TIDMJCH
RNS Number : 8291S
JPMorgan Claverhouse IT PLC
14 March 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN CLAVERHOUSE INVESTMENT TRUST PLC
FINAL RESULTS FOR THE YEARED 31ST DECEMBER 2022
Legal Entity Identifier : 549300NFZYYFSCD52W53
Information disclosed in accordance with the DTR 4.1.3
The Directors of JPMorgan Claverhouse Investment Trust plc (the
"Company") announce the Company's results for the year ended 31st
December 2022.
CHAIRMAN'S STATEMENT
Performance and Manager Review
2022 proved to be another very challenging year in general for
investors. Just as it seemed that the worst of the pandemic was
behind us, and the way was clear for economies to recover from the
virus' severe economic impact, Russia's invasion of Ukraine in
February 2022 dealt a fresh blow to the economic outlook and
investor confidence. As well as escalating geopolitical tensions to
post WWII highs, the war added to upward pressures on energy and
commodity prices, driving already rising inflation even higher.
Markets were shocked by central banks' aggressive policy response
and fears that high and still rising rates would push the major
economies, including the UK, into recession this year now seem more
likely to be realised.
These developments weighed heavily on financial markets. The
MSCI Word Index closed the year down 17.7%, and the FTSE All Share
Index also dropped sharply during the first half of the year. UK
domestic political instability was an additional source of
uncertainty during this period, but the appointment of Rishi Sunak
as Prime Minister in October calmed investors' jitters and the UK
market experienced a steep recovery, outperforming other major
markets, to close the year up slightly +0.3%. The Company
underperformed its benchmark over the 12 months to end December
2022, declining by 4.6% on a net asset value ('NAV') basis (with
debt at fair value), and 5.1% in share price terms over the period,
compared to a positive return of 0.3% for the benchmark.
This is clearly a disappointing result; however, it is important
to understand that this underperformance occurred in the first half
of the year, during the worst of the financial turmoil. Portfolio
performance improved in the second half of the year and the Company
outperformed its benchmark in this six-month period, recouping some
of its underperformance, as market conditions steadied, and the
portfolio changes implemented by the Portfolio Managers to
strengthen its resilience to the year's challenges began to pay
off.
The year was also characterised by a small percentage of stocks
outperforming the relevant index. For example, only 23% of stocks
outperformed the FTSE All Share Index over the year. This made it
particularly challenging for active managers operating for risk
management reasons within agreed investment guidelines and
restrictions. These are summarised in the Strategic Report in the
full annual report. During the year, the Board reviewed these
guidelines with the Portfolio Managers, in particular the range of
60 to 80 stocks, and confirmed that they remained appropriate.
Shareholders should also bear in mind that the Portfolio
Managers invest for the long-term, so they should be judged by
their performance over a longer timeframe. Over the ten years to
31st December 2022, the Company achieved an average annual return
of 7.9% on an NAV basis and 9.1% in share price terms,
outperforming the benchmark return of 6.5% on the same basis.
The Investment Manager's report below provides more detail on
performance during 2022, and how the Portfolio Managers have
adapted the Company's portfolio in light of the new lower growth,
higher inflation environment. They also discuss the outlook for
2023.
As at 10th March 2023, the Company's NAV per share (with debt at
fair value) was 722.54p and the share price was 684.00p.
Revenue and Dividends
The Directors have declared a fourth quarterly interim dividend
of 10.5p per share for the year ended 31st December 2022, to be
paid on 17th March 2023, which brought the total dividend per share
for the year to 33.0p (2021 total: 30.5p), an increase of 8.2% on
the year. I am very pleased to say that this is the 50th successive
year in which the dividend has been raised - a record which very
few investment trusts have achieved. The dividend has grown each
year from 0.48p per share in 1972 to 33.0p per share in 2022, a
compound dividend growth of 8.8% per annum, comfortably exceeding
inflation and UK dividend growth.
At a time when rising inflation is making dramatic inroads into
household budgets, I am sure shareholders will be equally
appreciative of the fact that following payment of the fourth
quarterly interim dividend, the Company will have continued to pay
dividends in excess of inflation over each of the past 3, 5 and 10
year periods, and above the dividend growth of the UK market as a
whole (as measured by the constituents of the FTSE All-Share Index)
as illustrated in the chart in the full annual report and table
below.
Source: Bloomberg.
Claverhouse UK Market
CPI DPS Growth Dividend Growth
(% per annum) (% per annum) (% per annum)
--------- -------------- -------------- ----------------
3 Year 4.1% 4.4% -7.1%
--------- -------------- -------------- ----------------
5 Year 3.3% 4.9% -1.2%
--------- -------------- -------------- ----------------
10 year 2.4% 5.7% 2.5%
--------- -------------- -------------- ----------------
Source: Office of National Statistics.
The Board's dividend policy remains to seek to increase the
dividend each year and, taking a run of years together, to increase
dividends at a rate close to or above the rate of inflation. With
UK inflation now at a 30 year high, the Board will continue to
monitor carefully the outlook for dividend income. However, given
the Company's revenue reserves, built up over a number of years,
and its ability, as an investment trust, to utilise these reserves
if necessary to support the dividend, the Board currently expects
future dividend increases to enable the Company to continue to meet
its dividend policy objectives. The Board intends to increase the
first three quarterly interim dividends in 2023 to 8.0p per share
from 7.5p per share in the previous financial year.
Premium/Discount and Share Issuance/Repurchases
During 2022, the discount to NAV at which the shares traded
ranged from a premium of +3.7% to a discount of -3.6%. As a result,
in the year to 31st December 2022, the Company issued 710,000 new
shares at times when the shares were trading at a premium. The
Company did not repurchase any of its shares during the year. The
Board's objective is to use the repurchase and allotment
authorities to manage imbalances between the supply and demand of
the Company's shares, with the intention of reducing the volatility
of the discount or premium, in normal market conditions.
As at 31st December 2022, the Company's discount (to its
cum-income, debt at fair value, NAV) was -0.3%, and at the time of
writing it currently stands at -5.33%.
At this year's Annual General Meeting ('AGM'), to be held on
28th April 2023, the Company will be seeking renewed authority from
shareholders to sell shares from Treasury at a small discount, to
issue new shares and to repurchase its own shares.
Since the year end, the Company's discount at which its shares
trade has widened, the Board has deemed it necessary to utilise the
Company's buy back authority, buying in a total of 465,000 shares
as at the date of this report.
The comparison between the debt at par and fair value NAV
reflects the difference between the interest paid on the Company's
long-term debt (the 3.22% GBP30 million private placement loan) and
current interest rates. The two calculations of NAV will therefore
vary in accordance with prevailing interest rates and will change
over the life of the long-term debt. At present, the difference
between the two methods of calculation is approximately 2%. The
Investment Manager's contribution to NAV performance should be
assessed without regard to the long-term debt interest rate, over
which it has no control; the cum income NAV with debt at par will
therefore continue to be reported in the annual and interim
reports. However, as mentioned above, the cum income NAV, with debt
at fair value, will be used for the purposes of decisions on share
buybacks and issues, as it is the basis upon which the NAV is
announced to the market.
Gearing/Long Term Borrowing
The Portfolio Managers can use FTSE 100 index futures to effect
reductions in the level of gearing by reducing the portfolio's
market exposure. The Company's gearing policy (excluding the effect
of any futures) is to operate within a range of 5% net cash and 20%
geared in normal market conditions. The Investment Manager has
discretion from the Board to vary the gearing level between 5% net
cash and 17.5% geared (including the effect of any futures). The
Board believes that over the long-term a moderate level of gearing
is an efficient way to enhance shareholder returns.
In order that the Portfolio Managers could retain the
flexibility to maintain gearing up to the maximum permitted level,
in May 2022 the Company secured a new two-year revolving credit
facility of GBP80 million with Mizuho Bank following the expiry of
the Company's loan facility with the National Australia Bank.
Taking into account borrowings, net of cash balances held and
the effect of futures, the Company ended 2022 approximately 7.2%
geared. During the year gearing varied between 1.8% net cash and
9.7% geared. Gearing is currently 8.0%. The Company has a GBP30
million 3.22% private placement loan, maturing in March 2045. In
addition, GBP10 million of the Mizuho revolving credit facility was
drawn down as at 31st December 2022. See note 13 in the full annual
report.
Environmental, Social and Governance ('ESG')
ESG considerations are integrated into the Investment Manager's
investment process and within the broader decision making
framework. This annual report includes a separate Environmental,
Social and Governance Report from the Investment Manager in the
full annual report. During the year, the Investment Manager became
a new signatory to the UK Stewardship Code.
Investment Management Fees and Manager Evaluation
Since the year end, the Board has agreed with the Manager to
amend the Company's investment management fees.
With effect from 1st July 2023, the investment management fee
will be charged on a tiered basis at an annual rate of 0.45% of the
Company's net assets on the first GBP400 million and at 0.40% of
net assets above that amount. The fee will continue to be
calculated and paid monthly.
During the year under review, the Management Engagement
Committee undertook a formal review of the Manager and Investment
Manager, covering the investment management, performance of the
Portfolio Managers and company secretarial, administrative and
marketing services provided to the Company. The review took into
account the Investment Manager's investment performance record,
management processes, investment style, resources and risk control
mechanisms. I am pleased to report that the Board agreed with the
Committee's recommendation that the continued appointment of the
Manager is in the interests of shareholders.
Keeping in Touch
The Board would like to increase dialogue with the Company's
existing shareholders. Investors holding their shares through
online platforms will shortly receive a letter inviting them to
sign up to receive email updates from the Company. These updates
will deliver regular news and views, as well as the latest
performance statistics. If shareholders wish to sign up to receive
these communications, please visit
https://web.gim.jpmorgan.com/emea_investment_trust_subscription/welcome?targetFund=JCH.
Annual General Meeting
We are planning to hold this year's AGM in person at JPMorgan's
offices at 60 Victoria Embankment, London EC4Y 0JP, on Friday, 28th
April 2023 at 12 noon. The Company's Portfolio Managers; William
Meadon and Callum Abbot will give a presentation to shareholders,
review the past year and comment on the outlook for the current
year. The meeting will be followed by a sandwich lunch and provide
shareholders with the opportunity to meet the Directors and
representatives of the Manager. We look forward to welcoming as
many shareholders as possible at the AGM.
For shareholders wishing to follow the AGM proceedings but
choosing not to attend, we will be able to welcome you through
conferencing software. Details on how to register, together with
access details, will be available on the Company's website:
www.jpmclaverhouse.co.uk, or by contacting the Company Secretary at
invtrusts.cosec@jpmorgan.com.
As is normal practice, all voting on the resolutions will be
conducted by a poll. Shareholders viewing the meeting via
conferencing software will not be able to vote on the poll and we
therefore encourage all shareholders, and particularly those who
cannot physically attend, to exercise their votes in advance of the
meeting by completing and submitting their form of proxy.
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 AGM are encouraged to use their proxy
votes.
If there are any changes to the arrangements for the AGM, the
Company will update shareholders through the Company's website and,
if appropriate, through an announcement on the London Stock
Exchange.
Board Succession
This is my first Annual Report since becoming Chairman following
the retirement of Andrew Sutch at the conclusion of the AGM on 29th
April 2022. Andrew had served as a Director of the Company since
2013, holding the position of Chairman from 2015. I would like to
once again take this opportunity, on behalf of the entire Board, to
thank him for all his hard work and his effective stewardship of
the Board and the Company during his tenure.
At the time of Andrew's retirement, Jill May became the Senior
Independent Director, Nicholas Melhuish took over as Audit
Committee Chair and Victoria Stewart became Chair of the
Remuneration Committee. Led by the Nomination Committee, following
a search for a suitably qualified candidate to replenish the Board
after Andrew's departure, I am delighted to welcome Joanne Fintzen
as a Non-Executive Director of the Company with effect from 3rd
October 2022. Joanne brings a wealth of experience to her new role,
and my Board colleagues and I look forward to working with her. The
Board therefore recommend that shareholders vote in favour of her
appointment at the forthcoming AGM.
Outlook
While it has been very challenging over recent months and years,
I share the Portfolio Managers' cautious optimism regarding the
outlook for UK equity markets. The likelihood of recession in 2013
is already well-discounted by investors at current market levels
and should sentiment continue to improve substantially investors
may be further tempted by the attractive valuations of many UK
stocks relative to their foreign peers.
We are also positive about the Company's prospects. It is
invested predominantly in large, high-quality, well-diversified
FTSE 100 stocks, many of which are continuing to pay growing
dividends. Attributable in part to the portfolio adjustments
implemented by the Portfolio Managers, the portfolio's holdings
began to recover in the second half of 2022 once equity market
conditions stabilised, and in the new lower growth, higher
inflation environment, stocks offering high, predictable and rising
income should continue to do especially well, benefitting our
shareholders over coming years.
We are pleased to have experienced Portfolio Managers who are
working hard to preserve and grow shareholders' assets and their
success in doing so is evident in their long-term record of
outperformance.
David Fletcher
Chairman 13th March 2023
INVESTMENT MANAGER'S REPORT
Investment Approach
Claverhouse is a diversified portfolio of JPMorgan's best UK
ideas, comprising both quality growth and value stocks. A handful
of very large stocks, which represent a significant part of the
benchmark, are held for risk-control reasons.
We adopt a long-term, patient investment perspective and we
believe that this approach will produce outperformance of the index
in a steady, consistent manner, irrespective of market conditions.
We also aim to maintain Claverhouse's multi-decade dividend growth
record.
Market Review
2022 was a significant and sobering year in many ways. Asset
prices tumbled as a veritable witches' brew of unexpected global
challenges were thrown at investors and policy makers alike.
Encouraged by the final lifting of Covid-19 restrictions, the
new year started in good heart. Such optimism was, however, short
lived, as Russia shocked the world by its invasion of Ukraine in
February, and the economic consequences were immediate. Russian gas
pipelines to Europe closed, sparking the Continent's biggest ever
energy crisis. Inflation, which was already becoming a problem,
soon rose to multi decade highs, fuelled by increases in both
energy and commodity prices. This in turn precipitated the fastest
interest rate rises for decades, as central banks scrambled to curb
surging prices. The decade-long era of easy, cheap money came to an
abrupt and painful end. Such events were toxic for most assets.
Unusually, equities and bonds fell in tandem. For much of the year
there were no safe investment havens in which to hide.
To add to UK investors' woes, as the cost of living crisis
deepened, politicians struggled to maintain authority. In a surreal
three-month period, the UK had three Prime Ministers and four
Chancellors of the Exchequer! A badly judged mini-budget in
September triggered turmoil - bond prices plummeted and sterling
dropped to a historic low of $1.03 - forcing the Bank of England to
intervene to stabilise markets.
Global equities experienced their worst year since 2008, with US
tech stocks and emerging markets being particularly badly hit. Many
crypto currencies collapsed. The UK equity market, however, did
relatively well by comparison. Investors welcomed the appointment
of Rishi Sunak as Prime Minister in October, and a strong rally in
the final quarter saw the FTSE All-Share Index finish just ahead
for the year (+0.3%), led by a handful of large oil and mining
stocks which investors saw as being beneficiaries of surging
commodity prices. China maintained harsh lockdowns for most of the
year as it struggled to contain the spread of the Covid-19 virus.
The end of the year, however, saw some loosening of restrictions,
and an associated resumption of economic activity, which gave
further impetus to equities' year-end market rally.
Performance Review
We are bottom-up stock pickers. Developments at the sector and
macroeconomic levels generally have less influence on the portfolio
than our assessment of the companies themselves. For much of 2022,
geopolitical and macro issues were of much more concern to
investors than usual and this explains, in part, our
under-performance. The portfolio struggled in the first half of the
year as markets nose-dived in the wake of the unexpected Russian
invasion of Ukraine. It declined by 12.8% on an NAV basis, 8.2
percentage points below the benchmark decline of 4.6%. However,
some significant portfolio changes (discussed below), intended to
improve the Company's resilience to the year's many unexpected
challenges, combined with our risk-controlled approach to sizing
positions at both a stock and sector level, helped the portfolio
navigate the storm. Performance improved in the second half and the
portfolio clawed back some of its H1 underperformance. In sum, in
the year to 31st December 2022 as a whole, Claverhouse delivered a
total return on net assets (capital plus dividends re-invested) of
-4.6%, 4.3 percentage points weaker than the benchmark return of
+0.3%. With the Company's shares moving from a premium of +0.2% to
a small discount of -0.3% at the year end, the total annual return
for shareholders was -5.1%.
Further detail of Claverhouse's performance over the year is
given in the accompanying table below.
Performance attribution
Year ended 31st December 2022
% %
------------------------------------------------- ----- -----
Contributions to total returns
------------------------------------------------- ----- -----
Benchmark return 0.3
------------------------------------------------- ----- -----
Stock & Sector selection -7.1
------------------------------------------------- ----- -----
Gearing & cash 0.2
------------------------------------------------- ----- -----
Investment Manager contribution -6.9
------------------------------------------------- ----- -----
Cost of debt -0.2
------------------------------------------------- ----- -----
Portfolio total return -6.8
------------------------------------------------- ----- -----
Management fee/other expenses -0.7
------------------------------------------------- ----- -----
Share buyback/share issuance -
------------------------------------------------- ----- -----
Sub total -0.7
------------------------------------------------- ----- -----
Return on net assets with debt at par value(A) -7.5
------------------------------------------------- ----- -----
Change in the fair value of the long term
debt 2.9
------------------------------------------------- ----- -----
Return on net assets with debt at fair value(A) -4.6
------------------------------------------------- ----- -----
Source: JPMAM/Morningstar. All figures are on a total return
basis.
Performance attribution analyses how the Company achieved its
recorded performance relative to its benchmark.
(A) Alternative Performance Measure ('APM').
A list of APMs, with explanations and calculations, and a
glossary of terms are provided on pages 96 to 98 in the full annual
report.
The Company delivered a dividend increase for the 50th
consecutive year, a notable milestone. Dividends in respect of the
financial year ended 31st December 2022 (FY22) totalled 33.0p per
share, an 8.2% rise on the previous year's dividend of 30.5p per
share. The dividend yield in respect of the year is 4.7% (based on
the share price as at 9th March 2023).
Across the market, the year's outperformers were very limited,
mainly comprising commodity companies and traditionally defensive
names investors thought could benefit from, or at least cope with,
the challenging economic environment. By contrast, financials and
consumer stocks were particularly hard hit, as were very small
companies. Accordingly, the most significant positive contributors
to the Company's performance over the year included several energy
and commodity companies as illustrated in the table below.
Top Contributors and Detractors to Performance vs FTSE All-Share
Index
Top Five Contributors Top Five Detractors
JPMorgan UK Smaller Cos
Shell +1.5% IT -1.5%
BP +1.1% Intermediate Capital -1.3%
AstraZeneca +1.0% Watches of Switzerland -0.7%
Glencore +0.5% Dunelm -0.6%
Prudential +0.3% Impax Asset Management -0.6%
Source: JPMAM, as at 31st December 2022.
Oil stocks continued to outperform in all major markets, and BP
and Shell were no exception, making them the largest contributors
to returns over the year. The Russian invasion of Ukraine exposed
the fragility of global energy markets and caused oil and gas
prices to soar. Years of underinvestment has led to capacity
constrained supply issues which were compounded by the closure of
Russia's pipelines. The resultant supernormal cash flows generated
by BP and Shell are being returned to shareholders. Additionally,
management teams are investing in the energy transition and have
recently increased capex guidance for upstream oil and gas
projects. However, management teams are aware that investors want
to see strong returns on investment and will not tolerate
squandering of capital chasing volumes, as has been the case
historically. Focusing on shareholder returns rather than growing
volumes should provide a good outcome for shareholders over the
medium term.
Pharmaceutical companies, including portfolio holding
AstraZeneca, performed strongly as investors sought out companies
with reliable earnings streams. AstraZeneca is finally reaping the
reward of a decade long strategy shift towards improving R&D
efficacy in high margin areas such as oncology. A number of the
drugs developed as a result have proved extremely effective, and
earnings growth should be boosted for many years ahead as these
drugs come to market.
Glencore is a diversified mining company with substantial
exposure to metals such as copper, zinc and nickel which are
essential to the electrification of vehicles. Higher commodity
prices have led to an improvement in Glencore's trading division,
allowing the company to pay down debt and return excess capital to
shareholders. In addition, a change in the management team has seen
a substantial improvement in the company's ESG credentials, marking
a new, greener era for this miner. Many outstanding legal cases
against Glencore have been settled, including one involving the US
Department of Justice.
It was a tale of two halves for the Asian insurance company,
Prudential. For most of the year, China's harsh zero Covid-19
policies prevented Chinese nationals from travelling into Hong Kong
to buy insurance products. However, towards the end of the year,
when the Chinese government began to re-open the economy, we bought
shares in Prudential at a very depressed valuation and they have
since enjoyed a meaningful recovery.
The Company's position in JPMorgan's Smaller Companies
Investment Trust, run by JPMAM's in-house small companies' team,
was the largest detractor from returns during the year. It
underperformed as investors sought the perceived safety of larger,
more liquid stocks. However, over the years, this fund has not only
contributed materially to the performance of Claverhouse, but as
stocks have grown out of the smaller companies' index and into the
FTSE 350, it has also provided a rich source of new direct
investment ideas for us. We therefore intend to maintain our
holding.
General market panic at the start of 2022, combined with rapidly
rising interest rates, led to a substantial sell off in many
financials such as private market specialist, Intermediate Capital
and ESG-focused asset manager, Impax. Intermediate Capital remains
in the portfolio as we continue to be happy with the company's
operational performance. However, we sold our holding in Impax as
we became concerned about the high level of the business's
operating leverage and the potential for outflows.
The sharp pickup in inflation led to a severe sell off in
consumer stocks, as the cost of living crisis limited discretionary
spending and investors began to fear an imminent recession. While
Dunelm and the retailer of luxury watches, Watches of Switzerland
sold off on these fears, both companies are coping well with this
challenging backdrop and remain holdings.
Highlighted Company: Natwest
Rising rates are beneficial for banks' net interest margins,
which have been severely depressed throughout the past decade of
low/zero interest rates. Higher rates should thus pave the way for
Natwest to deliver double digit returns on equity after years of
economic suppression. Accompanying this, stringent post GFC banking
regulations have left NatWest's balance sheet very well capitalised
and able to weather downturns in the macro environment.
Highlighted Company: Shell
This oil major is undergoing a significant restructuring to
position itself as a diversified energy company. Part of the
strategic shift involves returning surplus capital to shareholders,
rather than growing volumes through low return projects, as it has
done in previous cycles. This marks an important change to their
capital discipline and signals an improvement in the quality of the
business. In addition, the company has benefited from soaring
energy prices as years of underinvestment by the sector has led to
supply constraints which has been compounded by the closure of
Russia's pipelines. Shell trades at a significant discount to Exxon
Mobil, a US listed peer, and the broader UK market.
Portfolio Review
The portfolio held 63 stocks at the end of the year, towards the
lower end of our normal range, as we focused on the very limited
number of companies which could cope with the year's economic
storm. Indeed, less than a quarter of shares in the FTSE All Share
outperformed compared to a more normal year, where this number is
generally closer to 50%. While we are stock-focused, we do run a
sector-diversified portfolio, as the following discussion on the
year's portfolio activity illustrates.
Top Over and Under-weight positions vs FTSE All Share Index
Top Five Overweight Positions Top Five Underweight Positions
Glencore +2.2% Unilever -1.3%
SSE +2.2% Vodafone -0.9%
NatWest +2.1% Flutter -0.9%
AstraZeneca +2.1% Haleon -0.7%
BP +2.0% HSBC -0.7%
Source: JPMAM, as at 31st December 2022.
Purchases
Some significant portfolio changes were necessary to ensure it
was best-placed to weather the year's many challenges.
For the past three years, the Asian life insurance company
Prudential has been hamstrung by the covid-induced closure of
China's borders. As discussed above, this prohibited Chinese
nationals crossing into Hong Kong to take out insurance policies.
This business provides a significant portion of the revenues of
Prudential. Now the Chinese border has re-opened, there should be
plenty of pent-up demand for Prudential's products.
JD Sports is an international retailer of sports and leisure
wear. The company has exclusive relationships with big brands like
Nike, adidas and Levi Jeans which give them security of supply and
a strong competitive advantage versus peers. We sold out of the
shares at beginning of 2022 as consumer spending pressures loomed,
but after the sharp fall in the share price, we reopened the
position.
Oil and gas companies were some of the few beneficiaries of
events, due to the energy supply shock. We therefore added to our
existing holdings in BP and Shell, and opened new holdings in other
energy names such as Drax, SSE, Centrica and Serica, which we
thought would also benefit from higher gas and oil prices.
Glencore's exposure to copper, nickel and zinc also means it is
well positioned to benefit from the global transition to EVs and
other clean energy users and we opened a position/added to our
position.
As the economy turned down, we added to several defensive
businesses including Tesco, Imperial Brands and Unilever, which we
expected to be relatively resilient.
Higher defence budgets following the Russian invasion of Ukraine
will be beneficial for BAE and this prompted us to add a new
holding.
We added a new position in the catering services company Compass
Group, which struggled during the pandemic, however, its diverse
client base (offices, hospitals and sports venues, to name a few)
means revenues are relatively immune to normal economic slowdowns.
The company has emerged from the pandemic stronger than ever, and
recent results showed continued operational momentum.
We also added to several utilities names which have
inflation-linked, regulated asset bases. These included National
Grid and Severn Trent.
We also added a new position in Bunzl, a B2B distributor of
non-food consumable products such as food packaging and cleaning
and hygiene supplies, across a diverse range of end markets. Its
contracts are typically on a cost plus basis.
Man Group , a new position, is an alternative asset manager
which continues to deliver strong operational momentum, despite the
challenging backdrop. Its recent good performance in key strategies
has attracted new business, particularly in its higher fee absolute
return strategies. As a purely institutional manager, its asset
base is likely to be relatively sticky and we expect the company to
return significant amounts of excess cash to its shareholders if
performance remains strong.
4imprint , a new position, produces promotional merchandise and
is benefitting from the continuing shift away from physical
catalogues towards online merchandising.
The UK insurer, Aviva, has been on a multi-year restructuring to
sell off non-core assets and re-focus on markets where they have a
strong (top 3) market position. The disposals are now complete, and
the business is extremely well capitalised as a result, so we added
a new position.
Telecom Plus is a multiservice utilities provider to residential
and small business customers in the UK. The company can price at a
discount to the government price cap due to its scale and long-term
supply contracts with partners. The competitive environment has
greatly improved, as many of their smaller, aggressive competitors
have not survived the recent period of energy price volatility.
Sales
Even before the Russian invasion of Ukraine, we had, thankfully,
sold our holdings in Polymetal and EVRAZ both of which have
operations in Russia. EVRAZ shares have subsequently been
suspended.
After the Russian invasion, we sold a number of cyclicals as we
looked to position the portfolio more defensively. These companies
were either directly exposed to the economic cycle or lack the
pricing power to pass through cost inflation. They included
software company AVEVA, Breedon, a supplier of building materials,
fashion house Burberry, B&M, owner of variety stores, and
retailer Marks and Spencer.
In addition, we also closed our exposure to bus company National
Express, budget airline WIZZ Air, Synthomer, a producer of
specialist chemicals, Unite Group, a diversified REIT, and asset
managers Scottish Mortgage Investment Trust, Polar Capital and
Liontrust Asset Management, which have exposure to highly rated
growth names.
We sold several highly-rated companies where we grew concerned
about their expensive rating in a rising rate environment. These
included Ergomed, a biotech company, Games Workshop, which sells
toys and games, and Oxford Instruments, a producer of semiconductor
equipment and materials.
We also sold Rightmove, a provider of online information related
to UK residential real estate, Spirax-Sarco, a specialist
industrial machinery and Team 17, a video game designer.
Although global media platform Future and ad agency WPP are
quite different businesses, they are both exposed to economic
cycles, as expenditure on marketing is one of the first areas to be
cut in a downturn. Commentary from several large US tech names
suggests that media budgets are already being cut and we expect
more to follow. As a result, we sold out of both.
We also closed positions in international gambling companies
Flutter and Entain. We still think that the US gambling market is
an attractive structural growth story. However, these are
consumer-exposed companies and they both have significant European
operations which may struggle in the current macroeconomic
environment.
Asset management is a highly operationally geared business, and
we grew increasingly concerned about the downside risk at Impax, as
poor performance may lead to outflows. Although we think they are
well-placed in the ESG space, we sold our position due to these
near term headwinds.
Hilton Food Group processes, packs and distributes meat and fish
products to international food retailers. We bought Hilton on the
premise that is had many long-dated, cost-plus contracts, which
should have given visibility of revenues and protection from
inflation. Management commentary in meetings and in shareholder
communications supported these beliefs. However, at the time of
their H1 results, management announced that they had been unable to
pass on rampant cost inflation in some of their contracts, and
interest costs had ballooned. This led to a material profit warning
and the shares sold off sharply. We sold the stock on the news,
together with our exposure to the producer of chicken and pork
products, Cranswick, which we expected to experience similar
issues.
We sold out of our residual holdings in Vodafone and BT, as
price competition in the telecoms industry intensified.
Reluctantly, we sold out of two good companies, BHP and
Ferguson, both of which delisted from the main UK stockmarket.
Claverhouse's portfolio was geared throughout the year, but much
less so than usual. We use FTSE 100 futures to manage gearing and,
to a slightly greater extent than usual, to protect income. At the
year-end the Company was 7.2% geared, compared to 8.8% at the end
of the previous year, but by the time of writing, this had risen to
8.0%.
Highlighted Company: Ashtead Group
Ashtead is a rental company servicing industrial and
construction end markets. We expect Ashtead to continue to benefit
from the structural trend of increased rental penetration, and to
win market share in what is a highly fragmented industry. Ashtead
current market share is only just over 10% and management is hoping
to double this over the medium term. The company's scale and
technology give it a competitive advantage over small operators, as
they have better equipment availability and utilisation rates are
better. This has allowed Ashtead to generate returns well ahead of
its cost of capital and it has a long runway for reinvestment of
that capital - the perfect recipe for the business to keep creating
value for shareholders.
Highlighted Company: 3i Group
3i is a private equity investor. It owns companies that operate
in four core sectors: Business and Technology Services, Consumer,
Healthcare and Industrial Technology. The company targets
investments which it believes can double in size over their holding
period, and it has an excellent track record of achieving this
goal. Its largest portfolio company is Action, a discount retailer,
which is rapidly rolling out its stores across Europe. Action has
been phenomenally successful, yet its expansion is still in its
early stages. While many private equity companies have been doing
bigger and more expensive deals, 3i has focused on smaller
transactions and bolt-on deals for existing portfolio companies.
This acute focus on valuation should enhance returns over the long
run. Current CEO, Simon Borrows, took over in 2012 and has
consistently grown the value of the portfolio.
Environmental, Social, and Governance ('ESG') factors
Whilst Claverhouse holds stocks based primarily on companies'
fundamentals, we also consider the potential impact of ESG factors
on a company's ability to deliver shareholder value. We assess each
company's strategy for dealing with these important matters and the
consequent risks arising from them. Our analysis helps determine
whether relevant ESG factors are financially material and, if so,
whether they are reflected in the valuation of the company. Such
analysis may influence not only our decision to own a stock but
also, if we do, the size of that position in the portfolio.
For example, we own several stocks in the mining, energy and
tobacco sectors, all of which face significant ESG challenges. Our
analysis suggests that the risks posed by these ESG challenges are
currently adequately reflected in most of those companies'
valuations and do not outweigh the investment attractions of the
shares. As owners of these companies, we strive to influence
management in their efforts to address these important issues and
we hold them accountable for their ESG targets.
We explained our case for holding mining companies in our 2020
annual report. Our view remains that many of the commodities that
miners' produce are not only the building blocks of economic growth
but are essential to facilitating electrification of the global
economy. Hence, while the sector undoubtedly faces many ESG
challenges, there are good reasons to believe it has a key role to
play in developing a more sustainable future.
Accordingly, we added Glencore to the portfolio in early 2022.
Whilst the company has had a chequered past, culminating in fines
from several regulators relating to corruption and bribery, it has
since undergone a significant transformation, including changes to
senior management. We are now observing much improved ESG
credentials. At a recent capital markets day, Glencore set itself
ambitious climate targets, including reaching net zero emissions
from its own activities (Scope 1 and 2 emissions) and emissions
generated indirectly by its actions (Scope 3 emissions) by 2050. At
the same event, the new CEO, Gary Nagle, committed to strengthening
the company's Value and Code of Conduct and firmly embedding its
principles in the business. In the years to come we will, of
course, closely monitor management's progress in reaching these
targets. With a much-improved approach to ESG considerations, the
production of metals essential for electrification of the global
economy and consequent exceptional cash generation, we now believe
Glencore to be an attractive investment.
Company meetings continue to be an important opportunity to
engage with our portfolio companies on ESG issues. As an example,
we recently engaged with both Lloyds Banking Group and NatWest
Group regarding their progress towards realising their climate
goals. The meetings provided us with the chance to understand the
challenges these two banks face in achieving their net zero
targets. Both companies are significant providers of mortgages.
Decarbonising the UK housing stock presents one of the greatest
challenges for the UK in reducing the country's carbon emissions
and will require commitment from multiple stakeholders.
Understanding the role that mortgage lenders can play in addressing
this challenge was insightful.
Market Outlook
We continue to observe a fragile world characterised by
heightened risks. Global growth will be slower in 2023 and some
economies, including the UK, may slip into recession. The end of
the decade-long era of cheap money will require investors to factor
in structurally higher inflation and interest rates than those they
have enjoyed for so long. In addition, the UK economy faces several
unique challenges (some of them self-inflicted!).
However, despite these negatives, a likely peaking of both
inflation and interest rates this year, combined with the
long-awaited re-opening of China, and the sheer depth of universal
investor pessimism, makes us more optimistic on markets than we
have been for some time. We are particularly attracted to large,
blue chip FTSE 100 stocks, many of which are genuinely global in
their operations, but whose shares continue to trade on significant
discounts to their international peers. Indeed, the attractive
valuations of many UK stocks could see the UK market continuing to
be one of the better performing global markets over the coming year
and beyond.
In a lower growth environment, dividend income is likely to
comprise a higher proportion of future total returns. Consequently,
stocks offering high, predictable income should be re-rated - as,
hopefully, will high income Investment Trusts like Claverhouse,
which have a long track record of dividend growth. This trend is
likely to be supported by investors' increased need for income
given the current cost of living crisis.
The dangerous 'get rich quick' era of recent years, which placed
crypto currencies, Nasdaq stocks and profitless technology names in
the ascendancy, is well and truly over. In this new, more
challenged world, investors will need to extend their time horizons
and re-learn to appreciate traditional investment virtues such as
slow, steady compounding and the certainty of access to their
money.
Further tough economic times no doubt lie ahead. But the arrival
of a new, more cautious era should play to Claverhouse's strengths
- its long-term prudent approach of investing in good value,
dividend-paying, quality UK companies - and we are confident that
shareholders will be rewarded for their patience.
For and on behalf of the Investment Manager
William Meadon
Callum Abbot
Portfolio Managers 13th March 2023
PRINCIPAL AND EMERGING RISKS
The Board, through delegation to the Audit Committee, has
undertaken a robust assessment and review of the principal risks
facing the Company, together with a review of any new and emerging
risks that may have arisen during the year to 31st December 2022,
including those that would threaten its business model, future
performance, solvency or liquidity.
With the assistance of the Investment Manager, the Audit
Committee has drawn up a risk matrix, which identifies the key
risks to the Company, as well as emerging risks. The risk matrix,
including emerging risks, are reviewed formally by the Audit
Committee every six months or more regularly as appropriate. At
each meeting, the Board considers emerging risks which it defines
as potential trends, sudden events or changing risks which are
characterised by a high degree of uncertainty in terms of
occurrence probability and possible effects on the Company. As the
impact of emerging risks is understood, they may be entered on the
Company's risk matrix and mitigating actions considered as
necessary. 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 and emerging risks
are listed below, in alphabetical order:
Principal Description Mitigating activities
risk
Climate change Climate change can have a significant The Board receives ESG reports
impact on the business models, from the Investment Manager on
sustainability and viability the portfolio and how ESG considerations
of individual companies, whole are integrated into investment
sectors and even asset classes. decision making so as to mitigate
risk at the level of stock selection
and portfolio construction. The
analysis conducted by the Investment
Manager includes the approach
investee companies take to recognising
and mitigating climate change
risks.
The Board is also considering
the threat posed by the direct
impact on climate change on the
operations of the Manager, Investment
Manager and other major service
providers. As extreme weather
events become more common, the
resilience, business continuity
planning and the location strategies
of the Company's services providers
will come under greater scrutiny.
The Investment Manager is reviewing
the core disclosure elements of
the Task Force on Climate-related
Financial Disclosures ('TCFD')
reporting framework. As an investment
trust, the Company is not required
to provide information in compliance
with TCFD.
----------------------------------------- ----------------------------------------------
Cybersecurity Threat of cyber-attack, in all The Company benefits directly
its guises including threats or indirectly from all elements
from the work from home processes of JPMorgan's cyber security programme.
is regarded as at least as important The Board reviews the cyber security
as more traditional physical precautions taken by its third
threats to business continuity party suppliers on a regular basis.
and security. The controls around the physical
In addition to threatening the security of JPMorgan's data centres,
Company's operations, such an security of its networks and security
attack is likely to raise reputational of its trading applications are
issues which may damage the tested by independent reporting
Company's share price and reduce auditors and reported on every
demand for its shares. six months against the AAF 01/06
Standard.
----------------------------------------- ----------------------------------------------
Geopolitical There is an increasing risk The Investment Manager continuously
and macro-economic to market stability and investment monitors geopolitical developments
environment from geopolitical and societal issues relevant to
conflicts (for example, the its business. These are also considered
Russian invasion of the Ukraine as part of portfolio construction.
as well as growing tensions The Company is a closed-end vehicle
in Southeast Asia), which may and, unlike open-ended funds,
impact both investment performance does not have to sell investments
and/or the operating environment at low valuations in volatile
for the Company, Manager, Investment markets.
Manager or the Company's other
third party suppliers.
----------------------------------------- ----------------------------------------------
Investment Inappropriate investment strategy. The Board reviews investment strategy
and strategy For example, poorly calibrated at each board meeting.
asset allocation or inappropriate The Board manages these risks
levels of gearing, may lead by ensuring a diversification
to poor long-term investment of investments. The Investment
performance (significantly below Manager operates in accordance
agreed benchmark or market/industry with investment limits and restrictions
average) resulting in the Company's determined by the Board. The Board
shares trading at a wider discount reviews its investment limits
to NAV per share. and restrictions regularly and
the Manager confirms its compliance
with them each month.
The Investment Manager also provides
the directors with regular management
information, including risk and
performance reports as well as
competitor and shareholder analysis.
The Board monitors the implementation
and results of the investment
process with the Portfolio Managers,
who attend all board meetings.
The performance of the Company
relative to its benchmark and
its peers and the discount/ premium
to NAV per share are key performance
indicators measured by the Board
on a regular basis and are reported
on pages 31 and 32 in the full
annual report.
----------------------------------------- ----------------------------------------------
Legal and As an investment trust, the The Company has procedures to
Regulatory/ Company's operations are subject monitor the status of its compliance
Corporate to wide ranging regulations. with the relevant requirements
Governance The financial services sector to maintain its Investment Trust
continues to experience significant status, including receiving and
regulatory change at national reviewing information and reporting
and international levels. Failure from the Manager and Investment
to act in accordance with these Manager. The Depositary (The Bank
regulations could cause fines, of New York Mellon (International)
censure or other losses including Limited) reports regularly on
taxation or reputational loss. third party suppliers and their
Breach of Company Law or UK compliance with expected standards
Listing Rules resulting in suspension. of performance and these reports
are reviewed by the Audit Committee.
----------------------------------------- ----------------------------------------------
Loss of Investment Loss of key staff by the Investment The Board keeps the services of
Team Manager, such as the Portfolio the Manager, Investment Manager
Managers, could affect the performance and third-party suppliers under
of the Company. continual review. The Board obtains
assurances from the Investment
Manager that the team is suitably
resourced, and appropriately remunerated
and incentivised in its role.
The Board also considers the succession
plan for the portfolio management
team on an annual basis.
----------------------------------------- ----------------------------------------------
Market factors Market factors such as interest The Board considers asset allocation,
such as interest rates, inflation and equity stock selection and levels of
rates, inflation market performance may impact gearing on a regular basis and
and equity the value of investments and has set investment restrictions
market performance the performance of the Company. and guidelines, which are monitored
Government/Central Bank fiscal/monetary and reported on by the Investment
response to the high levels Manager.
of inflation in the UK affecting The Board monitors the implementation
economic growth directly or and results of the investment
valuation levels and a subsequent process and regularly discusses
increase in interest rates. portfolio positioning with the
portfolio management team.
The Board monitors the changing
risk landscape and potential threats
to the Company with the support
of regular reports and ad hoc
reports as required, the directors'
own experience and external insights
gained from industry and shareholder
events.
----------------------------------------- ----------------------------------------------
Operational Disruption to, or failure of, Details of how the Board monitors
the Manager's accounting, dealing the services provided by the Manager
or payments systems or the depositary's and its associates and the key
or custodian's records could elements designed to provide effective
prevent accurate reporting and internal control are included
monitoring of the Company's within the Risk Management and
financial position. Internal Control section of the
Corporate Governance report on
pages 52 and 53 in the full annual
report. The risk of fraud or other
control failures or weaknesses
within the Manager or other service
providers could result in losses
to the Company. The Audit Committee
receives independently audited
reports on the Manager's, the
Investment Manager's and other
service providers' internal controls,
as well as regular reporting from
the Manager's Compliance function.
The Company's management agreement
obliges the Manager to report
on the detection of fraud relating
to the Company's investments and
the Company is afforded protection
through its various contracts
with suppliers, of which one of
the key protections is the Depositary's
indemnification for loss or misappropriation
of the Company's assets held in
custody.
----------------------------------------- ----------------------------------------------
Share price The shares of the Company are The Board seeks to narrow the
volatility traded freely and are therefore discount by undertaking measured
subject to the influences of buybacks of the Company's shares
supply and demand and investors' taking account of market conditions
perception to the markets the and having established explicit
Company invests in. The share guidelines.
price is therefore subject to The Company and Manager work with
fluctuations and like all investment the Corporate Broker to understand
trusts may trade at a discount demand for the Company's shares.
to the NAV.
----------------------------------------- ----------------------------------------------
Strategy Inappropriate investment strategy, The Board manages these risks
and Performance for example asset allocation by setting its objectives carefully
or the level of gearing, may and through diversification of
lead to underperformance against Investments. The Company operates
the Company's benchmark index various investment restrictions
and peer companies, resulting and guidelines designed to ensure
in the Company's shares trading that the mandate given to the
on a wider discount. Investment Manager is properly
executed and these guidelines
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 Portfolio Managers,
who attend all Board meetings,
and reviews data which show statistical
measures of the Company's risk
profile. The Investment Manager
has been delegated powers from
the Board to determine appropriate
levels of gearing within a strategic
range set by the Board.
The Board holds a separate meeting
devoted to strategy each year
and also spends time considering
potential emerging risks which
might impact the Company in the
future.
----------------------------------------- ----------------------------------------------
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
Details of the management contract are set out in the Directors'
Report on page 44 in the full annual report. The management fee
payable to the Manager for the year was GBP2,222,000 (2021:
GBP2,206,000) of which GBPnil (2021: GBPnil) was outstanding at the
year end.
Included in administration expenses in note 6 on page 76 in the
full annual report are safe custody fees amounting to GBP8,000
(2021: GBP11,000) payable to JPMorgan Chase Bank N.A. of which
GBP2,000 (2021: GBP3,000) 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 GBP31,000 (2021: GBP19,000) of which GBPnil (2021:
GBPnil) was outstanding at the year end.
The Company holds an investment in JPMorgan Smaller Companies
Investment Trust plc which is also managed by JPMAM. At the year
end this was valued at GBP13.3 million (2021: GBP20.4 million) and
represented 3.0% (2021: 3.7%) of the Company's investment
portfolio. During the year, the Company made GBPnil (2021: GBPnil)
purchases of this investment and sales with a total value of
GBP811,000 (2021: GBP8,940,000). Dividend income amounting to
GBP334,000 (2021: GBP292,000) was receivable during the year, of
which GBPnil (2021: 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 GBP9.4 million (2021: GBP4.7 million). Interest amounting to
GBP325,000 (2021: GBP6,000) was receivable during the year, of
which GBPnil (2021: GBPnil) was outstanding at the year end.
Handling charges on dealing transactions amounting to GBP8,000
(2021: GBP6,000) were payable to JPMorgan Chase Bank N.A. during
the year of which GBP1,000 (2021: GBP2,000) was outstanding at the
year end.
At the year end, total cash of GBP157,000 (2021: GBP2,188,000)
was held with JPMorgan Chase Bank N.A. A net amount of interest of
GBP14,000 (2021: GBPnil) was receivable by the Company during the
year from JPMorgan Chase Bank N.A. of which GBPnil (2021: GBPnil)
was outstanding at the year end.
Full details of Directors' remuneration and shareholdings can be
found on pages 56 to 57 in the full annual report and in note 6 on
page 76 in the full annual report.
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 prepared the financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 102 'The Financial Reporting
Standard applicable in the UK and Republic of Ireland', and
applicable law).
Under company law, 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 or
loss of the company for that period. In preparing the financial
statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- state whether applicable United Kingdom Accounting Standards,
comprising FRS 102 have been followed, subject to any material
departures disclosed and explained in the financial statements;
-- make judgements and accounting estimates that are reasonable and prudent; and
-- 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 safeguarding the assets of the
company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain the
company's transactions and disclose with reasonable accuracy at any
time the financial position of the company and enable them to
ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity
of the company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
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.
The Strategic Report and Directors' Report include a fair review
of the development and performance of the business and the position
of the Company together with a description of the principal risks
and uncertainties that the Company faces.
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 on
page 43 in the full annual report, confirm that to the best of
their knowledge:
-- the Company financial statements, which have been prepared in
accordance with United Kingdom Accounting Standards, comprising FRS
102, give a true and fair view of the assets, liabilities,
financial position and return of the Company; and
-- the Strategic Report and Directors' Report includes a fair
review of the development and performance of the business and the
position of the Company, together with a description of the
principal risks and uncertainties that it faces.
The Board confirms that it is satisfied that the Annual Report
and Financial Statements taken as a whole are fair, balanced and
understandable and provide the information necessary for
shareholders to assess the performance, business model and strategy
of the Company.
For and on behalf of the Board
David Fletcher
Chairman
13th March 2023
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31st December 2022
2022 2021
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- -------- --------- --------- -------- --------- ---------
(Losses)/gains on investments
and derivatives
held at fair value through
profit or loss - (53,403) (53,403) - 67,191 67,191
Net foreign currency gains/(losses) - 285 285 - (4) (4)
Income from investments 22,346 - 22,346 20,224 - 20,224
Interest receivable and similar
income 339 - 339 6 - 6
------------------------------------- -------- --------- --------- -------- --------- ---------
Gross return/(loss) 22,685 (53,118) (30,433) 20,230 67,187 87,417
Management fee (778) (1,444) (2,222) (772) (1,434) (2,206)
Other administrative expenses (716) - (716) (668) - (668)
------------------------------------- -------- --------- --------- -------- --------- ---------
Net return/(loss) before
finance costs
and taxation 21,191 (54,562) (33,371) 18,790 65,753 84,543
Finance costs (658) (1,222) (1,880) (589) (1,094) (1,683)
------------------------------------- -------- --------- --------- -------- --------- ---------
Net return/(loss) before
taxation 20,533 (55,784) (35,251) 18,201 64,659 82,860
Taxation credit/(charge) 3 - 3 (99) - (99)
------------------------------------- -------- --------- --------- -------- --------- ---------
Net return/(loss) after taxation 20,536 (55,784) (35,248) 18,102 64,659 82,761
------------------------------------- -------- --------- --------- -------- --------- ---------
Return/(loss) per share 34.27p (93.10)p (58.83)p 30.77p 109.92p 140.69p
------------------------------------- -------- --------- --------- -------- --------- ---------
All revenue and capital items in the above statement derive from
continuing operations. No operations were acquired or discontinued
in the year.
The 'Total' column of this statement is the profit and loss
account of the Company and the 'Revenue' and 'Capital' columns
represent supplementary information prepared under guidance issued
by the Association of Investment Companies.
Net return/(loss) after taxation represents the return/(loss)
for the year and also Total Comprehensive Income/(Expense).
STATEMENT OF CHANGES IN EQUITY
For the year ended 31st December 2022
Called Share Capital Total
up
share premium redemption Capital Revenue Shareholders'
capital account reserve reserves reserve(1) funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- --------- ----------- --------- ----------- --------------
At 31st December 2020 14,651 165,378 6,680 184,483 21,667 392,859
Issuance of the Company's
shares from Treasury - 412 - 3,247 - 3,659
Issue of ordinary shares 208 6,073 - - - 6,281
Repurchase of shares into
Treasury - - - (2,329) - (2,329)
Net return - - - 64,659 18,102 82,761
Dividends paid in the
year - - - - (18,209) (18,209)
--------------------------- -------- --------- ----------- --------- ----------- --------------
At 31st December 2021 14,859 171,863 6,680 250,060 21,560 465,022
Issue of ordinary shares 178 5,004 - - - 5,182
Net (loss)/return - - - (55,784) 20,536 (35,248)
Dividends paid in the
year - - - - (19,156) (19,156)
--------------------------- -------- --------- ----------- --------- ----------- --------------
At 31st December 2022 15,037 176,867 6,680 194,276 22,940 415,800
--------------------------- -------- --------- ----------- --------- ----------- --------------
(1) This reserve is distributable. The amount that is
distributable is not necessarily the full amount as disclosed in
these financial statements of GBP22,940,000 as at 31st December
2022. This reserve may be used to fund distributions to
shareholders.
STATEMENT OF FINANCIAL POSITION
At 31st December 2022
2022 2021
GBP'000 GBP'000
------------------------------------------------------- --------- ----------
Fixed assets
Investments held at fair value through profit or loss 445,552 553,180
------------------------------------------------------- --------- ----------
Current assets
Debtors 1,098 1,403
Cash held at broker - 4,969
Cash and cash equivalents 9,556 6,886
------------------------------------------------------- --------- ----------
10,654 13,258
Current liabilities
Creditors: amounts falling due within one year (10,406) (70,480)
Derivative financial liabilities - (936)
------------------------------------------------------- --------- ----------
Net current assets/(liabilities) 248 (58,158)
------------------------------------------------------- --------- ----------
Total assets less current liabilities 445,800 495,022
Creditors: amounts falling due after more than one
year (30,000) (30,000)
------------------------------------------------------- --------- ----------
Net assets 415,800 465,022
------------------------------------------------------- --------- ----------
Capital and reserves
Called up share capital 15,037 14,859
Share premium account 176,867 171,863
Capital redemption reserve 6,680 6,680
Capital reserves 194,276 250,060
Revenue reserve 22,940 21,560
------------------------------------------------------- --------- ----------
Total shareholders' funds 415,800 465,022
------------------------------------------------------- --------- ----------
Net asset value per share 691.3p 782.4p
------------------------------------------------------- --------- ----------
STATEMENT OF CASH FLOWS
For the year ended 31st December 2022
2022 2021
GBP'000 GBP'000
------------------------------------------------------- ----------- -----------
Net cash outflow from operations before dividends and
interest (2,609) (2,888)
Dividends received 22,677 19,322
Interest received 316 6
Overseas tax recovered 1 -
Interest paid (1,971) (1,587)
------------------------------------------------------- ----------- -----------
Net cash inflow from operating activities 18,414 14,853
------------------------------------------------------- ----------- -----------
Purchases of investments (226,611) (191,662)
Sales of investments 280,403 156,615
Settlement of forward currency contracts - (1)
Settlement of futures contracts (504) (2,635)
Transfer of Company cash to be held at the broker 4,969 (4,969)
------------------------------------------------------- ----------- -----------
Net cash inflow/(outflow) from investing activities 58,257 (42,652)
------------------------------------------------------- ----------- -----------
Dividends paid (19,156) (18,209)
Issuance of the Company's shares from Treasury - 3,659
Repurchase of the Company's shares into Treasury - (2,329)
Issue of Ordinary shares 5,182 6,281
Repayment of bank loan (100,000) (25,000)
Drawdown of bank loan 40,000 45,000
------------------------------------------------------- ----------- -----------
Net cash (outflow)/inflow from financing activities (73,974) 9,402
------------------------------------------------------- ----------- -----------
Increase/(decrease) in cash and cash equivalents 2,697 (18,397)
------------------------------------------------------- ----------- -----------
Cash and cash equivalents at start of year 6,886 25,283
Exchange movements (27) -
------------------------------------------------------- ----------- -----------
Cash and cash equivalents at end of year 9,556 6,886
------------------------------------------------------- ----------- -----------
Cash and cash equivalents consist of:
------------------------------------------------------- ----------- -----------
Cash and short term deposits 157 2,188
Cash held in JPMorgan Sterling Liquidity Fund 9,399 4,698
------------------------------------------------------- ----------- -----------
Total 9,556 6,886
------------------------------------------------------- ----------- -----------
Reconciliation of net debt
As at Other non-cash As at
31st December Cash flows charges 31st December
2021 2022
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------------- ----------- --------------- --------------
Cash and cash equivalents
Cash 2,188 (2,004) (27) 157
Cash equivalents 4,698 4,701 - 9,399
-------------------------------- -------------- ----------- --------------- --------------
6,886 2,697 (27) 9,556
Borrowings
Debt due within one year (70,000) 60,000 - (10,000)
Debt due after one year
GBP30m 3.22% Private Placement
loan (30,000) - - (30,000)
(100,000) 60,000 - (40,000)
-------------------------------- -------------- ----------- --------------- --------------
Total (93,114) 62,697 (27) (30,444)
-------------------------------- -------------- ----------- --------------- --------------
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st December 2022
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 July 2022.
All of the Company's operations are of a continuing nature.
The financial statements have been prepared on a going concern
basis. In making their assessment, the Directors have reviewed
income and expense projections, the liquidly of the investment
portfolio and considered the impact of stressed conditions on the
portfolio liquidity and income. In addition, the Directors have
also considered the measures in place with key service providers,
including the Manager, to maintain operational resilience. The
disclosures on going concern on page 50 of the Directors' Report
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 declared
2022 2021
GBP'000 GBP'000
----------------------------------------------------------- -------- --------
Dividends paid
2021 fourth quarterly dividend of 9.50p (2020: 10.00p)
paid in March 2022 5,665 5,826
First quarterly dividend of 7.50p (2021: 7.00p) paid
in June 2022 4,497 4,083
Second quarterly dividend of 7.50p (2021: 7.00p) paid
in September 2022 4,497 4,150
Third quarterly dividend of 7.50p (2021: 7.00p) paid
in December 2022 4,497 4,150
----------------------------------------------------------- -------- --------
Total dividends paid in the year of 32.00p (2021: 31.00p) 19,156 18,209
----------------------------------------------------------- -------- --------
Dividend declared
Fourth quarterly dividend declared of 10.50p (2021:
9.50p) paid in March 2023 6,315 5,646
----------------------------------------------------------- -------- --------
All dividends paid and declared in the period have been funded
from the Revenue Reserve.
The dividend proposed in respect of the year ended 31st December
2021 amounted to GBP5,646,000. However, the amount paid amounted to
GBP5,665,000 due to new shares issued after the balance sheet date
but prior to the record date.
The fourth quarterly dividend has been declared and paid in
respect of the year ended 31st December 2022. This dividend will be
reflected in the financial statements for the year ending 31st
December 2023.
(b) Dividends 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 GBP20,536,000 (2021: GBP18,102,000). Brought forward
revenue reserves amounting to GBPnil (2021: GBPnil) have been
utilised in order to finance the dividend in respect of the
year.
2022 2021
GBP'000 GBP'000
--------------------------------------------------- -------- --------
First quarterly dividend of 7.50p (2021: 7.00p)
paid in June 2022 4,497 4,083
Second quarterly dividend of 7.50p (2021: 7.00p)
paid in September 2022 4,497 4,150
Third quarterly dividend of 7.50p (2021: 7.00p)
paid in December 2022 4,497 4,150
Fourth quarterly dividend of 10.50p (2021: 9.50p)
paid in March 2023 6,315 5,646
--------------------------------------------------- -------- --------
Total dividend declared in respect of the year
of 33.00p (2021: 30.50p) 19,806 18,029
--------------------------------------------------- -------- --------
The revenue reserve after payment of the fourth dividend will
amount to GBP16,625,000 (2021: GBP15,914,000).
3. Return/(loss) per share
2022 2021
GBP'000 GBP'000
--------------------------------------------------- ----------- ------------
Revenue return 20,536 18,102
Capital (loss)/return (55,784) 64,659
--------------------------------------------------- ----------- ------------
Total (loss)/return (35,248) 82,761
--------------------------------------------------- ----------- ------------
Weighted average number of shares in issue during
the year 59,917,311 58,822,971
Revenue return per share 34.27p 30.77p
Capital (loss)/return per share (93.10)p 109.92p
--------------------------------------------------- ----------- ------------
Total (loss)/return per share (58.83)p 140.69p
--------------------------------------------------- ----------- ------------
4. Net asset value per share
The net asset value per Ordinary share and the net asset value
attributable to the Ordinary shares at the year end follow. These
were calculated using 60,145,653 (2021: 59,435,653) Ordinary shares
in issue at the year end (excluding Treasury shares).
2022 2021
Net asset value attributable Net asset value attributable
GBP'000 pence GBP'000 pence
---------------------------------- ----------------- ------------ ----------------- ------------
Net asset value - debt at
par 415,800 691.3 465,022 782.4
Add: amortised cost of GBP30
million 3.22% private placement
loan March 2045 30,000 49.9 30,000 50.5
Less: fair value of GBP30
million 3.22% private placement
loan March 2045 (23,466) (39.0) (36,967) (62.2)
Net asset value - debt at
fair value 422,334 702.2 458,055 770.7
---------------------------------- ----------------- ------------ ----------------- ------------
5. Non-statutory accounts
The financial information set out above does not constitute the
Company's statutory accounts for the year ended 31 December 2022
but is derived from those accounts. Statutory accounts for the year
ended 31 December 2022 will be delivered to the Registrar of
Companies in due course. The Auditors have reported on those
accounts; their report was (i) unqualified, (ii) did not include a
reference to any matters to which the Auditors drew attention by
way of emphasis without qualifying their report and (iii) did not
contain a statement under Section 498 (2) or (3) of the Companies
Act 2006. The text of the Auditors' report can be found in the
Company's full Annual Report and Accounts on the Company's website
at www.jpmclaverhouse.co.uk .
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
13 March 2023
For further information, please contact:
Emma Lamb
For and on behalf of
JPMorgan Funds Limited
020 7742 4000
ENDS
A copy of the annual report will shortly be submitted to the
Financial Conduct Authority's National Storage Mechanism and will
be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
The annual report will shortly be available on the Company's
website at www.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
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR XXLLFXXLEBBF
(END) Dow Jones Newswires
March 14, 2023 03:00 ET (07:00 GMT)
Jpmorgan Claverhouse Inv... (LSE:JCH)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Jpmorgan Claverhouse Inv... (LSE:JCH)
Gráfica de Acción Histórica
De May 2023 a May 2024
