TIDMJCH
RNS Number : 5615H
JPMorgan Claverhouse IT PLC
13 March 2018
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN CLAVERHOUSE INVESTMENT TRUST PLC
FINAL RESULTS FOR THE YEARED 31ST DECEMBER 2017
Legal Entity Identifier: 549300NFZYYFSCD52W53
Information disclosed in accordance with the DTR 4.1.3
The Directors of JPMorgan Claverhouse Investment Trust plc
announce the Company's results for the year ended 31st December
2017.
CHAIRMAN'S STATEMENT
Performance and Manager Review
I am pleased to report that the strong performance in the first
half of 2017 continued into the second half and that for the year
to 31st December 2017 the Company's net asset total return was
+16.2%. This compares with a total return for the same period from
the Company's benchmark, the FTSE All-Share Index, of +13.1%,
reflecting a good year for equity markets and giving shareholders a
welcome outperformance of +3.1%. The long-term performance
continues to be strong and in the period from the change in
investment process and strategy on 1st March 2012 to 28th February
2018 there has been a cumulative total return on net assets of
+92.5%, an out-performance of +30.5% against the Company's
benchmark total return over the same period.
The share price rose from 622.0p as at 31st December 2016 to
730.5p as at the year end, reflecting the rise in net asset value
(NAV) and a narrowing of the discount. During the year, the
shareholder total return for the period was +21.8% (2016: +7.2%).
Since the year end the Company has not been immune from the
volatility affecting global stockmarkets and, as at 28th February
2018, the share price was 722.0p.
The Investment Managers' report below reviews the market and
provides more detail on performance.
Investment Manager
It was with sadness that in December we had to report the
untimely death of Sarah Emly who had been co-manager of the
Company's portfolio since 2006. Sarah had battled with ill health
for a number of years with a courage, humour and determination that
was truly inspirational. She was a key part of the team that
manages the Company's investments and has provided shareholders
with the investment returns mentioned above; and every shareholder
owes her a debt of gratitude.
Callum Abbot has now been appointed as a co-investment manager
on the portfolio. Callum joined JPMorgan's European Equity
Behavioural Finance team in 2012 and has been working with William
Meadon on the management of the portfolio since then.
Revenue and Dividends
Revenue for the year to 31st December 2017 increased to 29.32p
per share (2016: 25.28p). The Directors have declared a fourth
quarterly interim dividend of 9.5p per share for the year ended
31st December 2017 which will bring the total dividend per share
for the year to 26.0p (2016 total: 23.0p). This represents the 45th
successive year in which the dividend has been raised and is a
significant increase of 13.0% over the previous year, following a
7.0% increase in respect of 2016. The dividend was more than
covered by the Company's net income, after taking account of the
special dividends received on the portfolio, and once again a
transfer has been made to the Company's revenue reserves for the
year ended 31st December 2017.
The Board's dividend policy remains to seek to increase the
dividend each year and, taking a run of years together, to pay
dividends that at least match the rate of inflation. Given the
Company's strong revenue reserves, the Board currently expects
future dividend increases to continue to exceed the rate of
inflation. The Board also intends to increase the first three
quarterly interim dividends in 2018 from 5.5p per share to 6.0p per
share, to even out dividend payments more through the year.
Discount and Share Repurchases
Discounts in the investment trust sector have narrowed generally
over the year reflecting market demand. During the year the
discount on the Company's shares (based on the capital-only NAV,
with debt at par) ranged between 2.2% and 9.7%, averaging 7.0%. As
at 31st December 2017 the share price discount was 5.4%, broadly in
line with the peer group, and in absolute terms significantly lower
on average than in 2016. The Board has continued to monitor the
discount closely and during the year 145,000 shares (2016: 20,000)
were repurchased for holding in Treasury.
Your Directors continue to be concerned that, notwithstanding
the Company's good performance over the last few years, the share
price discount has often been greater than that of many of its peer
group. The Directors have therefore resolved to implement a more
active discount and premium management policy, an aspect of which
will be subject to shareholder approval at the Annual General
Meeting.
In future, the Company intends in normal market conditions to
repurchase shares offered on the market at prices representing
discounts to NAV (capital only) of 5% or more, with such shares to
be held in Treasury. In response to market demand the Company will
be willing to sell shares from Treasury (including the existing 2.2
million shares currently held in Treasury) at a discount to NAV
(cum income debt at par), subject to a maximum discount of 2%.
Additionally, new shares will be available for issue at a premium
to NAV (cum income debt at par), after the costs of issue.
Shareholder approval is required for a sale of shares out of
Treasury by the Company at a discount to NAV and Resolution 13 in
the Notice of Annual General Meeting in the Annual Report and
Financial Statements sets out this authority. The Directors
consider that the round trip of buying in Treasury shares at a
discount to NAV per share, and then selling them at a lower
discount, is, and will be, asset-accretive to shareholders, should
improve liquidity in the Company's shares and is in the interests
of the Company's shareholders.
Gearing/Long Term Borrowing
Taking into account borrowings, net of cash balances held, the
Company ended the year approximately 11.3% geared. During the year
gearing varied between 9.4% and 13.2%. Borrowing consisted of a
combination of the GBP30 million 7% 2020 debenture and a revolving
credit facility of GBP50 million, of which GBP35 million was drawn
at the year end. Gearing is a key differentiator for investment
companies compared to open-ended funds, and the Company's gearing
contributed 0.9% to performance relative to its benchmark.
The Company's gearing policy is to operate within a range of 5%
net cash to 20% geared in normal market conditions. However, in
consultation with the Manager, the Board has reviewed the gearing
guidelines that they give the Manager and has decided to increase
the Manager's flexibility to change gearing levels depending on
market conditions. As a result, the Board has agreed with the
Investment Managers that they have discretion to vary the gearing
level between 5% net cash and 17.5% geared.
The Company's existing GBP30 million 7% 2020 debenture matures
in March 2020. On 2nd November 2017 the Board announced that it has
agreed to issue in 2020 by way of private placement GBP30 million
fixed rate 25 year unsecured notes (the 'Notes') at an annualised
coupon of 3.22%. The Board agreed to issue the Notes at a future
date in order to take advantage of the opportunity to lock in long
term funding at rates which are low relative to historic levels, at
a cost which is lower than the current yield on the Company's
portfolio. The Notes will be unsecured which gives the Company
increased flexibility to manage its borrowings in the future. The
Notes are due to be repaid on 30th March 2045 and the funding date
is expected to be 30th March 2020, the maturity date of the 7%
debenture.
Board of Directors
All Directors will stand for re-appointment at the Annual
General Meeting.
Board Apprentice
The Board has continued to support the Board Apprentice
initiative that it joined in 2016. Jon Dinnis's term will come to
an end in April this year and we are in the process of interviewing
candidates with the intention of appointing a replacement for Jon
by the time of the Annual General Meeting. We hope that the new
Board Apprentice will find the experience as valuable as Jon has
found it and I look forward to introducing him or her at the Annual
General Meeting.
PRIIPs/KID
You may be aware that an EU regulation, the Packaged Retail and
Insurance-based Investment Products Regulation (the 'PRIIPs
Regulation'), came into force on 1st January 2018. The PRIIPs
Regulation requires the Investment Managers to prepare a Key
Information Document (KID) in respect of the Company. The KID must
be made available by the Investment Managers to retail investors
prior to them making any investment decision and it is also
available on the Company's website. However, the Company is not
responsible for the information contained in the KID and investors
should note that the procedures for calculating the risks, costs
and potential returns are prescribed by the law. The figures in the
KID may not reflect the expected returns for the Company and
anticipated performance returns cannot be guaranteed.
Annual General Meeting
This year's Annual General Meeting will be held at JPMorgan's
offices at 60 Victoria Embankment, London EC4Y 0JP on Wednesday
18th April 2018 at 12.00 noon. William Meadon and Callum Abbot will
give a presentation to shareholders, reviewing the past year and
commenting on the outlook for the current year. The meeting will be
followed by a sandwich lunch, thus providing shareholders with the
opportunity to meet the Directors and representatives of the
Manager. We look forward to seeing as many shareholders as possible
at the Annual General Meeting.
If you have any detailed or technical questions, it would be
helpful if you could raise them in advance with the Company
Secretary at 60 Victoria Embankment, London EC4Y 0JP or via the
'Ask a Question' link on the Company's website. Shareholders who
are unable to attend the Annual General Meeting are encouraged to
use their proxy votes.
Outlook
Notwithstanding the ongoing Brexit uncertainty and the political
upheavals which the UK experienced during 2017, with the Government
losing its absolute majority in the June general election, the UK
stock market performed strongly in 2017, reaching an all-time high.
Since the beginning of 2018 we have seen considerable volatility in
stock markets but the global economic outlook remains fairly
robust.
The consensus forecasts appear to be for lower UK GDP growth
over the coming few years, compared with other developed markets.
This is largely because of the disruption that is expected to be
caused by Brexit, whatever the outcome of the negotiations prior to
the UK's departure from the EU in March 2019. We should also expect
some modest interest rate rises in the UK over the coming year or
so.
However, in my view UK equities continue to be an attractive
asset class in which to invest for the medium to long term. While
we should be prepared for continuing volatility in share prices,
many UK companies will benefit from the growth in the global
economy. The Investment Managers will continue to look for
opportunities to invest in well-managed companies that exhibit
between them a mixture of good earnings growth and reasonable
valuations.
Andrew Sutch
Chairman 13th March 2018
INVESTMENT MANAGERS' REPORT
Market Review
Politics dominated investors' thoughts for much of the year. In
late Spring, in a remarkable six week period, the UK government
went from being genuinely strong and stable to weak and divided. By
contrast, the resounding victory by Emmanuel Macron in the French
Presidential Elections gave Europe a new-found confidence.
The same opinion polls which gave David Cameron the false
confidence to call the EU referendum also led to the fateful
decision of Prime Minister May to risk her parliamentary majority
by calling a snap June Election. The campaign was shambolic and
proved to be a humiliating experience for the Prime Minister, who
not only failed to increase her majority but actually lost it
altogether. It was only a hasty supply and confidence agreement
with the Democratic Unionist Party that enabled Mrs May to form a
government.
The uncertainty caused by both this and the ticking Brexit clock
(which was started in March) hurt consumer confidence which was
already suffering from a prolonged fall in real wages. However,
continuing low unemployment levels and a low savings ratio, gave
some support to consumer spending.
Despite UK GDP growth of only 1.7% during the year (the lowest
in the G7), UK business confidence remained buoyant since the
global economy continued to improve and the lower level of sterling
provided an opportunity for UK exporters and a fillip for companies
with overseas operations. US growth was sufficiently strong for the
Fed to start to raise interest rates.
The UK stock market shrugged off many of the political and
Brexit uncertainties and took heart from an accelerating global
economy and the likelihood that both inflation and interest rates
were likely to stay low for the foreseeable future. The UK stock
market gave a total return for 2017 of 13.1% and finished the year
at an all-time high.
Performance Review
In the year to 31st December 2017, your Company delivered a
total return on net assets (capital plus dividends re-invested) of
+16.2%, compared to the benchmark FTSE All-Share Index total return
of +13.1%. A detailed breakdown of the performance is given in the
accompanying table.
Top Contributors and Detractors to Performance vs FTSE All-Share
Index
Top Five Contributors Top Five Detractors
Fever-Tree +1.35% ITV -0.37%
3i Group +0.34% Anglo American -0.27%
Beazley +0.31% GKN -0.22%
Synthomer +0.29% Royal Dutch Shell -0.21%
Rentokil Initial +0.28% Unilever -0.20%
Source: JPMAM, as at 31st December 2017.
Our most positive contributor to performance during 2017 was
again our holding in the remarkable Fever-Tree, the leading player
within the premium segment of the drinks mixer market, which we
introduced to the portfolio in 2015. The shares doubled (again!)
during the year. Whilst we remain very positive on the outlook for
the company as it starts its international roll out, we thought it
prudent to take some profits. Our top slicing of the position in
August was in excess of GBP24.00 per share, which was exactly six
times the level at which we had made our initial purchases just two
years previously.
Another positive contributor was our long term holding in 3i
Group. The company provides an attractive way of investing in a
diversified portfolio of private equity, infrastructure and debt.
The fund's largest holding Action, the Dutch-based discount,
non-food retailer continues to expand rapidly with sales up 28% in
2017 with 244 new store openings bringing the total to 1,100. The
non-life insurer Beazley also had an excellent year and provided us
with another handsome dividend increase and another special
dividend. The equipment hirer, Ashtead had another very good year
as it benefited from a booming US economy and continued to make
market share gains. We were pleased with the performance of all of
our more recent purchases. The shares of Morgan Sindall the
specialist construction group and the electronics distributor,
Electrocomponents (bought at the end of 2016) were particularly
strong. We continued to benefit from our overweight position in the
mining sector with Rio Tinto our biggest holding performing very
well again on the back of rising commodity prices.
By contrast, the biggest detractor from performance during 2017
was again our long term position in the television broadcaster ITV.
We continue to believe that this company will play a role in the
consolidating global broadcasting sector. While we wait, we are
happy to collect the very attractive dividend which the stock pays.
On the subject of bids it was interesting to see that GKN, which
performed poorly for the portfolio in 2017 was, shortly after the
year end, bid for by Melrose, another of our holdings.
Portfolio Review
The portfolio held 64 stocks at the year end.
New holdings introduced during the year included many industrial
and engineering stocks as we increased the cyclical exposure of the
portfolio in the light of improving global growth. Such new
holdings included Renishaw, Fenner and Morgan Sindall.
We also increased our exposure to technology stocks.
Computacenter and Softcat are both providers of IT infrastructure
and offer attractive earnings growth and strong cash flow. The UK,
however, has a very limited number of quoted technology stocks. We
therefore started what we anticipate to be a long term holding in
Scottish Mortgage, the very successful global investment trust with
a high technology weighting. The trust has an excellent record and
gives the Company exposure to stocks such as Amazon, Apple and
Microsoft which we expect to add value to the portfolio over the
medium to long term.
In terms of sales, we sold out of our final utility holdings
through disposals of both Centrica and National Grid as we believed
that the onset of tighter regulation would be damaging for their
prospects. We also sold our holdings in Reckitt Benckiser, Smith
and Nephew and Intercontinental Hotels Group. We took considerable
profits on WS Atkins, the engineering consultancy group, which was
subject to an agreed cash bid from a Canadian rival
SNC-Lavalin.
Top Over and Under-weight positions vs FTSE All-Share Index
Top Five Overweight Top Five Underweight
Positions Positions
Ashtead +2.2% Reckitt Benckiser -1.8%
Synthomer +2.0% Vodafone -1.6%
Fever-Tree +1.9% Barclays -1.5%
Electrocomponents +1.8% National Grid -1.2%
3i Group +1.8% AstraZeneca -1.2%
Source: JPMAM, as at 31st December 2017.
The portfolio is constructed principally from bottom-up stock
selection; our sector and macro views have a lesser influence on
the portfolio. We aim to run a stock-focused but sector-diversified
portfolio.
We kept gearing at double digits for the whole year as we
continued to find many attractive opportunities in which to
invest.
FTSE 100 futures can be used to hedge the portfolio, but we did
not employ any in 2017.
PERFORMANCE ATTRIBUTION
YEARED 31ST DECEMBER 2017
% %
----------------------------------- ----- -----
Contributions to total returns
----------------------------------- ----- -----
Benchmark return 13.1
----------------------------------- ----- -----
Stock & Sector selection 3.1
----------------------------------- ----- -----
Tactical Gearing 0.9
----------------------------------- ----- -----
Cash -0.5
----------------------------------- ----- -----
Investment Managers' contribution 3.5
----------------------------------- ----- -----
Structural gearing 0.5
----------------------------------- ----- -----
Portfolio total return 17.1
----------------------------------- ----- -----
Management fee/other expenses -0.8
----------------------------------- ----- -----
Residual -0.1
----------------------------------- ----- -----
Other effects -0.9
----------------------------------- ----- -----
Return on net assets 16.2
----------------------------------- ----- -----
Return to shareholders 21.8
----------------------------------- ----- -----
Source: B-one/Datastream/JPMAM/Morningstar.
All figures are on a total return basis.
Performance attribution analyses how the Company achieved its
recorded performance relative to its benchmark.
Market Outlook
The current bull market, which has been running since March
2009, is one of the longest on record. Moreover, the exceptional
returns that equity investors have enjoyed recently have been
delivered with very little volatility. For example, the MSCI World
index rose in every month last year, which is without precedent.
This benign backdrop will not last. Global inflation and growth are
both picking up with long bond yields rising in response. After
almost a decade of continuous monetary stimulus, central banks are
pulling in their horns and starting to pass risk from themselves to
investors. This will cause some degree of volatility in equity
prices, which investors should be prepared for.
Moreover, the continuing Brexit negotiations and a fragile
government at home are both likely to magnify the volatility in UK
equities in the year ahead. We aim, however, to use such volatility
to our advantage by picking up more of the shares we like at lower
prices. The yield and growth in dividends on UK equities continues
to appeal and the many UK companies which have international
exposure will benefit from the improving global economic
backdrop.
We are fortunate indeed to have many long-standing shareholders
who are wise enough to look through short term price movements to
the medium term opportunities that still exist in a
well-diversified portfolio of strong, reasonably-priced UK
equities.
At the time of writing we are approximately 10.1% geared.
William Meadon
Callum Abbot
Investment Managers 13th March 2018
PRINCIPAL RISKS
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 Board has drawn up a
risk matrix, which identifies the key risks to the Company. In
assessing the risks and how they can be mitigated, the Board has
given particular attention to those risks that might threaten the
viability of the Company. These key risks fall broadly under the
following categories:
-- Investment and Strategy
An inappropriate investment strategy, for example asset
allocation or the level of gearing, may lead to underperformance
against the Company's benchmark index and peer companies, resulting
in the Company's shares trading on a wider discount. The Board
manages these risks by diversification of investments through its
investment restrictions and guidelines which are monitored and
reported on by the Manager. JPMF 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
results of the investment process with the Investment Managers, who
attend all Board meetings, and reviews data which show statistical
measures of the Company's risk profile. The Investment Managers
employ the Company's gearing within a strategic range set by the
Board. The Board holds a separate meeting devoted to strategy each
year.
-- Market
Market risk arises from uncertainty about the future prices of
the Company's investments. It represents the potential loss that
the Company might suffer through holding investments in the face of
negative market movements. The Company may use Index Futures to
manage the effective level of gearing. Such instruments are also
subject to fluctuations in value and may therefore result in gains
or losses. The Board considers asset allocation, stock selection
and levels of gearing on a regular basis and has set investment
restrictions and guidelines, which are monitored and reported on by
the Manager. The Board monitors the implementation and results of
the investment process with the Manager.
The Company invests in UK equities and as such market risk
includes those relating to uncertainties in the 'Brexit' process.
These risks are mitigated in part by the extensive overseas
operations and earnings of many companies in which the Company
invests.
-- Legal and Regulatory
In order to qualify as an investment trust, the Company must
comply with Section 1158 of the Corporation Tax Act 2010 ('Section
1158'). Details of the Company's approval are given in the Annual
Report and Financial Statements. Were the Company to breach Section
1158, it might lose investment trust status and, as a consequence,
gains within the Company's portfolio could be subject to Capital
Gains Tax. The Section 1158 qualification criteria are continually
monitored by the Manager and the results reported to the Board each
month. The Company must also comply with the provisions of the
Companies Act and, since its shares are listed on the London Stock
Exchange, the UKLA Listing Rules, Prospectus, Market Abuse
Regulation and Disclosure Guidance & Transparency Rules
('DTRs'). A breach of the Companies Act could result in the Company
and/or the Directors being fined or the subject of criminal
proceedings. Breach of the UKLA Listing Rules or DTRs could result
in the Company's shares being suspended from listing which in turn
would breach Section 1158. The Board relies on the services of its
Company Secretary and its professional advisers to ensure
compliance with The Companies Act and the UKLA Listing Rules and
DTRs.
-- Corporate Governance and Shareholder Relations
Details of the Company's compliance with Corporate Governance
best practice, including information on relations with
shareholders, are set out in the Corporate Governance report in the
Annual report and Financial Statements.
-- Operational and Cybercrime
Loss of key staff by the Manager such as the Investment
Managers, could affect the performance of the Company. Disruption
to, or failure of, the Manager's accounting, dealing or payments
systems or the depositary's or custodian's records could prevent
accurate reporting and monitoring of the Company's financial
position.
Details of how the Board monitors the services provided by the
Manager and its associates and the key elements designed to provide
effective internal control are included within the Risk Management
and Internal Control section of the Corporate Governance report in
the Annual Report and Financial Statements.
The threat of cyber attack, in all its guises, is regarded as at
least as important as more traditional physical threats to business
continuity and security. The Company benefits directly or
indirectly from all elements of JPMorgan's Cyber Security
programme. The information technology controls around the physical
security of JPMorgan's data centres, security of its networks and
security of its trading applications are tested by independent
reporting accountants and reported on every six months against the
AAF Standard.
-- Financial
The financial risks arising from the Company's financial
instruments include market price risk, interest rate risk,
liquidity risk and credit risk. Further details are disclosed in
note 23 in the Annual Report and Financial Statements.
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
Details of the management contract are set out in the Directors'
Report in the Annual Report and Financial Statements. The
management fee payable to the Manager for the year was GBP2,324,000
(2016: GBP1,858,000) of which GBPnil (2016: GBPnil) was outstanding
at the year end.
During the year GBP172,000 (2016: GBP289,000), including VAT,
was payable to the Manager for the administration of savings scheme
products, of which GBPnil (2016: GBPnil) was outstanding at the
year end.
Included in administration expenses in note 6 on page 52 are
safe custody fees amounting to GBP7,000 (2016: GBP6,000) payable to
JPMorgan Chase Bank N.A. of which GBP2,000 (2016: GBP1,000) was
outstanding at the year end.
The Manager may carry out some of its dealing transactions
through group subsidiaries. These transactions are carried out at
arm's length. The commission payable to JPMorgan Securities Limited
for the year was GBP142,000 (2016: GBP94,000) of which GBPnil
(2016: GBPnil) was outstanding at the year end.
The Company holds an investment in JPMorgan Smaller Companies
Investment Trust plc which is managed by JPMorgan. At the year end
this was valued at GBP17.9 million (2016: GBP11.3 million) and
represented 3.8% (2016: 2.6%) of the Company's investment
portfolio. During the year the Company made GBP2,519,000 (2016:
GBPnil) purchases of this investment and sales with a total value
of GBPnil (2016: GBPnil). Dividend income amounting to GBP380,000
(2016: GBP252,000) was receivable during the year of which GBPnil
(2016: GBPnil) was outstanding at the year end.
The Company also holds cash in the JPMorgan Sterling Liquidity
Fund, which is managed by JPMorgan. At the year end this was valued
at GBP16.2 million (2016: GBP11.6 million). Interest amounting to
GBP47,000 (2016: GBP70,000) was receivable during the year of which
GBP7,000 (2016: GBP3,000) was outstanding at the year end.
Handling charges on dealing transactions amounting to GBP4,000
(2016: GBP4,000) were payable to JPMorgan Chase Bank N.A. during
the year of which GBP1,000 (2016: GBPnil) was outstanding at the
year end.
At the year end, total cash of GBP302,000 (2016: GBP159,000) was
held with JPMorgan Chase Bank N.A. A net amount of interest of
GBPnil (2016: GBP2,000) was receivable by the Company during the
year from JPMorgan Chase Bank N.A. of which GBPnil (2016: GBPnil)
was outstanding at the year end.
Full details of Directors' remuneration and shareholdings can be
found in the Annual Report and Financial Statements.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the annual report
and 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
have elected to prepare the financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards) and applicable law. Under Company law
the Directors must not approve the financial statements unless they
are satisfied that, taken as a whole, the annual report and
accounts are fair, balanced and understandable, 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 are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on a 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 proper 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 to enable them to ensure that
the financial statements 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 accounts are published on the www.jpmclaverhouse.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 auditors accept no responsibility for any changes
that have occurred to the accounts since they were initially
presented on the website. The accounts are 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 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
the Annual Report and Financial Statements., confirm that, to the
best of their knowledge, the financial statements, which have been
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and
applicable law), give a true and fair view of the assets,
liabilities, financial position and return or loss of the
Company.
The Board confirms that it is satisfied that the annual report
and accounts taken as a whole are fair, balanced and understandable
and provide the information necessary for shareholders to assess
the strategy and business model of the Company.
For and on behalf of the Board
Andrew Sutch
Chairman
13th March 2018
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31ST DECEMBER 2017
2017 2016
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------- -------- -------- --------
Gains on investments held
at fair
value through profit or loss - 47,672 47,672 - 24,029 24,029
Net foreign currency gains - 17 17 - 6 6
Income from investments 18,484 - 18,484 16,236 - 16,236
Interest receivable and similar
income 47 - 47 72 - 72
----------------------------------- -------- -------- -------- -------- -------- --------
Gross return 18,531 47,689 66,220 16,308 24,035 40,343
Management fee (813) (1,511) (2,324) (650) (1,208) (1,858)
Performance fee write back - - - - 3,500 3,500
Other administrative expenses (780) - (780) (840) - (840)
----------------------------------- -------- -------- -------- -------- -------- --------
Net return on ordinary activities
before finance costs and taxation 16,938 46,178 63,116 14,818 26,327 41,145
Finance costs (921) (1,711) (2,632) (919) (1,706) (2,625)
----------------------------------- -------- -------- -------- -------- -------- --------
Net return on ordinary activities
before taxation 16,017 44,467 60,484 13,899 24,621 38,520
Taxation (20) - (20) (66) - (66)
----------------------------------- -------- -------- -------- -------- -------- --------
Net return on ordinary activities
after taxation 15,997 44,467 60,464 13,833 24,621 38,454
----------------------------------- -------- -------- -------- -------- -------- --------
Return per share (note 3) 29.32p 81.50p 110.82p 25.28p 44.99p 70.27p
Dividends declared and payable
in
respect of the year (note
2) 26.00p 23.00p
Dividends paid during the
year (note 2) 24.50p 21.50p
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31ST DECEMBER 2017
Called Capital
up
share Share redemption Capital Revenue(1)
capital premium reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- ----------- --------- ----------- ---------
At 31st December 2015 14,192 149,641 6,680 167,612 17,601 355,726
Repurchase of the Company's
shares
into Treasury - - - (115) - (115)
Net return on ordinary
activities - - - 24,621 13,833 38,454
Dividends paid in the
year (note 2) - - - - (11,758) (11,758)
----------------------------- -------- -------- ----------- --------- ----------- ---------
At 31st December 2016 14,192 149,641 6,680 192,118 19,676 382,307
Repurchase of the Company's
shares
into Treasury - - - (918) - (918)
Net return on ordinary
activities - - - 44,467 15,997 60,464
Dividends paid in the
year - - - - (13,355) (13,355)
----------------------------- -------- -------- ----------- --------- ----------- ---------
At 31st December 2017 14,192 149,641 6,680 235,667 22,318 428,498
----------------------------- -------- -------- ----------- --------- ----------- ---------
(1) This revenue forms the distributable reserve of the Company
and may be used to fund distribution of profits to investors via
dividend payments.
STATEMENT OF FINANCIAL POSITION
AT 31ST DECEMBER 2017
2017 2016
GBP'000 GBP'000
----------------------------------------------- ---------- ---------
Fixed assets
Investments held at fair value through profit
or loss 476,819 428,242
Current assets
Debtors 877 882
Cash and cash equivalents 16,489 11,771
----------------------------------------------- ---------- ---------
17,366 12,653
Current liabilities
Creditors: amounts falling due within one
year (768) (28,696)
----------------------------------------------- ---------- ---------
Net current assets/(liabilities) 16,598 (16,043)
Total assets less current liabilities 493,417 412,199
Creditors: amounts falling due after more
than one year (64,919) (29,892)
----------------------------------------------- ---------- ---------
Net assets 428,498 382,307
----------------------------------------------- ---------- ---------
Capital and reserves
Called up share capital 14,192 14,192
Share premium 149,641 149,641
Capital redemption reserve 6,680 6,680
Capital reserves 235,667 192,118
Revenue reserve 22,318 19,676
----------------------------------------------- ---------- ---------
Total shareholders' funds 428,498 382,307
----------------------------------------------- ---------- ---------
Net asset value per share (note 4) 785.4p 698.9p
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31ST DECEMBER 2017
2017 2016
GBP'000 GBP'000
--------------------------------------------------- ---------- ----------
Net cash outflow from operations before dividends
and interest (3,055) (4,437)
Dividends received 18,422 16,405
Interest received 43 69
Interest paid (2,560) (2,673)
Overseas tax recovered 37 2
--------------------------------------------------- ---------- ----------
Net cash inflow from operating activities 12,887 9,366
--------------------------------------------------- ---------- ----------
Purchases of investments (135,101) (162,447)
Sales of investments 134,197 163,025
Settlement of futures contracts - (1,999)
Settlement of foreign currency contracts 8 7
--------------------------------------------------- ---------- ----------
Net cash outflow from investing activities (896) (1,414)
--------------------------------------------------- ---------- ----------
Dividends paid (13,355) (11,758)
Repurchase of the Company's shares into Treasury (918) (115)
Repayment of bank loan - (25,000)
Drawdown of bank loan 7,000 8,000
--------------------------------------------------- ---------- ----------
Net cash outflow from financing activities (7,273) (28,873)
--------------------------------------------------- ---------- ----------
Increase/(decrease) in cash and cash equivalents 4,718 (20,921)
--------------------------------------------------- ---------- ----------
Cash and cash equivalents at start of year 11,771 32,691
Exchange movements - 1
Cash and cash equivalents at end of year 16,489 11,771
--------------------------------------------------- ---------- ----------
Increase/(decrease) in cash and cash equivalents 4,718 (20,921)
--------------------------------------------------- ---------- ----------
Cash and cash equivalents consist of:
Cash and short term deposits 302 159
Cash held in JPMorgan Sterling Liquidity Fund 16,187 11,612
--------------------------------------------------- ---------- ----------
Total 16,489 11,771
--------------------------------------------------- ---------- ----------
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
(a) Basis of accounting
The financial statements are prepared under historical cost
convention, modified to include fixed asset investments at fair
value, and in accordance with the Companies Act 2006, United
Kingdom Generally Accepted Accounting Practice ('UK GAAP'),
including FRS 102 'The Financial Reporting Standard applicable in
the UK and Republic of Ireland' and with the Statement of
Recommended Practice 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' (the 'SORP') issued by the
Association of Investment Companies in November 2014, and updated
in January 2017.
All of the Company's operations are of a continuing nature.
The financial statements have been prepared on a going concern
basis. The disclosures on going concern in the Annual Report and
Financial Statements form part of these financial statements.
The policies applied in these financial statements are
consistent with those applied in the preceding year.
2. Dividends
(a) Dividends paid and proposed
2017 2016
GBP'000 GBP'000
------------------------------------------------ -------- --------
Dividends paid
Unclaimed dividends refunded to the Company(1) (13) (7)
2016 fourth quarterly dividend of 8.00p
(2015: 6.50p) paid in March 2017 4,365 3,557
First quarterly dividend of 5.50p (2016:
5.00p) paid in June 2017 3,001 2,736
Second quarterly dividend of 5.50p (2016:
5.00p) paid in September 2017 3,001 2,736
Third quarterly dividend of 5.50p (2016:
5.00p) paid in December 2017 3,001 2,736
------------------------------------------------ -------- --------
Total dividends paid in the year of 24.50p
(2016: 21.50p) 13,355 11,758
------------------------------------------------ -------- --------
Dividend proposed
Fourth quarterly dividend proposed of
9.50p (2016: 8.00p) paid in March 2018 5,183 4,365
------------------------------------------------ -------- --------
(1) Represents dividends which remain unclaimed after a period
of 12 years and thereby become the property of the Company.
All dividends paid and declared in the period have been funded
from the Revenue Reserve.
The fourth quarterly dividend has been declared and paid in
respect of the year ended 31st December 2017. This dividend will be
reflected in the financial statements for the year ending 31st
December 2018.
(b) Dividend for the purposes of Section 1158 of the Corporation Tax Act 2010 ('Section 1158')
The requirements of Section 1158 are considered on the basis of
dividends declared in respect of the financial year, shown below.
The revenue available for distribution by way of dividend for the
year is GBP15,997,000 (2016: GBP13,833,000). The minimum
distribution required under Section 1158 is GBP13,220,000 (2016:
GBP11,387,000). Brought forward revenue reserves amounting to
GBPnil (2016: GBPnil) have been utilised in order to finance the
dividend.
2017 2016
GBP'000 GBP'000
------------------------------------------- -------- --------
First quarterly dividend of 5.50p (2016:
5.00p) paid in June 2017 3,001 2,736
Second quarterly dividend of 5.50p (2016:
5.00p) paid in September 2017 3,001 2,736
Third quarterly dividend of 5.50p (2016:
5.00p) paid in December 2017 3,001 2,736
Fourth quarterly dividend of 9.50p (2016:
8.00p) paid on 1st March 2018 5,183 4,365
------------------------------------------- -------- --------
Total dividend declared in respect of
the year of 26.00p (2016: 23.00p) 14,186 12,573
------------------------------------------- -------- --------
The revenue reserve after payment of the final dividend will
amount to GBP17,135,000 (2016: GBP15,311,000).
3. Return per share
2017 2016
GBP'000 GBP'000
-------------------------------------- ----------- -----------
Revenue return 15,997 13,833
Capital return 44,467 24,621
-------------------------------------- ----------- -----------
Total return 60,464 38,454
-------------------------------------- ----------- -----------
Weighted average number of shares in
issue during the year 54,564,897 54,720,755
Revenue return per share 29.32p 25.28p
Capital return per share 81.50p 44.99p
-------------------------------------- ----------- -----------
Total return per share 110.82p 70.27p
-------------------------------------- ----------- -----------
4. Net asset value per share
2017 2016
-------------------------------------- ----------- -----------
Net assets (GBP'000) 428,498 382,307
Number of shares in issue (excluding
shares held in Treasury) 54,558,979 54,703,979
-------------------------------------- ----------- -----------
Net asset value per share 785.4p 698.9p
-------------------------------------- ----------- -----------
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 shortly be submitted to the
National Storage Mechanism and will be available for inspection at
www.morningstar.co.uk/uk/NSM
The annual report will shortly be available on the Company's
website at www.jpmclaverhouse.co.uk where up-to-date information on
the Company, including daily NAV and share prices, factsheets and
portfolio information can also be found.
JPMORGAN FUNDS LIMITED
13th March 2018
This information is provided by RNS
The company news service from the London Stock Exchange
END
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