JPMorgan Indian Inv - Half-year Report
09/06/2023 07:00
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RNS Number : 1613C JPMorgan Indian Invest Trust PLC 09 June 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN INDIAN INVESTMENT TRUST PLC
Half Year Report & FINANCIAL STATEMENTS
for the six months ended 31st MARCH 2023
Legal Entity Identifier: 549300OHW8R1C2WBYK02
Information disclosed in accordance with DTR 4.2.2
CHAIRMAN'S STATEMENT
Performance
The Indian markets started the six-month period ended 31st March 2023 on a
strong note, rising broadly through October into mid-December but gave up the
gains towards the latter part of the period as rising inflation led to fears
that central banks would continue to raise interest rates and a global
recession was predicted for the near term. However, despite the headwinds in
the latter part of the six months period, the Company's portfolio outperformed
its benchmark index, the MSCI India Index (in sterling terms). This was mainly
due to the portfolio's structural underweight position in Utilities &
Industrials and strong stock selection in Financials.
The Company produced a total return on net assets of -8.3% in the period.
Albeit it is always disappointing to report a decrease in net asset value
('NAV'), I am pleased to inform that the Company outperformed its benchmark by
5.5%. The total return to shareholders was -6.7% during the period. The
Company's discount to NAV at which the Company's shares trade, narrowed from
20.1% at the previous financial year end to 18.6% at the half year end.
The Investment Managers provide a detailed commentary on these figures and
discuss performance, activity and the outlook for the Indian market in their
report on page 13 of the Half Year Report.
Gearing
The Board regularly discusses gearing with the Investment Managers. On
reflection of the fact that the Company's
2-year £30 million loan facility which matured in August 2022 was not being
utilised, the Board did not deem it appropriate to renew or replace the
facility. Therefore, the Company currently does not have a debt facility in
place and the Board will seek to arrange a facility at a time it considers
appropriate. As at 31st March 2023, the Company's portfolio held 0.5% net
cash, i.e. was 99.5% invested. At the time of writing, the Company's portfolio
is approximately 0.2% net cash.
Discount and Share Repurchases
The Board has guidelines in place with regard to the management of the
discount to net asset value at which the Company's shares trade. At the Annual
General Meeting ("AGM") held in February 2023, shareholders gave approval for
the Company to renew the Directors' authority to repurchase up to 14.99% of
the Company's shares for cancellation or into Treasury on an ongoing basis.
The Board constantly weighs the merits of buying back shares in order to
manage the level and volatility of the discount and will buy back shares, in
line with the Company's investment policy, if the discount is out of line with
the peer group and markets are orderly. The Company repurchased 1,262,194
shares into Treasury during the reporting period. Since the half year end,
687,904 shares have been bought back for holding in Treasury.
Conditional Tender Offer
Shareholders are reminded that a tender offer will be made to shareholders for
up to 25% of the Company's outstanding share capital at NAV less costs if,
over the five years from 1st October 2020, the Company's NAV total return in
sterling on a cum income basis does not exceed the total return of the
benchmark index plus 0.5% per annum over the five-year period on a cumulative
basis. If the tender offer is triggered, it will be subject to shareholder
approval at the relevant time.
The Company is required to pay capital gains tax on long-term and short-term
capital gains at the headline current rates of 10% and 15%, respectively, plus
associated surcharges of approximately 1-1.5%, which the Company's benchmark
does not take into account. Therefore, for the avoidance of doubt, in order to
ensure that the terms of the conditional tender offer more correctly reflect
the Investment Managers' performance in calculating whether the tender offer
has been triggered, the NAV per share will be adjusted to add back all such
taxes paid or accrued. For the benefit of the Company's shareholders, the
Company publishes on a monthly basis through a Regulatory Information Service
platform the Company's adjusted NAV per share. The Company's adjusted NAV per
share as at 30th September 2020 was 689.24 pence and as at 31st March 2023 it
stood at 982.75 pence, equating to a NAV performance (without the impact of
capital gains tax) of 42.6% since 1st October 2020.
It must, however, be noted that any tender offer will also be conditional on
shareholders approving the Company's continuation vote in 2024.
The Board
As announced last year, I will be stepping down as Chairman of the Company at
the conclusion of the AGM in February 2024 and will be succeeded by Jeremy
Whitley. As part of its long-term succession planning, the Board intends to
commence a formal recruitment search for a new Non-executive Director later in
the year. Led by the Nomination Committee, the search will focus on finding
candidates that have skills which are complementary to those of other members
of the Board and in line with the Company's investment strategy and objective.
The Board also acknowledges the importance of maintaining diversity on the
Board.
Manager Changes
In September 2022, the Board welcomed Amit Mehta and Sandip Patodia to
co-manage the Company's portfolio alongside Ayaz Ebrahim following Rajendra
Nair's departure from JPMAM. The Board has been working very closely with the
new portfolio management team since the appointment of Amit and Sandip and it
is pleasing to see their appetite and enthusiasm for achieving the goals and
ambitions for the Company.
Following discussions with the Investment Managers, the Board has agreed a
minor change to the Company's investment policy to permit investment in
companies where a material part of their economic activity is undertaken in
India but whose shares are listed on a stock exchange outside of India. This
allows the Investment Managers to pursue opportunities they are currently
unable to invest in.
Outlook
The economic forces in India remain supportive. Beyond the domestic story,
India is seeing a geopolitical windfall which may add further tailwinds, as
more companies seek to diversify their exposure from China. The Board believes
the long-term growth story for the Indian economy remains strong and is less
concerned about the near-term volatility that has been seen over the latter
part of the six months period. Moreover, the Board remains confident that the
portfolio management team continues to be focused on bolstering the overall
quality of the portfolio.
Rosemary Morgan
Chairman
8th June 2023
INVESTMENT MANAGERS' REPORT
Market Review
During the six months to end of March 2023, MSCI India declined 13.8%. This
compares to a return of 7.4% for MSCI China, 2.9% for MSCI Emerging Markets
Index and 4.2% for the S&P 500. This was clearly a much more challenging
period for the Indian equity markets relative to other markets around the
world. However, this performance follows several years of particularly high
returns for the Indian market, during which it significantly outpaced gains in
other markets. In the three years to end March 2023, the Indian market made an
average annualised return of over 22%, compared to gains of over 18% for the
S&P 500, over 8% for MSCI Emerging Markets and a decline of greater than
2% per annum for MSCI China.
In our view, there were two material contributing factors that were
responsible for the relative underperformance of the Indian equity market.
Firstly, the shift in zero COVID policy by the Chinese government meant that,
within Emerging Markets, there was now a new destination for capital to move
towards. India had benefited from many areas over the last couple of years due
to better and counter-intuitive monetary and fiscal policies during the COVID
period; a more stable political environment; lesser geopolitical risk;
stronger growth recovery; and a more resilient economy driven by domestic
consumption. Some of these relative tailwinds became less relevant over the
last six months hence we saw some short-term underperformance. The second
material factor was much more specific to the Indian equity market. This was
the release of a short seller report on the Adani group companies, which led
to a more negative sentiment towards the market, amidst concerns about
contagion risk to the broader market. We didn't share the same concerns around
contagion risk, nor have we changed our long-term positive stance on the
opportunity the Indian equity market presents. In fact, it has strengthened
our belief that India remains a large and one of the most compelling
opportunities for equity investors.
Performance review
Over the six-month period to 31 March 2023, the Company's assets fell by 8.3%.
While this amounts to an outperformance relative to the MSCI India benchmark
of 5.5%, this result is nonetheless disappointing. However, as is the case for
the Indian market, this performance follows several years of high absolute
returns. Over the three years to end March 2023, the Company delivered an
average annual return of 20.7%.
There were two key contributors to relative performance: firstly the lack of
exposure to any of the Adani group companies. Their underperformance was
driven by a short seller report by a US based firm, called Hindenburg, citing
issues relating to stock manipulation, account manipulation, convoluted
corporate structure, excessive leverage, and more. We have no opinion on the
allegations. In our last annual report, we had highlighted our rationale for
not owning shares in this group, namely: high capital intensity and high
levels of leverage for the underlying businesses within the group. Our views
remain the same. Secondly, positive stock selection in the financial sector
contributed specifically through the combination of the Company's underweight
in Bajaj Finance due to high valuations, and the material overweight in HDFC
Bank and Axis Bank, driven by robust outlook on credit demand.
The key detractors over the period were our underweight in Larsen &
Toubro, which performed well because of the positive sentiment on capital
expenditure growth, and our exposure to healthcare services in Metropolis and
Dr Lal Pathlabs, which were sold down because of a perceived increase in
competitive intensity in the market. We continue to believe that the
competition will be short-lived, and the incumbent players will emerge as the
long-term winners in a structurally attractive industry.
Portfolio changes
Before we go to the changes in the portfolio, a reminder of what the focus of
the investment strategy is: to invest in great businesses, run with the right
mindset at an attractive valuation. We think about our investments in that
order, trying to answer the simple question about corporate quality, before
considering the valuation merit. The market volatility over this period has
allowed us to initiate positions in several new businesses. Our comprehensive
research process classifies companies into four main categories of Premium,
Quality, Trading and Structurally Challenged. Premium is the highest quality
business and Structurally Challenged, the lowest. Our preference is to own
Premium or Quality businesses, but we also recognise it is important to ensure
that you are not also overpaying for those businesses so we consider the
classification in conjunction with the return we expect to make on the
investment. As Buffett once said: "…. you do get an occasional opportunity
to get into a wonderful business that's being run by a wonderful manager. And,
of course, that's hog heaven day. If you don't load up when you get those
opportunities, it's a big mistake." With that in mind, we made the following
portfolio changes over the 6-month period.
New initiations
Colgate India - A Premium company with a relatively attractive expected
return. Colgate is a dominant consumer company in a highly attractive category
of oral care leading to best-in-class economics of over 20%+ earnings before
interest and taxes ('EBIT') margin and 50%+ return on equity ('ROE'). We
believe Colgate retains its competitive moats of strong brand, distribution
and strong links with dental practices which should help it maintain/gain
market share. In addition, Colgate ticks most of the boxes when it comes to
Governance with a high-quality independent Board, strong local management and
noteworthy ESG initiatives.
HDFC Asset Management - A Quality company with an attractive expected return.
HDFC Asset Management is currently one of India's four listed fund managers
and is ranked second in the country by assets under management. Its economics
are excellent as it has high ROE, growth, and cash generation. Regulatory
changes and a period of investment underperformance have been minor detractors
in recent years, yet financial performance has still been consistently
impressive. Duration is also excellent - India's mutual fund industry is
primed for long-term structural growth as financial sophistication rises and
savings continue to shift from physical to financial assets. Governance is
also a strength, with the HDFC Group behind it, experienced management, board
members and a track-record of sensible capital allocation.
ITC - A Quality business with an attractive expected return. We believe
despite operating in a highly regulated environment, it dominates its key
business segment of cigarettes (more than 80% of EBIT) which provides it with
the requisite pricing power to sustain its strong economics for foreseeable
duration. The underlying businesses - Tobacco, fast-moving consumer goods and
hotels - all have solid economics, strong duration and sound governance.
Info Edge - A Premium company with a relatively attractive expected return for
its core business and potential value in earlier stage investments. Its core
business is in recruitment classifieds where it enjoys a monopoly position
with ~80% market share. There is ample cash generated in this business which
is used to fund three other classifieds businesses in different business
segments and to fund Info Edge's venture arm, which had notable success
backing Zomato and PolicyBazaar. Sanjeev Bikhchandani, founder, and former
CEO, remains in the business as an investor, Vice Chairman and Advisor with
significant influence, still owning 28% of Info Edge. Sanjeev is very highly
respected in India in the entrepreneurial and business community, known for
conservatism, strong ethics, a long-term view, and cost consciousness. He has
instilled this ethos in the business, and ceded control where necessary - most
notably by stepping aside in 2010 as CEO to make room for Hitesh Oberoi,
former COO, and taking on more of an advisory role. Capital allocation has
been strong, and although the appropriateness of the use of cash can be
debated, past returns from deployment of such have been solid.
Coforge - A Quality business with a reasonable expected return. Coforge is a
mid-sized Indian IT services company. The portfolio already has a reasonable
exposure to the IT Services industry, but Coforge can grow at a higher rate
given higher revenue potential and margin improvements. We remain positive
about the long-term structural opportunities in the broader IT Services sector
given the deep pool of talent in the market and the cost advantages of India
software engineers.
Triveni Turbine - A Quality business with an attractive expected return.
Triveni, a leading manufacturer of Turbines, offers diversified and
long-duration growth in a capex-dependent business that is expanding into new
sub-segments, particularly in the high margin and sticky aftermarket services
business that reduces the cyclicality inherent in this business, along with
good track-record on capital allocation and clean family-run governance with
long-term mindset.
United Spirits - A Quality business with a relatively attractive expected
return. United Spirits is the largest player in the Indian spirits' market. We
believe the company's market cap remains relatively low ($6.6bn) in the
context of the potential size of the pie India offers. In addition, the high
ROCE that the company makes on the distribution of brands imported from parent
Diageo into India and its increasing focus on the premium+ portfolio, will
deliver attractive growth rates.
Complete sales
Motilal Oswal - A Trading business which offers broking and other financial
services. The attractiveness of the investment case for this stock has
diminished in a sector where there are plenty of alternatives.
ICICI Prudential Life - A Quality business where we have consolidated our
insurance holdings into HDFC Life, believing it is better placed than ICICI
Prudential to capture the long-term opportunities in the industry given strong
support from the HDFC group.
Jubilant - This company operates several restaurant franchises including
Domino's Pizza. We sold given a materially lower expected return relative to
other consumer businesses and concerns on new growth areas.
Larsen and Toubro - A Trading business. This company is more capital-intensive
than our typical investment and our preference is to own more product-related
businesses as highlighted above.
Indusind Bank - We consolidated our exposure into higher quality banks. Our
recent interaction with the company highlighted a less acceptable risk
appetite. In addition, this Trading business offered little differentiation in
return expectations relative to peers.
Godrej Properties - A Trading business where we exited a small position in
favour of more attractive alternatives.
Team activity
It's been a busier than usual period for the team. Investment travel has
recommenced, and it is great to be back on the road. Our team of fund managers
and analysts spent nearly two weeks in India in February this year with the
wider investment team on the ground, combined with investment meetings and
getting back to business as usual. Being on the ground in Mumbai provided the
team with the opportunity to conduct a further deep dive of the Indian market.
The team met circa 130 companies comprising a combination of existing holdings
and new businesses. During this time, we also took the opportunity to hold our
first India offsite in J.P. Morgan's Mumbai office bringing together from
around the world all our analysts covering Indian securities. We have always
believed that our team possesses a great balance between global industry
expertise and local knowledge, and this was affirmed in the time we all spent
together. But more than that, it served to confirm the many compelling
opportunities this market has to offer for those willing to take a long-term
view.
Outlook - On the Cusp?
In our view the short-term weakness of Indian markets relative to other equity
markets is just that - short term. Markets, like stocks, rarely move in one
direction. There are some natural bumps along the way, but we believe the
long-term outlook continues to remain attractive. As an economy, India
continues to tick the key top-down factors most investors care about - namely
a strong democracy; fair and independent institutions; strong banking system;
low leverage and economic growth expectations materially above any other
global economy.
For these reasons, we believe India is on the cusp of being able to deliver a
high rate of economic growth over multiple decades driven by strong local
demand, an increase in in investment not only domestically but also from
overseas as it is becoming a globally attractive investment destination. The
advantage of land and labour is on the cusp of meeting demand both
domestically and globally.
As most developed and emerging countries globally continue to struggle to
expand their economies, our expectations are for India to remain one of the
fastest growing. We estimate real GDP growth at around 7% for 2023 coming down
to around 6% in 2025 but, encouragingly, being able to sustain this level of
growth for many years beyond this. It's difficult to find any other economy
around the world that comes close to that. India has already overtaken the UK
to become the fifth largest economy and based on estimates will likely become
the third largest economy in the next decade.
Demographic Dividend
Many readers will be aware that India's population has recently overtaken
China's to become the most populous country in the world. The fact that the
age distribution in India is more weighted to economically active age groups
underpins the structural opportunities in many sectors of the Indian economy.
This, combined with the increase in income for lower-earning households, will,
in our opinion, continue to drive higher demand from consumers. The
combination of rapid urbanisation, a growing population, rising household
affluence and improving accessibility of goods and services will drive the
twin engines of consumer demand in India - staple goods and discretionary
products - where we can find attractive investment opportunities.
Capital Expenditure meets demand
Post the global financial crisis, it's fair to say that India missed a
significant capex cycle (phase 4 to 5) and the chart on page 16 in the Half
Year Report highlights that more acutely in terms of the drop in gross fixed
asset formation.
We have previously described this as the lost decade. However, that is only
one part of the story. Over that period the government has made significant
strides in terms of getting the foundation laid to allow for a new cycle which
can be a much longer and more sustainable period of investment-led growth.
This all comes at the same time as growing demand from international companies
looking to have a balanced and diversified manufacturing base to ensure long
term security. India offers an abundance of natural resources and a growing
labour pool, which is highly skilled and low-cost. Many readers will have
already read about Apple's plans to switch manufacturing of iPhones to India.
This, in our view, is just the beginning. In addition, we are starting to see
a material pick-up in investment in areas like railways and road
transportation, as well as in the manufacturing side. The combination of all
these factors, gives us confidence about the outlook for growth. The banking
system, that will be so important to be able to support this growth, remains
in a sound position to be able to provide lines of credit as required.
IT Services
While this area, undoubtedly, is more connected to global growth expectations
than other areas of the Indian economy, we still believe the long-term
opportunity here remains extremely attractive. The talent pool mentioned above
means that there is really no alternative for global corporates thinking about
digital or cloud. Moreover the low cost of this talent pool means the
opportunity here remains robust though with some level of cyclicality. We are
less concerned with the noise around the short term. If anything, this is
where investors like us, that can take longer-term views, will see the biggest
opportunities present themselves.
Valuations
We are often asked about market valuations and whether we think the India
equity market is expensive. Part of the answer to this question lies with
investors' time horizon. But also, more fundamentally according to a
theoretical framework which we use to analyse and value individual stocks, the
key components that drive the value of any business are its growth rate and
the return on equity (ROE). Using the same lens for the market, we have long
argued about the much longer and higher duration for the India equity
universe. However, on top of that the Indian equity market has consistently
delivered the attractive combination of a much higher average ROE and a lower
variation around that coupled with the higher long-term growth. This provides
ample justification for higher long-term multiples. We don't view market
valuations to be out of sync with the long-term opportunity.
In addition to the above, the long-term opportunity for any market is a
function of two main drivers: 1) Dispersion - the difference between the best
and worst performing stocks i.e., the ability to add value in stock selection
and 2) Opportunity set. The India equity universe combines a high dispersion
within the opportunity set with a large universe in which to invest. Hence the
best backdrop for return generation.
So, all in all, there are many reasons to be optimistic about the long-term
prospects of the Indian equity markets. Volatility such as the market
experienced over the past six months is to be expected at times, although it
is never comfortable. But we view investing as a marathon, not a sprint, and
we remain confident that the Indian market offers just reward for patient
investors willing to stay in the race.
Amit Mehta
Sandip Patodia
Ayaz Ebrahim
Investment Managers
8th June 2023
INTERIM MANAGEMENT REPORT
The Company is required to make the following disclosures in its Half Year
Report.
Principal and Emerging Risks and Uncertainties
The principal and emerging risks and uncertainties faced by the Company fall
into the following broad categories: investment and strategy; environmental
regulatory risks; corporate governance and shareholder relations; financial
and operational, including cyber crime and taxation. Information on each of
these areas is given in the Business Review within the Annual Report and
Financial Statements for the year ended 30th September 2022.
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 during the period.
Going Concern
The Directors believe, having considered the Company's investment objective,
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 foreseeable
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 this half yearly 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 the Accounting
Standards Board's Statement 'Half Yearly Financial Reports' 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
March 2023, 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-adopted international 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
Rosemary Morgan
Chairman
8th June 2023
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 31ST MARCH 2023
(Unaudited) (Unaudited) (Audited)
Six months ended
Six months ended
Year ended
31st March 2023
31st March 2022
30th September 2022
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
(Losses)/gains on investments held - (67,618) (67,618) - (20,071) (20,071) - 36,867 36,867
at fair value through profit or loss
Net foreign currency (losses)/gains - (77) (77) - 28 28 - 98 98
Income from investments 4,354 - 4,354 3,218 - 3,218 9,403 - 9,403
Interest receivable and similar income 287 - 287 19 - 19 139 - 139
Total income/(loss) 4,641 (67,695) (63,054) 3,237 (20,043) (16,806) 9,542 36,965 46,507
Management fee (2,532) - (2,532) (2,457) - (2,457) (4,920) - (4,920)
Other administrative expenses (558) - (558) (613) - (613) (1,133) - (1,133)
Profit/(loss) before finance costs and 1,551 (67,695) (66,144) 167 (20,043) (19,876) 3,489 36,965 40,454
taxation
Finance costs (4) - (4) (80) - (80) (142) - (142)
Profit/(loss) before taxation 1,547 (67,695) (66,148) 87 (20,043) (19,956) 3,347 36,965 40,312
Taxation (473) (1,392) (1,865) (1,062) 4,995 3,933 (2,069) 5,867 3,798
Net profit/(loss) 1,074 (69,087) (68,013) (975) (15,048) (16,023) 1,278 42,832 44,110
Earnings/(loss) per share (note 4) 1.42p (91.47)p (90.05)p (1.26)p (19.45)p (20.71)p 1.66p 55.73p 57.39p
The Company does not have any income or expense that is not included in the
net profit/(loss) for the period. Accordingly the 'Net profit/(loss) for the
period, is also the 'Total comprehensive income' for the period, as defined in
IAS1 (revised).
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 represents the Company's Statement of
Comprehensive Income, prepared in accordance with IFRS.
The supplementary 'Revenue' and 'Capital' columns are prepared under guidance
published by the Association of Investment Companies.
All the profit/(loss) and total comprehensive income is attributable to the
equity shareholders of JPMorgan Indian Investment Trust plc, the Company.
There are no minority interests.
This is the Company's Statement of Comprehensive Income. Since the Mauritius
Subsidiary is in liquidation since 31 August 2022, it is no longer a group
company and accordingly no supplementary information is provided.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Called up Share premium Exercised warrant reserve Capital redemption Capital reserves Revenue reserve Total
share
£'000
£'000
reserve
£'000
£'000
£'000
capital
£'000
£'000
Six months ended 31st March 2023 (Unaudited)
At 30th September 2022 24,868 97,316 5,886 12,898 675,538 (21,257) 795,249
Repurchase of shares into Treasury - - - - (10,325) - (10,325)
(Loss)/profit for the period - - - - (69,087) 1,074 (68,013)
At 31st March 2023 24,868 97,316 5,886 12,898 596,126 (20,183) 716,911
Six months ended 31st March 2022 (Unaudited)
At 30th September 2021 24,868 97,316 5,886 12,898 645,480 (22,535) 763,913
Repurchase of shares into Treasury - - - - (6,635) - (6,635)
Loss for the period - - - - (15,048) (975) (16,023)
At 31st March 2022 24,868 97,316 5,886 12,898 623,797 (23,510) 741,255
Year ended 30th September 2022 (Audited)
At 30th September 2021 26,868 97,316 5,886 12,898 645,480 (22,535) 763,913
Repurchase of shares into Treasury - - - - (12,774) - (12,774)
Profit for the year - - - - 42,832 1,278 44,110
At 30th September 2022 24,868 97,316 5,886 12,898 675,538 (21,257) 795,249
CONDENSED STATEMENT OF FINANCIAL POSITION
AT 31ST MARCH 2023
(Unaudited) (Unaudited) (Audited)
At 31st March
At 31st March 2022
At 30th September 2022
2023
£'000
£'000
£'000
Non-current assets
Investments held at fair value through profit or loss 713,459 727,567 749,959
Investments in subsidiaries held at fair value through - 4,917 -
profit or loss(1)
Total non-current assets 713,459 732,484 749,959
Current assets
Financial assets: Derivative financial instruments - 8 -
Other receivables 1,693 3,626 6,076
Cash and cash equivalents 13,308 22,262 57,255
15,001 25,896 63,331
Current liabilities
Other payables(2) (671) (1,071) (8,246)
Net current assets 14,330 24,825 55,085
Total assets less current liabilities 727,789 757,309 805,044
Non-current liabilities
Provision for capital gains tax (10,878) (16,054) (9,795)
Net assets 716,911 741,255 795,249
Amounts attributable to shareholders
Called up share capital 24,868 24,868 24,868
Share premium 97,316 97,316 97,316
Exercised warrant reserve 5,886 5,886 5,886
Capital redemption reserve 12,898 12,898 12,898
Capital reserves 596,126 623,797 675,538
Revenue reserve (20,183) (23,510) (21,257)
Total shareholders' funds 716,911 741,255 795,249
Net asset value per share (note 5) 958.7p 965.0p 1,045.8p
(1) As at 31 March 2022 the Company owned a subsidiary, JPMorgan Indian
Investment Company (Mauritius) Limited which comprised of £5 million net of
cash and other payables.
This was put into liquidation on 31 August 2022.
(2) Included in other payables is an amount of £228,000 (31st March 2022:
nil; 30th September 2022: nil) for repurchase of shares awaiting settlement.
CONDENSED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 31ST MARCH 2023
(Unaudited) (Unaudited) (Audited)
Six months ended
Six months ended
Year ended
31st March 2023
31st March 2022
30th September 2022
£'000
£'000
£'000
Operating activities
Net (loss)/return before finance costs and taxation (66,148) (19,956) 40,312
Deduct dividends received (4,354) (3,218) (9,403)
Deduct bank interest received (287) (19) (139)
Add interest paid 4 80 142
Add losses/(deduct gains) on investments held at fair value 67,618 20,071 (36,867)
through profit or loss
Add losses/(deduct gains) on net foreign currency 77 - (98)
Decrease/(increase) in prepayments, VAT and other receivables 19 (12) (64)
Increase/(decrease) in other payables 35 (51) 43
Net cash outflow from operating activities before Interest and taxation (3,036) (3,105) (6,074)
Interest paid (4) (77) (141)
Tax paid (893) (849) (2,165)
Dividends received 4,404 4,342 10,675
Interest received 287 19 139
Capital gains tax paid (309) - (5,387)
Net cash inflow/(outflow) from operating activities 449 330 (2,953)
Investing activities
Purchases of investments held at fair value through profit or loss (98,144) (108,864) (219,128)
Sales of investments held at fair value through profit or loss 63,922 110,863 260,838
Settlement of foreign currency contracts - (1) -
Sales of investment in subsidiary held at fair value through - - 4,800
profit or loss
Net cash (outflow)/inflow from investing activities (34,222) 1,998 46,510
Financing activities
Repurchase of shares into Treasury (10,097) (6,432) (12,774)
Net cash outflow from financing activities (10,097) (6,432) (12,774)
Decrease in cash and cash equivalents (43,870) (4,104) 30,783
Cash and cash equivalents at the start of the period 57,255 26,366 26,374
Exchange movements (77) - 98
Cash and cash equivalents at the end of the period 13,308 22,262 57,255
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31ST MARCH 2023
1. Principal activity
The principal activity of the Company is that of an investment trust company
within the meaning of Section 1158 of the Corporation Tax Act 2010.
2. Financial Statements
The financial information for the six months ended 31st March 2023 and 2022
has not been audited or reviewed by the Company's auditors.
The financial information contained in these half year financial statements
does not constitute statutory accounts as defined in Section 434 of the
Companies Act 2006.
The information for the Company for the year ended 30th September 2022 has
been extracted from the latest published audited financial statements. Those
financial statements have been delivered to the Registrar of Companies and
included 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.
3. Accounting policies
On 31 December 2020, IFRS as adopted by the European Union at that date was
brought into UK law and became UK-adopted International Accounting Standards,
with future changes being subject to endorsement by the UK Endorsement Board.
The Company transitioned to UK-adopted International Accounting Standards in
its company financial statements on 1 January 2021. This change constitutes a
change in accounting framework. However, there is no impact on recognition,
measurement or disclosure in the period reported as a result of the change in
framework. The financial statements of the Company have been prepared in
accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting
under those standards.
Where presentational guidance set out in the Statement of Recommended Practice
(the 'SORP') for investment trusts issued by the Association of Investment
Companies in July 2022 is consistent with the requirements of IFRS, the
financial statements have been prepared on a basis compliant with the
recommendations of the SORP.
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 September 2022.
The Company had a 100% ownership interest in JPMorgan Indian Investment
Company (Mauritius) Limited ('the subsidiary') which is incorporated, in
Mauritius. The subsidiary was put into liquidation on 31st August 2022,
therefore the entity is no longer considered a group company and as a result,
group supplemental information is no longer provided.
4. Earnings/(loss) per share
(Unaudited) (Unaudited) (Audited)
Six months ended
Six months ended
Year ended
31st March 2023
31st March 2022
30th September 2022
£'000
£'000
£'000
Earnings/(loss) per share is based on the following:
Revenue profit/(loss) 1,074 (975) 1,278
Capital (loss)/return (69,087) (15,048) 42,832
Total (loss)/profit (68,013) (16,023) 44,110
Weighted average number of shares in issue 75,527,225 77,370,486 76,852,573
Revenue earnings/(loss) per share 1.42p (1.26)p 1.66p
Capital (loss)/earnings per share (91.47)p (19.45)p 55.73p
Total (loss)/earnings per share (90.05)p (20.71)p 57.39p
5. Net asset value per share
(Unaudited) (Unaudited) (Audited)
Six months ended
Six months ended
Year ended
31st March
31st March 2022
30th September 2022
2023
Net assets (£'000) 716,911 741,255 795,249
Number of shares in issue excluding shares held 74,777,655 76,817,359 76,039,849
in Treasury
Net asset value per share 958.7p 965.0p 1,045.8p
The Company will only re-issue shares held in Treasury at a premium and
therefore these shares have no dilutive potential.
For further information, please contact:
Divya Amin
For and on behalf of JPMorgan Funds Limited, Company 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 ASSET MANAGEMENT (UK) LIMITED
ENDS
A copy of the half year report will be submitted to the National Storage
Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
The half year will also shortly be available on the Company's website at
www.jpmindian.co.uk (http://www.jpmindian.co.uk) where up to date information
on the Company, including daily NAV and share prices, factsheets and portfolio
information can also be found.
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