Final Results
16 Julio 2003 - 12:00PM
UK Regulatory
MARTIN CURRIE JAPAN INVESTMENT TRUST plc
Annual results for the 12 months to 31 May 2003
The results for the trust over the year were poor because the Japanese
stockmarket fell sharply and because the net asset value (NAV) per share
fell by more than the benchmark. The market, as measured by the Tokyo
Stock Exchange First Section index in sterling, fell by 30.7% and the
NAV per share by 35.0%. The share price fell by 42.0%, with the discount
to NAV per share widening from 7.0% to 17.1%.
The trust underperformed the index for two main reasons. The first was
gearing. Despite reducing the level of borrowing in the period, the fall
in the stockmarket was compounded by the effect of being geared into a
declining stockmarket. Furthermore, repaying part of the debt early cost
�61,000 or 0.13p per share. Second, although stock selection was good,
this was more than offset by unfavourable sector allocation.
The company is required to pay a dividend to satisfy investment trust
regulations. The directors are recommending a dividend of 0.20p per
share, an increase of 11.1% on the 0.18p paid last year.
The last 12 months to May have been difficult for stockmarkets
worldwide, and Japan has been no exception. During the year the Tokyo
Stock Exchange index hit a 19-year low in March before recovering
slightly.
The Japanese stockmarket has suffered for some time from an imbalance
between supply and demand. Banks, life and non-life insurance companies
have all been keen to reduce the risk in their balance sheets, resulting
in further equity sales. Furthermore pension funds returned assets to
the government in cash, necessitating sales. Against a backdrop of poor
world stockmarkets, there were few buyers to absorb this stock and
prices fell.
Perversely all this occurred while the fundamentals got better.
Corporate earnings improved sharply, with operating profits overall up
by 43% for the year to March. This was also accompanied by higher
dividends and an increase in the number of companies intending to
repurchase more of their stock.
Profits as a share of GDP have risen, and the managers expect this trend
to continue. Corporate profitability is rising through restructuring
efforts. These have resulted in job cuts and lower corporate spending
which have depressed domestic economic growth. Against that, a fall in
the savings rate has helped to support consumption.
The company reduced gearing substantially during the year, but left some
in place. This was because the managers believed that the stockmarket
was becoming attractive (on low price/earnings and price/book ratios)
and that the correlation between profit growth and the stockmarket,
which has been relatively close in the past, would continue.
Martin Currie believes that the demand/supply relationship in the
stockmarket is set to improve over the next 12 months. Banks and life
companies will sell much less stock over the next year than in the past,
while stock buybacks will increase. This better environment should
reinforce the positive factors of low valuations and rising profits.
Against this background the managers are now more positive about the
outlook for the Tokyo stockmarket. To benefit further from the expected
rise in share prices, the trust's gearing has been increased since the
year end.
- ends -
For further information, please contact:
John Millar /Mike Woodward 0131 229 5252
Martin Currie Investment Management Ltd
jmillar@martincurrie.com/mwoodward@martincurrie.com
MARTIN CURRIE JAPAN INVESTMENT TRUST PLC
Statement of total return (incorporating the revenue account) for the
year ended 31 May
2003 (Unaudited)
Revenue Capital Total
�'000 �'000 �'000
Losses on - realised - (9,894) (9,894)
investments
- unrealised - (5,647) (5,647)
Currency gains - 738 738
Income - unfranked 566 - 566
Investment management fee (44) (395) (439)
Other expenses (304) - (304)
__________ __________ _________
Net return before finance costs 218 (15,198) (14,980)
and taxation
Interest payable and similar (18) (223) (241)
charges
__________ __________ _________
Return on ordinary activities 200 (15,421) (15,221)
before taxation
Taxation on ordinary activities (69) 19 (50)
__________ __________ _________
Return on ordinary activities 131 (15,402) (15,271)
after taxation for the
financial year
Dividend in respect of equity (93) - (93)
shares
__________ __________ _________
Transfer to/ (from) reserves 38 (15,402) (15,364)
_______ _______ _______
Return per ordinary share 0.28p (33.18p) (32.90p)
Subject to approval at the forthcoming Annual General Meeting, the
directors have declared a final dividend on the ordinary shares of the
company for the year ending 31 May 2003 of 0.20p per share (2002: 0.18p)
to be paid on 8 October 2003 to shareholders on the register on 12
September 2003. The annual results will be circulated to shareholders in
the form of an annual report, copies of which will be available at the
company's registered office, Saltire Court, 20 Castle Terrace, Edinburgh
EH1 2ES. This report has been prepared in accordance with financial
reporting standards and the Statement of Recommended Practice for the
financial statements of investment trust companies.
MARTIN CURRIE JAPAN INVESTMENT TRUST PLC
Statement of total return (incorporating the revenue account) for the
year ended 31 May
2002 (Audited)
Revenue Capital Total
�'000 �'000 �'000
Losses on - realised - (4,828) (4,828)
investments
- unrealised - (6,897) (6,897)
Currency gains - 688 688
Income - unfranked 555 - 555
Investment management fee (53) (475) (528)
Other expenses (280) - (280)
__________ __________ __________
Net return before finance costs 222 (11,512) (11,290)
and taxation
Interest payable and similar (20) (180) (200)
charges
__________ __________ ____________
Return on ordinary activities 202 (11,692) (11,490)
before taxation
Taxation on ordinary activities (95) - (95)
__________ __________ ____________
Return on ordinary activities 107 (11,692) (11,585)
after taxation for the
financial year
Dividend in respect of equity (84) - (84)
shares
__________ __________ ____________
Transfer to/(from) reserves 23 (11,692) (11,669)
__________ __________ ____________
Return per ordinary share 0.23p (25.19p) (24.96p)
MARTIN CURRIE JAPAN INVESTMENT TRUST plc
BALANCE SHEET
As at 31 May 2003 As at 31 May 2002
(Unaudited) (Audited)
�000 �000 �000 �000
Investments at market value
Listed on stock exchanges 31,391 52,370
abroad
Unlisted at directors' 278 965
valuation
______ ______
31,669 53,335
Current assets
Debtors 242 351
Cash 4,564 1,254
_____ _____
4,806 1,605
Creditors
Amounts falling due within (457) (292)
one year
_____ _____
Net current assets 4,349 1,313
______ ______
Total assets less current 36,018 54,648
liabilities
Creditors
Amounts falling due after one (7,473) (10,739)
year
______ ______
Total assets attributable to 28,545 43,909
share capital
______ ______
Capital and reserves
Called up ordinary capital 11,605 11,605
Share premium 5,461 5,461
Merger reserve 21,060 21,060
Capital reserve (9,805) 5,597
Revenue reserve 224 186
______ ______
Equity shareholders' funds 28,545 43,909
______ ______
Net asset value per ordinary 61.49p 94.59p
share of 25p
MARTIN CURRIE JAPAN INVESTMENT TRUST plc
STATEMENT OF CASH FLOW
Year ended 31 May Year ended 31 May
2003 unaudited 2002 audited
�000 �000 �000 �000
Operating activities
Net dividends and interest 573 569
received from investments
Investment management fee (472) (599)
Cash paid to and on behalf of (75) (72)
directors
Bank charges (38) (19)
Other cash payments (207) (435)
_______ ________
Net cash outflow from (219) (556)
operating activities
Servicing of finance
Interest paid (235) (205)
_______ ________
Net cash outflow from (235) (205)
servicing of finance
Capital expenditure and
financial investment
Payments to acquire (7,413) (13,536)
investments
Receipts from disposal of 13,789 15,487
investments
Foreign currency contracts (12) 230
_______ _______
Net cash inflow from capital
expenditure and financial 6,364 2,181
investment
Equity dividends paid (84) (84)
______ _______
Net cash inflow before 5,826 1,336
financing
Financing
Net movement in borrowings (2,528) (1,481)
______ _______
Net cash outflow from (2,528) (1,481)
financing
________ _______
Increase/(decrease) in cash 3,298 (145)
________ ________