Half Year Results

RNS Number : 0324T

JPMorgan Indian Invest Trust PLC

29 May 2009

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN INDIAN INVESTMENT TRUST PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 

31ST MARCH 2009

Chairman's Statement 

Performance

For much of the six months under review, the Indian stockmarket, in common with equity markets worldwide, continued to fall. Over the six months to 31st March 2009, your Company saw a decline in net assets of 14.5%, broadly in line with the performance of the Company's benchmark, the MSCI India Index in sterling terms, which fell by 14.1%. The decline in the Company's share price total return matched the return of the benchmark, reflecting a narrowing of the discount from 8.7% to 8.2%. The background against which the Company performed is discussed in more detail in the Investment Managers' Report below.

Discount Management

The Board has guidelines in place with regard to the management of any discount/premium that may develop between the Company's share price and its net asset value per share. The Company currently holds 1,979,788 ordinary shares in treasury and, under current guidelines, these may only be reissued at a premium to the prevailing net asset value at the time of reissue.

Share Capital

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.

Between 2nd January 2009 and 31st March 2009, applications were received to subscribe for 543,920 Ordinary shares and, following these subscriptions, the Company's share capital consisted of 105,555,526 Ordinary shares, including 1,979,788 Ordinary shares held in treasury, and 20,458,017 Subscription shares.

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 on the Company's website at www.jpmindian.co.uk.

Outlook

The Managers remain positive about the prospects for Indian equities over the medium to long term and have been encouraged by what they see as a positive result in the Indian elections. However, over the short term, returns are expected to remain volatile.

Hugh Bolland

Chairman

29th May 2009

Investment Managers' Report

The six months to 31st March 2009 was perhaps the worst period for the global economy in recent memory as a combination of a severe liquidity crunch and inventory reduction led to a sharp deterioration in most economic indicators. Equity markets fell during this volatile period, but they rallied sharply from their lows in early March.

Market Review

the benchmark, the MSCI India Index in sterling terms, fell 14.1% during the review period. Defensives such as consumer staples and utilities outperformed while telecoms, financials and industrials underperformed. Foreigners were net sellers to the tune of US$ 4.9bn while domestic mutual fund flows were marginally positive (US$ 85m).

In November, in an audacious terror attack, gunmen went on a rampage in Mumbai killing around 180 people and targeting important landmarks. This attack increased tensions with Pakistan due to the alleged involvement of terrorist groups based there. While tensions have eased since then, the deteriorating situation in Pakistan remains a concern from the Indian perspective.

In January, in a major corporate governance disaster, the chairman of the New York Stock Exchange listed Satyam Computers confessed to accounting irregularities over several years which left a massive hole (of around US$ 1.2bn) in the company's balance sheet. This caused the stock to plunge and raised corporate governance concerns about corporate India. The company has subsequently been bought by Tech Mahindra (which is part owned by Mahindra & Mahindra and British Telecom). 

GDP for the December quarter grew by 5.3%, more slowly than expected, as compared with 7.7% in the first half of the financial year (April - September). Agriculture surprised negatively, declining over 2%, while growth in the service sector was boosted by the payment of arrears to government employees (as part of the wage revision which happens once in a decade).

Industrial production declined for the first time in over a decade in December to -0.6% year on year (with the latest reading at -1.2% in February). Exports also declined for the fifth consecutive month in February (by 21% year on year). Inflation fell steadily with the latest reading at 0.26% (WPI). As a result, the Reserve Bank of India is expected to continue with the easing bias (having cut policy rates by over 400bps from the peak in mid 2008).

Performance

The Company marginally underperformed its benchmark over the six months under review. The overweight in defensives such as the utilities sector and ITC outperformed. The overweight in the consumer discretionary sector also contributed positively on (admittedly nascent) signs of a recovery in demand. On the other hand, the structural underweight in Reliance Industries and the overweight in HDFC were the key detractors. 

Outlook and Fund Strategy

Equity markets have rallied sharply following the unexpectedly positive election results (with the incumbent United Progressive Alliance (UPA) led by the Congress party returning to power with a strong mandate). The margin of victory means that this government will in all likelihood survive its full term of 5 years, with the well regarded Dr. Manmohan Singh back as the Prime Minister for a second term. In the short term however, markets could consolidate at current levels ahead of the announcement of the new cabinet within the next couple of weeks and the budget in June which will lay out the policy agenda of the government. 

With some preliminary signs of a demand revival, economic activity is expected to trough in the near term (if it hasn't done so already). We are also most likely towards the end of the cycle of downgrades in earnings and GDP growth forecasts. Despite the sharp rally, valuations remain attractive from a long term perspective at around fifteen times consensus 2010 earnings. The strategy remains focused on bottom-up portfolio construction since the massive divergence in stock performance makes stock selection more critical than top-down investing.  

Edward Pulling

Rukhshad Shroff

Rajendra Nair

Investment Managers

29th May 2009

Interim Management Report 

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

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Company fall into six broad categories: market; investment and strategy; accounting, legal and regulatory; corporate governance and shareholder relations; operational; and financial. Information on each of these areas is given in the Business Review within the Annual Report and Accounts for the year ended 30th September 2008.

During the market turmoil in the latter part of 2008, JPMAM reacted with heightened management scrutiny of counterparty risk. In addition, reviews were initiated of exposures, policies, procedures and legal arrangements applicable to the major sources of counterparty exposure.

Related Parties Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company during the period.

Directors' Responsibilities

The Board of Directors confirms that, to the best of its knowledge:

(i)    the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with the Accounting Standards Board's Statement 'Half-Yearly Financial Reports'; and

(ii)    the interim management report includes a fair review of the information required by 4.2.7R and 4.2.8R of the UK Listing Authority Disclosure and Transparency Rules.

Hugh Bolland

Chairman    

For further information, please contact:

Andrew Norman

For and on behalf of

JPMorgan Asset Management (UK) Limited, Secretary

020 7742 6000

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.jpmindian.co.uk

Group Income Statement

for the six months ended 31st March 2009

		(Unaudited) Six months ended 31st March 2009			(Unaudited) Six months ended 31st March 2008			(Audited) Year ended 30th September 2008
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Investment income	945	-	945	754	-	754	3,397	-	3,397
Other income	262	-	262	160	-	160	459	-	459
	1,207	-	1,207	914	-	914	3,856	-	3,856
Losses from investments
held at fair value through
profit or loss	-	(37,095)	(37,095)	-	(50,376)	(50,376)	-	(125,797)	(125,797)
Foreign exchange losses	-	(281)	(281)	-	(270)	(270)	-	(529)	(529)
Total income/(loss)	1,207	(37,376)	(36,169)	914	(50,646)	(49,732)	3,856	(126,326)	(122,470)
Expenses
Management fee	(1,588)	-	(1,588)	(2,921)	-	(2,921)	(5,064)	-	(5,064)
VAT recoverable	-	-	-	-	-	-	734	-	734
Other administrative expenses	(940)	-	(940)	(695)	-	(695)	(1,485)	-	(1,485)
Loss before finance costs  and taxation
	(1,321)	(37,376)	(38,697)	(2,702)	(50,646)	(53,348)	(1,959)	(126,326)	(128,285)
Finance costs	-	-	-	(395)	-	(395)	(396)	-	(396)
Loss before taxation	(1,321)	(37,376)	(38,697)	(3,097)	(50,646)	(53,743)	(2,355)	(126,326)	(128,681)
Taxation	-	-	-	-	-	-	2	-	2
Net loss	(1,321)	(37,376)	(38,697)	(3,097)	(50,646)	(53,743)	(2,353)	(126,326)	(128,679)
Loss per share (note 4)	(1.28)p	(36.24)p	(37.52)p	(2.96)p	(48.44)p	(51.40)p	(2.29)p	(122.78)p	(125.07)p

The 'Total' column of this statement represents the Group's Income Statement, prepared in accordance with IFRS. The supplementary 'Revenue' and 'Capital' columns are prepared under guidance published by the Association of Investment Companies.

All items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period.

All income is attributable to the equity shareholders of JPMorgan Indian Investment Trust plc, the Company. 

There are no minority interests.    

Group Statement of Changes in Equity

Six months ended  31st March 2009 (Unaudited)	Called up  share   capital   £'000	Share   premium   £'000	Other   reserve   £'000	Exercised   warrant   reserve   £'000	Capital   reserves   £'000	Capital  redemption   reserve   £'000	Revenue   reserve   £'000	Total   £'000
Balance as at  30 September 2008	26,188	50,914	41,929	5,886	183,124	6,362	(10,404)	303,999
Shares issued	201	1,628	-	-	-	-	-	1,829
Net loss for the period	-	-	-	-	(37,376)	-	(1,321)	(38,697)
Balance as at  31st March 2009	26,389	52,542	41,929	5,886	145,748	6,362	(11,725)	267,131
Six months ended  31st March 2008 (Unaudited)	Called up  share   capital   £'000	Share   premium   £'000	Other   reserve   £'000	Exercised   warrant   reserve   £'000	Capital   reserves   £'000	Capital   redemption   reserve   £'000	Revenue   reserve   £'000	Total   £'000
Balance as at  30 September 2007	26,202	50,914	41,929	5,886	312,958	6,348	(8,051)	436,186
Purchase of shares into Treasury	-	-	-	-	(3,234)	-	-	(3,234)
Repurchase and cancellation of shares	(14)	-	-	-	(274)	14	-	(274)
Net loss for the period	-	-	-	-	(50,646)	-	(3,097)	(53,743)
Balance as at  31st March 2008	26,188	50,914	41,929	5,886	258,804	6,362	(11,148)	378,935
Six months ended  30th September 2008 (Audited)	Called up  share   capital   £'000	Share   premium   £'000	Other   reserve   £'000	Exercised   warrant   reserve   £'000	Capital   reserves   £'000	Capital   redemption   reserve   £'000	Revenue   reserve   £'000	Total   £'000
Balance as at  30 September 2007	26,202	50,914	41,929	5,886	312,958	6,348	(8,051)	436,186
Purchase of shares into Treasury	-	-	-	-	(3,234)	-	-	(3,234)
Repurchase and cancellation of shares	(14)	-	-	-	(274)	14	-	(274)
Net loss for the year	-	-	-	-	(126,326)	-	(2,353)	(128,679)
Balance as at  30th September 2008	26,188	50,914	41,929	5,886	183,124	6,362	(10,404)	303,999

Group Balance Sheet

	(Unaudited) 31st March 2009 £'000	(Unaudited) 31st March 2008 £'000	(Audited) 30th September 2008 £'000
Non current assets
Investments held at fair value
through profit or loss	261,287	375,695	287,898
Current assets
Other receivables	221	2,083	2,955
Derivative financial instruments	-	2	-
Cash and cash equivalents	7,271	6,040	14,445
	7,492	8,125	17,400
Current liabilities
Other payables	(1,648)	(4,885)	(1,299)
Net current assets	5,844	3,240	16,101
Net assets	267,131	378,935	303,999
Equity attributable to equity holders
Called up share capital	26,389	26,188	26,188
Share premium	52,542	50,914	50,914
Other reserve	41,929	41,929	41,929
Exercised warrant reserve	5,886	5,886	5,886
Capital reserves	145,748	258,804	183,124
Capital redemption reserve	6,362	6,362	6,362
Revenue reserve	(11,725)	(11,148)	(10,404)
Total equity	267,131	378,935	303,999
Net asset value per share (note 5)	257.9p	368.7p	295.8p

Group Cash Flow Statement 

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st March 2009	31st March 2008	30th September 2008
	£'000	£'000	£'000
Operating activities
Loss before taxation	(38,697)	(53,743)	(128,681)
Add back interest paid	-	395	396
Add back losses on investments held at    fair value through profit or loss
	37,095	50,376	125,797
Foreign exchange gains	-	146	144
Net (purchases)/sales of investments held at
fair value through profit or loss	(8,176)	13,177	25,554
Decrease/(increase) in other receivables	738	158	(686)
Increase in amounts due from brokers	-	(1,049)	(1,077)
Increase on other payables	37	180	25
Increase in amounts due to brokers	-	-	959
Net cash (outflow)/inflow from operating  activities before interest payable and taxation
	(9,003)	9,640	22,431
Interest paid	-	(408)	(407)
Tax paid	-	-	(86)
Net cash (outflow)/inflow from  operating activities
	(9,003)	9,232	21,938
Financial activities
Net proceeds from the issue of shares	1,829	-	-
Repurchase of shares	-	(3,507)	(3,508)
Net repayment of short term loans	-	(7,844)	(12,144)
Net cash inflow/(outflow) from financing activities	1,829	(11,351)	(15,652)
(Decrease)/increase in cash and cash equivalents	(7,174)	(2,119)	6,286
Cash and cash equivalents at start of period	14,445	8,159	8,159
Cash and cash equivalents at end of period	7,271	6,040	14,445

Notes to the Group Accounts
for the six months ended 31st March 2009

1.    Principal activity    

The principal activity of the Company is that of an investment trust company within the meaning of Section 842 of the Income 
& Corporation Taxes Act 1988. 

2.    Financial statements

The financial information for the six months ended 31st March 2009 and 2008 has not been audited or reviewed by the Company's auditors.

The financial information contained in these half year accounts does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.

The information for the year ended 30th September 2008 has been extracted from the latest published audited financial statements. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

3.    Accounting polices

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB) and interpretations issued by the International Reporting Interpretations Committee of the IASB (IFRIC).

Where presentational guidance set out in the Statement of Recommended Practice ('the SORP') for investment trusts issued by the Association of Investment Companies in January 2009 is consistent with the requirements of IFRS, the financial statements have been prepared on a basis compliant with the recommendations of the SORP.

The accounting policies applied to these half year accounts are consistent with those applied in the accounts for the year ended 
30th September 2008.

4.    Loss per share

	(Unaudited) Six months ended 31st March 2009 £'000	(Audited) Six months ended 31st March 2008 £'000	(Audited) Year ended 30th September 2008 £'000
Revenue loss	(1,321)	(3,097)	(2,353)
Capital loss	(37,376)	(50,646)	(126,326)
Total loss	(38,697)	(53,743)	(128,679)
Weighted average number of shares in issue
during each period	103,148,191	103,000,182	102,882,855
Revenue loss per share	(1.28)p	(2.96)p	(2.29)p
Capital loss per share	(36.24)p	(48.44)p	(122.78)p
Total loss per share	(37.52)p	(51.40)p	(125.07)p

5.    Net asset value per share        

	(Unaudited) Six months ended 31st March 2009	(Audited) Six months ended 31st March 2008	(Audited) Year ended 30th September 2008
Shareholders funds £'000	267,131	378,935	303,999
Number of shares in issue at each period end
excluding shares held in Treasury	103,575,738	102,769,874	102,769,874
Net asset value per share	257.9p	368.7p	295.8p

6.    Issue of shares during the period

On 5th November 2008 the Company issued 21,001,937 Subscription shares by way of a bonus issue to Qualifying Shareholders on the basis of one Subscription share for every five Ordinary shares held. Each Subscription share confers the right 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 conversion prices have been determined as follows:

    (a)    If exercised between 2nd January 2009 and 2nd January 2010 - 227 pence;

    (b)    If exercised between 3rd January 2010 and 2nd January 2012 - 247 pence; and

    (c)    If exercised between 3rd January 2012 and 2nd January 2014 - 291 pence.

    During the period, shareholders have exercised their right to convert 543,920 Subscription shares into Ordinary shares.

    The Company also issued 361,944 new Ordinary shares on 5th November 2008 through a Placing and Offer for Subscription.

JPMORGAN ASSET MANAGEMENT (UK) LIMITED

www.jpmindian.co.uk

 

END

 

 

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