Half-year Report
09/08/2024 11:52
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RNS Number : 9382Z JPMorgan Claverhouse IT PLC 09 August 2024
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN CLAVERHOUSE INVESTMENT TRUST PLC
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2024
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 six months ended 30 June 2024.
CHAIRMAN'S STATEMENT
Performance
Over the six months to 30th June 2024, the UK continued to recover from the
inflation and cost of living crises which began in 2022. The economy emerged
from a mild recession, although growth remains below trend, and inflation
decreased steadily, hitting the Bank of England's 2% target in May 2024 for
the first time since July 2021. The Bank of England held base rates steady
over the review period, although interest rates have started or are expected
to fall in the UK, the US and Europe which should support global market
sentiment.
During the review period, the Company's benchmark, the FTSE All Share Index
grew by 7.4% while the Company's net asset value (NAV) (with debt at fair
value) returned 9.2%, ahead of the benchmark. This outperformance was largely
the result of stock selection decisions. The Company's share price rose 7.3%
during the period, reflecting a slight widening of the share price discount
relative to NAV. Over the ten years to 30th June 2024, the Company realised
an accumulated return of 77.8% on a NAV basis and 85.0% in share price terms,
outperforming the benchmark return of 77.3%.
As at 30th June 2024, the Company's NAV per share (with debt at par value) was
748.6p and the share price was 714.0p. Since the end of the period, the NAV
(with debt at par value) has decreased to 739.9p and the share price remains
714.0p, as at 7th August 2024.
The Investment Manager's report in the Half Year Report provides more detail
on performance during the period, recent portfolio changes and the outlook for
both the market and the Company.
Revenue and Dividends
The Board's dividend policy seeks 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 inflation rate. Although UK inflation has eased significantly
from its recent highs, the Board will continue to monitor carefully the
outlook for dividend income and will draw on revenue reserves, if required, to
realise its dividend objectives.
The Company has increased its dividend for 51 successive years. For the
financial year ended 31st December 2023, the total dividend was 34.50p. This
comprised three quarterly interim dividends of 8.0p and a fourth quarterly
interim dividend of 10.5p.
A first quarterly dividend of 8.25p per share in respect of the current
financial year was paid on 3rd June 2024. 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 8.25p per share to be paid
on 2nd September 2024 to shareholders on the register at the close of business
on 26th July 2024.
Portfolio earnings during the six months to 30th June 2024 will not fully
cover these payouts, so they will be funded partially from revenue reserves.
Revenue per share for the six months to 30th June 2024 was 16.02p, compared
with 15.80p earned in the same period in 2023.
Discount, Share Repurchases
Discounts have widened across the investment trust sector in the past 18
months, as investors have switched out of equities into fixed income and money
market funds in response to sharp increases in interest rates.
The Board's objective remains to act in the best interest of Shareholders by
using 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. During
the reporting period, the Board utilised the Company's buy back authority,
buying a total of 717,782 shares, at a cost of £4.9 million. Since then, the
Company has bought back a further 50,000 shares, at a cost of £364,000, as
at 7th August 2024.
Gearing/Long Term Borrowing
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 7.0% geared,
compared to 6.3% at the end of FY23. The Company holds £30 million in 3.22%
private placement notes, maturing in March 2045. The revolving credit facility
with Mizuho Bank Limited matured in May 2024. It was replaced with a new
£40 million one-year revolving loan facility with The Royal Bank of Scotland
International Limited.
Board Succession
I will be retiring from the Board at the Company's next AGM in April 2025 and
Victoria Stewart has been appointed to succeed me as Chair of the Board in
April 2025. Work is ongoing to find a suitably qualified Director to join the
Board following my retirement and the Board expects to announce an appointment
in late 2024.
Portfolio Management Changes
Since the end of the review period, the Company has seen a change in portfolio
managers. As announced in July, William Meadon will be leaving JPMorgan Asset
Management in August 2024. As a result, two new portfolio managers, Anthony
Lynch and Katen Patel, joined Callum Abbot as managers for the Company, with
effect from 1st July 2024. Callum has managed the fund alongside William for
six years.
William became the portfolio manager of the Company in 2012, following a
sustained period of disappointing investment performance. Initially, he worked
with Sarah Emly, and following her sad death in 2018, he was joined by Callum
Abbot. The Company has outperformed in 33 out of the 49 quarters since William
took on portfolio management in 2012. Over his 12-year tenure, the Company
enjoyed a positive investment record versus the benchmark. On behalf of the
Board and shareholders I would like to thank William for his significant
contribution to the Company's success. The Board enjoyed working with William
and his presentations at the Company's AGMs were always well-received and much
appreciated. We wish him every success in his future endeavours.
The new managers, Anthony Lynch and Katen Patel, are experienced members of
JPMorgan's UK asset management team. They have each been with JPMorgan for
over ten years and both have strong track records of investing in companies
across the market capitalisation spectrum of listed UK companies. Latterly
they have also been jointly managing JPMorgan's open-ended UK Equity Income
Fund, which has very similar investment objectives and policies to the
Company. This fund has seen strong investment performance since Anthony and
Katen assumed management responsibility. The investment team have over 35
years of investment trust experience and we believe that they are well
qualified to benefit shareholders. We look forward to working with them.
Although the Company has a new management team, there will be no change to its
investment objective or key policies, which were set out in the 2023 Annual
Report. The managers will be supported by the same UK research and analytical
team and follow the same model. However, we expect that there will be a few
tweaks to the portfolio. We foresee a combined focus on companies' dividend
growth prospects, as well as companies already offering high yields. This may
mean a slight increase in the number of portfolio companies in the mid cap and
small cap sectors and an increase in the diversity of sources for revenue.
This shift in focus will be explained in more detail in the 2024 Annual
Report. The portfolio managers understand clearly that the Board is still
prioritising outperformance of the benchmark, and dividend growth in line with
or above CPI, taking a run of years together. While the Company has
significant revenue reserves which are available to support dividend payments,
the shift in emphasis towards companies with good dividend growth prospects
should support future dividend coverage over time.
Outlook
The geopolitical climate remains a significant concern for investors. Tensions
between Russia and the NATO countries are simmering as the war in Ukraine
drags on, the conflict in the Middle East shows little sign of resolution, and
Sino-US relations remain fraught, despite a flurry of high-level, relatively
congenial meetings earlier this year. There is a risk that the outcome of
November's US presidential election will escalate tensions on all these fronts
and spark fresh bouts of market volatility. In the short term the recent
decision by US President Biden not to run for re- election in November will
increase market uncertainty.
In the UK, the market environment is more positive, and we share the managers
guarded optimism about the prospects for the market and the Company. The
likelihood of imminent decreases in UK interest rates, combined with rising
real wages, has boosted business and consumer confidence. On the political
front, the prospect of a more stable political climate following the general
election last month has been welcomed by investors.
Despite these favourable developments, UK equity valuations remain attractive
in absolute terms and relative to other markets. The recent pick up in M&A
activity in the UK market suggests investors are beginning to recognise the
value on offer, but there is scope for further significant gains, as and when
corporate earnings prospects improve and investors' confidence in this market
increases. Meanwhile, investors, both in the UK and abroad, have a rare
opportunity to access the attractive dividend yields on offer in the UK at
historically low valuations.
The Company's managers are taking advantage of the dividend growth
opportunities they see across the market, and they are positioning the
portfolio to benefit from better times ahead.
In summary, we believe the Company is well-placed to continue delivering
steady and consistent returns and growing income over the long-term.
Keeping in Touch
The Company is committed to engaging with its shareholders and other
interested parties. To support this goal, the Company delivers email updates
on the Company's progress with regular news and views, as well as the latest
performance data. If you have not already signed up to receive these
communications and you wish to do so, please scan the QR Code in the Half Year
Report.
The Board appreciates the ongoing support of its shareholders.
David Fletcher
Chairman
9th August 2024
INVESTMENT MANAGER'S REPORT
Market Review: a turning point in the rates cycle?
The first half of 2024 has been a tale of stickier than expected core
inflation leading to delays in anticipated interest rate cuts. That said, the
reduction in the rate of UK CPI from over 11% in November 2022 back down to
2.0% in May has eased the pressure being faced by businesses and consumers.
Global GDP growth has remained below trend in the first half of the year.
Despite that, we saw the UK recover strongly from its shallow recession in
late 2023, with growth in the first quarter of 2024 well ahead of market
expectations. As inflation has begun to normalise we have seen UK household
real incomes return to positive growth and this has fed through to sharply
improved consumer confidence. We have also seen a material increase in M&A
activity, with 17 bids for FTSE 350 companies announced year-to-date and
still live, compared to just two for the whole of last year. These factors
have driven greater breadth in UK market returns, with the FTSE 250 and FTSE
small cap indices outperforming the FTSE 100 year-to-date.
This improved backdrop has been reflected in the performance of the Company's
benchmark; the FTSE All-Share, Share (the 'Benchmark'), which returned 7.4%
in the six months to 30th June 2024.
Performance
In the six months to 30th June 2024, the Company delivered a total return on
net assets (capital plus dividends re-invested, with debt at par value) of
8.9% compared to the Benchmark's return of 7.4%. The total return to
shareholders was 7.3% with the discount widening to 4.6% (debt at par value)
and 6.3% (debt at fair value).
Relative performance benefitted from our overweight position in the Aerospace
& Defence sector, with holdings in companies such as Rolls Royce and
Qinetiq benefitting from increasing defence spending by NATO members'
governments.
Our holding in 3i Group, the private equity business with a large holding in
the European discount retailer, Action, was another strong contributor to
performance, with the shares delivering a return of 28% on-top of the 88%
delivered last year. We continue to believe that the market underappreciates
the duration of the growth potential at Action and 3i remains our largest
portfolio holding.
JD Sports, the sports fashion retailer, performed poorly in the first half of
the year reflecting an increasingly promotional marketplace, with Nike
products in particular suffering from weak demand. We have exited our
holding.
Watches of Switzerland, the luxury watch retailer, also underperformed
following a reduction in premium watch allocations from its largest supplier,
Rolex. We have also exited this holding, reflecting the difficult environment
for luxury goods sales and question marks over their key supplier
relationship.
Top contributors and detractors to performance vs FTSE All-Share Index
Average Average
Top 5 Stocks Active Attribution Bottom 5 stocks Active Attribution
Rolls-Royce Holdings +1.8% +0.68% JD Sports Fashion +0.2% -0.47%
3i Group +2.9% +0.57% Glencore -0.4% -0.33%
Intermediate Capital Group +1.9% +0.42% SSE +1.5% -0.32%
Reckitt Benckiser -1.2% +0.39% Watches of Switzerland +0.0% -0.27%
Diageo -1.9% +0.37% Barratt Developments +0.9% -0.24%
Source: JPMAM, Six months to 30th June 2024.
Top Over and Under-weight positions vs FTSE All-Share Index
Top Five Overweight Positions Top Five Underweight Positions
3i Group +2.9% Diageo -1.7%
Shell +2.2% Reckitt Benckiser -1.3%
Intermediate Capital Group +2.2% Glencore -1.2%
JD Sports +2.1% Flutter Entertainment -1.1%
Rolls-Royce Holdings +1.9% Unilever -0.9%
Source: JPMAM, as at 30th June 2024.
Purchases
Over the half year we built new positions in NatWest and Barclays, both of
which plan to return a large proportion of their market cap to shareholders
over the next few years and generate double digit returns on equity across the
cycle, yet still trade at material discounts to net asset value.
We increased our position in Intermediate Capital Group, making it one of our
largest active investments. The alternative asset manager continues to
demonstrate that its business model is more resilient than in previous cycles
and has delivered significant fundraising at attractive margins, which has
driven profit growth ahead of market expectations despite the difficult
competitive backdrop.
We topped up our holdings in the retailers Tesco and Marks & Spencer,
which have taken market share in food from Morrisons, Asda, Waitrose and even
the discounter Aldi. This has helped support earnings expectations and
valuations remain compelling.
Sales
In the second quarter of the year, we reduced exposure to the Georgian listed
banks by selling out of TBC Bank Group and reducing our position in the Bank
of Georgia. After a strong run we felt that the valuation case was no longer
as compelling. These sales were executed before the political situation in
Georgia destabilised.
We also sold out of Asian exposed financial companies, Prudential and Standard
Chartered. Prudential has seen persistent downgrades due to expectations about
China's reopening not coming to fruition. It also does not generate as much
capital as other insurers, therefore making it relatively less compelling from
an income perspective. We sold out of our underweight position in Standard
Chartered as we prefer HSBC for Asian exposure and have instead increased
exposure to UK banks, which are returning more excess capital and have higher
return on equity targets.
We sold out of retailers Watches of Switzerland Group and JD Sports. Both
stocks benefitted from strong trading through the pandemic period, however,
now end markets have become more challenging as demand has waned.
We already had a large underweight position in the global consumer goods
company Reckitt Benckiser but decided to sell out as we believed it was
unlikely to be able to achieve its organic growth targets given pricing was
unlikely to be as strong as it had been in 2023. This was well timed as the
stock subsequently issued a profit warning and has been impacted by
litigation.
We exited Flutter as the stock traded at an expensive multiple and we did not
feel this reflected both the regulatory risk or execution risk in the US.
Evolution of the investment approach
As discussed in the Chairman's statement, William Meadon stepped down from
managing the portfolio on 30th June 2024, with Anthony Lynch and Katen Patel
joining Callum Abbot in managing the Company's portfolio from 1st July 2024.
We thank William for his significant contributions over the past 12 years.
There is no change to the Company's investment objective, but the new team has
used this as an opportunity to evolve the investment approach, with more of an
emphasis placed on the dividend growth characteristics of holdings across the
full breadth of the FTSE All-Share Index. Following an initial period of
modest repositioning, ongoing portfolio turnover is expected to reduce versus
recent history.
Examples of new positions added to the portfolio include companies such as XPS
Pensions, the pension consultant, where a number of multi-year industry
tailwinds and strong management execution are supporting strong earnings and
dividend growth and Urban Logistics, a REIT exposed to attractive 'last mile'
logistics assets.
The result has been an increase in the diversity of the sources of our income
and greater confidence in the dividend growth prospects of the aggregate
portfolio going forwards. We believe that these changes will be supportive to
Claverhouse's AIC dividend hero status, recognising that the dividend is not
currently covered by earnings.
Market Outlook
The inter-connected forces of inflation and monetary policy have continued to
dominate the market narrative so far in 2024. However, with the rate of
inflation less extreme than it has been for two years, and global interest
rates still in restrictive territory, we believe that we are close to the
turning point for this interest rate cycle. As a result, we have observed
improving consumer and business sentiment as the UK has begun to recover from
recession.
Notwithstanding the strong start to 2024, the UK equity market continues to
trade at a significant discount to both its own history and to other markets,
offering the highest dividend yield of major equity markets. In addition, the
elevated level of share buybacks outpaces any other major market and gives us
confidence in the sustainability of dividends going forwards. With valuations
still attractive, any improvement in the outlook for corporate earnings growth
could, therefore, deliver further healthy market gains.
We remain cognisant of the ever-changing geopolitical backdrop and the risk it
poses to the fragile recovery in global growth. The ongoing conflicts in
Ukraine and the Middle East, alongside a number of finely balanced elections,
have the potential to knock this recovery off-course. In the UK, the change in
government has been met with a moderately positive reaction from markets,
reflecting increased stability in the eyes of international investors.
We have positioned the portfolio to benefit from the dividend growth
opportunities that we are finding across the market cap spectrum and our
confidence in the outlook is reflected in our gearing level of 7.0%.
Callum Abbot
Anthony Lynch
Katen Patel
Portfolio Managers
9th August 2024
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 2023 and in the view of the Board, these principal
risks and uncertainties are as applicable to the remaining six months of the
financial year as they were to the period under review. The Board, through the
Audit Committee, has identified Artificial Intelligence as an emerging risk.
There have been no changes to emerging risks over the reporting period.
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. For these reasons, they consider that
there is sufficient evidence to continue to adopt the going concern basis in
preparing the financial statements. This conclusion also takes into account
the Board's assessment of the impact of heightened market volatility due to
the Russian invasion of Ukraine and the unrest in Israel and Gaza.
Statement of Directors' Responsibilities
The Board of Directors of the Company, 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 2024 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.
For and on behalf of the Board
David Fletcher
Chairman
9th August 2024
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30th June 2024
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 2024 30th June 2023 31st December 2023
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments
held at fair value through
profit or loss - 26,282 26,282 - (4,658) (4,658) - 12,726 12,726
Net foreign currency
(losses)/gains - (13) (13) - 4 4 - 6 6
Income from investments 9,996 653 10,649 10,358 - 10,358 19,816 - 19,816
Interest receivable and
similar income 285 - 285 291 - 291 694 - 694
Gross return/(loss) 10,281 26,922 37,203 10,649 (4,654) 5,995 20,510 12,732 33,242
Management fee (312) (578) (890) (389) (723) (1,112) (693) (1,286) (1,979)
Other administrative expenses (404) - (404) (423) - (423) (867) - (867)
Net return/(loss) before
finance costs and taxation 9,565 26,344 35,909 9,837 (5,377) 4,460 18,950 11,446 30,396
Finance costs (370) (689) (1,059) (376) (699) (1,075) (757) (1,406) (2,163)
Net return/(loss) before
taxation 9,195 25,655 34,850 9,461 (6,076) 3,385 18,193 10,040 28,233
Taxation credit/(charge) 6 - 6 (8) - (8) (17) - (17)
Net return/(loss) after
taxation 9,201 25,655 34,856 9,453 (6,076) 3,377 18,176 10,040 28,216
Return/(loss) per share (note 3) 16.02p 44.68p 60.70p 15.80p (10.16)p 5.64p 30.69p 16.95p 47.64p
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 2024 (Unaudited)
At 31st December 2023 15,037 176,867 6,680 188,588 20,625 407,797
Repurchase of shares into Treasury - - - (4,968) - (4,968)
Proceeds from share forfeiture(2) - - - 168 - 168
Net return - - - 25,655 9,201 34,856
Dividends paid in the period (note 4) - - - - (10,780) (10,780)
Refund of unclaimed dividends(2) (note 4) - - - - 123 123
At 30th June 2024 15,037 176,867 6,680 209,443 19,169 427,196
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
Year ended 31st December 2023 (Audited)
At 31st December 2022 15,037 176,867 6,680 194,276 22,940 415,800
Repurchase of shares into Treasury - - - (15,728) - (15,728)
Net return - - - 10,040 18,176 28,216
Dividends paid in the year (note 4) - - - - (20,491) (20,491)
At 31st December 2023 15,037 176,867 6,680 188,588 20,625 407,797
(1) These reserves form the distributable reserves of the Company and
may be used to fund distributions to investors.
(2) During the period the Company undertook an Asset Reunification
Program for its shareholders. In accordance with the Company's Articles of
Association, shares that could not be traced to shareholders over 12 years old
were forfeited. These shares were sold in the open market and the proceeds
returned to the Company. In addition, unclaimed dividends over 12 years old
were also returned to the Company.
CONDENSED STATEMENT OF FINANCIAL POSITION
At 30th June 2024
(Unaudited) (Unaudited) (Audited)
At 30th June At 30th June At 31st December
2024 2023 2023
£'000 £'000 £'000
Non current assets
Investments held at fair value through profit or loss 463,248 443,181 439,131
Current assets
Derivative financial assets 8 215 -
Debtors 1,673 2,904 1,105
Cash and cash equivalents 12,586 16,390 8,296
Cash held at broker 299 844 432
14,566 20,353 9,833
Current liabilities
Creditors: amounts falling due within one year (20,618) (30,815) (11,010)
Derivative financial liabilities - - (157)
Net current liabilities (6,052) (10,462) (1,334)
Total assets less current liabilities 457,196 432,719 437,797
Non current liabilities
Creditors: amounts falling due after more than one year (30,000) (30,000) (30,000)
Net assets 427,196 402,719 407,797
Capital and reserves
Called up share capital 15,037 15,037 15,037
Share premium 176,867 176,867 176,867
Capital redemption reserve 6,680 6,680 6,680
Capital reserves 209,443 182,825 188,588
Revenue reserve 19,169 21,310 20,625
Total shareholders' funds 427,196 402,719 407,797
Net asset value per share (note 5) 748.6p 678.4p 705.7p
For the 2023 year end, the 'Fixed Assets' sub-heading was changed to
'Non-Current Assets' to align to the adapted format under FRS 102. This change
did not result in any measurement changes in respect of prior periods or the
current period.
CONDENSED STATEMENT OF CASH FLOWS
For the six months ended 30th June 2024
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 30th June 31st December
2024 2023 2023
£'000 £'000 £'000
Cash flows from operating activities
Net return before finance costs and taxation 35,909 4,460 30,396
Adjustment for:
Net (gains)/losses on investments held at fair value through
profit or loss (26,282) 4,658 (12,726)
Net foreign currency losses/(gains) 13 (4) (6)
Dividend income (10,649) (10,358) (19,816)
Interest income (285) (291) (694)
Realised (losses)/gains on foreign exchange transactions (13) 4 6
Decrease/(increase) in accrued income and other debtors 14 11 (1)
(Decrease)/increase in accrued expenses (83) 210 211
Net cash outflow from operations before dividends and interest (1,376) (1,310) (2,630)
Dividends received 10,050 10,068 19,804
Interest received 273 314 683
Overseas withholding tax recovered 35 - -
Net cash inflow from operating activities 8,982 9,072 17,857
Purchases of investments (59,098) (53,943) (109,200)
Sales of investments 61,551 50,486 129,024
Settlement of futures contracts (451) (603) (520)
Transfer of margin cash from/(to) the broker 133 (844) (432)
Net cash inflow/(outflow) from investing activities 2,135 (4,904) 18,872
Dividends paid (10,780) (11,083) (20,491)
Repurchase of the Company's shares into Treasury (5,209) (5,370) (15,484)
Proceeds from share forfeiture 168 - -
Refund of unclaimed dividends 123 - -
Repayment of bank loan (15,000) - (20,000)
Drawdown of bank loan 25,000 20,000 20,000
Interest paid (1,129) (881) (2,014)
Net cash (outflow)/inflow from financing activities (6,827) 2,666 (37,989)
Increase/(decrease) in cash and cash equivalents 4,290 6,834 (1,260)
Cash and cash equivalents at start of period/year 8,296 9,556 9,556
Cash and cash equivalents at end of period/year 12,586 16,390 8,296
Cash and cash equivalents consist of:
Cash and short term deposits 258 269 611
Cash held in JPMorgan GBP Liquidity Fund 12,328 16,121 7,685
Total 12,586 16,390 8,296
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
For the six months ended 30th June 2024.
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 2024 and 30th June 2023 has not been audited or reviewed by the
Company's Auditor.
The figures and financial information for the year ended 31st December 2023
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 2024.
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 2023.
3. Return/(loss) per share
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 30th June 31st December
2024 2023 2023
£'000 £'000 £'000
Return per share is based on the following:
Revenue return 9,201 9,453 18,176
Capital return/(loss) 25,655 (6,076) 10,040
Total return 34,856 3,377 28,216
Weighted average number of shares in issue 57,422,451 59,810,159 59,232,911
Revenue return per share 16.02p 15.80p 30.69p
Capital return/(loss) per share 44.68p (10.16)p 16.95p
Total return per share 60.70p 5.64p 47.64p
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 2024 30th June 2023 31st December 2023
Pence £'000 Pence £'000 Pence £'000
Dividend paid
Final dividend in respect of prior year 10.50 6,059 10.50 6,309 10.50 6,308
First quarterly dividend 8.25 4,721 8.00 4,774 8.00 4,775
Second quarterly dividend - - - - 8.00 4,731
Third quarterly dividend - - - - 8.00 4,677
Total dividends paid 18.75 10,780 18.50 11,083 34.50 20,491
Refund of unclaimed dividends over 12 years old (123) - -
Net dividends paid 10,657 11,083 20,491
All dividends paid in the period/year have been funded from the revenue
reserve.
A second quarterly dividend of 8.25p (2023: 8.00p) per share, amounting to
£4,704,000 (2023: £4,731,000) has been declared payable in respect of the
year ending 31st December 2024. It will be paid on 2nd September 2024 to
shareholders on the register at the close of business on 26th July 2024.
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 57,067,358 (June 2023: 59,359,718; December 2023: 57,785,140)
Ordinary shares in issue at the period/year end (excluding Treasury shares).
(Unaudited) (Unaudited) (Audited)
30th June 2024 30th June 2023 31st December 2023
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 427,196 748.6 402,719 678.4 407,797 705.7
Add: amortised cost of £30 million 3.22% private
placement loan March 2045 30,000 52.5 30,000 50.5 30,000 51.9
Less: fair value of £30 million 3.22% private
placement loan March 2045 (22,214) (38.9) (22,243) (37.5) (23,608) (40.8)
Net asset value - debt at fair value 434,982 762.2 410,476 691.4 414,189 716.8
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 2024 30th June 2023 31st December 2023
Assets Liabilities Assets Liabilities Assets Liabilities
£'000 £'000 £'000 £'000 £'000 £'000
Level 1(1) 463,256 - 443,396 - 439,131 (157)
Total value of investments 463,256 - 443,396 - 439,131 (157)
(1) Includes future currency contracts.
7. Reconciliation of net debt
As at As at
31st December Other 30th June
2023 Cash flows non-cash charges 2024
£'000 £'000 £'000 £'000
Cash and cash equivalents
Cash and short term deposits 611 (353) - 258
Cash held in JPMorgan GBP Liquidity Fund 7,685 4,643 - 12,328
8,296 4,290 - 12,586
Borrowings
Debt due within one year
Bank loan (10,000) (10,000) - (20,000)
Debt due after one year
£30 million 3.22% private placement loan (30,000) - - (30,000)
(40,000) (10,000) - (50,000)
Net debt (31,704) (5,710) - (37,414)
JPMORGAN FUNDS LIMITED
9th August 2024
For further information, please contact:
Anmol Dhillon
For and on behalf of
JPMorgan Funds Limited
0800 20 40 20
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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