Final Results
JPMorgan Fleming Japanese IT PLC
15 November 2006
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN FLEMING JAPANESE INVESTMENT TRUST PLC
FINAL RESULTS
Investment Performance
The strong performance of the Japanese economy over the latter months of 2005
and the early part of 2006 continued into the second half of the Company's
financial year. However, rather disappointingly, this strength was not reflected
in either the performance of the main Japanese markets, or the returns generated
for shareholders. Over the year to 30th September 2006 the Company produced a
total return on net assets of 2.0%, underperforming the total return of its
benchmark, the TOPIX Index, of 4.8%. The return to shareholders was a negative
3.2% as the discount on the shares widened from 3.1% to 7.7% at the end of the
financial year.
Revenue and Dividends
Net revenue after taxation for the year was £6,692,000 (2005: £5,112,000) and
earnings per share were 3.60p (2005: 2.75p). The change in accounting policy
made in 2003 regarding the allocation of the Company's expenses, together with
the strong growth in investment income witnessed in recent years, has meant that
the revenue reserve deficit that the Company had built up over the course of its
existence has been substantially reduced. In the absence of any unforeseen
circumstances, and as long as normal market conditions prevail, it appears
likely that the Company will be in a position to pay a dividend in respect of
the current financial year to September 2007.
Accounting Standards
Following the introduction of new financial reporting standards in 2005 there
have been a number of amendments this year to the accounting policies of the
Company. The main difference to prior years is the valuation of investments at
'fair value', which in this case means bid price instead of last trade price.
The move from bid price to mid price has necessitated the adjustment of the
Company's return on net assets. This is in line with investment trust practice.
Board of Directors
During the year, the Board carried out an evaluation of the Directors, the
Chairman, the Board's operations and its Committees. Three Directors are seeking
election or re-election at this year's Annual General Meeting. In accordance
with the Company's Articles of Association, Alan Barber, who was appointed to
the Board on 9th February 2006, retires and seeks election. The Director
retiring by rotation is David Pearson, who being eligible, offers himself for
re-election. In addition, I, having served as a Director for in excess of nine
years, therefore also retire and will seek re-election. The Board does not
believe that length of service in itself should disqualify a Director from
seeking re-election and, in proposing my re-election, it has taken into account
the ongoing requirements of the Combined Code, including the need to refresh the
Board and its Committees. Both Alan and David have proved invaluable in the
Board's deliberations and I have no hesitation in recommending their election
and re election respectively.
Investment Manager
The Company's objective is to provide shareholders with capital growth from a
portfolio of investments in Japanese companies. Your Board has reviewed the
capabilities of the Investment Manager in order to assess whether JPMorgan Asset
Management (UK) Limited remains the most appropriate manager of the Company's
assets.
Authority to Repurchase the Company's Shares
At last year's AGM, shareholders granted the Directors authority to repurchase
up to 14.99% of the company's shares for cancellation. Whilst the Company only
repurchased 0.15% of the Company's issued share capital (280,000 shares) for
cancellation during the year, the Directors believe that the power to buyback
shares is of benefit to shareholders. It is therefore proposed that the
authority be renewed for a further period.
Change of Company Name
In the light of the change of the Manager's name from J.P. Morgan Fleming Asset
Management (UK) Limited to JPMorgan Asset Management (UK) Limited on 3rd May
2005, the Board considers that there are advantages to changing the Company's
name to JPMorgan Japanese Investment Trust plc. The Board will therefore propose
a resolution to change the Company's name at the forthcoming Annual General
Meeting. None of the costs relating to this change will fall on shareholders.
Annual General Meeting
This year's Annual General Meeting will be held at The Library, JPMorgan's
offices, 6o Victoria Embankment, London EC4Y 0JP on Tuesday 19th December 2oo6
at 2.00 p.m.
Prospects
Japan benefited from three years of strong stock market gains from 2003 to 2005,
but in 2006 its performance has been much weaker. This has now left the stock
market looking more reasonably valued again - trading on broadly comparable
valuations to the United States equity market and by historical comparison a
more modest premium to European markets - despite a much lower cost of capital
for companies in Japan. The listed corporate sector from which the manager has
to choose investments is delivering a higher return-on-equity for shareholders
than at any time in the post-war period, and the companies are also implementing
both higher dividend pay-outs and share buy-backs to enhance shareholder
returns. Overall, this gives a relatively benign background in which to invest
in Japanese equities, particularly if earnings growth can be maintained. There
will though be challenges over the next year coming from a variety of sources:
the global economy which is adjusting to a slower path of growth than in the
last three years, consumption in Japan which has yet to respond to tighter
labour markets as companies hold down wages and from the demographic changes now
affecting the Japanese population. In 2006 geo-political problems in the middle
east and elsewhere have been much more frequent and it seems this trend may
continue for the foreseeable future. However, the Board remains confident that
out of the significant - and growing - universe of listed Japanese companies,
there are many that are creating shareholder value which can be included in a
portfolio dedicated to investing in Japan, thus hopefully providing most
satisfactory returns to shareholders for the future.
Jeremy Paulson-Ellis
Chairman
15th November 2006
For further information, please contact:
Andrew Norman
For and on behalf of
JPMorgan Asset Management (UK) Limited - Secretary
020 7742 6000
JPMorgan Fleming Japanese Investment Trust plc
Unaudited figures for the year ended 30th September 2006
Income Statement
for the year ended 30th September 2006
2006 2005
Revenue Capital Total Revenue Capital Total
return return return return return return
£'000 £'000 £'000 £'000 £'000 £'000
Gains from investments held at fair value
through profit or loss - 5,897 5,897 - 108,645 108,645
Income from investments 7,245 - 7,245 4,983 - 4,983
Other interest receivable and similar 1,205 - 1,205 1,554 - 1,554
income _______ ________ _______ _______ ________ _______
Gross revenue and capital gains 8,450 5,897 14,347 6,537 108,645 115,182
Management fee (702) (2,808) (3,510) (571) (2,285) (2,856)
Other administrative expenses (460) - (460) (439) - (439)
_______ ________ _______ _______ ________ _______
Net return on ordinary activities before
finance costs and taxation 7,288 3,089 10,377 5,527 106,360 111,887
Finance costs (89) (358) (447) (66) (265) (331)
_______ _______ _______ _______ _______ _______
Net return on ordinary activities before
taxation 7,199 2,731 9,930 5,461 106,095 111,556
Taxation (507) - (507) (349) - (349)
_______ _______ _______ _______ _______ _______
Net return on ordinary activities after
taxation 6,692 2,731 9,423 5,112 106,095 111,207
_______ _______ _______ _______ _______ _______
Return per share (basic and diluted) 3.60p 1.47p 5.07p 2.75p 57.10p 59.85p
All revenue and capital items in the above statement derive from continuing
operation. No operations were acquired or discontinued in the year.
JPMorgan Fleming Japanese Investment Trust plc
Unaudited figures for the year ended 30th September 2006
Reconciliation of Movements in Shareholders' Funds
for the year ended 30th September 2006
Called up Capital
share Other redemption
capital reserve reserve Capital Revenue
£'000 reserve reserve Total
£'000 £'000 £'000 £'000 £,000
At 30th September 2004 46,450 166,791 2,512 189,204 (11,875) 393,082
Total return on ordinary activities - - - 106,095 5,112 111,207
At 30th September 2005 46,450 166,791 2,512 295,299 (6,763) 504,289
Adjustment to opening shareholders'
funds at 1st October 2005 to reflect
the adoption of bid prices - - - (1,209) - (1,209)
Shares bought back and cancelled (70) - 70 (762) - (762)
Total return from ordinary - - - 2,731 6,692 9,423
activities
Unclaimed dividends returned in the
year - - - - 7 7
At 30th September 2006 46,380 166,791 2,582 296,059 (64) 511,748
JPMorgan Fleming Japanese Investment Trust plc
Unaudited figures for the year ended 30th September 2006
Balance Sheet
as at 30th September 2006
2006 2005
£'000 £'000
Fixed Assets
Investments at fair value 575,721 574,903
Current assets
Debtors 2,224 13,658
Cash at bank and in hand 879 889
3,103 14,547
Creditors:
Amounts falling due within one year (67,076) (84,282)
Derivative financial instruments - (879)
Net current liabilities (63,973) (70,614)
Total assets less current liabilities 511,748 504,289
Total net assets 511,748 504,289
Capital and reserves
Called up share capital 46,380 46,450
Other reserves 166,791 166,791
Capital redemption reserve 2,582 2,512
Capital reserve 296,059 295,299
Revenue reserve (64) (6,763)
Equity shareholders' funds 511,748 504,289
Net asset value per share 275.8p 271.4p
JPMorgan Fleming Japanese Investment Trust plc
Unaudited figures for the year ended 30th September 2006
Cash Flow Statement
for the year ended 30th September 2006 2006 2005
£'000 £'000
Net cash inflow from operating activities 3,660 2,763
Returns on investments and servicing of finance
Interest paid (478) (284)
Capital expenditure and financial investment
Purchases of investments (893,498) (590,308)
Sales of investments 898,078 569,379
Other capital charges (7) (10)
Net cash inflow / (outflow) from capital expenditure and financial
investment 4,573 (20,939)
Unclaimed dividends returned 7 -
Net cash inflow / (outflow) before financing 7,762 (18,460)
Financing
Repurchase of ordinary shares (762) -
Net (repayment)/draw down on loans (5,941) 17,929
Net cash (outflow) / inflow from financing (6,703) 17,929
Increase / (decrease) in cash for the year 1,059 (531)
Notes
1. Accounting policies
The Company has adopted certain new accounting policies following the issue of
new financial reporting standards (FRSs) and the Statement of Recommended
Practice 'Financial Statements of Investment Trust Companies' as issued by the
AIC in December 2005. The only material change to the accounts is
as follows:
Investments are designated as held at fair value through profit or loss in
accordance with FRS 26: 'Financial Instruments: Measurement'. Listed investments
are valued at bid market prices. This represents a change in accounting policy,
however in accordance with the exemption conferred by paragraph 108D of FRS26,
comparatives have not been restated. In prior years, listed investments were
valued using last trade prices. The adoption of bid prices on 1st October 2005
decreased the value of investments by £1,209,000.
2. Comparative figures
The above financial information does not constitute statutory accounts as
defined in Section 240 of the Companies Act 1985. The comparative financial
information is an extract from the statutory accounts for the year ended 30th
September 2005. Those accounts, upon which the auditors issued an unqualified
opinion, have been delivered to the Registrar of Companies.
JPMORGAN ASSET MANAGEMENT (UK) LIMITED
This information is provided by RNS
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