Half Yearly Report

RNS Number : 2127B

JPMorgan Emerging Mkts Invest Trust

14 February 2011

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN EMERGING MARKETS

INVESTMENT TRUST PLC

UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS

ENDED 31ST DECEMBER 2010

Chairman's Statement

Performance

I am pleased to report that in the first six months of the Company's financial year the portfolio return net of fees and expenses was +26.5%, as compared to the total return from our benchmark index, the MSCI Emerging Markets Free Index (in sterling terms) of +21.1%. The diluted total return on net assets, which assumes that all of the Company's subscription shares in issue were exercised at the price of 460 pence per share, was +24.7%. Over the same period, the return to ordinary shareholders was +24.4%. A review of the Company's performance for the first six months and the outlook for the remainder of the year is provided in the Investment Manager's Report.

Subscription shares

During the six months to 31st December 2010 and up to the date of this report, the Company has issued a total of 3,135,766 Ordinary shares following the exercise of Subscription shares, amounting to proceeds of £13.2m. Further details of the subscription shares can be found on page 13 of the half year report and on the Company's website at www.jpmemergingmarkets.co.uk

Outlook

Global markets have entered 2011 in good shape but, as current events in the Middle East remind us, we can take nothing for granted. Long term, though, we remain bullish on prospects for emerging markets.

Alan Saunders

Chairman

14th February 2011

Investment Manager's Report

During the six month period to the end of 2010 the share price of your Company rose by 24.4%; this reflects the continuing strong recovery of emerging market equities from the financial crisis. The benchmark index increased by 21.1%, and the total return from the Company's portfolio, after costs but before dilution effects arising from the conversion of subscription shares, was 26.5%. The subscription shares themselves produced a remarkable 123.9% gain over the same period.

This period of high returns reflects two underlying factors; the first is the return of valuations to normal levels, which is now more or less complete. Equity valuations became so low during the financial crisis, whose nadir occurred two years ago, that merely a return to long term average levels has produced a doubling of share prices. But in addition to that, economic growth has resumed in the developing world and profits have increased as companies have continued to grow. It is remarkable to think that for a good number of companies in emerging markets, the last three years have seen perhaps a thirty percent increase in the size of their business and profit base; and that in itself means that the intrinsic value of these companies is significantly higher than it was prior to the global financial crisis.

But there are some clouds, mostly macroeconomic and political, coming over the horizon. Loose monetary policy is producing inflationary pressures in a number of the countries in which we invest, and currency appreciation is also undermining competitiveness at varying speeds. It is certain that in some places companies are earning excess profits, and in the normal way of things, the stock market is extrapolating this as if it can go on indefinitely. It cannot. Cost inflation will erode some of this excess, while tightening monetary policy will work on valuations.

So some caution is needed in the shorter term. Where share prices are ahead of themselves, we will either tread water for a while, or need some declines to open up real opportunities again. These are however normal cyclical pressures that should be expected. We do not see in them a need to change either the basis of our approach to managing your Company's assets, nor a reason to alter what one might call a big structural view, that trends related to domestic demand will, in the long run, prove more powerful than most other forces, provided that they be exploited through investments in well-managed businesses at reasonable valuations. Most of the recent changes in the portfolio have in fact been motivated by marked differences in valuations in different parts of the world, rather than by a large change in the overall shape of the portfolio; we have sold or reduced stocks that had moved to very high valuations and tried to invest instead in equally good businesses at much lower prices. Unusually, takeover activity (three in six months!) has helped this process as well.

Our view about the longer term opportunities in the developing world remains unchanged; in industries from beer to mining, from supermarket retailing to industrial manufacturing, the world contains much to enthuse us about the future and enough opportunities to keep us busy for many years.

Austin Forey

Investment Manager

14th February 2011

Interim Management Report

The Company is now required to make the following disclosures in its half year report:

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Company fall into the following broad categories: investment underperformance; political and economic; loss of investment team or investment manager; discount; change of corporate control of the manager; accounting, legal and regulatory; corporate governance and shareholder relations; operational and financial. Information on each of these areas is given in the Business Review within the Annual Report and Accounts for the year ended 30th June 2010.

Related Parties Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company during the period.

Going Concern

The Directors believe, having considered the Company's investment objectives, risk management policies, capital management policies and procedures, nature of the portfolio and expenditure projections; that the Company has adequate resources, an appropriate financial structure and suitable management arrangements in place to continue in operational existence for the foreseeable future. For these reasons, they consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts.

Directors' Responsibilities

The Board of Directors confirms that, to the best of its knowledge:

(i) the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with the Accounting Standards Board's Statement 'Half Yearly Financial Reports'; and

(ii) the half year management report includes a fair review of the information required by DTR 4.2.7R and 4.2.8R of the UK Listing Authority Disclosure and Transparency Rules.

For and on behalf of the Board

Alan Saunders

Chairman

For further information, please contact:

Jonathan Latter

For and on behalf of

JPMorgan Asset Management (UK) Limited, Secretary

020 7742 6000

Income Statement

for the six months ended 31st December 2010

	(Unaudited) Six months ended 31st December 2010			(Unaudited) Six months ended 31st December 2009			(Audited) Year ended 30th June 2010
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair value through profit or loss	-	165,660	165,660	-	157,102	157,102	-	179,076	179,076
Net foreign currency gains/(losses)	-	308	308	-	(216)	(216)	-	78	78
Income from investments	6,701	-	6,701	6,011	-	6,011	12,333	-	12,333
Other interest receivable and similar income	1	-	1	1	-	1	2	-	2
Gross return	6,702	165,968	172,670	6,012	156,886	162,898	12,335	179,154	191,489
Management fee	(3,548)	-	(3,548)	(2,592)	-	(2,592)	(5,770)	-	(5,770)
Performance fee	-	(3,068)	(3,068)	-	-	-	-	(712)	(712)
Other administrative expenses	(595)	-	(595)	(472)	-	(472)	(1,038)	-	(1,038)
Net return on ordinary activities before finance costs and taxation	2,559	162,900	165,459	2,948	156,886	159,834	5,527	178,442	183,969
Finance costs	(5)	-	(5)	(1)	-	(1)	(2)	-	(2)
Net return on ordinary activities before taxation	2,554	162,900	165,454	2,947	156,886	159,833	5,525	178,442	183,967
Taxation (note 3)	(417)	-	(417)	(372)	-	(372)	(473)	-	(473)
Net return on ordinary activities after taxation	2,137	162,900	165,037	2,575	156,886	159,461	5,052	178,442	183,494
Return per Ordinary share (note 4)
Undiluted	1.88p	143.09p	144.97p	2.33p	142.06p	144.39p	4.56p	161.21p	165.77p
Diluted	1.82p	138.76p	140.58p	2.32p	141.33p	143.65p	4.47p	157.94p	162.41p

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

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

Reconciliation of Movements in Shareholders' Funds

	Called up		Capital
Six months ended	share	Share	redemption	Other	Capital	Revenue
31st December 2010	capital	premium	reserve	reserve	reserves	reserve	Total
(Unaudited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th June 2010	28,010	74,138	1,665	69,939	450,604	7,539	631,895
Exercise of Subscription shares into Ordinary shares	(31)	31	-	-	-	-	-
Issue of Ordinary shares on  exercise of Subscription shares	780	12,384	-	-	-	-	13,164
Net return on ordinary activities	-	-	-	-	162,900	2,137	165,037
Dividends appropriated in the period	-	-	-	-	-	(3,657)	(3,657)
At 31st December 2010	28,759	86,553	1,665	69,939	613,504	6,019	806,439

	Called up		Capital
Six months ended	share	Share	redemption	Other	Capital	Revenue
31st December 2009	capital	premium	reserve	reserve	reserves	reserve	Total
(Unaudited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th June 2009	27,796	70,579	1,665	69,939	272,162	6,019	448,160
Subscription shares' issue costs written back	-	5	-	-	-	-	5
Exercise of Subscription shares into Ordinary shares	(4)	4	-	-	-	-	-
Issue of Ordinary shares on  exercise of Subscription shares	91	1,425	-	-	-	-	1,516
Net return on ordinary activities	-	-	-	-	156,886	2,575	159,461
Dividends appropriated in the period	-	-	-	-	-	(3,532)	(3,532)
At 31st December 2009	27,883	72,013	1,665	69,939	429,048	5,062	605,610

	Called up		Capital
Year ended	share	Share	redemption	Other	Capital	Revenue
30th June 2010	capital	premium	reserve	reserve	reserves	reserve	Total
(Audited)	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th June 2009	27,796	70,579	1,665	69,939	272,162	6,019	448,160
Subscription shares' issue costs written back	-	5	-	-	-	-	5
Exercise of Subscription shares into Ordinary shares	(9)	9	-	-	-	-	-
Issue of Ordinary shares on exercise of Subscription shares	223	3,545	-	-	-	-	3,768
Net return on ordinary activities	-	-	-	-	178,442	5,052	183,494
Dividends appropriated in the year	-	-	-	-	-	(3,532)	(3,532)
At 30th June 2010	28,010	74,138	1,665	69,939	450,604	7,539	631,895

Balance Sheet

at 31st December 2010

	(Unaudited)	(Unaudited)	(Audited)
	31st December	31st December	30th June
	2010	2009	2010
	£'000	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	802,055	595,602	621,354
Investments in liquidity funds held at fair value through profit or loss	511	8,725	3,496
Total investments	802,566	604,327	624,850
Current assets
Debtors	961	952	7,515
Cash and short term deposits	6,171	482	469
	7,132	1,434	7,984
Creditors: amounts falling due within one year	(3,259)	(151)	(939)
Net current assets	3,873	1,283	7,045
Total assets less current liabilities	806,439	605,610	631,895
Total net assets	806,439	605,610	631,895
Capital and reserves
Called up share capital	28,759	27,883	28,010
Share premium	86,553	72,013	74,138
Capital redemption reserve	1,665	1,665	1,665
Other reserve	69,939	69,939	69,939
Capital reserves	613,504	429,048	450,604
Revenue reserve	6,019	5,062	7,539
Shareholders' funds	806,439	605,610	631,895
Net asset value per Ordinary share (note 5)
Undiluted	705.5p	547.3p	568.3p
Diluted	672.0p	526.7p	544.9p

Cash Flow Statement

for the six months ended 31st December 2010

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st December 2010	31st December 2009	30th June 2010
	£'000	£'000	£'000
Net cash inflow from operating activities (note 6)	1,591	3,158	5,286
Net cash outflow from returns on investments and servicing of finance	(5)	(1)	(2)
Taxation recovered	-	8	8
Net cash outflow from capital expenditure and financial investment	(5,699)	(609)	(5,295)
Dividends paid	(3,657)	(3,532)	(3,532)
Net cash outflow before financing	(7,770)	(976)	(3,535)
Net cash inflow from financing	13,163	1,316	3,570
Increase in cash in the period	5,393	340	35
Reconciliation of net cash flow to movement in net funds
Net cash movement	5,393	340	35
Exchange movements	309	(222)	70
Movement in net funds in the period	5,702	118	105
Net funds at the beginning of the period	469	364	364
Net funds at the end of the period	6,171	482	469
Represented by:
Cash and short term deposits	6,171	482	469

Notes to the Accounts

for the six months ended 31st December 2010

1.       Financial statements

          The information contained within the financial statements in this half year report has not been audited or reviewed by the Company's auditors.

          The figures and financial information for the year ended 30th June 2010 are extracted from the latest published accounts of the Company and do not constitute statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

2.       Accounting policies

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

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

          The accounting policies applied to these interim accounts are consistent with those applied in the accounts for the year ended 30th June 2010.

3.       Taxation

          The taxation charge of £417,000 (31st December 2009: £372,000 and 30th June 2010: £473,000) comprises irrecoverable overseas withholding tax.

4.       Return per Ordinary share

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st December 2010	31st December 2009	30th June 2010
	£'000	£'000	£'000
Return per Ordinary share is based on the following:
Revenue return	2,137	2,575	5,052
Capital return	162,900	156,886	178,442
Total return	165,037	159,461	183,494
Weighted average number of Ordinary shares in issue during the period used for the purpose of the undiluted calculation	113,846,394	110,434,706	110,690,361
Weighted average number of Ordinary shares in issue during the period used for the purpose of the diluted calculation	117,393,377	111,007,606	112,979,623
Undiluted
Revenue return per share	1.88p	2.33p	4.56p
Capital return per share	143.09p	142.06p	161.21p
Total return per share	144.97p	144.39p	165.77p
Diluted
Revenue return per share	1.82p	2.32p	4.47p
Capital return per share	138.76p	141.33p	157.94p
Total return per share	140.58p	143.65p	162.41p

          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 period as adjusted in accordance with the requirements of Financial Reporting Standard 22 'Earnings per share'.

5.       Net asset value per Ordinary share

	(Unaudited)	(Unaudited)	(Audited)
	31st December 2010	31st December 2009	30th June 2010
Undiluted
Ordinary shareholders' funds (£'000)	806,439	605,610	631,895
Number of Ordinary shares in issue	114,313,321	110,662,708	111,196,525
Net asset value per Ordinary share (pence)	705.5	547.3	568.3
Diluted
Ordinary shareholders' funds assuming exercise of Subscription shares (£'000)	889,469	697,187	721,220
Number of potential Ordinary shares in issue	132,363,525	132,363,525	132,363,525
Net asset value per Ordinary share (pence)	672.0	526.7	544.9

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

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

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	31st December 2010	31st December 2009	30th June 2010
	£'000	£'000	£'000
Total return on ordinary activities before finance costs and taxation	165,459	159,834	183,969
Less capital return on ordinary activities before finance costs and taxation	(162,900)	(156,886)	(178,442)
Scrip dividends received as income	(121)	(25)	(127)
Decrease in net debtors and accrued income	305	632	401
Overseas withholding tax	(440)	(397)	(515)
Performance fee paid	(712)	-	-
Net cash inflow from operating activities	1,591	3,158	5,286

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 half year has been submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do

The half year will also shortly be available on the Company's website at www.jpmemergingmarkets.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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