Half Yearly Report

RNS Number : 9847Z

JPMorgan Glb Emerging Mkts Inc Tst

23 March 2012

 



JPMORGAN GLOBAL EMERGING MARKETS INCOME TRUST PLC

LONDON STOCK EXCHANGE ANNOUNCEMENT

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS

ENDED 31ST JANUARY 2012

Chairman's Statement

Performance

In the six months to 31st January 2012, the Company recorded a total return on net assets of +0.1%. When set against the backdrop of weak equity markets during the period, with the MSCI Emerging Markets Free Index (in sterling terms) falling 5.9%, this represents a significant and pleasing outperformance. The total return to shareholders was +0.5% as the premium at which the Company's shares trade increased from 0.2% to 1.2% over the period. The Investment Manager's Report reviews the Company's performance and comments on the investment strategy.

Dividends

When the Company was launched in July 2010, it targeted an initial gross dividend of at least 4% based on the initial issue price of 100 pence per share. For the period to 31st July 2011 the total dividend paid was 4.7p, thus comfortably achieving the initial target.

The Board also stated its intention to move to paying dividends quarterly when appropriate. With the establishment of a Revenue Reserve, the Board has been able to initiate quarterly dividend payments this year.

The quarterly interim dividends are expected to be paid each year in January, April and July with a final dividend in November. A first interim dividend of 0.9p per share was paid to shareholders on 13th January 2012. The Board has declared a second interim dividend of 0.9p per share to be paid on 16th April 2012, giving a total of 1.8p per share for the first six months (2011 : 1.0p).

Share Issuance

In the six months to 31st January 2012, the Company issued a total of 10,980,000 new ordinary shares. Since that date a further 7,650,000 new ordinary shares have been issued. All new shares have been issued at a premium to net asset value, thereby enhancing the net asset value for continuing shareholders.

Outlook

While emerging market equity indices have been and will probably remain choppy, it is reassuring that dividends paid by the companies in the portfolio have been in line with expectations. The dynamics of growth for these companies remain healthy. The prospects for long term growth in dividends and capital therefore remain positive.

Andrew Hutton

Chairman, 23rd March 2012

Investment Manager's Report

Performance

The six month period to 31st January 2012 was a negative one for emerging markets, with the Company's benchmark index, the MSCI Emerging Markets Free Index, declining 5.9% (in sterling terms). However, the Company's performance was strongly ahead of the benchmark, achieving a positive total return on net assets of 0.1%. From a sector perspective, investments in the Financials, Telecommunications and Consumer sectors contributed positively to returns, whilst positions in the Information Technology sector detracted from returns. Given the volatile and negative market environment, our gearing detracted from returns over the period, but we are comfortable that this will provide positive returns to shareholders over the longer term horizon.

Market Review

Over the six months, emerging markets experienced a sharp decline and subsequent bounce-back, as investors' appetite for risk assets ebbed and flowed. At the start of the period investors switched into more defensive assets as they focussed on concerns over the US debt ceiling talks and debt issues in Europe. However, October saw markets rally, as political leaders in the European Union appeared to grasp the severity of the situation and started to find a permanent solution to Europe's escalating debt crisis. The markets' appetite for risk assets returned in 2012, as emerging markets equities saw their strongest January performance since 2001.

The Portfolio

The Company's portfolio is intended to be a low turnover, long-term portfolio allowing it to benefit from the compound growth in emerging markets and specifically the compound growth of dividends, which we expect to see growing strongly over the next five years. During the period exposure to central Europe was reduced through the sale of Komercni Banka; and in Turkey portfolio risk was reduced by switching the cyclical Arcelik into the more stable Turk Telecom. As markets fell holdings were added in India through investments in Tata Motors and Hero Motocorp.

The portfolio has continued to be oriented towards sectors with sustainable growth such as telecommunications, consumer and manufacturing industries and away from the more cyclical and speculative commodity areas.

Outlook

Despite the sharp rally in markets we are positive, as fundamentals are improving and valuations remain attractive. Three risks that overhung markets last year - inflation, China and Europe - have started to ease. Inflation is beginning to abate across emerging markets, led by food prices. The focus of central banks is therefore shifting from containing inflation to supporting growth. In China the authorities are trying to engineer a soft landing, amid concerns of over-heating in the property market. We believe that this will be a positive catalyst for a market that had become relatively cheap.

Richard Titherington

Investment Manager, 23rd March 2012

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: 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 Company's Annual Report and Accounts for the period ended 31st July 2011.

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 interim 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 DTR 4.2.7R and 4.2.8R of the UK Listing Authority Disclosure and Transparency Rules.

For and on behalf of the Board

Andrew Hutton

Chairman, 23rd March 2012

For further information, please contact:

Jonathan Latter

For and on behalf of

JPMorgan Asset Management (UK) Limited, Secretary

020 7742 6000

Income Statement

for the six months ended 31st January 2012

	(Unaudited)			(Unaudited)			(Audited)
	Six months ended			Period ended			Period ended
	31st January 2012			31st January 2011			31st July 2011
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair
value through profit or loss	-	18	18	-	10,427	10,427	-	13,520	13,520
Net foreign currency (losses)/gains	-	(619)	(619)	-	114	114	-	500	500
Income from investments	3,199	-	3,199	2,035	-	2,035	8,459	-	8,459
Other interest receivable and
similar income	1	-	1	6	-	6	8	-	8
Gross return/(loss)	3,200	(601)	2,599	2,041	10,541	12,582	8,467	14,020	22,487
Management fee	(229)	(534)	(763)	(184)	(428)	(612)	(398)	(928)	(1,326)
Performance fee	-	(1,041)	(1,041)	-	(55)	(55)	-	(897)	(897)
Other administrative expenses	(179)	-	(179)	(118)	-	(118)	(398)	-	(398)
Net return/(loss) on ordinary
activities before finance costs
and taxation	2,792	(2,176)	616	1,739	10,058	11,797	7,671	12,195	19,866
Finance costs	(64)	(149)	(213)	(40)	(93)	(133)	(102)	(149)	(251)
Net return/(loss) on ordinary
activities before taxation	2,728	(2,325)	403	1,699	9,965	11,664	7,569	12,046	19,615
Taxation	(244)	-	(244)	(130)	-	(130)	(706)	-	(706)
Net return/(loss) on ordinary
activities after taxation	2,484	(2,325)	159	1,569	9,965	11,534	6,863	12,046	18,909
Return/(loss) per share (note 5)	1.67p	(1.56)p	0.11p	1.41p	8.92p	10.33p	5.76p	10.11p	15.87p

All revenue and capital items in the above statement derive from continuing operations.

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.

Statement of Total Recognised Gains and Losses

for the six months ended 31st January 2012

	(Unaudited)			(Unaudited)			(Audited)
	Six months ended			Period ended			Period ended
	31st January 2012			31st January 2011			31st July 2011
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Movement in the fair value of the
cash flow hedge during
the period	-	(11)	(11)	-	1	1	-	(121)	(121)
Net return/(loss) on ordinary
activities	2,484	(2,325)	159	1,569	9,965	11,534	6,863	12,046	18,909
Total recognised gains/(loss) in
the period	2,484	(2,336)	148	1,569	9,966	11,535	6,863	11,925	18,788

Reconciliation of Movements in Shareholders' Funds

	Called up	Capital
Six months ended	share	redemption	Share	Other	Capital	Revenue
31st January 2012	capital	reserve	premium	reserve	reserves	reserve	Total
(Unaudited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 31st July 2011	1,426	13	40,561	101,276	13,439	3,065	159,780
Issue of ordinary shares	110	-	11,194	-	-	-	11,304
Share issue expenses	-	-	(73)	-	-	-	(73)
Movement in the fair value of the	-	-	-	-	(11)	-	(11)
cash flow hedge
Net (loss)/return on ordinary activities	-	-	-	-	(2,325)	2,484	159
Dividends appropriated in the period	-	-	-	-	-	(3,578)	(3,578)
At 31st January 2012	1,536	13	51,682	101,276	11,103	1,971	167,581
	Called up	Capital
Period ended	share	redemption	Share	Other	Capital	Revenue
31st January 2011	capital	reserve	premium	reserve	reserves	reserve	Total
(Unaudited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 4th June 2010	-	-	-	-	-	-	-
Issue of 'management' shares	13	-	-	-	-	-	13
Repurchase and cancellation of
'management' shares	(13)	13	-	-	(13)	-	(13)
Issue of ordinary shares following
placing and offer for subscription	1,040	-	102,960	-	-	-	104,000
Expenses of placing and offer
for subscription	-	-	(1,713)	-	-	-	(1,713)
Issue of ordinary shares	124	-	13,517	-	-	-	13,641
Additional share issue expenses	-	-	(310)	-	-	-	(310)
Redesignation of share premium	-	-	(101,276)	101,276	-	-	-
Movement in the fair value of the cash
flow hedge	-	-	-	-	1	-	1
Net return on ordinary activities	-	-	-	-	9,965	1,569	11,534
At 31st January 2011	1,164	13	13,178	101,276	9,953	1,569	127,153

	Called up	Capital
Period ended	share	redemption	Share	Other	Capital	Revenue
31st July 2011	capital	reserve	premium	reserve	reserves	reserve	Total
(Audited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 4th June 2010	-	-	-	-	-	-	-
Issue of 'management' shares	13	-	-	-	-	-	13
Repurchase and cancellation of
'management' shares	(13)	13	-	-	(13)	-	(13)
Issue of ordinary shares following
placing and offer for subscription	1,040	-	102,960	-	-	-	104,000
Expenses of placing and offer for
subscription	-	-	(1,712)	-	-	-	(1,712)
Issue of ordinary shares	156	-	17,137	-	-	-	17,293
Additional share issue expenses	-	-	(310)	-	-	-	(310)
Redesignation of share premium	-	-	(101,276)	101,276	-	-	-
Issue of ordinary shares on
conversion of 'C' shares	230	-	23,762	-	1,527	-	25,519
Movement in the fair value of the cash
flow hedge	-	-	-	-	(121)	-	(121)
Net return on ordinary activities	-	-	-	-	12,046	6,863	18,909
Dividends appropriated in the period	-	-	-	-	-	(3,798)	(3,798)
At 31st July 2011	1,426	13	40,561	101,276	13,439	3,065	159,780

Balance Sheet

at 31st January 2012

	(Unaudited)	(Unaudited)	(Audited)
	31st January 2012	31st January 2011	31st July 2011
	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	177,615	138,207	169,227
Investments in liquidity fund held at fair value
through profit or loss	697	-	579
Total investments	178,312	138,207	169,806
Current assets
Derivative financial instrument	-	1	-
Debtors	6,457	2,579	1,235
Cash and short term deposits	198	1,315	2,117
	6,655	3,895	3,352
Creditors: amounts falling due within one year	(3,550)	(2,424)	(1,087)
Derivative financial instruments	(132)	-	(121)
Net current assets	2,973	1,471	2,144
Total assets less current liabilities	181,285	139,678	171,950
Creditors: amounts falling due after more than
one year	(12,663)	(12,470)	(12,170)
Provisions for liabilities and charges
Performance fee	(1,041)	(55)	-
Net assets	167,581	127,153	159,780
Capital and reserves
Called up share capital	1,536	1,164	1,426
Capital redemption reserve	13	13	13
Share premium	51,682	13,178	40,561
Other reserve	101,276	101,276	101,276
Capital reserves	11,103	9,953	13,439
Revenue reserve	1,971	1,569	3,065
Total equity shareholders' funds	167,581	127,153	159,780
Net asset value per share (note 6)	109.1p	109.2p	112.0p

Company registration number: 7273382.

Cash Flow Statement

for the six months ended 31st January 2012

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Period ended	Period ended
	31st January 2012	31st January 2011	31st July 2011
	£'000	£'000	£'000
Net cash inflow from operating activities (note 7)	2,019	890	4,876
Net cash outflow from servicing of finance	(208)	(45)	(1,045)
Net cash outflow from capital expenditure and
financial investment	(11,256)	(127,731)	(156,255)
Dividends paid	(3,578)	-	(3,798)
Net cash inflow from financing	11,231	128,163	158,217
(Decrease)/increase in cash in the period	(1,792)	1,277	1,995
Reconciliation of net cash flow to movement in
net debt
Net cash movement	(1,792)	1,277	1,995
Drawdown of short term loan	-	(12,545)	(12,544)
Exchange movements	(619)	114	500
Other movements	(1)	(1)	(4)
Movement in net debt in the period	(2,412)	(11,155)	(10,053)
Net debt at the beginning of the period	(10,053)	-	-
Net debt at the end of the period	(12,465)	(11,155)	(10,053)
Represented by:
Cash and short term deposits	198	1,315	2,117
Foreign currency bank loan falling due after more
than one year	(12,663)	(12,470)	(12,170)
Net debt	(12,465)	(11,155)	(10,053)

Notes to the Accounts

for the six months ended 31st January 2012

1.             Comparative accounting periods

                The comparative interim and annual accounts cover the period from the date of incorporation of the Company on 4th June 2010, to 31st January 2011 and 31st July 2011 respectively. Dealings in the Company's shares began on 29th July 2010 and the Company began investing on that date.

2.             Financial statements

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

3.             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 and Venture Capital Trusts' issued by the AIC in January 2009.

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

                The accounts have been prepared on a going concern basis.

4.             Dividends

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Period ended	Period ended
	31st January 2012	31st January 2011	31st July 2011
	£'000	£'000	£'000
2011 final dividend of 1.45p	2,198	n/a	n/a
1st interim dividend paid of 0.90p (2011: 1.00p)	1,380	n/a	1,164
2011 2nd interim dividend paid of 2.25p	n/a	n/a	2,634
Total dividends paid in the period	3,578	-	3,798

                A 2nd interim dividend of 0.90p per share, amounting to £1,383,000 has been declared payable in respect of the six months ended 31st January 2012.

5.             Return/(loss) per share

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Period ended	Period ended
	31st January 2012	31st January 2011	31st July 2011
	£'000	£'000	£'000
Return/(loss) per share is based on the following:
Revenue return	2,484	1,569	6,863
Capital (loss)/return	(2,325)	9,965	12,046
Total return	159	11,534	18,909
Weighted average number of shares in issue during
the period	148,898,353	111,707,593	119,152,531
Revenue return per share	1.67p	1.41p	5.76p
Capital (loss)/return per share	(1.56)p	8.92p	10.11p
Total return per share	0.11p	10.33p	15.87p

6.             Net asset value per share

	(Unaudited)	(Unaudited)	(Audited)
	31st January 2012	31st January 2011	31st July 2011
Funds attributable to ordinary shareholders (£'000)	167,581	127,153	159,780
Number of ordinary shares in issue	153,635,853	116,400,000	142,655,853
Net asset value per ordinary share	109.1p	109.2p	112.0p

7.             Reconciliation of total return on ordinary activities before finance costs and taxation to net cash inflow from operating activities

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Period ended	Period ended
	31st January 2012	31st January 2011	31st July 2011
	£'000	£'000	£'000
Total return on ordinary activities before finance costs
and taxation	616	11,797	19,866
Less: capital loss/(return) on ordinary activities
before finance costs and taxation	2,176	(10,058)	(12,195)
Scrip dividends received as income	(13)	-	(24)
Decrease/(increase) in accrued income	823	(308)	(1,094)
Decrease/(increase) in other debtors	103	(9)	(137)
(Decrease)/increase in accrued expenses	(11)	26	98
Management fee charged to capital	(534)	(428)	(928)
Overseas withholding tax	(244)	(130)	(710)
Performance fee paid	(897)	-	-
Net cash inflow from operating activities	2,019	890	4,876

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement

JPMORGAN ASSET MANAGEMENT (UK) LIMITED

ENDS

A copy of the interim report will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.hemscott.com/nsm.do

The interim report will also shortly be available on the Company's website at www.jpmglobalemergingmarketsincome.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

 

END

 

 

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