TIDMJII
RNS Number : 5607W
JPMorgan Indian Invest Trust PLC
13 December 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN INDIAN INVESTMENT TRUST PLC
(the 'Company')
FINAL RESULTS FOR THE YEARED 30TH SEPTEMBER 2023
Legal Entity Identifier : 549300OHW8R1C2WBYK02
Information disclosed in accordance with the DTR 4.1.3
CHAIRMAN'S STATEMENT
Performance
This will be my last Chairman's Statement before I step down
after the Annual General Meeting (AGM) in February next year. It
has been a privilege to be a Director of the Company since 2013 and
Chairman for the last three years and I am pleased to present the
Company's annual results for the year ended 30th September
2023.
I would like to begin this statement by thanking shareholders
for their patience, in what has been an uncertain and volatile time
for investors. An unusually large number of adverse influences
conspired to undermine global financial market sentiment and
generate volatility over the review period. Inflation remained
stubbornly high in large parts of the world and geo-political
tensions intensified. However, the Benchmark still managed to
realise a small gain of 0.7% (in GBP terms) over the year.
It is pleasing to be able to report that the Company's Portfolio
Managers successfully navigated the volatility generated by these
disparate forces to outperform the index over the year. The
Company's total return on net assets was 1.2% (in GBP terms), while
the share price return of 2.2% reflected a small narrowing of the
share price discount to net asset value from 20.1% at the end of
the previous financial year to 19.3% as at 30th September 2023.
Given the long-term focus of the Company's investment approach,
it is important for shareholders to also consider performance over
a longer timeframe. And on this basis, absolute returns have been
strong. The Company has made an average annualised return of 11.3%
on an NAV basis and 10.7% in share price terms over the ten years
to end September 2023. This compares with a Benchmark return of
12.9%.
The Portfolio Managers' report below provides a clear review of
the market environment, the Company's performance, portfolio
adjustments and the outlook for the year ahead. The Portfolio
Managers also outline the reasons for their optimism about India's
very favorable long-term prospects, and the positive implications
this has for the Company's portfolio.
Discount and Share Repurchases
At the AGM held in February 2023, shareholders gave approval for
the Company to renew the Directors' authority to repurchase up to
14.99% of the Company's shares for cancellation or into Treasury on
an ongoing basis.
Whilst the Board would like to see the Company's shares trading
at narrower discount levels, it recognises that in general, the
investment trust sector as a whole, and single country funds in
particular have been impacted by recent markets during which
discounts have significantly widened and have also been more
volatile. The discount at which the Company's shares trade versus
its NAV narrowed slightly to 19.3% over the review period (2022:
20.1%). The Board constantly weighs the merits of buying back
shares, in line with the Company's share buyback policy, to manage
the absolute level and volatility of the discount. Pursuant to this
policy, the Company repurchased 2,767,119 shares during the
reporting period at a cost of GBP22,609,000 and since the financial
year end, a further 694,512 shares have been bought back at a cost
of GBP5,990,000 and an average discount of 18.8%. As shares are
only re-purchased at a discount to the prevailing net asset value,
share buybacks benefit shareholders as they increase the net asset
value per share of remaining shares.
The Board believes that the share buyback facility is an
important tool in the management of discount volatility and is,
therefore, seeking approval from shareholders to renew the
authority to repurchase the Company's shares at the forthcoming AGM
in February 2024. The Board is optimistic that the discount will
narrow once the economic outlook and market sentiment improve.
Gearing
The Board regularly discusses gearing with the Portfolio
Managers. The Company's two-year, GBP30 million loan facility
matured in August 2022, but as it was not being utilised, the Board
did not deem it appropriate to renew or replace the facility.
Therefore, the Company currently does not have a debt facility in
place, although the Board will seek to arrange a facility as and
when it considers it appropriate to do so. As at 30th September
2023, the Company's portfolio held 0.6% net cash, i.e.it was 99.4%
invested.
Board and Corporate Governance
The Board reviews its composition on a regular basis, taking
into account the need to refresh its membership and maintain
diversity, whilst also ensuring the necessary degree of continuity
of Board experience. As previously announced, I will be stepping
down as Chairman of the Company at the conclusion of the AGM in
February 2024. I will be succeeded by Jeremy Whitley, the current
Senior Independent Director. Vanessa Donegan will take over the
role of Senior Independent Director from Jeremy Whitley at the
conclusion of the 2024 AGM. The Board has asked Jasper Judd, the
Chairman of the Audit and Risk Committee, who will have been on the
Board for nine years by the 2024 AGM, to stay on till the
conclusion of the 2025 AGM to ensure a smooth transition. With this
in mind, as part of its succession planning, the Board, led by the
Nomination Committee, has already commenced a formal recruitment
search for a new Non-executive Director who would be able to take
on the chairmanship of the Audit and Risk Committee after an
appropriate handover period.
The Board recognises the value and importance of diversity in
the boardroom. The Board is pleased to report that it fulfils the
recommendations of the Parker Review by having at least one
Director from a minority ethnic background. It also meets the
recommendations of the FTSE Women Leaders Review, which build on
the work of the former Hampton-Alexander and Davies Reviews, in
respect of female board representation. The Board, through the
Nomination Committee, has a succession plan that aims to continue
meeting these recommendations as the Board undergoes future
refreshment.
The Board supports the annual re-election for all Directors, as
recommended by the AIC Code of Corporate Governance, and therefore
all of the Directors, except for me, will stand for re-election at
the forthcoming AGM.
Shareholders who wish to contact the Chairman or other members
of the Board may do so through the Company Secretary or the
Company's website, details of which appear below.
Continuation Vote and Conditional Tender Offer
The Company's Articles require that at the AGM to be held in
2024, and at every fifth year thereafter, the Directors propose a
resolution that the Company continues as an investment trust for a
further five-year period. If the resolution is not passed, the
Company's articles of association require that the Directors shall,
within four months of the AGM, convene a General Meeting of the
Company at which a special resolution will be proposed, designed to
result in the holders of shares in the Company receiving, in lieu
of their shares, units in a unit trust scheme (or equivalent), or
in the reorganisation of the Company's share capital in some other
manner, or which shall be a resolution requiring the Company to be
wound up voluntarily.
The Board believes that the long-term outlook for India remains
positive and that JPMAM has the resources and investment process to
deliver returns for shareholders consistent with the Company's
investment objectives. Accordingly, the Board believes that the
continuation of the Company is in the best interests of all
shareholders and strongly recommends that shareholders vote in
favour of the resolution, as they intend to do in respect of their
own holdings.
As announced on 26th January 2021, a tender offer will be made
to shareholders for up to 25% of the Company's outstanding share
capital, at NAV less costs if, over the five years from 1st October
2020, the Company's NAV total return in sterling on a cum income
basis does not exceed the total return of the benchmark index plus
0.5% per annum over the five-year period on a cumulative basis. If
the tender offer is triggered, it will be subject to shareholder
approval at the relevant time.
The Company's Benchmark does not take any account of actual or
potential tax on gains. In contrast, the Company is required to pay
capital gains tax on long-term and short-term capital gains at the
headline current rates of 10% and 15%, respectively, plus
associated surcharges of approximately 1-1.5%. For the avoidance of
doubt, in order to ensure that the terms of the conditional tender
offer correctly reflects the Investment Manager's performance in
calculating whether the tender offer has been triggered, the NAV
per share will be adjusted to add back all Indian capital gains tax
paid or accrued, plus any surcharge and cess in respect of realised
and unrealised gains made on investments. The NAV performance since
1 October 2020 without the impact of capital gains tax stood at
59.6% as at 30th November 2023, compared to 60.5% for the
Benchmark.
Any tender offer will also be conditional on shareholders
approving the Company's continuation vote in 2024. Accordingly, the
Board believes that the continuation of the Company is in the best
interests of all shareholders and strongly recommends that
shareholders vote in favour of the resolution at the AGM on 13th
February 2024, as the Directors intend to do in respect of their
own holdings.
Mauritius Subsidiary and Taxation
As reported during the last financial period, following the
amendment to the India-Mauritius treaty, the Company had
transferred its holdings from its Mauritius subsidiary to the
parent company. A cash balance was maintained in the Mauritian
subsidiary to fund its dissolution expenses. The Company's
Mauritian subsidiary was placed into liquidation on 31st August
2022, with IQEQ (Mauritius) engaged as the liquidator. For this
reason, there are no longer any supplemental information or
reconciliations to the statutory financial statements to include in
the notes to the Financial Statements.
Environmental, Social and Governance Considerations
Whilst the Portfolio Managers select stocks based primarily on
company fundamentals, they also consider the potential impact of
financially material ESG factors on a company's ability to deliver
shareholder value.
Throughout the investment process, a company's strategy is
assessed according to its ability to deal with these important
factors and the consequent risks they may generate. The analysis
helps determine whether relevant ESG factors are financially
material and, if so, whether they are reflected in the valuation of
the company. Such analysis may influence not only the Portfolio
Managers' decision to own a stock, but also, if they do, the size
of that position within the portfolio. Further information on the
Manager's ESG process and engagement is set out in the ESG section
on pages 18 to 23 of the Annual Report and Financial
Statements.
Task Force on Climate-related Financial Disclosures
As a regulatory requirement for the Company's Manager, on 30th
June 2023, JPMAM published its first UK Task Force on
Climate-related Financial Disclosures ('TCFD') Report for the
Company in respect of the year ended 31st December 2022. The report
discloses estimates of the Company's portfolio climate-related
risks and opportunities according to the Financial Conduct
Authority ('FCA') Environmental, ESG Sourcebook and the TCFD. The
report is available on the Company's website under the ESG
documents section: UK TCFD Product Report and ESG Fund Report .
This is the first report under the new guidelines and disclosure
requirements. The Board is aware that best practice reporting under
TCFDs is still evolving in regard to metrics and input data
quality, as well as the interpretation and implications of the
outputs produced, and will continue to monitor developments as they
occur.
Stay Informed
The Company delivers email updates on the Company's progress
with regular news and views, as well
as the latest performance. If you have not already signed up to
receive these communications and you
wish to do so you can opt in via https://tinyurl.com/d95jkrzx or
by scanning the QR code on this page of the Chairman's Statement in
the Annual Report and Financial Statements.
Annual General Meeting
The Company's thirtieth AGM will be held at 60 Victoria
Embankment, London EC4Y 0JP on 13th February 2024 at 2.00 p.m.
We are delighted to invite shareholders to join us in person for
the Company's AGM, to hear directly from the Portfolio Managers.
Their presentation will be followed by a question-and-answer
session. Shareholders wishing to follow the AGM proceedings but
choosing not to attend in person will be able to view proceedings
live and ask questions (but not vote) through conferencing
software. Details on how to register, together with access details,
will be available shortly on the Company's website at
www.jpmindian.co.uk or by contacting the Company Secretary at
invtrusts.cosec@jpmorgan.com
My fellow Board members, representatives of JPMorgan and I look
forward to the opportunity to meet and speak with shareholders
after the formalities of the meeting have been concluded.
As is best practice, all voting on the resolutions will be
conducted on a poll. Your Board encourages all shareholders to
support the resolutions proposed. Please note that shareholders
viewing the meeting via conferencing software will not be able to
vote on the poll and we therefore encourage all shareholders, and
particularly those who cannot attend physically, to exercise their
votes in advance of the meeting by completing and submitting their
proxy. Proxy votes can be lodged in advance of the AGM either by
post or electronically: detailed instructions are included in the
Notes to the Notice of Annual General Meeting on pages 100 to 102
of the Annual Report and Financial Statements .
If there are any changes to the above AGM arrangements, the
Company will update shareholders through an announcement to the
London Stock Exchange, and on the Company's website.
Outlook
Despite the numerous concerns - inflation, high interest rates,
slowing growth and geopolitical uncertainties - currently pervading
global financial markets, the Board shares the Portfolio Managers'
conviction that the long-term prospects for the Indian market
continue to improve, supported by the country's demographics,
increased capital expenditure, government reforms and the huge
potential for structural change and technological advancement.
Given this, and the Portfolio Managers' focus on good quality
companies capable of benefiting most from India's promising future
and thus outperforming over the long run, the Board is optimistic
about the Company's prospects, and we share the Portfolio Managers'
confidence in their ability to continue delivering attractive
levels of capital growth to shareholders over the long-term.
I would like to conclude by thanking my fellow Directors and the
team at JPMorgan for their support and contribution during my time
on the Board, and I would also like to extend my thanks to our
shareholders for their ongoing support. I wish the Company well for
the future.
Rosemary Morgan
Chairman
12 December 2023
PORTFOLIO MANAGER'S REPORT
The year in review
During the 12 months to end September 2023, the MSCI India Index
produced a small positive return of 0.7%. It was a year of two
halves, the first half weak and the second half catching up
strongly. As we wrote in the Interim Report, in our opinion, two
factors contributed to weakness in the Indian market during the
first half. One was China's sudden decision to abandon its zero
covid policy, which presented investors with another investment
destination for capital. The other factor was a short seller report
on the Adani Group companies, which triggered concerns regarding
the overall Indian market. In contrast, the second half of the year
saw a strong rebound, driven by a buoyant domestic economy led by
capital formation on the back of government investment in
infrastructure and a revival in capex (discussed further in this
review). To a lesser extent, the markets were helped by investor
disappointment when China's economic recovery lost momentum.
Against this backdrop, over the year your Company made a
positive outright return of 1.2% on a net asset value basis, which
also includes the adverse impact of capital gains tax, detracting
1.4 percentage points from performance. The share price return over
the period was 2.2%, reflecting some narrowing of the discount to
NAV.
In this report we review the main drivers of recent performance,
portfolio positioning and consider the long-term outlook for Indian
equities.
Performance review
Stock selection in Utilities and Financials were the main driver
of the positive relative return during the year. Having no exposure
to the Adani Group companies was the key contributor in the
Utilities sector. Our position in Power Grid Corporation also
helped enhance returns, thanks to the government's focus on power
related infrastructure spending. Within financials, our position in
Shriram Finance, which mainly provides loans for used commercial
vehicles, was also a positive contributor. The overhang on the
stock price came off following the exit by a private equity
investor and the company also delivered strong asset growth and
credit performance given cyclical recovery in the vehicle financing
segment. In addition, our holding in MCX, the leading commodities
exchange in India, performed well, as the company completed the
transition to a new tech platform, and average values traded on its
exchanges continued to grow.
Detractors during the review period came mainly from the
Industrial, Discretionary and Energy sectors. Not owning Larsen
& Toubro, an engineering and construction company, was a
material detractor given its exposure to the upswing in India's
capex cycle. In addition, our holdings in companies focused on
business process outsourcing (BPO), including Genpact and WNS, were
perceived to be at risk of disruption by artificial
intelligence-based tools, following recent advancement in AI-based
products, and their share prices came under pressure accordingly.
We remain constructive on our BPO holdings and believe that the
market is overestimating the potential negative impact of
generative AI on their defensive business model. Amongst our
Discretionary holdings, not owning Tata Motors and being
underweight Mahindra & Mahindra, a conglomerate with several
auto and farm equipment businesses, detracted due to (1) its
personal and commercial vehicle businesses benefitting from an
upcycle and market share gains and (2) restructuring of the group
following arrival of a new Chief Executive Officer (more on this
later in the report). Within the Energy sector, our underweight to
Reliance Industries, a conglomerate with material exposure to the
oil and gas sector, was the main detractor - the stock price
outperformed due to positive expectations in the company's other
divisions including retail, telecom, and a separate listing of its
financial services subsidiary.
However, beyond these stock-specific impacts on performance,
another notable adverse influence on returns over the past year was
the style rotation within the Indian market. Our process is focused
on owning high quality businesses that compound earnings over a
long period of time. Markets may move in cycles, but we believe
this investment approach creates value for investors over the long
term. However, over the last 12 months, value and lower quality
names have performed materially better than the higher quality
parts of the market which we favour. For example, state-owned banks
have outperformed private sector banks, and real estate and energy
sectors have outperformed the more defensive consumer businesses.
But while this environment presented a headwind for our
performance, it also gave us the opportunity to make some changes
to better align the portfolio with our long-term views. These are
detailed below.
Performance Attribution
12 mths to
30th September 2023
----------------------------------- --- --------------------
% %
----------------------------------- --- --------------------
Benchmark Total Return 0.7
----------------------------------- --- --------------------
Stock and sector allocation 1.9
----------------------------------- --- --------------------
Currency Effect 0.1
----------------------------------- --- --------------------
Gearing/cash 0.1
----------------------------------- --- --------------------
Investment Manager contribution 2.1
----------------------------------- --- --------------------
Impact of Capital Gains Tax(1) (1.4)
----------------------------------- --- --------------------
Portfolio Total Return 1.4
----------------------------------- --- --------------------
Management Fees and Other Expenses (0.8)
----------------------------------- --- --------------------
Share Buy-Back 0.6
----------------------------------- --- --------------------
Net Asset Value Total Return 1.2
----------------------------------- --- --------------------
Ordinary Share Price Total Return 2.2
----------------------------------- --- --------------------
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 which does not
take into account the effect of
capital gains Tax.
Spotlight on stocks and portfolio activity
Given opportunities created by the rotation away from quality
names, it is not surprising that turnover for the year was
relatively higher than what you should expect over the medium to
long term, although it was more modest in the second half of the
year, once we had made the desired changes. We expect turnover to
be lower going forward. In our half yearly report, we wrote about
changes we had made in the first half of the year. We detail below
the changes made over the last six months.
New initiations
Mahindra & Mahindra (M&M) - Founded in 1945, M&M is
an Indian conglomerate with a diverse portfolio of businesses, the
largest tractor manufacturer (by volume) in the world, the leading
manufacturer of light commercial vehicle makers in India, and the
country's fastest growing SUV maker. Its material holdings also
include a non-bank finance company and an IT services business.
Over recent years, M&M's CEO, Dr. Anish Shah, has divested
or closed several businesses that had little chance of improving
their return or growth potential. The remaining businesses have
been required to outline a credible path to above inflation growth
and a return on equity of at least 18%. This improvement in the
conglomerate's portfolio discipline is one reason we found M&M
appealing as an investment.
In addition, better capital allocation discipline has led to a
more effective focus on growth and profitability which has further
enhanced M&M's appeal. We see scope for further improvement in
operating performance if M&M sustains its focus on sensible
resource allocation and conglomerate discipline, and if it executes
well to realise the growth potential of successful businesses and
raise profitability in the underperforming ones.
Tube Investments of India (TII) -TII is a flagship company of
the renowned Murugappa Group, one of India's leading conglomerates.
Established in 1900, with its headquarters in Chennai, the group
has 29 businesses, with ten listed companies trading on local
exchanges.
TII is one of India's leading manufacturers of a wide range of
precision engineered and metal formed products for major industries
such as automotive, railway, construction, agriculture, etc. The
company is also among the leading manufacturers of bicycles in
India. The acquisition of CG Power and Industrial Solutions
Limited, a major manufacturer of motors, transformers, switch gears
and railway parts, marked a major step-up for the company,
amplifying its scale, returns and scope of operations.
Following recent meetings, we believe that TII has all the
hallmarks of a high-quality business - a long growth runway, strong
and improving economics and excellent governance. The company
benefits from its chairman Vellayan Subbiah's focus on efficient
and value-creating capital allocation, both organically and through
acquisitions, which is a rare skill.
Cholamandalam Investment and Finance Company (Chola) - Chola was
incorporated in 1978 as the financial services arm of the Murugappa
Group. Headquartered in Chennai, India, it is the largest of 29
businesses in the conglomerate by market capitalisation. While
Chola commenced business as an equipment financing company, it is
now a comprehensive financial services provider offering vehicle
finance, home loans, loan against property, SME loans, secured
business personal loans (SBPL), consumer & small enterprises
loans (CSEL) and is now expanding into unsecured personal
loans.
Chola is the third largest non-bank vehicle financier in the
country, thanks to consistent and successful expansion into
adjacent product categories while retaining focus on middle of the
pyramid customers and providing loans which support livelihoods as
opposed to funding discretionary consumption. The company has
successfully deployed data-driven underwriting by constantly
calibrating its credit models by product segments and micro-market
to assess risk and make pricing decisions. This has ensured stable
through cycle credit costs. We expect the company to benefit from
both (1) strong growth in its core vehicle financing business due
to expansion of manufacturing/industrial component of GDP and (2)
successful expansion into new segments while keeping credit costs
under check.
EXLS - EXLS is a Business Process Outsourcing (BPO) company
focused on insurance, healthcare, and analytics. It is a
high-quality business in a services sub-sector with secular
tailwinds given low penetration of BPO. The business should remain
resilient over the coming years as the industry tends to benefit in
periods of economic pressure. This is because its business model is
geared towards providing cost savings and efficiencies to its
clients through outsourcing of business processes.
The business process outsourcing (BPO) industry enables its
customers to outsource non-core processes by providing headcount
and process expertise, thereby allowing them to focus on work which
is mission critical. Customers not only benefit from labour
arbitrage, but also knowledge of process 'best practice' across
industries and ongoing investment into technology and automation
made by the BPOs. This means that BPOs should be able to drive
ongoing efficiencies for its customers beyond the initial 30% cost
saving typically seen in year one. Given this focus, the industry
has historically been counter cyclical. Once a business outsources
work it is rare that it insources it again, so client churn tends
to be limited.
Complete sales
Embassy REIT - We sold this real estate investment trust given
the lower growth outlook for the business relative to
alternatives.
HCL Tech - We consolidated our IT services industry holdings
into companies where we see the sector's strongest long term growth
opportunities.
Apollo - We followed our valuation signal, selling out of this
hospital chain as we expect the company to deliver lower returns
going forward.
Shriram Finance - We sold our position, taking profits following
the company's strong return and replacing it with a higher quality
vehicle financier.
Hero Motocorp - We exited the business given low expected
returns, due to strong performance and a consolidation of our
two-wheeler holdings into Bajaj Auto and Eicher Motors.
Aarti - We sold this position due to a deterioration in the
long-term attractiveness of the business, because of the pressure
on long term margins and higher capital intensity.
Lemon Tree - We sold this cyclical business, which has done
well, as the higher valuation materially lowered our expected
return.
Portfolio objectives
As we had laid out in our report last year, we want to ensure
shareholders understand what we are trying to achieve and the type
of companies the Company invests in.
For every investment, we ask ourselves "Is this a great business
we want to own?" But what is a great business?
1) The typical characteristics of the businesses we seek
include:
- High returns on capital
- Low capital intensity or high capital efficiency
- Pricing power and scope to capture inflation
- Secular long-term growth
- Free cash flow generation
- Low or no leverage
- Competitive advantages or high barriers to entry
2) Then we take a view on the management team.
As Philip Fisher, the highly regarded American strategist and
long-term buy and hold investor, said, "In evaluating a common
stock, the management is 90%, industry is 9% and all other factors
are 1%."
We think that many investors underestimate the importance of
good management teams but, in our view, this is one of the most
important drivers of corporate value creation. Assessing management
quality requires time, and deep scrutiny of a management's track
record and alignment with shareholders, both in terms of integrity
and capital allocation. We are also very wary of both new companies
and aggressive/ambitious management teams.
3) Lastly, valuations:
Our preference is always to invest in a great company at a fair
price, rather than an average company at a cheap price. For us, it
is corporate quality, not the share price, that determines idea
generation.
That means while we meet many companies, we spend more time
saying no than accepting optimistic or even aggressive views from
corporate management.
The last year has seen an increase in IPOs and secondary market
sell-downs. We have avoided this part of the market given shorter
history and higher valuations, although we have used the
opportunity to keep meeting new businesses, as the market landscape
evolves.
The key for us remains to stay true to our core investment
beliefs. As a team, we spend a lot of time ensuring we avoid a
mission drift, guarding against seemingly small, immaterial
deviations that collectively could divert unwary investors from our
strategic objectives.
Outlook
Over the last 12 months, the investment case for India has
become a lot more credible, for several reasons. India's growth
catalysts are multiplying and broadening, and the country is set to
become the world's fourth largest economy in 2025.
Capex spending and economic reforms are transforming the
economy
Perhaps the most compelling aspect of India's transformation is
the rapid growth in capital spending, which will also help balance
the mix of GDP, which is currently skewed to services, more into
manufacturing. As we noted in our last report, India has
under-invested in capital formation over the last decade, but both
the government and the private sector have now realised that capex
is essential if the country is to achieve its target of 6% GDP
growth over the next decade. The government has prioritised capex
spending accordingly - almost doubling capital expenditure as a
percentage of budget from 12% in the last decade, to 22% currently
- and progress has been remarkable. Highway construction has grown
by nearly 60% in the last nine years, from an already high base.
Additionally, rail investments have increased more than fourfold in
the last six years, port capacity has climbed by more than 80%,
reducing turnaround times, and the country boasts 73 new airports.
Metro rail has risen three and a half times, with more cities now
benefiting from metro services.
The government has also implemented economic reforms to put the
private sector on a solid footing. It has formalised the industrial
sector by introducing a nationwide goods and services tax, reduced
the corporate tax rate, lowered real lending rates, and introduced
subsidies to incentivise domestic manufacturing. These measures,
combined with buoyant demand, have improved the financial health of
private companies, which are now at peak profitability and have
sufficient firepower to fund investment without depending too much
on external financing.
The government's encouragement of domestic manufacturing is
paying off. Companies are improving their cost competitiveness by
upgrading existing facilities, stepping up automation and
electrification, and switching to renewable energy. These efforts
have reduced the cyclicality in earnings inherent in the
manufacturing sector, and India is now winning new business,
replacing China in parts of the global supply chain, as
multinational companies seek to diversify and secure supply in the
wake of recent geopolitical events.
The Company's portfolio has exposure to these dramatic changes
via investments in businesses such as Ultratech Cement, Tube
Investments, Kajaria Ceramics, Triveni Turbines, Supreme Industries
and Power Grid.
The Demographic Dividend is driving domestic consumption
India has recently overtaken China as the most populous country
in the world and the age distribution is weighted towards more
working age groups. This growing working age population, and the
associated rise in incomes, should continue to fuel the growth in
India's middle class and underpin and sustain consumption spending
and housing demand for decades.
Our portfolio is set to benefit from rising consumer demand via
positions in personal and household products suppliers Colgate
India and Hindustan Unilever, packaged foods supplier, Britannia
industries, drinks company United Spirits, and auto makers Bajaj
Auto, Eicher Motors and Maruti Suzuki.
Financial inclusion and digitalisation are increasing access to
many services. The value of money transferred though India's
instant real-time digital payment system through mobiles, UPI
(Unified Payment Interface), has exploded from roughly $110bn or 3%
of GDP in 2019 to $1trn or 19% of GDP in 2022.
Government efforts to increase financial inclusion have been
very successful in ensuring Indian consumers have greater access to
banking and financial services. The number of individuals with bank
accounts has increased from 35% of the population in 2011, to over
77% by 2021, thanks to the Jan Dhan scheme designed to provide
citizens with basic bank accounts, deposits and other financial
services. Around 500 million Jan Dhan accounts have been opened
since 2014, dramatically improving access to government benefits
payments and simplifying everyday transactions for hundreds of
millions of people.
These developments have coincided with the trend towards digital
empowerment - another Indian success story which has drastically
transformed the digital landscape in the past decade. The number of
internet users in the country more than tripled from c240 million
in 2014 to 759 million in 2022 - reaching a penetration level of
52% of the population. Moreover, the lead has come from rural
areas, which now have more internet users than cities (399 million
vs 360 million). Additionally, over 190,000 village panchayats,
usually elderly and respected community leaders, now have optical
fibre connections, compared to only 60 in 2014. This enhanced
connectivity has increased consumers' access to e-commerce, online
banking and other fintech services.
But this is just the beginning. The potential for future growth
in both financial and digital services is massive. As just a couple
of examples, the percentage of the population that owns a credit
card is still less than 5%, and the spend per capita on insurance
is less than $100. This compares to the UK, where credit card
ownership is 80% and insurance spending per capita is approximately
GBP4,000.
The Company's portfolio has access to these trends through its
positions in HDFC Bank, ICICI, Axis Bank, HDFC Life and HDFC Asset
Management. The change in our holding in HDFC Bank appears
significant due to the merger of HDFC Bank and HDFC Ltd this year.
Given both these businesses were core holdings for us prior to the
merger, there has been no increase in our underlying exposure.
Politics
Lastly, given the proximity of India's next general election,
which is expected by May 2024, it would be remiss of us not to
mention this event, at least briefly, if only to relay our view
that whatever the result, it will have limited implications for
long term investors. Our view is based on several considerations.
First, we expect successive governments of whatever ilk to carry on
the reform process, which will ensure the country continues to
attract long-term capital. Furthermore, the government's share of
GDP of 12.7% isn't that large. The Indian economy is driven more by
individuals and private enterprise than government spending.
Lastly, Indian corporates have long experience in dealing with the
country's chaotic political governance.
Valuations
India's huge growth potential has been, and will continue to be,
reflected in market returns. We are often asked about market
valuations and whether we think the India equity market is
expensive. As we noted in the half year report, part of the answer
to this question lies with investors' time horizon. But also, more
fundamentally, according to the theoretical framework which we use
to analyse and value individual stocks, the key components that
drive the value of any business, or by extension, the entire
market, are its return on equity (ROE) and its growth rate. The
Indian equity market has consistently delivered an attractive
combination of a high, and relatively stable, average ROE, coupled
with high long-term growth. This provides ample justification for
higher long-term multiples, and we do not view market valuations as
out of sync with the long-term opportunity.
When considering valuations, it is also important to note that
India offers investors significant diversification benefits, as the
market has low correlations with the rest of world - 0.4 to China
and 0.6 to the MSCI World. This should reduce portfolio volatility
in unsettled times.
Summary
As we look forward, we see a lot to be very positive about on
the long-term opportunity for the Indian market. While the economy
has averaged a real GDP growth rate of around 6% for 3 decades,
this has also translated into strong equity market returns. This
doesn't hold true for many markets around the world, and we would
say over that period the political shifts that have happened have
not stood in the way of that outcome. While we would never rule out
market volatility driven by political events, we would also expect
that, as in the past, these would not change the outcome of
economic growth.
In our opinion, we now have the backdrop where all the stars
have aligned and we can look forward to probably the most
attractive decade ahead. We have spoken plenty about the
demographic dividend and the opportunity that brings; the impact of
financial inclusion and the access to every part of the Indian
market; and now a capex cycle which has been dormant for a decade.
The combination of all these things provides a powerful tailwind to
the Indian equity market for the foreseeable future.
Amit Mehta
Sandip Patodia
Ayaz Ebrahim
Portfolio Managers
12 December 2023
PRINCIPAL AND EMERGING RISKS
The Board has overall responsibility for reviewing the
effectiveness of the Company's system of risk management and
internal control. The Board is supported by the Audit and Risk
Committee in the management of risk. The risk management process is
designed to identify, evaluate, manage, and mitigate risks faced.
Although the Board believes that it has a robust framework of
internal controls in place, this can provide only reasonable, and
not absolute, assurance against material financial misstatement or
loss and is designed to manage, not eliminate, risk.
The Directors confirm that they have carried out a robust
assessment of the principal risks facing the Company, including
those that would threaten its business model, future performance,
solvency or liquidity. With the assistance of the Manager, the
Audit and Risk Committee has drawn up a risk matrix, which
identifies the principal and emerging risks to the Company. These
are reviewed and noted by the Board through the Audit and Risk
Committee, which includes the ways in which these risks are managed
or mitigated.
The Board considers that the risks detailed below are the
principal risks facing the Company currently. These are the risks
that could affect the ability of the Company to deliver its
strategy.
Principal Risk Description Mitigation/Control Movement
in risk
status
in year
to 30th
September
2023
------------------------ ---------------------------------- ----------------------------------- -----------
Investment and Strategy
--------------------------------------------------------------------------------------------------------------
Appropriateness An inappropriate investment The Board manages these
and effective strategy, or poor execution risks by diversification
execution of strategy of that strategy, for of investments through
example stock selection, its investment restrictions
asset allocation or the and guidelines which
level of gearing, may are monitored and reported
lead to under-performance by the Investment Manager.
against the Company's The Investment Manager
benchmark index and competitor adheres to the investment
funds. risk appetite and parameters,
including gearing and
the use of derivatives
set by the Board and
provides the Directors
with timely and accurate
management information,
including performance
data and attribution
analyses, revenue estimates,
liquidity reports and
shareholder analyses.
The Board monitors the
implementation, and where
appropriate, challenges
the results of the investment
process with the Investment
Manager, who attend all
Board meetings, and review
data which show statistical
measures of the Company's
risk profile.
------------------------ ---------------------------------- ----------------------------------- -----------
ESG Requirements The Company's policy The Manager's investment
from investors on ESG may be out of process integrates consideration
line with ESG practices of environmental, social
which investors are looking and governance factors
to invest in accordance into decisions on which
with. stocks to buy, hold or
sell. The Investment
Managers have set out
the way in which environmental,
social and governance
issues are incorporated
into their investment
process on pages 18 to
23 of the Annual Report
and Financial Statements
and this is regularly
discussed with the Board.
------------------------ ---------------------------------- ----------------------------------- -----------
Regulatory Risks
--------------------------------------------------------------------------------------------------------------
Legal and Regulatory Loss of its investment The Section 1158 qualification
trust status and, as criteria are continuously
a consequence, gains monitored by the Manager
within the Company's and the results reported
portfolio could be subject to the Board at each
to capital gains tax. Board meeting.
A breach of the Companies The Board relies on the
Act 2006 could result services of its Company
in the Company and/or Secretary, the Manager
the Directors being fined and its professional
or the subject of criminal advisers to ensure compliance
proceedings. with the Companies Act
Breach of the FCA Listing 2006, the FCA Listing
Rules or Disclosure, Rules, DTRs and the Alternative
Guidance & Transparency Investment Fund Managers'
Rules ('DTRs') could Directive.
result in the Company's
shares being suspended
from listing which in
turn would breach Section
1158.
------------------------ ---------------------------------- ----------------------------------- -----------
Corporate Governance & Shareholder Relations
--------------------------------------------------------------------------------------------------------------
Share Discount Investment trust shares The Board monitors the
often trade at discounts Company's discount to
to their underlying NAVs. NAV daily and compare
Discounts can fluctuate to peers/sector. The
considerably leading Board reviews sales and
to volatile returns for marketing activity designed
shareholders. to increase demand for
the Company's shares.
The Company also has
authority to buy back
its existing shares to
enhance the NAV per share
for remaining shareholders
and to reduce the absolute
level of discount and
discount volatility.
------------------------ ---------------------------------- ----------------------------------- -----------
Operational
--------------------------------------------------------------------------------------------------------------
Cyber Crime The threat of cyber-attack The Company benefits
is regarded as at least directly and/or indirectly
as important as more from all elements of
traditional physical JPMorgan's Cyber Security
threats to business continuity programme. The information
and security. In addition technology controls around
to threatening the Company's physical security of
operations, such an attack JPMorgan's data centres,
is likely to raise reputational security of its networks
issues which may damage and security of its trading
the Company's share price applications, are tested
and reduce demand for by independent auditors
its shares. and reported every six
months against the AAF
Standard.
------------------------ ---------------------------------- ----------------------------------- -----------
Broadscale external Pandemics and geographically The Board receives reports
factors extensive weather conditions on the business continuity
etc. put at risk the plans of the Manager
Managers' and/or other and other key service
suppliers' ability to providers.
operate. The effectiveness of
these measures was assessed
throughout the course
of the COVID-19 pandemic
and the Board will continue
to monitor developments
in general and seek to
learn lessons which may
be of use in the event
of future pandemics.
------------------------ ---------------------------------- ----------------------------------- -----------
Taxation As a result of the amendment The Board has taken external
to the India/Mauritius specialist advice and
Double Tax Treaty in adequate processes have
May 2016, in June/July been established to move
2021, the Company sold assets to the parent
down all of its listed company. Capital gains
investments held through tax is calculated by
the Mauritian subsidiary specialist advisors and
company and bought them verified by the Manager.
back in the UK parent On the 31st August 2022,
company's portfolio leading the Mauritian subsidiary
to 100% of the Group's was put into liquidation,
investments being held formally completing the
directly by the parent re-structuring exercise
company. The Company and mitigating most of
is subject to risks, the associated risks.
such as increased tax
liability and incorrect
calculation of capital
gains tax, as a result
of the re-structuring
of the parent company/Mauritian
subsidiary.
------------------------ ---------------------------------- ----------------------------------- -----------
Financial
--------------------------------------------------------------------------------------------------------------
Market and geopolitical The investments of the This risk is managed
tensions Company and their pricing to some extent by diversification
are subject to the risk of investments and by
of changes in market regular communication
sentiment, which may with the Manager on matters
be driven by geopolitical of investment strategy
factors. and portfolio construction
These factors currently which will directly or
include the conflicts indirectly include an
in Ukraine and the Middle assessment of these risks.
East and the relationships The Board receives regular
between China and the reports from the Manager
USA, Taiwan and India. regarding market outlook
Volatility in inflation, and gives the Investment
energy prices, global Managers discretion regarding
supply chains also present acceptable levels of
potential risks to the gearing and/or cash.
market's assessment of The Board monitors the
value. implementation and results
These risks represent of the investment process
the potential loss the with the Manager.
Company might suffer
through holding investments
in the face of negative
market movements.
------------------------ ---------------------------------- ----------------------------------- -----------
Monetary The Company is faced Details of how the Company
by such risks as market mitigates and controls
price risk, currency these risks are disclosed
risk, interest rate risk, in note 21 on pages 87
liability risk, credit to 93 of the Annual Report
risk and borrowing default and Financial Statements
risk. The intensity of .
these risks has been
heightened by the current
volatile market caused
by factors like the geopolitical
conflict in Middle East,
Russia and Ukraine and
the sudden sharp rise
in interest rates in
the US, UK and Europe.
------------------------ ---------------------------------- ----------------------------------- -----------
Environmental
------------------------ ---------------------------------- ----------------------------------- -----------
Climate Change Climate change is one The Manager's investment
of the most critical process integrates consideration
issues confronting asset of environmental, social
managers and their investors and governance factors
today. Climate change into decisions on which
may have a disruptive stocks to buy, hold or
effect on the business sell. This includes the
models, sustainability approach investee companies
and even viability of take to recognising and
individual companies mitigating climate change
in India, and indeed, risks.
whole sectors. Perception The Board ensures that
of risk associated with consideration of climate
climate change may adversely change risks and opportunities
affect the valuation is an integral part of
of the Company's holdings. the Investment Manager's
India in particular is investment process. It
prone to severe weather recognises that given
conditions, including the portfolio stocks
extreme heat, changing are all quoted investments,
rainfall patterns and the relevant environmental
droughts risks are reflected in
The Board is also mindful their share price over
of the risk posed by time by the market. Where
the direct impact of appropriate, the Board
climate change on the challenges the Investment
operations of the Manager Manager on the investment
and other major service process considerations
providers. and investment decisions,
and receives updates
from the Investment Manager
on the evolution of its
ESG work and policies.
The Investment Manager
aims to influence the
management of climate
related risks through
engagement and voting
and is a participant
of Climate Action 100+
and a signatory of the
United Nations Principles
for Responsible Investment.
------------------------ ---------------------------------- ----------------------------------- -----------
Emerging Risks
The AIC Code of Corporate Governance also requires the Audit and
Risk Committee to put in place procedures to identify emerging
risks. Emerging risks, which are not deemed to represent an
immediate threat, are considered by the Audit and Risk Committee as
they come into view and are incorporated into the existing review
of the Company's risk register. However, since emerging risks are
likely to be more dynamic in nature, they are considered on a more
frequent basis, through the remit of the Board when the Audit and
Risk Committee does not meet. The Board considers the following to
be an emerging risk:
Political and Economic - an escalation of the geopolitical
tensions/conflicts, for example, between China and Taiwan, Ukraine
and Russia, and in the Middle East could lead to extreme market
volatility and de-rating.
TRANSACTION WITH THE MANAGER AND RELATED PARTIES
Details of the management contract are set out in the Directors'
Report on page 46 of the Annual Report and Financial
Statements.
The management fee payable to the Manager for the year was
GBP4,974,000 (2022: GBP4,920,000) of which GBPnil (2022: GBPnil)
was outstanding in the financial statements at the year end.
Included in other administration expenses in note 6 on page 80
of the Annual Report and Financial Statements are safe custody fees
payable to JPMorgan Chase Bank, N.A. as custodian of the Company
amounting to GBP511,000 (2022: GBP584,000) of which GBP213,000
(2022: GBP129,000) was outstanding at the year end.
The Manager carries out some of its dealing transactions through
group subsidiaries. These transactions are carried out at arms'
length. The commission payable to JPMorgan Securities for the year
by the Company was GBP50,000 (2022: GBP51,000) of which GBPnil
(2022: GBPnil) was outstanding in Company's financial statements at
the year end.
Handling charges payable on dealing transactions undertaken by
overseas sub custodians on behalf of the Company amounted to
GBP14,000 (2022: GBP18,000) during the year, of which GBP3,000
(2022: GBP4,000) was outstanding at the year end.
The Company also holds cash in the JPMorgan Sterling Liquidity
Fund. At 30th September 2023, the holding in JPMorgan Sterling
Liquidity Fund was valued at GBP21,210,000 (2022: GBP44,000,000).
During the year, the Company made purchases in this fund amounting
to GBP128,000,000 (2022: GBP164,700,000) and sales on this fund
amounting to GBP150,790,000 (2022: GBP141,300,000). Income
receivable from this fund amounted to GBP663,000 (2022: GBP139,000)
of which GBPnil (2022: GBPnil) was outstanding at the year end.
JPMorgan earns no management fee on this fund.
At the year end, the Company held bank balances of GBP834,000
with JPMorgan Chase Bank, N.A. (2022: GBP13,247,000). A net amount
of interest of GBP5,000 (2022: GBPnil) was receivable by the
Company during the year, of which GBPnil (2022: GBPnil) was
outstanding at the year end.
Prior to being put into liquidation on 31 August 2022, the
subsidiary bought back nil (2022: 22,561) shares from the Company
(see note 10c in the Annual Report and Financial Statements for
details).
Details of the Directors' shareholdings and the remuneration
payable to Directors are given in the Directors' Remuneration
Report on page 59 of the Annual Report and Financial
Statements.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the financial statements in accordance with
UK-adopted international accounting standards and the requirements
of the Companies Act 2006. Under company law the Directors must not
approve the financial statements unless they are satisfied that,
taken as a whole, the annual report and financial statements
provide the information necessary for shareholders to assess the
Company's performance, business model and strategy and that they
give a true and fair view of the state of affairs of the Company
and of the total return or loss of the Company for that period. In
order to provide these confirmations, and in preparing these
financial statements, the Directors must be satisfied that, taken
as a whole, the annual report and financial statement are fair,
balanced and understandable; and the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- state whether applicable United Kingdom Accounting Standards,
comprising FRS 102, have been followed, subject to any material
departures disclosed and explained in the financial statements;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable UK-adopted international accounting
standards have been followed, subject to any material departures
disclosed and explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business;
and the Directors confirm that they have done so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements and the Directors' Remuneration Report
comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The annual report and financial statements are published on the
www.jpmindian.co.uk website, which is maintained by the Company's
Manager. The maintenance and integrity of the website maintained by
the Manager is, so far as it relates to the Company, the
responsibility of the Manager. The work carried out by the auditors
does not involve consideration of the maintenance and integrity of
this website and, accordingly, the auditor accept no responsibility
for any changes that have occurred to the Annual Report since they
were initially presented on the website. The Annual Report is
prepared in accordance with UK legislation, which may differ from
legislation in other jurisdictions.
Under applicable law and regulations the Directors are also
responsible for preparing a Strategic Report, a Directors' Report
and Directors' Remuneration Report that comply with that law and
those regulations.
Each of the Directors, whose names and functions are listed in
Directors' Report confirm that, to the best of their knowledge:
-- the Company's financial statements, which have been prepared
in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 102
'The Financial Reporting Standard applicable in the UK and Republic
of Ireland', and applicable law), give a true and fair view of the
assets, liabilities, financial position and profit of the Company;
and
-- the Directors' Report includes a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties that it faces.
The Board confirms that it is satisfied that the annual report
and financial statements taken as a whole are fair, balanced and
understandable and provide the information necessary for
shareholders to assess the position and performance, business model
and strategy of the Company.
For and on behalf of the Board
Rosemary Morgan
Chairman
12 December 2023
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30TH SEPTEMBER 2023
2023 2022
Revenue Capital Total Revenue(1) Capital(1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- --------- --------- ---------- ---------- --------
Gains from investments held
at fair value
through profit or loss - 9,650 9,650 - 36,867 36,867
Net foreign currency (losses)/gains - (367) (367) - 98 98
Income from investments 11,461 - 11,461 9,403 - 9,403
Interest receivable and similar
income 668 - 668 139 - 139
------------------------------------- -------- --------- --------- ---------- ---------- --------
Total income 12,129 9,283 21,412 9,542 36,965 46,507
Management fee (4,974) - (4,974) (4,920) - (4,920)
Other administrative expenses (1,100) - (1,100) (1,133) - (1,133)
------------------------------------- -------- --------- --------- ---------- ---------- --------
Profit before finance costs
and taxation 6,055 9,283 15,338 3,489 36,965 40,454
Finance costs (4) - (4) (142) - (142)
------------------------------------- -------- --------- --------- ---------- ---------- --------
Profit before taxation 6,051 9,283 15,334 3,347 36,965 40,312
Taxation (1,314) (11,063) (12,377) (319) 4,117 3,798
------------------------------------- -------- --------- --------- ---------- ---------- --------
Net profit/(loss) 4,737 (1,780) 2,957 3,028 41,042 44,110
------------------------------------- -------- --------- --------- ---------- ---------- --------
Earnings/(loss) per share 6.34p (2.38p) 3.96p 3.94p 53.45p 57.39p
------------------------------------- -------- --------- --------- ---------- ---------- --------
(1) An adjustment to the 30th September 2022 taxation figures
has been made to reflect an amount of GBP1,750,000 in respect of
withholding tax on Indian income from investments, which had been
incorrectly credited against capital gains tax for the two years
ended 30 September 2022.
The Company does not have any income or expense that is not
included in the net profit for the year. Accordingly the 'Net
profit/ (loss)' for the year, is also the 'Total comprehensive
income' for the year, as defined in IAS1 (revised).
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
in the year.
The 'Total' column of this statement represents the Company's
Statement of Comprehensive Income, prepared in accordance with
IFRS.
The supplementary 'Revenue' and 'Capital' columns are prepared
under guidance published by the Association of Investment
Companies.
Details of revenue and capital items, together with the
associated reserves are contained in note 16 in the Annual Report
and Financial Statements.
All of the profit and total comprehensive income is attributable
to the equity shareholders of JPMorgan Indian Investment Trust plc,
the Company. There are no minority interests.
.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30TH SEPTEMBER 2023
Called
up Exercised Capital
share Share warrant redemption Capital Revenue
capital premium reserve reserve reserve(1) reserve(1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- --------- ----------- ----------- ----------- ---------
At 30th September 2021 24,868 97,316 5,886 12,898 645,480 (22,535) 763,913
Repurchase of shares into Treasury - - - - (12,774) - (12,774)
Profit for the year - - - - 41,082 3,028 44,110
----------------------------------- -------- -------- --------- ----------- ----------- ----------- ---------
At 30 September 2022 24,868 97,316 5,886 12,898 673,788 (19,507) 795,249
Repurchase of shares into Treasury - - - - (22,609) - (22,609)
(Loss)/profit for the year - - - - (1,780) 4,737 2,957
----------------------------------- -------- -------- --------- ----------- ----------- ----------- ---------
At 30th September 2023 24,868 97,316 5,886 12,898 649,399 (14,770) 775,597
----------------------------------- -------- -------- --------- ----------- ----------- ----------- ---------
(1) An adjustment to the 30th September 2022 taxation figures
has been made to reflect an amount of GBP1,750,000 in respect of
withholding tax on Indian income from investments, which had been
incorrectly credited against capital gains tax for the two years
ended 30 September 2022.
STATEMENT OF FINANCIAL POSITION
AT 30TH SEPTEMBER 2023
2023 2022(1)
GBP'000 GBP'000
---------------------------------------- --------- ---------
Non current assets
Investments held at fair value through
profit or loss 770,957 749,959
---------------------------------------- --------- ---------
770,957 749,959
Current assets
Other receivables 817 6,076
Cash and cash equivalents 22,044 57,255
---------------------------------------- --------- ---------
22,861 63,331
Current liabilities
Other payables (571) (8,246)
---------------------------------------- --------- ---------
Net current assets 22,290 55,085
---------------------------------------- --------- ---------
Total assets less current liabilities 793,247 805,044
---------------------------------------- --------- ---------
Non current liabilities
Provision for capital gains tax (17,650) (9,795)
---------------------------------------- --------- ---------
Net assets 775,597 795,249
---------------------------------------- --------- ---------
Amounts attributable to shareholders
Called up share capital 24,868 24,868
Share premium 97,316 97,316
Exercised warrant reserve 5,886 5,886
Capital redemption reserve 12,898 12,898
Capital reserves 649,399 673,788
Revenue reserve (14,770) (19,507)
---------------------------------------- --------- ---------
Total shareholders' funds 775,597 795,249
---------------------------------------- --------- ---------
Net asset value per share 1,058.5p 1,045.8p
---------------------------------------- --------- ---------
(1) An adjustment to the 30th September 2022 taxation figures
has been made to reflect an amount of GBP1,750,000 in respect of
withholding tax on Indian income from investments, which had been
incorrectly credited against capital gains tax for the two years
ended 30 September 2022.
Registered in England. No: 2915926.
STATEMENT OF CASH FLOWS
FOR THE YEARED 30TH SEPTEMBER 2023
2023 2022(1)
GBP'000 GBP'000
------------------------------------------------------ ---------- ----------
Operating activities
Profit before taxation 15,334 40,312
Deduct dividends receivable (11,461) (9,403)
Deduct interest receivable (668) (139)
Add interest paid 4 142
Deduct gains on investments held at fair
value through profit or loss (9,650) (36,867)
Add losses/(deduct gains) on net foreign
currency 367 (98)
Decrease/(increase) in prepayments, VAT
and other receivables 14 (64)
Increase in other payables 127 43
------------------------------------------------------ ---------- ----------
Net cash outflow from operating activities
before interest and taxation (5,933) (6,074)
------------------------------------------------------ ---------- ----------
Interest paid (4) (141)
Income tax paid (1,421) (415)
Dividends received 11,383 10,675
Interest received 668 139
Capital gains tax paid (3,208) (7,137)
------------------------------------------------------ ---------- ----------
Net cash inflow/(outflow) from operating
activities 1,485 (2,953)
------------------------------------------------------ ---------- ----------
Investing activities
Purchases of investments held at fair
value through profit or loss (189,558) (219,128)
Sales of investments held at fair value
through profit or loss 175,665 260,838
Sales of investment in subsidiary held at fair value
through profit or loss - 4,800
------------------------------------------------------ ---------- ----------
Net cash (outflow)/inflow from investing
activities (13,893) 46,510
------------------------------------------------------ ---------- ----------
Financing activities
Repurchase of shares into Treasury (22,436) (12,774)
------------------------------------------------------ ---------- ----------
Net cash outflow from financing activities (22,436) (12,774)
------------------------------------------------------ ---------- ----------
(Decrease)/Increase in cash and cash
equivalents (34,844) 30,783
------------------------------------------------------ ---------- ----------
Cash and cash equivalents at the start
of the year 57,255 26,374
Exchange movements (367) 98
------------------------------------------------------ ---------- ----------
Cash and cash equivalents at the end
of the year 22,044 57,255
------------------------------------------------------ ---------- ----------
(1) An adjustment to the 30th September 2022 taxation figures
has been made to reflect an amount of GBP1,750,000 in respect of
withholding tax on Indian income from investments, which had been
incorrectly credited against capital gains tax for the two years
ended 30 September 2022.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30TH SEPTEMBER 2023
1. Principal Activity
The principal activity of JPMorgan Indian Investment Trust plc,
(the Company), is that of an investment holding company within the
meaning of Section 1158 of the Corporation Tax Act 2010.
2. Basis of Preparation
Basis of accounting
On 31 December 2020, IFRS as adopted by the European Union at
that date was brought into UK law and became UK-adopted
International Accounting Standards, with future changes being
subject to endorsement by the UK Endorsement Board. The Company
transitioned to UK-adopted International Accounting Standards in
its company financial statements on 1 January 2021. This change
constitutes a change in accounting framework. However, there is no
impact on recognition, measurement or disclosure in the period
reported as a result of the change in framework. The financial
statements of the Company have been prepared in accordance with
UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
The financial statements have been prepared on the going concern
basis. The disclosures on going concern in the Audit and Risk
Committee's Report on page 55 of the Annual Report and Financial
Statements form part of these financial statements. The Board has,
in particular, considered the impact of heightened market
volatility since the Russian invasion of Ukraine, the conflict
between Israel and Palestine, the persistent inflationary
environment, rising interest rates and other geopolitical risks,
and does not believe the Company's going concern status is
affected. The principal accounting policies adopted are set out
below. Where presentational guidance set out in the Statement of
Recommended Practice 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' (the 'SORP') issued by the
Association of Investment Companies ('AIC') in July 2022 is
consistent with the requirements of IFRS, the Directors have sought
to prepare the financial statements on a basis compliant with the
recommendations of the SORP.
In preparing these financial statements the Directors have
considered the impact of climate change risk as a principal risk as
set out on page 36 of the Annual Report and Financial Statements
and have concluded that there was no further impact of climate
change to be taken into account as the investments are valued based
on market pricing, which incorporates the market's perception of
climate risk.
The Company's share capital is denominated in sterling and this
is the currency in which its shareholders operate and expenses are
generally paid. The Directors have therefore determined the
functional currency to be sterling.
3. Earnings/(loss) per share
2023 2022(1)
GBP'000 GBP'000
---------------------------------------------- ---------- ----------
Earnings per share is based on the following:
Revenue profit 4,737 3,028
Capital (loss)/profit (1,780) 41,082
---------------------------------------------- ---------- ----------
Total profit 2,957 44,110
---------------------------------------------- ---------- ----------
Weighted average number of shares in issue 74,711,625 76,852,573
Revenue earnings per share 6.34p 3.94p
Capital (loss)/earnings per share (2.38p) 53.45p
---------------------------------------------- ---------- ----------
Total earnings per share(2) 3.96p 57.39p
---------------------------------------------- ---------- ----------
(1) An adjustment to the 30th September 2022 taxation figures
has been made to reflect an amount of GBP1,750,000 in respect of
withholding tax on Indian income from investments,
which had been incorrectly credited against capital gains tax
for the two years ended 30 September 2022.
(2) Represents both the basic and diluted earnings per share and
excludes shares held in Treasury.
4. Net asset value per share
2023 2022
------------------------------------------------ ---------- ----------
Net assets (GBP'000) 775,597 795,249
Number of shares in issue excluding shares held
in Treasury 73,272,730 76,039,849
------------------------------------------------ ---------- ----------
Net asset value per share 1,058.5p 1,045.8p
------------------------------------------------ ---------- ----------
5. Status of results announcement
2023 Financial Information
The figures and financial information for 2023 are extracted
from the published Annual Report and Accounts for the year ended
30th September 2023 and do not constitute the statutory accounts
for that year. The Annual Report and Accounts include the Report of
the Independent Auditors which was unqualified and did not contain
a statement under either section 498(2) or section 498(3) of the
Companies Act 2006. The Annual Report and Accounts will be
delivered to the Register of Companies in due course.
2022 Financial Information
The figures and financial information for 2022 are extracted
from the Annual Report and Accounts for the year ended 30th
September 2022 and do not constitute the statutory accounts for the
year. The Annual Report and Accounts include the Report of the
Independent Auditors which was unqualified and did not contain a
statement under either section 498(2) or section 498(3) of the
Companies Act 2006.
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of, this
announcement.
12 December 2023
For further information, please contact:
Divya Amin
For and on behalf of JPMorgan Funds Limited,
Company Secretary
020 7742 4000
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of, this
announcement.
JPMORGAN FUNDS LIMITED
ENDS
A copy of the annual report will be submitted to the FCA's
National Storage Mechanism and will shortly be available for
inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The annual report will shortly be available on the Company's
website at www.jpmindian.co.uk where up-to-date information on the
Company, including daily NAV and share prices, factsheets and
portfolio information can also be found.
This information is provided by RNS, the news service of the
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END
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(END) Dow Jones Newswires
December 13, 2023 02:00 ET (07:00 GMT)
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