Half-year Report
10/08/2023 07:00
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RNS Number : 8458I JPMorgan Claverhouse IT PLC 10 August 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN CLAVERHOUSE INVESTMENT TRUST PLC
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED
30TH JUNE 2023
Legal Entity Identifier: 549300NFZYYFSCD52W53
Information disclosed in accordance with the DTR 4.2.2
The Directors of JPMorgan Claverhouse Investment Trust plc (the "Company")
announce the Company's results for the half year ended 30th June 2023.
Chairman's Statement
Performance
Over the six months to 30th June 2023, the UK's economic outlook remained
blighted by persistently high inflation, forcing the Bank of England to
maintain its aggressive monetary tightening stance. The base rate rose from
3.5% at the end of December 2022, to 5.0% at the end of June 2023. This was
further increased to 5.25% on 3rd August 2023.
This combination of stubbornly high inflation, interest rate hikes, and the
associated risk of recession, was a drag on UK equity markets. Investor
sentiment was dented further by industrial action across the public sector, as
workers sought wage increases to counteract the rising cost of living. The
Company's benchmark, the FTSE All Share Index, rose by just 2.6% over the
first half of the year, underperforming global markets, where inflation
pressures are easing more rapidly. For example, US CPI inflation has declined
from its peak above 9% in mid-2021 to just 3% in May 2023. The UK market's
lack of large technology stocks also detracted from relative performance, as
these and other growth stocks have returned to favour with investors in recent
months.
During the past six months, the Portfolio Managers made changes to the
portfolio to reflect the various challenges generated by high inflation,
rising interest rates, the associated cost-of-living crisis and the
possibility that the UK will slip into recession later this year, as higher
rates take effect. Specifically, the Portfolio Managers focused on companies
with robust balance sheets, low debt levels, strong competitive positions and
price power to pass on rising costs to end customers.
Despite these changes, the Company underperformed its benchmark over the
period by 1.9% on a net asset value ('NAV') basis (with debt at par), and 6.9%
in share price terms. While this underperformance is disappointing, it does
reflect a market that has been driven by macro concerns and sentiment, rather
than individual stock fundamentals, which are the Portfolio Managers' focus.
The share price discount to NAV (with debt at fair) moved from a discount of
0.3% at the start of the period to a discount of 5.7% at 30th June 2023.
The Investment Manager's Report below provides more detail on performance
during the period.
When assessing the Company's performance, shareholders should bear in mind
that the Portfolio Managers invest for the long-term, so it is more meaningful
to judge performance over a longer timeframe. On this basis, the Company
continues to do well in absolute terms and remains ahead of its benchmark over
the ten years to 30th June 2023.
As at 30th June 2023, the Company's NAV per share (with debt at par value) was
678.4p and the share price was 652.0p. Since the end of the period, the NAV
has decreased to 674.78 and the share price has remained unchanged at the time
of writing*.
*as at 8(th) August 2023.
Revenue and Dividends
Revenue per share for the six months to 30th June 2023 was 15.80p, compared
with 17.38p earned in the same period in 2022, but significantly higher than
in the same period in 2021, reflecting the weak UK economy over the period.
The Company declared a total dividend of 33.00p in respect of the financial
year ended 31st December 2022. This dividend comprised three quarterly interim
dividends of 7.50p and a fourth quarterly interim dividend of 10.50p. A first
quarterly dividend of 8.00p per share in respect of the current financial year
was paid on 13th June 2023. It remains the Board's intention that the first
three quarterly dividends should be of equal size, and to this end, it has
declared a second quarterly dividend of 8.00p per share to be paid on 1st
September 2023 to shareholders on the register at the close of business on
28th July 2023.
The Company has increased its dividend for 50 successive years. The Board's
dividend policy is to seek to increase the total 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 remaining stubbornly high, the
Board will continue to monitor carefully the outlook for dividend income, and
will take into account the Company's revenue reserves, which have accumulated
over a number of years, and its ability, as an investment trust, to utilise
these reserves if necessary to support the dividend.
Discount, Share Repurchases
Discounts generally in the investment trust sector have widened over the last
12 months with investors switching their equity exposure to fixed income and
money market funds. The Company has not been immune to this trend, with the
discount to NAV (with debt at fair value) widening to close on 30th June 2023
at 5.7%. During the period the discount touched on 6.8% as a result of selling
from a significant shareholder, JPMorgan Elect plc, following that company's
combination with JPMorgan Global Growth & Income plc. Since the period end
the discount has narrowed and is currently 5.2%*.
*as at 8(th) August 2023.
The Board's objective is to use its 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. Over the review period, the Board utilised the Company's
buy back authority, buying a total of 785,935 shares, at a cost of £5.4
million.
Since the end of the period, the Company has bought back a total of 223,085
shares at a cost of £1.4 million at the time of writing*.
*as at 8(th) August 2023.
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
Portfolio Managers have discretion 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.
Taking into account borrowings, net of cash balances held and the effect of
futures, the Company ended the review period approximately 4.9% geared,
compared to gearing of approximately 7.2% at the end of December 2022. The
Company has a £30 million 3.22% private placement loan, maturing in March
2045 and a revolving credit facility with Mizuho Bank Limited, of which £30
million was drawn down as at 30th June 2023.
Investment Management Fees
During the period, the Board agreed with the Manager to reduce the Company's
investment management fees. With effect from 1st July 2023, the investment
management fee is charged on a tiered basis at an annual rate of 0.45% of the
Company's net assets on the first £400 million and at 0.40% of net assets
above that amount. This compares with the previous arrangement under which the
management fee was charged at an annual rate of 0.55% on the first £400
million of Company assets and 0.40% thereafter. The fee will continue to be
calculated and paid monthly.
Outlook
Good news has been scarce since our last report. The geopolitical and economic
environment remains worrying, exacerbated by the weight of global governments'
debt to be financed. The war in Ukraine drags on, with no prospect of
resolution in sight, while China's post-lockdown economic rebound has
disappointed expectations. At home, UK inflation has surprised on the upside
although the latest inflation rate figures have shown improvement, while
growth has been disappointingly weak. This is beginning to impact corporate
margins, and profits are likely to decline this year. The recent interest rate
rises have increased the risk of recession, as higher rates begin to bite and
mortgage holders and others struggle to meet their monthly repayment
commitments. There are also concerns by some that the current widespread
industrial action will fuel a wage/price spiral that may see the UK revisit
the stagflation of the 1970s. The government's finances are also weak, due in
part to generous support packages implemented during the pandemic and more
recently in initiatives to help households cope with sharply higher energy
prices. This means that there is currently limited scope for the government to
implement fiscal stimulus measures to boost activity.
However, looking beyond the gloomy near-term macroeconomic outlook, there are
still encouraging reasons to be positive about the longer-term prospects of UK
equities, and of the Company. As the Portfolio Managers observe in their
report on the following pages, much of the bad news is now discounted by the
market, and UK equity valuations are still extremely attractive in absolute
terms and relative to other markets. This represents a rare opportunity for
investors to enter this market at historically low valuations and suggests
there is scope for significant market gains, as and when the economic backdrop
improves, and investors once again focus on long-term fundamentals.
In the meantime, we believe the Portfolio Managers' current prudent, long-term
investment approach remains appropriate for these challenging times. The
Company's diversified portfolio comprises mainly large, high-quality, FTSE 100
stocks which have been selected for their strong balance sheets, capacity to
grow significantly over the medium term and their pricing power, which allows
them to pass on higher input costs to end customers - an especially valuable
attribute in the current inflationary environment.
In sum, we believe the portfolio represents a balanced mix of quality
companies, which leaves the Company well-positioned to continue delivering
steady and consistent returns and a growing income, over the long-term.
Task Force on Climate-related Financial Disclosures
The Investment Manager published its first UK Task Force on Climate-related
Financial Disclosures Report for the Company in respect of the year ended 31st
December 2022 on 30th June 2023. The report discloses the portfolio's
climate-related risks and opportunities according to the Financial Conduct
Authority Environmental, Social and Governance Sourcebook and the Task Force
on Climate-related Financial Disclosures Recommendations. The report is
available on the Company's website: here
(https://am.jpmorgan.com/content/dam/jpm-am-aem/emea/regional/en/regulatory/esg-information/jpmorgan-claverhouse-investment-trust-plc-tcfd-report.pdf)
This is the first report under the new guidelines and disclosure requirements
and the Board will continue to monitor as these reports evolve.
Keeping in Touch
The Board and the Portfolio Managers are keen to increase dialogue with the
Company's shareholders and other interested parties. If you wish to sign up to
receive email updates from the Company, including news and views and latest
performance statistics, please click here
(https://web.gim.jpmorgan.com/emea_investment_trust_subscription/welcome?targetFund=JCH)
The Board appreciates the ongoing support of its shareholders.
David Fletcher
Chairman
9th August 2023
INVESTMENT MANAGER'S REPORT
Investment Approach
We aim to construct a diversified portfolio of our best ideas, comprising
quality, growth and value stocks. For the patient investor, such an approach
will, we believe, over a run of years produce outperformance of the index in a
steady, risk-controlled manner irrespective of market conditions. We also
strive to maintain Claverhouse's enviable dividend record by biasing the
portfolio towards attractive dividend stocks.
Market Review
UK equities lagged well behind global equities over the six months ended 30th
June 2023. The absence of (now back in favour with investors) large technology
stocks, together with stubbornly high inflation, detracted from the UK's
appeal.
Despite a further fall in oil and gas prices, UK inflation continued to
disappoint with the May CPI printing at 8.7%, and Core inflation showing
another worrying rise from 6.8% to 7.1% - the highest since 1992. The Bank of
England responded by raising short rates for the 13th consecutive month, to
5.0% at the end of June 2023. The pound rallied to finish the period at $1.27,
the highest level in twelve months. In the spring, markets wobbled on the
rapid collapse of Credit Suisse and the collapse of the West coast, American
bank, Silicon Valley Bank (SVB). But investors soon took the view that another
systemic banking crisis was unlikely.
Political turmoil was a feature of the period. In the UK, former Prime
Minister Boris Johnson stood down as a member of Parliament (MP) in disgrace,
following a report that found he deliberately misled MPs over lockdown parties
in Downing Street. In the US, Donald Trump became the first former president
to face criminal charges after a New York court indicted him on 34 counts of
falsifying business records. France was plagued by a series of widespread,
violent riots triggered by a police shooting.
The Ukraine war remained locked in a bloody stalemate. Wagner, a mercenary
army supporting Russia's war effort, threatened to march on Moscow to
challenge Russia's military leaders, but soon backed down, with its leader
seemingly retreating to exile in Belarus.
At the end of the period, the mood amongst investors was fragile. A
combination of UK high inflation and continuing industrial unrest led some
commentators to draw parallels with the country's economic woes of the 1970s.
By the end of June, the total return on the FTSE All-Share index from the
start of the year was +2.5%.
Portfolio review
The portfolio struggled to make absolute or relative headway during the
period. The magnitude of the current economic and geo-political challenges
dampened investors' enthusiasm for many attractively valued, good quality UK
companies. Glencore and Watches of Switzerland were two such examples of
companies in the portfolio which we believe were under-appreciated by the
market over the past six months.
The principal transactions we undertook during the period are detailed below.
Purchases
The global travel industry was absolutely decimated by the pandemic. However,
companies that are well capitalised, like Premier Inn owner Whitbread, and
packaged holiday provider JET2, are now well placed to take advantage of the
resultant supply shortage. Surging demand has led to a very favourable pricing
environment for airlines and hotels which we expect to continue, especially in
the budget part of the market where these two companies operate, as consumers
become more price sensitive.
Georgia has benefitted from a huge influx of affluent Ukrainians and Russians
fleeing the war. This has led to a surge in the Georgian economy and a
thriving banking sector as deposits have grown. Bank of Georgia and TBC Bank
operate a duopoly in this market, which lends itself to very favourable
economics for both banks. As a result, both earn returns on equity of between
20-30% and have consistently created value for shareholders. Their balance
sheets are in strong positions, with core equity tier 1 ratios in the high
teens, which should allow them to continue to return substantial capital to
shareholders. Both positions were bought at under 5x PE.
Another bank we added to the portfolio was Standard Chartered as it traded at
around 50% of its book value, a level at which we viewed as good value. In
addition, around 80% of Standard Chartered's operating income is generated in
Asia, which is benefitting from China's reopening.
We added Flutter, a market leader in the rapidly expanding US gambling market
following regulatory reforms. We decided to initiate with a relatively small
position as results have positively surprised even versus the market's high
expectations.
We also topped up several existing positions which are continuing to deliver
operationally. For example, Centrica is benefitting from the benign
competitive environment for British Gas, after many of its competitors went
bust in 2022, while the high volatility in energy prices is a prime
environment for Centrica's energy trading division.
Ashtead is an equipment rental business which looks extremely well placed to
capitalise on the wave of the so called 'mega-projects' which are taking place
in the US to facilitate, among other themes, onshoring and the energy
transition. 3i Group announced that its portfolio company, discount retailer
Action, continues to take market share as price sensitive consumers look for
cheaper places to shop. Historically this sort of environment has been ideal
for discounters, and customers have been surprisingly loyal once the backdrop
improves.
Sales
Barclays has had significant issues with internal controls in recent years, so
it was the obvious name to reduce as we looked to reduce our bank exposure
following the failure of SVB. We also sold out of the asset manager M&G,
as we reduced our broader financial exposure in response to rising interest
rates.
Bunzl is a distributor of single use products, which can pass through all cost
inflation to its end customers, which leaves it well placed in the current
inflationary environment. However, price deflation would be a significant
headwind for earnings and the stock is trading at close to peak multiples, so
we decided to exit our holding in response to evidence that inflation may have
peaked.
We exited UK water company Severn Trent as we continue to prefer utility
companies, such as SSE, which have greater exposure to the energy transition.
We sold some small holdings in UK domestic companies which we suspect may
struggle in the face of a weakening UK economy, including Morgan Sindall, a
construction and regeneration company, and homebuilders Crest Nicholson, and
Redrow.
The government outsourcer, Serco, is undergoing a period of change after the
departure of its CEO. The Company's new management team is relatively untested
and faces some large contract renegotiations in its first year, so we thought
it prudent to sell the stock.
Serica, an oil and gas explorer and producer, announced a large acquisition of
another oil & gas E&P which called into question the capital
discipline of the management team. So, after collecting the quarterly
dividend, we sold the stock.
Performance Review: six months to 30th June 2023 - Stock Attribution (actives
ex-futures)
Average
Top 5 Stocks Active % Attribution % Explanation
3i Group +2.6 +0.98 The European retailer, Action (3i's largest holding) continued to post
excellent results on the back of improving market share and the continuing
roll out of new stores.
Centrica +1.0 +0.3 Supernormal profits in its energy trading division have transformed Centrica's
balance sheet. Furthermore, a more benign competitive environment for British
Gas is also proving beneficial.
Ashtead +1.4 +0.20 The backlog of large US infrastructure projects provides a strong tailwind for
this equipment rental business.
BAE +1.4 +0.19 The valuation gap vs the global defence peers closed as BAE's results
continued to impress. Future growth seems well underpinned.
SSE +2.5 +0.18 SSE has an essential role in the transition to renewable energy through its
development and ownership of assets which are integral to the UK's energy
infrastructure.
Average
Bottom 5 stocks Active % Attribution % Explanation
Glencore +2.1 -0.44 This strong, diversified global mining company benefited significantly from
last year's surge in coal prices, but underperformed over the period on the
back of a weakening coal price.
Watches of +0.9 -0.29 A perception of a weaker growth outlook in
Switzerland America for this retailer of luxury watches led to its shares de-rating.
Flutter -0.9 -0.29 Shares in this international gambling company
Entertainment outperformed as they continued to deliver better than expected results in the
US.
Telecom Plus +1.3 -0.28 Despite the continued strong results and improved competitive landscape, the
shares of this utility were surprisingly weak.
Rolls-Royce -0.5 -0.20 After several lacklustre years, full year results at this aerospace engine
manufacturer showed some improvement.
Top Over and Under-weight positions vs FTSE All-Share Index
Top Five Overweight Positions Top Five Underweight Positions
3i Group +2.8% Barclays -1.1%
SSE +2.7% National Grid -1.1%
BP +1.8% Reckitt Benckiser -1.1%
JD Sports +1.7% Flutter Entertainment -0.9%
Glencore +1.7% Unilever -0.9%
Source: JPMAM, as at 30th June 2023.
Market Outlook
The global economy continues to face a number of significant challenges:
worryingly high inflation, rapidly rising interest rates and an ongoing and
brutal war on the edge of Europe, to name just three.
In the UK, the spectre of stagflation looms large. Economic growth remains
anaemic and stubbornly high inflation had led to 13 consecutive monthly
increases in base rates to 5.0% (from a low of 0.1%). The market is expecting
rates to keep rising until next spring, peaking at an eye-watering 6.5%.
At least savers will receive some comfort from rising rates on their
deposits.
Whilst the overwhelming majority of mortgages are on fixed terms, there is
nevertheless considerable pain to come for borrowers: roughly 35,000 mortgages
are coming to the end of their term each week, the vast majority of them
paying below 2.5% per annum. Current fixed two-year mortgage rates are 6.5%
and rising.
Nor is the UK government immune from the impact of higher rates: with the
national debt now in excess of 100% of GDP (for the first time since 1961),
government annual interest payments of circa £100 billion per annum. are
set to rise further still. With an election quite likely next year, it is
difficult to see how the government can afford any pre-election tax cuts -
quite the reverse, in fact.
Having for a long time insisted that inflationary pressures were 'transitory',
the very credibility of the Bank of England is now in question. The rapid
growth in wages (and continuing industrial unrest) suggests that the public
thinks that inflation will stay higher for longer than previously forecast and
are fighting to protect their own interest. Moreover, the government's
strategy for growth is also under scrutiny, not just from opposition parties
but increasingly from those on its own side.
Whilst recognising that UK equities have priced in a lot of this bad news,
until we see some marked abatement of the current significant economic and
geo-political woes, it is quite possible that many UK investments will remain
lowly-rated. Our portfolio is geared, reflecting the range of attractive stock
opportunities that we see; however, it is predominantly in liquid large caps
that give us greater flexibility to deal with macro uncertainty. Meanwhile, we
trust that shareholders will appreciate the attractive dividends which your
Company continues to pay, confident that in time such anomalous value will be
realised.
At the time of writing, the Company is 6.5% geared, with an overweighting to
international FTSE 100 'blue chip' stocks.
For and on behalf of the Investment Manager
William Meadon
Callum Abbot
Portfolio Managers
9th August 2023
Interim Management Report
The Company is required to make the following disclosures in its half yearly
report.
Principal Risks and Uncertainties
The Board has an ongoing process for identifying, evaluating and managing the
principal risks, emerging risks and uncertainties of the Company. The
principal risks and uncertainties faced by the Company fall into the following
broad categories: cybercrime; geopolitical and macro-economic; share price
volatility; investment and strategy; market factors such as interest rates,
inflation and equity market performance; operational; loss of investment team;
strategy and performance; climate change; legal and regulatory/corporate
governance; and financial. Detailed information on each of these areas is
given in the Strategic Report within the Annual Report and Accounts for the
year ended 31st December 2022.
Related Parties Transactions
During the first six months of the current financial year, no transactions
with related parties have taken place which have materially affected the
financial position or the performance of the Company.
Going Concern
The Directors believe, having considered the Company's investment objectives,
risk management policies, capital management policies and procedures,
liquidity and nature of the portfolio, and expenditure projections, that the
Company has adequate resources, an appropriate financial structure and
suitable management arrangements in place to continue in operational existence
for the foreseeable future and, more specifically, that there are no material
uncertainties pertaining to the Company that would prevent its ability to
continue in such operational existence for at least 12 months from the date of
the approval of this half yearly report. In reaching that view, the Board has
considered the impact of heightened market volatility since the Russian
invasion of Ukraine, the inflationary environment and other geopolitical and
financial risks. However, it does not believe the Company's going concern
status is affected. For these reasons, the Board considers that there is
sufficient evidence to continue to adopt the going concern basis in preparing
the financial statements.
Statement of Directors' Responsibilities
The Board of Directors of the Company, who are listed in the Company
information section, confirms that, to the best of its knowledge:
(i) the condensed set of financial statements contained within the half
year financial report has been prepared in accordance with FRS 104 'Interim
Financial Reporting' and gives a true and fair view of the state of affairs of
the Company, and of the assets, liabilities, financial position and net return
of the Company as at 30th June 2023 as required by the Disclosure Guidance and
Transparency Rules 4.2.4R; and
(ii) the interim management report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the Disclosure Guidance and
Transparency Rules.
In order to provide these confirmations, and in preparing these financial
statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Company will continue in business;
and the Directors confirm that they have done so.
The half yearly financial report for the six-month period to 30th June 2023
has not been audited or reviewed by the Company's Auditor.
For and on behalf of the Board
David Fletcher
Chairman
9th August 2023
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30th June 2023
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 2023 30th June 2022 31st December 2022
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Losses on investments held
at fair value through
profit or loss - (4,658) (4,658) - (68,379) (68,379) - (53,403) (53,403)
Net foreign currency gains - 4 4 - 275 275 - 285 285
Income from investments 10,358 - 10,358 11,393 - 11,393 22,346 - 22,346
Interest receivable and
similar income 291 - 291 90 - 90 339 - 339
Gross return/(loss) 10,649 (4,654) 5,995 11,483 (68,104) (56,621) 22,685 (53,118) (30,433)
Management fee (389) (723) (1,112) (403) (749) (1,152) (778) (1,444) (2,222)
Other administrative expenses (423) - (423) (385) - (385) (716) - (716)
Net return/(loss) before
finance costs and taxation 9,837 (5,377) 4,460 10,695 (68,853) (58,158) 21,191 (54,562) (33,371)
Finance costs (376) (699) (1,075) (298) (555) (853) (658) (1,222) (1,880)
Net return/(loss) before
taxation 9,461 (6,076) 3,385 10,397 (69,408) (59,011) 20,533 (55,784) (35,251)
Taxation (8) - (8) 1 - 1 3 - 3
Net return/(loss) after
taxation 9,453 (6,076) 3,377 10,398 (69,408) (59,010) 20,536 (55,784) (35,248)
Return/(loss) per share
(note 3) 15.80p (10.16)p 5.64p 17.38p (115.99)p (98.61)p 34.27p (93.10)p (58.83)p
All revenue and capital items in the above statement derive from continuing
operations.
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.
The net return/(loss) after taxation represents the profit/(loss) for the
period/year and also the total comprehensive income for
the period/year.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Called up Capital
share Share redemption Capital Revenue
capital premium reserve reserves(1) reserve(1) Total
£'000 £'000 £'000 £'000 £'000 £'000
Six months ended 30th June 2023 (Unaudited)
At 31st December 2022 15,037 176,867 6,680 194,276 22,940 415,800
Repurchase of shares into Treasury - - - (5,375) - (5,375)
Net (loss)/return - - - (6,076) 9,453 3,377
Dividends paid in the period (note 4) - - - - (11,083) (11,083)
At 30th June 2023 15,037 176,867 6,680 182,825 21,310 402,719
Six months ended 30th June 2022 (Unaudited)
At 31st December 2021 14,859 171,863 6,680 250,060 21,560 465,022
Issue of Ordinary shares 130 3,713 - - - 3,843
Net (loss)/return - - - (69,408) 10,398 (59,010)
Dividends paid in the period (note 4) - - - - (10,162) (10,162)
At 30th June 2022 14,989 175,576 6,680 180,652 21,796 399,693
Year ended 31st December 2022 (Audited)
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 (note 4) - - - - (19,156) (19,156)
At 31st December 2022 15,037 176,867 6,680 194,276 22,940 415,800
1 This reserve forms the distributable reserve of the Company
and may be used to fund distributions to investors.
CONDENSED STATEMENT OF FINANCIAL POSITION
At 30th June 2023
(Unaudited) (Unaudited) (Audited)
At 30th June 2023 At 30th June 2022 At 31st December 2022
£'000 £'000 £'000
Fixed assets
Investments held at fair value through profit or loss 443,181 427,465 445,552
Current assets
Derivative financial assets 215 - -
Debtors 2,904 1,800 1,098
Cash held at broker 844 1,894 -
Cash and cash equivalents 16,390 28,989 9,556
20,353 32,683 10,654
Current liabilities
Creditors: amounts falling due within one year (30,815) (379) (10,406)
Derivative financial liabilities - (76) -
Net current (liabilities)/assets (10,462) 32,228 248
Total assets less current liabilities 432,719 459,693 445,800
Creditors: amounts falling due after more than one year (30,000) (60,000) (30,000)
Net assets 402,719 399,693 415,800
Capital and reserves
Called up share capital 15,037 14,989 15,037
Share premium 176,867 175,576 176,867
Capital redemption reserve 6,680 6,680 6,680
Capital reserves 182,825 180,652 194,276
Revenue reserve 21,310 21,796 22,940
Total shareholders' funds 402,719 399,693 415,800
Net asset value per share (note 5) 678.4p 666.6p 691.3p
CONDENSED STATEMENT OF CASH FLOWS
For the six months ended 30th June 2023
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Six months ended
30th June 2023 30th June 2022(1) 31st December 2022(1)
£'000 £'000 £'000
Cash flows from operating activities
Net return/(loss) before finance costs and taxation 4,460 (58,158) (33,371)
Adjustment for:
Net loss on investments held at fair value through profit or loss 4,658 68,379 53,403
Net foreign currency gains (4) (275) (285)
Dividend income (10,358) (11,393) (22,346)
Interest income (291) (90) (339)
Realised gains on foreign exchange transactions 4 275 312
Decrease/(increase) in accrued income and other debtors 11 (14) (1)
Increase/(decrease) in accrued expenses 210 (28) 18
Net cash utilised in operating activities (1,310) (1,304) (2,609)
Dividends received 10,068 11,011 22,677
Interest received 314 90 316
Overseas withholding tax recovered - - 1
Net cash inflow from operating activities 9,072 9,797 20,385
Purchases of investments (53,943) (133,414) (226,611)
Sales of investments 50,486 190,615 280,403
Settlement of foreign currency contracts - (2) -
Settlement of futures contracts (603) (724) (504)
Transfer of Company cash (from)/to the Broker (844) 3,075 4,969
Net cash (outflow)/inflow from investing activities (4,904) 59,550 58,257
Dividends paid (11,083) (10,162) (19,156)
Issue of Ordinary Shares - 3,843 5,182
Repurchase of the Company's shares into Treasury (5,370) - -
Repayment of bank loan - (80,000) (100,000)
Drawdown of bank loan 20,000 40,000 40,000
Interest paid (881) (925) (1,971)
Net cash inflow/(outflow) from financing activities 2,666 (47,244) (75,945)
Increase in cash and cash equivalents 6,834 22,103 2,697
Cash and cash equivalents at start of period/year 9,556 6,886 6,886
Unrealised loss on foreign currency cash and cash equivalents - - (27)
Cash and cash equivalents at end of period/year 16,390 28,989 9,556
Cash and cash equivalents consist of:
Cash and short term deposits 269 262 157
Cash held in JPMorgan Sterling Liquidity Fund 16,121 28,727 9,399
Total 16,390 28,989 9,556
1 The presentation of the Cash Flow Statement, as permitted under FRS
102, has been changed so as to present the reconciliation of 'net
return/(loss) before finance costs and taxation' to 'net cash utilised in
operating activities' on the face of the Cash Flow Statement. Previously, this
was shown by way of note. Other than consequential changes in presentation of
the certain cash flow items, there is no change to the cash flows as presented
in previous periods.
Reconciliation of net debt
As at Other As at
31st December 2022 Cash flows non-cash charges 30th June 2023
£'000 £'000 £'000 £'000
Cash and cash equivalents
Cash 157 112 - 269
Cash equivalents 9,399 6,722 - 16,121
9,556 6,834 - 16,390
Borrowings
Debt due within one year (10,000) (20,000) - (30,000)
Debt due after one year
£30 million 3.22% Private Placement loan (30,000) - - (30,000)
(40,000) (20,000) - (60,000)
Net debt (30,444) (13,166) - (43,610)
Notes to the financial statements
for the six months ended 30th June 2023
1. Financial statements
The condensed financial information contained in this half yearly financial
report does not constitute statutory accounts as defined in Section 435 of the
Companies Act 2006. The financial information for the six months ended
30th June 2023 and 30th June 2022 has not been audited or reviewed by the
Company's Auditor.
The figures and financial information for the year ended 31st December 2022
are extracted from the latest published financial statements of the Company
and do not constitute statutory accounts for that year. Those financial
statements have been delivered to the Registrar of Companies including the
report of the auditor which was unqualified and did not contain a statement
under either section 498(2) or 498(3) of the Companies Act 2006.
2. Accounting policies
The financial statements have been prepared in accordance with the Companies
Act 2006, FRS 102 'The Financial Reporting Standard applicable in the UK and
Republic of Ireland' of the United Kingdom Generally Accepted Accounting
Practice ('UK GAAP') 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.
FRS 104, 'Interim Financial Reporting', issued by the Financial Reporting
Council ('FRC') in March 2015 has been applied in preparing this condensed set
of financial statements for the six months ended 30th June 2023.
All of the Company's operations are of a continuing nature.
The accounting policies applied to this condensed set of financial statements
are consistent with those applied in the financial statements for the year
ended 31st December 2022.
3. Return/(loss) per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 2023 30th June 2022 31st December 2022
£'000 £'000 £'000
Return/(loss) per share is based on the following:
Revenue return 9,453 10,398 20,536
Capital loss (6,076) (69,408) (55,784)
Total return/(loss) 3,377 (59,010) (35,248)
Weighted average number of shares in issue, excluding shares
held in Treasury 59,810,159 59,839,438 59,917,311
Revenue return per share 15.80p 17.38p 34.27p
Capital loss per share (10.16)p (115.99)p (93.10)p
Total return/(loss) per share 5.64p (98.61)p (58.83)p
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 2023 30th June 2022 31st December 2022
£'000 £'000 £'000
2022 fourth quarterly dividend of 10.50p (2021: 9.50p) paid in
March 2023 6,309 5,665 5,665
2023 first quarterly dividend of 8.00p (2022: 7.50p) paid in June 2023 4,774 4,497 4,497
2022 second quarterly dividend of 7.50p paid in September 2022 n/a n/a 4,497
2022 third quarterly dividend of 7.50p paid in December 2022 n/a n/a 4,497
Total dividends paid in the period/year 11,083 10,162 19,156
All dividends paid in the period/year have been funded from the revenue
reserve.
A second quarterly dividend of 8.0p (2022: 7.50p) per share, amounting to
£4,731,000 (2022: £4,497,000) has been declared payable in respect of the
year ending 31st December 2023. It will be paid on 1st September 2023 to
shareholders on the register at the close of business on 28th July 2023.
5. Net asset value per share
The net asset value per Ordinary share and the net asset value attributable to
the Ordinary shares at the period/year end are shown below. These were
calculated using 59,359,718 (June 2022: 59,955,653; December 2022: 60,145,653)
Ordinary shares in issue at the period/year end (excluding Treasury shares).
(Unaudited) (Unaudited) (Audited)
30th June 2023 30th June 2022 31st December 2022
Six months ended Six months ended Year ended
Net asset value Net asset value Net asset value
attributable attributable attributable
£'000 pence £'000 pence £'000 pence
Net asset value - debt at par 402,719 678.4 399,693 666.6 415,800 691.3
Add: amortised cost of £30 million 3.22% private
placement loan March 2045 30,000 50.5 30,000 50.1 30,000 49.9
Less: fair value of £30 million 3.22% private
placement loan March 2045 (22,243) (37.5) (28,853) (48.1) (23,466) (39.0)
Net asset value - debt at fair value 410,476 691.4 400,840 668.6 422,334 702.2
6. Fair valuation of instruments
The fair value hierarchy analysis for financial instruments held at fair value
at the period end is as follows:
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 2023 30th June 2022 31st December 2022
Assets Liabilities Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000 £'000 £'000
Level 1(1) 443,396 - 427,465 (76) 445,552 -
Total value of investments 443,396 - 427,465 (76) 445,552 -
1 Includes future currency contracts.
JPMORGAN FUNDS LIMITED
10th August 2023
For further information, please contact:
Emma Lamb
For and on behalf of
JPMorgan Funds Limited
020 7742 4000
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
ENDS
A copy of the half year report will shortly be submitted to the FCA's National
Storage Mechanism and will be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
The half year report will also shortly be available on the Company's website
at www.jpmclaverhouse.co.uk (http://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.
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