TIDMJMO
RNS Number : 0733Q
JPMorgan Overseas IT PLC
24 February 2016
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN OVERSEAS INVESTMENT TRUST PLC
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS
ENDED 31ST DECEMBER 2015
Chairman's Statement
This is my first report to you as Chairman following the
retirement of Simon Davies after our Annual General Meeting held in
November last year.
Global stock markets had a volatile six months to 31st December
2015, with sentiment dominated by uncertainty over the timing and
pace of interest rate rises in the US and concern over the impact
of a possible slowdown in the growth of the Chinese economy on
global growth. Equity markets rose modestly during the six months
to 31st December 2015. The total return on the Company's net assets
was +1.2% and the return to shareholders was +2.5% compared with
the return on our benchmark, the MSCI AC World Index (in sterling
terms) of +1.5%.
Our Investment Manager, Jeroen Huysinga, provides a detailed
commentary on markets and the portfolio performance in his Report
which also shows the performance attribution.
During the six month period, 3,885,042 Ordinary shares were
issued upon final exercise of Subscription shares, amounting to
proceeds of GBP38,306,000. The Company repurchased 1,196,422
Ordinary shares at a cost of GBP11,908,000 for holding into
Treasury.
Gearing levels increased during the period from 7.0% at the
start of the period to 8.7% at 31st December 2015 with Company's
GBP25 million borrowing facility with National Australia Bank fully
drawn.
Following approval at the Company's Annual General Meeting, the
Company's shares were sub-divided into five new ordinary shares for
every one share held. That means for every one share you held
previously, you now hold five. This sub-division took effect on 8th
January 2015. We hope and expect that this sub-division will reduce
dealing costs slightly, hence increasing the attractiveness of the
shares to new investors and increasing the liquidity of the market
for the Company's shares. The share split did not affect the
overall value of your holding in the Company as the reduction in
the price per share was offset by a commensurate increase in the
number of shares you hold in the Company.
In the first few weeks of 2016 financial markets have been very
volatile with equity markets generally falling. The tumbling oil
price has led to concerns about the stability of the financial
system and as a consequence bank shares have been weak, as have
prices of many of the (mainly technology) stocks that were strong
last year. The Board does not expect an early end to this
volatility but notes that economic growth continues in most parts
of the developed and developing world. In this environment the
Board has confidence that the Manager will be able to use its
robust investment process and extensive research resources to
identify attractively priced companies in which to invest on behalf
of the Company.
For and on behalf of the Board
Nigel Wightman
Chairman 24 February 2016
Investment manager's report
Market environment
The MSCI All Countries World Index gained 1.5% in sterling terms
over the six months to the end of December. While this performance
could have been worse, minimal returns and markedly higher
volatility made for an unwelcome contrast with previous years. Over
the last six months, investors have been torn between the positive
influence of a gradual recovery in US consumer spending and
supportive policy measures in Europe and Japan on the one hand, and
the increasingly negative influence of weaker global economic
growth and tumbling commodity prices on the other. Markets fell
sharply in August as the surprise decision by the People's Bank of
China to devalue the Chinese currency (the renminbi) caused
investors to reduce their expectations for global growth. Stock
prices recovered strongly towards the end of the year, although
markets suffered renewed volatility in the closing weeks of
December and into 2016, driven by similar concerns to those that
weighed on sentiment in August.
The divergence in performance across sectors was stark over the
six months, with investors showing a strong preference for the
fastest-growing companies. The winners were the US mega cap
internet companies Facebook, Amazon, Netflix and Google (now
renamed Alphabet), which became known collectively as 'FANG'.
Investors also continued to seek shelter in 'safe-haven' assets,
such as consumer giants Unilever, Coca-Cola and Nestle, which
outperformed companies that are more sensitive to global growth.
The energy and commodity-related sectors were the worst performers
as commodity prices plummeted, with oil falling below USD 30.
Portfolio review
In the six months to December 2015 your Company marginally
underperformed the benchmark. Positions in a number of high growth
companies performed strongly. Here we would include the
aforementioned Alphabet (+44%) as well as AutoTrader (+45%), the
UK's leading online marketplace and classified advertising company
for used vehicles, and Ryanair (20%), the leading low-cost airline
operator in Europe. Our weakest areas of stock selection were
focused on energy and basic industries. In energy we have a
preference for exploration and production (E&P) companies,
which lagged the more defensive oil majors. In basic industries our
holding in First Quantum, the copper producer, saw its shares fall
68%. Originally, we had thought that a strong management team would
be able to unlock value for shareholders, but the ongoing drop in
commodity prices has caused the company's balance sheet to weaken,
severely limiting management options. We recently exited the
position.
Portfolio positioning and outlook
Many markets are today pricing in a significant probability of
recession, and in our view - too high a probability. The difference
between undervalued and overpriced stocks is wide by historical
standards and widening further, for example in the US the gap is
larger than has been the case about 80% of the time over the last
thirty years. This valuation gap is one measure that informs our
decisions around gearing, with levels in the portfolio around 7%.
Our focus remains on company-specific valuation signals derived
from intensive company research and long term cash flow models.
While we have not made any significant changes to the overall shape
of the portfolio, we are finding a number of exciting investment
opportunities and we have been very active in trading around this
market environment. In particular, we have been adding to positions
in stocks that are more sensitive to the economy, such as in
technology-semi conductors, basic industries, banks and
transport.
Regionally, our fundamental research process continues to result
in large positions in Europe and the UK, while we are underweight
in North America compared to the benchmark. In North America,
excessive valuations still prevent us from investing in defensive
stocks and in many mega cap names. A key challenge that investors
continue to face is the ongoing uncertainty around China. Although
official figures suggest the economy is still growing by around 7%,
other factors-such as the weakness of commodity prices and the drop
in industrial activity across the rest of emerging Asia-seem
consistent with much weaker growth. Against this backdrop, company
valuations are increasingly interesting and we have selectively
added to our exposure to China, initiating new holdings in CNOOC,
the major national oil company, and Ping An, the Chinese insurer.
Our focus remains, as ever, on evaluating underlying company
fundamentals and our dedicated team of highly experienced research
analysts continue to identify attractive investment opportunities
around the world.
Jeroen Huysinga
Investment Manager 24 February 2016
Interim Management Report
The Company is required to make the following disclosures in its
half year report:
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Company have
not changed and fall into the following broad categories:
investment and strategy; market; accounting, legal and regulatory;
corporate governance and shareholder relations; operational; going
concern; and financial. Information on each of these areas is given
in the Business Review within the Annual Report and Accounts for
the year ended 30th June 2015.
Related Parties Transactions
During the first six months of the current financial year, no
transactions with related parties have taken place which have
materially affected the financial position or the performance of
the Company.
Going Concern
The Directors believe, having considered the Company's
investment objectives, risk management policies, capital management
policies and procedures, nature of the portfolio and expenditure
projections, that the Company has adequate resources, an
appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the
foreseeable future and, more specifically, that there are no
material uncertainties pertaining to the Company that would prevent
its ability to continue in such operation 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:
February 24, 2016 12:19 ET (17:19 GMT)
Statement of Financial Position at 31st December 2015
(Unaudited) (Unaudited) (Audited)
31st December 31st December 30th June
2015 2014 2015
GBP'000 GBP'000 GBP'000
---------------------------------- -------------- -------------- ----------
Fixed assets
Investments held at fair
value through profit or loss 318,075 272,526 289,301
Investment in liquidity fund
held at
fair value through profit
or loss - 4,719 6,792
---------------------------------- -------------- -------------- ----------
318,075 277,245 296,093
Current assets
Derivative financial assets 3,521 1,350 1,120
Debtors 525 375 1,256
Cash and short term deposits 577 503 1,169
---------------------------------- -------------- -------------- ----------
4,623 2,228 3,545
Creditors: amounts falling
due within one year (731) (20,551) (26,799)
Derivative financial liabilities (2,826) (694) (1,842)
---------------------------------- -------------- -------------- ----------
Net current assets/(liabilities) 1,066 (19,017) (25,096)
---------------------------------- -------------- -------------- ----------
Total assets less current
liabilities 319,141 258,228 270,997
Creditors: amounts falling
due after more than one year (25,200) (200) (200)
Provisions for liabilities
and charges
Performance fee payable (966) (895) (1,672)
---------------------------------- -------------- -------------- ----------
Net assets 292,975 257,133 269,125
---------------------------------- -------------- -------------- ----------
Capital and reserves
Called up share capital 7,745 6,682 6,814
Share premium 46,692 4,055 9,317
Capital redemption reserve 27,401 27,401 27,401
Capital reserves 197,017 203,716 208,191
Revenue reserve 14,120 15,279 17,402
---------------------------------- -------------- -------------- ----------
Total equity shareholders'
funds 292,975 257,133 269,125
---------------------------------- -------------- -------------- ----------
Net asset value per share
(note 6)
- undiluted 1,134.3p 1,118.3p 1,163.0p
- diluted 1,134.3p 1,096.9p 1,137.6p
Company registration number: 24299
Notes to the financial statements for the six months ended 31st
December 2015
1. Financial statements
The information contained within the financial statements in
this half year report has not been audited or reviewed by the
Company's auditors.
The figures and financial information for the year ended 30th
June 2015 are extracted from the latest published financial
statements of the Company and do not constitute statutory accounts
for that year. These financial statements have been delivered to
the Registrar of Companies and included the report of the auditors
which are unqualified and did not contain a statement under either
Section 498(2) or 498(3) of the Companies Act 2006.
2. Accounting policies
The financial statements have been prepared in accordance with
the Companies Act 2006, FRS 102 'The Financial Reporting Standard
applicable in the UK and Republic of Ireland' of the United Kingdom
Generally Accepted Accounting Practice ('UK GAAP') and with the
Statement of Recommended Practice 'Financial Statements of
Investment Trust Companies and Venture Capital Trusts' (the revised
'SORP') issued by the Association of Investment Companies in
November 2014.
FRS 104 'Interim Financial Reporting', issued by the Financial
Reporting Council ('FRC') in March 2015 has been applied in
preparing this condensed set of financial statements for the six
months ended 31st December 2015.
As a result of the first time adoption of FRS 102 and the
revised SORP, comparative numbers and presentational formats have
been restated where required. The Company has elected to not
prepare a Statement of Cash Flows for the current period on the
basis that substantially all of its investments are liquid and
carried at market value.
All of the Company's operations are of a continuing nature.
The accounting policies applied to this condensed set of
financial statements are consistent with those applied in the
financial statements for the year ended 30th June 2015 with the
following exceptions and amendments:
Finance costs
Finance costs are accounted for on an accruals basis using the
effective interest method in accordance with the provisions of FRS
102.
Financial instruments
Cash and cash equivalents may comprise cash (including demand
deposits which are readily convertible to a known amount of cash
and are subject to an insignificant risk of change in value) as
well as cash equivalents.
Derivative financial instruments, including short term forward
currency contracts, are valued at fair value, which is the net
unrealised gain or loss, and are included in current assets or
current liabilities in the statement of financial position in
accordance with FRS 102.
Foreign currency
In accordance with FRS 102 the Company is required to identify
its functional currency, being the currency of the primary economic
environment in which the Company operates. The Board, having regard
to the currency of the Company's share capital and the predominant
currency in which its shareholders operate, has determined that
sterling is the functional currency. Sterling is also the currency
in which the financial statements are presented.
Dividends payable
In accordance with FRS 102 the final dividend is included in the
financial statements in the year in which it is approved by
shareholders.
Accounting for shares held in Treasury
The cost of repurchasing shares into Treasury, including the
related stamp duty and transaction costs is charged to capital
reserves and dealt with in the Statement of Changes in Equity.
Share repurchase transactions are accounted for on a trade date
basis. Where shares held in Treasury are subsequently cancelled,
the nominal value of those shares is transferred out of called up
share capital and into the capital redemption reserve
Only the relevant section of the applicable policies from the
last year end financial statements which have changed as a result
of the application of the 2014 AIC SORP and FRS 102 have been
reproduced above - all other aspects of those policies remain the
same. The impact of the changes is substantially in relation to
presentation and disclosure.
3. Dividends paid(1)
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
31st December 31st December 30th June
2015 2014 2015
GBP'000 GBP'000 GBP'000
------------------------------ -------------- -------------- -----------
Unclaimed dividends refunded
to the Company - - (4)
2015 Final dividend of
16.0p (2014: 15.0p) 4,240 3,467 3,467
------------------------------ -------------- -------------- -----------
Total dividends paid
in the period/year 4,240 3,467 3,463
------------------------------ -------------- -------------- -----------
(1) All dividends paid and declared in the period have been funded from the Revenue Reserve.
4. Taxation
The taxation charge of GBP139,000 (31st December 2014:
GBP133,000 and 30th June 2015: GBP380,000) comprises irrecoverable
overseas withholding tax.
5. Return per share
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
31st December 31st December 30th June
2015 2014 2015
GBP'000 GBP'000 GBP'000
--------------------------- -------------- -------------- -----------
Return per share is based
on the following:
Revenue return 958 919 3,038
Capital return 1,165 16,946 25,815
--------------------------- -------------- -------------- -----------
Total return 2,123 17,865 28,853
--------------------------- -------------- -------------- -----------
Weighted average number
of Ordinary shares in
issue
during the period used
for the purpose of the
undiluted calculation 24,081,102 23,096,037 23,027,715
Weighted average number
of Ordinary shares in
issue
during the period used
for the purpose of the
diluted calculation 24,081,102 23,128,019 23,222,638
Undiluted
Revenue return per share 3.97p 3.98p 13.19p
February 24, 2016 12:19 ET (17:19 GMT)
Capital return per share 4.84p 73.37p 112.10p
--------------------------- -------------- -------------- -----------
Total return per share 8.81p 77.35p 125.29p
--------------------------- -------------- -------------- -----------
Diluted(1)
Revenue return per share 3.97p 3.98p 13.08p
Capital return per share 4.84p 73.27p 111.16p
--------------------------- -------------- -------------- -----------
Total return per share 8.81p 77.25p 124.24p
--------------------------- -------------- -------------- -----------
(1) The Company's subscription shares expired and their rights lapsed on 30th October 2015.
6. Net asset value per share
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
31st December 31st December 30th June
2015 2014 2015
------------------------------- -------------- -------------- -----------
Undiluted
Ordinary shareholders'
funds (GBP'000) 292,975 257,133 269,125
Number of Ordinary shares
in issue 25,829,137 22,993,660 23,140,517
Net asset value per Ordinary
share (pence) 1,134.3 1,118.3 1,163.0
Diluted(1)
Ordinary shareholders'
funds assuming exercise
of
Subscription shares (GBP'000) 292,975 300,834 307,431
Number of potential Ordinary
shares in issue 25,829,137 27,425,742 27,025,559
Net asset value per Ordinary
share (pence) 1,134.3 1,096.9 1,137.6
------------------------------- -------------- -------------- -----------
(1) The Company's subscription shares expired and their rights lapsed on 30th October 2015.
7. Fair valuation of investments
The fair value hierarchy analysis for investments held at fair
value at the period end is as follows:
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
31st December 31st December 30th June
2015 2014 2015
Assets Liabilities Assets Liabilities Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- ------------ -------- ------------ ----------- ------------
Quoted prices for identical
instruments in
active markets(1) 318,075 - 277,245 - 296,093 -
Valuation techniques
using observable
market value(2) 3,521 (2,826) 1,350 (694) 1,120 (1,842)
----------------------------- -------- ------------ -------- ------------ ----------- ------------
Total value of investments 321,596 (2,826) 278,595 (694) 297,213 (1,842)
----------------------------- -------- ------------ -------- ------------ ----------- ------------
(1) Includes liquidity funds.
(2) Includes forward foreign currency contracts.
8. Subsequent event
On 8th January 2016 the Company completed a sub-division of each
of its ordinary shares of 25 pence each into five new ordinary
shares of 5 pence each.
JPMORGAN FUNDS LIMITED
24th February 2016
For further information, please contact:
Divya Amin
For and on behalf of
JPMorgan Funds Limited
020 7742 4000
ENDS
A copy of the half year will be submitted to the National
Storage Mechanism and will shortly be available for inspection at
www.morningstar.co.uk/uk/NSM
The half year will also shortly be available on the Company's
website at www.jpmoverseas.co.uk where up to date information on
the Company, including daily NAV and share prices, factsheets and
portfolio information can also be found.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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February 24, 2016 12:19 ET (17:19 GMT)
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