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JP Morgan Flem Inc (JPI)

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Wednesday 25 May, 2005

JP Morgan Flem Inc

Final Results

JP Morgan Flem Income & Capital Inv
25 May 2005


                           STOCK EXCHANGE ANNOUNCEMENT

25th May 2005

The Board today announces the preliminary results of the Company for the year
ended 28th

February 2005.

Chairman's Statement

Portfolio Performance

During the year under review, the UK stock market continued its recovery from
the lows of 2002 and early 2003, and I am happy to be able to report that the
Company's portfolio again outperformed its composite benchmark index. The total
return on shareholders' funds was 13.8%, compared with a return of 12.3% on the
index. Our UK equities returned a total of 19.5% against 15.1% from the equity
benchmark, but our relatively small bond portfolio was less successful,
returning 5.0% versus 6.5% from the bond benchmark. This was principally because
the life of the bond portfolio is shorter than that of its benchmark, being
matched to the end of the Company's life in 2008.

Share Price Performance

The buoyant stock market, our own relatively good performance, and the return of
confidence in soundly based split-capital investment trusts as the investigation
by The Financial Services Authority neared a conclusion, all contributed to a
further notable resurgence in the Company's ordinary share price. Taking into
account net dividends, ordinary shareholders enjoyed an increase in value of
45.3% during the year. With the price of the zero dividend preference shares
rising by 10.6%, the value of a unit (including net dividends) increased by

Against that background, I feel that I should repeat my comments in the last
interim report about the risks involved in investing in the ordinary shares of a
split-capital investment trust when stock markets are flat or falling. Because
the amount of the Company's assets attributable to the zero dividend preference
(ZDP) shareholders increases by 8.2% per annum (regardless of stock market
movements), the total value of the Company's equity assets has to rise by more
than the cost of that increase if ordinary shareholders are to enjoy a positive
capital return. An indicator called the hurdle rate measures the percentage by
which the total value of the Company's equity assets has to rise on average each
year in order to allow the Company to return the current share price to ordinary
shareholders when it winds up in February 2008. At the time of writing the
hurdle rate is 4.0%. The equivalent rate to return the original subscription
price of 100p is a challenging 8.8%.  If the average annual growth in total
equity assets falls below the hurdle rate of 4.0%, ordinary shareholders will
receive less than the current share price, although they will have continued, in
the meantime, to receive all the Company's distributed income. The current yield
on the income shares of 9.4% is considerably higher than the average yield on
the shares of other investment trusts.

The hurdle rate is published regularly by many stockbrokers who follow the
investment trust sector, as well as being shown in our interim and annual

Revenue and Dividends

Revenue for the year, after taxation, was £6,131,000 and earnings per ordinary
share were 8.21p.

A fourth interim dividend of 2.00p per ordinary share was paid on 1st April 2005
to ordinary shareholders and unitholders on the register at the close of
business on 4th March 2005. That dividend, together with the three interim
dividends previously paid, each of 1.75p per ordinary share, brings the total
payment for the year to 7.25p per ordinary share.

Regulatory Matters

After a lengthy investigation, The Financial Services Authority eventually
agreed the terms of a settlement with most of those whom it had accused of
mis-selling split-capital investment trusts. Meanwhile, following comments made
by the Treasury Select Committee during its own investigation into the affair,
the Treasury has produced a consultation paper seeking views on the case for
requiring investment trusts to be authorised and regulated by The Financial
Services Authority. Virtually unanimously, and led by the Association of
Investment Trust Companies, investment trust boards, including your own, have
stated firmly that existing regulation under company law and the Stock Exchange
Listing Rules is more than adequate, that the problems leading to mis-selling
have already been addressed by changes to the Rules, and that an additional
layer of regulation would be unnecessary, expensive and time-consuming. We now
await the Treasury verdict.

Corporate Governance

The Board believe that the Company operates in full accordance with best
practice in corporate governance. In particular, we have during the year carried
out vigorous reviews of the performance of the Board as a whole and as
individuals, and of all aspects of the services provided to the Company by its
Manager. The results of these reviews were satisfactory.  Further details can be
found in the Corporate Governance section and the Directors' Report in the
Annual Report & Accounts.

Share Repurchase Facility

At last year's Annual General Meeting, shareholders granted the Directors
authority to repurchase the Company's shares for cancellation, such authority to
expire at the earlier of 6th December 2005 or the conclusion of the Annual
General Meeting of the Company in 2005. The Company did not repurchase any
shares for cancellation during the year. However, the Board recommend that the
repurchase authority be kept in place to be used as and when appropriate in the
interests of shareholders, and is seeking approval from shareholders to review
the authority at the forthcoming Annual General Meeting.

Re-election of Directors

In accordance with the Company's Articles of Association, Antony Hichens and I
are required to retire from the Board by rotation at this year's Annual General
Meeting, and we are seeking re-election. Following the review of the performance
of individual directors, the other members of the Board have authorised me to
say that they recommend shareholders to vote in favour of our re-election.

Annual General Meeting

The Annual General Meeting will be held at 10 Aldermanbury, London EC2V 7RF at
2.30pm on Tuesday 26th July 2005.

Sir Charles Nunneley

Morgan Fleming Income & Capital Investment Trust plc
Unaudited figures for the year ended 28th February 2005

Statement of Total Return (Unaudited)

                                                   For the year ended              For the year ended

                                                         28th February 2005         29th February 2004
                                                      Revenue    Capital     Total Revenue      Capital     Total
                                                        £'000      £'000     £'000     £'000      £'000     £'000

Realised (losses)/gains on investments                      -      (701)     (701)         -      8,980     8,980
Unrealised gains on investments                             -     13,947    13,947         -     21,317    21,317
Net gains on foreign currency cash and short term
deposits held during the year                               -         92        92         -        473       473
Unrealised gain/(loss) on currency hedge                    -         56        56         -       (13)      (13)
Other capital charges                                                (1)       (1)                  (4)       (4)
Income from investments                                 7,107          -     7,107     7,685          -     7,685
Other income                                              654          -       654       876          -       876
                                                      _______   ________   _______   _______   ________   _______

Gross return                                            7,761     13,393    21,154     8,561     30,753    39,314

Management fee                                          (550)      (825)   (1,375)     (543)      (813)   (1,356)

Other administrative expenses                           (310)          -     (310)     (391)          -     (391)

Interest Payable                                        (151)      (352)     (503)     (575)    (1,340)   (1,915)

Breakage costs on repayment of loan                         -      (120)     (120)         -          -         -

                                                      _______    _______   _______   _______    _______   _______

Return before taxation                                  6,750     12,096    18,846     7,052     28,600    35,652

Taxation                                                (619)        411     (208)     (737)        676      (61)

                                                       ______    _______   _______    ______    _______   _______

Return after taxation                                   6,131     12,507    18,638     6,315     29,276    35,591

Capital return attributable to zero dividend                -    (6,009)   (6,009)         -    (5,553)   (5,553)
preference shareholders

Dividend on ordinary shares                           (5,414)          -   (5,414)   (5,414)          -   (5,414)

                                                       ______    _______   _______    ______    _______   _______

Transfer to reserves                                      717      6,498     7,215    901        23,723    24,624

Return per ordinary share                               8.21p      8.70p    16.91p     8.46p     31.77p    40.23p

JPMorgan Fleming Income & Capital Investment Trust plc
Unaudited figures for the year ended 28th February 2005

BALANCE SHEET                                                       At 28th February      At 29th February
                                                                                2005                  2004
                                                                               £'000                 £'000

Investments at valuation                                                     150,143               165,988

Net current assets/(liabilities)                                               2,001                 (668)

Creditors: amounts falling due after more than one year                            -              (26,400)
                                                                              ______                ______

Total net assets                                                             152,144               138,920
                                                                               =====                 =====
Net asset value per ordinary share                                             97.7p                 88.0p
Net asset value per zero dividend preference share                            121.6p                112.4p

                                                                                2005                  2004
                                                                               £'000                 £'000

Net cash inflow from operating activities                                      6,205                 6,989

Net cash outflow from servicing of finance                                     (987)               (2,000)

Total taxation recovered /(paid)                                                 155                 (134)

Net cash inflow from capital expenditure and financial                        29,493                 6,414

Total equity dividends paid                                                  (5,414)               (5,265)

Net cash outflow from financing                                             (26,400)               (7,064)
                                                                             _______               _______
Increase/(decrease) in cash for the period                                     3,052               (1,060)
                                                                               =====                 =====

The above financial information does not constitute statutory accounts as
defined in Section 240 of the Companies Act 1985.The comparative financial
information is based on the statutory accounts for the period ended 29th
February 2004. These accounts, upon which the auditors issued an unqualified
opinion, have been delivered to the Registrar of Companies.


                      This information is provided by RNS
            The company news service from the London Stock Exchange