Final Results

RNS Number : 4626I

JPMorgan American IT PLC

11 March 2010

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN AMERICAN INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2009

 

Chairman's Statement

Investment Performance

Investors in US equities enjoyed a rollercoaster ride during 2009, with the rise in the S&P 500 Index of 26.0%, in Dollar terms, over the course of the year, disguising the dramatic fall and subsequent rebound that took place. Hampered by the strength of Sterling, your Company produced a total return on net assets, in Sterling terms, of 11.6% for the year to 31st December 2009, marginally underperforming the Sterling total return of the S&P 500 Index (our benchmark) of 12.2%. The Company's total return to shareholders was stronger, at 13.5%. Over the longer term, the Company's record is strong, particularly since 2002.

The Dollar, having begun 2009 at a rate of 1.44 to the pound, weakened over the year, ending at 1.61. This Sterling strength has meant that UK based investors saw their returns reduced by around 11.0%. In order to protect against currency fluctuations in respect of the Company's existing £50 million debenture, a currency hedge was put in place on 3rd October, 2001 at a $/£ rate of 1.46.

The Company's net asset value in Sterling total return terms thus underperformed its benchmark index by 0.6 percentage points over the year. Performance attribution data shows that the larger companies' portfolio underperformed by 2.7%, with the smaller companies' portfolio outperforming by 0.6% along with a positive contribution from gearing and the currency hedge. The investment management team has continued its policy of investing in larger, blue chip growth companies on attractive valuations.

Revenue Account and Dividends

Net revenue after taxation for the year was £4,540,000 (2008: £4,853,000) and earnings per share were 10.63p (2008: 11.36p). Revenue stood up well in what was a difficult year for dividend paying companies, with the Manager's underweight position in financial services proving particularly provident.

The Company's dividend policy has been to distribute all, or substantially all, of the available income in each year. Despite the modest decline in earnings, the Board is proposing to maintain last year's dividend of 11.0p per share and, in doing so, will be drawing around £160,000 from revenue reserves. Shareholders should note that income streams can vary significantly, and the Company's dividend payouts are likely to reflect those variations. After accounting for the payment of the proposed final dividend, this leaves a balance in revenue reserves of £10.0m (equivalent to 23.4p per share or 2.1 times our current payout). The dividend will be paid on 6th May 2010 to shareholders on the register on 9th April 2010.

Gearing

The Board of Directors sets the overall gearing strategy and guidelines and reviews these at each meeting. The investment management team manages the gearing levels actively within these agreed guidelines. At present, there is an upper limit of 20% of shareholders' funds and this can only be increased with Board consent. The £50 million debenture provides the potential to gear up to around 17%. As at the year end, the Company's net gearing level (offsetting cash and near cash against our debenture) was 111% of shareholders' funds, having ranged between 107% and 113% during the year.

Management of the Discount

The Company's discount (based on the NAV with debt at fair value and excluding income) narrowed by 0.6 percentage points over the course of the year, finishing at 3.3%. During the year the shares traded between a 5.0% discount and a 8.5% premium. Whilst the Company did not repurchase any shares during the year, your Board believes that such a facility is an important tool in the management of discount volatility. A resolution to renew the authority to allow the Company to repurchase up to 14.99% of its share capital will be submitted to the Annual General Meeting.

Investment Manager

The Company's objective is to provide shareholders with capital growth from a broad portfolio of North American investments. Your Board has once again thoroughly reviewed the capabilities of the Investment Manager in order to assess whether J.P.Morgan Asset Management remains the most appropriate manager of the Company's assets. In addition to scheduled Board Meetings, your Directors have undertaken additional strategy and investment meetings with the named investment managers, conducted comparisons with the peer group both in the UK and the US (with regard to performance, fee rates and costs of management) and spent time reviewing the investment management operation whilst in New York for a Board Meeting. We have concluded that the ongoing appointment of the existing Investment Manager is in the best interests of shareholders.

The Board

The Board has put in place procedures to ensure that the Company complies fully with the revised Combined Code and the AIC Code on Corporate Governance™.

Three Directors are seeking re-election at this year's Annual General Meeting. The Directors retiring by rotation are James Fox and James Williams, who, being eligible, offer themselves for re-election. In addition, I, having served as a Director for over nine years, also retire and offer myself for re-election. James Fox, who was appointed in 2003, performs the role of Chairman of the Audit Committee extremely efficiently and James Williams, who was also appointed in 2003, contributes significantly on a wide range of issues and the Board recommends their 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 own re-election, it has taken into account the ongoing requirements of the Combined Code, including the need to refresh the Board and its Committees. The Nomination Committee has carefully reviewed my performance as Chairman and the merits of my continued Chairmanship and recommends my re-election.

Annual General Meeting

The Annual General Meeting, will be held at Trinity House, Tower Hill, London EC3N 4DH on Wednesday 5th May 2010 at 2.30 p.m.

Outlook

The economic recovery in the US is evident in both GDP data and the robust earnings recovery seen from many of the companies in the investment portfolio. Whether this recovery is in a nascent phase that will not be fully realised is a question which is exercising policy makers in America and beyond. The investment management team remains fully invested but has recently reduced the gearing levels employed by the Company.

Hamish Buchan

Chairman                                                                                                             11th March 2010

Investment Manager's Report

Market Review

For the US stock market, the last 12 months have arguably been one of the most dramatic periods on record. The first few months of 2009 continued as 2008 had ended - with stock prices falling swiftly - and the decline continued into early March. By the time prices bottomed out, investors had witnessed one of the steepest stock market plunges and the worst economic collapses since the Great Depression of the 1930s. Banks largely stopped lending, layoffs soared, fear spread and consumer confidence declined sharply.

The market rebound was equally dramatic. Driven largely by coordinated efforts by the US Treasury and Federal Reserve to shore up confidence in the financial system and keep credit flowing, stocks, beginning in March, staged a significant 'relief rally' - the biggest since the 1930s - that spanned the entire US equity spectrum. By the end of the year, stocks had recouped significant portions of their losses - though major indices remained well below their highs set in the autumn of 2007. In the meantime, the US economy showed signs of life by expanding at an annualised rate of 2.8% in the third quarter, its first increase since the second quarter of 2008 and showed further improvement in the fourth quarter with an annualized 5.7% rate of growth. Within this volatile market environment, the NAV, despite its 11.6% return, slightly underperformed its benchmark.

Overall Asset Allocation

The investment management team is responsible for managing the allocation between the two investment portfolios, together with the levels of cash and gearing. In recent years your investment team has worked closely with the Board of Directors to develop modelling tools to assist in both asset allocation and gearing decisions. In 2009, the Company's gearing ranged between 107% and 113% of shareholders' funds, with the level at the year end being 111%. The level of gearing is adjusted at regular intervals within the gearing guidelines laid down by the Board to reflect the outlook on risk and return for both equities and bonds. After increasing the gearing level late in 2008, we maintained a relatively high level throughout 2009 due to our gearing asset allocation model favouring equities and our belief that the overall market provided decent value.

The weighting in the smaller companies portfolio ranged between 6.8% and 8.3% of the Company's total assets less current liabilities and ended the year at 7.7%. We believe that our ability to move between the two segments enhances potential returns to shareholders. Attribution data for 2009 shows that it was the smaller companies portfolio and gearing that gave the greatest contribution towards performance. The large cap underperformance was driven more by stock selection than by sector positioning as we did not shift the portfolio as rapidly as the market changed its appetite for riskier securities. Detailed reports on the larger and smaller companies portfolios are shown below.

Large Companies Portfolio

Our investment methodology continues to focus on investing in high quality, reasonably valued companies. This style leads us to invest in companies that exhibit good growth characteristics with growing earnings, strong cash flows and reasonable valuations. This approach produced mixed results throughout 2009. During the first quarter of the year, our philosophy and process yielded positive results as the market continued its sell off, with our defensive posture aiding the returns. Post the market nadir in March, the markets rallied significantly, largely being driven by a 'low quality' rally. Although towards the second half of the year we were largely able to keep pace, the portfolio struggled to keep up during the early stages of the rally.

The over arching theme was 'that which worked in 2008 generally did not in 2009'. Defensive positions in names such as McDonalds, Exxon Mobil and Lockheed Martin detracted from the portfolio's returns. On the flip side, we benefited from active positions in Schering Plough and Wyeth (both of which were acquired) and Dow Chemical.

 

Sector Weightings of the Large Cap Portfolio versus S&P 500 as at 31st December 2009

	Large
	Company		Overweight/
	Portfolio	S&P 500	Underweight
Sector	%	%	%
Technology	19.4	16.4	3.0
Integrated Oils	9.8	7.7	2.1
Financial Services	15.7	13.7	2.0
Producer Durables	6.7	5.7	1.0
Health Care	14.6	14.0	0.6
Consumer Discretionary	10.7	11.3	-0.6
Auto & Transportation	1.8	2.6	-0.8
Utilities	6.1	7.3	-1.2
Materials & Processing	2.8	4.1	-1.3
Other	0.9	2.4	-1.5
Consumer Staples	8.1	9.7	-1.6
Other Energy	3.3	5.0	-1.7

From a sector perspective, the health care and utilities sectors were the top contributors during the year. We began the year significantly overweight in the health care sector, although we reduced our weighting as the year progressed, due to uncertainty surrounding healthcare reform. Within the sector, we increased our position in Medco Health Solutions, which handles drug benefits for health plan sponsors. As the U.S. government continues to debate healthcare reform, Medco Health Solutions is positioned to be part of the solution. The company expects to profit more from generics in coming years as growing numbers of blockbuster drugs lose patent protection and low-cost generics reach the market; as a benefits manager, Medco makes a larger profit on them. Performance in the utilities sector was positively impacted by CenturyTel. This telecommunications provider has successfully made the transition from a rural phone company to a regional telecommunications company, with a formidable presence in 26 States, following their acquisition of Embarq.

The portfolio's relative performance was hurt by the financial services and consumer discretionary sectors. Results in the financials were hurt by the portfolio's underweight position in American Express. As the financial markets collapsed in 2008, American Express fell further and faster than its big credit card competitors MasterCard and Visa. The company collected $3.4 billion in Troubled Asset Relief Program ('TARP') funds amid concerns about rising defaults and debt. This year, the company repaid the money it received from the TARP, and the stock has quadrupled. Performance in the consumer discretionary sector was hindered by our underweight position in Amazon.com. While Amazon.com showed exceptionally strong growth in the holiday selling season, we believe there are better opportunities elsewhere in the sector.

The table below shows the largest positive and negative stock contributors to the portfolio's performance:

		Average
		weight	Return	Impact
Stock	Action	%	%	%
Positive Contributors
Corning	D, I	1.1	105.6	0.9
MasterCard	D, I	1.4	79.7	0.8
Schering Plough	D, S	1.3	67.1	0.7
Wyeth	D, S	1.5	37.1	0.6
Coach	B, I	0.5	77.2	0.5
Negative Contributors
Exxon Mobil	D, I	6.0	-12.6	-0.7
McDonalds	D	2.8	4.0	-0.6
Lockheed Martin	D	1.4	-7.6	-0.4
Apple Computer	I	1.3	147.1	-0.3
Safeway	D, S	0.6	-8.8	-0.3

Return in US$

I = Increased;  D = Decreased;  S = Sold;  B = Bought.

Source: Wilshire

Smaller Companies Portfolio

2009 was a year for the record books for small caps, with the Russell 2000 down over 30% at one point only to rally back to its eighth-best year since its inception with a positive return of 27.2% in Dollar terms. It was also a less challenging year for active managers as most managers, including ourselves, outperformed their benchmarks. Over the course of the year, our small cap holdings had a positive effect on the overall performance of the Company.

Amongst individual stocks, the selection of Switch & Data Facilities, a provider of data centre services, and upscale retailer J. Crew were top contributors. Switch & Data Facilities is being acquired by Equinox and the deal is expected to close later this year. J. Crew's share price rebounded as investors rewarded the company for its improving 'same store' sales and tighter inventory management.

In contrast, the portfolio's performance was adversely affected by its exposure to Meridian Bioscience, a leader in diagnostic test kits. It appears that growth within the company's US diagnostic business remains marginally weaker than expected and real growth within the European business will probably be slightly below expectations. We believe that its core organic revenue growth potential and its operating margins of greater than 30% puts it in the upper tier of its peer group. Moreover, Meridian pays a healthy dividend, which makes it unique amongst its competitors.

As we look out to 2010, we have seen quite a bit of an improvement in the market indicators. Volatility has fallen, credit spreads have narrowed, fund flows have picked up again and earnings are forecast to rise. These improvements should help boost performance, but again relative to large caps, it might not be enough. We think the small cap market will be less liquid and probably more volatile than in previous years and thus fundamentals should start to matter along with quality. This should bode well for our portfolio.

Market Outlook

Our belief is that the US economy will grow at a slightly above-trend rate in 2010, just enough to nudge the unemployment rate a bit lower. Business inventories are only in the early stages of being replenished and high corporate cash balances are likely to be used, in part, to fund new capital expenditures, especially after the sharp cuts seen in 2009. Despite the popular assumption that the highly leveraged consumer will be a small factor in the recovery, we do believe increased consumption will contribute to growth in 2010. Estimates for US GDP growth are much lower than would be typical after such a deep recession, as significant headwinds, such as demand being restrained by weakness in bank credit, sluggish growth in employment and the still saturated residential and commercial real estate markets, have developed.

The rescue operation performed by both the US Government and The Federal Reserve (Fed) in 2008-2009 restored investor confidence, which allowed markets to bounce back from their March 2009 lows. However, official support for a number of markets is set to expire over the coming months. The Fed's purchases of agency mortgage-backed securities will cease at the end of March and the tax credit for US homebuyers is currently scheduled to end in April. Whether or not the financial markets and broader economy can stand on their own will therefore depend on demand from the private sector being strong enough to take up the slack. Also, in the forefront of investor's minds is how interest rates will be impacted by the recovery of economic activity, potentially higher inflation expectations and deteriorating fiscal budgets.

S&P 500 operating earnings per share are expected to rise by 25% or more this year, as sustained cost containment and moderate economic growth allow firms to benefit from both revenue gains and higher profit margins. In addition, US equities still look attractive on a free cash flow valuation basis, especially given today's low borrowing costs. While we expect the upward trend for the equity markets to remain mostly intact, given the size of last year's strong advance and the prospect of less of a tailwind provided by government stimulus, the vigour of the 2009 rally is unlikely to be maintained.

Garrett Fish

Investment Manager                                                                                                      11th March 2010

Principal Risks

With the assistance of the Manager, 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 and Strategy: An inappropriate investment strategy, for example asset allocation or the level of gearing, 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 this risk by diversification of investments through its investment restrictions and guidelines which are monitored and reported on regularly by the Managers. J.P. Morgan Asset Management ('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 Managers, who attend the majority of Board meetings, and reviews data which shows statistical measures of the Company's risk profile. The Investment Managers employ the Company's gearing tactically, within a

strategic range set by the Board.

• Market: Market risk arises from uncertainty about the future prices of the Company's investments. This market risk comprises three elements - currency risk, interest rate risk and other price risk. 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 Manager.  However, the fortunes of the portfolio are significantly  determined by market movements in US equities, the rate of exchange between US Dollars and Sterling pounds and interest rate changes.

• Accounting, Legal and Regulatory: In order to qualify as an investment trust, the Company must comply with Section 842 of the Income and Corporation Taxes Act 1988 ('Section 842'). Details of the Company's approval are given under 'Business of the Company' above. Were the Company to breach Section 842, it might lose investment trust status and, as a consequence, gains within the Company's

portfolio would be subject to Capital Gains Tax. The Section 842 qualification criteria are monitored by the Manager and the results reported to the Board each month. The Company must also comply with the provisions of the Companies Act 2006 and, as its shares are listed on the London Stock Exchange, the UKLA Listing Rules. A breach of the Companies Act 2006 could result in the Company and/or the Directors being fined or the subject of criminal proceedings. Breach of the UKLA Listing Rules could result in the Company's shares being suspended from listing, which in turn would breach Section 842. The Directors seek to comply with all relevant regulation and legislation in the UK, Europe and the US and rely on the services of its Company Secretary and Manager to monitor compliance with all relevant requirements.

• 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 report.

• Operational: Disruption to, or failure of, JPMAM's accounting, dealing or payments systems or the custodian's records could 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 internal control are included within the Internal control section of the Corporate Governance report.

• Financial: The financial risks faced by the Company include market price risk, interest rate risk, foreign currency risk, liquidity risk and credit risk. Further details are disclosed in note 22.

• Political and Economic: Changes in financial or tax legislation, including in the European Union, may

adversely effect the Company. The Manager makes recommendations to the Board on accounting, dividend  and tax policies and the Board seeks external advice where appropriate. In addition, the Company is subject to political risks, such as the imposition of restrictions on the free movement of capital.

Directors' Responsibilities in Respect of the Accounts

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

Company law requires the Directors to prepare accounts for each financial year. Under that law the Directors have elected to prepare the accounts 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 accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for

that period. In preparing these accounts, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgments and 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 accounts on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The Directors are responsible for keeping adequate 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.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The accounts are published on the www.jpmamerican.co.uk website, which is maintained by the Company's Manager, J.P. Morgan 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.

Statement under the Disclosure & Transparency Rules 4.1.12

Responsibility Statement

We confirm to the best of our knowledge:

(a) the accounts, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

(b) this Annual 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 they face.

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.jpmamerican.co.uk.

For further information please contact:

Andrew Norman

For and on behalf of

JPMorgan Asset Management (UK) Limited, Secretary

020 7742 6000

 

Income Statement

for the year ended 31st December 2009

		2009				2008
	Revenue	Capital	Total	Revenue		Capital	Total
	£'000	£'000	£'000	£'000	£'000		£'000
Gains/(losses) on investments held at
fair value through profit or loss	-	25,902	25,902	-	( 10,732)		(10,732)
Net foreign currency gains/(losses)*	-	5,955	5,955	-	(12,726)		(12,726)
Income from investments	7,072	-	7,072	7,846	-		7,846
Other interest receivable and similar income	12	-	12	310	-		310
Gross return/(loss)	7,084	31,857	38,941	8,156	(23,458)		(15,302)
Management fee	(325)	(1,299)	(1,624)	(351)	(1,406)		(1,757)
Performance fee write back / (charge)	-	108	108	-	(1,257)		(1,257)
VAT recoverable	-	-	-	100	85		185
Other administrative expenses	(465)	-	(465)	(423)	-		(423)
Net return/(loss) on ordinary activities
before  finance costs and taxation	6,294	30,666	36,960	7,482	(26,036)		(18,554)
Finance costs	(694)	(2,775)	(3,469)	(694)	(2,774)		(3,468)
Net return/(loss) on ordinary activities
before  taxation	5,600	27,891	33,491	6,788	(28,810)		(22,022)
Taxation	(1,060)	52	(1,008)	(1,935)	870		(1,065)
Net return/(loss) on ordinary activities
after taxation	4,540	27,943	32,483	4,853	(27,940)		(23,087)
Return/(loss) per share (note 3)	10.63p	65.40p	76.03p	11.36p	(65.40)p		(54.04)p

*Includes £6,947,000 gain (2008: £14,182,000 loss) on a forward foreign currency contract which acts to hedge the Currency risk in respect of the geared portion of the portfolio.

The dividend proposed in respect of the year ended 31st December 2009 amounts to 11.0p (2008: 11.0p) per share, costing £4,700,000 (2008: £4,700,000).

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	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31st December 2007	10,682	18,906	8,151	269,020	14,711	321,470
Repurchase and cancellation of the
Company's own shares1	-	-	-	(5)	-	(5)
Net (loss)/return on ordinary activities	-	-	-	(27,940)	4,853	(23,087)
Dividends appropriated in the year	-	-	-	-	(4,700)	(4,700)
At 31st December 2008	10,682	18,906	8,151	241,075	14,864	293,678
Net return on ordinary activities	-	-	-	27,943	4,540	32,483
Dividends appropriated in the year	-	-	-	-	(4,695)	(4,695)
At 31st December 2009	10,682	18,906	8,151	269,018	14,709	321,466

¹Comprises stamp duty on shares repurchased for cancellation in the previous year.

Balance Sheet

at 31st December 2009

	2009	2008
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	357,900	331,144
Investment in liquidity fund held at fair value through profit or loss	8,745	14,369
	366,645	345,513
Current assets
Derivative instrument	4,628	-
Debtors	518	627
Cash and short term deposits	501	2,899
	5,647	3,526
Current liabilities
Creditors: amounts falling due within one year	(654)	(2,480)
Derivative instrument	-	(2,319)
Net current assets/(liabilities)	4,993	(1,273)
Total assets less current liabilities	371,638	344,240
Creditors: amounts falling due after more than one year	(49,753)	(49,724)
Provisions for liabilities and charges	(419)	(838)
Total net assets	321,466	293,678
Capital and reserves
Called up share capital	10,682	10,682
Share premium	18,906	18,906
Capital redemption reserve	8,151	8,151
Capital reserves	269,018	241,075
Revenue reserve	14,709	14,864
Shareholders' funds	321,466	293,678
Net asset value per share (note 4)	752.4p	687.4p

Cash Flow Statement

for the year ended 31st December 2009

	2009	2008
	£'000	£'000
Net cash inflow from operating activities	3,582	4,982
Returns on investments and servicing of finance
Interest	(3,444)	(3,439)
Capital expenditure and financial investment
Purchases of equity investments	(107,625)	(98,673)
Purchases of liquidity fund	(33,173)	(297)
Sales of equity investments	106,584	66,694
Sales of liquidity fund	37,381	13,806
Other capital charges	(16)	(7)
Net cash inflow/(outflow) from capital expenditure
and financial investment	3,151	(18,477)
Dividend paid	(4,695)	(4,700)
Net cash outflow before financing	(1,406)	(21,634)
Financing
Repurchase and cancellation of the Company's own shares	-	(671)
Net cash outflow from financing	-	(671)
Decrease in cash in the year	(1,406)	(22,305)

Notes to the Accounts

for the year ended 31st December 2009

1.          Accounting policies

            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' (the 'SORP') issued by the Association of Investment Companies (AIC) in January 2009. All of the Company's operations are of a continuing nature.

2.         Dividends

		2009	2008
		£'000	£'000
	Dividends paid and proposed
	Unclaimed dividends refunded to the Company1	(5)	-
	2008 Final dividend paid of 11.0p (2007: 11.0p)	4,700	4,700
	Net dividend paid in the year	4,695	4,700
	2009 Final dividend proposed of 11.0p (2008: 11.0p)	4,700	4,700

¹Represents dividends which remain unclaimed after a period of 12 years and thereby become the property of the Company.

            The final dividend has been proposed in respect of the year ended 31st December 2009 and 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 31st December 2010.

3.         Return/(loss) per share

            The revenue return per ordinary share of 10.63p (2008: 11.36p) is based on the revenue earnings attributable to the ordinary shares of £4,540,000 (2008: £4,853,000) and on the weighted average number of shares in issue during the year of 42,725,949 (2008: 42,725,949).

            The capital return per ordinary share of 65.40p (2008: 65.40p loss) is based on the capital return attributable to the ordinary shares of £27,943,000 (2008: £27,940,000 loss) and on the weighted average number of shares in issue during the year of 42,725,949 (2008: 42,725,949).

            The total return per ordinary share of 76.03p (2008: 54.04p loss) is based on the total return attributable to the ordinary shares of £32,483,000 (2008: £23,087,000 loss) and on the weighted average number of shares in issue during the year of 42,725,949 (2008: 42,725,949).

4.         Net asset value per share

            The net asset value per share of 752.4p (2008: 687.4p) is based on the net assets attributable to the ordinary shareholders of £321,466,000 (2008: £293,678,000) and on the 42,725,949 (2008: 42,725,949) shares in issue at the year end.

5. Status of announcement

2008 Financial Information

The figures and financial information for 2008 are extracted from the published Annual Report and Accounts for the year ended 31st December 2008 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 Auditors which was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985.

2009 Financial Information

         The figures and financial information for 2009 are extracted from the Annual Report and Accounts for the year ended 31st December 2009 and do not constitute the statutory accounts for the year.  The Annual Report and Financial Accounts includes the Report of the Independent Auditors 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.

Annual Report and Accounts

The Annual Report and Accounts will be posted to shareholders on or around 18th March 2010 and will shortly be available on the Company's website (www.jpmamerican.co.uk) or in hard copy format from the Company's Registered Office, Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ

JPMORGAN ASSET MANAGEMENT (UK) LIMITED

 

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