Final Results

RNS Number : 3703U

JPMorgan Asian Investment Tst PLC

20 December 2011

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN ASIAN INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 30th SEPTEMBER 2011

Chairman's Statement

Performance

In what was an extraordinary period for world and Asian markets, the Company's portfolio returned -21.1% net of management fees and expenses, underperforming our benchmark index by 7.5 percentage points. The Company's diluted net asset value ('NAV') total return (which assumes that the 11.7 million Subscription shares outstanding at 30th September 2011 were all exercised at 176p per share) was -20.1% and the return to Ordinary Shareholders, which includes the effect of a narrowing in the year of the Company's discount to NAV, was -17.8%. In their report the investment managers give greater detail on the key factors which influenced performance in the year under review.

In 2006 your Board decided to change the investment style of the Company, following a number of years of respectable, but broadly in-line performance, with our benchmark index. The Company's investment managers were authorised to adopt a higher conviction investment approach, which involved holding fewer stocks in a more concentrated portfolio which they rated highly, regardless of benchmark weighting, and a nimbler and more flexible attitude to gearing. Although it was recognized by the Board that this investment approach would increase the risk profile of the portfolio and that the Company's returns would diverge, at times significantly, from those delivered by our benchmark, we expected that Shareholders would benefit from better relative returns over time. It is therefore disappointing to note that the underperformance against our benchmark this year, much of which occurred in the last six weeks of the Company's financial year, principally from stock selection in China and Hong Kong, means that relative performance is now also behind our benchmark over longer time periods.

Your Board has spent much time with J.P.Morgan Asset Management ('JPMAM') analysing in detail the causes of the underperformance. One major contributory factor was JPMAM's belief that major Asian economies would effectively de-couple from the turmoil in the Eurozone and the debt problems in the US. JPMAM favoured China over other markets in Asia, in the expectation of falling inflation and looser monetary policy in due course, with a selection of sectors and stocks reflecting that view. The positioning of our portfolio, particularly in China and Hong Kong, at a time when the global economic outlook was so unstable, appears in retrospect to have been ill judged and this severely and adversely affected performance. The Board does not fault JPMAM generally, nor our investment managers in particular, for lack of conviction: on the contrary, JPMAM made certain global macro-economic calls on asset allocation which have yet to deliver, but they were well argued and have been consistently applied. As a consequence, our portfolio underperformed the benchmark index by 6.2 percentage points in September alone, as investors retreated still further from Chinese stocks. It was an extremely uncomfortable time for any investment manager with a bottom up stock picking approach and a particularly uncomfortable time for our own investment managers.

Future Management Arrangements

We have concluded after our extensive discussions with JPMAM that it is in the Company's best interests that the management of the portfolio move to Hong Kong from Singapore. Companies listed on the markets of China, Hong Kong, South Korea and Taiwan account for approximately 70% of our benchmark index. The proximity of the investment manager to these northeast Asian markets and also to the country specialist teams in JPMAM's Hong Kong office who follow these and other Asian markets is, we believe, critically important at this juncture. Accordingly Jeffrey Roskell, an investment manager with more than 19 years of fund management experience, will take over as the Company's lead investment manager with effect from 1st January 2012. Jeff has been managing Asia ex-Japan portfolios for JPMAM in Hong Kong for 11 years and is a senior member of its Pacific Region Group.

Joshua Tay has served as our lead investment manager for the past five years, more recently supported by Pauline Ng. Investors who have met Joshua at AGMs or in other meetings have always appreciated his candour, his commitment, his energetic drive to seek out and invest in great companies. We wish him very well in the future.

In appointing Jeff Roskell, we signal no fundamental change of investment management approach, but will closely monitor how JPMAM responds to the challenges it faces in its Asian portfolio performance. Jeff has the immediate task of boosting our performance and the Board will give him all possible support to achieve this.

Revenue and Dividends

Revenue per share for the year amounted to 2.23p (on an undiluted basis) and the Board is recommending a final dividend of 2.20p which, if approved by Shareholders, will be payable on 10th February 2012 to Shareholders on the register at the close of business on 6th January 2012.

Continuation Vote and Discount Management

It was pleasing that Shareholders voted overwhelmingly in favour of the continuation of the Company as an investment trust for a further three years at our annual general meeting in January 2011. The Company's next continuation vote will be laid before Shareholders at the annual general meeting to be held in 2014.

In addition to the regular three yearly continuation vote, the Board closely monitors the level of discount at which the Company's Ordinary shares trade relative to their NAV. Over the year the average daily discount, using the Company's diluted cum-income NAV, was 8.9%.

As part of its range of tools to manage the discount the Board obtained Shareholder approval at the Company's general meeting in February to implement, at its discretion, a conditional tender offer for up to 5% of the Company's Ordinary shares, at a 2% discount to diluted cum income NAV, less the costs of effecting the tender, if the Company's Ordinary shares traded at an average daily discount of more than 9% relative to their diluted cum-income NAV in the period between 1st April and 30^th September 2011. As the Ordinary Shares traded marginally above this 9% level over this period, the Board has decided to exercise its discretion and to implement a tender offer for up to 5% of the Ordinary shares in issue on the record date of 30th September 2011. Subscription Shareholders can also participate in this tender if they exercise their conversion rights by 30th December 2011. The documentation in relation to this Tender Offer is enclosed separately with the Company's 2011 Report & Accounts.

Subject to receiving the necessary Shareholder approval at the forthcoming Annual General Meeting, the Board intends to conduct further tenders on the same basis if the Company's Ordinary shares trade at an average daily discount of more than 9% relative to their diluted cum-income NAV over the period between 1st October 2011 and 31st March 2012 and the period between 1st April 2012 and 30th September 2012. Shareholders should note that these tender offers will, however, remain at the discretion of the Board and be subject to prevailing market conditions at the time, so they should place no expectation on these tender offers being implemented. In addition to these conditional tender offers the Board has decided to amend its discount management policy and will now, subject to market conditions, consider buying back shares with the objective of stabilising the discount between 8 and 10% to their diluted cum-income NAV and provide an uplift in NAV per share for continuing investors (as a result of those shares being acquired at a discount to their NAV). It is intended that this will be the Board's policy for the year ahead and the Directors will therefore propose a resolution at the forthcoming Annual General Meeting to authorise the Company to repurchase its Ordinary and Subscription shares.

The Board has been actively seeking to stabilize the discount since the year end and has bought back a further 1,095,000 shares in the market to the date of this announcement.

Subscription Shares

The Company issued 32,000,805 Subscription shares as a bonus issue to qualifying Shareholders on the basis of one Subscription share for every five Ordinary shares held in February 2009. Each Subscription share confers the right (but not the obligation) to subscribe for one Ordinary share at predetermined prices on any business day during the period from 1st April 2009 until 31st March 2014, after which the rights on the Subscription shares will lapse. Between 1st October 2010 and 30th September 2011, 158,613 Subscription shares were converted into Ordinary shares, raising proceeds of £279,000. As at the date of this Report, a further 9,696 Subscription shares have been converted, meaning that a total of £27,940,000 has been raised for investment by the Company since the Subscription shares were issued, with 63.4% of the original allotment of Subscription shares being converted.

On 1st April 2012, the exercise price of the outstanding Subscription shares will step up for the final time to 203p per share from the current 176p per share. At the time of writing the Company's Ordinary share price, is 183p, which despite the Company's recent performance remains above the current exercise price, but below the final step up price. A reminder about the final step up in exercise price will be sent to Subscription Shareholders in February next year. Further details on the Subscription shares, including the apportionments for capital gains tax purposes and how they may be exercised, can be found on the Company's website at www.jpmasian.co.uk and on page 68 of the Company's 2011 Report & Accounts.

Manager

In addition to the comprehensive review of the Company's recent portfolio performance and the changes subsequently agreed with JPMAM regarding its future investment management arrangements, the Board has also carried out its formal annual review of the company secretarial, administration and marketing services provided to the Company by JPMAM. After full consideration, the Board concluded that the continued appointment of JPMorgan Asset Management (UK) Limited for provision of these services on the terms agreed is in the interests of Shareholders.

Performance Fee

As the Company's NAV total return underperformed the benchmark, this has resulted in a negative performance fee calculation of £5,900,000, which is carried forward and must be made good by future outperformance before any performance fee can be accrued or paid.

Borrowing Facilities

The Company has a £30 million three year multi currency loan facility with ING Bank in place which will expire in August 2013. In May the Company's £25 million five year multi currency loan facility with Lloyds Banking Group expired. Given the increasing levels of uncertainty and the investment managers' growing caution, the Board decided not to replace this facility at that time. The Board's policy permits the investment managers to utilise gearing within a range of 90-120% invested.

Board

The Board was very pleased during the year to announce the appointment of Dr Linda Yueh as a non-executive Director with effect from 1st July 2011. A recruitment consultancy was engaged to assist with the appointment and the Board considered issues such as diversity and balance of skills in its selection process. Ultimately, we were able to select the most outstandingly competent candidate and Dr Yueh has already proved to be a strong addition to the Board. In times such as these, of massive global market upheaval and instability, we are fortunate indeed to enjoy the input of a University of Oxford Economics Tutor and distinguished author and broadcaster, whose grasp of the elements of China's economic and social development is internationally renowned. Dr Yueh was recruited to fill the enormous gap left by Mr Alun Evans, who has been a Director since 2001 and who will be retiring at the forthcoming Annual General Meeting. During his time in office, Mr Evans has proved to be a most valuable member of the Board and his insights into geopolitical affairs will be sorely missed. We set great store by the quality and diversity of directors' individual input, demanding intellectual rigour and fierce independence of mind: Alun Evans set an unprecedentedly high standard on both scores.

Annual General Meeting

This year's Meeting will be held at the Trinity House, Tower Hill, London EC3N 4DH onWednesday, 1st February 2012 at 12.00 noon. In addition to the formal proceedings, there will be a presentation by Jeff Roskell who will also be available to respond to questions on the Company's portfolio, his investment strategy and outlook for Asian markets. Following the Meeting there will be an opportunity for Shareholders to meet the Board and Jeff over a buffet lunch and I look forward to seeing as many of you as

possible.

Outlook

Since the Company's year end global markets have remained extremely volatile. Following a strong rally in Asian equities in October we saw another reversal in November and markets will probably remain unsettled at least until there is a credible and co-ordinated response to the Eurozone crisis.  Notwithstanding this turbulence, your Board remains convinced of the longer term relative attraction of investing in Asia ex Japan equity markets and therefore looks forward to seeing our new investment manager adeptly exploiting the opportunities which will present themselves over the coming months.

James M Long

Chairman        

20th December 2011

Investment Managers' Report

Market Review

The twelve months to 30th September 2011 have been one of the most challenging periods for Asian equities in the past decade. The MSCI AC Asia ex Japan Index fell by 13.6% in sterling terms over this period, compared to the MSCI World's 5.9% decline. In Asia, particularly in India, Indonesia and China, the main drivers of growth remained domestic consumption and domestic investment rather than the export sector. Gearing at government, corporate and personal levels remained low throughout the period. Nonetheless, inflation across Asia remained high, leading to monetary policy being tightened throughout the year. This had a negative effect on investor sentiment during the period under review.

Asian markets were largely directionless for the last quarter of 2010 and the first quarter of 2011, as persistently strong inflation and tighter monetary policy neutralised continued strong economic and corporate earnings growth. In March, markets seemed to have reached a bottom - earnings were strong, inflation and monetary tightening appeared to have peaked across Asia, and the China National People's Congress meeting reaffirmed the Chinese government's commitment to 'harmonious growth' in the country's twelfth Five-Year Plan. In particular, the Five-Year Plan aimed to address rising inequality and create an environment for more sustainable growth by prioritising more equitable wealth distribution, increased domestic consumption, and improved social infrastructure and social safety nets. This included a target to build 36 million social housing units over the next five years. This gave rise to renewed optimism that, having underperformed regional and global markets for over eighteen months, Chinese equities, which were then trading at one of the lowest valuation levels in the region, had bottomed.

After a generally firm period from mid-March until the end of June, Asian markets then collapsed by over 20% in the third quarter of 2011. The principal reason was continued concern over sovereign credit in the developed world, as illustrated by a spike in Italian bond yields, and consequent concerns over the European banking system. The reactive nature of policy response in Europe and brinksmanship over the debt ceiling in the US turned sentiment sharply negative amidst signs of slowing growth and concerns over a potential double dip recession. Asian companies linked to the global economy, particularly in Taiwan and Korea, saw their earnings forecasts revised down sharply.

Most importantly for Asia, concerns about China not being able to 'bail out' the West were transformed into worries about a potential hard landing for its economy. This caused a major sell-off in cyclical and policy-related sectors such as property and commodities. As a result, China underperformed the region during this period. Corporate earnings in India were revised down from early in the year thanks to persistent high inflation of 9% which led to the Reserve Bank of India increasing interest rates by 2.25% over the past twelve months. In addition, political paralysis weighed heavily on investment, particularly in infrastructure.

Outperforming markets over the review period were the other more domestic-oriented countries, such as Indonesia, and the more insulated / defensive countries such as Malaysia. The election in Thailand in July was decisive and there were encouraging indications that the new Thaksin government would act prudently.

Performance

Over the twelve months ended 30th September 2011, the Company's portfolio returned -21.1%, net of management fees and expenses, underperforming the benchmark index by 7.5 percentage points. Over the course of the year we employed gearing of approximately 102% on average. Both asset allocation and stock selection detracted from performance, with stock selection in China accounting for approximately 80% of the underperformance. On the asset allocation side, our average overweight position in China and India, coupled with our underweight position in Malaysia, were the main negatives. However, our overweight in Thailand and Indonesia contributed positively to performance.

At the stock level, selection was strongest in Korea. In particular, our overweight in Samsung Engineering was one of the top contributors to performance. Its earnings were boosted by strong order books throughout the year. Our overweight in Korea Kumho Petrochemical benefited from strong product pricing due to supply discipline, and our holding in OCI Co., a manufacturer of polysilicon (a material used in solar cells), was boosted by incremental order growth and favourable industry trends earlier in the year. Several of our Korean consumer names, such as tobacco stock KT&G and cosmetics company Amorepacific, also contributed strongly to performance over the year.

The positive contributors were however heavily outweighed by the negative contribution from stock selection in China and Hong Kong. Our holdings in property (Poly Hong Kong, China Resources Land), building materials (China National Building Material, BBMG), and in banks (Agricultural Bank of China) were the major detractors from performance. Positions in these companies were bought early in 2011 on the basis of attractive relative valuations and expected strong earnings growth.

We had a strong preference for cement companies because of consolidation in the sector and supply pricing discipline. We believed this would feed through to stronger earnings, despite the perceived cyclical nature of these stocks. As an example of the volatility in the market, cement and building materials stocks almost doubled between March and June of 2011, before dropping by over 60% in the third quarter of 2011. For the year under review, they ended up as net detractors to performance. We were also hurt by stock selection in Singapore, where our overweight in Midas Holdings, a producer of aluminium parts used in train carriages in China, hurt performance after a spate of rail accidents in China led to speculation that China would slow its rail expansion. Otto Marine, a shipbuilder, was also affected by the global slowdown as fears grew of slowing orders and reduced shipping rates.

Portfolio Activity and Positioning

Enduring problems in Europe and the US made us enter the year very cautious about the developed world and with a firm belief that Asian growth and the absence of systemic debt problems in Asia would see the region outperform. Accompanying that belief was the view that domestic consumption would remain vibrant, particularly in China, and that domestic consumption stocks would make positive contributions. We were particularly sensitive about valuations believing that, against the negative world backdrop, cheap valuations would be rewarded and cheap underperformers would be bought by the cautious. We believed such stocks would be defensive in the event of further periods of selling. China had underperformed for three consecutive years, was very cheap and had the expected catalyst of an imminent (we believed) end to the tightening cycle and soft landing ahead for its economy. Corporate earnings were still growing and the market continued to see upgrades to these during the first half of this year.

Within China, banks and properties were the two sectors where we saw the highest pessimism amongst investors and thus the best value. We also took the view that inflationary pressures would decline going into the third quarter, which would allow policy to be eased. For these reasons we raised our weighting to China in July and added more to property names to take advantage of an anticipated recovery in the market as inflation peaked. Inflation did, indeed, peak in July coming in at 6.5% versus 6.1% in August. This should have provided a boost to China equities. However, the coincidence of this slowdown in China with concerns over OECD growth and funding simply lead to investors de-risking their portfolios. The absence of any policy response in the quarter, and the evident determination of the Chinese leadership to focus on cooling continued property speculation, led to China underperforming the region.

Performance has clearly been disappointing. Our strategy has been to continue to focus closely on domestic names where we see good fundamental value. We have also maintained a low exposure to small cap stocks. With the benefit of hindsight, our overweight in China was premature and our optimism about appetite for Asia's growth advantages outweighing risk aversion misplaced. We have taken advantage of the dislocation in the market to sell outperformers such as our consumer staples holdings in Korea (KT&G, Amorepacific) and have added more to banks, property and cement stocks in China following the sell-off.

Market Outlook

Valuations in Asia are slightly below historic averages but not yet at extreme levels. Without a major change in global sentiment and consequent upward revisions to Asian corporate profits, it is currently hard to imagine any catalyst for Asian markets trading materially above historic averages. A 15% correction from current levels would however put valuations into 'stressed' territory where one would expect to see upside opportunity.

Deleveraging will continue in the developed world. Government deficits will continue to gain attention and will allow limited fiscal flexibility. Hence asset markets are likely to remain both volatile and rotational, for which reason we expect to be both cautious and flexible. In response to tighter fiscal policy, monetary policy will have to remain accommodative.

For Asia, muted growth in the OECD suggests that again export growth will not be the primary driver and this will remain a headwind for overall growth and sentiment in the region, with GDP trimmed but still comfortably stronger than in the OECD. Export markets, such as Taiwan, will remain vulnerable to weak consumption in the West.

Until recently, concerns in Asia have been almost the opposite of the developed world. With healthy balance sheets, Asian governments were able to stimulate their economies post the global financial crisis in 2008 and households and corporate were willing to increase leverage in response to falling interest rates. Demand in most Asian economies recovered quickly. However, this brought with it a rebound in inflation and policy tightening, particularly in India and China, which has been a drag on markets. We see this tightening phase ending and the structural growth advantage of 'domestic' Asia coming to the fore.

We will therefore continue to prefer domestically-oriented businesses in markets such as China, India, Indonesia and Thailand. The exact weighting and balance between these markets will very much depend on valuations. The global backdrop reinforces our conviction in the investment case of Asia. We believe that 2012 will provide us with attractive entry points into equities in Asia which will lead to strong performance for our shareholders in the longer term.

Joshua Tay

Pauline Ng

Investment Managers

20th December 2011

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, in areas such as asset allocation or the level of gearing, may lead to underperformance against the Company's benchmark index and peer companies, and may result in the Company's shares trading on a wider discount. The Board seeks to manage these risks by diversification of investments through its investment restrictions and guidelines which are monitored and reported on by the Manager. The Manager provides the Directors with timely and accurate management information, including performance data and attribution analysis, revenue estimates and shareholder analysis. The Board monitors the implementation and results of the investment process with the investment managers, who attend all Board meetings, and reviews data which show statistical measures of the Company's risk profile. The 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 that 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 the Manager. The Board monitors the implementation and results of the investment process with the Manager.

•           Accounting, Legal and Regulatory: In order to qualify as an investment trust, the Company must comply with Section 1158 of the Corporation Tax Act 2010 ('Section 1158'). Details of the Company's approval are given under "Business of the Company" on page 19. Were the Company to breach Section 1158, 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 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. 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 1158. The Board relies on the services of its Company Secretary, JPMAM, to ensure compliance with the Companies Act 2006 and the UKLA Listing Rules.

•           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 section of the Company's 2011 Annual Report.

•           Operational: Disruption to, or failure of, the Manager'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 the Manager and its associates and the key elements designed to provide effective internal control are included with the Internal Control section of the Corporate Governance section of the Company's 2011 Annual Report.

•           Financial: The financial risks faced by the Company include market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. Further details are disclosed in note 23 of the Company's 2011 Annual Report.

•           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.

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 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 financial statements, the Directors are required to:

•   select suitable accounting policies and then apply them consistently; and

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

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 to 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.

Each of the Directors, whose names and functions are listed in the Directors' Report confirms that, to the best of his/her 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 net 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

James M Long

Chairman        

20th December 2011

Income Statement

for the year ended 30th September 2011

		2011			2010
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments held at fair value through profit or loss		-	(91,982)	(91,982)	-	83,627	83,627
Net foreign currency losses		-	(19)	(19)	-	(1,529)	(1,529)
Income from investments		9,163	-	9,163	7,241	-	7,241
Other interest receivable and similar income		12	-	12	15	-	15
Gross return/(loss)		9,175	(92,001)	(82,826)	7,256	82,098	89,354
Management fee		(2,964)	-	(2,964)	(2,413)	-	(2,413)
Performance fee		-	-	-	-	(53)	(53)
Other administrative expenses		(835)	-	(835)	(792)	-	(792)
Net return/(loss) on ordinary activities before  finance costs and taxation		5,376	(92,001)	(86,625)	4,051	82,045	86,096
Finance costs		(592)	-	(592)	(540)	-	(540)
Net return/(loss) on ordinary activities before taxation		4,784	(92,001)	(87,217)	3,511	82,045	85,556
Taxation		(955)	-	(955)	(514)	-	(514)
Net return/(loss) on ordinary activities after taxation		3,829	(92,001)	(88,172)	2,997	82,045	85,042
Return/(loss) per Ordinary share - diluted	3	2.19p	(52.73)p	(50.54)p	1.75p	47.90p	49.65p
Return/(loss) per Ordinary share - undiluted	3	2.23p	(53.55)p	(51.32)p	1.76p	48.20p	49.96p

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		Exercised	Capital
	share	Share	warrant	redemption	Other	Capital	Revenue
	capital	premium	reserve	reserve	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2009	40,430	4,187	977	3,009	106,481	183,473	2,920	341,477
Repurchase of the Company's own Ordinary shares for cancellation	(780)	-	-	780	(6,045)	-	-	(6,045)
Exercise of Subscription shares into Ordinary shares	(197)	197	-	-	-	-	-	-
Issue of Ordinary shares on exercise of Subscription shares	4,918	22,054	-	-	-	-	-	26,972
Net return on ordinary activities	-	-	-	-	-	82,045	2,997	85,042
Dividends appropriated in the year	-	-	-	-	-	-	(2,444)	(2,444)
At 30th September 2010	44,371	26,438	977	3,789	100,436	265,518	3,473	445,002
Repurchase of the Company's own Ordinary shares for cancellation	(2,213)	-	-	2,213	(20,562)	-	-	(20,562)
Exercise of Subscription shares into Ordinary shares	(2)	2	-	-	-	-	-	-
Issue of Ordinary shares on exercise of Subscription shares	40	239	-	-	-	-	-	279
Net (loss)/return on ordinary activities	-	-	-	-	-	(92,001)	3,829	(88,172)
Dividends appropriated in the year	-	-	-	-	-	-	(3,010)	(3,010)
At 30th September 2011	42,196	26,679	977	6,002	79,874	173,517	4,292	333,537

Balance Sheet

at 30th September 2011

		2011	2010
	Note	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss		320,030	462,427
Current assets
Debtors		4,129	7,602
Cash and short term deposits		20,570	31,496
		24,699	39,098
Creditors: amounts falling due within one year		(2,843)	(37,480)
Derivative financial instruments held at fair value through profit or loss		(4)	(5)
Net current assets		21,852	1,613
Total assets less current liabilities		341,882	464,040
Creditors: amounts falling due after more than one year		(8,345)	(19,038)
Net assets		333,537	445,002
Capital and reserves
Called up share capital		42,196	44,371
Share premium		26,679	26,438
Exercised warrant reserve		977	977
Capital redemption reserve		6,002	3,789
Other reserve		79,874	100,436
Capital reserves		173,517	265,518
Revenue reserve		4,292	3,473
Total equity shareholders' funds		333,537	445,002
Net asset value per Ordinary share - diluted	4	196.7p	246.7p
Net asset value per Ordinary share - undiluted	4	198.2p	251.4p

Cash Flow Statement

for the year ended 30th September 2011

		2011	2010
		£'000	£'000
Net cash inflow from operating activities		3,958	2,729
Returns on investments and servicing of finance
Interest paid		(553)	(551)
Taxation paid		(80)	(120)
Capital expenditure and financial investment
Purchases of investments		(523,944)	(487,561)
Sales of investments		569,121	471,978
Settlement of futures contracts		-	2
Other capital charges		(36)	(84)
Net cash inflow/(outflow) from capital expenditure and financial investment		45,141	(15,665)
Dividends paid		(3,010)	(2,444)
Net cash inflow/(outflow) before financing		45,456	(16,051)
Financing
Repurchase of the Company's own Ordinary shares for cancellation		(20,564)	(6,045)
Issue of Ordinary shares on exercise of Subscription shares		279	26,972
Net (repayment)/drawdown of bank loans		(36,474)	11,958
Net cash (outflow)/inflow from financing		(56,759)	32,885
(Decrease)/increase in cash in the year		(11,303)	16,834

Notes to the Accounts

for the year ended 30th September 2011

1.    Accounting policies

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. 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 at fair value.

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

2.   Dividends

(a)  Dividends paid and proposed

	2011	2010
Dividend paid	£'000	£'000
2010 final dividend proposed of 1.7p (2009: 1.5p)	3,010	2,444
Dividend proposed
2011 final dividend proposed of 2.2p (2010: 1.7p)	3,703	3,009

The final dividend paid in respect of the year ended 30th September 2010, amounted to £3,009,000, however, the actual payment amounted to £3,010,000 due to the issue of Ordinary shares following the conversion of Subscription shares after the balance sheet date but prior to the share register record date.

The final dividend proposed in respect of the year ended 30th September 2011 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 2012.

3.   Return/(loss) per Ordinary share

	2011	2010
	£'000	£'000
Return/(loss) per Ordinary share is based on the following:
Revenue return	3,829	2,997
Capital (loss)/return	(92,001)	82,045
Total (loss)/return	(88,172)	85,042
Weighted average number of Ordinary shares in issue during the year used for the purpose of the diluted calculation	174,464,515	171,274,043
Weighted average number of Ordinary shares in issue during the year used for the purpose of the undiluted calculation	171,802,870	170,217,959
Diluted
Revenue return per Ordinary share	2.19p	1.75p
Capital (loss)/return per Ordinary share	(52.73)p	47.90p
Total (loss)/return per Ordinary share	(50.54)p	49.65p
Undiluted
Revenue return per Ordinary share	2.23p	1.76p
Capital (loss)/return per Ordinary share	(53.55)p	48.20p
Total (loss)/return per Ordinary share	(51.32)p	49.96p

The diluted return per Ordinary share represents the return on ordinary activities after taxation divided by the weighted average number of Ordinary shares in issue during the year as adjusted in accordance with Financial Reporting Standard 22 'Earnings per share'.

4.   Net asset value per Ordinary share

	2011	2010
Diluted
Ordinary shareholders' funds assuming exercise of Subscription shares (£'000)	354,163	465,907
Number of potential Ordinary shares in issue	180,035,651	188,888,349
Net asset value per Ordinary share (pence)	196.7	246.7
Undiluted
Ordinary shareholders' funds (£'000)	333,537	445,002
Number of Ordinary shares in issue	168,316,005	177,010,090
Net asset value per Ordinary share (pence)	198.2	251.4

The diluted net asset value per Ordinary share assumes that all outstanding Subscription shares were converted into Ordinary shares at the year end.

5.   Status of announcement

2010 Financial Information

The figures and financial information for 2010 are extracted from the published Annual Report and Accounts for the year ended 30th September 2010 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 498(2) or section 498(3) of the Companies Act 2006.

2011 Financial Information

The figures and financial information for 2011 are extracted from the Annual Report and Accounts for the year ended 30th September 2011 and do not constitute the statutory accounts for the year. The Annual Report and 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 28th December 2011 and will shortly be available on the Company's website (www.jpmasian.co.uk ) or in hard copy format from the Company's Registered Office, Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ. A copy of the annual report will also shortly be submitted to the National Storage Mechanism and will be available for inspection at www.hemscott.com/nsm.do

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 -

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.jpmasian.co.uk.

For further information please contact:

Alison Vincent

For and on behalf of

JPMorgan Asset Management (UK) Limited, Secretary - 020 7742 6000

20th December 2011

 

END

 

 

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