Final Results

RNS Number : 2005U

JPMorgan Indian Invest Trust PLC

21 December 2012

 

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN INDIAN INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 30^TH SEPTEMBER 2012

Chairman's Statement

Year Under Review

The year to 30th September 2012 has been a modest one for investors in the Indian stockmarket, although the Company again outperformed its benchmark, the MSCI India Index (in Sterling terms), providing a diluted NAV return of 5.1% versus the Index's return of 3.7%. The return to shareholders was 4.4%, reflecting a slight widening of the discount, from 10.1% to 10.8%, over the year.

Our investment managers remain confident about the long term prospects for the Indian market and have maintained the high quality bias within the portfolio. For a full review of the year, an examination of the current portfolio and the prospects for the future, please see the Investment Managers' Report below.

Gearing

The Company has a one year floating rate US$ 25 million loan facility with the Royal Bank of Scotland plc to provide the investment managers with the flexibility to gear the portfolio should it be deemed appropriate. As at the date of this report, the facility is undrawn.

Board of Directors

During the year, the Nomination Committee carried out evaluations of the Directors, the Chairman, the Board and its Committees. It concluded that all the Directors contributed strongly to the Board's deliberations. In accordance with corporate governance best practice, all the Directors will retire at this year's Annual General Meeting and, being eligible, offer themselves for reappointment.

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 2012 shareholders granted the Directors authority to repurchase up to 14.99% of the Company's shares for cancellation or into Treasury. The Company repurchased 3,287,000 shares into Treasury during the year and your 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. 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 and any reissue from Treasury would be at a premium to NAV.

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 premium. The Board has established guidelines relating to the issue of shares and if these 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. Issuing shares out of Treasury would be cheaper since this avoids 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 net asset value, and issue new shares, or reissue Treasury shares, when they trade at a premium to their net asset value, so as not to prejudice remaining shareholders.

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.

The Company's Ordinary share price has continued to trade above the current exercise price of 291p per Subscription share over the course of the year. Since their issue in November 2008, 14,899,512 Subscription shares (71% of those issued) have been converted, raising proceeds of more than £36.7 million.

Further details of the subscription shares, including the subscription periods and their respective prices and the bonus cost for the calculation of taxation, can be found on the Company's website at www.jpmindian.co.uk

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 Tuesday 29th January 2013. As in previous years, in addition to the formal part of the meeting, there will be a presentation from a representative of the Manager, who will answer questions on the portfolio and performance. There will also be an opportunity to meet the Board and representatives of JPMorgan.

In view of the overcrowding that has occurred at recent Annual General Meetings, the Board has reviewed its policy of allowing the free entry of guests. Henceforth, entry will be restricted to shareholders only and no exceptions will be made.

If you have any detailed or technical questions, it would be helpful if you could raise them in advance with the Company Secretary at Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ. Shareholders who are unable to attend the AGM are encouraged to use their proxy votes.

Hugh Bolland

Chairman                                                                                                                                                              21st December 2012

Investment Managers' Report

The Company's financial year was a lacklustre one for investors in the Indian stock market. The diluted return for shareholders was 5.1%, slightly higher than the underlying benchmark which rose by 3.7%. Our report looks back at the financial year, analyses the drivers of performance and then discusses the outlook.

Review

In ways not dissimilar to the previous year, the macro picture remained muddied by a combination of several variables.

Inflation finally started to ease. From its peak of 10%, wholesale price inflation is now 7.2%, but even at these levels remains high and above the Reserve Bank of India's ('RBI') comfort level. Given the aggressive monetary policy tightening response of last year, the retreat is by no means adequate. This poses a major challenge for the RBI as it has to strike a very fine balance between holding the line on rates to combat inflation on the one hand and easing to stimulate growth, on the other. It has done this by effectively executing one 0.5% cut in April 2012 and then holding steady, but continuing to ease liquidity to keep the system functional.

Growth too has remained a challenge. GDP growth has fallen sharply from a peak of 11.2% in March 2010, to a low of 5.3% in September 2012. While many may argue that 5-6% growth is perfectly respectable in a very sluggish global environment, we would counter that with the caveat that 5-6% growth in India in many ways feels like a recession. Government finances are severely impaired, corporate earnings growth slows, hiring and wage growth is reined in and debt becomes a heavier burden to carry.

As if these stagflation like conditions were not enough, the Indian government continues to remain severely paralysed. Inconsistencies within the Congress party, unhelpful coalition partners and an emboldened opposition have combined to make this government highly ineffectual. Hopes of some recovery with the Uttar Pradesh elections were dashed after a disastrous performance by the Congress party, not withstanding Rahul Gandhi's earnest efforts. Prime Minister Manmohan Singh did make some changes, primary among them was to bring back P Chidambaram as Finance Minister, and the two together made a series of announcements in September to kick start reform momentum, contain the fiscal deficit and persuade the credit rating agencies not to downgrade India's sovereign rating to junk. Some of these steps have been implemented, some are as yet being negotiated and a few may require Parliament's approval. The last few sessions of Parliament have been a total wash out, with virtually no legislative business being conducted. In fact, the number of bills currently before Parliament is the lowest in India's history since independence.

The global environment has added its own set of challenges to the domestic problems described above. The EU debt crisis, election and fiscal uncertainties in the US and the slowing of the Chinese economy have been a constant reminder of how globally integrated India has become. India's exports have slowed, while imports have held up, driven by the continued dependence on imported oil, resulting in a surge in the trade and current account deficit. At 11.9% of GDP (annualised for September), the former is at a record and near-alarming level. It is no wonder that the rupee has been volatile, but with a weak bias. During the financial year the rupee has lost 7% against the USD and 12% versus sterling. Credit rating agencies are watching and warning of possible downgrades, only adding to the rupee's woes. If fund flows had not been so strong, the rupee would very easily have been much weaker. Foreign Institutional Investors have put USD 15.4 billion into the Indian equity market during the financial year.

However, there is a bright spot, and, as far as equity investors are concerned, an important one. After almost two years of consistent downgrades, corporate earnings growth has stabilised over the last 3-4 quarters.

Performance       

Aggregate returns were low this financial year, but were at least positive: 5.1% on a diluted basis, ahead of the benchmark which was up 3.7%. In rupee terms, the index returns would have been close to 16%, highlighting the currency weakness.

We continue to maintain a disciplined approach to stock picking, with a strong quality preference. That implies we steer away from poorer quality names. This approach once again aided performance. Some examples of stocks we own that contributed to performance worth highlighting are: IDFC, which detracted from performance last year, but we held on, to capture strong gains in the year gone by; Divi's Laboratories, a mid-size pharmaceuticals company that capitalises on India's inherent strengths in science and manufacturing; cement, where a contrarian call on the cycle worked out.

Not owning Hindustan Unilever was the single biggest drag on relative performance, although this was somewhat compensated by our large position in ITC.

As correlations have broken down, stock selection is likely to be much more important than sector selection. This suits our style of investment and portfolio construction.

Outlook

We can list a whole host of issues that would be construed as hurdles for equity returns. While many of these are indeed serious, they are not new or unknown to the market. In fact, in many cases, such as persistent inflation, high fiscal deficit and the collapse in investment activity, these are already largely discounted in equity prices. Some, however, such as inflation, attempts at fiscal consolidation, the reduction of subsidies, tackling chronic issues in the power sector and early steps towards attracting more foreign direct investment, are beginning to improve.

While political uncertainty may dominate the headlines over the next 12-15 months, it should be remembered that major political events almost always offer an opportunity to make strong gains in their aftermath.

Two factors underpin our more upbeat outlook. As referenced earlier, earnings have stabilised and forecasts have now been reconciled to the 5-6% GDP growth reality. With more subdued earnings expectations, there is room for positive surprises, generally a good catalyst for equity returns and we believe that the prospect for an earnings recovery in the next 12-15 months remains a reasonable one. The second factor is valuations. The overall market trades at price/earnings and price/book multiples in line with, or modestly below, their respective long term averages. This, at the very least, suggests to us that equities are not expensive. More importantly, we are able to find attractive businesses at valuations that we like and we are adding these to the portfolio.

India's long term growth story remains intact and compelling: a young and growing population, expanding employment and income opportunities, an enormous infrastructure deficit that needs to be addressed, supported by dynamic entrepreneurship and management that will grab these opportunities, funded by the large and growing pool of domestic savings. Short term headwinds notwithstanding, we believe these shall return to the fore in the medium term.

Rukhshad Shroff, CFA

Rajendra Nair, CFA

Investment Managers                                                                                                                                           21st December 2012

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 by the Manager JPMorgan Asset Management (UK) Limited ("JPMAM"). 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 show statistical measures of the Company's risk profile. The Investment Managers employ the Company's gearing, within a strategic range set by the Board.

•     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 JPMAM. 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' above. Were the Company to breach Section 1158, it would lose its 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 and, since 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. 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 and the UKLA Listing Rules.

•     Any change in the taxation legislation or taxation regime applicable to the Mauritian Subsidiary could affect the value of the investments held by the Group, affect the Company's ability to provide returns to Shareholders or alter the post-tax returns to Shareholders. In particular, it is expected that the Mauritian Subsidiary will continue to benefit from the India/Mauritius Double Tax Treaty. Future changes to Mauritian or Indian law or to the India/Mauritius Double Tax Treaty, or the interpretations given to them by the regulatory authorities, could impose additional costs or obligations on the activities of the Mauritian Subsidiary, which in turn may have adverse effects on the performance of the Company. The terms of the India/Mauritius Double Tax Treaty were challenged in India but were upheld by the Supreme Court of India in October 2003. However, more recently, there have been discussions between the Indian and Mauritian authorities with regard to a re-negotiation of the Treaty. Adverse tax consequences would result if the Mauritian Subsidiary ceased to qualify for the benefits under the India/Mauritius Double Tax Treaty (for example, if it were held that the Mauritian Subsidiary was not a resident of Mauritius). There can be no assurance that the Mauritian Subsidiary will continue to qualify for or receive the benefits of the India/Mauritius Double Tax Treaty or that the terms of the India/Mauritius Double Tax Treaty will not be changed. Such an event may require the Mauritian Subsidiary to pay or provide for tax liabilities that would reduce the net asset value of the Ordinary Shares.

•     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: Loss of key staff by JPMAM, such as the Investment Managers, could affect the performance of the Company. Disruption to, or failure of, JPMAM's accounting, dealing or payments systems or the custodian's records could prevent accurate reporting and monitoring of the Company's financial position. Details of how the Board monitors the services provided by JPMAM and its associates and the key elements designed to provide effective internal control are included with the Internal Control section of the Corporate Governance report.

•     Financial: The financial risks faced by the Company include market price risk, interest rate risk, liability risk and credit risk.

•     Political and Economic: Adminstrative risks, such as the imposition of restrictions on the free movement of capital.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements 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 are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and Article 4 of the IAS Regulation and have also chosen to prepare the Parent Company financial statements under IFRS as adopted by the EU. Under company law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, International Accounting Standard 1 requires that the Directors:

•        properly select and apply accounting policies;

•        present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

•        provide additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

•        make an assessment of the Company's ability to continue as a going concern.

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

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

Responsibility statement

We confirm that to the best of our knowledge:

•        the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

•        the management report, which is incorporated into the Directors' Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

For and on behalf of the Board

Hugh Bolland

Chairman

21st December 2012

Group Income Statement

for the year ended 30th September 2012

		2012			2011
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Investment income		6,294	-	6,294	7,145	-	7,145
Other income		39	-	39	56	-	56
Gains/(losses) from investments held at
fair value through profit or loss		-	21,291	21,291	-	(129,005)	(129,005)
Foreign exchange losses		-	(114)	(114)	-	(26)	(26)
Total income/(loss)		6,333	21,177	27,510	7,201	(129,031)	(121,830)
Management fee		(5,477)	-	(5,477)	(6,725)	-	(6,725)
Other administrative expenses		(1,346)	-	(1,346)	(1,533)	-	(1,533)
(Loss)/profit before finance costs
and taxation		(490)	21,177	20,687	(1,057)	(129,031)	(130,088)
Finance costs		(277)	-	(277)	(508)	-	(508)
(Loss)/profit before taxation		(767)	21,177	20,410	(1,565)	(129,031)	(130,596)
Taxation		-	-	-	-	-	-
Net (loss)/profit		(767)	21,177	20,410	(1,565)	(129,031)	(130,596)
(Loss)/earnings per Ordinary share -
undiluted	3	(0.66)p	18.28p	17.62p	(1.36)p	(112.20)p	(113.56)p
(Loss)/earnings per Ordinary share -
diluted	3	(0.65)p	18.13p	17.48p	(1.32)p	(108.85)p	(110.17)p

The Group does not have any income or expense that is not included in the net profit for the year. Accordingly the 'Net (loss)/profit' for the year, is also the 'Total comprehensive income' for the year, as defined in IAS1 (revised) and no separate Statement of Comprehensive Income has been presented.

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 represents the Group's Income Statement, prepared in accordance with IFRS. The 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies and Venture Capital Trusts.

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

Group and Company Statements of Changes in Equity

-for the year ended 30th September 2012

	Group
	2012
	Called up			Exercised		Capital
	share	Share	Other	warrant	Capital	redemption	Revenue
	capital	premium	reserve	reserve	reserves	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2011	29,486	76,903	41,929	5,886	327,620	6,362	(14,469)	473,717
Exercise of Subscription   shares into
Ordinary shares	(23)	23	-	-	-	-	-	-
Issue of Ordinary shares
on conversion of   Subscription shares	569	5,074	-	-	-	-	-	5,643
Repurchase of shares into   Treasury	-	-	-	-	(11,565)	-	-	(11,565)
Profit/(loss) for the year	-	-	-	-	21,177	-	(767)	20,410
At 30th September 2012	30,032	82,000	41,929	5,886	337,232	6,362	(15,236)	488,205

	Group
	2011
	Called up			Exercised		Capital
	share	Share	Other	warrant	Capital	redemption	Revenue
	capital	premium	reserve	reserve	reserves	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2010	29,051	72,861	41,929	5,886	456,651	6,362	(12,904)	599,836
Exercise of Subscription shares
into Ordinary shares	(18)	18	-	-	-	-	-	-
Issue of Ordinary shares on
conversion of Subscription   shares	453	4,024	-	-	-	-	-	4,477
Loss for the year	-	-	-	-	(129,031)	-	(1,565)	(130,596)
At 30th September 2011	29,486	76,903	41,929	5,886	327,620	6,362	(14,469)	473,717

Group and Company Statements of Changes in Equity

-for the year ended 30th September 2012

	Company
	2012
	Called up			Exercised		Capital
	share	Share	Other	warrant	Capital	redemption	Revenue
	capital	premium	reserve	reserve	reserves	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2011	29,486	76,903	41,929	5,886	332,489	6,362	(19,338)	473,717
Exercise of Subscription   shares into Ordinary
shares	(23)	23	-	-	-	-	-	-
Issue of Ordinary shares on
conversion of Subscription   shares	569	5,074	-	-	-	-	-	5,643
Repurchase of shares into   Treasury	-	-	-	-	(11,565)	-	-	(11,565)
Profit/(loss) for the year	-	-	-	-	20,975	-	(565)	20,410
At 30th September 2012	30,032	82,000	41,929	5,886	341,899	6,362	(19,903)	488,205

	Company
	2011
	Called up			Exercised		Capital
	share	Share	Other	warrant	Capital	redemption	Revenue
	capital	premium	reserve	reserve	reserves	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 30th September 2010	29,051	72,861	41,929	5,886	462,446	6,362	(18,699)	599,836
Exercise of Subscription shares into
Ordinary shares	(18)	18	-	-	-	-	-	-
Issue of Ordinary shares on
conversion of Subscription shares	453	4,024	-	-	-	-	-	4,477
Loss for the year	-	-	-	-	(129,957)	-	(639)	(130,596)
At 30th September 2011	29,486	76,903	41,929	5,886	332,489	6,362	(19,338)	473,717

Group and Company Balance Sheets

at 30th September 2012

		Group	Group	Company	Company
		2012	2011	2012	2011
	Note	£'000	£'000	£'000	£'000
Non current assets
Investments held at fair value through profit or loss		477,377	460,324	488,069	468,493
Investment in liquidity fund held at fair value
through profit or loss		10,000	-	-	-
Total investments		487,377	460,324	488,069	468,493
Current assets
Other receivables		2,377	1,946	2,274	21
Cash and cash equivalents		3,404	11,768	2	5,302
		5,781	13,714	2,276	5,323
Current liabilities
Other payables		(4,936)	(321)	(2,123)	(99)
Bank Overdraft		(14)	-	(14)	-
Financial liability: Derivative financial instruments		(3)	-	(3)	-
Net current assets		828	13,393	136	5,224
Total assets less current liabilities		488,205	473,717	488,205	473,717
Net assets		488,205	473,717	488,205	473,717
Equity attributable to equity holders
Called up share capital		30,032	29,486	30,032	29,486
Share premium		82,000	76,903	82,000	76,903
Other reserve		41,929	41,929	41,929	41,929
Exercised warrant reserve		5,886	5,886	5,886	5,886
Capital reserves		337,232	327,620	341,899	332,489
Capital redemption reserve		6,362	6,362	6,362	6,362
Revenue reserve		(15,236)	(14,469)	(19,903)	(19,338)
Total equity shareholders' funds		488,205	473,717	488,205	473,717
Net asset value per Ordinary share - undiluted	4	426.0p	409.7p	426.0p	409.7p
Net asset value per Ordinary share - diluted	4	419.1p	398.7p	419.1p	398.7p

Hugh Sandeman

Director

Company registration number: 2915926

Group and Company Cash Flow Statements

for the year ended 30th September 2012

	Group	Group	Company	Company
	2012	2011	2012	2011
	£'000	£'000	£'000	£'000
Operating activities
Profit/(loss) before taxation	20,410	(130,596)	20,410	(130,596)
Add back interest	278	508	1	-
Add back (gains)/losses on investments held at fair value
through profit or loss	(21,291)	129,005	(20,989)	129,966
Unrealised foreign exchange gains	2	-	2	-
Net (purchases)/sales of investments held at fair value
through profit or loss	(5,762)	5,505	1,413	6
Decrease/(increase) in prepayments, VAT and other receivables	82	(63)	6	(3)
(Increase)/decrease in amounts due from brokers	(513)	3,077	(2,259)	-
Increase/(decrease) in other payables	364	(96)	13	(41)
Increase/(decrease) in amounts due to brokers	2,240	(3,599)	-	-
Net cash (outflow)/inflow from operating activities before
interest and taxation	(4,190)	3,741	(1,403)	(668)
Interest paid	(278)	(508)	(1)	-
Taxation paid	-	(137)	-	-
Net cash (outflow)/inflow from operating activities	(4,468)	3,096	(1,404)	(668)
Financing activities
Net proceeds from the issue of Ordinary shares	5,643	4,477	5,643	4,477
Repurchase of shares	(9,553)	-	(9,553)	-
Increase in bank overdraft	14	-	14	-
Drawdown of short term loans	6,000	-	-	-
Net repayment of short term loans	(6,000)	-	-	-
Net cash (outflow)/inflow from financing activities	(3,896)	4,477	(3,896)	4,477
(Decrease)/increase in cash and cash equivalents	(8,364)	7,573	(5,300)	3,809
Cash and cash equivalents at the start of the year	11,768	4,195	5,302	1,493
Cash and cash equivalents at the end of the year	3,404	11,768	2	5,302

Notes to the Accounts

for the year ended 30th September 2012

1.             Principal activity

                The principal activity of the Company is that of an investment holding company within the meaning of Section 1158 of the Corporation Tax Act 2010. The principal activity of its Subsidiary Company, JPMorgan Indian Investment Company (Mauritius) Limited, is that of an investment company.

2.             Accounting policies

                Basis of accounting

                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'), the 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. The disclosures on going concern in the Directors' Report in the Report & Accounts form part of these financial statements. The principal accounting policies adopted are set out below. Where presentational guidance set out in the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies 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.

                The Company's share capital is denominated in sterling and this is the currency in which its shareholders operate and expenses are generally paid. The Directors have therefore determined the functional currency to be sterling.

		Group
		2012	2011
		£'000	£'000
3.	(Loss)/earnings per Ordinary share
	(Loss)/earnings per Ordinary share is based on the following:
	Revenue loss	(767)	(1,565)
	Capital return/(loss)	21,177	(129,031)
	Total return/(loss)	20,410	(130,596)
	Weighted average number of Ordinary shares in issue during the year
	used for the purpose of the undiluted calculation	115,815,283	114,998,087
	Weighted average number of Ordinary shares in issue during the year
	used for the purpose of the diluted calculation	116,793,906	118,541,866
	Undiluted
	Revenue loss per share	(0.66)p	(1.36)p
	Capital return/(loss) per share	18.28p	(112.20)p
	Total return/(loss) per share	17.62p	(113.56)p
	Diluted
	Revenue loss per share	(0.65)p	(1.32)p
	Capital return/(loss) per share	18.13p	(108.85)p
	Total return/(loss) per share	17.48p	(110.17)p

                The diluted earnings/(loss) per Ordinary share represents the earnings/(loss) on ordinary activities after taxation divided by the weighted average number of Ordinary shares in issue during the year as adjusted in accordance with the requirements of IAS 33, 'Earnings per Share'.

		2012	2011
4.	Net asset value per Ordinary share
	Undiluted
	Ordinary shareholders funds (£'000)	488,205	473,717
	Number of Ordinary shares in issue excluding shares held in Treasury	114,615,313	115,625,322
	Net asset value per Ordinary share (pence)	426.0	409.7
	Diluted
	Ordinary shareholders funds assuming exercise of Subscription shares (£'000)	506,048	494,486
	Number of potential Ordinary shares in issue excluding shares held in Treasury	120,746,755	124,033,755
	Net asset value per Ordinary share (pence)	419.1	398.7

                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.

5. Status of preliminary announcement

2011 Financial Information

The figures and financial information for 2011 are extracted from the published Annual Report and Accounts for the year ended 30th September 2011 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.

2012 Financial Information

            The figures and financial information for 2012 are extracted from the Annual Report and Accounts for the year ended 30th September 2012 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  29th December 2012 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

 

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