Final Results

RNS Number : 9710S

JPMorgan Japanese Inv. Trust PLC

13 November 2013

 



LONDON STOCK EXCHANGE ANNOUNCMENT

JPMORGAN JAPANESE INVESTMENT TRUST PLC

AUDITED FINAL RESULTS FOR THE YEAR ENDED 30^th SEPTEMBER 2013

The Directors of JPMorgan Japanese Investment Trust plc announce

the Company's results for the year ended 30^th September 2013.

Chairman's Statement

Investment Performance

In the year to 30th September 2013, the Company's net assets rose by 45.9% in sterling terms, compared with the Tokyo Stock Exchange First Section (TOPIX) Index (our benchmark), which rose by 30.3%. The returns are calculated on a total return basis in sterling terms and were impacted by the movement in the yen/sterling rate from yen 125.6 at the beginning of the year to yen 158.9 at its conclusion. This is the best return achieved in nominal terms in the last eight years. The share price of your Company rose by 57.8% during the year, assuming the reinvestment of the dividend.

As outlined above the increase in net assets in the latest financial year was significantly above that of our benchmark and, as a result, the Company now has a much improved 5-year record. Indeed since the current Manager, Nicholas Weindling, took sole responsibility for the portfolio in August 2010, the net asset value per share has risen 52.2% against a benchmark increase of 28.7%

Revenue and Dividends

The Company's revenue received during the year declined with earnings per share for the full year falling to 2.78p (2012: 4.10p). The Board proposes, subject to shareholders' approval at the Annual General Meeting, to pay a final dividend of 2.80p per share (2012: 3.65p) on 23rd December 2013 to shareholders on the register at the close of business on 29th November 2013 (ex-dividend date 27th November 2013). As previously explained, the objective of the Company is capital growth, any dividend paid being a residual of the portfolio structure. This year's lower dividend level is paid in line with the Board's policy to pay out income received and results from the change in portfolio composition made following the election of Prime Minister Abe to take account of the improved economic outlook.

Gearing

The Board of Directors sets the overall strategic gearing policy and guidelines, reviewing these at each meeting. The Investment Manager then manages the gearing within these agreed levels. On 30th September 2013, the Company had a gearing level of 13.7%. This level of gearing at the end of the financial year reflected the confidence of the Investment Manager in the individual companies held in the portfolio. The management of gearing has also been active during the year with the level ranging between geared positions of 6.0% and 14.0%.

The funds available to be drawn down by the Company were increased from yen 10 billion to yen 12 billion during the year (drawdown being managed in accordance with the Board's guidelines) and the loan facility was renewed on maturity in July 2013, with the additional capacity to increase gearing to yen 15 billion, should market conditions allow.

Investment Manager

The Company's objective is to provide shareholders with capital growth from a portfolio of investments in Japanese companies and your Investment Manager achieved outperformance against our benchmark, equally through stock selection and gearing. These results can be seen from the performance attribution data shown in the annual report.

Board of Directors

As previously announced, David Pearson will retire at the conclusion of the Annual General Meeting and is not seeking reappointment. I would like to thank David for the significant contribution he has made to the Company over the past eleven years.

The Board has recognised for some time the need to refresh itself and its Committees. We were delighted to announce the appointment of Sir Stephen Gomersall to the Board with effect from 1st July 2013. Sir Stephen is a director of Hitachi Limited and holds a number of directorships of Hitachi Group companies in the UK. He was Ambassador to Japan from 1999 to 2004 and spent more than fourteen years living and working there. Sir Stephen will seek reappointment at the forthcoming Annual General Meeting. In accordance with the Company's Articles of Association, Alan Barber will retire by rotation and seeks reappointment at the Annual General Meeting. Andrew Fleming, Keith Percy and I, having served on the Board for more than nine years, are also retiring and seeking reappointment. Alan, Andrew and Keith all bring a wealth of experience to the Board and I have no hesitation in recommending their reappointment.

Authority to Repurchase the Company's Shares

At last year's Annual General Meeting, shareholders granted the Directors' authority to repurchase up to 14.99% of the Company's shares. The Company repurchased 70,000 shares during the year for cancellation (2012: nil). The Directors continue to believe that the power to repurchase shares is of ongoing benefit to shareholders and therefore propose that the authority be renewed for a further period. Share repurchases continue to be a useful tool for decreasing discount volatility and this approach will be used when considered to be appropriate by the Board.

Revised Reporting Requirements

There have been a number of changes in reporting requirements for companies with years beginning on or after 1st October 2012. Shareholders will note in particular the addition of a Strategic Report and the changes to the structure and voting in respect of the Directors' Remuneration Report.

The Strategic Report is designed to replace and enhance reporting previously included in the Business Review section of the Directors' Report. Its purpose is to inform members and help them assess how the Directors have performed their duty to promote the success of the Company during the year under review. There have also been consequential changes in the contents of the remainder of the Report.

Alternative Investment Fund Managers Directive ('AIFMD')

The Board is pleased to announce that it has agreed in principle to appoint JPMorgan as its Manager for the purposes of AIFMD. Advice is being taken on the implications of the implementation of the AIFMD for the Company and further announcements will be made in due course. One new requirement will be for the Company to have a depositary. The depositary will oversee the Company's custody and cash management operations. Shareholders will also note additional reporting requirements as implementation of AIFMD progresses.

Auditors

Begbies have served the Company well for many years and I would like to take this opportunity to thank them for their work. However, after undertaking a review of audit service providers, the Audit Committee recommended to the Board that PricewaterhouseCoopers LLP be appointed as Auditors to the Company with effect from the close of the forthcoming Annual General Meeting. Begbies will retire and are not seeking reappointment. The first audit by PricewaterhouseCoopers LLP will be in respect of the year ending 30th September 2014.

Annual General Meeting

This year's Annual General Meeting will be held on Friday, 20th December 2013 at 2.00 p.m. at Holborn Bars, 138-142 Holborn, London EC1N 2NQ. As in previous years, in addition to the formal part of the meeting, there will be a presentation from the Investment Manager who will answer questions on the portfolio and performance. There will also be an opportunity to meet the Board, the Investment Manager and representatives of JPMorgan Asset Management after the meeting. I look forward to welcoming as many of you as possible to this meeting.

If you have any detailed or technical questions, it would be helpful if you could raise these in advance of the meeting with the Company Secretary at Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ. Alternatively, questions may be submitted via the Company's website (www.jpmjapanese.co.uk). Shareholders who are unable to attend the Annual General Meeting are encouraged to use their proxy votes. Proxy votes may be lodged electronically, whether shares are held through CREST or in certificate form, and full details are set out on the form of proxy.

Prospects

The Investment Manager's Report gives a detailed review of the prospects for Japan over the next few years. I share the positive comments that are made and would emphasise the potential for both infrastructure expenditure and also corporate capital investment as growth takes hold within the economy at a higher pace. The weaker yen must also assist those companies which are strong in exporting. As wages increase it is reasonable to expect growth in consumer expenditure though this is likely to be muted in 2014 with the rise in the consumption tax.

It is essential, however, that the Government also follows through on the much needed structural reforms in the labour market and elsewhere. With the popularity of Prime Minister Abe at record levels, this is the ideal time to undertake such reforms and it is to be hoped that the Prime Minister will follow through on his stated intentions.

With the changes taking place within Japan and more positive economic outlook there should undoubtedly be continuing opportunities for the Investment Manager to seek out new investments among the more entrepreneurial and fast growing Japanese companies.

Jeremy Paulson-Ellis

Chairman                            

13th November 2013

Investment Manager's Report

The benchmark TOPIX index rose over 30% in sterling terms during the year ended 30th September 2013 with the Company's NAV rising 45.9%.

Review

The December 2012 general election substantially altered the outlook for Japan. The Liberal Democratic Party ('LDP') under Shinzo Abe won a landslide victory. This was followed by a convincing win in the Upper House election in the summer. The yen weakened substantially against all major currencies and economic and corporate data improved. In September Tokyo was awarded the 2020 Summer Olympics.

Prime Minister Abe has a radical set of policies collectively known as 'Abenomics', the centrepiece of which is the economy. There are three arrows to this policy: monetary policy, which aims to end deflation; fiscal stimulus of around $100 billion; and structural reform. We believe that there are good reasons to think the recovery in Japan could be long lasting. Firstly, Prime Minister Abe has strong support from his own party, the Bank of Japan under new governor Haruhiko Kuroda, corporations and the general population, all of which is in contrast to previous leaders. Secondly, Prime Minister Abe has three years to push through his reform agenda before he has to face the electorate again.

The Bank of Japan now has a two per cent inflation target. We believe that ending deflation is the key to healing the domestic economy. Under deflation there is always a reason to delay every purchasing decision and people are incentivised to hold their assets in cash. In an inflationary environment people and companies will be forced to make more productive use of their savings whether that is in the form of new investments or purchases. There are already signs of inflation and the wider economy is also improving. The value of land has started to rise, consumption is recovering, GDP growth is higher than it has been for several years and the unemployment rate is at a five year low.

Fiscal stimulus is also important. Public works expenditure has been in steady decline over the last fifteen years and much of Japan's infrastructure is now crumbling. This was tragically illustrated last year when a tunnel collapsed on a major expressway. These investments will not be the bridges to nowhere and concreting of riverbeds with which Japan has sometimes been associated; rather, we expect significant investment in existing infrastructure.

The third arrow, structural reform, includes promoting free trade, increasing female participation in the workforce, boosting tourism, cutting corporation tax rates (which are some of the highest in the world), reforming the energy sector, encouraging new industries such as bio-technology and labour market reform. Already, Japan has joined the Trans Pacific Partnership free trade negotiations. Many of the reforms being discussed are controversial but we believe that Prime Minister Abe has strong political capital and, although change cannot happen overnight, we expect the government to continue pushing ahead with this agenda.

One consequence of the changes above has been a weakening of the yen. Over the year it weakened from yen 78 to yen 98 against the US dollar. This happened because of the loosening of monetary policy in Japan on the one hand and a possible gradual tightening in the United States, as the economy continues to improve, on the other. The yen weakened against all major currencies with the moves against the euro and Korean won noteworthy in terms of the boost to competitiveness that this will give Japanese exporters. The current level of the yen already brings significant benefits for many Japanese export companies and we expect this to feed directly through to exporter company earnings. These companies will then increase wages and bonuses as well as increasing capital expenditure. Thus, the effects of the weaker yen will be positive for the domestic economy. It is important to remember that the weaker yen also increases prices of goods imported into Japan. To that extent a rapid depreciation of the currency is not necessarily positive. With prices rising and an increase in consumption tax due in April 2014, it is important that workers' pay starts to rise and we are carefully monitoring this. It is also important to note that economic growth is likely to slow next year due to the consumption tax rise.

Portfolio Performance

The Company's outperformance of the benchmark over the year was due to stock selection and gearing. The decision to increase the level of gearing close to the maximum permitted following the election result was particularly beneficial. Turnover was higher than in recent years as we reoriented the portfolio in line with the change to the macro-economic outlook. We reduced our exposure to relatively defensive, higher-yielding companies and increased the positions in banks, real estate and construction.

Several of the top performing stocks were internet related. Digital Garage invests in unlisted internet start-ups which include the recently listed Twitter. Kakaku.com is rapidly gaining users with its restaurant review website. Cookpad (online recipes) and Rakuten (e-commerce) also continue to see rapid rates of growth which are being boosted by the increasing use of smartphones. Other top performing stocks included Taiheiyo Cement which will benefit from increased construction spending under the LDP government as well as Hulic and Sumitomo Realty which will benefit from the improved outlook for the real estate sector. The main detractor was the non-ownership of Toyota which saw a substantial boost to earnings from the weaker yen.

Future Strategy

There are two pillars to our strategy. First, the improved outlook for export companies thanks to the weaker yen will feed directly through to the domestic economy in the form of higher profits and, in turn, higher wages. Furthermore, the drive for inflation should force companies and individuals out of cash savings and into riskier assets as they become concerned about their purchasing power being eroded. The portfolio is therefore overweight financial stocks. Banks will benefit from increased loan demand as well as being able to sell more investment products. Real estate companies will benefit as the improved economic outlook pushes down vacancy rates and drives up rents. We also expect housing and condominium sales to improve. Eventually we expect wages to rise which should, in turn, increase demand for discretionary goods and services. The portfolio is therefore overweight retailers. We also have a substantial portion of the portfolio in companies that will benefit from the new government's plan to increase public works spending including Taiheiyo Cement and bridge repair company Sho-Bond. The Company should also benefit as Prime Minister Abe starts his reform programme. For example, we believe the legalisation of casinos is likely and own several stocks that may be involved in this new industry.

Long term structural trends are the other core pillar of the holdings. On the export side, Japanese companies are global leaders in growth areas such as factory automation - as wages in Asia rise we expect factories to increasingly automate, with companies such as robot maker Fanuc ideally placed to benefit. Domestically there are also long term trends. The percentage of shopping done on the internet is still very low by global standards but we see no reason why this low level should persist. We therefore own shares in Japan's largest e-commerce company Rakuten. We think the time people spend using mobile devices such as smartphones and tablets will continue to increase, not least because Tokyo is the world's largest city with long average commuting times. We own several web content companies such as restaurant review company Kakaku.com.

We also invest in companies that will benefit from the ageing population. One example is Unicharm, the number one company in adult nappies. The ageing population should also mean that many sectors in Japan, such as retail, start to consolidate. One illustration of this is the Japanese drug store industry where the top ten companies have just over 30% market share. We expect that these companies will be the long term sector winners as "mom and pop" stores drop out of the industry. All of these are multi-year trends.

It is important to note that we do not think that the weaker yen solves the problems of much of corporate Japan. Some companies have lost their competitive advantage or are involved in industries in structural decline. For example, twenty years ago Japanese consumer electronics companies such as Sony, Panasonic and Sharp were global leaders with very valuable brands. Now, their products have become commoditised and they have been surpassed by low cost manufacturers in Taiwan, Korea and China. Even in areas where market shares remain high, technology changes are working against them. Thus, even though Canon is the global number one in printing, copying and cameras we believe that all these products are in structural decline. We do not have any exposure to such companies and sectors in the portfolio.

At JPMorgan we have a large team based on the ground in Tokyo and we conduct many company visits each year - around 2,400 company meetings in 2012 - to try to identify significant changes in sectors and companies. We expect this to be a source of continued competitive advantage. Overall, we are positive on the outlook for the economy, market, active fund management and the performance of the Company.

Nicholas Weindling

Investment Manager                                                                                                                                                                          

13th November 2013

Strategic Report

Principal Risks

With the assistance of the Manager, JPMorgan Asset Management (UK) Limited ('JPMAM'), the Board has drawn up a risk matrix, which identifies the key risks to the Company. These key risks fall broadly under the following categories:

• Investment Underperformance and Strategy: An inappropriate investment strategy, for example asset allocation, the level of gearing or the degree of portfolio risk, may lead to underperformance against the Company's benchmark index and peer companies, resulting in the Company's shares trading on a wider discount. The Board manages these risks by diversification of investments and through a set of investment restrictions and guidelines, which are monitored and reported on. JPMAM provides the Directors with timely and accurate management information, including performance data and attribution analyses, revenue estimates, liquidity reports and shareholder analyses. The Board monitors the implementation and results of the investment process with the Investment Manager, who attends all Board meetings, and reviews data which show statistical measures of the Company's risk profile. The Investment Manager employs the Company's gearing tactically, within a strategic range set by the Board. The Board holds a separate meeting devoted to strategy each year.

• Market: Market risk arises from uncertainty about the future prices of the Company's investments. It represents the potential loss the Company might suffer through holding investments in the face of negative market movements. The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by JPMAM. The Board monitors the implementation and results of the Investment process with the Investment Manager.

• Political, Economic and Governance: Administrative risks, such as the imposition of restrictions on the free movement of capital. These risks are discussed by the Board on a regular basis.

• Loss of Investment Team or Investment Manager: A sudden departure of the investment manager or several members of the investment management team could result in a short term deterioration in investment performance. The Manager takes steps to reduce the likelihood of such an event by ensuring appropriate succession planning and the adoption of a team based approach, as well as special efforts to retain key personnel.

• Discount: A disproportionate widening of the discount relative to the Company's peers could result in loss of value for shareholders. The Board regularly discusses discount policy and has set parameters for the Manager and the Company's broker to follow.

• Change of Corporate Control of the Manager: The Board holds regular meetings with senior representatives of JPMAM in order to obtain assurance that the Manager continues to demonstrate a high degree of commitment to its investment trusts business through the provision of significant resources.

• Accounting, Legal and Regulatory: In order to qualify as an investment trust, the Company must comply with Section 1158. Details of the Company's approval are given under 'Business of the Company' above. Were the Company to breach Section 1158, it may lose investment trust status and, as a consequence, gains within the Company's portfolio would be subject to Capital Gains Tax. The Section 1158 qualification criteria are continually monitored by JPMAM and the results reported to the Board each month. The Company must also comply with the provisions of the Companies Act 2006 and, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules and Disclosure and Transparency Rules ('DTRs'). A breach of the Companies Act could result in the Company and/or the Directors being fined or the subject of criminal proceedings. Breach of the UKLA Listing Rules or DTRs could result in the Company's shares being suspended from listing which in turn would breach Section 1158. The Board relies on the services of its Company Secretary, JPMAM, and its professional advisers to ensure compliance with the Companies Act, the UKLA Listing Rules and DTRs.

• Corporate Governance and Shareholder Relations: Details of the Company's compliance with Corporate Governance best practice, including information on relations with shareholders, are set out in the Corporate Governance Statement in the annual report.

• Operational: Disruption to, or failure of, JPMAM's accounting, dealing or payments systems or the Custodian's records may prevent accurate reporting and monitoring of the Company's financial position. Details of how the Board monitors the services provided by JPMAM and its associates and the key elements designed to provide effective risk management and internal control are included within the Risk Management and Internal Control section of the

Corporate Governance Statement in the annual report.

• Going concern: Pursuant to the Sharman Report, Boards are now advised to consider going concern as a potential risk, whether or not there is an apparent issue arising in relation thereto. Going concern is considered rigorously on an ongoing basis and the Board's statement on going concern is detailed in the annual report.

• Financial: The financial risks faced by the Company include market risk, liquidity risk and credit risk. Further details are disclosed in note 22 to the accounts in the annual report.

Related Parties Transactions

During the 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 year.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the annual report and accounts in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards) and applicable law. Under company law the Directors must not approve the financial statements unless they are satisfied that, taken as a whole, the annual report and accounts provide the information necessary for shareholders to assess the Company's performance, business model and strategy and that they give a true and fair view of the state of affairs of the Company and of the total return or loss of the Company for that period. In order to provide these confirmations, and in preparing these financial statements, the Directors must be satisfied that, taken as a whole, the annual report and accounts are fair, balanced and understandable; and the Directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business;

and the Directors confirm that they have done so.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations.

The accounts are published on the www.jpmjapanese.co.uk website, which is maintained by the Company's Manager, JPMorgan Asset Management (UK) Limited ('JPMAM'). The maintenance and integrity of the website maintained by JPMAM is, so far as it relates to the Company, the responsibility of JPMAM. The work carried out by the Auditors does not involve consideration of the maintenance and integrity of this website and, accordingly, the Auditors accept no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. The financial statements are prepared in accordance with UK legislation, which may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed in the Directors' Report, confirms that, to the best of their knowledge:

•     the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards) and applicable law, give a true and fair view of the assets, liabilities, financial position and return or loss of the Company; and

•     the Directors' Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

For and on behalf of the Board

Jeremy Paulson-Ellis

Chairman

13th November 2013

Income Statement

for the year ended 30th September 2013

		2013			2012
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments held at
fair value through profit or loss		-	124,427	124,427	-	(11,574)	(11,574)
Net foreign currency gains		-	9,302	9,302	-	141	141
Income from investments		6,041	-	6,041	8,121	-	8,121
Gross return/(loss)		6,041	133,729	139,770	8,121	(11,433)	(3,312)
Management fee		(459)	(1,835)	(2,294)	(368)	(1,475)	(1,843)
Other administrative expenses		(519)	-	(519)	(479)	-	(479)
Net return/(loss) on ordinary activities
before finance costs and taxation		5,063	131,894	136,957	7,274	(12,908)	(5,634)
Finance costs		(151)	(605)	(756)	(93)	(371)	(464)
Net return/(loss) on ordinary activities
before taxation		4,912	131,289	136,201	7,181	(13,279)	(6,098)
Taxation		(432)	-	(432)	(569)	-	(569)
Net return/(loss) on ordinary activities
after taxation		4,480	131,289	135,769	6,612	(13,279)	(6,667)
Return/(loss) per share (note 3)		2.78p	81.40p	84.18p	4.10p	(8.23)p	(4.13)p

Details of dividends paid and proposed are given in note 2 below.

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

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

	Called up		Capital
	share	Other	redemption	Capital	Revenue
	capital	reserve	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2011	40,330	166,791	8,632	91,291	7,080	314,124
Net (loss)/return on ordinary activities	-	-	-	(13,279)	6,612	(6,667)
Dividends appropriated in the year	-	-	-	-	(5,323)	(5,323)
At 30th September 2012	40,330	166,791	8,632	78,012	8,369	302,134
Repurchase and cancellation of the Company's own shares	(18)	-	18	(139)	-	(139)
Net return on ordinary activities	-	-	-	131,289	4,480	135,769
Dividends appropriated in the year	-	-	-	-	(5,888)	(5,888)
At 30th September 2013	40,312	166,791	8,650	209,162	6,961	431,876

Balance Sheet

at 30th September 2013

		2013	2012
		£'000	£'000
Fixed assets
Investments held at fair value through profit or loss		487,941	324,227
Current assets
Debtors		5,623	9,850
Cash and short term deposits		3,737	4,796
		9,360	14,646
Creditors: amounts falling due within one year		(2,494)	(36,739)
Net current assets/(liabilities)		6,866	(22,093)
Total assets less current liabilities		494,807	302,134
Creditors: amounts falling due after more than one year		(62,931)	-
Net assets		431,876	302,134
Capital and reserves
Called up share capital		40,312	40,330
Other reserve		166,791	166,791
Capital redemption reserve		8,650	8,632
Capital reserves		209,162	78,012
Revenue reserve		6,961	8,369
Total equity shareholders' funds		431,876	302,134
Net asset value per share (note 4)		267.8p	187.3p

The accounts were approved and authorised for issue by the Directors on 13th November 2013 and were signed on their behalf by:

Jeremy Paulson-Ellis

Director

Company registration number: 223583

Cash Flow Statement

for the year ended 30th September 2013

		2013	2012
		£'000	£'000
Net cash inflow from operating activities		3,738	4,795
Returns on investments and servicing of finance
Interest paid		(757)	(476)
Capital expenditure and financial investment
Purchases of investments		(264,472)	(121,148)
Sales of investments		226,068	96,134
Other capital charges		(3)	(5)
Net cash outflow from capital expenditure and financial investment		(38,407)	(25,019)
Dividend paid		(5,888)	(5,323)
Net cash outflow before financing		(41,314)	(26,023)
Financing
Net drawdown of loans		41,420	20,587
Repurchase and cancellation of the Company's own shares		(139)	-
Net cash inflow from financing		41,281	20,587
Decrease in cash and cash equivalents		(33)	(5,436)

Notes to the Accounts

for the year ended 30th September 2013

1.    Accounting policies

(a)  Basis of accounting

      The accounts are prepared in accordance with the Companies Act 2006, 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' (the 'SORP') issued by the AIC in January 2009. They have also been prepared on the assumption that approval as an investment trust will continue to be granted.

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

      The accounts have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of investments and derivative financial instruments at fair value.

      The policies applied in these accounts are consistent with those applied in the preceding year.

2.   Dividend

(a)  Dividends paid and proposed

	2013	2012
	£'000	£'000
Dividend paid
2012 final dividend of 3.65p (2011: 3.30p)	5,888	5,323
Dividend proposed
2013 final dividend of 2.80p (2012: 3.65p)	4,515	5,888

      The final dividend proposed in respect of the year ended 30th September 2013 is subject to approval at the forthcoming Annual General Meeting. In accordance with the accounting policy of the Company, this dividend will be reflected in the accounts for the year ending 30th September 2014.

(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010 ('Section 1158')

      The proposed dividend of £4,515,000 (2012: £5,888,000) is the amount on which the requirements of Section 1158 are considered. The revenue available for distribution by way of dividend is £4,480,000 (2012: £6,612,000).

3.   Return/(loss) per ordinary share

      The revenue return per share is based on the revenue earnings attributable to the ordinary shares of £4,480,000 (2012: £6,612,000) and on the weighted average number of shares in issue throughout the year of 161,282,215 (2012: 161,318,078).

The capital return per share is based on the capital return attributable to the ordinary shares of £131,289,000 (2012 loss: £13,279,000) and on the weighted average number of shares in issue throughout the year of 161,282,215 (2012: 161,318,078).

The total return per share is based on the total return attributable to the ordinary shares of £135,769,000 (2012 loss: £6,667,000) and on the weighted average number of shares in issue throughout the year of 161,282,215 (2012: 161,318,078).

4.   Net asset value per share

      The net asset value per share is based on the net assets attributable to the ordinary shareholders of £431,876,000 (2012: £302,134,000) and on the 161,248,078 (2012: 161,318,078) shares in issue at the year end.

5.   Status of preliminary announcement

2012 Financial Information

The figures and financial information for 2012 are extracted from the published Annual Report and Accounts for the year ended 30^th September 2012 and do not constitute the statutory accounts for that year.  The Annual Report and Accounts has been delivered to the Registrar of Companies and included the Report of the Independent Auditor which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

2013 Financial Information

The figures and financial information for 2013 are extracted from the Annual Report and Accounts for the year ended 30^th September 2013 and do not constitute the statutory accounts for the year.  The Annual Report and Accounts include the Report of the Independent Auditor which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The Annual Report and Accounts will be delivered to the Registrar of Companies in due course.

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 annual report will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM

The annual report will also shortly be available on the Company's website at www.jpmjapanese.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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