Half Year Report JPMorgan Russian Securities plc. Half Year Report & Accounts for the six months ended 30th April 2012

Transcription

1 2012 Half Year Report JPMorgan Russian Securities plc Half Year Report & Accounts for the six months ended 30th April 2012

2 Features Contents About the Company 1 Half Year Performance 2 Chairman s Statement 4 Investment Managers Report Investment Review 7 List of Investments 8 Sector Analysis Accounts 9 Income Statement 10 Reconciliation of Movements in Shareholders Funds 11 Balance Sheet 12 Cash Flow Statement 13 Notes to the Accounts Shareholder Information 15 Interim Management Report 16 Glossary of Terms and Definitions 17 Information about the Company Objective To provide capital growth from investment in Russian securities. Investment Policies - To maintain a diversified portfolio of investments in quoted Russian securities and Russian pre-ipo stocks (up to 10% of the gross assets of the Company) or other companies which derive the majority of their revenue or gains from operating in Russia. - To use gearing when appropriate to increase potential returns to shareholders. - To invest no more than 15% of gross assets in other UK listed investment companies (including investment trusts). Benchmark The MSCI Russian 10/40 Equity Indices Index in sterling terms. Capital Structure At 30th April 2012, the Company s share capital comprised 54,692,312 ordinary shares of 1p each. Continuation Vote A resolution that the Company continue as an investment trust will be put to shareholders at the Annual General Meeting in 2017 and every five years thereafter. Management Company The Company employs JPMorgan Asset Management (UK) Limited to manage its assets.

3 Half Year Performance Total returns (includes dividends reinvested) +2.4% +5.3% Return to shareholders 1 Return on net assets % Benchmark return 1,3 Financial Data 30th April 31st October % change Total net assets ( 000) 325, , Number of shares in issue 54,692,312 55,124,312 Net asset value per share 594.6p 564.4p +5.3 Share price 543.5p 531.0p +2.4 Share price discount to net asset value per share 8.6% 5.9% A glossary of terms and definitions is provided on page Source: Morningstar. 2 Source: J.P. Morgan. 3 The Company s benchmark is the MSCI Russian 10/40 Equity Indices Index in sterling terms. JPMorgan Russian Securities plc. Half Year Report & Accounts

4 Chairman s Statement Performance In my first reporting period as Chairman of your Company, I am pleased to announce that the Company s net asset value increased 5.3% in the six months to 30th April 2012, representing an outperformance of 4.2 percentage points over its benchmark (the MSCI Russian 10/40 Equity Indices Index). During the period under review the Russian market as well as markets globally continued to be characterised by heightened volatility. In the two months from 1st November to the end of December 2011, following an initial rise, the Company s benchmark index fell by just over 9%. By the middle of March the index had rallied by over 23% only to lose most of its gains in the following month, ending the period with a total return of 1.1%. Under such conditions the management team s performance was highly creditable. The Company s share price increased by 2.4% over the period, resulting in a widening of the discount at which the ordinary shares traded to the net asset value from 5.9% to 8.6%. A full commentary on the market environment and a review of portfolio performance are set out in the Investment Managers report on pages 4 to 6. Continuation Vote The Board would like to express its thanks to Shareholders for voting overwhelmingly in favour of the continuation of the Company at the general meeting held in January The Company s next continuation vote will be held at the annual general meeting in Portfolio Construction As reported in the last Chairman s Statement to accompany the Company s 2011 year end results, the Board and Investment Managers agreed to introduce additional controls on portfolio construction. These limit the amount by which sector positions in the portfolio can deviate from the benchmark index and introduce a maximum overweight position per stock against its index weighting. The aim of the controls is to reduce the volatility of the Company s performance when compared to its benchmark. The readjustment of the portfolio has now been completed. Shareholders should note that the new investment guidelines continue to allow the Investment Management team to operate with a high degree of conviction in relation to sector and individual stock weightings. Discount Control The Company repurchased 432,000 shares for cancellation at an average discount to net asset value of 8.3%. The Board s objective remains to use the share repurchase authority to assist in managing any imbalance between supply and demand for the Company s shares, thereby reducing the volatility of the discount. The Board will only repurchase shares at a discount to their prevailing net asset value, and will only issue new shares when the Company is trading at a premium to its net asset value, so as not to prejudice existing shareholders. 2 JPMorgan Russian Securities plc. Half Year Report & Accounts 2012

5 Board of Directors My predecessor, Pamela Idelson Smith, retired from the Board in April this year, completing the Company s phased programme of renewal to refresh the Board s membership. I, along with my fellow Directors, would like to thank Pamela for her extensive contribution to the Board and sound stewardship of the Company during her tenure and wish her well for the future. Outlook The Russian market remains among the cheapest in the global emerging market universe. Our Investment Managers will continue to focus on sectors benefiting from robust domestic demand and companies delivering consistently high returns based on strong free cash flow. Lysander Tennant Chairman 29th June 2012 JPMorgan Russian Securities plc. Half Year Report & Accounts

6 Investment Managers Report Market Commentary Over the six month reporting period, the MSCI Russian 10/40 Equity Indices Index rose 1.1%. This relatively minor market movement belied the extreme volatility of stock prices over the period. The market proved to be directionless as equities decoupled from the oil price and were influenced, in the main, by external factors including a very busy political and election driven agenda. Oleg I. Biryulyov Vitaly N. Kazakov Political risks were elevated over the period by the election season, as the parliamentary elections in December and irregularities in the vote counting practice triggered a number of street protests. In the end the presidential elections in March were less dramatic than expected, as the voting process was more open than in previous elections. Although the opposition still highlighted certain irregularities and questionable practices of Mr Putin s team, the result came as expected with Mr Putin becoming president in May The major issue for us as investors going forward will be the economic agenda of Russia s new rulers. The wishes of the investment community and public are to a certain extent in conflict, and the Government will have to manoeuvre between the two. Economic stability, which has been proposed as a major target by Mr Putin, is not achievable without an acceleration of economic growth. The latter will require a new wave of privatisation, deregulation and large-scale investment in infrastructure and education. The Russian economy needs to improve its competitiveness by reducing administrative barriers and increasing productivity. Until we see revisions to the federal budget, which should be announced in the third quarter of 2012, we will reserve our opinion on the extent of reforms under the new regime. There were limited flows for the Russian dedicated funds, so the market share redistribution towards ETFs has slowed. We continue to expect that ETFs will be a major threat to market efficiency via index replication and that this will create additional opportunities for active fund managers. Performance The Company s return on net assets was +5.3%, representing a 4.2 percentage point outperformance of the Company s benchmark index. The return to shareholders was +2.4%, reflecting a widening of the share price discount to net asset value per share from 5.9% at the end of October 2011 to 8.6% at the end of April The major contributor to the outperformance of the Company in the reporting period was the portfolio s relatively large underweight in energy and utilities; the sector was particularly weak due to negative news flow from a lack of privatisations, the weakening price of oil and tariff regulation. The best performing stock in the portfolio was Kalina Concern, which was the subject of a bid by Unilever. Dixy Group (a retailer) also contributed positively following its re-rating. 4 JPMorgan Russian Securities plc. Half Year Report & Accounts 2012

7 Neither of these stocks were represented in the benchmark. The portfolio s performance benefited further by holding an underweight position in Uralkali (a potash producer) which de-rated relative to the market over the period. The largest detractors from the Company s relative performance came from stocks in the portfolio not included in the benchmark, including Alliance Oil, Bank of St Petersburg and Pharmacy Chain Alliance Oil produced disappointing upstream production figures, there were ongoing concerns over Bank of St Petersburg s level of non-performing loans, and Pharmacy Chain 36.6 s operating performance was disappointing following a change in management structure. Portfolio Activity At the beginning of the period under review and as reported in our last communication with shareholders, we agreed with the Board of Directors that we would seek to improve control risk in the portfolio by limiting the amount by which sectors in the portfolio can deviate from the benchmark index and by introducing a maximum overweight stock position against the benchmark weighting. We have now completed this rebalancing exercise, which mainly affected positions in the consumer and energy sectors. Going forward, investors should expect a lower tracking error for the Company and lower volatility of returns against the benchmark index. There were no IPOs during the review period, but we did invest in several new companies that we have not held in the portfolio previously: Alliance Oil this company s main asset is an oil refinery located in Russia s Far East and it also benefits from some minor exposure to oil and gas exploration and development projects across Siberia/Timano Pechora regions. We believe that the valuation of this business today is attractive, as the market has ignored the potential coming from the upgrade and restructuring of the Far East oil refinery. This upgrade will improve its operational and financial efficiency several times over and, accordingly, we believe that the market will re-rate the company within the next months. Rostelecom this is a state controlled federal telecommunication company with close to a monopoly on fixed line operations across the country. This position acts as a small hedge against the potential upside risk of a substantially better outcome of the industry restructuring programme. It was initiated due to a valuation gap for the stock relative to the industry. Etalon Group this company is a residential property developer in St Petersburg and Moscow and the surrounding Moscow region. Although we did not participate in its IPO, as it was felt that the price offered then was too high, a subsequent price correction made the stock attractive. The company used its cash proceeds from the JPMorgan Russian Securities plc. Half Year Report & Accounts

8 Investment Managers Report continued IPO wisely and strengthened its position on the market. Based on the quality of its employees and projects, we view this company as one of the few interesting stories in the Russian real estate sector. O KEY this is a company operating in the food and general retail industry and specialises in the hypermarket format. As with Etalon Group, we did not invest at launch, however, following a price correction and the underlying business developments we changed our investment view. This is an addition to our holdings in the retail sector and partial rotation from an extended position in Magnit. We are still comfortable with our holding in Magnit as the business remains sound, but we are less excited about its stock price and valuation. IDGC Holding this is the state controlled federal high voltage electricity network. The company is a hedge position for us, which gives the portfolio exposure to any positive developments in this highly regulated sector. Additionally the company s valuation is attractive following last year s poor performance. We continue to look for ways to increase diversification across the portfolio and are very keen to see new companies and industries not represented today on the market. We hope that the supply of new companies will come from both the private and state sectors, the latter of which has an ambitious privatisation programme over the next five years. Outlook Political risks should reduce over the next months as some of the requested changes will be initiated or at least discussed in public. The Russian market will not be able to escape from the shadow of uncertainty in global financial markets, but its current valuation (MSCI Russian forward 12 months consensus estimate P/E ratio is currently 4.7x) and foreseeable dividend increases from companies, makes it attractive on a relative basis. We will continue to see risks which emanate from the commodity dominance on the Russian market in the long run, although in the short term, the same dominance will produce a vast amount of cash for the state and shareholders. Earnings revisions are likely to be more positive in the second half of 2012 in comparison to the last 12 months of ongoing negative revisions. The new policy of currency flexibility provided by the Central Bank of Russia will help smooth the adjustment of the Russian economy to the volatility of global energy prices. We believe that the long-term fundamental case for Russian equity market is still intact and provides ample opportunities for active fund managers to add value. Oleg I. Biryulyov Vitaly N. Kazakov Investment Managers 29th June JPMorgan Russian Securities plc. Half Year Report & Accounts 2012

9 List of Investments at 30th April 2012 Valuation Company Sector 000 % Lukoil ADR Energy 37, Sberbank Rossii 1 Financials 32, Mobile Telesystems 2 Telecommunication Services 18, Magnit Consumer Staples 15, Dixy Consumer Staples 15, Gazprom ADR Energy 15, Tatneft ADR Energy 15, Novatek GDR Energy 14, Mostotrest Industrials 12, MMC Norilsk Nickel ADR Materials 11, Sistema 3 Telecommunication Services 10, Novolipetsk Iron & Steel GDS Materials 10, O Key Consumer Staples 8, Cherkizovo GDR Consumer Staples 8, Alliance Oil Energy 7, CTC Media Consumer Discretionary 7, Uralkali GDR Materials 6, Eurasia Drilling GDR Energy 6, Sollers Consumer Discretionary 5, Oriflame Cosmetics SDR Consumer Staples 5, IDGC Utilities 4, Bank Saint Petersburg Financials 4, X5 Retail GDR Consumer Staples 4, World Trade Centre Moscow Consumer Discretionary 4, Veropharm Health Care 4, Etalon GDR Consumer Discretionary 4, Pharmacy Chain 36.6 Health Care 3, Magnitogorsk Iron & Steel Materials 3, Mechel 4 Materials 3, Rostelecom Telecommunication Services 3, Rosneft GDR Energy 3, ROS Agro GDR Consumer Staples 3, WGC 3 Utilities 2, Sitronics GDR Information Technology 1, Bank Saint Petersburg Financials 1, Lenenergo Utilities Hals-Development GDR Financials Total Portfolio excluding Liquidity Fund 319, JPM US Dollar Liquidity Fund Liquidity Fund 2, Total Portfolio 321, Includes GDR amounting to 2,307, Includes ADR amounting to 1,529, Includes GDR amounting to 7,737, Includes GDR amounting to 782,000. JPMorgan Russian Securities plc. Half Year Report & Accounts

10 Sector Analysis 30th April st October 2011 Active Active Portfolio Benchmark Position Portfolio Benchmark Position % 1 % % % 1 % % Energy (14.6) (27.4) Consumer Staples Financials (2.6) Materials (5.3) (10.2) Telecommunication Services Consumer Discretionary Industrials Health Care Utilities (7.7) (7.6) Information Technology Liquidity Fund Net Current assets/(liabilities) (0.3) (0.3) Total Based on total assets less current liabilities of 325.2m (2011: 311.1m). 8 JPMorgan Russian Securities plc. Half Year Report & Accounts 2012

11 Income Statement for the six months ended 30th April 2012 (Unaudited) (Unaudited) (Audited) Six months ended Six months ended Year ended 30th April th April st October 2011 Revenue Capital Total Revenue Capital Total Revenue Capital Total Gains/(losses) on investments held at fair value through profit or loss 17,933 17,933 29,267 29,267 (63,520) (63,520) Net foreign currency losses (495) (495) (227) (227) (327) (327) Income from investments 1,428 1,428 2,565 2,565 7,548 7,548 Other interest receivable and similar income Gross return/(loss) 1,435 17,438 18,873 2,566 29,040 31,606 7,550 (63,847) (56,297) Management fee (1,919) (1,919) (3,035) (3,035) (5,760) (5,760) Other administrative expenses (387) (387) (559) (559) (1,170) (1,170) Net (loss)/return on ordinary activities before finance costs and taxation (871) 17,438 16,567 (1,028) 29,040 28, (63,847) (63,227) Finance costs (4) (4) (1) (1) Net (loss)/return on ordinary activities before taxation (875) 17,438 16,563 (1,028) 29,040 28, (63,847) (63,228) Taxation (185) (185) (284) (284) (969) (969) Net (loss)/return on ordinary activities after taxation (1,060) 17,438 16,378 (1,312) 29,040 27,728 (350) (63,847) (64,197) (Loss)/return per share (note 3) (1.93)p 31.77p 29.84p (2.37)p 52.53p 50.16p (0.63)p (115.53)p (116.16)p 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 Russian Securities plc. Half Year Report & Accounts

12 Reconciliation of Movements in Shareholders Funds Called up Capital Six months ended share Other redemption Capital Revenue 30th April 2012 capital reserve reserve reserves reserve Total (Unaudited) At 31st October , ,924 (4,900) 311,107 Shares bought back and cancelled (4) (2,275) 4 (2,275) Net return/(loss) on ordinary activities 17,438 (1,060) 16,378 At 30th April , ,362 (5,960) 325,210 Called up Capital Six months ended share Other redemption Capital Revenue 30th April 2011 capital reserve reserve reserves reserve Total (Unaudited) At 31st October , ,771 (4,550) 376,103 Net return/(loss) on ordinary activities 29,040 (1,312) 27,728 At 30th April , ,811 (5,862) 403,831 Called up Capital Year ended share Other redemption Capital Revenue 31st October 2011 capital reserve reserve reserves reserve Total (Audited) At 31st October , ,771 (4,550) 376,103 Repurchase of the Company s own shares for cancellation (2) (799) 2 (799) Net loss on ordinary activities (63,847) (350) (64,197) At 31st October , ,924 (4,900) 311, JPMorgan Russian Securities plc. Half Year Report & Accounts 2012

13 Balance Sheet at 30th April 2012 (Unaudited) (Unaudited) (Audited) 30th April th April st October Fixed assets Equity investments held at fair value through profit or loss 319, , ,496 Investment in liquidity fund held at fair value through profit or loss 2,094 3,342 7,666 Total investment portfolio 321, , ,162 Current assets Financial assets: Derivative financial instruments 1 Debtors 1,865 1, Cash and short term deposits 2, ,066 2, Creditors: amounts falling due within one year (102) (132) (1,476) Net current assets/(liabilities) 3,964 2,509 (1,055) Total assets less current liabilities 325, , ,107 Net assets 325, , ,107 Capital and reserves Called up share capital Other reserve 46,207 49,281 48,482 Capital redemption reserve Capital reserves 284, , ,924 Revenue reserve (5,960) (5,862) (4,900) Shareholders funds 325, , ,107 Net asset value per share (note 4) 594.6p 730.5p 564.4p JPMorgan Russian Securities plc. Half Year Report & Accounts

14 Cash Flow Statement for the six months ended 30th April 2012 (Unaudited) (Unaudited) (Audited) Six months ended Six months ended Year ended 30th April th April st October Net cash (outflow)/inflow from operating activities (note 5) (1,785) (1,111) 1,453 Net cash outflow from returns on investments and servicing of finance (4) (1) Net cash inflow/(outflow) from capital expenditure and financial investment 6,658 (806) (3,222) Net cash outflow from financing (2,275) (799) Increase/(decrease) in cash for the period 2,594 (1,917) (2,569) Reconciliation of net cash flow to movement in net funds Net cash movement 2,594 (1,917) (2,569) Exchange movements (495) (228) (327) Movement in net funds/debt in the period 2,099 (2,145) (2,896) Net funds at the beginning of the period 102 2,998 2,998 Net funds at the end of the period 2, Represented by: Cash and short term deposits 2, Net funds at the end of the period 2, JPMorgan Russian Securities plc. Half Year Report & Accounts 2012

15 Notes to the Accounts for the six months ended 30th April 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 31st October 2011 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 31st October (Loss)/return per share (Unaudited) (Unaudited) (Audited) Six months ended Six months ended Year ended 30th April th April st October (Loss)/return per share is based on the following: Revenue loss (1,060) (1,312) (350) Capital return 17,438 29,040 (63,847) Total return 16,378 27,728 (64,197) Weighted average number of shares in issue 54,893,191 55,284,312 55,263,230 Revenue loss per share (1.93)p (2.37)p (0.63)p Capital return per share 31.77p 52.53p (115.53)p Total return per share 29.84p 50.16p (116.16)p 4. Net asset value per share Net asset value per share is based on the net assets attributable to shareholders 325,210,000 (30th April 2011: 403,831,000 and 31st October 2011: 311,107,000) and on the 54,692,312 (30th April 2011: 55,284,312 and 31st October 2011: 55,124,312) shares in issue at the period end. JPMorgan Russian Securities plc. Half Year Report & Accounts

16 Notes to the Accounts continued 5. Reconciliation of total return/(loss) 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 30th April th April st October Total return/(loss) on ordinary activities before finance costs and taxation 16,567 28,012 (63,227) Add back capital return before finance costs and taxation (17,438) (29,040) 63,847 Net movements in debtors, accrued income and accrued expenses (729) 201 1,802 Overseas withholding tax (185) (284) (969) Net cash outflow from operating activities (1,785) (1,111) 1, JPMorgan Russian Securities plc. Half Year Report & Accounts 2012

17 Interim Management Report The Company is now required to make the following disclosures in its half year report. Principal Risks and Uncertainties The principal risks and uncertainties faced by the Company remain unchanged and fall into the following broad categories: investment and strategy; 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 31st October Related Parties Transactions 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. 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 Lysander Tennant Chairman 29th June 2012 JPMorgan Russian Securities plc. Half Year Report & Accounts

18 Glossary of Terms and Definitions Return to shareholders Total return to the shareholder, on a mid-market price to mid-market price basis. Return on Net Assets Total return on net asset value per share, on a bid value to bid value basis. Benchmark Return Total return on the benchmark, on a mid-market value to mid-market value basis, assuming that all dividends received were reinvested, without transaction costs, in the shares of the underlying companies at the time the shares were quoted ex-dividend. 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 is not to follow or track this index and consequently, there may be some divergence between the Company s performance and that of the benchmark. Share price Discount/Premium to net asset value ( NAV ) per Share If the share price of an investment trust is lower than the net asset value ( 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 or sector compared with that stock or sector s weighting in the Company s benchmark index. A positive number indicates an active decision by the Manager to own more of (i.e. be overweight) a particular stock or sector versus the benchmark and a negative number indicates a decision to hold less of (i.e. be underweight) a particular stock or sector versus the benchmark. 16 JPMorgan Russian Securities plc. Half Year Report & Accounts 2012

19 Information about the Company Financial Calendar Financial year end Final results announced Half year end Half year results announced Interim Management Statements announced Dividend (if any) Annual General Meeting 31st October January 30th April June February/August March February/March History The Company was launched in December 2002 by a placing and offer for subscription. It is the successor Company to The Fleming Russia Securities Fund Limited, a closed-ended investment company incorporated in Jersey and listed on the Irish Stock Exchange. The Company adopted its present name on 1st March Directors Lysander Tennant (Chairman) Robert Jeens (Audit Committee Chairman) Alexander Easton George Nianias Gill Nott Company Numbers Company registration number: London Stock Exchange Sedol number: ISIN: GB Bloomberg ticker: JRS LN Market Information The Company s shares are listed on the London Stock Exchange. The market price is shown daily in the Financial Times, The Times, The Daily Telegraph, The Scotsman, The Independent and on the JPMorgan website at where the share price is 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 A member of the AIC Manager and Secretary JPMorgan Asset Management (UK) Limited Company s Registered Office Finsbury Dials 20 Finsbury Street London EC2Y 9AQ Telephone number: Custodian JPMorgan Chase Bank, N.A. 125 London Wall London EC2Y 5AJ For company secretarial and administrative matters, please contact Alison Vincent. Registrars Equiniti Limited Reference 2610 The Causeway Worthing, West Sussex BN99 6DA Telephone number: 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 all enquiries regarding certificates should be sent to the Registrar quoting reference Registered shareholders can obtain further details on individual holdings on the internet by visiting Independent Auditor Ernst & Young LLP Statutory Auditor 1 More London Place London SE1 2AF 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. JPMorgan Russian Securities plc. Half Year Report & Accounts

20 J.P. Morgan Helpline Freephone or +44 (0) Your telephone call may be recorded for your security