Half Yearly Report

RNS Number : 2099H

JPMorgan Indian Invest Trust PLC

24 May 2011

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN INDIAN INVESTMENT TRUST PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED

31ST MARCH 2011

Chairman's Statement

Performance

The six months to 31st March 2011 have seen a modest decline in the Indian stockmarket. Over this period, your Company saw a decrease in diluted net assets of 4.1%, slightly outperforming the return of the Company's benchmark, the MSCI India Index (in sterling terms), which fell by 4.7%. On an undiluted basis, the Company returned -4.7%. The Company's share price total return was -4.9%, reflecting the widening of the discount from 7.6% to 8.4%. The background against which the Company performed is discussed in more detail in 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 circumstances permit. As at the date of this report, the facility is undrawn.

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.

The Company's Ordinary share price has remained comfortably above the current exercise price of 247p per Subscription share during the period under review. As at the date of this report, 12,231,673 of the original 21,001,937 Subscription shares (58.2%) have been converted, raising proceeds of £27.9 million.

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

Outlook

Our Managers remain positive about the prospects for Indian equities over the medium to long term, but over the short term returns are expected to remain volatile.

Hugh Bolland

Chairman 24th May 2011

Investment Managers' Report

The six months ended 31st March 2011 was a volatile period for the Indian stock market, but eventually resulted in only a modest decline for our benchmark, the MSCI India. In light of the many factors weighing on sentiment, the decline was understandable. Happily, your Company's NAV managed to outperform the benchmark.

The final quarter of 2010 was a difficult period for India politically. Corruption scandals relating to telecommunications, the Commonwealth Games, property in Mumbai and the allocation of land and mining licenses, brought legislative activity to a near standstill. Certainly, the Winter Session of the Indian Parliament was the least productive such gathering in two decades. At times it seemed that the Congress led government might fall. Prime Minister Singh engineered a mini cabinet reshuffle and instituted some anti-corruption initiatives, but the strength of his government has diminished. The budget in February 2011 was a non-event, in contrast to the 2010 Budget which triggered a market rally.

Another major factor weighing on sentiment has been stubbornly high inflation. Despite repeated increases in interest rates and reserve requirements and some administrative measures, inflation in India remains well above the Reserve Bank's comfort zone of 3-7%. Even more worrisome, inflation is no longer simply a function of food prices. With oil well above US$ 100 per barrel, wages growing in excess of 10% and raw material prices elevated, inflation is now appearing in the manufacturing sector also. We expect more monetary tightening measures from the Reserve Bank and we expect inflation to impact corporate margins.

The rate of economic growth is also decelerating. GDP growth was hovering just below 9% in mid 2010, but now it is at 8% and likely to trend lower. Growth in industrial production has been noticeably sluggish in the 3-5% per annum range. Demand for steel and cement is growing at a disappointing pace. That the demand for loans is still increasing at 20% or more year-on-year indicates that the service/consumption sectors of the Indian economy are still very robust. On the other hand, the demand for capital from the infrastructure and heavy industry sectors has been anaemic. We believe one explanation relates to the near paralysis in government decision making in the wake of the corruption scandals mentioned above.

Foreign investment in equities reached a peak in late 2010 coinciding with the initial public offering of Coal India, the largest coal company in the world by reserves and India's largest IPO. In 2010, foreigners purchased nearly net $30 billion of Indian equities. Local institutional investors consistently sold Indian equities in 2010. The roles reversed in the first quarter of 2011.

Corporate India delivered six months of apparently strong earnings, although the 20% growth rate was helped by a variety of factors, some unpredictable and some anomalous. For example, the international operations of Tata Motors and Tata Steel enjoyed phoenix-like recoveries from the depths of the global financial crisis. That said, a few of our portfolio stalwarts, such as HDFC Bank and ITC, continue to regularly register 20-30% growth. Our outlook for overall earnings is cautious. We expect aggregate earnings forecasts to be reduced as the effects of inflation become evident.

It is worth noting that all the difficulties discussed above were already widely anticipated and somewhat discounted. The long term Price/Earnings Ratio multiple of the Indian stock market is in the 14.5-15 times range. Assuming some cuts to the March 2012 earnings per share forecast, the market is trading just above this range. Investors can still build a portfolio of attractively priced stocks with structurally strong growth prospects.

The Company's NAV slightly outperformed the benchmark during the period under review. This was primarily a result of avoiding lower quality companies in the property, infrastructure and telecom sectors which struggled due to investigations, project delays and/or rising interest rates. We still have some work to do to extract ourselves from the performance problems we encountered in 2009, but at least progress has been made.

Looking ahead, we expect the market to resume its upward trajectory later in 2011. Once a few more quarters of solid earnings growth are digested, the market will start to look attractive in valuation terms. We fully accept that there are plenty of external concerns - oil prices, European sovereign debt worries, America's deficit. Long term perspective and informed stock picking have delivered strong returns in India and we expect that to continue.

Ted Pulling

Raj Nair

Rukhshad Shroff

Investment Managers 24th May 2011

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 the following broad categories: 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 2010.

Related Party 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.

Going Concern

The Directors believe, having considered the Company's investment objective, risk management policies, capital management policies and procedures, nature of the portfolio and expenditure projections, that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future. For these reasons, they consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts.

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 24th May 2011

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 2011

	(Unaudited)			(Unaudited)			(Audited)
	Six months ended			Six months ended			Year ended
	31st March 2011			31st March 2010			30th September 2010
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Investment income	1,627	—	1,627	1,128	—	1,128	6,249	—	6,249
Other income	21	—	21	8	—	8	24	—	24
(Losses)/gains on investments
held at fair value through profit or loss	—	(22,673)	(22,673)	—	90,238	90,238	—	152,711	152,711
Foreign exchange gains/(losses)	—	94	94	—	(108)	(108)	—	(351)	(351)
Total income/(loss)	1,648	(22,579)	(20,931)	1,136	90,130	91,266	6,273	152,360	158,633
Management fee	(3,474)	—	(3,474)	(2,671)	—	(2,671)	(5,866)	—	(5,866)
Other administrative expenses	(705)	—	(705)	(754)	—	(754)	(1,615)	—	(1,615)
(Loss)/profit before finance costs and taxation	(2,531)	(22,579)	(25,110)	(2,289)	90,130	87,841	(1,208)	152,360	151,152
Finance costs	(326)	—	(326)	(105)	—	(105)	(312)	—	(312)
(Loss)/profit before taxation	(2,857)	(22,579)	(25,436)	(2,394)	90,130	87,736	(1,520)	152,360	150,840
Taxation	—	—	—	(35)	—	(35)	(172)	—	(172)
Net (loss)/profit	(2,857)	(22,579)	(25,436)	(2,429)	90,130	87,701	(1,692)	152,360	150,668
(Loss)/earnings per Ordinary share (note 4)
– undiluted	(2.49)p	(19.70)p	(22.19)p	(2.21)p	81.83p	79.62p	(1.51)p	136.19p	134.68p
– diluted	(2.41)p	(19.02)p	(21.43)p	(2.13)p	79.14p	77.01p	(1.46)p	131.66p	130.20p

The Group does not have any income or expense that is not included in net (loss)/profit for the period. Accordingly the 'Net (loss)/profit for the period' is also the 'Total comprehensive income for the period', as defined in IAS 1 (revised) and no separate Statement of Comprehensive Income has been presented.

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 of the (loss)/profit and total comprehensive 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

	Called up			Exercised		Capital
Six months ended	share	Share	Other	warrant	Capital	redemption	Revenue
31st March 2011	capital	premium	reserve	reserve	reserves	reserve	reserve	Total
(Unaudited)	£'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	(12)	12	-	-	-	-	-	-
Issue of Ordinary shares on
conversion of Subscription
shares	296	2,629	-	-	-	-	-	2,925
Net loss for the period	-	-	-	-	(22,579)	-	(2,857)	(25,436)
At 31st March 2011	29,335	75,502	41,929	5,886	434,072	6,362	(15,761)	577,325

	Called up			Exercised		Capital
Six months ended	share	Share	Other	warrant	Capital	redemption	Revenue
31st March 2010	capital	premium	reserve	reserve	reserves	reserve	reserve	Total
(Unaudited)	£'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	(71)	71	-	-	-	-	-	-
Issue of Ordinary shares on
conversion of Subscription shares	1,779	14,417	-	-	-	-	-	16,196
Net profit/(loss) for the period	-	-	-	-	90,130	-	(2,429)	87,701
At 31st March 2010	28,903	71,495	41,929	5,886	394,421	6,362	(13,641)	535,355

	Called up			Exercised		Capital
Year ended	share	Share	Other	warrant	Capital	redemption	Revenue
30th September 2010	capital	premium	reserve	reserve	reserves	reserve	reserve	Total
(Audited)	£'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
Net 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 Balance Sheet

at 31st March 2011

	(Unaudited)	(Unaudited)	(Audited)
	31st March 2011	31st March 2010	30th September 2010
	£'000	£'000	£'000
Non current assets
Investments held at fair value through profit or loss	561,746	532,410	594,834
Current assets
Other receivables	286	185	4,960
Cash and cash equivalents	15,663	3,131	4,195
	15,949	3,316	9,155
Current liabilities
Other payables	(370)	(371)	(4,153)
Net current assets	15,579	2,945	5,002
Net assets	577,325	535,355	599,836

Equity attributable to equity holders
Called up share capital	29,335	28,903	29,051
Share premium	75,502	71,495	72,861
Other reserve	41,929	41,929	41,929
Exercised warrant reserve	5,886	5,886	5,886
Capital reserves	434,072	394,421	456,651
Capital redemption reserve	6,362	6,362	6,362
Revenue reserve	(15,761)	(13,641)	(12,904)
Total equity	577,325	535,355	599,836
Net asset value per Ordinary share (note 5)
- undiluted	502.0p	472.9p	527.0p
- diluted	483.5p	453.2p	504.0p

Group Cash Flow Statement

for the six months ended 31st March 2011

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st March 2011	31st March 2010	30th September 2010
	£'000	£'000	£'000
Operating activities
(Loss)/profit before taxation	(25,436)	87,736	150,840
Add back interest paid	326	105	312
Add back losses/(gains) on investments held at fair
value through profit or loss	22,673	(90,238)	(152,711)
Unrealised foreign exchange losses	-	9	9
Net purchases of investments held at fair value
through profit or loss	10,415	(11,798)	(11,747)
(Increase)/decrease in other receivables	(149)	(27)	20
Decrease/(increase) in amounts due from brokers	4,823	1,504	(3,319)
(Decrease)/increase in other payables	(175)	78	123
(Decrease)/increase in amounts due to brokers	(3,471)	(1,900)	1,699
Net cash inflow/(outflow) from operating activities
before interest payable and taxation	9,006	(14,531)	(14,774)
Interest paid	(326)	(106)	(312)
Tax paid	(137)	(35)	(36)
Net cash inflow/(outflow) from operating activities	8,543	(14,672)	(15,122)
Financing activities
Net proceeds from the issue of shares	2,925	16,196	17,710
Net cash inflow from financing activities	2,925	16,196	17,710
Increase in cash and cash equivalents	11,468	1,524	2,588
Cash and cash equivalents at the start of the period	4,195	1,607	1,607
Cash and cash equivalents at the end of the period	15,663	3,131	4,195

Notes to the Group Accounts

for the six months ended 31st March 2011

1. Principal activity

The principal activity of the Company is that of an investment trust company within the meaning of Section 1158 of the Corporation Tax Act 2010 (formerly Section 842 of the Income and Corporation Taxes Act 1988).

2. Financial statements

The financial information for the six months ended 31st March 2011 and 2010 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 2010 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 policies

The 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 to the extent that they have been adopted by the European Union.

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 2010.

4. (Loss)/earnings per Ordinary share

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st March 2011	31st March 2010	30th September 2010
	£'000	£'000	£'000
(Loss)/earnings per share is based on the following:
Revenue loss	(2,857)	(2,429)	(1,692)
Capital (loss)/profit	(22,579)	90,130	152,360
Total (loss)/profit	(25,436)	87,701	150,668
Weighted average number of Ordinary shares in issue during
the period used for the purpose of undiluted calculation	114,623,396	110,147,348	111,875,619
Weighted average number of Ordinary shares in issue during
the period used for the purpose of diluted calculation	118,687,611	113,887,734	115,720,226
Undiluted
Revenue loss per share	(2.49)p	(2.21)p	(1.51)p
Capital (loss)/profit per share	(19.70)p	81.83p	136.19p
Total (loss)/profit per share	(22.19)p	79.62p	134.68p
Diluted
Revenue loss per share	(2.41)p	(2.13)p	(1.46)p
Capital (loss)/profit per share	(19.02)p	79.14p	131.66p
Total (loss)/profit per share	(21.43)p	77.01p	130.20p

5. Net asset value per Ordinary share

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st March 2011	31st March 2010	30th September 2010
Undiluted
Ordinary shareholders' funds £'000	577,325	535,355	599,836
Number of Ordinary shares in issue	114,997,059	113,199,823	113,812,663
Net asset value per Ordinary share (pence)	502.0	472.9	527.0
Diluted
Ordinary shareholders' funds assuming exercise of Subscription shares £'000
	599,645	562,114	625,082
Number of potential Ordinary shares in issue	124,033,755	124,033,755	124,033,755
Net asset value per Ordinary share (pence)	483.5	453.2	504.0