loss)/profit before taxation	(130,596)	150,840	(130,596)	170,667
Add back interest	508	312	-	1
Add back losses/(gains) on investments held at fair value through profit or loss	129,005	(152,711)	129,966	(174,279)
Unrealised foreign exchange losses	-	9	-	-
Net sales/(purchases) of investments held at fair value through profit or loss	5,505	(11,747)	6	6,009
Gifted money to Subsidiary Company	-	-	-	(20,000)
(Increase)/decrease in prepayments, VAT and other receivables	(63)	20	(3)	(7)
Decrease/(increase) in amounts due from brokers	3,077	(3,319)	-	-
(Decrease)/increase in other payables	(96)	123	(41)	34
(Decrease)/increase in amounts due to brokers	(3,599)	1,699	-	-
Net cash inflow/(outflow) from operating activities before interest and taxation	3,741	(14,774)	(668)	(17,575)
Interest paid	(508)	(312)	-	(1)
Taxation paid	(137)	(36)	-	(1)
Net cash inflow/(outflow) from operating activities	3,096	(15,122)	(668)	(17,577)
Financing activities
Net proceeds from the issue of Ordinary shares	4,477	17,710	4,477	17,710
Net cash inflow from financing activities	4,477	17,710	4,477	17,710
Increase in cash and cash equivalents	7,573	2,588	3,809	133
Cash and cash equivalents at the start of the year	4,195	1,607	1,493	1,360
Cash and cash equivalents at the end of the year	11,768	4,195	5,302	1,493

Notes to the Accounts

for the year ended 30th September 2011

1.   Principal activity

      The principal activity of the Company is that of an investment holding company within the meaning of Section 1158 of the Corporation Tax Act 2010. The principal activity of its Subsidiary Company, JPMorgan Indian Investment Company (Mauritius) Limited, is that of an investment company.

2.   Accounting policies

(a)  Basis of accounting

      The Group and Company financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS'), which comprise standards and interpretations approved by the International Accounting Standards Board ('IASB'), the International Accounting Standards and Standing Interpretations Committee and interpretations approved by the International Accounting Standards Committee ('IASC') that remain in effect and to the extent that they have been adopted by the European Union.

      The accounts have been prepared on the going concern basis. The disclosures on going concern in the Directors' Report in the annual accounts form part of these financial statements. The principal accounting policies adopted are set out below. Where presentational guidance set out in 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 is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.

      The policies applied in these accounts are consistent with those applied in the preceding year. In November 2009, the IASB issued IFRS 9, 'Financial Instruments', effective for periods beginning on or after 1st January 2013. Early adoption is currently not permitted. This is the first instalment of a phased replacement of the existing standard IAS 39, 'Financial Instruments'. This standard may be relevant to the Group and Company financial statements and the Board is currently assessing any impact.

      The Company's share capital is denominated in sterling and this is the currency in which its shareholders operate and expenses are generally paid. The Directors have therefore determined the functional currency to be sterling.

		Group
		2011	2010
		£'000	£'000
3.	(Loss)/earnings per Ordinary share
	(Loss)/earnings per Ordinary share is based on the following:
	Revenue loss	(1,565)	(1,692)
	Capital (loss)/return	(129,031)	152,360
	Total (loss)/return	(130,596)	150,668
	Weighted average number of Ordinary shares in issue during the year used for the purpose of the undiluted calculation	114,998,087	111,875,619
	Weighted average number of Ordinary shares in issue during the year used for the purpose of the diluted calculation	118,541,866	115,720,226
	Undiluted
	Revenue loss per share	(1.36)p	(1.51)p
	Capital (loss)/return per share	(112.20)p	136.19p
	Total (loss)/return per share	(113.56)p	134.68p
	Diluted
	Revenue loss per share	(1.32)p	(1.46)p
	Capital (loss)/return per share	(108.85)p	131.66p
	Total (loss)/return per share	(110.17)p	130.20p

      The diluted (loss)/earnings per Ordinary share represents the (loss)/earnings on ordinary activities after taxation divided by the weighted average number of Ordinary shares in issue during the year as adjusted in accordance with the requirements of IAS 33, 'Earnings per Share'.

		2011	2010
4.	Net asset value per Ordinary share
	Undiluted
	Ordinary shareholders funds (£'000)	473,717	599,836
	Number of Ordinary shares in issue excluding shares held in Treasury	115,625,322	113,812,663
	Net asset value per Ordinary share (pence)	409.7	527.0
	Diluted
	Ordinary shareholders funds assuming exercise of Subscription shares (£'000)	494,486	625,082
	Number of potential Ordinary shares in issue excluding shares held in Treasury	124,033,755	124,033,755
	Net asset value per Ordinary share (pence)	398.7	504.0

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

5. Status of preliminary announcement

2010 Financial Information

The figures and financial information for 2010 are extracted from the published Annual Report and Accounts for the year ended 30th September 2010 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.

2011 Financial Information

            The figures and financial information for 2011 are extracted from the Annual Report and Accounts for the year ended 30th September 2011 and do not constitute the statutory accounts for the 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.

Annual Report and Accounts

The Annual Report and Accounts will be posted to shareholders on or around  29th December 2011 and will shortly be available on the Company's website (www.jpmindian.co.uk ) or in hard copy format from the Company's Registered Office, Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ.

JPMORGAN ASSET MANAGEMENT (UK) LIMITED

 

END

 

 

FR DKDDKNBDDOBB