Half Year Report JPMorgan Asian Investment Trust plc. Half Year Report & Accounts for the six months ended 31st March 2011

Transcription

1 2011 Half Year Report JPMorgan Asian Investment Trust plc Half Year Report & Accounts for the six months ended 31st March 2011

2 Features Contents About the Company 1 Half Year Performance 2 Chairman s Statement 4 Investment Managers Report Investment Review 7 Twenty Largest Investments 8 Portfolio Analyses Accounts 9 Income Statement 10 Reconciliation of Movements in Shareholders Funds 11 Balance Sheet 12 Cash Flow Statement 13 Notes to the Accounts 16 List of Investments Shareholder Information 18 Subscription Shares 18 Rollover Apportionments 19 Interim Management Report 20 Glossary of Terms and Definitions 21 Information about the Company Objective Capital growth, primarily from investing in equities quoted on the stockmarkets of Asia, excluding Japan Investment Policies - To have a diversified portfolio of Asian stocks. - To have a portfolio comprising 50 to 80 investments. - To use borrowings from time to time to gear the portfolio within a range of 90% 120% invested. Benchmark MSCI AC Asia ex Japan Index with net dividends reinvested, expressed in sterling terms. Capital Structure At 31st March 2011, the Company s issued share capital comprised 168,235,868 Ordinary shares of 25p each and 11,799,783 Subscription shares of 1p each. Discount Management In normal market circumstances the Company will use its buyback powers in order to ensure that, as far as possible, its Ordinary shares trade at less than 10 per cent. relative to their diluted ex-income Net Asset Value ( NAV ). The Company has introduced conditional semi-annual tender offers for up to 5 per cent. of the Company s Ordinary shares in issue at the relevant date, at a 2 per cent. discount to diluted cum-income NAV, less the costs of effecting the tender. The first such tender may be implemented if the Company s Ordinary shares have traded at an average daily discount of more than 9 per cent. relative to their diluted cum-income NAV over the six month period ending 30th September Conditional tender offers may be implemented at the discretion of the Board and Shareholders should place no expectation or reliance on the Board exercising such discretion. Continuation Vote In accordance with the Company s Articles of Association, the Directors are required to propose a resolution that the Company continue as an investment trust at the Annual General Meeting in 2014 and every third year thereafter. Management Company The Company employs JPMorgan Asset Management (UK) Limited ( JPMAM or the Manager ) to manage its assets.

3 Half Year Performance Total Returns (includes dividends reinvested) +6.7% Portfolio return net of fees and expenses 1,2 +6.1% Benchmark return % Return to Ordinary shareholders % Diluted return on net assets 5 1 Source: J.P.Morgan. 2 Return on net assets, that is net of management fees and administration expenses, but excluding the effect of Subscription shares which have been converted during the period and the dilutive impact of Subscription shares in issue at the period end. 3 Source: MSCI. The Company s benchmark is the MSCI Asia ex Japan Index with net dividends reinvested, expressed in sterling terms. 4 Source: Morningstar. 5 Return on net assets calculated using the diluted net asset value, which assumes that all outstanding Subscription shares were converted into Ordinary shares at the period end. Financial Data 31st March 30th September % change Total net assets ( 000) 446, , Number of Ordinary shares in issue 168,235, ,010, Number of Subscription shares in issue* 11,799,783 11,878, Diluted net asset value per Ordinary share 259.3p 246.7p +5.1** Undiluted net asset value per Ordinary share 265.1p 251.4p +5.4** Ordinary share price 235.0p 224.0p +4.9** Subscription share price 55.0p 50.3p +9.3 Ordinary share price discount to diluted net asset value 9.4% 9.2% * Details of the subscription rights conferred by these shares are given on page 18. Net asset value assuming that all outstanding Subscription shares were converted into Ordinary shares at the period end. ** % change, excluding dividends paid. The discount at 30th September 2010, based on the diluted net asset value after the deduction of the 1.7p final dividend, is 8.6%. A glossary of terms and definitions is provided on page 20. JPMorgan Asian Investment Trust plc. Half Year Report & Accounts

4 Chairman s Statement Performance I am pleased to announce that the Company outperformed its benchmark (the MSCI AC Asia Pacific ex Japan Index) in a six month review period characterised by continued volatility in Asian equity markets. In the period from 1st October 2010 to the beginning of January 2011 the Index rose by just over 10%, albeit with a number of sharp corrections along the way. From its peak on 6th January 2011, however, it then fell by 11.6% in just seven weeks, before climbing again to end the period with a total return of 6.1% for the six months. Under such conditions the Company s return of 6.7% at a portfolio level, net of management fees and expenses, was highly creditable. The return to Ordinary shareholders was 5.6%. The Company s diluted net asset value total return (which assumes that the 11.8 million Subscription shares outstanding at 31st March 2011 were all exercised at 176p per share) was 6.5%. A full commentary on the market environment and review of portfolio performance are set out in the investment managers report on pages 4 to 6. Continuation Vote and Discount Management Shareholders voted overwhelmingly for the continuation of the Company at the AGM in January and subsequently approved proposals for a one-off tender offer for up to 5% of the Company s Ordinary share capital. This was effected at a 2% discount to net asset value, less the direct costs and expenses of the tender offer. A total of 8,852,698 shares, representing 5% of the Company s then outstanding Ordinary shares, were repurchased at a price of pence per share and were subsequently cancelled in late February. There were no further buy-backs of shares during the review period and there have been no buy-backs subsequent to the period end. Shareholders also gave approval for a conditional tender offer, which may be implemented in This conditional tender offer, if implemented, will also be for up to 5% of the Company s Ordinary shares in issue on 30th September 2011 and at the same price formula as the one-off tender offer. The conditional tender offer may be implemented by the Board if the Ordinary shares have traded at an average discount of more than 9% to their diluted cum income NAV over the six month period ending 30th September If the Board does resolve to implement the conditional tender offer, a circular will be sent to shareholders with the annual report and accounts of the Company in December this year. Since 1st April 2011 to the date of this report, the Company s shares have traded at an average discount of 8.9%. The annual report & accounts for the year ended 30th September 2010 and the tender offer documents sent to Shareholders articulated the Board s commitment to manage both the absolute level and the volatility of the discount and also described how it may use a range of methods, including tender offers, in prosecution of this objective. The Board remains firm in this resolve. Subscription Shares Shareholders are reminded that Subscription shares may be exercised on any business day until 31st March 2014, after which the rights on these shares will lapse. At present the Subscription share exercise price is 176p per share. This exercise price will increase to 203p on 1st April In the six month period to 31st March 2011, 78,476 Subscription shares were converted into Ordinary shares, raising proceeds of 138,000. As at the date of this Report, a further 22,202 Subscription shares have been exercised, so that a total of 27,644,000 has now been raised for investment by the Company since the Subscription shares were issued, with just over 63% of the original issue of Subscription shares being converted. 2 JPMorgan Asian Investment Trust plc. Half Year Report & Accounts 2011

5 Further details on the Subscription shares, including their exercise prices, the apportionments for capital gains tax purposes and how they may be exercised, can be found on the Company s website at and on page 18. Gearing Over the period the Company s gearing ranged between 97 and 107%. Reflecting the investment managers growing caution in the review period, gearing at the end of March was 101%. The Board has a policy that permits the investment managers to use gearing within a range of % invested. Outlook Asian earnings forecasts are generally expected to decline and interest rates to rise, but these negatives are mostly priced in to valuations around the region. An ascendant US stock market is a positive for Asia. However, events in the Middle East and their effect on the price of oil remain an overhang. On the other hand, the strength of Korean earnings and order books gives strong evidence that the global economy is healing, albeit fitfully. India s outlook in the short term remains extremely fluid and unpredictable and, within the ASEAN region, monetary tightening is expected to continue. In Greater China, markets are expected to remain volatile and will be wary of a further sharp rise in oil prices. However, over a slightly longer time horizon, optimism about China and Taiwan remains unchanged and valuations, particularly in China, are not obviously stretched. Against this backdrop our investment managers are cautious, but remain confident in their ability to uncover sound investment opportunities that have the potential to deliver strong returns over the longer term. James M Long Chairman 17th May 2011 JPMorgan Asian Investment Trust plc. Half Year Report & Accounts

6 Investment Managers Report Market Review Joshua Tay Pauline Ng The MSCI AC Asia ex Japan Index rose 6.1% in sterling terms in the six months ended 31st March 2011, although it was highly volatile over the period. Asian markets rallied strongly at the start of the six month period, on reduced concerns of a double dip recession in the US and as a hard landing in China failed to materialise. Importantly, global central banks signalling possible further quantitative easing measures provided a liquidity boost to equity markets and helped them to rally at the end of 2010 and into However, markets were later impacted in February and March 2011 by two major developments: the popular uprisings in the Arab world and what will in time be known as the Great Tohoku Earthquake in Japan. These events led to a leap of over 30% in the oil price during the first quarter of 2011 and concerns over supply disruptions due to production stoppages in Japan. In Asia the main problems faced by policy makers were rising inflation and upward pressure on currencies. Inflation in Asia was exacerbated by temporary food price inflation, but it eventually became clear that this was moderating. Margin pressures came into focus across the Asian manufacturing spectrum especially as one of the consequences of quantitative easing in the West has been to drive liquidity into commodities, underpinning their elevated prices. In China policymakers actions to rein in monetary policy and control property prices led to Chinese equities underperforming the rest of the region during the period under review. It was only in March 2011 that investors began to discount further monetary tightening measures and the Chinese equity market began to rally. In general the top performing markets over the six month period were those that were associated with earnings upgrades and low valuations, such as Korea and Thailand. Several stocks in these countries were also seen as key beneficiaries of supply disruptions post the earthquake, such as petrochemical stocks and Korean automakers. Taiwan also performed very strongly over the period, as the financial sector surged on an improved cross-straits relationship with China and as an improved US consumer end-demand outlook buoyed the performance of technology stocks. However, Taiwan gave up a large part of its gains following the Japanese earthquake due to concerns over the impact that a disruption in component supply from Japan would have on the earnings of the Taiwanese technology sector. India was the worst performing market over the period. After a strong performance in the first three quarters of 2010, the Indian market was trading at valuation levels above the regional average and was weighed down by earnings downgrades, persistently high inflation, a raft of corruption scandals and large foreign investment outflows. Performance At the portfolio level, the Company outperformed our benchmark index by 60 basis points. Throughout the period we employed gearing of 105% on average, which contributed to performance. If we look at the underlying stock selection, the most significant contributors to performance were our stock picks in Korea. Our large positions in shipbuilder Hyundai Heavy and in construction company Samsung Engineering both rose strongly over the period, on the back of earnings upgrades. Both companies continued to gain market share, see rising international order books and benefit from 4 JPMorgan Asian Investment Trust plc. Half Year Report & Accounts 2011

7 Performance attribution for the six months to 31st March 2011 Contributions to total returns % % Benchmark total return 6.1 Stock selection 1.1 Gearing/cash 0.1 Currency effect 0.2 Investment manager contribution 1.0 Portfolio return 7.1 Management fees/ other expenses -0.4 Portfolio return, net of fees and expenses 6.7 Repurchase and cancellation of shares following a Tender Offer 0.1 Net asset value total return undiluted 6.8 Subscription share dilution -0.3 Net asset value total return diluted 6.5 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 definitions is provided on page 20. a relatively weak currency which helped translated earnings. In addition, we had a large overweight in OCI, a manufacturer of polysilicon, a material used in solar cells, which helped performance as the stock rose due to new order wins, especially following the fall-out from the nuclear accident in Japan. Two petrochemicals stocks in the portfolio, Korea s Kumho Petrochemical and Malaysia s Petronas Chemicals Group, also helped performance. We initiated positions in these stocks because we had a positive outlook on the demand/supply outlook and on rising product prices. These stocks received a further boost following the shutdown of competing refining supply in Japan. In China, we increased positions in cement and building materials stocks after we believed that the stock prices had fallen to sufficiently attractive valuations to factor in the associated risks associated with the property sector. This decision turned out to be profitable, with overweights in China Resources Cement and in China National Building Materials being amongst the top contributors to performance over the period. Our overweight position in Singapore is driven by our holdings in regional stocks listed on the Singapore exchange or in Singapore companies that derive a significant proportion of their earnings offshore. GMG Global, a Singapore-listed owner of rubber plantations, was one of the top contributors to performance following its outperformance on the back of strong rubber prices. Keppel Corp, Singapore s largest conglomerate and the world s largest manufacturer of offshore oil rigs, was also a strong contributor to performance as rising oil exploration budgets and a replacement cycle led to a sharp increase in Keppel Corp s order books. On the negative side, performance suffered through stock selection in India, where our holding in Maruti Suzuki was a key negative detractor from performance, as the stock disappointed on earnings due to falling margins driven by rising competitive pressure and input cost. Our overweight in power equipment producer Bharat Heavy and in Infrastructure Development Finance Co. of India also detracted from performance as investors questioned the outlook for infrastructure in India following the raft of corruption scandals. Holdings in mid-cap Chinese stocks further detracted from performance. Our holdings fared poorly, especially in the fourth quarter of 2010 as increased risk aversion, driven by concerns over continued monetary tightening, led to sharp share price drops in our holdings such as Nine Dragons Paper and Xinjiang Goldwind Science & Technology. Our overweight in China Eastern Airlines also detracted from performance as it fell sharply due to the spike in oil prices. In Taiwan, we were hurt by our underweight in several technology stocks such as Taiwan Semiconductor and smart-phone manufacturer HTC, which both had a strong run due to optimism over demand for their products. Market Outlook Asia continues to be supported by reasonable valuations of 13.3 times 2011 price/earnings, earnings upgrades and moderating food inflation. However, overall inflation is being underpinned by buoyant wages and property costs and by rates priced off the US dollar. Central banks across the region will continue to have a tightening bias for the next couple of quarters. In addition, the global backdrop JPMorgan Asian Investment Trust plc. Half Year Report & Accounts

8 Investment Managers Report continued continues to look challenging for Asia with high unemployment in the US and ongoing sovereign debt issues in Europe. The oil price needs to be watched very carefully as there seems to be a general assumption that the oil price will fall back towards the US$100 level. The uncertainty over oil will add to margin pressures in Asia and across the globe and it would be hard for Asia to register positive returns against a backdrop of sustained high oil prices. The next set of corporate results will reflect higher costs and this may bring to an end the current period in which markets have ignored bad news. We will continue to have limited gearing in the portfolio and focus on stock selection to add value. We may move the portfolio to adopt a more defensive stance, such as by the addition of high-dividend yielding telecommunication stocks, if we believe that the market environment will turn less favourable. However, in the medium to longer term, the balance sheet strength and superior growth prospects of Asia are a sharp contrast to those of Europe and the US and we believe that this will be increasingly recognised and rewarded by investors. In terms of the countries that the portfolio is invested in, China is near the end of its tightening cycle and we will remain overweight here, especially in view of its relative insulation from further oil price rises. We prefer China to India at present given the latter s higher valuations and earnings downgrades. North Asian export economies may have seen the best of the recent cycle and the effects of supply disruption due to the earthquake in Japan may impact earnings this quarter. We remain underweight in the export orientated sectors and in countries such as Taiwan, as demand in the West is not dependable. Furthermore, Taiwanese technology companies are the most adversely affected by the component shortage out of Japan. In the ASEAN region, Thailand remains as an overweight given its attractive valuation and we have positioned the portfolio to gain exposure to capital expenditure, energy and petrochemicals. Joshua Tay Pauline Ng Investment Managers 17th May JPMorgan Asian Investment Trust plc. Half Year Report & Accounts 2011

9 Twenty Largest Investments at 31st March 2011 Active Valuation Portfolio Benchmark Position Company Country Sector 000 % 1 % % Samsung Electronics South Korea Information Technology 15, Hyundai Heavy Industries South Korea Industrials 14, Keppel Singapore Industrials 14, Agricultural Bank Of China H 2 Hong Kong & China Financials 14, Petronas Chemicals Malaysia Materials 13, China Construction Bank H 2 Hong Kong & China Financials 13, OCI Company South Korea Materials 11, Siam Cement Thailand Materials 11, KB Financial South Korea Financials 11, CNOOC Hong Kong & China Energy 11, Genting Singapore Singapore Consumer Discretionary 11, Samsung Engineering South Korea Industrials 10, BOC Hong Kong Hong Kong & China Financials 10, BBMG Hong Kong & China Materials 9, United Tractors Indonesia Industrials 9, Advanced Semiconductor Engineering Taiwan Information Technology 9, Amorepacific South Korea Consumer Staples 8, Formosa Chemical & Fibre Taiwan Materials 8, China National Building Material H 2 Hong Kong & China Materials 8, Olam International Singapore Consumer Staples 7, Total 3 224, Based on total assets less current liabilities of 446.0m. 2 Hong Kong H shares are shares in companies incorporated in mainland China and listed in Hong Kong and other foreign stock exchanges. 3 At 30th September 2010, the value of the twenty largest investments amounted to 195.4m representing 42.1% of total assets less current liabilities. JPMorgan Asian Investment Trust plc. Half Year Report & Accounts

10 Portfolio Analyses Geographical Analysis 31st March th September 2010 Active Active Portfolio Benchmark Position Portfolio Benchmark Position % 1 % % % 1 % % Hong Kong & China South Korea Singapore India Taiwan Thailand Indonesia Malaysia Philippines Net current (liabilities)/assets (1.5) Total Based on total assets less current liabilities of 446.0m (30th September 2010: 464.0m). Sector Analysis 31st March th September 2010 Active Active Portfolio Benchmark Position Portfolio Benchmark Position % 1 % % % 1 % % Industrials Materials Financials Consumer Discretionary Information Technology Consumer Staples Energy Utilities Healthcare Telecommunication Services Net current(liabilities)/assets (1.5) Total Based on total assets less current liabilities of 446.0m (30th September 2010: 464.0m). 8 JPMorgan Asian Investment Trust plc. Half Year Report & Accounts 2011

11 Income Statement for the six months ended 31st March 2011 (Unaudited) (Unaudited) (Audited) Six months ended Six months ended Year ended 31st March st March th September 2010 Revenue Capital Total Revenue Capital Total Revenue Capital Total Gains on investments held at fair value through profit or loss 25,632 25,632 48,482 48,482 83,627 83,627 Net foreign currency losses (442) (442) (1,371) (1,371) (1,529) (1,529) Income from investments 1,726 1,726 1,390 1,390 7,241 7,241 Other interest receivable and similar income Gross return 1,733 25,190 26,923 1,395 47,111 48,506 7,256 82,098 89,354 Management fee (1,520) (1,520) (1,105) (1,105) (2,413) (2,413) Performance fee (53) (53) Other administrative expenses (469) (469) (358) (358) (792) (792) Net return/(loss) on ordinary activities before finance costs and taxation (256) 25,190 24,934 (68) 47,111 47,043 4,051 82,045 86,096 Finance costs (322) (322) (244) (244) (540) (540) Net return/(loss) on ordinary activities before taxation (578) 25,190 24,612 (312) 47,111 46,799 3,511 82,045 85,556 Taxation (185) (185) (114) (114) (514) (514) Net return/(loss) on ordinary activities after taxation (763) 25,190 24,427 (426) 47,111 46,685 2,997 82,045 85,042 Return/(loss) per Ordinary share diluted (note 4) (0.43)p 14.14p 13.71p (0.25)p 27.72p 27.47p 1.75p 47.90p 49.65p Return/(loss) per Ordinary share undiluted (note 4) (0.44)p 14.37p 13.93p (0.26)p 28.95p 28.69p 1.76p 48.20p 49.96p All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period. The Total column of this statement is the profit and loss account of the Company and the Revenue and Capital columns represent supplementary information prepared under guidance issued by The Association of Investment Companies. The Total column represents all the information that is required to be disclosed in a Statement of Total Recognised Gains and Losses ( STRGL ). For this reason a STRGL has not been presented. JPMorgan Asian Investment Trust plc. Half Year Report & Accounts

12 Reconciliation of Movements in Shareholders Funds Called up Exercised Capital Six months ended share Share warrant redemption Other Capital Revenue 31st March 2011 capital premium reserve reserve reserve reserves reserve Total (Unaudited) At 30th September ,371 26, , , ,518 3, ,002 Repurchase and cancellation of the Company s own Ordinary shares following a Tender Offer (2,213) 2,213 (20,527) (20,527) Exercise of Subscription shares into Ordinary shares (1) 1 Issue of Ordinary shares on exercise of Subscription shares Net return/(loss) on ordinary activities 25,190 (763) 24,427 Dividends appropriated in the period (3,010) (3,010) At 31st March ,177 26, ,002 79, ,708 (300) 446,030 Called up Exercised Capital Six months ended share Share warrant redemption Other Capital Revenue 31st March 2010 capital premium reserve reserve reserve reserves reserve Total (Unaudited) At 30th September ,430 4, , , ,473 2, ,477 Repurchase of the Company s own Ordinary shares for cancellation (190) 190 (1,491) (1,491) Exercise of Subscription shares into Ordinary shares (41) 41 Issue of Ordinary shares on exercise of Subscription shares 1,021 4,571 5,592 Net return/(loss) on ordinary activities 47,111 (426) 46,685 Dividends appropriated in the period (2,444) (2,444) At 31st March ,220 8, , , , ,819 Called up Exercised Capital Year ended share Share warrant redemption Other Capital Revenue 30th September 2010 capital premium reserve reserve reserve reserves reserve Total (Audited) At 30th September ,430 4, , , ,473 2, ,477 Repurchase of the Company s own Ordinary shares for cancellation (780) 780 (6,045) (6,045) Exercise of Subscription shares into Ordinary shares (197) 197 Issue of Ordinary shares on exercise of Subscription shares 4,918 22,054 26,972 Net return on ordinary activities 82,045 2,997 85,042 Dividends appropriated in the year (2,444) (2,444) At 30th September ,371 26, , , ,518 3, , JPMorgan Asian Investment Trust plc. Half Year Report & Accounts 2011

13 Balance Sheet at 31st March 2011 (Unaudited) (Unaudited) (Audited) 31st March st March th September Fixed assets Investments held at fair value through profit or loss 452, , ,427 Current assets Debtors 4,244 1,941 7,602 Cash and short term deposits 6,136 7,265 31,496 10,380 9,206 39,098 Creditors: amounts falling due within one year Bank loans (11,229) (13,185) (25,384) Other creditors (5,972) (7,330) (12,096) Derivative financial instruments (1) (5) Net current (liabilities)/assets (6,821) (11,310) 1,613 Total assets less current liabilities 446, , ,040 Creditors: amounts falling due after more than one year Bank loans (26,370) (19,038) Total net assets 446, , ,002 Capital and reserves Called up share capital 42,177 41,220 44,371 Share premium 26,557 8,799 26,438 Exercised warrant reserve Capital redemption reserve 6,002 3,199 3,789 Other reserve 79, , ,436 Capital reserves 290, , ,518 Revenue reserve (300) 50 3,473 Shareholders funds 446, , ,002 Net asset value per Ordinary share diluted (note 5) 259.3p 223.5p 246.7p Net asset value per Ordinary share undiluted (note 5) 265.1p 238.0p 251.4p JPMorgan Asian Investment Trust plc. Half Year Report & Accounts

14 Cash Flow Statement for the six months ended 31st March 2011 (Unaudited) (Unaudited) (Audited) Six months ended Six months ended Year ended 31st March st March th September Net cash (outflow)/inflow from operating activities (note 6) (1,141) (532) 2,729 Net cash outflow from returns on investments and servicing of finance (313) (229) (551) Taxation paid (58) (120) Net cash inflow/(outflow) from capital expenditure and financial investment 33,037 (15,480) (15,665) Dividends paid (3,010) (2,444) (2,444) Net cash (outflow)/inflow from financing (53,348) 10,737 32,885 (Decrease)/increase in cash for the period (24,775) (8,006) 16,834 Reconciliation of net cash flow to movement in net debt Net cash movement (24,775) (8,006) 16,834 Loans repaid/(drawn down) 33,055 (6,636) (11,958) Exchange movements (447) (1,369) (1,524) Changes in net debt arising from cash flows 7,833 (16,011) 3,352 Net debt at the beginning of the period (12,926) (16,278) (16,278) Net debt at the end of the period (5,093) (32,289) (12,926) Represented by: Cash and short term deposits 6,136 7,265 31,496 Bank loans (11,229) (39,554) (44,422) Net debt at the end of the period (5,093) (32,289) (12,926) 12 JPMorgan Asian Investment Trust plc. Half Year Report & Accounts 2011

15 Notes to the Accounts for the six months ended 31st March 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 September 2010 are extracted from the latest published Accounts of the Company and do not constitute statutory accounts for that year. Those Accounts 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 Accounting policies The accounts have been prepared in accordance with 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, issued in January All of the Company s operations are of a continuing nature. The accounting policies applied in these Half Year Accounts are consistent with those applied in the Accounts for the year ended 30th September Dividends (Unaudited) (Unaudited) (Audited) Six months ended Six months ended Year ended 31st March st March th September Final dividend paid in respect of the year ended 30th September 2010 of 1.70p (2009: 1.50p) 3,010 2,444 2,444 No interim dividend has been declared in respect of the six months ended 31st March 2011 (2010: nil). JPMorgan Asian Investment Trust plc. Half Year Report & Accounts

16 Notes to the Accounts continued 4. (Loss)/return per Ordinary share (Unaudited) (Unaudited) (Audited) Six months ended Six months ended Year ended 31st March st March th September (Loss)/return per share is based on the following: Revenue (loss)/return (763) (426) 2,997 Capital return 25,190 47,111 82,045 Total return 24,427 46,685 85,042 Weighted average number of Ordinary shares in issue during the period used for the purpose of the diluted calculation 178,199, ,930, ,274,043 Weighted average number of Ordinary shares in issue during the period used for the purpose of the undiluted calculation 175,349, ,727, ,217,959 Diluted Revenue (loss)/return per Ordinary share (0.43)p (0.25)p 1.75p Capital return per Ordinary share 14.14p 27.72p 47.90p Total return per Ordinary share 13.71p 27.47p 49.65p Undiluted Revenue (loss)/return per Ordinary share (0.44)p (0.26)p 1.76p Capital return per Ordinary share 14.37p 28.95p 48.20p Total return per Ordinary share 13.93p 28.69p 49.96p The diluted (loss)/return per Ordinary share represents the (loss)/return on ordinary activities after taxation divided by the weighted average number of Ordinary shares in issue during the period as adjusted in accordance with the requirements of Financial Reporting Standard 22: Earnings per share. 14 JPMorgan Asian Investment Trust plc. Half Year Report & Accounts 2011

17 5. Net asset value per Ordinary share (Unaudited) (Unaudited) (Audited) Six months ended Six months ended Year ended 31st March st March th September 2010 Diluted Ordinary shareholders funds assuming exercise of Subscription shares ( 000) 466, , ,907 Number of potential Ordinary shares in issue 180,035, ,247, ,888,349 Net asset value per Ordinary share (pence) Undiluted Ordinary shareholders funds ( 000) 446, , ,002 Number of Ordinary shares in issue 168,235, ,781, ,010,090 Net asset value per Ordinary share (pence) The diluted net asset value per Ordinary share assumes that all outstanding Subscription shares were converted into Ordinary shares at the period end. 6. Reconciliation of net return on ordinary activities before finance costs and taxation to net cash (outflow)/inflow from operating activities (Unaudited) (Unaudited) (Audited) Six months ended Six months ended Year ended 31st March st March th September Net return on ordinary activities before finance costs and taxation 24,934 47,043 86,096 Less capital return before finance costs and taxation (25,190) (47,111) (82,045) Scrip dividends received as income (671) Increase in accrued income (566) (260) (6) (Increase)/decrease in other debtors (31) (8) 3 Decrease in accrued expenses (29) (82) (16) Overseas taxation (206) (114) (632) Performance fee paid (53) Net cash (outflow)/inflow from operating activities (1,141) (532) 2,729 JPMorgan Asian Investment Trust plc. Half Year Report & Accounts

18 List of Investments at 31st March 2011 Valuation Percentage Company Country 000 % Samsung Electronics South Korea 15, Hyundai Heavy Industries South Korea 14, Keppel Singapore 14, Agricultural Bank of China Hong Kong & China 14, Petronas Chemicals Malaysia 13, China Construction Bank Hong Kong & China 13, OCI Company South Korea 11, Siam Cement 1 Thailand 11, KB Financial South Korea 11, CNOOC Hong Kong & China 11, Genting Singapore Singapore 11, Samsung Engineering South Korea 10, BOC Hong Kong Hong Kong & China 10, BBMG Hong Kong & China 9, United Tractors Indonesia 9, Advanced Semiconductor Engineering Taiwan 9, Amorepacific South Korea 8, Formosa Chemical & Fibre Taiwan 8, China National Building Material Hong Kong & China 8, Olam International Singapore 7, Banpu 1 Thailand 7, Tata Motors India 7, Lock & Lock South Korea 7, Poly (Hong Kong) Investments Hong Kong & China 6, Overseas Union Enterprises Singapore 6, Fraser & Neave Singapore 6, Weichai Power Hong Kong & China 6, China Windpower Hong Kong & China 6, Hutchison Whampoa Hong Kong & China 6, Astra International Indonesia 6, Infrastructure Development Finance India 6, Taiwan Semiconductor Manufacturing Taiwan 6, Maruti Suzuki India India 6, China Resources Cement Hong Kong & China 6, Sany Heavy Equipment Hong Kong & China 6, Global Logistic Properties Singapore 6, Samsung Techwin South Korea 5, China Yurun Food Hong Kong & China 5, Mundra Port & Special Economic Zone India 5, Yanzhou Coal Mining Hong Kong & China 5, President Chain Store Taiwan 5, China Eastern Airlines Hong Kong & China 5, Yuanta Financial Holdings Taiwan 5, Ambuja Cements India 5, Jiangxi Copper Hong Kong & China 5, HDFC Bank India 5, Brilliance China Hong Kong & China 4, JPMorgan Asian Investment Trust plc. Half Year Report & Accounts 2011

19 Valuation Percentage Company Country 000 % Korea Kumho Petrochemical South Korea 4, Wharf Hong Kong & China 4, Thai Airway International Thailand 4, Bank Danamon Indonesia 4, Midas Singapore 4, Orient Overseas International Hong Kong & China 4, Sri Trang Agro Industry Thailand 4, Hindalco Industries 2 India 4, Kerry Properties Hong Kong & China 4, Taishin Financial Taiwan 4, China Shineway Pharmaceutical Hong Kong & China 4, Xinjiang Goldwind Hong Kong & China 4, Otto Marine Singapore 3, China Resources Land Hong Kong & China 2, Berlian Laju Tanker Indonesia 1, Neptune Orient Lines Singapore Total Portfolio 452, Includes non-voting depository receipts. 2 Participatory note. JPMorgan Asian Investment Trust plc. Half Year Report & Accounts

20 Subscription Shares On 4th February 2009 the Company issued Subscription shares as a bonus issue to the Ordinary shareholders on the basis of one Subscription share for every five Ordinary shares held. Each Subscription share conferred the right (but not the obligation) to subscribe for one Ordinary share on any business day during the period from 1st April 2009 until 31st March 2014, after which the rights on the Subscription shares will lapse. For the purposes of UK taxation, the issue of Subscription shares is treated as a reorganisation of the Company s share capital. Whereas such reorganisations do not trigger a chargeable disposal for the purposes of the taxation of capital gains, they do require shareholders to reallocate the base cost of their Ordinary shares between Ordinary shares and Subscription shares received. At the close of business on 5th February 2009 the middle market prices of the Company s Ordinary shares and Subscription shares were as follows: Ordinary shares: pence Subscription shares: pence Accordingly an individual investor who on 4th February 2009 held five Ordinary shares (or a multiple thereof) would have received a bonus issue of one Subscription share (or the relevant multiple thereof) and would apportion the base cost of such holding 96.77% to the five Ordinary shares and 3.23% to the Subscription shares. The conversion prices of the Subscription shares are as follows: If Subscription share rights are exercised on any day between and including 1st April 2010 and 31 March 2012, 176 pence. If Subscription share rights are exercised on any day between and including 1st April 2012 and 31st March 2014, 203 pence. Notice of the exercise of the Subscription share rights may be given at any time until 31st March 2014 and the Ordinary shares arising on conversion will be issued within ten business days of the first business day of the calendar month following the month in which the relevant notices are received by the registrars. For further details on how to exercise the Subscription share rights please refer to the Company s website at or contact the Company Secretary on Rollover Apportionments For shareholders who rolled their investment in The Fleming Far Eastern Investment Trust plc into the Company, the Capital Gains Tax apportionments are shown below. The apportionment of the original base cost will depend upon which option under the Fleming Far Eastern reconstruction scheme was chosen. Option 1 All share option JPMorgan Asian Ordinary shares JPMorgan Asian Warrants Option 2 Share and Japanese unit option JPMorgan Asian Ordinary shares JPMorgan Asian Warrants S&P Japanese Units Option 3 Share and cash option JPMorgan Asian Ordinary shares JPMorgan Asian Warrants S&P Cash Units JPMorgan Asian Investment Trust plc. Half Year Report & Accounts 2011

21 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 fall into the following broad categories: investment and strategy; market; accounting, legal and regulatory; corporate governance and shareholder relations; operational; 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 September 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 (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. Related Party 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 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. For these reasons, they consider there is reasonable evidence to continue to adopt the going concern basis in preparing the accounts. For and on behalf of the Board James M Long Chairman 17th May 2011 JPMorgan Asian Investment Trust plc. Half Year Report & Accounts

22 Glossary of Terms and Definitions Portfolio return Return on net assets, that is net of management fees and administration expenses, but excluding the effect of Subscription shares which have been converted during the period and the dilutive impact of Subscription shares in issue at the period end. Return to Ordinary shareholders Total return to the Ordinary Shareholder on a mid-market price to mid-market price basis, assuming that all dividends received were reinvested, without transaction costs, in the Ordinary shares of the Company at the time the shares were quoted ex-dividend. Diluted net asset value ( NAV ) per Ordinary share The diluted NAV per Ordinary share assuming that all outstanding Subscription shares were converted into Ordinary shares at the period end. Diluted return on net assets Return on the diluted NAV, on a bid value to bid value basis, assuming that all dividends paid out by the Company were reinvested in the shares of the Company at the NAV per share at the time the shares were quoted ex-dividend. In accordance with industry practice, dividends payable which have been declared but which are unpaid at the balance sheet date are deducted from the diluted NAV when calculating the diluted return on net assets. Undiluted return on net assets Return on the undiluted NAV per share, on a bid value to bid value basis, assuming that all dividends paid out by the Company were reinvested in the shares of the Company at the NAV per share at the time the shares were quoted ex-dividend. In accordance with industry practice, dividends payable which have been declared but which are unpaid at the balance sheet date are deducted from the undiluted NAV when calculating the undiluted return on net assets. Benchmark total return Total return on the benchmark, on a mid-market value to mid-market value basis, assuming that all dividends received were reinvested in the shares of the underlying companies at the time the shares were quoted ex-dividend. Share price discount/premium to diluted NAV per Ordinary share If the share price of an investment trust is lower than the NAV per share, the shares are said to be trading at a discount. The discount is shown as a percentage of the NAV. The opposite of a discount is a premium. It is more common for an investment trust s shares to trade at a discount than at a premium. Active position The active position shows the difference between the Company s holding of an individual stock, sector or country compared with that stock, sector or country s weighting in the Company s benchmark. A positive number indicates an active decision by the investment manager to own more of (i.e. be overweight) a particular stock, sector or country versus the benchmark and a negative number indicates a decision to hold less of (i.e. be underweight) a particular stock, sector or country versus the benchmark. Performance attribution definitions: Stock selection Measures the effect of investing in securities to a greater or lesser extent than their weighting in the benchmark, or of investing in securities which are not included in the benchmark. Gearing/cash Measures the impact on returns of borrowings or cash balances on the Company s relative performance. Currency effect Measures the impact of currency exposure differences between the company s portfolio and its benchmark. Management fees/other expenses The payment of fees and expenses reduces the level of total assets and therefore has a negative effect on relative performance. Subscription share dilution effect Measures the dilutive effect of the potential conversion of all outstanding Subscription shares at the period end. The benchmark is a recognised index of stocks which should not be taken as wholly representative of the Company s investment universe. The Company s investment strategy does not follow or track this index and consequently, there may be some divergence between the Company s performance and that of the benchmark. 20 JPMorgan Asian Investment Trust plc. Half Year Report & Accounts 2011

23 Information about the Company Financial Calendar Financial year end Final results announced Half year end Half year results announced Interim Management Statement announced Dividend on Ordinary shares paid (if any) Annual General Meeting 30th September November 31st March May February and July February January/February History The Company was launched in September 1997 as a rollover vehicle for shareholders in The Fleming Far Eastern Investment Trust plc. The Company adopted its present name following approval from shareholders at the Annual General Meeting in February Directors James M Long TD (Chairman) Alun Evans CMG Ronald Gould James Strachan Andrew Sykes Company Numbers Company registration number: Ordinary Shares London Stock Exchange Sedol number: ISIN: GB Bloomberg ticker: JAI LN Subscription Shares London Stock Exchange Sedol number: B3KHYY3 ISIN: GB00B3KHYY38 Bloomberg ticker: JAIS LN Market Information The Company s Ordinary and Subscription shares are listed on the London Stock Exchange. The market price of the Ordinary shares is shown daily in the Financial Times, The Times, The Daily Telegraph, The Scotsman and The Independent. The market price of the Subscription shares is listed in the Financial Times. The Share price of both the Ordinary and Subscription shares are on the JPMorgan internet site at where the prices are updated every fifteen minutes during trading hours. Website Share Transactions The Company s shares may be dealt in directly through a stockbroker or professional adviser acting on an investor s behalf. They may also be purchased and held through the J.P. Morgan Investment Account, J.P. Morgan ISA and J.P. Morgan SIPP. These products are all available on the online wealth manager service, J.P. Morgan WealthManager+ available at Manager JPMorgan Asset Management (UK) Limited. Company s Registered Office Finsbury Dials 20 Finsbury Street London EC2Y 9AQ Telephone number: For company secretarial and administrative matters, please contact Alison Vincent. Registrars Equiniti Reference 1357 Aspect House Spencer Road Lancing West Sussex BN99 6DA Telephone: Calls to this number cost 8p per minute from a BT landline. Other providers costs may vary. Lines open 8.30 a.m. to 5.30 p.m., Monday to Friday. The overseas helpline number is +44 (0) Notifications of changes of address and enquiries regarding share certificates or dividend cheques should be made in writing to the Registrar quoting reference Registered shareholders can obtain further details on individual holdings on the internet by visiting Independent Auditors PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors 7 More London Riverside London SE1 2RT Brokers Cenkos Securities plc 6, 7, 8 Tokenhouse Yard London EC2R 7AS Savings Product Administrators For queries on the J.P. Morgan Investment Account, J.P. Morgan ISA and J.P. Morgan SIPP, see contact details on the back cover of this report. A member of the AIC JPMorgan Asian Investment Trust plc. Half Year Report & Accounts

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