JPMor Glob EM IncTst (JEMI) - Annual Financial Report RNS Number : 5093O JPMorgan Glb Emerging Mkts Inc Tst 11 October 2012 LONDON STOCK EXCHANGE ANNOUNCEMENT JPMORGAN GLOBAL EMERGING MARKETS INCOME TRUST PLC ANNOUNCEMENT OF FINAL RESULTS The Directors of JPMorgan Global Emerging Markets Income Trust plc announce the Company's results for the year ended 31st July 2012. Chairman's Statement Performance I am pleased to report on another strong performance in the year to 31stJuly 2012. The Company recorded a total return on net assets of +4.0%, outperforming the benchmark index, the MSCI Emerging Markets Index with net dividends reinvested (insterling terms), which produced a total return of -9.8%. The Investment Manager's Report reviews the Company's performance and gives details on the investment strategy and portfolio construction. The total return to shareholders was +5.7%, as the Company's share price increased from 112.25p to 114.25p over the year. Revenue and Dividends Gross revenue for the year amounted to £10.5 million (2011: £8.5 million) and net total revenue after finance costs, administrative expenses and taxation amounted to £8.5million (2011: £6.9 million). Revenue return per Ordinary share for the year, calculated on the average number of shares in issue, was 5.41p(2011:5.76p). The Company targeted an initial gross dividend yield of at least 4% based on the initial issue price of 100p per share. In the period from launch until 31stJuly 2011, the Company paid a total dividend of 4.7p. In the current financial year the Board has moved to paying quarterly dividends and, to date, three payments of 0.9p per share have been paid. The Board is pleased to recommend a final dividend of 2.15pper share. Subject to shareholders' approval at the Annual General Meeting on 21st November 2012, the dividend will be paid on 28thNovember 2012 to shareholders on the register as at the close of business on 2ndNovember 2012. Thiswill bring the total dividend for the year to 4.85p, an increase of3.2%. Gearing The Company's assets have grown substantially since launch and in order to maintain the flexibility to use gearing appropriately, a second three year loan facility of US$20million has been taken out and drawn down in full subsequent to the year end. Share Capital During the year, the Company issued a total of 31.1million new shares at a premium to net asset value. On 10thMay 2012, shareholders granted authority to issue up to a further 30% of the then issued share capital. This authority will expire at the forthcoming Annual General Meeting and the Board will seek shareholder approval for its renewal. However, in order to comply with the UKLA Listing Rules, the 30% limit will be reset to 10% of the issued share capital on 13thMay 2013, when the prospectus issued on 14thMay 2012 will expire. More details are given in the Annual Report. The Board On 1stAugust 2011 Pablo Forero resigned as a Director from the Company. On 1stDecember 2011, Richard Robinson was appointed a Director. He is Investment Director at the Paul Hamlyn Foundation and was previously Group Head of Charities & Foundations at Schroders plc. He had previously held a number of senior positions at Rothschild Asset Management and was formerly a director of Aurora Investment Trust plc. In accordance with corporate governance best practice, all Directors will seek reappointment at this year's Annual General Meeting. Annual General Meeting The Annual General Meeting will be held at Holborn Bars, 138-142 Holborn, LondonEC1N 2NQ on Wednesday 21stNovember 2012 at2.00 p.m. The meeting will include a presentation from the Investment Manager on investment policy and performance. There will also be an opportunity for shareholders to meet the Board and representatives of JPMorgan after the meeting. It would be helpful if shareholders seeking answers to detailed questions put them in writing beforehand, addressed to the Company Secretary at Finsbury Dials, 20Finsbury Street, London EC2Y 9AQ. Alternatively, questions may be submitted via the Company's website (www.jpmglobalemergingmarketsincome.co.uk). Shareholders who are unable to attend the AGM in person are encouraged to use their proxy votes. Proxy votes may be lodged electronically, whether shares are held through CREST or in certificate form and full details are set out on the form of proxy. Outlook History tells us that when price-to-book ratios of companies in emerging markets stand at levels of 1.5x to 1.6x, as they do now, future returns tend to be quite good. Allelse being equal, one might feel very optimistic about the prospects for these markets. But all else is not equal. The trajectory of the Chinese economy is not at all clear; and the outturn for China will materially influence profits and dividends for many companies. Coupled with a global economic malaise, currency tensions and an unstable political landscape, the investment outlook for emerging equity markets is even foggier than usual. That being said, the valuation data are comforting. Dividendyields are attractive relative to many other asset classes and long term growth prospects remain superior. Andrew Hutton Chairman, 11th October 2012 Investment Manager's Report During its second year, it is pleasing that the Company has again achieved its income target as well as producing a rise in net asset value of 4.0%, outperforming the benchmark, the MSCI Emerging Markets Index, which fell by 9.8%, all this despite very volatile market conditions. The Company has followed on from last year, delivering a steady income stream from a diversified portfolio of high quality companies and despite the difficult market conditions, we continue to find attractive ideas. Excess returns have come largely from stock selection, with the Thai mobile phone service provider Advanced Info Service being the single largest stock level contributor, along with significant contributions from Brazilian IT company Cielo and Turkish bank Arcelik, more than countering underperformers such as KT Corporation, Asia Cement and Oriflame Cosmetics. Over the year, currency has boosted performance to a small degree. By continuing to have a broad range of exposure at a country level, this diversifies our currency exposure across the asset class and across the two groups of emerging market currencies: those which are producers of raw materials, and therefore have currencies affected by commodity prices, and those of consumer-led markets. Weexpect that although emerging market currencies will remain volatile, the overall trend against sterling will remain positive. Portfolio changes over the year have been modest, with overall turnover of close to30%. This is consistent with our desire to be a long term investor and benefit from the compound growth of dividends, which is expected to average over 10-12% per annum in coming years. The emphasis of the portfolio, favouring stable growth in sectors such as consumer, telecommunications and utilities over the cyclicality of natural resources, has remained constant. Diversification by stock, country and sector is an important part of the portfolio and the Company is expected to continue to hold 60-70 individual holdings over the coming year. Disappointments, of which there were few, tended to be stock specific. Forinstance, we sold out of a position in an Indian auto-manufacturer during the year when they cut their dividend, not through anything company specific, but due to the management's view that they were paying more than their peers. Understandably, this affected our confidence in the company and the level of transparency behind the dividend policy. We believe it is critical to understand the difference between a value trap, whose profitability is deteriorating for structural reasons, and a value opportunity whose long term prospects are obscured by cyclical issues, and that this will continue to be the key to adding performance through stock selection. Our customary emerging markets valuation metric, the price-to-book ratio, remains in the 1.5x to 1.6x range, sitting at the lower end of its historical trading range of 1.5x to 2.5x. This is partly due to the risk aversion of investors, which stems from macro economic uncertainties. It may also be attributable to the double dip in earnings due to cost pressures, which resulted in earnings expectations being cut for both 2012 and 2013. We believe we are at the tail end of this cycle and, given the supportive liquidity backdrop, that emerging markets equity valuations look to be at relatively attractive levels. Richard Titherington Investment Manager, 11th October 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 underperformance 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 analysis, revenue estimates, liquidity reports and shareholder analyses. The Board monitors the implementation and results of the investment process with the Investment Manager who attends all Board meetings, and reviews data which show statistical measures of the Company's risk profile. The Investment Manager is free to employ the Company's gearing tactically, within a strategic range set by the Board. • Foreign Currency: Certain of the Company's assets, liabilities and income are denominated in currencies other than sterling (the Company's functional currency and the currency in which it reports). As a result, movements in exchange rates may affect the sterling value of these items. • Financial: The financial risks faced by the Company include market price risk, interest rate risk, liquidity risk and credit risk. Further details are disclosed in note 23 of the Company's Annual Report. • Accounting, Legal and Regulatory: In order to qualify as an investment trust, the Company must comply with Section 1158. Were the Company to breach Section 1158, it might lose investment trust status and, as a consequence, gains within the Company's portfolio could 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 2006 and, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules and Disclosure and Transparency Rules ('DTRs'). 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 or DTRs 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 2006 and the UKLA Listing Rules and DTRs. • 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 Annual Report. • Operations: 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 within the Internal Control section of the Corporate Governance report. Related Parties Transactions During the year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company. Directors' Responsibilities The Directors each confirm to the best of their knowledge that: a) the financial statementshave been prepared in accordance withapplicableUK accounting standards,and give a true and fair view of theassets, liabilities,financial position and profit or lossof the Company; and b) theAnnual Report, to be published shortly,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 uncertaintiesthat they face. For and on behalf of the Board Andrew Hutton Chairman 11th October 2012 Income Statement for the year ended 31st July 2012 2012 2011^1 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments held at fair value through profit or loss - 4,496 4,496 - 13,520 13,520 Net foreign currency (losses)/gains - (1,035) (1,035) - 500 500 Income from investments 10,530 - 10,530 8,459 - 8,459 Other interest receivable and similar income 2 - 2 8 - 8 Gross return 10,532 3,461 13,993 8,467 14,020 22,487 Management fee (501) (1,170) (1,671) (398) (928) (1,326) Performance fee - (2,838) (2,838) - (897) (897) Other administrative expenses (450) - (450) (398) - (398) Net return/(loss) on ordinary activities before finance costs and taxation 9,581 (547) 9,034 7,671 12,195 19,866 Finance costs (128) (298) (426) (102) (149) (251) Net return/(loss) on ordinary activities before taxation 9,453 (845) 8,608 7,569 12,046 19,615 Taxation (971) - (971) (706) - (706) Net return/(loss) on ordinary activities after taxation 8,482 (845) 7,637 6,863 12,046 18,909 Return/(loss) per share (note 3) 5.41p (0.54)p 4.87p 5.76p 10.11p 15.87p ^1 For the period from incorporation on 4th June 2010 to 31st July 2011. All revenue and capital items in the above statement derive from continuing operations. No operations were discontinued during the year. 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. Statement of Total Recognised Gains and Losses for the year ended 31st July 2012 2012 2011^1 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Movement in fair value of the cash flow hedge - 19 19 - (121) (121) Net return/(loss) on ordinary activities 8,482 (845) 7,637 6,863 12,046 18,909 Total recognised gains/(losses) for the year 8,482 (826) 7,656 6,863 11,925 18,788 ^1 For the period from incorporation on 4th June 2010 to 31st July 2011. Reconciliation of Movements in Shareholders' Funds for the year ended 31st July 2012 Called up Capital share redemption Share Other Capital Revenue capital reserve premium reserve reserves reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 4th June 2010^1 - - - - - - - Issue of Management shares 13 - - - - - 13 Repurchase and cancellation of Management shares (13) 13 - - (13) - (13) Issue of Ordinary shares following placing and offer for subscription 1,040 - 102,960 - - - 104,000 Expenses of placing and offer for subscription - - (1,712) - - - (1,712) Issue of Ordinary shares 156 - 17,137 - - - 17,293 Additional share issue expenses - - (310) - - - (310) Redesignation of share premium - - (101,276) 101,276 - - - Issue of Ordinary shares on conversion of 'C' shares 230 - 23,762 - 1,527 - 25,519 Movement in fair value of the cash flow hedge - - - - (121) - (121) Net return on ordinary activities - - - - 12,046 6,863 18,909 Dividends appropriated in the period - - - - - (3,798) (3,798) At 31st July 2011 1,426 13 40,561 101,276 13,439 3,065 159,780 Issue of Ordinary shares 311 - 33,748 - - - 34,059 Expenses of new share issue - - (298) - - - (298) Net (loss)/return from ordinary activities - - - - (845) 8,482 7,637 Movement in fair value of the cash flow hedge - - - - 19 - 19 Dividends appropriated in the year - - - - - (6,546) (6,546) At 31st July 2012 1,737 13 74,011 101,276 12,613 5,001 194,651 ^1 Date of incorporation. Balance Sheet at 31st July 2012 2012 2011 £'000 £'000 Fixed assets Investments held at fair value through profit or loss 207,152 169,227 Investment in liquidity fund held at fair value through profit or loss 2,904 579 Total investments 210,056 169,806 Current assets Debtors 1,830 1,235 Cash and short term deposits 729 2,117 2,559 3,352 Creditors: amounts falling due within one year (3,649) (1,087) Financial liability: derivative financial instrument (102) (121) Net current (liabilities)/assets (1,192) 2,144 Total assets less current liabilities 208,864 171,950 Creditors: amounts falling due after more than one year (12,757) (12,170) Provision for liabilities and charges Performance fees (1,456) - Net assets 194,651 159,780 Capital and reserves Called up share capital 1,737 1,426 Capital redemption reserve 13 13 Share premium 74,011 40,561 Other reserve 101,276 101,276 Capital reserves 12,613 13,439 Revenue reserve 5,001 3,065 Total equity shareholders' funds 194,651 159,780 Net asset value per share (note 4) 112.0p 112.0p Company registration number: 7273382 Cash Flow Statement for the year ended 31st July 2012 2012 2011^1 £'000 £'000 Net cash inflow from operating activities 6,084 4,876 Returns on investments and servicing of finance Interest paid (419) (250) Finance costs paid relating to 'C' shares - (795) Net cash outflow from returns on investments and servicing of finance (419) (1,045) Taxation Overseas tax recovered 19 - Total tax recovered 19 - Capital expenditure and financial investment Purchases of investments (130,736) (223,292) Sales of investments 97,035 67,342 Other capital charges (18) (305) Net cash outflow from capital expenditure and financial investment (33,719) (156,255) Dividends paid (6,546) (3,798) Net cash outflow before financing (34,581) (156,222) Financing Proceeds of placing and offer for subscription - 104,000 Expenses of placing and offer for subscription - (1,712) Proceeds of issue of ordinary shares 33,945 17,293 Costs of subsequent issue of ordinary shares (298) (310) Drawdown of loan - 12,562 Loan arrangement fees paid - (18) Gross proceeds of 'C' share issue - 26,402 Net cash inflow from financing 33,647 158,217 (Decrease)/increase in cash for the year (934) 1,995 ^1 For the period from incorporation on 4th June 2010 to 31st July 2011. Notes to the Accounts for the year ended 31st July 2012 1. Accounting policies Basis of accounting The accounts are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the AIC in January 2009. All of the Company's operations are of a continuing nature. The accounts have been prepared on a going concern basis. 2. Dividends Dividends paid and proposed 2012 2011 £'000 £'000 2011 Final dividend paid of 1.45p 2,198 - First interim dividend paid of 0.90p (2011: 1.00p) 1,380 1,164 Second interim dividend paid of 0.90p (2011: 2.25p) 1,449 2,634 Third interim dividend paid of 0.90p (2011: Nil) 1,519 - Total dividends paid in the year 6,546 3,798 Final dividend proposed of 2.15p (2011: 1.45p) 3,735 2,069 3. Return/(loss) per share Return/(loss) per share is based on the following: 2012 2011 £'000 £'000 Revenue return 8,482 6,863 Capital (loss)/return (845) 12,046 Total return 7,637 18,909 Weighted average number of Ordinary shares in issue during the year 156,827,362 119,152,531 Revenue return per share 5.41p 5.76p Capital (loss)/return per share (0.54)p 10.11p Total return per share 4.87p 15.87p 4. Net asset value per share The net asset value per share is based on the net assets attributable to the ordinary shareholders of £194,651,000 (2011: £159,780,000) and on the 173,719,438 (2011: 142,655,853) ordinary shares outstanding at 31st July 2012. 5. Status of results announcement 2011FinancialInformation The figures and financial information for 2011are extractedfrom thepublishedAnnual Report and Accountsforthe period ended 31st July 2011and do not constitute the statutory accountsfor that year.TheAnnual Report and Accountshasbeen delivered to the Registrar of Companies and included theReport of theIndependent Auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. 2012FinancialInformation The figures and financial information for 2012are extractedfromtheAnnual Report and Accountsfor the yearended 31st July 2012and do not constitutethestatutory accountsfor the year.TheAnnual Report andAccountsincludetheReport of theIndependent Auditors which is unqualified anddoesnot contain a statement under either section498(2)or section498(3) of the Companies Act2006. TheAnnual Report andAccountswill be delivered to the Register of Companies in due course. Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement. JPMORGAN ASSET MANAGEMENT (UK) LIMITED ENDS A copy of the annual report will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.hemscott.com/nsm.do The annual report will also shortly be available on the Company's website at www.jpmglobalemergingmarketsincome.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found. JPMORGAN ASSET MANAGEMENT (UK) LIMITED This information is provided by RNS The company news service from the London Stock Exchange END ACSFFUFEFFESEIS -0- Oct/11/2012 13:00 GMT
JPMor Glob EM IncTst JEMI Annual Financial Report
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