Final Results

RNS Number : 5656E

JPMorgan Indian Invest Trust PLC

22 December 2009

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN INDIAN INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 30TH SEPTEMBER 2009

AND PROPOSED NEW ARTICLES OF ASSOCIATION 

The Directors of JPMorgan Indian Investment Trust plc announce the Company's results for the year ended 30th September 2009. The following comprises extracts from the Company's Annual Financial Report for the year ended 30th September 2009. The full Annual Report and Accounts, including the Notice of the Annual General Meeting will be available to be viewed on or downloaded from the Company's website at www.jpmindian.co.uk shortly.

Chairman's Statement

Year Under Review

The year to 30th September 2009 has proved to be a challenging one for investors as markets veered from panic to enthusiasm. Over the year, the Company provided a return to shareholders of 45.1%, underperforming the benchmark, the MSCI India Index (in sterling terms), which rose by 47.1%. This is somewhat disappointing, but should be viewed in the context of the longer term. The Managers have contributed positively to performance in each of the previous six years. The Board have spent a considerable amount of time in recent months discussing with the Managers the portfolio and the reasons for the underperformance. The Board is confident that the fundamental, research-based approach of the Managers which has provided such good returns for the Company over a long period is the correct one, and believe that it will again provide superior returns in more normal market conditions.

The investment managers remain upbeat about the long term prospects for the Indian market and have maintained the themes of infrastructure and capital projects and high quality domestic consumer investments within the portfolio. In support of this view, the Company has recently entered into a one year floating rate US$ 50million loan with ING Bank to provide the investment managers with the flexibility to gear the portfolio. 

The Board is aware of the provisions in the new Draft Indian Direct Tax Code which impacts on the Indian-Mauritius Tax Treaty and is monitoring the situation.

Board of Directors

During the year, the Board carried out evaluations of the Directors, the Chairman, the Board and its Committees. The Director retiring by rotation at this year's Annual General Meeting is myself and, being eligible, I offer myself for re-election. Vijay Joshi, having served as a Director for in excess of nine years, also stands for re-election. Vijay's insights into the Indian economy and government have proved invaluable to the Board's deliberations and I have no hesitation in recommending his re-election.

As part of its discussions regarding the re-election of Directors, the Board has agreed to a phased programme of renewal to refresh its membership. At the Annual General Meeting in 2011, Pierre Dinan will retire and not seek re-election, while Vijay Joshi will do likewise in 2012. Suitable replacements for Pierre and Vijay will be sought over the coming months.

Investment Manager

The Board has reviewed the investment management, secretarial and marketing services provided to the Company by JPMorgan Asset Management (UK) Limited ('JPMAM'). This annual review has included their performance record, management processes, investment style, resources and risk control mechanisms. The Board was satisfied with the results of the review and therefore in the opinion of the Directors, the continuing appointment of JPMAM for the provision of these services, on the terms agreed, is in the best interests of shareholders as a whole.

Share Issues and Repurchases

At the Annual General Meeting in January 2009 shareholders granted the Directors authority to repurchase up to 14.99% of the Company's shares. Whilst the Company did not repurchase any shares for cancellation during the year, the Board believes that such a facility is an important tool in the management of discount volatility and is, therefore, seeking approval from shareholders to renew the authority at the forthcoming Annual General Meeting. Shares repurchased in this way might not be cancelled but rather held in Treasury. Purchases of shares to be held in Treasury will be made in accordance with the Listing Rules of the UK Listing Authority and the Companies (Acquisitions of Own Shares) (Treasury Shares) Regulations 2003 as amended.

Shareholders also granted the Directors authority to issue new Ordinary shares. At times over recent years, the Company's Ordinary shares have traded at a premium to net asset value ('NAV') which has enabled the issue of new Ordinary shares at various levels of premia. The Board has established guidelines relating to the issue of shares and if the conditions are met, this authority will be utilised to enhance the Company's NAV per share and therefore benefit existing shareholders. To supplement this authority the Board proposes to reissue shares from Treasury when appropriate. Doing so would be cheaper than issuing new shares since it would avoid the necessity of the Company paying listing fees to the London Stock Exchange and the UK Listing Authority. The Board will only buy back shares at a discount to their prevailing NAV, and issue shares when they trade at a premium to their NAV, so as not to prejudice remaining shareholders.

The Board believe that the judicious use of share repurchase and issuance powers can minimise discount volatility by enabling the repurchase of shares at a discount and the issuance of new shares at a premium to their NAV. By undertaking such a programme the Board expects that the share price will move in a reasonable range around NAV, which your Directors believe is in the best interests of shareholders as a whole. 

Bonus Issue of Subscription Shares

In November 2008, the Company issued 21,001,937 Subscription shares to shareholders on the basis of one Subscription share for every five Ordinary shares previously held. Each Subscription share confers the right (but not the obligation) to subscribe for one Ordinary share on any business day during the period from 2nd January 2009 to 2nd January 2014, after which the rights under the Subscription shares will lapse.

It has been pleasing to note that the Company's Ordinary share price has remained comfortably above the initial exercise price of 227p per Subscription share throughout the year. Between 2nd January 2009 and 30th September 2009, applications were received to convert 3,049,358 Subscription shares into Ordinary shares, raising proceeds of £6.9m. As at the date of this report, a further 1,756,577 Subscription shares have been converted, meaning that 23% of the Subscription shares initially issued have now been converted and £10.9million raised for investment by the Company. The Board expects that a substantial proportion of the remaining Subscription shares will be converted before the first step up in price on 3rd January 2010.

Annual General Meeting

This year's Annual General Meeting will be held at Trinity House, Tower Hill, London EC3N 4DH at 12.00 noon on Monday 25th January 2010. 

Hugh Bolland

Chairman                                            22nd December 2009

Investment Managers' Report

Review

The past financial year has been the most eventful of any over the life of this Company. Events both within India and without rocked the Indian stockmarket, driving it down 35% in late 2008 and then propelling it to double from its low by September 2009. When compared to other asset classes in other parts of the world, the Indian stockmarket has weathered the storm admirably. This resilience has reminded existing investors and informed new investors of the undeniable long term strengths and prospects of the Indian investment story.

The period October 2008 to March 2009 was a tumultuous one, as the liquidity crunch intensified following the collapse of Lehman Brothers in September and the world economy suffered the equivalent of a massive seizure as businesses de-stocked and laid off workers in a bid to conserve cash. The resulting risk aversion hit most asset classes. Equity markets hit a low in October, rebounded towards the end of the year before re-testing their lows again in March. Eventually a modicum of stability returned as economies began to respond to the extraordinary stimuli provided by governments and central banks around the world and historically low yields resulted in a return of risk appetite. This, in turn, helped equity markets stage an extraordinary turnaround in the following two quarters retracing a large part of the losses of 2008.

During the year under review the MSCI India Index rose by 47.1% (in sterling terms) substantially outperforming the regional and emerging markets indices. Consumer discretionary, materials and industrials outperformed while defensives like healthcare and staples lagged. The sharp turnaround in risk appetite was evident in foreign portfolio flows; in the first half of the year foreign institutional investors sold stock worth around US$5 billion, but the tide turned in the subsequent two quarters with inflows of US$20 billion.

Although the Indian economy, being domestically driven, managed to avoid the worst effects of the credit crisis, it was not completely unscathed. GDP growth decelerated to a low of 5.8% in the fourth quarter of 2008, while industrial production declined (albeit marginally) for the first time in over a decade during the same period. Nevertheless, India remained among the few countries in the world to achieve positive growth. More recently, growth momentum seems to have recovered in line with the rest of the world. Inflation, which peaked in mid 2008, fell steadily through the fourth quarter of that year and slipped into negative territory in the first half of 2009 for the first time in almost two decades as commodity prices (notably oil) plunged. Inflation, however, has almost certainly bottomed and is expected to rise to 5-6% by the first half of 2010. Concomitantly interest rates are also expected to rise next year. 

In November 2008, in one of the worst terror attacks in Indian history, terrorists went on the rampage in multiple locations in Mumbai over 3 days, killing over 140 people. In the immediate aftermath, tensions with Pakistan dramatically increased although the prospect of military conflict soon receded. Notwithstanding the tragic nature of this event, it had negligible impact on the economy and the stock market.

In January, the Chairman of New York Stock Exchange listed Satyam Computers confessed to long term accounting irregularities at the company, leaving a massive hole (of around US$1.2 billion) in the balance sheet. This caused the stock to plunge and raised governance concerns about corporate India. The damage was limited to some extent by the prompt action of the government which reconstituted the board of directors which in turn sold the company to Tech Mahindra (part owned by Mahindra & Mahindra & British Telecom).

In May, contrary to expectations of a divided Parliament, the results from the national elections surprised most. The Congress party led United Progressive Alliance (UPA) returned to power with a strong mandate, with the highly regarded Dr. Manmohan Singh back at the helm as Prime Minister for a second term. Due to the wide margin of victory, there are expectations that the government will be able to focus on rejuvenating growth momentum and cutting the fiscal deficit unencumbered by the communists who were an extremely disruptive influence in the previous term. On the other hand, the monsoon season was a poor one, with overall rainfall 22% below normal. This will affect agriculture output and, more importantly, rural consumption this year. Economists expect this to shave between 0.5 and 1.0% off GDP growth for the financial year 2010, although a late revival in rains should help the winter crop offset some of this damage. As a result of the drought in many parts of the country, food inflation rose sharply to double-digit levels (around 13% year on year).

Performance 

The Company underperformed the benchmark over the financial year mainly due to the disconnect between our bottom up investment approach and the macro factor driven move in markets this year. We were underweight stocks that were heavily leveraged and were, therefore, most vulnerable to the credit crunch. As the macro environment normalised, such names have been amongst the best performers which has hurt relative performance. The portfolio was also too defensively positioned, with overweight positions in the staples and healthcare sectors and excessive levels of cash. This helped in the October 2008 - March 2009 period, but hurt performance when markets staged their dramatic turnaround.

The overweight in Bharti Airtel, which has been a a feature of the portfolio over recent years and has outperformed substantially over that time, severely lagged this year. Initially this was due to the uncertainty from the proposed transaction with South Africa's MTN (which was subsequently called off) and later due to the unexpectedly fierce tariff war from the likes of Tata Docomo and Reliance Communications. The underweight in global cyclicals, which also contributed to the relative performance in the second half of 2008 and in early 2009, detracted from performance as markets turned around.

Despite the weak returns this year, we do not intend to abandon our long term, fundamentals driven, bottom up investment approach as we continue to believe that this is the most appropriate strategy for India over the longer term. To this end, we have realigned the portfolio over the course of the past six months to reflect our more optimistic view on India (following the election results) by adding to the infrastructure and consumption names in the portfolio. 

Outlook

The near term trajectory of the markets will inevitably be determined by the global macro environment. While the macro gurus debate the likely outcomes for the world economy, it is probably reasonable to expect the recovery in the developed world to remain sluggish in the near term with policy makers trying to balance the inherently conflicting objectives of sustaining the growth momentum while winding down the stimulus plans to manage the burgeoning deficits. Meanwhile, the bulk of the growth in the world economy will be generated by the likes of China, India and Brazil for the foreseeable future. It would not be an exaggeration to say that the worst economic crisis since the Great Depression has perhaps done more to burnish the investment case for the likes of China and India than any other event in history. 

Our base case investment hypothesis on India is that the economy (which is around US$ 1.1trillion in size currently) can double over the next 5-6 years, which implies GDP growth to 7-8% (in real terms) led by rising infrastructure and consumption spending. To put this in context, GDP growth averaged 8.8% for the financial years 2004-2008. We believe that this will be made possible by the fact that the current government is possibly the strongest in two decades, which at the outset can be confident of serving its full term, and is determined to use economic growth to generate employment and reduce the grinding poverty in the country.

This should drive a sharp recovery in the earnings cycle. It is worth noting that although nominal GDP growth in India has been at around 8-9% during the worst economic crisis since the Great Depression, earnings growth has been muted at low to mid single digits over the financial year 2009-10 (primarily due to the high base from an exceptionally strong cycle over the previous five years). We now believe that Indian corporate earnings have passed the nadir of the cycle and have commenced a multi year recovery. Earnings can double between fiscal 2010 and fiscal 2013, as massive investments in long duration, big ticket projects come on line.

However, headline valuations are not compelling following the exceptional performance this year with the Sensex trading at around 17-18 times 2010 earnings and 15-16 times 2011 consensus estimates. This is in line with long term averages but substantially below previous peaks. Our optimistic investment case is predicated on the belief that equity returns over the next 3-5 years will be driven by growth in earnings rather than expansion in multiples. 

Edward Pulling

Rukhshad Shroff

Rajendra Nair

Investment Managers                                        22nd December 2009

Adoption of new Articles of Association

The Company proposes to adopt new Articles of Association. These incorporate amendments to the current Articles of Association to reflect the changes in company law brought about by the 2006 Companies Act (the 'Act') which came into effect on 1st October 2009 and changes made to the 2006 Act in August 2009 to implement the EU Shareholder Rights Directive in the UK, as well as some minor technical or clarifying changes.

The principal changes in the new Articles of Association proposed to be adopted at the 2010 Annual General Meeting relate to shareholder meetings and resolutions, the Company's constitution and share capital.

In August 2009, changes were made to the provisions in the 2006 Act on company meetings by The Companies (Shareholders' Rights) Regulations 2009 ("Shareholders' Rights Regulations") to implement the EU Shareholder Rights Directive in the UK. The new articles incorporate amendments in relation to meetings to ensure consistency with the 2006 Act (as amended by the Shareholders' Rights Regulations). 

Under the 2006 Act all provisions of the Company's memorandum, but most significantly the objects clause, are deemed to form part of the Company's articles from 1st October 2009. It is possible for the objects clause to be removed or amended by amending the articles by special resolution. It is not necessary under the 2006 Act for a company to set out its objects. The 2006 Act provides that, unless the articles state otherwise, a company's objects will be unrestricted.

One of the other key provisions of the memorandum which is deemed to form part of the Company's articles from 1st October 2009 is the restriction created by the existing authorised share capital statement. The 2006 Act removes the requirement for a company to place limits on its authorised share capital.

By adopting the new Articles which do not contain the objects clause or the authorised share capital statement, the Company will remove these provisions, which would otherwise be deemed to form part of the Company's articles under section 28 of the 2006 Act, from its articles.

For a more detailed explanation of these and other amendments please refer to the Notice of Annual General Meeting and the Appendix in the Annual Report and Accounts. Copies of the new Articles of Association will be available for inspection at the offices of JPMAM, Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ from the date of this report up until the close of the Annual General Meeting.

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 under-performance against the Company's benchmark index and peer companies, resulting in the Company's shares trading on a wider discount. The Board manages these risks by diversification of investments through its investment restrictions and guidelines which are monitored and reported on. JPMAM provides the Directors with timely and accurate management information, including performance data and attribution analyses, revenue estimates, liquidity reports and shareholder analyses. The Board monitors the implementation and results of the investment process with the Investment Managers, who attend all Board meetings, and review 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. The Board holds a separate meeting devoted to strategy each year.

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

• 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. Should the Company breach Section 842, it may lose investment trust status and as a consequence capital gains within the Company's portfolio would be subject to Capital Gains Tax. The Section 842 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 1985 and, as its shares are listed on the London Stock Exchange, the UKLA Listing Rules. A breach of the Companies Act could result in the Company and/or the Directors being fined or the subject of criminal proceedings. A breach of the UKLA Listing Rules may result in the Company's shares being suspended from listing which in turn would breach Section 842. The Board relies on the services of its Company Secretary, JPMAM, and its professional advisers to ensure compliance with the Companies Act 1985, the relevant amendments in 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 report.

• Operational: Disruption to, or failure of, JPMAM's accounting, dealing or payments systems or the custodian's records may prevent accurate reporting and monitoring of the Company's financial position. Details of how the Board monitors the services provided by JPMAM and its associates and the key elements designed to provide effective 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, liquidity risk and credit risk.

Directors' Responsibilities

The Directors each confirm to the best of their knowledge that:

(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) the 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 it face.

Hugh Bolland

Chairman

22nd December 2009

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.jpmindian.co.uk

For further information please contact:

Andrew Norman

For and on behalf of

JPMorgan Asset Management (UK) Limited, Secretary

020 7742 6000

Group Income Statement

for the year ended 30th September 2009

		2009			2008
		Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Investment income		3,681	-	3,681	3,397	-	3,397
Other income		274	-	274	459	-	459
Gains/(losses) on investments held at fair value
through profit or loss		-	121,460	121,460	-	(125,797)	(125,797)
Foreign exchange losses		-	(293)	(293)	-	(529)	(529)
Total income/(loss)		3,955	121,167	125,122	3,856	(126,326)	(122,470)
Management fee		(3,651)	-	(3,651)	(5,064)	-	(5,064)
VAT recoverable		-	-	-	734	-	734
Other administrative expenses		(1,106)	-	(1,106)	(1,485)	-	(1,485)
(Loss)/profit before finance costs and taxation		(802)	121,167	120,365	(1,959)	(126,326)	(128,285)
Finance costs		(6)	-	(6)	(396)	-	(396)
(Loss)/profit before taxation		(808)	121,167	120,359	(2,355)	(126,326)	(128,681)
Taxation		-	-	-	2	-	2
Net (loss)/profit		(808)	121,167	120,359	(2,353)	(126,326)	(128,679)
(Loss)/earnings per Ordinary share
- undiluted (note3)		(0.78)p	116.50p	115.72p	(2.29)p	(122.78)p	(125.07)p
(Loss)/earnings per Ordinary share- diluted (note 3)
		(0.75)p	112.88p	112.13p	(2.29)p	(122.78)p	(125.07)p

The 'Total' column of this statement represents the Group's Income Statement, prepared in accordance with IFRS. The supplementary 'Revenue' and 'Capital' columns are prepared under guidance published by the Association of Investment Companies.

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

All income is attributable to the equity shareholders of JPMorgan Indian Investment Trust plc, the Company. There are no minority interests. 

Group and Company Statements of Changes in Equity

for the year ended 30th September 2009

	Group 2009
	Called up share capital £'000	Share premium £'000	Other reserve £'000	Exercised warrant reserve £'000	Capital reserves £'000	Capital redemption reserve £'000	Revenue reserve £'000	Total £'000
At 30th September 2008	26,188	50,914	41,929	5,886	183,124	6,362	(10,404)	303,999
Issue of Ordinary shares	65	529	-	-	-	-	-	594
Bonus issue of Subscription shares	210	(210)	-	-	-	-	-	-
Subscription shares' issue costs	-	(416)	-	-	-	-	-	(416)
Exercise of Subscription shares into
Ordinary shares	(30)	30	-	-	-	-	-	-
Issue of Ordinary shares on
conversion of Subscription shares	762	6,160	-	-	-	-	-	6,922
Profit/(loss) for the year	-	-	-	-	121,167	-	(808)	120,359
At 30th September 2009	27,195	57,007	41,929	5,886	304,291	6,362	(11,212)	431,458
	Group 2008
	Called up share capital £'000	Share premium £'000	Other reserve £'000	Exercised warrant reserve £'000	Capital reserves £'000	Capital redemption reserve £'000	Revenue reserve £'000	Total £'000
At 30th September 2007	26,202	50,914	41,929	5,886	312,958	6,348	(8,051)	436,186
Purchase of shares into Treasury	-	-	-	-	(3,234)	-	-	(3,234)
Repurchase and cancellation of shares	(14)	-	-	-	(274)	14	-	(274)
Loss for the year	-	-	-	-	(126,326)	-	(2,353)	(128,679)
At 30th September 2008	26,188	50,914	41,929	5,886	183,124	6,362	(10,404)	303,999

	Company 2009
	Called up share capital £'000	Share premium £'000	Other reserve £'000	Exercised warrant reserve £'000	Capital reserves £'000	Capital redemption reserve £'000	Revenue reserve £'000	Total £'000
At 30th September 2008	26,188	50,914	41,929	5,886	186,083	6,362	(13,363)	303,999
Issue of Ordinary shares	65	529	-	-	-	-	-	594
Bonus issue of Subscription shares	210	(210)	-	-	-	-	-	-
Subscription shares' issue costs	-	(416)	-	-	-	-	-	(416)
Exercise of Subscription shares into Ordinary shares	(30)	30	-	-	-	-	-	-
Issue of Ordinary shares on conversion of Subscription shares	762	6,160	-	-	-	-	-	6,922
Profit/(loss) for the year	-	-	-	-	122,193	-	(1,834)	145,359
At 30th September 2009	27,195	57,007	41,929	5,886	308,276	6,362	(15,197)	431,458
	Company 2008
	Called up share capital    £'000	Share premium £'000	Other reserve £'000	Exercised warrant reserve £'000	Capital reserves £'000	Capital redemption reserve £'000	Revenue reserve £'000	Total £'000
At 30th September 2007	26,202	50,914	41,929	5,886	316,179	6,348	(11,272)	436,186
Purchase of shares into Treasury	-	-	-	-	(3,234)	-	-	(3,234)
Repurchase and cancellation of shares	(14)	-	-	-	(274)	14	-	(274)
Loss for the year	-	-	-	-	(126,588)	-	(2,091)	(128,679)
At 30th September 2008	26,188	50,914	41,929	5,886	186,083	6,362	(13,363)	303,999

Group and Company Balance Sheets

at 30th September 2009

		Group 2009 £'000	Group 2008 £'000	Company 2009 £'000	Company 2008 £'000
Non current assets
Investments held at fair value through profit or loss		430,375	287,898	430,196	302,483
Current assets
Other receivables		1,670	2,955	10	880
Cash and cash equivalents		1,607	14,445	1,360	748
		3,277	17,400	1,370	1,628
Current liabilities
Other payables		(2,194)	(1,299)	(108)	(112)
Net current assets		1,083	16,101	1,262	1,516
Net assets		431,458	303,999	431,458	303,999
Equity attributable to equity holders
Called up share capital		27,195	26,188	27,195	26,188
Share premium		57,007	50,914	57,007	50,914
Other reserve		41,929	41,929	41,929	41,929
Exercised warrant reserve		5,886	5,886	5,886	5,886
Capital reserves		304,291	183,124	308,276	186,083
Capital redemption reserve		6,362	6,362	6,362	6,362
Revenue reserve		(11,212)	(10,404)	(15,197)	(13,363)
Total equity		431,458	303,999	431,458	303,999
Net asset value per Ordinary share - undiluted (note 4)		406.7p	295.8p	406.7p	295.8p
Net asset value per Ordinary share - diluted (note 4)		380.7p	295.8p	380.7p	295.8p

Group and Company Cash Flow Statements

for the year ended 30th September 2009

	Group 2009 £'000	Group 2008 £'000	Company 2009 £'000	Company 2008 £'000
Operating activities
Profit/(loss) before taxation	120,359	(128,681)	120,359	(128,678)
Add back interest	6	396	-	161
Add back (gains)/losses on investments held at fair value through profit or loss	(121,460)	125,797	(122,177)	126,457
Unrealised foreign exchange (gains)/losses	(9)	144	-	144
Net (purchases)/sales of investments held at fair value
through profit or loss	(21,016)	25,554	19,465	9,231
Gifted money to Subsidiary company	-	-	(25,000)	-
Decrease/(increase) in prepayments, VAT and other receivables	798	(686)	870	(776)
Decrease/(increase) in amounts due from brokers	496	(1,077)	-	-
(Decrease)/increase in other payables	(48)	25	(5)	3
Increase in amounts due to brokers	941	959	-	-
Net cash (outflow)/inflow from operating activities   before interest payable and taxation	(19,933)	22,431	(6,488)	6,542
Interest paid	(5)	(407)	-	(166)
Tax paid	-	(86)	-	-
Net cash (outflow)/inflow from operating activities	(19,938)	21,938	(6,488)	6,376
Financing activities
Net proceeds from the issue of Ordinary shares	7,100	-	7,100	-
Repurchase of shares	-	(3,508)	-	(3,508)
Net repayment of short term loans	-	(12,144)	-	(3,144)
Net cash inflow/(outflow) from financing activities	7,100	(15,652)	7,100	(6,652)
(Decrease)/increase in cash and cash equivalents	(12,838)	6,286	612	(276)
Cash and cash equivalents at the start of the year	14,445	8,159	748	1,024
Cash and cash equivalents at the end of the year	1,607	14,445	1,360	748

Notes to the Accounts

for the year ended 30th September 2009

1.    Principal activity

The principal activity of the Company is that of an investment holding company within the meaning of Section 842 of the Income and Corporation Taxes Act 1988. The principal activity of its Subsidiary company, JPMorgan Indian Investment Company (Mauritius) Limited, is that of an investment company.

2.    Accounting policies

The Group and Company financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS'), which comprise standards and interpretations approved by the International Accounting Standards Board ('IASB'), International Accounting Standards and Standing Interpretations Committee and interpretations approved by the International Accounting Standards Committee ('IASC') that remain in effect and to the extent that they have been adopted by the European Union.

The accounts have been prepared on the going concern basis. 

Where presentational guidance set out in the Statement of Recommended Practice ('SORP') for investment trusts issued by the Association of Investment Companies ('AIC') in January 2009 is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.

3.    (Loss)/earnings per Ordinary share

	Group
	2009 £'000	2008 £'000
(Loss)/return per Ordinary share is based on the following:-
Revenue loss	(808)	(2,353)
Capital return/(loss)	121,167	(126,326)
Total return/(loss)	120,359	(128,679)
Weighted average number of Ordinary shares in issue during the year
used for the purpose of the undiluted calculation	104,007,815	102,882,855
Weighted average number of Ordinary shares in issue during the year
used for the purpose of the diluted calculation	107,343,556	102,882,855
Undiluted
Revenue loss per share	(0.78)p	(2.29)p
Capital return/(loss) per share	116.50p	(122.78)p
Total return/(loss) per share	115.72p	(125.07)p
Diluted
Revenue loss per share	(0.75)p	(2.29)p
Capital return/(loss) per share	112.88p	(122.78)p
Total return/(loss) per share	112.13p	(125.07)p

The diluted (loss)/return per Ordinary share represents the (loss)/return on ordinary activities after taxation divided by the weighted average number of Ordinary shares in issue during the year as adjusted for the conversion of all outstanding Subscription shares into Ordinary shares at the year end. For this purpose, the assumed proceeds from this conversion are regarded as having been received from the issue of Ordinary shares at the average market price of Ordinary shares during the year. 

The difference between the number of Ordinary shares issued and the number of Ordinary shares that would have been issued at the average market price of Ordinary shares during the year is treated as an issue of Ordinary shares for no consideration.

There was no dilution to the returns for the year ended 30th September 2008 as there were no dilutive potential Ordinary shares in issue at that date.

4.    Net asset value per Ordinary share

Undiluted:	2009	2008
Ordinary shareholders funds (£'000)	431,458	303,999
Number of Ordinary shares in issue	106,081,176	102,769,874
Net asset value per Ordinary share (pence)	406.7	295.8
Diluted:
Ordinary shareholders funds assuming exercise of
Subscription shares (£'000)	472,210	303,999
Number of potential Ordinary shares in issue	124,033,755	102,769,874
Net asset value per Ordinary share (pence)	380.7	295.8

The diluted net asset value per Ordinary share assumes that all outstanding Subscription shares were converted into Ordinary shares at the year end. The Company will only re-issue shares held in Treasury at a premium and therefore these shares have no dilutive potential.

There was no dilution to the net asset value at 30th September 2008 as there were no dilutive potential Ordinary shares in issue at that date.

5. Status of preliminary announcement

2008 Financial Information

The figures and financial information for 2008 are extracted from the published Annual Report and Accounts for the year ended 30th September 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 30th September 2009 and do not constitute the statutory accounts for the year.  The Annual Report and Financial Statements 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 24th December 2009 and will shortly be available on the Company's website (www.jpmindian.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

 

END

 

 

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