TIDMJDT
RNS Number : 7394K
Jupiter Dividend & Growth Trust PLC
20 April 2015
Jupiter Dividend & Growth Trust plc ('the Company')
Annual Report & Accounts for the year ended 31 December
2014
This announcement contains regulated information
Financial Highlights
Performance
As at As at
31.12.14 31.12.13 % change
Total assets less current liabilities
(GBP'000) 50,465 49,315 +2.3
FTSE All-Share Index (Capital)* 3,532.74 3,609.63 -2.1
FTSE All-Share Index (Total Return)* 5,449.09 5,385.63 +1.2
Share Performance
As at As at
31.12.14 31.12.13 % change
Zero Dividend Preference shares
Mid market price (p) 111.13 97.50 +14.0
Net Asset Value (p) 123.10 115.04 +7.0
Discount (%) (9.7) (15.2) -
Ordinary Income shares
Mid market price (p) 4.50 4.75 -5.3
Net Asset Value (p) 1.10 3.38 -67.5
Premium (%) 307.2 40.53 -
Total dividends declared and paid
during the year (p) 0.72 0.72 +0.0
Total Return (NAV & dividends) (p) 1.82 4.10 -55.6
Common shares
Mid market price (p) 111.25 106.50 +4.5
Net Asset Value (p) 124.48 116.07 +7.2
Discount (%) (10.6) (8.2) -
Total dividends declared and paid
during the year (p) 2.00 2.00 +0.0
Total Return (NAV & dividends) (p) 126.48 118.07 +7.1
Revenue Performance
Year to Year to
31.12.14 31.12.13 % change
Revenue after taxation due to Ordinary
Income shareholders (GBP'000) 748 742 +0.8
Return per Ordinary Income share
(p) 0.82 0.81 +1.2
Return per Common share (p) (shown
within revenue finance costs) 2.36 2.23 +5.83
* This announcement contains information based on the FTSE
All-Share Index. 'FTSE(R)' is a trade mark owned by the London
Stock Exchange Plc and is used by FTSE International Limited
('FTSE') under licence. The FTSE All-Share Index is calculated by
FTSE. FTSE does not sponsor, endorse or promote the product
referred to in this announcement and is not in any way connected to
it and does not accept any liability in relation to its issue,
operation and trading. All copyright and database rights in the
index values and constituent list vest in FTSE.
Strategic Report
Chairman's Statement
Investment Performance
Your Company maintained an investment policy of focusing on
large, stable companies in sectors that are benefiting from the
resurgence of the UK consumer economy and which have shown the
capacity discipline necessary to secure pricing power, grow profits
and reward shareholders. This approach helped it to beat its
benchmark in 2014.
The total assets less current liabilities of your Company
increased by 2.3 per cent. during the year to 31 December 2014. By
comparison, the Company's benchmark index, the FTSE All-Share
Index, decreased by 2.1 per cent. (in capital terms) during the
same period.
The Net Asset Value of the Common shares increased by 7.2 per
cent. during the period under review from 116.07p to 124.48p
(including income and expenses), while the discount on the Common
shares widened from 8.2 per cent. to 10.6 per cent.
The Net Asset Value of the Zero Dividend Preference shares
increased by 7.0 per cent. during the period under review from
115.04p to 123.10p*, while the discount on the Zero Dividend
Preference shares narrowed from 15.2 per cent. to 9.7 per cent.
Revenue & Dividends
The Company's revenue after tax for the period amounted to
GBP748,000. Dividends totalling 0.72p (net) per Ordinary Income
share and 2.00p (net) per Common share were paid to the respective
shareholders for the year ending 31 December 2014.
For the current year the Directors have declared a fourth
interim dividend of 0.18p per Ordinary Income share and 0.50p per
Common share. Both dividends will be paid on 20 February 2015 to
the shareholders on the register as at 23 January 2015 and these
are in accordance with the relative entitlements of the Ordinary
Income shares and the Common shares to the distributable profits of
the Company under the Company's Articles of Association.
Ordinary Income shares are entitled to share in all of the
distributable revenues arising from assets attributable to both the
Zero Dividend Preference shares and Ordinary Income shares, whereas
the Common shares are entitled only to distributable revenues
attributable to the proportion of the Company's total assets that
they represent.
Dividends on the Ordinary Income and Common shares are paid in
Sterling, quarterly in arrears. From time to time, subject to the
requirements of the Corporation Tax Act 2010 the Directors may
retain income in the revenue reserves of the Company with a view to
producing a consistent level of dividend for Ordinary Income and
Common shareholders in subsequent accounting periods.
Annual General Meeting
The Company's Annual General Meeting ('AGM') will be held on
Wednesday, 10 June 2015 at the offices of Jupiter Asset Management
Limited, 1 Grosvenor Place, London SW1X 7JJ. In addition to the
formal business, the Investment Adviser will provide a short
presentation to shareholders on the performance of the Company over
the past year as well as an outlook for the future. The Board would
welcome your attendance at the AGM as it provides shareholders with
an opportunity to ask questions of the Board and Investment
Adviser.
Outlook
Advanced economies remain hampered by heavy debt burdens, a lack
of company investment and wage growth. The global economy is
healing but it remains unbalanced and growth prospects for 2015 are
being revised down. Although the collapse in the oil price should
be highly beneficial to consumers and much of the corporate sector,
it has continued to fuel fears of deflation and push down
government bond yields. But, for the moment, your fund manager
remains confident that prospects for the UK are set fair and should
continue to be so for the next 12-18 months. Your Company's equity
positions are in companies which are well positioned for further
growth and which are believed to have the potential to deliver
consistent performance and rising dividends.
Martin Boase
Chairman
20 April 2015
* The notional accrued entitlement of the Zero Dividend
Preference shares at 31 December 2014 was 123.10p.
Investment Adviser's Review
Review
The period under review started with optimism around economic
growth but overall was characterised by a period of risk aversion
and nervousness over the strength of the global economy. Worries
over a potential rise in interest rates in the UK, concerns over
economic growth and geo-political worries (Syria, Russia/Ukraine)
were some of the main causes cited. Towards the end of the year
sharp falls in oil and commodity prices in general caused
significant share price reductions in commodity related areas. The
FTSE All-Share Index and the FTSE 350 Index both returned 1.2 per
cent. while smaller companies (excluding investment companies)
returned -2.7 per cent. having risen very sharply over the past two
years. The total assets of your Company rose by 2.3 per cent.
At first, financial markets continued to dance to the tunes of
the world's major central banks. In the US, the end of an
extraordinary period of stimulatory monetary policy came into view
whereas, in the UK, the success of the government's mortgage
guarantee scheme fuelled anticipation for an increase in interest
rates. In contrast, the European Central Bank moved as slowly as it
dared towards zero interest rates and hence the endgame of
politically contentious quantitative easing. In Japan, the central
bank's remit was to create inflation.
However, as time progressed, central banks looked increasingly
as if they might be hoist by their own petard. Perhaps more than at
any time in the past, the financial market tail appeared to be
wagging the economic dog. Thus, having pumped up financial asset
prices, central banks seemed to find themselves having to take ever
greater account of financial market conditions when evaluating
monetary policy. Against such a background the domestic UK economy
- to which your Company retains a strong focus - remained one of
the few bright spots.
2014 was a year of heightened merger and acquisition activity,
notably in the pharmaceutical sector. Your Company enjoyed the
benefit of interest in AstraZeneca after Pfizer's approach
highlighted the inherent value in the sector, as did an asset swap
between GlaxoSmithKline and Novartis. Our holding in Sinclair
Pharma gained after taking steps to release the value in its drugs
portfolio. We took profits and sold Shire (speciality
biopharmaceuticals) after its shares soared following a bid from a
US company which aimed to use Shire to adopt a controversial,
tax-advantageous UK address. The bid was later withdrawn. We took
profits in pub operator Spirit Group following a bid by Greene
King. Our holding in Friends Life also benefited from a bid from
Aviva.
In 2014 we actively reshaped the portfolio. We opened new
positions in ITV (economic recovery should boost advertising
spend), Ryanair (cost control, better yields) and Playtech (key B2B
partner for online gambling operators). Other new holdings included
Barclays, retailer Next and tobacco groups British American Tobacco
and Imperial Tobacco.
Our decision to avoid mining stocks proved correct; the price of
iron ore plummeted during the period as demand from China waned. We
favoured insurance companies (e.g. Brit, Prudential and Legal &
General), over banks because they already offered attractive,
rising dividends and operate under a less repressive regulatory
regime. That said, in the latter part of the year, we took a
position in Barclays which as one of the cheapest banks in Europe
we considered to be a special situation value play. Its new
chairman comes from Aviva where he has demonstrated his ability to
turn around the company. Barclays has passed its stress tests and
has the potential to substantially improve its dividends.
Capacity discipline, which then creates pricing power, is one of
our major investment themes which should serve investors well in a
low growth environment. We have positions in airlines (Ryanair and
International Airlines Group), motor underwriters (esure),
housebuilders (Crest Nicholson and Galliford Try) and packaging
company Mondi. All these companies have shown disciplined use of
their capital and in common with ITV (media) and Friends Life
(insurance) have increased returns to shareholders in the absence
of better alternative investment opportunities.
In the first half of the year we cut holdings in Halma and
Spirax-Sarco. Both had significant international exposure and we
were concerned about the speed at which sterling had strengthened
against the dollar. We also reduced positions in BBA Aviation and
Babcock International. In the latter half of the year we sold
Lancashire Holdings, Mitie and most of Tate & Lyle. We added to
holdings in Brit, Conviviality Retail, esure, GKN, KCOM, Playtech,
Ryanair and Vodafone. Following the sharp fall in the oil price
towards the year end we reduced our exposure to the sector by
trimming positions in BP and IMI. We also trimmed back positions in
AstraZeneca, BT, Cineworld, Micro Focus International and Sinclair
IS Pharma.
Outlook
The sharp drop in the oil price alongside politically-inspired
reductions in future household energy bills, lower food prices and
a smidgeon of real wage growth all sit comfortably alongside the
unacknowledged pre-election boom carefully engineered by the
Chancellor. As such, we can expect a consumer-dominated economy to
continue to tick along well enough for now, albeit against
headwinds which include slower growth in the eurozone and Asia.
Manufacturing exporters look particularly sensitive to the latter.
Nevertheless, our equity holdings in airlines, housebuilders,
consumer stocks and specialty financials have continued to benefit
from a broadly benign domestic environment.
In an ideal world, further investment and rising exports could
take up the baton of the Chancellor's domestically-generated growth
which successfully kick-started the economy in 2013. But, for the
time being, we think shorter term momentum in the UK economy versus
its developed nation peers looks set to continue. Furthermore, the
low cost of borrowing for corporations and their serial
underinvestment makes us think that M&A activity could be a big
feature of 2015 which should provide some additional support.
Quantitative easing has succeeded in pushing up the prices of
numerous asset classes. Central bank determination to suppress bond
yields suggests to us that the total return from investment grade
bonds is therefore likely to be limited. In a world where many
government bond yields are close to zero or have turned negative,
it seems to us that the search for yield is likely to continue, if
not to intensify. Fortunately, we are able to identify companies
with good individual growth prospects which have the ability to pay
attractive and rising dividends. As such, your Company remains
fully invested.
Alastair Gunn
Fund Manager
Jupiter Asset Management Limited*
20 April 2015
*Appointed as Investment Manager to the Company until 21 July
2014. Subsequently appointed as Investment Adviser to JUTM, who
were appointed as AIFM to the Company on 22 July 2014.
Investment Portfolio
Market value Percentage
Company Sector GBP'000 of Portfolio
AstraZeneca Health Care 2,478 5.1
Royal Dutch Shell 'B' Oil & Gas 2,477 5.1
GlaxoSmithKline Health Care 2,367 4.8
WPP Consumer Services 1,900 3.9
Vodafone Group Telecommunications 1,893 3.9
BP Oil & Gas 1,848 3.8
BT Group Telecommunications 1,807 3.7
Plus500 Financials 1,783 3.6
Cineworld Group Consumer Services 1,660 3.4
HSBC Holdings Financials 1,615 3.3
Imperial Tobacco Group Consumer Goods 1,418 2.9
Friends Life Group Financials 1,410 2.9
Galliford Try Industrials 1,222 2.5
Crest Nicholson Consumer Goods 1,204 2.5
Mondi Basic Materials 1,050 2.1
Playtech Consumer Services 1,029 2.1
Barclays Financials 974 2.0
ITV Consumer Services 968 2.0
International Airlines
Group Consumer Services 960 2.0
esure Group Financials 919 1.9
Ryanair Holdings Consumer Services 911 1.9
Sinclair IS Pharma Health Care 910 1.9
British American Tobacco Consumer Goods 875 1.8
ISG Industrials 822 1.7
Babcock International
Group Industrials 794 1.6
Verizon Communications Telecommunications 784 1.6
CRH Industrials 772 1.6
GKN Consumer Goods 757 1.5
IMI Industrials 756 1.5
William Hill Consumer Services 753 1.5
Prudential Financials 746 1.5
Micro Focus International Technology 716 1.5
Greencore Group Consumer Goods 715 1.5
KCOM Group Telecommunications 710 1.4
Melrose Industries Industrials 696 1.4
Legal & General Group Financials 684 1.4
Next Consumer Services 680 1.4
Brit Financials 676 1.4
Amec Foster Wheeler Oil & Gas 576 1.2
Centrica Utilities 558 1.1
Brown (N.) Group Consumer Services 516 1.0
Tullett Prebon Financials 426 0.9
Aga Rangemaster Group Consumer Goods 425 0.9
Tate & Lyle Consumer Goods 421 0.8
BBA Aviation Industrials 360 0.7
Conviviality Retail Consumer Services 348 0.7
Ricardo Industrials 281 0.6
Balfour Beatty Industrials 264 0.5
--------------------------- --------------------- ------------- -------------
Total Investments 48,914 100.0
-------------------------------------------------- ------------- -------------
Cross Holdings in other Investment Companies
It is the Company's policy to invest no more than 10 per cent.,
in aggregate, of the value of the Total Assets of the Company in
other listed closed-ended investment funds or closed-ended
investment funds other than those which themselves have published
investment policies to invest no more than 15 per cent. of their
total assets in other closed-ended investment funds. As at 31
December 2014, none of the Company's assets were invested in listed
closed-ended investment funds.
Sector Analysis of Investments
Overseas UK
2013 2014 Percentage Percentage
% % Equities of Portfolio of Portfolio
12.2 10.1 Oil & Gas
10.4 8.9 Oil & Gas Producers 8.9
Oil Equipment, Services and
1.8 1.2 Distribution 1.2
2.0 2.1 Basic Materials
2.0 2.1 Forestry & Paper 2.1
24.9 12.1 Industrials
3.2 4.6 Construction Materials 1.6 3.0
1.1 - Electronics & Electrical Equipment -
7.2 2.9 Industrial Engineering 2.9
10.1 3.9 Support Services 3.9
3.3 0.7 Industrial Transportation 0.7
7.8 11.9 Consumer Goods
- 1.5 Automobiles & Parts 1.5
5.0 2.3 Food Producers 1.5 0.8
2.8 3.4 Household Goods 3.4
- 4.7 Tobacco 4.7
13.1 11.8 Health Care
13.1 11.8 Pharmaceuticals & Biotechnology 11.8
15.5 19.9 Consumer Services
0.7 0.7 Food & Drug Retailers 0.7
3.5 5.9 Media 5.9
3.4 2.4 General Retailers 2.4
7.9 10.9 Travel & Leisure 3.9 7.0
11.0 10.6 Telecommunications
6.4 3.9 Mobile Telecommunications 3.9
4.6 6.7 Fixed Line Telecommunications 1.6 5.1
1.4 1.1 Utilities
1.4 1.1 Gas, Water & Multiutilities 1.1
10.1 14.4 Financials
4.5 5.3 Banks 5.3
3.2 5.8 Life Insurance 5.8
2.4 3.3 Nonlife Insurance 3.3
1.9 4.5 Financial Services
1.9 4.5 General Financial 3.6 0.9
0.1 1.5 Technology
0.1 1.5 Software & Computer Services 1.5
100.0 100.0 Total Equities 12.2 87.8
----- ----- -------------------------------------- ------------ ------------
Strategic Review
The Strategic Report has been prepared in accordance with the
Companies Act 2006 (Strategic Report and Directors' Report)
Regulations 2013.
The Strategic Report seeks to provide shareholders with the
relevant information to enable them to assess the performance of
the Directors of the Company during the period under review.
Business and Status
During the year the Company carried on business as an investment
trust with its principal activity being portfolio investment. The
Company has been approved by HM Revenue & Customs as an
investment trust subject to the Company continuing to meet the
eligibility conditions of sections 1158 and 1159 of the Corporation
Taxes Act 2010 and the ongoing requirements for approved companies
as detailed in Chapter 3 of Part 2 of the Investment Trust
(Approved Company) (Tax) Regulations 2011. In the opinion of the
Directors, the Company has conducted its affairs in the appropriate
manner to retain its status as an investment trust.
The Company is an investment company within the meaning of
section 833 of the Companies Act 2006.
The Company is not a close company within the meaning of the
provisions of the Corporation Tax Act 2010 and has no
employees.
The Company was incorporated in England & Wales on 28
September 1999 and started trading on 30 November 1999, immediately
following the Company's launch.
Reviews of the Company's activities are included in the
Chairman's Statement and Investment Adviser's Review.
There has been no significant change in the activities of the
Company during the year to 31 December 2014 and the Directors
anticipate that the Company will continue to operate in the same
manner during the current financial year.
Planned life of the Company
The life of the Company was extended in January 2009 from 30
November 2010 to 30 November 2017. On 30 November 2017 the
directors are required to convene an Extraordinary General Meeting
and propose a resolution requiring the Company to be wound up
voluntarily unless the directors have previously been released from
the obligation by the Company's shareholders.
The limited life of the Company is designed to ensure that all
shareholders can realise the underlying Net Asset Value of their
shares (after liquidation costs), irrespective of their market
price on the winding-up date.
Investment Objective
The objective of the Company is to provide Ordinary Income and
Common shareholders with a high and rising income together with the
possibility of capital appreciation and to provide Zero Dividend
Preference and Common shareholders with a predetermined level of
capital growth.
Strategy
The Investment Adviser is not currently limited in the asset
allocation between sectors, geographic regions or the types of
equities and equity elated securities in which the Company may
invest, but will consider each potential investment on its own
merits. The Investment Adviser will focus on the sectors that it
considers to be the most undervalued areas of the market from time
to time and the allocation of assets between different sectors will
be determined by the Investment Adviser in its absolute
discretion.
The Company concentrates on generating capital growth and income
rather than adhering closely to the Benchmark or any other indices.
It focuses on investing in companies where, in the opinion of the
Investment Adviser, valuations are low and growth in earnings or
assets is not fully appreciated. The Investment Adviser seeks to
identify companies within growth industries which enjoy certain key
characteristics, including an imaginative, proven and incentivised
management team and balance sheet strength. The portfolio also
concentrates on situations which can be easily analysed and
understood. The Investment Adviser intends to exercise caution with
respect to purchase prices and a strong sell discipline is
maintained where target valuations are exceeded.
The Board has not set an objective of a specific portfolio yield
for the Investment Adviser as the level of such yield is expected
to vary with the sectors and geographical regions to which the
Company's portfolio is exposed at any given time. However,
substantially all distributable revenues that are generated from
the Company's investment portfolio will be paid out in the form of
quarterly dividends.
Business Model & Investment Policy
The investment policy of the Company is to invest mainly in a
portfolio of UK listed equities, UK equity-related securities (such
as convertible securities, preference shares, convertible unsecured
loan stock, warrants and other similar securities) and UK fixed
interest securities.
The Company may invest in unlisted securities (up to a maximum
of 5 per cent. of Total Assets) and derivatives but it is not the
Investment Adviser's present intention to do so (save, in respect
of derivatives for the purposes of efficient portfolio
management).
It is the Company's policy to invest no more than 10 per cent.,
in aggregate, of the value of the Total Assets of the Company in
other listed closed-ended investment funds or closed-ended
investment funds other than those which themselves have published
investment policies to invest no more than 15 per cent. of their
total assets in other closed-ended investment funds. As at 31
December 2014, none of the Company's assets were invested in listed
closed-ended investment funds.
Benchmark Index
The Company's benchmark index is the FTSE All-Share Index.
Capital Structure
Zero Dividend Preference Shares
The Zero Dividend Preference shares are designed to provide a
pre-determined capital entitlement of 150p on 30 November 2017
which ranks alongside the Common shares, behind the Company's
creditors (if any), but in priority to the capital entitlements of
the Ordinary Income shares. The Zero Dividend Preference shares are
not entitled to income and their entire return will take the form
of capital.
The Zero Dividend Preference shares entitle their holders to
vote at all general meetings of the Company. In addition, they
carry the right to vote as a class on certain proposals which would
be likely to materially affect their position.
Ordinary Income Shares
The Ordinary Income shares are designed to provide holders with
income and the possibility of capital growth alongside the Common
shares in the Ordinary Income Share Proportion*.
Ordinary Income shareholders are entitled to share alongside the
Common shares in the Company's surplus assets in the Ordinary
Income share proportion after satisfying the pre-determined
entitlements of the Zero Dividend Preference shares, the Common
shares and the Company's creditors (if any) on the planned
winding-up date of 30 November 2017. Any such surplus will be
shared with the holders of Common Shares in the Ordinary Income
Share Proportion*.
The Ordinary Income shares are geared by the Zero Dividend
Preference shares and Common shares both in terms of income, where
the Zero Dividend Preference shares have no entitlement and the
Common shares which have the entitlement in the Common Share
Proportion**, and capital, where the Zero Dividend Preference
shares and Common shares have a fixed entitlement.
The Ordinary Income shares entitle their holders to vote at all
general meetings of the Company. In addition, they carry the right
to vote as a class on certain proposals which would be likely to
materially affect their position.
Common Shares
The Common shares are designed to provide a pre-determined
capital entitlement of 150p on 30 November 2017, which ranks
alongside the Zero Dividend Preference shares, behind the Company's
creditors (if any), but in priority to the capital entitlements of
the Ordinary Income shares.
Common shares are also entitled to share in the Company's
surplus assets, after satisfying the pre-determined entitlements of
the Zero Dividend Preference shares and Common shares, (referred to
above) and the Company's creditors (if any) on the planned wind-up
date of 30 November 2017. Any such surplus will be shared alongside
the holders of Ordinary Income shares in the Common Share
Proportion**.
Common shareholders have the right to vote at general meetings
of the Company. In addition they carry the right to vote as a class
in certain circumstances. The Common shares are designed to provide
holders with income, alongside the Ordinary Income shares in the
Common Share Proportion**.
Dividend Policy
Dividends on the Ordinary Income Shares and the Common Shares
will be paid quarterly in arrears. From time to time, subject to
the requirements of the Corporation Tax Act 2010, the Directors may
retain income in the revenue reserves of the Company with a view to
producing a consistent level of dividends for Ordinary Income
Shareholders and Common Shareholders in subsequent accounting
periods.
Management
The Company has no employees and most of its day-to-day
responsibilities are delegated to Jupiter Asset Management Limited,
who act as the Company's Investment Adviser and Company
Secretary.
* Ordinary Income Share Proportion - the proportion of dividend
and capital distributions to which Ordinary Income shares are
entitled to share pari passu with the Common shares, calculated as
at 30 November 2010 as 80.41 per cent.
** Common Share Proportion - the proportion of dividends and
capital distributions to which the Common shares are entitled to
share pari passu with Ordinary Income shares, calculated as at 30
November 2010 as 19.59 per cent.
Key Performance Indicators
At the quarterly board meetings the Directors consider a number
of performance indicators to help assess the Company's success in
achieving its objectives. The key performance indicators used to
measure the performance of the Company over time are as
follows:
-- Net Asset Value changes and the premium or discount of share
price to Net Asset Value over time;
-- Ordinary Income, Zero Dividend Preference and Common share price movement;
-- Zero Dividend Preference and Common share cover and Ordinary
Income and Common share yield and dividend rates; and
-- Peer group comparative performance.
A history of the Net Asset Value, Ordinary Income, Zero Dividend
Preference and Common share price and Benchmark Index are shown in
the monthly factsheets which can be viewed on the Company's section
of the Investment Adviser's website www.jupiteram.com/JDT and which
are available on request from the Company Secretary.
Gearing
Gearing is defined as the ratio of a company's total assets to
its net assets, expressed as a percentage. The effect of gearing is
that in rising markets a geared share class tends to benefit from
any out-performance of the relevant company's investment portfolio
above the cost of payment of the prior ranking entitlements of any
lenders and other creditors. Conversely, in falling markets the
value of the geared shares class suffers more if the Company's
investment portfolio under-performs the cost of those prior
entitlements.
The Company is geared by its Zero Dividend Preference and Common
shares. As at 31 December 2014, the gearing was 98.0 per cent. (31
December 2013: 93.7 per cent.).
Risks and Uncertainties
The principal risk factors that may affect the Company and its
business can be divided into the following areas:
Investment Strategy and Share Price Movement - The Company is
exposed to the effect of variations in the price of its
investments. A fall in the value of its portfolio will have an
adverse effect on shareholders' funds. It is not the aim of the
Board to eliminate entirely the risk of capital loss, rather it is
its aim to seek capital growth. The Board reviews the Company's
investment strategy and the risk of adverse share price movements
at its quarterly board meetings taking into account the economic
climate, market conditions and other factors that may have an
effect on the sectors in which the Company invests.
Liquidity Risk - This risk can be viewed as the liquidity of the
securities in which the Company invests and the liquidity of the
Company's shares. The Company may invest in securities that have a
very limited market which will affect the ability of the Company's
Investment Adviser to dispose of securities when he no longer feels
they offer the potential for future returns. Likewise the Company's
shares may experience liquidity problems when shareholders are
unable to realise their investment in the Company because there is
a lack of demand for the Company's shares. At its quarterly
meetings the Board considers the current liquidity in the Company's
investments when setting restrictions on the Company's exposure.
The Board also reviews, on a quarterly basis, the Company's buy
back programme and in doing so is mindful of the liquidity in the
Company's shares.
Gearing Risk - The Company's gearing (which includes the
Company's Zero Dividend Preference and Common shares) can impact
the Company's performance by accelerating the decline in value of
the Company's Total Assets at a time when the Company's portfolio
is declining. Conversely gearing can have the effect of
accelerating the increase in the value of the Company's Total
Assets at a time when the Company's portfolio is rising. At its
quarterly meetings the Board is mindful of the outlook for equity
markets when reviewing the Company's gearing.
Discount to Net Asset Value - A discount in the price at which
the Company's shares trade to Net Asset Value would mean that
shareholders would be unable to realise the true underlying value
of their investment. The Directors have powers granted to them at
the last Annual General Meeting to purchase Geared Ordinary shares
and Zero Dividend Preference shares as a method of controlling the
discount to Net Asset Value and enhancing shareholder value.
Regulatory Risk - The Company operates in a complex regulatory
environment and faces a number of regulatory risks. A breach of
section 1158 of the Corporation Tax Act 2010 could result in the
Company being subject to capital gains on portfolio movements.
Breaches of other regulations, such as the UKLA Listing Rules,
could lead to a number of detrimental outcomes and reputational
damage. Breaches of controls by service providers such as the
Investment Adviser could also lead to reputational damage or loss.
The Board relies on the services of its Company Secretary, Jupiter
Asset Management Limited, and its professional advisers to ensure
compliance with, amongst other regulations, the Companies Act 2006,
the UKLA Listing Rules and the Alternative Investment Fund Managers
Directive.
Credit and Counterparty Risk - The failure of the counterparty
to a transaction to discharge its obligations under that
transaction could result in the Company suffering a loss.
Loss of Key Personnel - The day-to-day management of the Company
has been delegated to the Investment Adviser. Loss of the
Investment Adviser's key staff members could affect investment
return. The Board is aware that Jupiter Asset Management Limited
recognises the importance of its employees to the success of its
business. Its remuneration policy is designed to be market
competitive in order to motivate and retain staff and succession
planning is regularly reviewed. The Board also believes that
suitable alternative experienced personnel could be employed to
manage the Company's portfolio in the event of an emergency.
Operational - Failure of the Investment Adviser's core
accounting systems, or a disastrous disruption to its business,
could lead to an inability to provide accurate reporting and
monitoring. The Investment Adviser is contractually obliged to
ensure that its conduct of business conforms to applicable laws and
regulations. Details of how the Board monitors the services
provided by Jupiter Asset Management Limited and its associates are
included within the Internal Control section of the Report of the
Directors.
Financial - inadequate financial controls could result in
misappropriation of assets, loss of income and debtor receipts and
inaccurate reporting of Net Asset Value per share. The Board
annually reviews the Investment Adviser's and the Administrator's
statements on its internal controls and procedures.
Social and Environmental Matters
The Investment Adviser considers various factors when evaluating
potential investments. While an investee company's policy towards
the environment and social responsibility, including with regard to
human rights, is considered as part of the overall assessment of
risk and suitability for the portfolio, the Investment Adviser does
not necessarily decide to, or not to, make an investment on
environmental and social grounds alone.
All of the Company's activities are outsourced to third parties.
As such it does not have any physical assets, property, employees
or operations of its own and does not generate any greenhouse gas
or other emissions.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from its
operations as its day-to-day management and administration
functions have been outsourced to third parties and it neither owns
physical assets, property nor has employees of its own. It
therefore does not have responsibility for any other emissions
producing sources under the Companies Act 2006 (Strategic Report on
Directors' Reports) Regulations 2013.
Board Diversity
It is seen as a prerequisite that each member of the Board must
have the skills, experience and character that will enable each
Director to contribute individually, and as part of the Board team,
to the effectiveness of the Board and the success of the Company.
Subject to that overriding principle, diversity of experience and
approach, including gender diversity, amongst Board members is of
great value, and it is the Board's policy to give careful
consideration to issues of overall Board balance and diversity in
appointing new directors.
The Board currently comprises of four male directors.
For and on behalf of the Board
Martin Boase
Chairman
20 April 2015
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and Accounts in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable laws).
Under Company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit and
loss of the Company for that period. In preparing those financial
statements, the Directors are required to:
(a) select suitable accounting policies and then apply them
consistently;
(b) make judgments and estimates that are reasonable and
prudent;
(c) state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
(d) prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
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 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.
Under applicable law and regulations, the Directors are also
responsible for preparing a Directors' Report, Directors'
Remuneration Report and Statement of Corporate Governance that
comply with that law and those regulations.
The financial statements are published on www.jupiteram.com/JDT
which is a website maintained by Jupiter.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. The work carried out by the auditor does not
include consideration of the maintenance and integrity of the
website and accordingly the auditor accepts no responsibility for
any changes that have occurred to the financial statements when
they are presented on the website. Legislation in the UK governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Each of the Directors, confirm to the best of their knowledge
that:
(a) the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company; and
(b) the Strategic Report and Report of the Directors include a
fair review of the development and performance of the Company,
together with a description of the principal risks and
uncertainties that the Company faces; and
(c) that in the opinion of the Board, the Annual Report and
Accounts taken as a whole, is fair, balanced and understandable and
it provides the information necessary to assess the Company's
performance, business model and strategy.
So far as each Director is aware at the time the report is
approved:
(a) There is no relevant audit information of which the
company's auditors are unaware; and
(b) The Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information
and to establish that the auditors are aware of that
information.
By Order of the Board
Martin Boase
Chairman
20 April 2015
Income Statement
31 December 2014 31 December 2013
Revenue Capital Revenue Capital
Return Return Total Return Return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains from investments
held at fair value
through profit or
loss - 1,049 1,049 - 11,096 11,096
Foreign exchange
gain - 23 23 - - -
Income 1,766 - 1,766 1,646 - 1,646
Gross return 1,766 1,072 2,838 1,646 11,096 12,742
Investment management
fee (371) - (371) (336) - (336)
Other expenses (427) (10) (437) (388) - (388)
Net return on ordinary
activities before
finance costs and
taxation 968 1,062 2,030 922 11,096 12,018
Finance costs (190) (3,238) (3,428) (180) (8,166) (8,346)
Net return on ordinary
activities before
taxation 778 (2,176) (1,398) 742 2,930 3,672
Tax on ordinary activities (30) - (30) - - -
---------------------------- -------- -------- -------- -------- -------- --------
Net return on ordinary
activities after
tax 778 (2,176) (1,428) 742 2,930 3,672
---------------------------- -------- -------- -------- -------- -------- --------
Net return per Ordinary
Income share 0.82p (2.37)p (1.55)p 0.81p 3.20p 4.01p
---------------------------- -------- -------- -------- -------- -------- --------
Net return per Common
share 2.36p 8.06p 10.42p 2.23p 20.80p 23.03p
---------------------------- -------- -------- -------- -------- -------- --------
The total column of this statement is the profit and loss
account of the Company.
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
in the year.
A Statement of Total Recognised Gains and Losses is not required
as all gains and losses of the Company have been reflected in the
above statement.
Balance Sheet
2014 2013
GBP'000 GBP'000
Fixed Assets
Investments held at fair value through
profit or loss 48,914 47,798
Current assets
Debtors 148 205
Cash at bank 1,757 1,588
1,905 1,793
Creditors: amounts falling due within
one year (354) (276)
Net current assets 1,551 1,517
Total assets less current liabilities 50,465 49,315
Creditors: amounts falling due after
more than one year
Zero Dividend Preference shares and Common
shares (49,452) (46,214)
-------------------------------------------- --------- ---------
Total net assets 1,013 3,101
-------------------------------------------- --------- ---------
Capital and reserves
Called up share capital 8,235 8,235
Share premium 21,864 21,864
Special reserve 62,062 62,062
Capital reserve (91,572) (89,396)
Revenue reserve 424 336
-------------------------------------------- --------- ---------
Total shareholders' funds 1,013 3,101
-------------------------------------------- --------- ---------
Net Asset Value per Ordinary Income share 1.10p 3.38p
-------------------------------------------- --------- ---------
Approved by the Board of Directors and authorised for issue on
20 April 2015 and signed on its behalf by:
Martin Boase
Chairman
Company Registration Number 3852295
Reconciliation of Movements in Shareholders' Funds
Share Share Special Capital Revenue
For the year ended Capital Premium Reserve Reserve Reserve Total
31 December 2014 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January
2014 8,235 21,864 62,062 (89,396) 336 3,101
Net return for the
year - - - (2,176) 748 (1,428)
Equity dividends paid
and declared - - - - (660) (660)
------------------------ -------- -------- -------- --------- -------- --------
Balance at 31 December
2014 8,235 21,864 62,062 (91,572) 424 1,013
------------------------ -------- -------- -------- --------- -------- --------
Share Share Special Capital Revenue
For the year ended Capital Premium Reserve Reserve Reserve Total
31 December 2013 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January
2013 8,235 21,864 62,062 (92,161) 254 254
Repurchase of Zero
Dividend preference
shares - - - (165) - (165)
Net return for the
year - - - 2,930 742 3,672
Equity dividends paid
and declared - - - - (660) (660)
------------------------ -------- -------- -------- --------- -------- --------
Balance at 31 December
2013 8,235 21,864 62,062 (89,396) 336 3,101
------------------------ -------- -------- -------- --------- -------- --------
Cash Flow Statement
2014 2013
GBP'000 GBP'000
Operating activities
Net cash inflow from operating
activities 1,083 956
Net tax paid (26) -
---------------------------------------- --------- ---------
1,057 956
---------------------------------------- --------- ---------
Net cash flows from investing
activities
Purchases of investments (17,235) (13,067)
Sale of investments 17,168 12,656
Net cash outflow from investing
activities (67) (411)
Equity dividends paid (660) (660)
Finance costs on Common shares (161) (180)
---------------------------------------- --------- ---------
Net cash flow before financing 169 (295)
---------------------------------------- --------- ---------
Repurchase of Zero Dividend Preference
shares - (165)
---------------------------------------- --------- ---------
Net cash inflow/(outflow) 169 (460)
---------------------------------------- --------- ---------
Notes to the Accounts
1. Accounting policies
A summary of the principal accounting policies all of which have
been applied consistently throughout the year are set out
below.
(a) Basis of Preparation
The Financial Statements for the year ended 31 December 2014
have been prepared in accordance with UK Generally Accepted
Accounting Practice ('UK GAAP') and with the Statement of
Recommended Practice ('SORP') for Investment Trust Companies and
Venture Capital Trusts issued by the Association of Investment
Companies ('AIC') in January 2009 and replaced in November 2014.
The Company continues to adopt the going concern basis in the
preparation of the financial statements.
(b) Revenue
Dividends on investments are included in revenue when the
investment is quoted ex-dividend. UK dividends are shown net of tax
credits. Interest on deposits is accounted for on an accruals
basis. The fixed return on a debt security is recognised on a time
apportionment basis so as to reflect the effective yield on the
debt security. Where the Company has elected to receive its
dividends in the form of additional shares rather than in cash, the
amount of the cash dividend is recognised as income. Any excess in
the value of the shares received over the amount of the cash
dividend is recognised in capital reserves.
(c) Expenses
Expenses are accounted for on an accruals basis. Management
fees, administration and other expenses are charged fully to the
revenue column of the income statement. That part of any Investment
performance fee which is deemed by the Directors to relate to the
capital outperformance of the Company's investments will be charged
to capital and that part relating to revenue outperformance will be
charged to revenue. Expenses which are incidental to the purchase
or sale of an investment are charged to capital.
(d) Finance costs
Finance costs are accounted for on an accruals basis in
accordance with the effective interest rate. Common share revenue
return is charged in full to the revenue column of the Income
Statement.
In accordance with the provisions of Financial Reporting
Standard 25 'Financial Instruments' the Zero Dividend Preference
shares and Common shares are classified as liabilities in the
accounts and held at amortised cost and finance costs of Zero
Dividend Preference shares and Common shares are charged to the
capital column of the Income Statement.
(e) Taxation
Withholding tax deducted at source from income received is
treated as part of the taxation charge in the income account, in
instances where it cannot be recovered. Deferred tax is recognised
in respect of all timing differences that have originated but not
reversed at the balance sheet date where transactions or events
that result in an obligation to pay more, or right to pay less, tax
in the future have occurred at the balance sheet date. This is
subject to deferred tax assets only being recognised if it is
considered more likely than not that there will be suitable profits
from which the future reversal of the underlying timing differences
can be deducted. Timing differences are differences between the
Company's taxable profits and its results as stated in the
financial statements which are capable of reversal in one or more
subsequent periods.
(f) Foreign Currency
Assets and liabilities denominated in foreign currencies are
translated at the rates of exchange ruling at the balance sheet
date.
Foreign currency transactions are translated at the rates of
exchange applicable at the transaction date.
Foreign currency differences are dealt with in the capital
reserve.
(g) Capital Reserve
The following are accounted for in this reserve:
-- gains and losses on the realisation of investments
-- changes in fair value of investments held at the year end
-- performance fee relating to capital outperformance
-- finance costs of ZDP and Common shares
-- transaction costs and reconstruction costs
-- foreign currency difference
The capital reserve is not available for the payment of
dividends.
(h) Special reserve
This reserve is used to finance the Company's share buy back
facility.
(i) Investments
Investments are recognised and derecognised on the trade date
where a purchase and sale of an investment is under contract whose
terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at
cost, being the consideration given.
All investments are classified as fair value through profit or
loss and subsequently measured at fair value. Changes in the fair
value of investments listed at fair value through profit or loss
and gains and losses on disposal are recognised in the income
statement as 'Gains on investments at fair value through profit or
loss'. The fair value of listed investments is based on their
quoted bid market price at the balance sheet date without any
deduction for estimated future selling costs.
Foreign exchange gains and losses on fair value through profit
and loss investments are included within the changes in the fair
value of the investment.
2. Income
2014 2013
GBP'000 GBP'000
Income from investments
UK dividend income (net) 1,481 1,506
Dividends from overseas
companies 280 122
-------------------------- -------- --------
1,761 1,628
-------------------------- -------- --------
Other income
Deposit interest - 4
Underwriting commission 5 14
-------------------------- -------- --------
5 18
-------------------------- -------- --------
Total income 1,766 1,646
-------------------------- -------- --------
Total income comprises
Dividends 1,761 1,628
Interest - 4
Other income 5 14
-------------------------- -------- --------
1,766 1,646
-------------------------- -------- --------
Income from investments
Listed in the UK 1,481 1,506
Listed overseas 280 122
-------------------------- -------- --------
1,761 1,628
-------------------------- -------- --------
3. Return per share
2014 2013
Return per Ordinary Income share
Net revenue return applicable to Ordinary
Income shares (GBP'000) 748 742
Net capital return (GBP'000) (2,176) 2,930
------------------------------------------------ ----------- -----------
Net total return (GBP'000) (1,428) 3,672
------------------------------------------------ ----------- -----------
Number of Ordinary Income shares in issue
during the year 91,675,333 91,675,333
Net revenue return per Ordinary Income share 0.82p 0.81p
Net capital return per Ordinary Income share (2.37)p 3.20p
------------------------------------------------ ----------- -----------
Net return per Ordinary Income share (1.55)p 4.01p
------------------------------------------------ ----------- -----------
Return per Common share
Net revenue return applicable to Common shares
(GBP'000) 190 180
Capital growth entitlement (GBP'000) 649 1,675
------------------------------------------------ ----------- -----------
Net total return (GBP'000) 839 1,855
------------------------------------------------ ----------- -----------
Number of Common shares in issue during the
year 8,054,045 8,054,045
Net revenue return per Common share 2.36p 2.23p
Net capital return per Common share 8.06p 20.80p
------------------------------------------------ ----------- -----------
Net total return per Common share 10.42p 23.03p
------------------------------------------------ ----------- -----------
Return per Zero Dividend Preference share
Capital growth entitlement (GBP'000) 2,589 6,491
Number of Zero Dividend Preference shares
in issue during the year 32,119,031 32,119,031
------------------------------------------------ ----------- -----------
Net return per Zero Dividend Preference share 8.06p 20.21p
------------------------------------------------ ----------- -----------
4. Net Asset Value
The Net Asset Value per Ordinary Income and Common share as at
31 December 2014, calculated in accordance with the Articles of
Association, was as follows:
2014 2013
Net Net
Asset Value Asset Value
per share Net assets per share Net assets
attributable attributable attributable attributable
pence GBP'000 pence GBP'000
Ordinary Income
shares 1.10 1,013 3.38 3,101
-------------------- ------------- ------------- ------------- -------------
2014 2013
Net Net
Asset Value Asset Value
per share Net assets per share Net assets
attributable attributable attributable attributable
pence GBP'000 pence GBP'000
-------------------- ------------- ------------- ------------- -------------
Common shares 124.48 10,025 116.07 9,348
-------------------- ------------- ------------- ------------- -------------
2014 2013
Net Net
Asset Value Asset Value
per share Net assets per share Net assets
attributable attributable attributable attributable
pence GBP'000 pence GBP'000
-------------------- ------------- ------------- ------------- -------------
Zero Dividend
Preference shares 123.10 39,538 115.04 36,949
-------------------- ------------- ------------- ------------- -------------
5. Related parties
During the financial year under review, Reef Hogg(1) was a
director of Jupiter Investment Management Group Limited and Jupiter
Asset Management Limited ('JAM') companies within the same group as
Jupiter Unit Trust Managers Limited ('JUTM') the Alternative
Investment Fund Manager.
The Company appointed JUTM as its Alternative Investment Fund
Manager ('AIFM') with effect from 22 July 2014. In order to
facilitate this appointment, the Company terminated the investment
management agreement (the 'IMA') with JAM and entered into a new
investment management agreement with JUTM (the 'new IMA'). The new
IMA contains no substantive changes to the previous IMA other than
to reflect regulatory changes, changes to service providers to the
Company and to update the agreement to reflect current market
practice. Under these new agreements, certain investment management
functions have been delegated by the AIFM.
JUTM is contracted to provide investment management services to
the Company (subject to termination by not less than twelve months'
notice by either party) for an annual fee of 0.75 per cent. of
total assets less current liabilities payable quarterly in
arrears.
The management fee paid to JAM for the period 1 January 2014 to
21 July 2014 was GBP206,523 and to JUTM for the period 22 July 2014
to 31 December 2014 was GBP164,478 respectively.
Management fees of GBP95,000 were outstanding as at 31 December
2014 (2013: GBP93,000).
JAM was also entitled to receive a performance fee of 15 per
cent. of the amount by which audited total assets less current
liabilities on the last day of each accounting period exceed the
higher of (a) 110 per cent. of the total assets less current
liabilities at the end of the immediately preceding accounting
period and (b) the total assets less current liabilities at the end
of the last accounting period for which a performance fee was paid
('the high water mark'). In the event of, inter alia, a reduction
of capital or bonus issue the calculation of the performance fee
shall be adjusted in such a manner as the Company's auditors shall
determine is appropriate to take account of such events. No
performance fee was payable for the year (2013: GBPnil).
(1) Reef Hogg retired from Jupiter on 27 February 2015.
6. Contingent liabilities and capital commitments
There were no contingent liabilities or capital commitments as
at 31 December 2014 (2013: GBPnil).
7. Post Balance Sheet Event
There were no post balance sheet events at the year end.
Availability of Annual Report
The Annual Report & Accounts will be posted to shareholders
shortly. Copies will also be available from the Company's
registered office at 1 Grosvenor Place, London SW1X 7JJ. An
electronic version of the Annual Report & Accounts will also be
available for download from the Company's section of Jupiter Asset
Management's website www.jupiteram.com/JDT.
For further information, please contact:
Richard Pavry
Head of Investment Trusts
Jupiter Asset Management Limited, Company Secretary
investmentcompanies@jupiteram.com
020 3817 1496
20 April 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR URRSRVBASUAR
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