REG - JPMorgan Indian Inv - Annual Financial Report
13/12/2024 07:00
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RNS Number : 9486P JPMorgan Indian Invest Trust PLC 13 December 2024
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN INDIAN INVESTMENT TRUST PLC
FINAL RESULTS FOR THE YEAR ENDED 30TH SEPTEMBER 2024
Legal Entity Identifier: 549300OHW8R1C2WBYK02
Information disclosed in accordance with the DTR 4.1.3
CHAIRMAN'S STATEMENT
Performance
During the 12 month period ended 30th September 2024, the MSCI India Index
increased by an impressive +27.7%, outperforming both the MSCI Emerging
Markets Index and the MSCI China Index.
Against this positive backdrop, the Company produced a total return on net
assets of +18.1% in the year, underperforming its benchmark by -9.6%. Nearly
all of this underperformance occurred in the first half of the financial year,
and is mainly attributable to the Portfolio Managers' bias towards higher
quality corporate names, at a time when lower quality sectors of the market
did well. The performance of several portfolio holdings also disappointed over
the year. In addition, some areas of the market are now experiencing what the
Portfolio Managers believe are unjustifiably high valuations which have
precluded them from participating to any meaningful extent, given their focus
on quality. Moreover, it must also be noted that of the shortfall compared to
the benchmark, 4.4% is attributable to capital gains tax not being included in
the benchmark.
In their report on pages 13 to 18 in the Annual Report, the Portfolio Managers
provide a detailed and frank commentary on the year's performance. They also
discuss portfolio activity and their outlook for the Indian market over the
coming year and beyond.
While this relative underperformance is disappointing, the Company's return
over the past year at +18.1% is high in absolute terms. Given the Portfolio
Managers' long term investment focus, it is sensible to judge their
performance over a longer time frame. On this basis, the portfolio has
realised an average, annualised return of +9.5% over the ten years ended
30th September 2024. However, this is still behind the benchmark's annualised
return of +12.1% over the same period.
Board Review of Investment Manager's Investment Process and Performance
Against this backdrop, the Board has undertaken a detailed review of the
Investment Manager's investment process and the drivers of the Company's
underperformance, particularly in the most recent period. The Investment
Manager's process is designed to identify and invest in superior businesses
with growth potential which will likely deliver strong absolute returns and
outperform over time. This review confirmed that up to the middle of 2023,
premium and quality businesses as defined and favoured by the Investment
Manager, had outperformed the broader Indian investment universe, whilst, more
recently, cyclical and challenged businesses (again as defined and least
favoured by the Investment Manager) outperformed. In summary, since the middle
of 2023 companies with riskier characteristics and cheaper initial valuations
have materially outperformed higher quality companies with strong governance.
In order to improve their opportunities for relative outperformance, the
Investment Manager has allocated further resource to their Indian equity
strategy, by hiring additional analysts on the ground in India to deepen their
local knowledge and to promote idea generation via greater market coverage,
particularly in the mid and smaller company area. Recognising that many
factors remain outside the control of the Investment Manager, the Board is
minded to allow time for these measures to result in a noticeable improvement
in long term relative performance, while continuing to keep performance under
close scrutiny.
Revised Management Fee Arrangements
As recently announced, with effect from 1st October 2024, the annual
investment management fee, calculated as 0.75% on the first £300 million and
0.60% in excess of £300 million, will be charged on a market capitalisation
basis instead of on a gross assets basis, as previously.
The Board believes that this change of fee basis will not only be immediately
accretive to the Company in monetary terms but will also more closely align
the interests of the Manager with those of the shareholders.
Discount and Share Repurchases
At the AGM held in February 2024, 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 transfer into Treasury.
The discount at which the Company's shares trade versus its NAV narrowed
slightly to 17.8% over the review period (2023: 19.3%). The Board is cognisant
that it is in shareholders' interests that the Company's share price should
not differ excessively from the underlying NAV under normal market conditions,
and as such, it constantly considers the merits of buying back shares, in line
with the Company's share buyback policy, to manage the absolute level and
volatility of the discount. Given the Board's conviction that the level of the
current discount to NAV is unwarranted, during the year, 4,408,623 shares were
repurchased, amounting to 4.4% of the shares in issue, and held in Treasury.
Since the financial year end, the Company has purchased a further 1,355,248
shares. As shares are only repurchased at a discount to the prevailing net
asset value, share buybacks benefit shareholders, as they increase the net
asset value per share of remaining shares.
The Board believes that the share buyback facility is an important tool in the
management of discount volatility and is, therefore, seeking approval from
shareholders to renew the authority to repurchase the Company's shares at the
forthcoming AGM in February 2025.
Continuation Vote and Conditional Tender Offer
As stipulated by the Company's Articles of Association, at the AGM held on
13th February 2024, the resolution to continue the Company as an investment
trust for a further five years was put to shareholders and duly passed with
96.2% of votes cast in favour. The continuation vote will next be put to a
shareholder vote at the Company's AGM to be held in 2029.
Shareholders are reminded that a tender offer will be made to shareholders for
up to 25% of the Company's outstanding share capital (excluding shares held in
Treasury) 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 levied by the Indian
government on long-term and short-term capital gains, which the Company's
benchmark does not take into account. Until 23rd July 2024, these were on the
headline rates of 10% and 15%, respectively, plus associated surcharges of
approximately 1-1.5%. On the 23rd July 2024, the headline rates on long-term
and short-term capital gains were increased to 12.5% and 20% respectively,
plus associated surcharges. Such capital gains charges are not included in the
performance of the Benchmark. Therefore, for the avoidance of doubt, to ensure
that the terms of the conditional tender offer correctly reflect the
Investment Manager's 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. To enable the tax-adjusted performance to be compared to the
Benchmark, the Company publishes the Company's unaudited tax-adjusted NAV per
share on a monthly basis, through a Regulatory Information Service platform.
The NAV performance since 1st October 2020 before the impact of capital gains
tax, stood at +95.5% as at 30th September 2024, compared to +105.4% for the
benchmark.
Board
I became Chairman of the Company following the conclusion of the AGM in
February 2024, having joined the Board in 2020. I took over from Rosemary
Morgan who retired following ten years on the Board, the last three of which
she served as Chairman. I would like to take this opportunity on behalf of the
Board to thank Rosemary once again for her wise counsel and leadership during
her tenure. Vanessa Donegan assumed the role of Senior Independent Director
and Chair of the Nomination Committee and Remuneration Committee following my
appointment as Chairman.
During the year the Board commenced an external recruitment search for a new
Non-executive Director. I am delighted to report that the process concluded
with the appointment of Charlotta Ginman on 1st August 2024. Charlotta is a
qualified Chartered Accountant and an experienced Non-executive Director. Her
professional experience is summarised on page 43 of the Annual Report.
Jasper Judd, our Audit & Risk Committee Chairman, will retire at the
conclusion of the 2025 AGM. The Board has benefitted immensely from Jasper's
commitment and consistently thoughtful and constructive contributions. He will
leave with our gratitude and best wishes for the future. It is intended that
Charlotta Ginman will take on the Chairmanship of the Audit and Risk Committee
from Jasper upon his retirement.
The Board supports the annual election/re-election for all Directors, as
recommended by the AIC Corporate Governance Code, and therefore all the
Directors, with the exception of Jasper Judd, will stand for
election/re-election at the forthcoming AGM in 2025.
Audit Tender
PricewaterhouseCoopers LLP ('PwC') has been the Company's independent auditors
since 2015. The Company's Audit & Risk Committee, taking account of the
regulatory requirement to conduct an audit tender at least every ten years,
undertook a tender process during the year for the audit of the financial year
ending 30th September 2025. Several audit firms, including the incumbent,
were invited to participate in the tender process. Following a detailed review
of the tender submissions, the Audit & Risk Committee recommended to the
Board the continued appointment of PwC, given the firm's breadth of experience
within the investment trust sector and the resources and strength of their
audit team. PwC are not permitted to continue as auditors beyond the year
ending 30th September 2034, by which time a further audit tender must have
taken place.
Stay Informed
The Company delivers email updates on the Company's progress with regular news
and views, as well as the latest performance. If you have not already signed
up to receive these communications and you wish to do so, you can opt in via
www.tinyurl.com/JII-Sign-Up or by scanning the QR code in the Chairman's
Statement of the Annual Report.
Annual General Meeting
The Company's thirty-first AGM will be held at 60 Victoria Embankment, London
EC4Y 0JP on 11th February 2025 at 2.00 p.m. We are delighted to invite
shareholders to join us in person for the Company's AGM, to hear directly from
the Portfolio Managers. Their presentation will be followed by
a question-and-answer session. Shareholders wishing to follow the AGM
proceedings but choosing not to attend in person will be able to view
proceedings live and ask questions (but not vote) through conferencing
software. Details on how to register, together with access details, will be
available shortly on the Company's website at www.jpmindian.co.uk, or by
contacting the Company Secretary at invtrusts.cosec@jpmorgan.com.
My fellow Board members, representatives of JPMorgan and I look forward to the
opportunity to meet and speak with shareholders after the formalities of the
meeting have been concluded.
As is best practice, all voting on the resolutions will be conducted on a
poll. Your Board encourages all shareholders to support the resolutions
proposed. Please note that shareholders viewing the meeting via conferencing
software will not be able to vote on the poll and we therefore encourage all
shareholders, and particularly those who cannot attend physically, to exercise
their votes in advance of the meeting by completing and submitting their
proxy. Proxy votes can be lodged in advance of the AGM either by post or
electronically; detailed instructions are included in the Notes to the Notice
of Annual General Meeting on pages 96 to 98 in the Annual Report.
If there are any changes to the above AGM arrangements, the Company will
update shareholders through an announcement to the London Stock Exchange, and
on the Company's website.
Outlook
The Board shares the Portfolio Managers' view that the investment case for
India remains compelling, thanks to the country's strong and improving growth
prospects, which are supported by a series of major structural reforms.
India's economic outlook is even more impressive given that most major
economies, with the exception of China, are forecast to deliver only modest
growth over the next couple of years. In addition the attraction of investing
in the Indian stock market lies in the ability of listed companies to convert
the country's exciting growth prospects into strong earnings growth. This
positive outlook should translate into great opportunities for equity
investors with a longer-term perspective.
Having undertaken a review of the Investment Manager's process and performance
and agreed revised Management Fee arrangements as detailed earlier, my fellow
directors and I welcome the steps the Portfolio Managers have taken over the
review period to gain broader, more balanced exposure to these opportunities,
across a wider range of sectors. We also support their focus on good quality
businesses with sustainably high returns on capital and superior growth
prospects, and their disciplined approach to valuation, which means they are
unwilling to overpay for otherwise attractive companies that fit their
investment criteria.
We believe that the Portfolio Managers' focus on identifying interesting and
appealing businesses, combined with their disciplined investment process are
well positioned to provide patient shareholders with an enduring and
reasonable return over the long term.
We thank you for your ongoing support.
Jeremy Whitley
Chairman
12th December 2024
INVESTMENT MANAGER'S REPORT
Market review
During the 12 months to end September 2024, the MSCI India Index produced a
strong positive return of +27.7%, extending the +14.7% return it delivered in
the first half. After several weeks of voting, India's general elections
concluded on 1st June 2024. Despite heightened volatility driven by exit
polls, markets made gains from the first week of June onwards on the belief
that the government will continue with its growth and fiscal consolidation
agenda despite not getting an absolute majority on its own. Perceived
stability of the BJP-led NDA coalition government and limited changes to the
line-up of key economic ministers buoyed investor confidence.
Small and mid-cap stocks (SMID) have continued to outperform the broader
market. We remain concerned about elevated valuations here. Since the
elections in June however, we have seen a rotation towards defensive/higher
quality sectors due to concerns around a slowdown in growth. With single digit
earnings growth for the quarter ending in September 2024, the market took
a breather in October; however its strength until the end of September was
driven by significant flows into domestic mutual funds. Inflows have risen
despite an increase in tax rates on both short-term capital gains on equities
(from 15% to 20%) and long-term gains (from 10% to 12.5%). With markets awash
with liquidity, it is no surprise that deal activity remains strong, including
the recent IPO of Hyundai India.
Despite strong domestic flows and the longer-term story remaining intact, we
feel that Indian markets could take a cyclical breather in the near-term due
to: (1) foreign investors withdrawing money from India to allocate to China
(in response to the recent rally there); (2) quarterly results coming in below
market expectations; (3) upcoming state elections where the BJP was not
expected to do well; and (4) growing concerns around overvaluation,
especially in the SMID space, now gaining greater traction. However, the
long-term structural investment case for India remains on track and any
correction might create opportunities for us to buy names where demanding
valuations have precluded us from investing.
Against this backdrop, over the year your Company made a positive outright
return of +18.1% on a net asset value basis, which also includes the adverse
impact of capital gains tax (more on this below). The share price return over
the period was +20.4%, reflecting some narrowing of the discount to NAV.
In this report we review the main drivers of recent performance, discuss
portfolio positioning, and consider the long-term outlook for Indian equities.
Performance review
Given the strong market backdrop, we recognise that this is a disappointing
period of performance relative to the benchmark.
At this point we believe it is important to highlight the impact of capital
gains tax (CGT) in India; it is a pertinent issue for investors and a real
cost which does not impact the benchmark.
The drivers of underperformance can be broken down into three areas: (a) the
style rotation away from the 'quality' and 'growth' stocks we favour to
'value', due to a step change in interest rates as inflation rose dramatically
post-Covid; (b) too much portfolio concentration in slower growing sectors
like private banks, staples and IT, and holdings in some names facing company
or sector specific issues; and (c) errors of omission which resulted in
underweights to certain high quality names in rapid growth sectors such as
fixed asset creation, consumer discretionary and disruptive business models.
If we consider the ten best performing stocks in the index over that period,
six are businesses that we consider low intrinsic value creating businesses,
where we also have governance question marks; two are businesses we owned,
while two are businesses we believe we should have held but missed (errors of
omission).
With regards to specific stock impact, we would highlight three names which
have been disappointing on a relative basis:
• HDFC Bank: The bank faced central bank induced liquidity challenges,
which impacted the rate of deposit collection, following its merger with HDFC
Limited (a wholesale funded institution).
• WNS: The IT services company that provides business process
outsourcing (BPO) to global clients was affected by negative sentiment towards
the BPO sector, exacerbated by concerns over the impact of Generative AI and a
one-off client loss.
• Hindustan Unilever: The company experienced a slowdown in consumer
spending and increased competition from smaller players, impacting its market
position.
On the positive side, our large holding in the auto sector (Bajaj Auto and
Mahindra Mahindra), produced very strong positive returns over the period
driven by strong earnings growth and improved capital allocation. Our
long-standing position in Multi Commodity Exchange (MCX) was also another
stand out performer as it managed to go live with a new Commodity Derivative
Platform. Our underweights in Bajaj Finance and Asian Paints also contributed
positively. We have avoided both names given demanding valuations.
Performance Attribution
For the year ended 30th September 2024
% %
Benchmark Total Return 27.7
Stock and sector allocation (5.3)
Gearing/net cash (0.3)
Investment Manager contribution (5.6)
Impact of Indian capital gains tax(1) (4.4)
Portfolio Total Return 17.7
Management Fees and Other Expenses (0.8)
Share Buy-Back 1.2
Net Asset Value Per Share Total Return 18.1
Share Price Total Return 20.4
(1) See note 8 and 14 in the Annual Report for the increase in the
deferred tax liability for Indian capital gains tax which has had a negative
impact on performance. The benchmark index does not take into account the
effect of capital gains tax.
Source: Factset, JPMAM and MorningStar. All figures are on a total return
basis.
Performance attribution analyses how the Company achieved its recorded
performance relative to its benchmark index.
A glossary of terms and alternative performance measures is provided on pages
99 to 101 in the Annual Report.
Select Portfolio changes
Before we delve into changes made to the portfolio, a reminder of our
investment strategy - invest in great businesses with strong governance
standards at attractive valuations. We think about our investments in that
order, by first answering the question whether it's a good business and only
then looking at valuation. With that in mind, below are select portfolio
changes we made during the six-month period.
New initiations
• Blue Star: Blue Star is a leading player in the commercial air
conditioning (AC), commercial refrigeration, and room AC segments in India,
boasting strong market shares. The company's DNA is deeply rooted in R&D,
enabling continuous innovation and product differentiation.
• CG Power: CG Power is a manufacturer of industrial products and power
equipment. Its product offerings across industrial motors, power transformers
and switchgears, is perfectly aligned with the investment priorities of the
government around encouraging private sector capex in manufacturing and
shoring up power deficit in the county.
• PB Fintech: PB Fintech operates India's leading insurance platform,
Policybazaar. It has firmly established its dominance and pricing power in the
life and health segments, by offering better quality customers (better
persistency and lower claims ratios) to insurance companies. The company's
platform wields significant bargaining power thanks to its high-quality
customer base and is further entrenching itself in the customer journey by
offering more services such as claims processing.
• Shriram Finance: Shriram Finance is a quality non-bank financial
company (NBFC). It is India's leading second-hand commercial vehicle (CV)
financier and this position, combined with the diversification of its loan
book following a merger with Shriram City Union Finance, makes the business
more resilient. Growth is being driven by decent pricing in secondhand CVs and
+30% growth in loans to micro, small and medium sized enterprises.
• Sundaram Finance: Sundaram Finance is one of the most conservative-run
NBFCs in the country with an exemplary track-record on credit costs and
governance standards. We especially admire the long-term thinking of the
majority owners and management of this business. The company has an impressive
track record of compounding growth at 15-17% per annum for more than
50 years, consistently generating an ROE of 16-18% with the lowest
non-performing asset (NPA) ratio among its peers. It achieves this by
targeting low-risk, high-ticket customers, empowering its salesforce, and
expanding its branch network through an apprenticeship model.
• Tech Mahindra: Tech Mahindra is a mid-sized India IT services company.
We expect the new management team to turn this business around by
significantly improving its cost cadence, through sub-contracting, offshoring
and employee pyramid levers, and potentially also improving the growth profile
and earnings quality of the business by stabilising market share losses in the
telecom sector, mining existing clients more extensively and delivering faster
growth in financial services which is the largest IT outsourcing sector
globally.
• Make My Trip: MakeMyTrip (MMyT) is the dominant online travel agency
platform in India, offering both air-ticketing and hotel booking services. The
company is well-placed to benefit from increased discretionary spending on
travel and leisure. The investment case for MMyT is largely predicated on
maintaining its dominant position in the hotel booking business, where
barriers to entry are higher and online penetration is lower than in
air-ticketing. The company benefits from having aggregated a large, fragmented
supply of Indian hotels and from having the largest market share measured by
both transactions and value. This ensures a virtuous cycle of consumers
transacting on the platform and hotel owners extending their inventory and
promotions to MMyT.
• Tata Motors: Tata Motors is a leading automobile manufacturer with a
portfolio that includes a wide range of personal vehicles, trucks and buses.
It is the market leader in the commercial vehicle and personal electric
vehicle segments in India. It also owns Jaguar Land Rover (JLR) since 2008,
which has two niche luxury British car brands: Jaguar and Land/Range Rover.
Tata's Indian truck and bus business is a great franchise. We expect the
company to continue transitioning JLR to a more premium positioning and
increase consumer pull in global markets, further strengthen its market
position in commercial vehicles and gain market share in the Indian personal
vehicle segment, through leadership in EVs, over the medium-to-long-term.
Complete sales
• Maruti Suzuki: Maruti's share of the auto market in India has
moderated from 52% in FY2019 to ~43% off currently. While the business
generates relatively high ROCEs due to its assembly model, we believe it will
keep losing market share to local players like Tata Motors and M&M, as
well as to Korean car makers. This is due in part to a premiumisation trend in
the country and move towards SUVs, both areas which Maruti does not have
traditional strengths in. The company's high market share base, increasing
competition, and its mass-market positioning, mean it will be tough for Maruti
to outgrow, or to even keep pace with growth in the auto market. For these
reasons, we have sold our position in Maruti and replaced it with Tata Motors,
which offers a more unique investment opportunity.
• Power Finance Corporation (PFC): Our initial investment in this
government-owned energy infrastructure finance provider was based on high and
sustained growth in the power sector, and the lack of alternatives due to
valuation constraints in higher-quality product companies and in the power
utility space. PFC screened well on economics and the duration of its business
model. Being a state-owned entity, we always knew governance could be less
than satisfactory, but we believed the government would not compromise
minority shareholders, especially given the ongoing reforms to improve the
financial health of the power sector. However, several data points since
making the investment changed our opinion on governance which could compromise
the lending standards and diversification of the business outside of the power
sectors. Given these developments, we exited our position.
Can Indian markets continue to deliver?
Given the phenomenal run the Indian equity market has seen over the last
decade, and more significantly, in the last couple of years, it is
unsurprising to see commentary questioning the sustainability of the on-going
rally, and the underlying factors that may support it going forward.
We think these are important questions, and we suspect many of our readers
share this view. However, we remain confident that the long-term pillars that
have allowed Indian companies to deliver superior operating performance and
therefore attractive investment returns to equity investors remain firmly in
place. Having said that, due to a variety of cyclical reasons (more on this
later), there could be some challenges in the near-term. Any potential
correction in the near-term we believe is an opportunity for longer-term
investors to get/increase exposure to the structurally attractive Indian
market.
Short-term cyclical challenges
The near-term challenges that India faces can be broken down into the 3 Es:
1) Economic - We do not see a material risk to the Indian economy being able
to grow around 6%+. It has been growing above trend post-Covid, and growth
may slow towards trend, but that would still put India well ahead of any other
large economy globally. However, some of the challenges the economy faces stem
from a higher rate of inflation, which has kept the central bank from reducing
interest rates. We maintain our long-held view that the central bank remains
prudent and is in no hurry to start a rate-cutting cycle, especially as the
Indian economy does not require stimulus. Inflation is not a new phenomenon,
but it is something to keep an eye on, particularly if there are further
knock-on effects from geopolitical events. In addition, there has been a
notable slowdown in government capital expenditure (capex), which we believe
is just a hangover from the general elections, but if this slowdown persists,
it will represent a further challenge to near term growth.
2) Elections - While this year's national elections are behind us, important
state elections lie ahead, and these can spark some market volatility. The
state elections, particularly in the state of Maharashtra, will be a signal of
whether the current ruling party BJP has lost sheen amongst voters and whether
it will shift towards populist measures to shore up support in the future.
3) Earnings - As we write, the earning season has disappointed market
expectations which were elevated. We raise this issue in this section on
short-term challenges, as we believe that earnings disappointments are just
that - short-term. Once the post-election lull abates, we expect to see
a resumption of strong earnings growth, although we will continue to monitor
the situation.
Connected to this is the topic of valuations on which we engage significantly
with internal colleagues and external observers and commentators. As with any
purchase, price has to be considered alongside the quality you get in return.
Equity markets are the same. That said, we do think there are certain pockets
of the market where market valuations have become disconnected from the
fundamentals of the business. In these areas, we would certainly advise
caution, particularly in the small and mid-cap areas of the market.
Longer term opportunity remains intact
From a top-down perspective, India's macroeconomic investment case remains
strong. The country remains one of the world's fastest growing economies.
Based on International Monetary Fund (IMF) data, the nation should clock an
annual growth rate of 6.1% over the next five years, making it likely to be
the world's third-largest economy by 2027 after the U.S. and China. It is
expected to double its current annual GDP of $3.5 trillion, to $7 trillion, by
2030.
India's working age population continues to rise and workforce growth will
persist unabated for the next couple of decades. While we note the inflation
risk above, inflation has trended down significantly over the last decade,
driven by government policies and a more hawkish central bank. The balance of
payments is also much stronger than before, making the market much more
resilient to external shocks. The current account remains under control with a
deficit of 1.2% GDP. Indian real rates remain firmly in positive territory,
giving the central bank plenty of scope to cut rates if needed.
The number of Indian stocks included in the MSCI Emerging Markets Index has
more than doubled in the last ten years and the country's weighting in the
MSCI Emerging Markets index is constantly increasing, as its investable market
expands. It rose to 20.3% during the year, close to China's weighting of
24.3%.
Fixed Asset Creation
The growth uptick in India over the last three years has been led by a capex
cycle, which has further scope to expand over the long-term. Investment
spending is split about 35:40:25 between corporates, housing, and government
respectively. The housing cycle is in the middle of a large growth phase with
volumes expected to grow at a compound annual rate of 10% over the next 3-5
years. While government capex has tripled over the past five years and has
thus likely peaked, the mantle is now being passed to the corporate sector.
Strong corporate balance sheets and government support via direct investment
incentives should start showing actual results in terms of corporate capex
spending on the ground with a lag.
The decline in India's investment-to-GDP ratio from 34% in 2012 to 27% in 2021
was primarily driven by reduced household spending on real estate and lower
corporate capex on machinery for utilities and manufacturing. The ratio is
projected to rebound to 34% by FY2030, driven by house construction, power
generation, and new investment areas like green hydrogen, defence, solar
modules, robotics, data centres, and energy storage. This growth is expected
to be supported by structural demand drivers and a cyclical recovery in real
estate and power sectors. This capex cycle appears to be gaining momentum.
There is clear buoyancy in capex 'intentions' across sectors such as power,
airports, renewable energy and building materials. Given corporate balance
sheets remain in good shape, a significant portion of incremental capex is
being funded through internal accruals, with banks stepping in later in the
project funding phase (post initial construction). This suggests that a more
palpable rise in capex activity is likely to be visible in FY2026 and beyond.
We are exposed to the capex cycle through names like Tata Steel, Ultratech,
Tube Investments and productive asset lending NBFCs like Chola, Shriram
Finance, and Sundaram.
India's Power Minister announced plans to invest ~$110 billion between
FY24-32 in power transmission, more than doubling the current annual rate.
This increase aims to address delays in grid connectivity for new renewable
projects and prevent transmission problems from interrupting electricity
supply. We prefer to get exposure to the power theme indirectly, through
companies which supply goods and services to the sector and tend to have a
bigger share of the profit pool and generate higher ROCEs than power
companies, including names like CG Power and Triveni Turbine.
India's real estate up-cycle is in the middle of its growth phase and is
likely to be sustained for at least a further 3-5 years. We have indirect
exposure to real estate via building material names and appliance companies
like Havells, Crompton, Blue Star, Cera and Supreme. Other holdings including
Embassy REIT, Bajaj Housing Finance and Aavas Financiers are also indirect
beneficiaries of the real estate cycle.
Domestic investor flows have further to run
Indian equity markets have enjoyed strong performance primarily as the
domestic flows have surged to all-time highs. At more than ~US$7 billion per
month, the domestic participation in equities (via both mutual fund
investments and individual stock purchases) is high and already accounts for
c.25% of financial savings. This could be an unsustainable pace near term,
although longer term the financialisation of Indian savings and the still low
level of equity investment make domestic flows a structural story.
We believe the financialisation of savings is a structural story because
households in India hold just 5.8% of their total assets in equities, compared
to 13.3% in bank deposits. Further, household savings are growing. Indian
households save $650 billion annually, which is expected to reach $1.6
trillion by 2035. And investors' preferences are shifting away from more
risk-averse holdings like fixed deposits, property, and gold, towards
return-focused products like mutual funds. Systematic Investment Plans (SIPs)
are now a significant driver of flows, accounting for ~80% of annual net flows
from households to the mutual fund industry, with AUM through SIPs now at $150
billion. All these factors suggest that households are likely to continue
increasing allocations to equities for many years to come. We own CAMS, a
mutual fund transfer agency, and HDFC Asset Management Company, both of which
benefit from the financialisation of savings theme.
This shift towards investments in higher yielding assets has wider
ramifications. For example, it has resulted in a wealth effect, boosting
discretionary consumption and luxury spending. We are seeing, for example,
demand for leisure travel and premium SUV cars sustain, both of which are
reflected in the portfolio through our holdings in MakeMyTrip and Mahindra
& Mahindra. Further, encouragingly strong domestic flows are to some
extent negating the impact of foreign outflows.
Manufacturing
Manufacturing in India still accounts for less than 20% of the economy - a
figure that has remained relatively flat in the last decade, compared with the
growth seen in other sectors. However, the government has laid out ambitious
plans for goods exports to hit US$1 trillion annually by 2030, as the country
hopes to become a top alternative for companies looking to diversify their
supply chains away from China. As part of these plans, the government is
providing Production Linked Incentives (PLI) across 14 sectors worth Rs2.0Trn
and an additional Rs0.7Trn to boost the semiconductor and display
manufacturing ecosystem.
India is already benefiting from supply chain diversification in some areas.
For example, iPhone production in India has gone up from less than 1% of
global shipments in 2017, to 10% in 2023, and Apple has plans to scale
production up further, to 25% of global shipments by 2025, thanks in part to
the PLI scheme.
Outlook
So, while we expect some near-term volatility, we believe the medium to
long term outlook remains robust. The investment universe has materially
changed, expanded, and deepened, and this provides an attractive backdrop for
stock selection for those with the capabilities to investigate the market
deeply. Headline valuations remain elevated with pockets of exuberance but
also with opportunities. We believe other than the US, there is no other large
market globally that has the same potential for growth and sustained economic
returns. Given the structural changes underway, and the market's lower risk
relative to its long history, in our view, the opportunities are extremely
attractive for investors such as us, who have a long-term investment horizon.
For and on behalf of
JPMorgan Asset Management (UK) Limited
Investment Manager
Amit Mehta
Sandip Patodia
Portfolio Managers
12th December 2024
PRINCIPAL AND EMERGING RISKS
The Board has overall responsibility for reviewing the effectiveness of the
Company's system of risk management and internal control. The Board is
supported by the Audit and Risk Committee in the management of risk. The risk
management process is designed to identify, evaluate, manage, and mitigate
risks faced. Although the Board believes that it has a robust framework of
internal controls in place, this can provide only reasonable, and not
absolute, assurance against material financial misstatement or loss and is
designed to manage, not eliminate, risk.
The Directors confirm that they have carried out a robust assessment of the
principal risks facing the Company, including those that would threaten its
business model, future performance, solvency or liquidity. With the assistance
of the Investment Manager, the Audit and Risk Committee has drawn up a risk
matrix, which identifies the principal and emerging risks to the Company.
These are reviewed and noted by the Board through the Audit and Risk
Committee, which includes the ways in which these risks are managed or
mitigated.
The Board considers that the risks detailed below are the principal risks
facing the Company currently. These are the risks that could affect the
ability of the Company to deliver its strategy.
Movement in risk
status in year to
Principal risk Description Mitigating activities 30th September 2024
Investment and Strategy
Poor and ineffective execution of the strategy Poor execution of the strategy, for example, due to poor stock selection, The Board manages these risks by diversification of investments through its ã
inappropriate risk controls, poor gearing decisions or a combination of these investment restrictions and guidelines which are monitored and reported by the
factors, may lead to under-performance against the Company's benchmark index Investment Manager. The risk has been heightened during the year due to the Company's continued
and competitor funds. NAV under-performance over a five year period, in turn,
under-performance and the potential triggering of the performance-related
has the potential to trigger the Company's conditional tender offer, which, if The Investment Manager adheres to the investment risk appetite and parameters, conditional tender offer. The Portfolio Managers continue to work to improve
fully subscribed will reduce the Company's size. including gearing and the use of derivatives set by the Board and provides the the Company's performance against its benchmark.
Directors with timely and accurate management information, including
performance data and attribution analyses, revenue estimates, liquidity
reports and shareholder analyses.
The Board monitors the implementation, and where appropriate, challenges the
results of the investment process with the Investment Manager, who attend all
Board meetings, and review data which show statistical measures of the
Company's risk profile.
Legal and Regulatory
Breach of Legal/ Regulatory rules and non-compliance with sanctions Loss of its investment trust status and, as a consequence, gains within the The Section 1158 qualification criteria are continuously monitored by the â
Company's portfolio could be subject to capital gains tax. Manager and the results reported to the Board at each Board meeting.
The risk remains unchanged from 2023. Compliance with relevant regulations is
A breach of the Companies Act 2006 could result in the Company and/or the The Board relies on the services of its Company Secretary, the Manager and its monitored on an ongoing basis by the Company Secretary and the Investment
Directors being fined or the subject of criminal proceedings. professional advisers to ensure compliance with the Companies Act 2006, the Manager who report regularly to the Board.
FCA Listing Rules, DTRs and the Alternative Investment Fund Managers'
Breach of the FCA Listing Rules or Disclosure, Guidance & Transparency Directive.
Rules ('DTRs') could result in the Company's shares being suspended from
listing which in turn would breach Section 1158 of the Corporation Tax If the Company becomes subject to sanctions, the Board will review the
Act 2010. position with the Manager and its compliance department and determine the
necessary actions to be taken.
The company must ensure that it does not breach any applicable sanctions
regimes, as the consequences of a breach can be severe and long-lasting,
affecting both the financial health and operational capabilities of the
Company.
Corporate Governance & Shareholder Relations
Share Discount - share price significantly lags NAV, resulting in lower Investment trust shares often trade at discounts to their underlying NAVs. The Board monitors the Company's discount to NAV daily and compares it to â
returns to shareholders Discounts can fluctuate considerably leading to volatile returns for peers/sector. The Board reviews sales and marketing activity designed to
shareholders. increase demand for the Company's shares. The risk remains high but unchanged from 2023. The Board regularly reviews and
monitors the Company's level of discount/premium to net asset value at which
The Company also has authority to buy back its existing shares to enhance the the shares trade and the movements in the share register. Although the
NAV per share for remaining shareholders and to reduce the absolute level of widening of the Company's discount is in line with the experience of other
discount and discount volatility. investment trusts, the Company continues to buyback shares to narrow the
discount.
Operational
Cybercrime - disruption to the systems of the Manager and other service The threat of cyber-attack is regarded as at least as important as more The Company benefits directly and/or indirectly from all elements of â
providers, and potential loss of Company data traditional physical threats to business continuity and security. In addition JPMorgan's Cyber Security programme. The information technology controls
to threatening the Company's operations, such an attack is likely to raise around physical security of JPMorgan's data centres, security of its networks The risk remains high but unchanged from 2023. To date the Manager's and other
reputational issues which may damage the Company's share price and reduce and security of its trading applications, are tested by independent auditors service providers' cyber security arrangements have proven robust and the
demand for its shares. and reported every six months against the AAF Standard. Company has not been impacted
The Investment Manager reviews all the service providers to ensure they have by any cyber attacks threatening its operations.
appropriate procedures in place to prevent and address cyberattacks.
Loss of the Portfolio Managers A sudden departure of one or more of the Portfolio Managers could result in The Board seeks assurance that the Investment Manager takes steps to reduce â
a deterioration in investment performance. the likelihood of such an event by ensuring appropriate succession planning
and the adoption of a team-based approach. The risk remains unchanged from 2023. The Investment Manager has ensured the
portfolio is managed by a robust portfolio management team i.e. the portfolio
is managed by two portfolio managers who are supported by a number of
investment professionals.
Control failures/weaknesses within the Investment Manager's and other service Disruption or failure, for example, in the Manager's accounting, trading, or Details of how the Board monitors the services provided by the Investment â
providers' organisations payment systems, or in the records of the Depositary or Custodian, could Manager and its associates and the key elements designed to provide effective
hinder accurate reporting and monitoring of the Company's financial status or risk management and internal control can be found on pages 51 and 52 of the The risk remains unchanged from 2023. The Board continues to monitor the
lead to asset misappropriation. Annual Report. controls environment of the Investment Manager and other service providers.
Financial
Miscalculation of Indian Capital Gains Tax ('CGT') Liability In 2018, changes to Indian CGT legislation were implemented that affect the The Investment Manager ensures CGT is calculated accurately by using the â
Company. Since then, the Company has been obligated to pay CGT on both Company's fund administrator's system, which automatically computes the CGT
long-term and short-term capital gains. daily based on the portfolio. Additionally, the Company has engaged a local The risk remains unchanged from 2023. The Board continues to oversee the
Indian Tax advisor to prepare and deliver an independent CGT report to the process and accuracy of calculating the Company's CGT liability.
Investment Manager each month. This report is compared with the
administrator's CGT calculations. The Audit and Risk Committee Chairman
reviews these calculations semi-annually.
Monetary Risks The Company is faced by such risks as market price risk, currency risk, Details of how the Company mitigates and controls these risks are disclosed in â
interest rate risk, liability risk, credit risk and borrowing default risk. note 21 on pages 85 to 89 in the Annual Report.
The risk remains high but unchanged from 2023. The market continues to be
volatile due to factors such as geopolitical tensions in the Middle East and
Europe.
Geopolitical and Economic
Geopolitical risks posing threats to markets and restricting the growth Geopolitical risk is the potential for political, socio-economic and cultural There is little direct control of the risks from the interconnected nature of ã
opportunities for Indian equities events and developments to have an adverse effect on the value of the political, economic, and social factors that can impact the investment
Company's assets. There appears to be an increasing risk to market stability environment. The Company addresses these global developments through regular The risk has been heightened during the year by the growing geopolitical
and investment opportunities from the increasing number of worldwide questioning of the Investment Manager and will continue to monitor these tensions
geopolitical conflicts. An escalation of the geopolitical tensions/conflicts, issues as they develop.
for example, between China and Taiwan, Ukraine and Russia, and in the Middle
and conflicts in Europe and the Middle East. The tensions can significantly
East could lead to extreme market volatility and de-rating. The Company and The Board has the ability, with shareholder approval, to amend the policy and impact
its assets may be impacted by the instability, which could potentially limit objectives of the Company to mitigate the risks arising from geopolitical
the opportunities of Indian equities to derive growth and thrive. concerns. global markets, investor sentiment,
and economic stability.
Broadscale external factors affecting the operations of the Manager and/or Pandemics and geographically extensive weather conditions etc. put at risk the The Board receives reports on the business continuity plans of the Manager and â
third-party service providers Managers' and/or other suppliers' ability to operate. other key service providers.
The Risk remains unchanged from 2023. Broadscale external factors can occur
The effectiveness of these measures was assessed throughout the course of the and impact daily operations at anytime. The Board continues to review the
Covid-19 pandemic and the Board will continue to monitor developments in Manager's and other key service providers' business continuity plans.
general and seek to learn lessons which may be of use should a similar event
occur in the future.
Environmental
Climate change poses a risk to the operations of the Company's investee Climate change is one of the most critical issues confronting asset managers The Investment Manager's investment process integrates consideration of â
companies, the Manager, and third-party service providers and their investors today. Climate change may have a disruptive effect on the financially material environmental, social and governance factors into
business models, sustainability and even viability of individual companies in decisions on which stocks to buy, hold or sell. This includes the approach The risk remains high but unchanged from 2023 due to the continued rising of
India, and indeed, whole sectors. Perception of risk associated with climate investee companies take to recognising and mitigating climate change risks. temperatures fuelling environmental degradation, natural disasters, weather
change may adversely affect the valuation of the Company's holdings. India in
extremes, food and water insecurity and economic disruption.
particular is prone to severe weather conditions, including extreme heat, The Board ensures that consideration of climate change risks and opportunities
changing rainfall patterns and droughts. is an integral part of the Investment Manager's investment process. It
recognises that given the portfolio stocks are all quoted investments, the
The Board is also mindful of the risk posed by the direct impact of climate relevant environmental risks are reflected in their share price over time by
change on the operations of the Investment Manager and other major service the market. Where appropriate, the Board challenges the Investment Manager on
providers. the investment process considerations and investment decisions, and receives
updates from the Investment Manager on the evolution of its ESG work and
policies. The Investment Manager aims to influence the management of climate
related risks through engagement and voting and is a signatory of the United
Nations Principles for Responsible Investment and the Net Zero Asset Managers
Initiative.
EMERGING RISKS
The AIC Code of Corporate Governance also requires the Audit and Risk
Committee to put in place procedures to identify emerging risks. Emerging
risks, which are not deemed to represent an immediate threat, are considered
by the Audit and Risk Committee as they come into view and are incorporated
into the existing review of the Company's risk register. However, since
emerging risks are likely to be more dynamic in nature, they are considered on
a more frequent basis, through the remit of the Board when the Audit and Risk
Committee does not meet. The Board considers the following to be an emerging
risk:
Geopolitical and Economic - Trade wars might erupt if, for instance, the
United States raises tariffs and enacts trade-restrictive measures. This could
subsequently limit the growth prospects for Indian equities.
TRANSACTION WITH THE MANAGER AND RELATED PARTIES
Details of the management contract are set out in the Directors' Report on
page 45 of the Annual Report.
The management fee payable to the Manager for the year was £5,321,000 (2023:
£4,974,000) of which £nil (2023: £nil) was outstanding in the financial
statements at the year end.
Included in other administration expenses in note 6 on page 78 in the Annual
Report are safe custody fees payable to JPMorgan Chase Bank, N.A. as custodian
of the Company amounting to £557,000 (2023: £512,000) of which £151,000
(2023: £213,000) was outstanding at the year end.
The Manager carries out some of its dealing transactions through group
subsidiaries. These transactions are carried out at arms' length. The
commission payable to JPMorgan Securities for the year by the Company was
£12,000 (2023: £50,000) of which £nil (2023: £nil) was outstanding in
Company's financial statements at the year end.
Handling charges payable on dealing transactions undertaken by overseas sub
custodians on behalf of the Company amounted to £14,000 (2023: £14,000)
during the year, of which £3,000 (2023: £3,000) was outstanding at the year
end.
The Company also holds cash in the JPMorgan GBP Liquidity Fund. At 30th
September 2024, the holding in JPMorgan GBP Liquidity Fund was valued at
£13,700,000 (2023: £21,210,000). During the year, the Company made purchases
in this fund amounting to £217,680,000 (2023: £128,000,000) and sales on
this fund amounting to £225,190,000 (2023: £150,790,000). Income receivable
from this fund amounted to £1,170,000 (2023: £663,000) of which £nil (2023:
£nil) was outstanding at the year end. JPMorgan earns no management fee on
this fund.
At the year end, the Company held bank balances of £509,000 with JPMorgan
Chase Bank, N.A. (2023: £834,000). A net amount of interest of £9,000 (2023:
£5,000) was receivable by the Company during the year, of which £nil (2023:
£nil) was outstanding at the year end.
Details of the Directors' shareholdings and the remuneration payable to
Directors are given in the Directors' Remuneration Report on page 59 of the
Annual Report.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the financial
statements in accordance with UK-adopted international accounting standards.
Under company law, Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the company and of the profit or loss of the company for that period. In
preparing the financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable UK-adopted international accounting standards
have been followed, subject to any material departures disclosed and explained
in the financial statements;
• make judgements and accounting estimates that are reasonable and
prudent; and
• prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the company will continue in business.
The Directors are responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The Directors are also responsible for keeping adequate accounting records
that are sufficient to show and explain the company's transactions and
disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements and the
Directors' Remuneration Report comply with the Companies Act 2006.
The Directors have delegated the maintenance and integrity of the Company's
website (www.jpmindian.co.uk) to the Company's Manager. Legislation in the
United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors' confirmations
Each of the Directors, whose names and functions are listed in the Directors'
Report confirm that, to the best of their knowledge:
• the company financial statements, which have been prepared in
accordance with UK-adopted international accounting standards, give a true and
fair view of the assets, liabilities, financial position and result of the
company; and
• the Strategic Report and Directors' Report 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 uncertainties
that it faces.
The Board confirms that it is satisfied that the annual report and financial
statements taken as a whole are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Company's position
and performance, business model and strategy.
For and on behalf of the Board
Jeremy Whitley
Chairman
12(th) December 2024
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30th September 2024
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains from investments held at fair value
through profit or loss - 161,223 161,223 - 9,650 9,650
Net foreign currency losses - (528) (528) - (367) (367)
Income from investments 8,756 - 8,756 11,461 - 11,461
Interest receivable and similar income 1,179 - 1,179 668 - 668
Total income 9,935 160,695 170,630 12,129 9,283 21,412
Management fee (5,321) - (5,321) (4,974) - (4,974)
Other administrative expenses (1,225) - (1,225) (1,100) - (1,100)
Profit before finance costs and taxation 3,389 160,695 164,084 6,055 9,283 15,338
Finance costs - - - (4) - (4)
Profit before taxation 3,389 160,695 164,084 6,051 9,283 15,334
Taxation (1,006) (35,793) (36,799) (1,314) (11,063) (12,377)
Net profit/(loss) 2,383 124,902 127,285 4,737 (1,780) 2,957
Earnings/(loss) per share 3.35p 175.39p 178.74p 6.34p (2.38)p 3.96p
The Company does not have any income or expense that is not included in the
net profit for the year. Accordingly the 'Net profit/(loss)' for the year, is
also the 'Total comprehensive income' for the year, 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 year.
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.
Details of revenue and capital items, together with the associated reserves
are contained in note 16.
All of the Net 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.
The notes on pages 75 to 90 of the Annual Report form an integral part of
these financial statements.
STATEMENT OF CHANGES IN EQUITY
For the year ended 30th September 2024
Called up Exercised Capital
share Share warrant redemption Capital Revenue
capital premium reserve reserve reserve(1) reserve(1) Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30th September 2022 24,868 97,316 5,886 12,898 673,788 (19,507) 795,249
Repurchase of shares into Treasury - - - - (22,609) - (22,609)
(Loss)/profit for the year - - - - (1,780) 4,737 2,957
At 30th September 2023 24,868 97,316 5,886 12,898 649,399 (14,770) 775,597
Repurchase of shares into Treasury - - - - (41,995) - (41,995)
Profit for the year - - - - 124,902 2,383 127,285
At 30th September 2024 24,868 97,316 5,886 12,898 732,306 (12,387) 860,887
(1) These reserves form the distributable reserves of the Company and
may be used where there are reserves available.
STATEMENT OF FINANCIAL POSITION
At 30th September 2024
2024 2023
£'000 £'000
Non current assets
Investments held at fair value through profit or loss 888,542 770,957
888,542 770,957
Current assets
Other receivables 583 817
Cash and cash equivalents 14,209 22,044
14,792 22,861
Current liabilities
Other payables (841) (571)
Net current assets 13,951 22,290
Total assets less current liabilities 902,493 793,247
Non current liabilities
Deferred tax liability for Indian capital gains tax (41,606) (17,650)
Net assets 860,887 775,597
Amounts attributable to shareholders
Called up share capital 24,868 24,868
Share premium 97,316 97,316
Exercised warrant reserve 5,886 5,886
Capital redemption reserve 12,898 12,898
Capital reserves 732,306 649,399
Revenue reserve (12,387) (14,770)
Total shareholders' funds 860,887 775,597
Net asset value per share 1,250.1p 1,058.5p
STATEMENT OF CASH FLOWS
For the year ended 30th September 2024
2024 2023
£'000 £'000
Operating activities
Profit before taxation 164,084 15,334
Deduct dividends receivable (8,756) (11,461)
Deduct interest receivable (1,179) (668)
Add interest paid - 4
Deduct gains from investments held at fair value through profit or loss (161,223) (9,650)
Add losses on net foreign currency 528 367
Decrease in prepayments, VAT and other receivables 16 14
(Decrease)/increase in other payables (57) 127
Net cash outflow from operating activities before interest and taxation (6,587) (5,933)
Interest paid (6) (4)
Income tax paid (942) (1,421)
Dividends received 8,910 11,383
Interest received 1,179 668
Indian capital gains tax paid (11,837) (3,208)
Net cash (outflow)/inflow from operating activities (9,283) 1,485
Investing activities
Purchases of investments held at fair value through profit or loss (253,363) (189,558)
Sales of investments held at fair value through profit or loss 297,172 175,665
Net cash inflow/(outflow) from investing activities 43,809 (13,893)
Financing activities
Repurchase of shares into Treasury (41,833) (22,436)
Net cash outflow from financing activities (41,833) (22,436)
Decrease in cash and cash equivalents (7,307) (34,844)
Cash and cash equivalents at the start of the year 22,044 57,255
Exchange movements (528) (367)
Cash and cash equivalents at the end of the year 14,209 22,044
NOTES TO THE FINANCIAL STATEMENTS
1. Material Accounting Policies and Basis of Preparation
(a) Basis of accounting
The financial statements of the Company have been prepared under historical
cost convention, modified to include fixed asset investments at fair value,
and 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 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' (the 'SORP') issued by the Association
of Investment Companies ('AIC') in July 2022 is consistent with the
requirements of IFRS, the Directors have sought to prepare the financial
statements on a basis compliant with the recommendations of the SORP. The
accounting policies adopted are consistent with those of the previous
financial year. The principal accounting policies adopted are set out below.
The financial statements have been prepared on the going concern basis. The
disclosures on going concern in the Audit and Risk Committee's Report on page
56 in the Annual Report form part of these financial statements. The Board
has, in particular, considered the impact of heightened market volatility
since the Russian invasion of Ukraine, the conflict in the Middle East, the
persistent inflationary environment, rising interest rates and other
geopolitical risks, and does not believe the Company's going concern status is
affected.
In preparing these financial statements the Directors have considered the
impact of climate change risk as a principal risk as set out on page 36 in the
Annual Report, and have concluded that there was no further impact of climate
change to be taken into account as the investments are valued based on market
pricing, which incorporates the market's perception of climate risk.
The Company's share capital is denominated in sterling and this is the
currency in which its shareholders operate and expenses are generally paid.
The Directors have therefore determined the functional currency to be
sterling.
2. Non current assets
(a) Investments held at fair value through profit or loss
2024 2023
£'000 £'000
Investments listed on a recognised stock exchange 888,542 770,957
Total investments held at fair value through profit or loss 888,542 770,957
2024 2023
£'000 £'000
Opening book cost 619,285 589,817
Opening investment holding gains 151,672 160,142
Opening valuation 770,957 749,959
Movements in the year:
Purchases at cost 253,534 181,583
Sales - proceeds (297,186) (170,249)
Gains on investments 161,237 9,664
Closing valuation 888,542 770,957
Closing book cost 653,417 619,285
Closing investment holding gains 235,125 151,672
Total investments held at fair value through profit or loss 888,542 770,957
The Company received £297,186,000 (2023: £170,249,000) from investments sold
in the year. The book cost of these investments when they were purchased was
£219,402,000 (2023: £152,115,000).
These investments have been revalued over time and until they were sold any
unrealised gains/losses were included in the fair value of the investments.
(b) Transaction costs
2024 2023
£'000 £'000
Transaction costs on purchases 501 361
Transaction costs on sales 517 333
1,018 694
The above costs comprise mainly brokerage commission.
(c) Gains from investments held at fair value through profit
or loss
2024 2023
£'000 £'000
Realised gains on sales of investments 77,784 18,134
Net change in unrealised gains and losses on investments 83,453 (8,470)
Other capital charges (14) (14)
Total gains from investments held at fair value through profit or loss 161,223 9,650
3. Earnings/(loss) per share
2024 2023
£'000 £'000
Earnings per share is based on the following:
Revenue profit 2,383 4,737
Capital profit/(loss) 124,902 (1,780)
Total profit 127,285 2,957
Weighted average number of shares in issue 71,214,156 74,711,625
Revenue earnings per share 3.35p 6.34p
Capital earnings/(loss) per share 175.39p (2.38)p
Total earnings per share(1) 178.74p 3.96p
(1) Represents both the basic and diluted earnings per share and
excludes shares held in Treasury.
4. Net asset value per share
2024 2023
Net assets (£'000) 860,887 775,597
Number of shares in issue excluding shares held in Treasury 68,864,107 73,272,730
Net asset value per share 1,250.1p 1,058.5p
JPMORGAN FUNDS LIMITED
13th December 2024
For further information, please contact:
Sachu Saji
For and on behalf of
JPMorgan Funds Limited
Telephone: 0800 20 40 20 or or +44 1268 44 44 70
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.
ENDS
A copy of the Annual 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 Annual Report 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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. END FR FFUEEEELSEDERecent news on Jpmorgan Indian Investment Trust
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