TIDMJMG
RNS Number : 5351X
JPMorgan Emerging Mkts Invest Trust
22 February 2017
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN EMERGING MARKETS INVESTMENT TRUST PLC
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHSED
31ST DECEMBER 2016
Chairman's Statement
Performance
The first half of the Company's financial year was a positive
period for emerging markets investors. Over the six months to 31st
December 2016 the Company's benchmark index, the MSCI Emerging
Markets Index (in sterling terms), rose 13.0%.
For the same period, the Company produced a total return on net
assets of +7.4%. Whilst this is a significant underperformance
against our benchmark, it follows a period of exceptional
outperformance. Our Investment Manager continues to focus on
quality growth stocks and the portfolio is underweight in the more
cyclical stocks in energy and resources. Therefore, in a period
where these cyclical stocks performed well, the portfolio lagged
behind the benchmark. Such periods of underperformance are to be
expected from time to time but I would emphasise that the
Investment Manager's impressive long term performance record
remains intact, the Company having outperformed the benchmark index
over two, three, five and ten years to 31st December 2016.
The return to shareholders over the first half of the financial
year was higher, at +10.2%. This reflects a narrowing of the
discount at which the Company's shares trade, from 13.2% as at 30th
June 2016 to 11.7% at the half year end. 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 which follows.
Discount
During the first six months of this financial year, the discount
on the Company's shares to their net asset value ranged between
9.6% and 14.0%, averaging 12.1%. At the period end, the discount
was 11.7%.
The Board's policy on discount management remains unchanged - it
is prepared to take action to try to ensure that the discount does
not exceed 10.0% for an extended period, but only if the discount
is out of line with our peer group and market conditions are
orderly. During the six months the Company repurchased a total of
550,402 shares into Treasury at an average discount of 12.1% and a
total cost of GBP3.8 million, though that was insufficient to move
the discount down to levels the Board feels appropriate.
The Board
Nigel Kenny retired at the conclusion of the AGM held in
November 2016. Richard Laing has succeeded him as chairman of the
Audit Committee and Anatole Kaletsky has become the Senior
Independent Director.
Ruary Neill was appointed a Director of the Company with effect
from 1st January 2017. He worked in investment banking for 28 years
where he most recently managed the multi asset sales business at
UBS Investment Bank. Prior to that he spent a number of years
working in the Asian Equity Markets for UBS Investment Bank and
Schroder Securities. He is Chairman of The Investment Committee,
Great Ormond Street Children's Charity and a member of The Advisory
Council, The SOAS China Institute, London University.
As previously advised, I will stand down from the Board at the
conclusion of the 2017 AGM, having been a Director of your Company
for fifteen years. The Board has agreed that Sarah Arkle will
succeed me as Chairman and I am sure she will prove to be an
excellent choice.
Outlook
The start of the new calendar year has seen further progress by
emerging markets, supported by some signs of economic progress as
well as recovery in commodity markets. I need hardly add that
uncertainties have increased in the post-Trump world, especially
with regard to international trade so we must expect some
volatility in the months ahead. Nevertheless, valuations are
reasonable and the long term case for emerging markets remains
solid.
Alan Saunders
Chairman
22nd February 2017
Investment Manager's Report
In last year's half year report, I addressed a period in which
the Company's net asset value per share had decreased, yet done
better than our benchmark index. This time, the opposite has
happened; while the Company's NAV per share has increased by 7.4%,
we have failed to keep up with the index, which rose by 13% over
the last half year.
Such an outcome, while not welcome from our point of view, will
inevitably happen from time to time, as I sought to explain in the
Company's last annual report. I had hoped that my comments would
not prove so immediately prophetic. We know, however, and will
continue to affirm, that an outcome which differs from the
benchmark is necessary if we are to add value to the Company in the
long term; this means that sometimes the Company's portfolio will
do worse. Shareholders should always expect that I will try to
learn from individual mistakes which have affected performance, but
not that I will significantly alter the investment approach that we
have followed for more than twenty years, when such periods
occur.
Why has this been a challenging time? Obviously part of the
answer lies in the tumultuous political events of 2016, which have
brought great uncertainty for investors in terms of trade and other
aspects of economic policy. We do not really know what the new
regimes will bring. Higher inflation, which was not widely expected
a year ago, has implications for commodity prices, for the US
dollar, for interest rates and for all kinds of macro-economic
factors which affect the valuation of equities in emerging markets
and elsewhere. Similarly, big changes in trade policy and tariffs
can have consequences for exporters everywhere. One particular
event which bears brief comment is the startling decision taken
last November in India to cancel a significant part of the money in
circulation in the country, in an attempt to demonetise the economy
- in other words, to force the large informal cash economy to move
into the formal financial system. This is likely to be very good
for the Indian economy in the long term, reducing graft, increasing
tax and helping productivity; but the abruptness with which it was
announced produced a short term economic squeeze which did affect
share prices and had a visible impact on our investment results; I
believe this will prove to be only a temporary effect. But I do not
want to use politics as an excuse; in recent months your Company's
portfolio has, not unusually, lagged somewhat in a period when
share prices have risen and cyclical sectors have been among the
best performing areas. As well as our investments in India, some of
the leading contributors to underperformance have been stable
businesses in sectors like consumer staples, whose share prices
have not moved much; conversely, sectors like energy and materials,
which we do not find appealing on a long term view and where the
portfolio has little exposure, have rallied sharply as investors
have begun to think about the prospect of rising inflation
ahead.
In general, however, I should emphasise that I put much more
store by the achievements and results of the businesses that are
owned in the portfolio than I do in trying to second guess
macroeconomic trends. I believe that we have a collection of
strong, and in many cases outstanding, businesses in the portfolio;
in general they have continued to deliver good results in the last
six months and I think they can continue to do so in the future.
Unless their share prices are at very elevated levels, which I do
not believe to be the case, I am happy to continue to own them.
Austin Forey
Investment Manager
22nd February 2017
Interim Management Report
The Company is required to make the following disclosures in its
half year report:
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Company have
not changed and fall into the following broad categories:
investment underperformance; political, economic and governance;
loss of investment team or investment manager; share price
discount; change of corporate control of the manager; legal and
regulatory; corporate governance and shareholder relations;
operational and cyber crime; 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 2016.
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.
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
forseeable future and more specifically, that there are no material
uncertainties pertaining to the Company that would prevent its
ability to continue in such operational existence for at least
twelve months from the date of the approval of the half year
financial report. 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 FRS 104 'Interim Financial Reporting' and gives a true and
fair view of the state of affairs of the Company and of the assets,
liabilities, financial position and net return of the Company, as
at 31st December 2015, as required by the UK Listing Authority
Disclosure and Transparency Rules 4.2.4R; and
(ii) the interim management report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the UK Listing
Authority Disclosure and Transparency Rules.
In order to provide these confirmations, and in preparing these
financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business;
and the Directors confirm that they have done so.
For and on behalf of the Board
Alan Saunders
Chairman
22nd February 2017
Statement of Comprehensive Income
for the six months ended 31st December 2016
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st December 2016 31st December 2015 30th June 2016
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- -------- -------- --------- ---------- ---------- -------- -------- --------
Gains/(losses) on
investments held at
fair value through
profit or loss - 66,201 66,201 - (59,173) (59,173) - 91,226 91,226
Net foreign currency
gains - 1,139 1,139 - 59 59 - 4,723 4,723
Income from
investments 8,373 - 8,373 6,054 - 6,054 16,978 - 16,978
Interest receivable
and similar income 71 - 71 40 - 40 141 - 141
---------------------- --------- -------- -------- --------- ---------- ---------- -------- -------- --------
Gross return/(loss) 8,444 67,340 75,784 6,094 (59,114) (53,020) 17,119 95,949 113,068
Management fee (1,424) (3,322) (4,746) (1,203) (2,806) (4,009) (2,406) (5,613) (8,019)
Other administrative
expenses (793) - (793) (664) - (664) (1,326) - (1,326)
---------------------- --------- -------- -------- --------- ---------- ---------- -------- -------- --------
Net return/(loss) on
ordinary activities
before finance costs
and taxation 6,227 64,018 70,245 4,227 (61,920) (57,693) 13,387 90,336 103,723
Finance costs - (1) (1) - - - - - -
---------------------- --------- -------- -------- --------- ---------- ---------- -------- -------- --------
Net return/(loss) on
ordinary activities
before taxation 6,227 64,017 70,244 4,227 (61,920) (57,693) 13,387 90,336 103,723
Taxation (715) - (715) (439) - (439) (1,251) - (1,251)
---------------------- --------- -------- -------- --------- ---------- ---------- -------- -------- --------
Net return/(loss) on
ordinary activities
after taxation 5,512 64,017 69,529 3,788 (61,920) (58,132) 12,136 90,336 102,472
---------------------- --------- -------- -------- --------- ---------- ---------- -------- -------- --------
Return/(loss) per
share (note 4) 4.38p 50.86p 55.24p 2.95p (48.21)p (45.26)p 9.49p 70.63p 80.12p
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 net return/loss on ordinary activities after taxation
represents the profit/(loss) for the period and also the total
comprehensive income.
Statement of Changes in Equity
for the six months ended 31st December 2016
Called
up Capital
share Share redemption Other Capital Revenue
capital premium reserve reserve reserves reserve(1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- --------- ----------- -------- ---------- ----------- ----------
Six months ended 31st December 2016 (Unaudited)
At 30th June
2016 33,091 173,657 1,665 69,939 634,869 21,421 934,642
Repurchase of
shares into
Treasury - - - - (3,837) - (3,837)
Net return on
ordinary activities - - - - 64,017 5,512 69,529
Dividend paid
in the period - - - - - (11,324) (11,324)
---------------------- -------- --------- ----------- -------- ---------- ----------- ----------
At 31st December
2016 33,091 173,657 1,665 69,939 695,049 15,609 989,010
---------------------- -------- --------- ----------- -------- ---------- ----------- ----------
Six months ended 31st December 2015 (Unaudited)
At 30th June
2015 33,091 173,657 1,665 69,939 557,345 16,992 852,689
Repurchase of
shares into
Treasury - - - - (1,089) - (1,089)
Net (loss)/return
on ordinary
activities - - - - (61,920) 3,788 (58,132)
Dividend paid
in the period - - - - - (7,707) (7,707)
---------------------- -------- --------- ----------- -------- ---------- ----------- ----------
At 31st December
2015 33,091 173,657 1,665 69,939 494,336 13,073 785,761
---------------------- -------- --------- ----------- -------- ---------- ----------- ----------
Year ended 30th June 2016 (Audited)
At 30th June
2015 33,091 173,657 1,665 69,939 557,345 16,992 852,689
Repurchase of
shares into
Treasury - - - - (12,812) - (12,812)
Net return on
ordinary activities - - - - 90,336 12,136 102,472
Dividend paid
in the year - - - - - (7,707) (7,707)
---------------------- -------- --------- ----------- -------- ---------- ----------- ----------
At 30th June
2016 33,091 173,657 1,665 69,939 634,869 21,421 934,642
---------------------- -------- --------- ----------- -------- ---------- ----------- ----------
(1) This reserve forms the distributable reserve of the Company
and may be used to fund distribution of profits to investors via
dividend payments.
Statement of Financial Position
at 31st December 2016
(Unaudited) (Unaudited) (Audited)
31st December 31st December 30th June
2016 2015 2016
GBP'000 GBP'000 GBP'000
------------------------------ -------------- -------------- ----------
Fixed assets
Investments held at fair
value through profit
or loss 983,311 750,872 901,025
Current assets
Debtors 1,176 3,966 2,771
Cash and cash equivalents(1) 5,436 32,168 31,052
------------------------------ -------------- -------------- ----------
6,612 36,134 33,823
Current liabilities
Creditors: amounts falling
due within one year (913) (1,245) (206)
------------------------------ -------------- -------------- ----------
Net current assets 5,699 34,889 33,617
------------------------------ -------------- -------------- ----------
Total assets less current
liabilities 989,010 785,761 934,642
------------------------------ -------------- -------------- ----------
Net assets 989,010 785,761 934,642
------------------------------ -------------- -------------- ----------
Capital and reserves
Called up share capital 33,091 33,091 33,091
Share premium 173,657 173,657 173,657
Capital redemption reserve 1,665 1,665 1,665
Other reserve 69,939 69,939 69,939
Capital reserves 695,049 494,336 634,869
Revenue reserve 15,609 13,073 21,421
------------------------------ -------------- -------------- ----------
Total equity shareholders'
funds 989,010 785,761 934,642
------------------------------ -------------- -------------- ----------
Net asset value per share
(note 5) 787.3p 612.7p 740.8p
(1) This line item combines the two lines of 'Investment in
liquidity fund held at fair value through profit or loss' and 'Cash
and short term deposits' in the financial statements for the half
year ended 31st December 2015 into one. Under FRS 102, liquidity
funds are considered cash equivalents as they are held for cash
management purposes.
Statement of Cash Flows
for the six months ended 31st December 2016
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st December 2016 31st December 2015 30th June 2016
GBP'000 GBP'000 GBP'000
----------------------------------------------------------- ------------------- ------------------- ---------------
Net cash outflow from operations before dividends and
interest (note 6) (4,437) (3,003) (4,648)
Dividends received 9,291 7,744 15,694
Interest received 68 39 141
Overseas tax recovered (23) 56 57
Interest paid (1) - -
----------------------------------------------------------- ------------------- ------------------- ---------------
Net cash inflow from operating activities 4,898 4,836 11,244
----------------------------------------------------------- ------------------- ------------------- ---------------
Purchases of investments (40,097) (10,897) (20,794)
Sales of investments 24,004 13,643 28,918
Settlement of foreign currency contracts 39 67 (37)
----------------------------------------------------------- ------------------- ------------------- ---------------
Net cash (outflow)/inflow from investing activities (16,054) 2,813 8,087
----------------------------------------------------------- ------------------- ------------------- ---------------
Dividends paid (11,324) (7,707) (7,707)
Repurchase of shares into Treasury (3,150) - (12,812)
----------------------------------------------------------- ------------------- ------------------- ---------------
Net cash outflow from financing activities (14,474) (7,707) (20,519)
----------------------------------------------------------- ------------------- ------------------- ---------------
Decrease in cash and cash equivalents (25,630) (58) (1,188)
----------------------------------------------------------- ------------------- ------------------- ---------------
Cash and cash equivalents at start of period 31,052 32,219 32,219
Exchange movements 14 7 21
Cash and cash equivalents at end of period 5,436 32,168 31,052
----------------------------------------------------------- ------------------- ------------------- ---------------
Decrease in cash and cash equivalents (25,630) (58) (1,188)
----------------------------------------------------------- ------------------- ------------------- ---------------
Cash and cash equivalents consist of:
Cash and short term deposits 1,354 909 697
Cash held in JPMorgan US Dollar Liquidity Fund 4,082 31,259 30,355
----------------------------------------------------------- ------------------- ------------------- ---------------
Total 5,436 32,168 31,052
----------------------------------------------------------- ------------------- ------------------- ---------------
Notes to the Financial Statements
for the six months ended 31st December 2016
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 2016 are extracted from the latest published financial
statements of the Company and do not constitute statutory accounts
for that year. Those financial statements have been delivered to
the Registrar of Companies and including 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 financial statements are prepared in accordance with the
Companies Act 2006, United Kingdom Generally Accepted Accounting
Practice ('UK GAAP'), including FRS 102 'The Financial Reporting
Standard applicable in the UK and Republic of Ireland' and 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 November
2014.
FRS 104, 'Interim Financial Reporting', issued by the Financial
Reporting Council ('FRC') in March 2015 has been applied in
preparing this condensed set of financial statements for the six
months ended 31st December 2016.
All of the Company's operations are of a continuing nature.
The accounting policies applied to this condensed set of
financial statements are consistent with those applied in the
financial statements for the year ended 30th June 2016.
3. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st December 2016 31st December 2015 30th June 2016
GBP'000 GBP'000 GBP'000
------------------------------------------ ------------------- ------------------- ---------------
2016 Final dividend of 9.0p (2015: 6.0p) 11,324 7,707 7,707
------------------------------------------ ------------------- ------------------- ---------------
Total dividends paid in the period/year 11,324 7,707 7,707
------------------------------------------ ------------------- ------------------- ---------------
All dividends paid and declared in the period have been funded
from the Revenue Reserve.
4. Return/(loss) per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st December 2016 31st December 2015 30th June 2016
GBP'000 GBP'000 GBP'000
-------------------------------------------------------- ------------------- ------------------- ---------------
Return/(loss) per share is based on the following:
Revenue return 5,512 3,788 12,136
Capital return/(loss) 64,017 (61,920) 90,336
-------------------------------------------------------- ------------------- ------------------- ---------------
Total return/(loss) 69,529 (58,132) 102,472
-------------------------------------------------------- ------------------- ------------------- ---------------
Weighted average number of Ordinary shares in issue
(excluding shares held in Treasury) 125,881,804 128,447,289 127,893,440
Revenue return per share 4.38p 2.95p 9.49p
Capital return/(loss) per share 50.86p (48.21)p 70.63p
-------------------------------------------------------- ------------------- ------------------- ---------------
Total return/(loss) per share 55.24p (45.26)p 80.12p
-------------------------------------------------------- ------------------- ------------------- ---------------
5. Net asset value per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st December 2016 31st December 2015 30th June 2016
Net assets (GBP'000) 989,010 785,761 934,642
Number of shares in issue 125,624,301 128,248,376 126,174,703
--------------------------- ------------------- ------------------- ---------------
Net asset value per share 787.3p 612.7p 740.8p
--------------------------- ------------------- ------------------- ---------------
6. Reconciliation of net return/(loss) on ordinary activities
before finance costs and taxation to net cash outflow from
operations before dividends and interest
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st December 2016 31st December 2015 30th June 2016
GBP'000 GBP'000 GBP'000
-------------------------------------------------------- ------------------- ------------------- ---------------
Net return/(loss) on ordinary activities before finance
costs and taxation 70,245 (57,693) 103,723
(Less capital return)/add capital loss on ordinary
activities before finance costs and taxation (64,018) 61,920 (90,336)
Decrease in accrued income and other debtors 1,546 2,198 20
Increase/(decrease) in accrued expenses 27 (116) (60)
Overseas withholding tax (643) (480) (1,286)
Management fee charged to capital (3,322) (2,806) (5,613)
Dividends received (9,291) (7,744) (15,694)
Interest received (68) (39) (141)
Realised gain on liquidity transactions 1,689 1,772 4,655
Realised (loss)/gain on foreign exchange transactions (602) (15) 84
-------------------------------------------------------- ------------------- ------------------- ---------------
Net cash outflow from operations before dividends and
interest (4,437) (3,003) (4,648)
-------------------------------------------------------- ------------------- ------------------- ---------------
7. Fair valuation of investments
The fair value hierarchy disclosures required by FRS 102 are
given below.
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
31st December 2016 31st December 2015 30th June 2016
Assets Liabilities Assets Liabilities Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- ------------ -------- ------------ -------- ------------
Level 1 983,311 - 750,872 - 901,025 -
---------------------------- --------- ------------ -------- ------------ -------- ------------
Total value of investments 983,311 - 750,872 - 901,025 -
---------------------------- --------- ------------ -------- ------------ -------- ------------
For further information, please contact:
Jonathan Latter
For and on behalf of
JPMorgan Funds Limited, Secretary 020 7742 4000
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 FUNDS LIMITED
ENDS
A copy of the half year will be submitted to the National
Storage Mechanism and will shortly be available for inspection at
www.morningstar.co.uk/uk/NSM
The half year will also shortly be available on the Company's
website at www.jpmemergingmarkets.co.uk here up to date information
on the Company, including daily NAV and share prices, factsheets
and portfolio information can also be found.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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