Half Yearly Report

RNS Number : 5746H

JPMorgan Overseas IT PLC

23 February 2010

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN OVERSEAS INVESTMENT TRUST PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS

ENDED 31ST DECEMBER 2009

Chairman's Statement

During the second half of 2009, global equity prices continued to recover very strongly after falling to a low point in mid-March 2009. The rebound was particularly steep in the first half of the reporting period when the effects of the significant fiscal and monetary stimulae began to stabilise the economic situation.

The Company produced an excellent return of 38.8% for shareholders in the six months period. The total return on net assets was positive 36.8% significantly outperforming the MSCI All Country World Index (in sterling terms) return of positive 25.8%. The Company's portfolio outperformed across a wide range of sectors and performance across regions was well balanced with five out of six regions contributing positively to performance. The Investment Manager's report gives a more detailed commentary about the markets and conditions experienced during this period and the outlook for the remainder of the financial year.

The Board continues to monitor the Company's discount at which the Company's shares trade to their net asset value ('NAV') and exercises its powers to buy back shares when it considers this to be in the best interests of shareholders. As a result, 421,966 shares were repurchased at a total cost of £2,597,000 and held in Treasury during the period. The closing discount at 31st December 2009 had narrowed to 3.7%.

Gearing levels fell during the period from 7.8% at the start of the period to 6.3% at 31st December 2009 as the markets rose strongly. The £10 million borrowing facility with Lloyds TSB remained fully utilised throughout the reporting period.

Following the appointment of Jonathan Carey to the Board on 17th September 2009, the process of refreshing the Company's Board will continue in 2010. I plan to retire from the Board following the AGM next October and the Nomination Committee has decided that Simon Davies will succeed me. As Dick Barfield will also be retiring after the next AGM a new non-executive director will be appointed during the course of this year.

The Board remains optimistic about the outlook for the second half of this year, however, gains are likely to be more modest in comparison with the first half. The Board supports the Investment Manager's approach of remaining focused on investing in stocks in which he has a high degree of conviction to strive towards achieving optimum returns for shareholders.

for and on behalf of the Board

George Paul

Chairman                                                                                                                                      

23rd February 2010

Investment Manager's Report

The second half of 2009, in particular the third quarter, witnessed the continuation of a powerful recovery in global equities which started in March of that year. Following the massive economic turmoil of 2007-2008, which had created the largest constriction and disarray that most major economies had experienced since the 1930s, fiscal and monetary stimulus of enormous magnitude provided a foundation for economic stabilisation and subsequent re-rating of risk assets.

In sterling terms, the MSCI All Country World Index rose by 25.8%. Regionally, only Japan acted as a major laggard. On a sector basis, advances were led by traditionally cyclical areas such as Basic Industries, Semi Conductors and Media, whereas less economically sensitive sectors such as Utilities and Telecoms lagged the markets.

The portfolio outperformed across a wide range of sectors as the valuation process upon which we base our stock selection enjoyed some particularly propitious conditions. Within cyclicals, stocks such as Rhodia, Lanxess and Dow Chemical were strong on a combination of demand recovery, industry restocking, corporate cost reduction and exceptionally positive cashflow. In commodities, holdings in companies such as Petropavlosk (gold in Russia) and Interoil (energy in Papua New Guinea) rose significantly as an increased sense of economic stability and company specific developments facilitated a new and more positive assessment of normalised worth.

Although it is our objective to provide superior long term capital growth through stock selection across sectors globally, irrespective of domicile, it is reassuring to note that performance was well balanced across regions, with stock selection in 5 out of 6 regions contributing positively to performance. In North America, Google and Walt Disney led strong returns. In Japan, Nissan - a new holding - and Nidec performed well. UK performance was driven by significant advances in stocks such as InterContinental Hotels and Cookson Group.

The relative underperformance of Japan provided us with an excellent opportunity to add to our holdings in this market. While the combination of a strong yen, a new government and cautious central bank filled the minds of many investors with fear, companies such as Mitsubishi Electric and Kubota in addition to existing holdings like Japan Tobacco - all of which have strong, global franchises - became increasingly cheap. Adherence to this valuation discipline has resulted in a weighting to Japan which is well in excess of the benchmark. In order to fund these moves we have taken profits across a variety of areas, particularly in Emerging Market stocks, which have, in our view, become relatively expensive.

As the markets advanced from their lows in March 2009 some very conspicuous and unprecedented valuation anomalies narrowed but were not eliminated. Markets will inevitably become less unconditional in comparison with 2009. Areas of concern for investors will include; the potential emergence of central bank exit strategies, the sustainability of China's growth rate, the strength and cohesiveness of European financial union, the scale of government debt and, more generally, the perception of increased government intervention in the developed economies. While absolute gains could therefore be more modest than those of last year, the portfolio will continue to focus on companies which are cheap, which contain considerable potential earnings upside to normalised and are capable of demonstrating such potential within an acceptable time frame.

Jeroen Huysinga

Investment Manager                                                                                                                     

23rd February 2010

Interim Management Report

The Company is now 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

underperformance; political and economic; loss of investment team or investment manager; discount; change of corporate

control of the manager; 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 June 2009.

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.

Going Concern

The Directors believe, having considered the Company's investment objectives, 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 half year management report includes a fair review of the information required by DTR 4.2.7R and 4.2.8R of the

UK Listing Authority Disclosure and Transparency Rules.

For and on behalf of the Board

George Paul

Chairman

23rd February 2010

For further information, please contact:

Divya Amin

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.jpmoverseas.co.uk.

Income Statement

for the six months ended 31st December 2009

	(Unaudited) Six months ended 31st December 2009			(Unaudited) Six months ended 31st December 2008			(Audited) Year ended 30th June 2009
	Revenue  £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Gains/(losses) on  investments held at fair  value through profit or loss	-	49,383	49,383	-	(26,564)	(26,564)	-	(14,936)	(14,936)
Net foreign currency  gains/(losses)	-	576	576	-	(816)	(816)	-	(257)	(257)
Income from investments	1,833	-	1,833	1,542	-	1,542	4,153	-	4,153
Other interest receivable  and similar income	8	-	8	682	-	682	687	-	687
Gross return/(loss)	1,841	49,959	51,800	2,224	(27,380)	(25,156)	4,840	(15,193)	(10,353)
Management fee	(165)	(165)	(330)	(142)	(142)	(284)	(271)	(271)	(542)
Performance fee (provision)/writeback	-	(2,603)	(2,603)	-	817	817	-	(1,668)	(1,668)
VAT recoverable	-	-	-	126	141	267	126	141	267
Other administrative  expenses	(209)	-	(209)	(206)	-	(206)	(439)	-	(439)
Net return/(loss) on  ordinary activities before finance costs and taxation	1,467	47,191	48,658	2,002	(26,564)	(24,562)	4,256	(16,991)	(12,735)
Finance costs	(32)	(32)	(64)	(116)	(116)	(232)	(155)	(155)	(310)
Net return/(loss) on  ordinary activities before taxation	1,435	47,159	48,594	1,886	(26,680)	(24,794)	4,101	(17,146)	(13,045)
Taxation (note 3)	(90)	-	(90)	(418)	315	(103)	(860)	520	(340)
Net return/(loss) on  ordinary activities after taxation	1,345	47,159	48,504	1,468	(26,365)	(24,897)	3,241	(16,626)	(13,385)
Return/(loss) per share  (note 4)	5.18p	181.70p	186.88p	5.51p	(98.95)p	(93.44)p	12.26p	(62.88)p	(50.62)p

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

The 'Total' column of this statement is the profit and loss account of the Company and the 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies. The Total column represents all the information that is required to be disclosed in a Statement of Total Recognised Gains and Losses ('STRGL'). For this reason a STRGL has not been presented.

 

Reconciliation of Movements in Shareholders' Funds

Six months ended 31st December 2009 (unaudited)		Called up share capital £'000	Capital redemption reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total £'000
At 30th June 2009		6,544	27,401	93,721	17,804	145,470
Repurchase of shares into Treasury		-	-	(2,597)	-	(2,597)
Net return on ordinary activities		-	-	47,159	1,345	48,504
Dividends appropriated in the period		-	-	-	(2,979)	(2,979)
At 31st December 2009		6,544	27,401	138,283	16,170	188,398
		Called up share capital £'000	Capital redemption reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total £'000
Six months ended 31st December 2008 (unaudited)
At 30th June 2008		6,735	27,210	114,251	17,610	165,806
Repurchase and cancellation of the Company's own shares		(133)	133	(2,699)	-	(2,699)
Net (loss)/return on ordinary activities		-	-	(26,365)	1,468	(24,897)
Dividends appropriated in the period		-	-	-	(3,047)	(3,047)
At 31st December 2008		6,602	27,343	85,187	16,031	135,163
		Called up share capital £'000	Capital redemption reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total £'000
Year ended 30th June 2009 (audited)
At 30th June 2008		6,735	27,210	114,251	17,610	165,806
Repurchase and cancellation of the Company's own shares		(191)	191	(3,772)	-	(3,772)
Repurchase of shares into Treasury		-	-	(132)	-	(132)
Net (loss)/return on ordinary activities		-	-	(16,626)	3,241	(13,385)
Dividends appropriated in the year		-	-	-	(3,047)	(3,047)
At 30th June 2009		6,544	27,401	93,721	17,804	145,470

 

Balance Sheet

at 31st December 2009

	(Unaudited) 31st December 2009 £'000	(Unaudited) 31st December 2008 £'000	(Audited) 30th June 2009 £'000
Fixed assets
Equity investments held at fair value through profit or loss	200,289	144,000	156,739
Investments in liquidity funds held at fair value through profit or loss	-	2,180	1,027
Total investments	200,289	146,180	157,766
Current assets
Debtors	1,825	430	1,375
Cash and short term deposits	679	160	708
	2,504	590	2,083
Creditors: amounts falling due within one year	(11,301)	(11,407)	(12,712)
Net current liabilities	(8,797)	(10,817)	(10,629)
Total assets less current liabilities	191,492	135,363	147,137
Creditors: amounts falling due after more than one year	(200)	(200)	(200)
Provision for liabilities and charges	(2,894)	-	(1,467)
Total net assets	188,398	135,163	145,470
Capital and reserves
Called up share capital	6,544	6,602	6,544
Capital redemption reserve	27,401	27,343	27,401
Capital reserves	138,283	85,187	93,721
Revenue reserve	16,170	16,031	17,804
Shareholders' funds	188,398	135,163	145,470
Net asset value per share (note 5)	732.3p	511.8p	556.3p

 

Cash Flow Statement

for the six months ended 31st December 2009

	(Unaudited) 31st December 2009 £'000	(Unaudited) 31st December 2008 £'000	(Audited) 30th June 2009 £'000
Net cash inflow from operating activities (note 6)	369	3,544	5,190
Net cash outflow from returns on investments and
servicing of finance	(64)	(248)	(328)
Taxation recovered	30	120	147
Net cash inflow/(outflow) from capital expenditure and
financial investment	6,941	(2,030)	(2,038)
Dividends paid	(2,979)	(3,047)	(3,047)
Net cash (outflow)/inflow from financing	(2,537)	1,312	(164)
Increase/(decrease) in cash for the period	1,760	(349)	(240)
Reconcilliation of net cash flow to movement in net debt
Net cash movement	1,760	(349)	(240)
Loans drawn down in the period	-	(4,000)	(4,000)
Exchange movements	(1,789)	205	644
Movement in net debt in the period	(29)	(4,144)	(3,596)
Net debt at the beginning of the period	(9,492)	(5,896)	(5,896)
Net debt at the end of the period	(9,521)	(10,040)	(9,492)
Represented by:
Cash and short term deposits	679	160	708
Debt falling due within one year	(10,000)	(10,000)	(10,000)
Debt falling due after more than 5 years	(200)	(200)	(200)
Total	(9,521)	(10,040)	(9,492)

 

Notes to the Accounts

for the six months ended 31st December 2009

1. Financial statements

The information contained within the Financial Statements in this preliminary announcement has not been audited or reviewed by the Company's auditors.

The figures and financial information for the year ended 30th June 2009 are extracted from the latest published accounts of the Company and do not constitute statutory accounts for that year. 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.

2. Accounting policies

The accounts have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' issued in January 2009.

All of the Company's operations are of a continuing nature.

The accounting policies applied to these half year accounts are consistent with those applied in the accounts for the year ended 30th June 2009.

3. Taxation

The taxation charge of £90,000 (31st December 2008: £103,000 and 30th June 2009: £340,000) relates to irrecoverable overseas taxation.

4. Return/(loss) per share

	(Unaudited) Six months ended 31st December 2009 £'000	(Unaudited) Six months ended 31st December 2008 £'000	(Audited) Year ended 30th June 2009 £'000
Return/(loss) per share is based on the following:
Revenue return	1,345	1,468	3,241
Capital return/(loss)	47,159	(26,365)	(16,626)
Total return/(loss)	48,504	(24,897)	(13,385)
Weighted average number of shares in issue:	25,954,521	26,644,266	26,441,114
Revenue return per share	5.18p	5.51p	12.26p
Capital return/(loss) per share	181.70p	(98.95)p	(62.88)p
Total return/(loss) per share	186.88p	(93.44)p	(50.62)p

5. Net asset value per share

Net asset value per share is calculated by dividing the funds attributable to ordinary shareholders by the number of ordinary shares in issue at 31st December 2009 of 25,726,732 (31st December 2008: 26,408,348 and 30th June 2009: 26,148,698), excluding shares held in Treasury.

6. Reconciliation of total return/(loss) on ordinary activities before finance costs and taxation to net cash inflow from operating activities

	(Unaudited) Six months ended 31st December 2009 £'000	(Unaudited) Six months ended 31st December 2008 £'000	(Audited) Year ended 30th June 2009 £'000
Total return/(loss) on ordinary activities before  finance costs and taxation	48,658	(24,562)	(12,735)
Add back capital (return)/loss before finance costs and taxation	(47,191)	26,564	16,991
Scrip dividends received as income	(2)	-	(34)
Net movement in debtors and accruals	186	178	41
Decrease in VAT recoverable	-	1,507	1,507
Tax on unfranked investment income	(99)	(142)	(450)
Expenses charged to capital	(165)	(1)	(130)
Performance fee paid	(1,018)	-	-
Net cash inflow from operating activities	369	3,544	5,190

JPMORGAN ASSET MANAGEMENT (UK) LIMITED

 

END

 

 

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