RNS Number : 2001J
JPMorgan Eur Fldglng Inv Trust PLC
28 November 2008
STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN EUROPEAN FLEDGELING INVESTMENT TRUST PLC
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED
30TH SEPTEMBER 2008
Chairman's Statement
Performance
Against a background of acute economic uncertainty, global equity markets were extremely volatile in the first six months of the
Company's financial year and the environment has not improved post the period end.
For the six months to 30th September 2008, the Company produced a return on net assets of -20.8%. This compares with the return of
-23.7% from the benchmark index, the HSBC Smaller European ompanies (ex UK) Index. Whilst it is disappointing to report such a fall in net
asset value, it is a small comfort that the Investment Managers have again outperformed the benchmark index over the first half of the
financial year. The return to shareholders over the period was -25.5% as the discount on the Company's shares widened in these difficult
markets from 15.8% as at 31st March 2008 to 20.7% as at 30th September 2008, its highest level in several years.
Revenue and Dividend
Revenue return after tax for the six months to 30th September 2008 was �4,439 million, significantly higher than the revenue generated
in the corresponding period in 2007 (�450,000). This primarily reflected the higher dividend levels on the more defensive stocks held during
this period together with the income on the increased level of cash and liquid assets being held. As at 30th September 2008, approximately
18% of the Company's assets were held in cash.
The Company has a deficit on the revenue reserve, �3.341 million at the end of the period, reflecting the Company's objective to achieve
long term capital growth, rather than producing revenue. Accordingly, as in previous periods, no dividend will be payable.
Share Capital
In the six months to 30th September 2008 the Company has continued to use the authority given by shareholders to buy and sell its shares
through Treasury. During the period 727,000 shares were repurchased into Treasury at a total cost of �4.9million. A total of 57,000 shares
were repurchased and cancelled over the period at a cost of �399,000. Since the end of September, the Company has repurchased a further
407,000 shares into Treasury at a total cost of �1.9million.
VAT
We have reached agreement in principle with our Managers JPMAM (who have been negotiating recovery from HMRC) on the basis of recovery
of past VAT and are in the process of documenting this. Our total recovery is expected to be of the order of �2.8 million plus interest.
Outlook
We expect that the exceptionally volatile market conditions of the past year will continue. We therefore anticipate that in the short
term our Investment Managers will maintain their cautious stance and not employ gearing. Whilst it is very difficult to put a timeframe on a
return to more stable market conditions, we are mindful that the negative economic outlook will become fully reflected in market pricing and
that this point may not be far off.
Elisabeth Airey
Chairman
27 November 2008
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 five 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 March 2008.
Related Parties Transactions
During the first six months of the current financial year, no transactions with related parties have taken place which have materially
affected the financial position or the performance of the Company during the period.
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.
Elisabeth Airey
Chairman
27 November 2008
Investment Managers' Report
Review
While the banking crisis continued in the new financial year, following the successful takeover of Bear Stearns by JPMorgan, there were
tentative signs that the markets had started to believe in the "too big to fail" mantra, where, in the worst case scenario bank equity
holders would lose their equity but bond investors and the system at large would be protected. However, the protracted difficulties in the
credit markets had an increasingly negative impact on the economy. From the middle of July, the themes which had dominated the last few
years, of strong emerging economies buying infrastructure equipment, capital goods and services from the western economies, went into sharp
reversal. There was a flight to safety which resulted in strengthening of the usual safe havens such as the US dollar, Swiss Franc and gold,
while prices of other commodities fell sharply, easing the central banks' mounting inflationary concerns.
With Lehman Brothers failing in September, confidence in the banking system evaporated. The inter-bank market, along with bank bond
issuance which had increasingly been suffering, came to a virtual standstill and depositors began withdrawing their cash from banks
perceived to be inadequately financed. 1929 analogies looked frighteningly realistic. Fear of systemic failure was not stemmed until after
the period ended, when the G7 countries agreed on a global banking bail out plan which essentially amounted to nationalisation of many banks
and the guarantee of virtually all deposits. The negative economic impact resulting from the consumer confidence collapse at the end of the
period is something we shall probably live with for some time.
With a flight to safety, in the first six months of the financial year, the blue-chip MSCI Europe (ex UK) Index fell by 15.9 per cent,
continuing to outperform the HSBC Smaller European Companies (ex UK) Index which fell by 23.7 per cent. The portfolio net asset value
outperformed the small cap index, with a fall of 20.8 per cent.
The sharp change in the global macroeconomic environment from strong growth to sharp deceleration meant that sectors such as
construction and capital goods producers, i.e. "value" stocks, performed very badly whilst companies less dependent on the general economic
environment, "growth" stocks, performed better.
Portfolio
The key active sector exposures within the Company's portfolio were stable over the six months, with software and IT services and
support services remaining the largest overweight positions. At the time of writing, we still feel comfortable with our IT weighting as
companies in the sector continue to display good operational momentum, while we are disposing of more economically sensitive companies in
support services.
In the period we cut the industrial and oil and gas weightings as forward macro economic indicators, such as the price of commodities
and freight rates, increasingly pointed to sharp global deceleration. Likewise, prices of agricultural soft commodities fell, resulting in
the sale of Vilmorin, the European leader in seeds. During the six months we increased our exposure to defensive stocks in the
pharmaceutical sector.
Best performing stocks in the period were French smart card producer Gemalto, Italian rail equipment producer Ansaldo STS and Grifols, a
Spanish producer of plasma derivatives. Worst performing stocks included Spanish pharmaceutical producer Laboratorios Almirall, on failure
of a phase three drug trial, Dutch oil service company SBM Offshore on cost over-runs, and German capital goods manufacturer GEA as markets
feared a slowdown. Net cash at the end of the quarter was 17% of the portfolio.
Jim Campbell
Fancesco Conte
Investment Managers
27 November 2008
For further information, please contact:
Jonathan Latter
For and on behalf of
JPMorgan Asset Management (UK) Limited, Secretary
020 7742 6000
Please note that up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can
be found at www.jpmeuropeanfledgeling.co.uk.
JPMorgan European Fledgeling Investment Trust plc
Unaudited figures for the six months ended 30th September 2008
Income Statement
(Unaudited)Six months ended30th September 2008 (Unaudited)Six months ended30th September 2007
(Audited)Year ended31st March 2008
Revenue Capital Total Revenue Capital Total Revenue
Capital Total
�*000 �*000 �*000 �*000 �*000 �*000 �*000
�*000 �*000
Losses frominvestments held at
fair value through profit or
loss
* (86,266) (86,266) * (4,680) (4,680) *
(39,175) (39,175)
Net foreign * (377) (377) * 376 376 *
2,107 2,107
currency(losses)/gains
Income from investments 7,511 * 7,511 4,326 * 4,326 5,890
* 5,890
Other interest receivable and 256 * 256 118 * 118 259
* 259
similar income
Gross revenue and capital 7,767 (86,643) (78,876) 4,444 (4,304) 140 6,149
(37,068) (30,919)
losses
Management fee (2,104) * (2,104) (2,795) * (2,795) (4,992)
* (4,992)
Other administrative expenses
(297) * (297) (327) * (327) (617)
* (617)
Net return/(loss) before
finance costs and taxation
5,366 (86,643) (81,277) 1,322 (4,304) (2,982) 540
(37,068) (36,528)
Finance costs (25) * (25) (374) * (374) (394)
* (394)
Net return/(loss) before 5,341 (86,643) (81,302) 948 (4,304) (3,356) 146
(37,068) (36,922)
taxation
Taxation (902) * (902) (498) * (498) (522)
* (522)
Net return/(loss) after 4,439 (86,643) (82,204) 450 (4,304) (3,854) (376)
(37,068) (37,444)
taxation
Return/(loss) per share (note
3)
9.20p (179.55)p (170.35)p 0.88p (8.42)p (7.54)p (0.75)p
(73.57)p (74.32)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 European Fledgeling Investment Trust plc
Unaudited figures for the six months ended 30th September 2008
Reconciliation of Movement in Shareholders' Funds
Six months ended 30th September 2008 (unaudited)
Called up Capital
share Share redemption Other Capital Revenue
capital premium reserve reserve reserve reserve Total
�*000 �*000 �*000 �*000 �*000 �*000 �*000
At 31st March 2008 12,837 1,312 2,799 415 384,374 (7,780) 393,957
Repurchase and cancellation of (14) * 14 * (399) * (399)
shares
Repurchase of shares into * * * (4,931) * * (4,931)
Treasury
Net (loss)/return from * * * * (86,643) 4,439 (82,204)
ordinary activities
At 30th September 2008 12,823 1,312 2,813 (4,516) 297,332 (3,341) 306,423
Six months ended 30thSeptember 2007 (unaudited)
Called up Capital
share Share redemption Other Capital Revenue
capital premium reserve reserve reserve reserve Total
�*000 �*000 �*000 �*000 �*000 �*000 �*000
At 31st March 2007 13,195 1,312 2,441 19,258 421,442 (7,404) 450,244
Repurchase of shares in * * * (3,937) * * (3,937)
Treasury
Net (loss)/ return from * * * * (4,304) 450 (3,854)
ordinary activities
At 30th September 2007 13,195 1,312 2,441 15,321 417,138 (6,954) 442,453
Year ended 31stMarch 2008 (audited)
Called up Capital
share Share redemption Other Capital Revenue
capital premium reserve reserve reserve reserve Total
�*000 �*000 �*000 �*000 �*000 �*000 �*000
At 31st March 2007 13,195 1,312 2,441 19,258 421,442 (7,404) 450,244
Repurchase of shares in * * * (18,843) * * (18,843)
Treasury
Cancellation of shares held in (358) * 358 * * * *
Treasury
Net loss from ordinary * * * * (37,068) (376) (37,444)
activities
At 31st March 2008 12,837 1,312 2,799 415 384,374 (7,780) 393,957
JPMorgan European Fledgeling Investment Trust plc
Unaudited figures for the six months ended 30th September 2008
Balance Sheet
(Unaudited) (Unaudited) (Audited)
30th September 2008 30th September 2007 31st March 2008
�*000 �*000 �*000
Fixed assets
Investments at fair value through
profit or loss
280,640 465,948 397,331
Current assets
Debtors 8,434 1,938 6,582
Cash and short term deposits 22,329 192 2,456
Derivative financial instrument * * 2
30,763 2,130 9,040
Creditors: amounts falling due within
one year
(4,974) (25,625) (12,414)
Derivative financial instrument (6) * *
Net current assets/(liabilities) 25,783 (23,495) (3,374)
Total assets less current liabilities 306,423 442,453 393,957
Total net assets 306,423 442,453 393,957
Capital and reserves
Called up share capital 12,823 13,195 12,837
Share premium 1,312 1,312 1,312
Capital redemption reserve 2,813 2,441 2,799
Other reserve (4,516) 15,321 415
Capital reserve 297,332 417,138 384,374
Revenue reserve (3,341) (6,954) (7,780)
Shareholders* funds 306,423 442,453 393,957
Net asset value per share (note 4): 638.6p 870.0p 807.8p
JPMorgan European Fledgeling Investment Trust plc
Unaudited figures for the six months ended 30th September 2008
Cash Flow Statement
(Unaudited)Six (Unaudited)Six (Audited)Year
months ended30th months ended30th ended31st March
September 2008�*000 September 2007�*000 2008�*000
Net cash inflow /(outflow) 4,453 186 (1,083)
from operating activities
Net cash outflow from returns
on investments and servicing
of finance
(25) (355) (395)
Tax recovered 31 130 216
Net cash inflow/(outflow) from
capitalexpenditure and
financial investment
21,113 (5,071) 18,952
Net cash (outflow)/inflow from (5,330) 4,435 (17,544)
financing
Increase/(decrease) in cash 20,242 (675) 146
for the period
Reconciliation of net cash
flow to movement in net
funds/debtNet cash movement
20,242 (675) 146
Net loans drawn down in the * (5,396) (99)
period
Exchange movements (369) 374 2,104
Movement in net funds/debt in 19,873 (5,697) 2,151
the period
Net funds at the beginning of 2,456 305 305
the period
Net funds/(debt) at the end of 22,329 (5,392) 2,456
the period
Represented by:
Cash at bank and in hand 22,329 192 2,456
Debt falling due within one * (5,584) *
year
Net funds/(debt) at the end of 22,329 (5,392) 2,456
the period
Notes to the Accounts
1. Financial Statements
The information contained within the financial statements in this preliminary announcement has not been audited or reviewed by the Company*s
auditors.
The figures and financial information for the year ended 31st March 2008 are extracted from the latest published accounts of the Company and
do not constitute statutory accounts (as defined in section 434 (3) of the Companies Act 2006) 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 237(2) or 237(3) of the Companies Act 1985 (as amended).
2. 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* dated 31st December 2005.
All of the Company*s operations are of a continuing nature.
The accounting policies applied to these half year accounts are consistent with those applied in the accounts for the year ended
31st March 2008.
3. Return/(loss) per share
(Unaudited)30th (Unaudited)Six (Audited)Year
September 2008�*000 months ended30th ended31st March
September 2007�*000 2008�*000
Return/(loss) per share is
based on the following:
Revenue return/(loss) 4,439 450 (376)
Capital loss (86,643) (4,304) (37,068)
Total loss (82,204) (3,854) (37,444)
Weighted average number of 48,256,977 51,132,996 50,380,312
shares in issue
Revenue return /(loss) per 9.20p 0.88p (0.75)p
share
Capital loss per share (179.55)p (8.42)p (73.57)p
Total loss per share (170.35)p (7.54)p (74.32)p
4. Net asset value per share
The net asset value per share is calculated by dividing shareholders' funds by the number of shares in issue at 30th September 2008 of
51,293,198 (30th September 2007: 50,855,698 and 31st March 2008: 48,770,323) excluding shares held in Treasury.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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