Interim Results
JPMorgan Fleming Japanese IT PLC
01 June 2004
JPMORGAN FLEMING JAPANESE INVESTMENT TRUST PLC
STOCK EXCHANGE ANNOUNCEMENT OF
UNAUDITED RESULTS FOR THE SIX MONTHS TO 31ST MARCH 2004
The Board today release the unaudited interim results of the Company for the six
months to 31st March 2004.
The following are comments from the Chairman:
Chairman's statement
There have been few periods in recent times when investors have made more money
in Japan than in other major stock markets. However, in the six months covered
by this report the TOPIX index in Japan was one of the world's better performing
indices, rising 13% in sterling terms, and in the past year it rose by almost
50%.
The most obvious reason why investors are now more confident is that the
Japanese economy is recovering and, with it, corporate profits across most
industrial sectors. It is difficult to isolate a single catalyst for the
turnaround but strong demand for capital goods from China and a wave of global
demand for digital consumer electronics products have been major contributors.
These higher sales volumes for a whole range of finished goods have had a
knock-on effect all the way down the production chain. Steel companies such as
Nippon Steel are raising prices because they cannot meet demand, shipping
companies like Mitsui OSK are raising rates and ordering more vessels as cargo
space is sold out, in turn stimulating a recovery in the shipbuilding industry.
The rise in factory overtime and monthly wages provide hope for the retail
sector, where signs of life are emerging in shop and department store sales.
All this has brought about a broad-based economic recovery, benefiting not just
the newer service sectors but also many of the oldest industries in Japan, which
are seeing their first sales and profits gains for fifteen years. Importantly,
the corporate restructuring seen in the past few years is now beginning to bear
fruit. Companies are enjoying significant free cash flow and, with it, the
confidence to invest.
The Company's portfolio still maintains large positions in stocks that have
global businesses that are taking market share from their competitors in Europe
and the USA, such as Canon, Toyota and Honda, but there has been a major change
of emphasis in the past six months and the portfolio is now more invested to
reflect a domestic economic recovery than it has been for many years. The most
significant absolute shifts have been the de-emphasising of sectors like
technology and machinery, and a shift into banks, securities companies and
retail shares.
This shift to a broader based recovery has led to a rotation in sectors that
have been leading the market, and has meant that the rise in our net asset value
has slightly lagged the benchmark as the portfolio was repositioned. The share
price, however, has been strong as the discount narrowed on increased investor
interest in Japan.
Outlook
The outlook for the Japanese economy for the remainder of the year is
encouraging, although we are wary of potential setbacks in China or the US.
Order trends in manufacturing remain firm, indeed, given the breadth of demand,
sales of machine tool companies like Makino Milling may well pass the previous
peaks of 1997 and 2000. Service sector demand is recovering as both companies
and individuals start to spend more, and the real estate and banking sectors
appear to be turning the corner. Land prices in certain areas of Tokyo have
started to rise, and the investment managers believe it likely that it will not
be long before this is seen in other parts of the country such as Osaka and
Nagoya. A sustained recovery in real estate and banking would have a
disproportionate impact on the stock market and, if it does coincide with a
general broadening of spending by companies and individuals alike, it may well
herald the end of the era of deflation which has been the millstone round the
neck of the Tokyo market for so many years.
In the twelve months to 31st March 2004, the Japanese equity market rose almost
50% in Yen terms, representing the single largest gain in any fiscal year since
the early 1970s. Future returns are likely to be less dramatic but, given the
current earnings trends and valuations of Japanese companies, the prospect of
sustainable demand from Asia and a gradual improvement in other world economies,
we believe the outlook for the Japanese equity market remains positive.
Board
Andrew Fleming was appointed to the Board on 15th April following a search
process involving external consultants. Aged 44, he is the Chief Investment
Officer of ABN AMRO Investment Management, prior to which he worked with
Gartmore Investment Management, a period which included a six year spell running
its Tokyo operation.
David Ritchie
Chairman, 1st June 2004
For further information, please contact:
Jonathan Latter
J.P. Morgan Fleming Asset Management (UK) Limited, 020 7742 6000
Secretary to the Company
JPMorgan Fleming Japanese Investment Trust plc
Unaudited figures for the six months ended 31 March 2004
Statement of Total Return (Unaudited)
Six months to 31 March 2004 Six months to 31 March 2003 Year to 30 September 2003
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Realised (losses)/gains
on investments - (12,511) (12,511) - (19,953) (19,953) - 11,335 11,335
Net unrealised gains/
(losses) on investments - 61,107 61,107 - (32,697) (32,697) - 62,079 62,079
Realised currency
losses on cash and
short-term
deposits - (2,152) (2,152) - (253) (253) - (2,132) (2,132)
Unrealised (losses)/
gains on currency
hedges - - - - (38) (38) - 1,428 1,428
Net unrealised currency
gains/(losses) on loans - 1,892 1,892 - - - - (158) (158)
Realised currency
losses on repayment of
Yen loan - - - - (481) (481) - (481) (481)
Other capital charges - (22) (22) - (14) (14) - (21) (21)
Overseas dividends 2,496 - 2,496 2,014 - 2,014 3,443 - 3,443
Sundry receipts - - - 502 - 502 502 - 502
Stock lending fees 278 - 278 62 - 62 321 - 321
Deposit interest 2 - 2 7 - 7 8 - 8
_______ ________ _______ ______ _______ ________ _______ _______ _______
Gross return/(loss) 2,776 48,314 51,090 2,585 (53,436) (50,851) 4,274 72,050 76,324
Management fee (279) (1,118) (1,397) (200) (800) (1,000) (412) (1,647) (2,059)
Other administrative
expenses (275) - (275) (237) - (237) (405) - (405)
Interest payable (42) (167) (209) (84) (337) (421) (166) (660) (826)
_______ _______ _______ ______ _______ _______ _______ _______ _______
Return/(loss) before
taxation 2,180 47,029 49,209 2,064 (54,573) (52,509) 3,291 69,743 73,034
Taxation (559) 382 (177) (478) - (478) (1,062) 708 (354)
______ _______ _______ ______ _______ ______ _______ _______ _______
Available for ordinary
shareholders 1,621 47,411 49,032 1,586 (54,573) (52,987) 2,229 70,451 72,680
Return/(loss) per
ordinary share 0.87p 25.52p 26.39p 0.84p (29.06)p (28.22)p 1.19p 37.70p 38.89p
JPMorgan Fleming Japanese Investment Trust plc
Unaudited figures for the six months ended 31 March 2004
BALANCE SHEET 31 March 31 March 30 Sept
2004 2003 2003
£'000 £'000 £'000
Investments at valuation 528,176 304,898 458,581
Net current (liabilities)/assets (39,186) 6,435 (17,675)
Creditors (amounts falling due after more than one year) (31,380) (26,676) (32,327)
_______ _______ _______
Total net assets 457,610 284,657 408,579
===== ===== =====
Net asset value per ordinary share 246.3p 152.1p 219.9p
CASH FLOW STATEMENT
2004 2003 2003
£'000 £'000 £'000
Net cash inflow from operating activities 106 57 1,218
Net cash (outflow)/inflow from returns on investments and
servicing of finance (262) 419 6,178
Net cash (outflow)/inflow from capital expenditure and
financial investment (2,768) 7,983 (25,774)
Net cash (outflow)/inflow from financing - (14,655) 20,659
_______ _______ ______
(Decrease)/increase in cash for the period (2,924) (6,196) 2,281
===== ===== ====
The above financial information does not constitute statutory accounts as
defined in Section 240 of the Companies Act 1985. Statutory accounts for the
year ended 30 September 2003 have been delivered to the Registrar of Companies.
J.P. MORGAN FLEMING ASSET MANAGEMENT (UK) LIMITED
1 June 2004
This information is provided by RNS
The company news service from the London Stock Exchange