REG - JPMorgan Claver IT - Final Results
21/03/2025 07:00
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RNS Number : 5751B JPMorgan Claverhouse IT PLC 21 March 2025
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN CLAVERHOUSE INVESTMENT TRUST PLC
FINAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER 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 year ended 31st December 2024.
CHAIRMAN'S STATEMENT
Performance and Manager Review
A number of favourable developments underpinned a strong performance from the
UK market in the first half of the Company's financial year ended 31st
December 2024. UK economic growth exceeded expectations, and lower inflation
raised hopes of interest rate cuts. However, the mood became more negative in
the second half of the year, as the market felt that the newly elected Labour
government's gloomy rhetoric undermined consumer and business confidence. In
October, the government's first budget further unsettled the market and caused
investors to revise their expectations about the pace of interest rate cuts.
As a result, the market moved mostly sideways in the second half of the year.
The Company's benchmark, the FTSE All-Share index (the 'Benchmark'), generated
a total return of +9.4% over the year as a whole, only a modest improvement on
the +7.4% rise seen in the first half.
The Company's performance over the period was consistent with this outcome.
The portfolio returned +9.2% on a net asset value ('NAV') with debt at fair
value for the year ended 31st December 2024. The share price total return was
+8.3%, reflecting the slight widening of the discount at which the Company's
shares traded relative to its NAV.
In the view of the Board, to gain a more meaningful perspective, it is
important to assess the performance of the Manager over a longer time frame.
On this basis, the Company's NAV has risen in absolute terms over three, five
and ten years, and while performance has lagged the benchmark over three and
five year periods, annualised returns have matched the benchmark's annualised
return of +6.1% over ten years. This has reflected a period that included a
global pandemic, a generational inflationary spike and a war on the European
continent.
The Investment Manager's Report on pages 15 to 20 (of the Company's Annual
Report and Financial Statements for the year ended 31st December 2024 -'2024
Annual Report') provides more detail on performance during 2024 and sets out
the view of the Portfolio Managers as to the outlook for UK equities and the
Company, over 2025.
As at 31st December 2024, the Company's NAV per share (with debt at fair
value) was 746.0p and the share price was 704.0p. Since the end of the review
period, the Company's NAV per share (with debt at fair value) has risen to
791.0p and the share price rose to 752.0p as at 19th March 2025.
Portfolio management changes
During the second half of the review period, the Company had a change in
portfolio management. As announced in July, William Meadon, who had been
serving as a Portfolio Manager since 2012, left JPMorgan Asset Management in
August 2024. We extend our sincere thanks to William on behalf of the Board
for his dedicated service and contributions over the years. Following his
departure, Anthony Lynch and Katen Patel joined Callum Abbot as new Portfolio
Managers for the Company, effective from 1st July 2024. Callum has managed the
fund alongside William for six years, and his continuation in the role
provides a significant degree of consistency for the portfolio management
team. The two new Portfolio Managers are both 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. They are
joint managers of JPMorgan's open-ended UK Equity Income Fund, which has very
similar investment objectives and policies to your Company. Together the three
Portfolio Managers have over 35 years of investment trust experience. They are
supported by JPMorgan's well-resourced UK research and analytical team.
As I stressed in the Half Year Report, although the Company has a new
management team, there will be no change to its investment objective or key
policies, as set out in the 2023 and this Annual Report. The Portfolio
Managers understand clearly that the Board's priority remains that the
portfolio should outperform the FTSE All Share Index on a total return basis,
and provide dividend growth in line with or above CPI, taking a run of years
together.
However, as I indicated in the Interim Statement at the Half Year, the new
team has taken steps to evolve the Company's investment approach. While they
have maintained a focus on companies already offering high yields, they have
also increased the portfolio's exposure to companies across the whole of the
FTSE All Share Index, enhancing the dividend growth opportunity of the
portfolio. As a result of this dual focus, portfolio exposure to some
traditional high yielding sectors such as utilities and miners has been
reduced, in favour of positions in a broader range of sectors, across the
market cap spectrum, where the managers believe medium term growth prospects
are more attractive. As at 31st December 2024 the dividend yield on the
portfolio was 4.32%, compared to the FTSE all share yield of 4.02%.
The Board is fully supportive of this shift in focus, which is explained more
fully in the Investment Manager's Report that follows.
Revenue and Dividends
The Company'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 inflation. Consistent with this policy, the Directors declared a
fourth quarterly interim dividend of 10.65p per share for the year ended
31st December 2024, paid on 3rd March 2025, which brought the total dividend
per share for the year to 35.4p (2023 total: 34.5p), an increase of 2.6% on
the prior year, slightly higher than inflation. I am pleased to say that this
is the 52nd successive year in which the dividend has been raised, a record
which only very few investment trusts have attained. As a result, the Company
is recognised as an 'AIC Dividend Hero' for having delivered more than 20
consecutive years of dividend growth.
Following the payment of the fourth interim dividend for 2024, the Company
will have paid dividends in excess of inflation over the past six years. Since
2014 the dividend has increased from 20p per share to 35.4p per share in 2024,
an increase of 77%. During the same period inflation has been 35.5%. Although
UK inflation has now fallen sharply from the 30 year high seen in October
2022, the Board will continue to monitor the outlook of dividend income and
may continue to draw on revenue reserves, if necessary, to assist the Company
in meeting its dividend policy objectives.
The past year was one in which the dividend was supplemented in this manner.
Portfolio earnings declined during the 12 months to 31st December 2024, for
the reasons discussed in the Investment Manager's report. Revenue return per
share for the 12 months to the year end was 30.15p, compared to 30.69p earned
in the same period in 2023. As a result, underlying earnings did not fully
cover the 2024 dividend, therefore the dividend was partially funded from
revenue reserves. The Board is very focused on returning the Company to a
covered dividend over time.
The Company's revenue reserves remain substantial, having been accumulated
over a number of years. After the payment of the fourth interim dividend for
2024, revenue reserves will represent 21.45p per share as at 19th March 2025.
The recent portfolio changes implemented by the new management team in favour
of companies with good dividend growth prospects should result in dividends
received by the company increasing at a rate above inflation. For example,
market forecasts for the next few years are currently indicating dividend
growth prospects for the portfolio, as at 31st December 2024, at well above
inflation (before taking account of any special dividends). The Portfolio
Managers expect that this approach should narrow the differential between the
Company's revenue return and the dividends per share and improve dividend
cover over the next few years.
Accordingly the Board intends to raise the first three quarterly interim
dividends in 2025 to 8.40p per share, from 8.25p per share during each of the
first three quarters of the previous financial year. The fourth quarterly
dividend will be announced in January 2026, in accordance with usual practice.
Discount and Share Repurchases
During the year, the discount at which the Company's shares traded relative to
its NAV (with debt at fair value), ranged from a high of 7.2% to a low of
3.0%. The Board's objective is to use the Company's repurchase and allotment
authorities to actively manage short-term imbalances between the supply and
demand of the Company's shares, with the intention of, in normal market
conditions, reducing the volatility of the discount or premium. To this end,
over the past year, the Company repurchased 1,648,774 of its own shares, at a
total cost of £11.6 million.
As at 31st December 2024, the Company's discount (to its cum-income, debt at
fair value NAV) was 5.6%. Since then, the discount has narrowed to 4.9%(1) and
the Board has continued to utilise targeted repurchases, buying in a total of
834,678 shares as at the date of this report. However, the Board recognises
that consistent and strong investment performance is essential to ensure that
the Company's shares trade close to NAV over the long-term.
(1) As at 19th March 2025.
At this year's Annual General Meeting in May 2025, the Company will be seeking
renewed authorities from shareholders to sell shares from Treasury at a
discount to net asset value, to issue new shares and to repurchase its own
shares.
Gearing/Long Term Borrowing
The Company's gearing policy (excluding the effect of 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 futures). The Board believes
that over the long-term, a moderate level of gearing is an efficient way to
enhance shareholder returns. The Portfolio Managers can use FTSE 100 index
futures to effect increases and reductions in the level of gearing by changing
the portfolio's market exposure. The Portfolio Managers will reach their
target level of gearing by considering the number of attractive bottom-up
stock opportunities, rather than adjusting the gearing level due to a top-down
overlay.
Taking borrowings into account, net of cash balances held and the effect of
futures, the Company ended 2024 7.6% geared. No futures have been entered into
since July 2024. During the year, gearing varied between 4.7% and 9.0% geared.
Excluding the effect of the futures, the maximum gearing reached during the
year was 9.0%. Gearing is currently 7.9%(2). The Company has a £30 million
3.22% private placement note, maturing in March 2045. An £80 million
revolving loan facility (of which £10 million was drawn down) with Mizuho
Bank matured in May 2024 and was repaid by the Company. It was replaced with a
new £40 million one-year revolving loan facility with The Royal Bank of
Scotland International Limited. The Board is currently considering its short
term borrowing options for when the current loan facility matures in May 2025
and whether there are other more efficient ways of gearing the portfolio,
while remaining within the existing guidelines.
(2) As at 19th March 2025.
Environmental, Social and Governance issues
Financially material Environmental, Social and Governance ('ESG') factors have
been integrated into the Investment Manager's investment process over recent
years, and these issues are considered as part of the decision making in
whether to invest in a stock. The Board receives regular ESG updates from the
Investment Manager.
This Annual Report includes a separate Environmental, Social and Governance
Report from the Investment Manager on page 24 of the 2024 Annual Report which
provides information on these issues and how they have been developed and
integrated into the Investment Manager's investment process.
Investment Management Fees and Manager Evaluation
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, having been reduced with effect from 1st July
2023.
During the year under review, the Management Engagement Committee undertook a
formal review of the Manager and Investment Manager, covering the investment
management, company secretarial, administrative and marketing services
provided to the Company. The review took account of 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.
Board Succession
I have served as a member of the Company's Board since 2015, and I had the
honour to be appointed Chairman of your Board in April 2022. As announced in
the Company's Half Year Report, I plan to stand down from the Board following
this year's Annual General Meeting which is scheduled to be held on 1st May
2025. The Nomination Committee of the Company, chaired by the Senior
Independent Director, excluding myself, has considered the Company's
succession plan and, again as announced in the Half Year Report, I am pleased
to report that Victoria Stewart, a Director of the Company since February
2020, has been appointed to succeed me as Chair of the Board, effective from
the conclusion of the 2025 Annual General Meeting. Victoria will be stepping
down as Chair of the Remuneration Committee and will also no longer serve as a
member of the Audit Committee, although she will attend Audit Committee
meetings by invitation. The Board has unanimously appointed Joanne Fintzen to
succeed Victoria Stewart as Chair of the Remuneration Committee.
The Board was also pleased to announce the appointment of Mr. Tom Smethers as
a Non-Executive Director of the Company with effect from 3rd February 2025.
Mr Smethers is presently the Chief Financial Officer at Carlsberg Britvic and
has held senior positions at Costa Coffee, TUI Group, Jumeriah Group LLC and
Easy Jet plc. He is an experienced finance professional and has international
experience across Europe, the Middle East and Australia. He is a Fellow of the
Institute of Chartered Accountants of England and Wales and has, in the past,
been a Director and Audit Committee Chair of Artemis Alpha Trust plc.
Shareholder Engagement
The Board and the Portfolio Managers are always keen to increase dialogue with
the Company's existing shareholders.
During the past year, investors holding their shares through online platforms
will have received a letter inviting them to sign up for email updates from
the Company. These updates deliver regular news and views, as well as the
latest performance statistics. If you have not already signed up to receive
these communications and you wish to do so, you can opt in via
https://tinyurl.com/JCHSign-Up (https://tinyurl.com/JCHSign-Up) or by scanning
the QR code on page 13 of the 2024 Annual Report.
During the past year, the Portfolio Managers also held regular calls with
shareholders, including webinars, and provided portfolio and market updates on
the Company's website.
Annual General Meeting
The Company's sixty-second Annual General Meeting will be held at 60 Victoria
Embankment, London EC4Y 0JP, on Thursday, 1st May 2025, at 12 noon. The
Company's Portfolio Managers, Anthony Lynch, Callum Abbot and Katen Patel,
will give a presentation to shareholders, reviewing the past year and
commenting on the outlook for the current year. The meeting will be followed
by refreshments, providing shareholders with the opportunity to meet the
Directors and the Portfolio Managers. We look forward to welcoming as many
shareholders as possible to the Annual General Meeting.
For shareholders wishing to follow the Annual General Meeting proceedings
without attending in person can do so via conferencing software. Registration
and access details will be available on the Company's website:
www.jpmclaverhouse.co.uk (http://www.jpmclaverhouse.co.uk) , or by contacting
the Company Secretary at JPMAM Investment Trusts
jpmam.investment.trusts@jpmorgan.com
(mailto:jpmam.investment.trusts@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 either
by post or electronically. Detailed instructions are included in the Notes to
the Notice of Annual General Meeting on page 98 of the 2024 Annual Report.
Completion of a proxy card and its return will not preclude you from attending
the meeting and voting in person. If your shares are held through a platform,
platform providers often provide shareholders with the ability to receive
company documentation, to vote their shares and to attend general meetings, at
no cost. Please refer to your investment platform for more details, or visit
the Association of Investment Companies' ('AIC') website at
www.theaic.co.uk/aic/shareholder-voting-consumer-platforms
(http://www.theaic.co.uk/aic/shareholder-voting-consumer-platforms) for
information on which platforms support these services and how to utilise them.
We would like to ensure we answer all your questions fully, so if you have any
detailed or technical questions, it would be helpful if you could raise them
in advance with the Company Secretary either in writing to 60 Victoria
Embankment, London EC4Y 0JP, via email at jpmam.investment.trusts@jpmorgan.com
(mailto:jpmam.investment.trusts@jpmorgan.com) or via the 'Ask a Question' link
on the Company's website.
If there are any changes to the arrangements for the Annual General Meeting,
the Company will update shareholders through the Company's website and, if
appropriate, through an announcement on the London Stock Exchange.
Outlook
Although the US presidential election alleviated some of the political
uncertainty affecting the US market the early actions of the new US
administration has resulted in increased economic uncertainty and volatility.
The real threat of widespread tariffs by the US and potential reciprocal
actions by those countries directly impacted cast a shadow over the short term
economic outlook in the US and elsewhere. In addition the US Administration's
foreign policies have increased uncertainty globally while the world tries to
come to terms with the consequences. The war in Ukraine, the international
relationships with Russia and China, together with the ongoing conflict in the
Middle East, are all pressing geopolitical issues and concerns. As a result it
is unlikely in the short term that there will be any diminution in volatility.
In Europe there are already signs that defence spending will increase across
the continent as countries seek to reduce their reliance on the US. However
many countries, including the US, are looking to address their budget deficits
and focus on growing their economies.
In the UK, the near-term outlook is mixed. Consumer and business confidence
have weakened, jobs growth is stagnant and many businesses will be adversely
impacted by increases in the minimum wage and National Insurance contributions
announced in the new government's first budget. While the recent interest rate
cut is welcome The Bank of England has also forecast lower GDP growth this
year and inflation remains stubbornly higher than hoped. However, on a more
positive note, wages are rising, inflation has fallen from its high levels in
2023 and the Bank of England expects to reduce interest rates, with further
interest rate cuts this year. These developments should hopefully help
consumer confidence and activity over time, especially if the new government
implements concrete initiatives to boost growth, as it has promised. However,
the last few months have seen an increase in volatility and this is unlikely
to lessen in the short term given the geopolitical and global economic
outlook.
Despite the near-term uncertainties around the UK's economic prospects, the
Board shares the Portfolio Managers' positive outlook for UK equities and for
the Company over the medium term. UK stock valuations continue to be low by
historic standards in both absolute terms and relative to other markets, and
this is generating many opportunities to invest in the kind of quality
businesses with high and growing dividends targeted by the Portfolio Managers.
The Board welcomes their efforts to take advantage of the dividend growth
opportunities they see across the market, while also positioning the portfolio
to benefit from better times ahead. 2025 and 2026 will be important years for
the new Portfolio Managers to establish themselves with the Company but we are
confident that the team's approach will ensure the Company continues
delivering attractive returns and a growing income to shareholders over the
long term.
This will be my last Annual General Meeting. The last ten years have been
eventful and generally difficult for many professional and other investors to
navigate. During this period the requirements and responsibilities required of
Board members have multiplied and this is only going to increase further as
illustrated by recent events in the Investment Trust sector. This may in due
course lead to a re-evaluation of directors' fees. I would like to take this
opportunity to thank the Manager, the investment team, and the Board for their
dedication and hard work in achieving these positive outcomes. The prime focus
of the Company's Board has been on investment performance and total return for
shareholders. I have been continually impressed by the diligent and committed
execution of their responsibilities and I would like to thank them for their
support and contribution.
On behalf of the Board, I also thank you, our shareholders, for your continued
support.
David Fletcher
Chairman
20th March 2025
INVESTMENT MANAGER'S REPORT
Market review
2024 proved to be a year of two halves, with the strong stock-market
performance of the first half but a loss of some momentum through the latter
stages of the year.
The year began with stronger than expected UK economic growth data and a
reducing rate of inflation, which fed through to falling interest rate
expectations. Through the summer we began to see the first interest rate cuts
of the cycle, with the European Central Bank (ECB) initially cutting in June,
the Bank of England in July and the Federal Reserve (Fed) in September. Equity
markets had moved in anticipation of this, with the FTSE All Share Index
increasing by a healthy +10.8% in the seven months to 31st July 2024.
However, mixed macroeconomic data brought the risk of stagflation back to the
fore through the autumn - with sticky core inflation data, despite weaker
employment trends. This has resulted in a slower pace of anticipated interest
rate cuts, with rates now likely to remain in restrictive territory for longer
than previously expected, reducing expectations of economic growth.
In the UK, the change to a Labour led government, following 14 years of
Conservative administration, was initially shrugged off, with the outcome
having been the base case for markets for some time. However, the maiden
budget in October surprised markets, with increased government spending funded
by increased borrowing (resulting in higher interest rate expectations) and
increased National Insurance Contributions (impacting earnings expectations
for labour-intensive, domestically-focused businesses). As a result, the UK
equity market broadly maintained its position through the second half of the
year and ended the year having delivered a total return of +9.4%.
Performance
In the year to 31st December 2024, the Company delivered a total return on net
assets (capital plus dividends re-invested with debt at fair value) of +9.2%,
below the Benchmark's return of +9.4%. Total return on net assets, with debt
at par value, was +8.6%. The share price return to shareholders was +8.3%.
Our overweight position in 3i Group, the private equity business with a large
holding in the European discount retailer, Action, benefitted performance
during the year. Action continued to deliver double digit like-for-like
growth, with new store openings on-top, driving strong double-digit earnings
growth. We continue to believe that the market undervalues the future growth
potential of this asset and 3i Group remains the largest active position in
the portfolio, relative to the benchmark.
Performance also benefitted from an overweight position in Aerospace &
Defence businesses, particularly Rolls-Royce, the engine manufacturer, which
significantly upgraded its free cash flow guidance and reinstated its
dividend. We anticipate that the dividend should continue to grow rapidly from
this base, nonetheless following the significant re-rating we took some
profits.
However, an overweight position in Bytes Technology Group detracted from
returns. The share price fell following the news that the CEO had made a
number of undeclared trades in the company's stock and resigned. Following a
sharp de-rating in the share price relative to peers we chose to remain
invested in the company, noting that the company has continued to deliver
double digit earnings growth and generate strong free cash flow, with this
resulting in the payment of an increased special dividend during the year. We
consider the larger IT value added resellers to be well positioned to continue
increasing their share in a growing market and their capital-light business
models are supportive to returns to shareholders.
JD Sports Fashion also performed poorly, reflecting an increasingly
promotional marketplace, with Nike products in particular suffering from weak
demand. We have exited our holding, concerned that the business has lost its
entrepreneurial spirit under new management and that this could continue to
weigh on the future trading performance of the business.
The income generated by the portfolio fell during the year, reflecting
dividend cuts at portfolio companies such as Glencore and SSE, as well as a
trend towards companies undertaking share buy-backs, rather than special
dividends.
Top contributors and detractors to performance vs FTSE All-Share Index
Average Average
Top five stocks active position Attribution Bottom five stocks active position Attribution
3i Group +2.80% +0.91% Bytes Technology +1.12% -0.51%
Rolls-Royce +1.15% +0.70% JD Sports Fashion +0.03% -0.39%
Imperial Brands +1.34% +0.40% Barratt Redrow +1.03% -0.36%
Diageo -1.81% +0.33% Compass -0.79% -0.34%
Qinetiq +0.72% +0.30% Anglo American -0.39% -0.31%
Source: JPMAM, 12 months to 31st December 2024.
Performance attribution
Year ended 31st December 2024
% %
Contributions to total returns
Benchmark return +9.4%
Stock & Sector selection -1.0%
Gearing & cash +0.8%
Investment Manager contribution -0.2%
Cost of debt -0.2%
Portfolio total return +9.0%
Management fees and other administrative expenses -0.6%
Share buyback +0.2%
Sub total -0.4%
Return on net assets with debt at par value(A) +8.6%
Change in the fair value of the long term debt(1) +0.6%
Return on net assets with debt at fair value(A) +9.2%
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.
(1) Reflects the effect of fair value of the 3.22% £30 million
private placement loan. The fair value has been calculated using discounted
cash flow techniques, using the yield from similar dated gilt plus a margin
based on the five year average for the AA Barclays Sterling Aggregate
Corporate Bond spread. Please refer to Note 17 on page 85 of the 2024 Annual
Report for fair value details.
(A) Alternative Performance Measure ('APM').
A list of APMs, with explanations and calculations, and a glossary of terms
are provided on pages 100 to 103 of the 2024 Annual Report.
Evolution of the investment approach
Following the end of the half year it was announced that Portfolio Manager,
William Meadon, was leaving JPMorgan Asset Management and that Anthony Lynch
and Katen Patel would be joining Callum Abbot in managing the Company's
portfolio.
There is no change to the Company's investment objective or policy but the new
team has used this refresh of the investment management team as an opportunity
to evolve the investment approach. More of an emphasis will be placed on the
dividend growth characteristics of holdings, rather than focusing primarily on
the current income and yield. This will be achieved by considering a broader
investment opportunity set across the whole of the UK equity market. We
believe that these changes will be supportive of the Company's 'AIC Dividend
Hero' status.
Rebuilding dividend cover, alongside continuing to grow the dividend is a
priority for the Company. To assist in this, the portfolio was repositioned,
in line with our new approach. Going forwards, the portfolio turnover is
expected to reduce versus recent history.
With this approach, we now consider each of the Company's investments to fall
into one of three categories: i) high yielding companies, ii) companies able
to compound earnings growth at attractive rates and without much volatility,
leading to higher dividends over time, and iii) high dividend growth
companies. This has resulted in reduced exposure to some traditional areas of
yield, such as utilities and miners, and increased exposure to opportunities
found across a broader range of sectors and across the market cap spectrum,
where we believe that growth prospects are more attractive. Today,
approximately half of the Company's investments could be considered 'high
yielders', with the balance of the portfolio providing higher levels of
anticipated dividend growth, supporting the future growth of the Company's own
dividend.
Portfolio weight by category
Source: JPMAM, as at 31st December 2024. (Please see chart on page 17 of the
2024 Annual Report)
Totals may not sum to 100% due to rounding.
The underlying blended yield of the portfolio holdings has not changed
following these positioning changes and at 4.3%, remains at a 7% premium to
the FTSE All Share Index, but we now consider the portfolio to offer a more
attractive dividend growth rate with less reliance on a small number of very
high yielding stocks. This should mean that the portfolio income is more
resilient to the risk of company-specific dividend cuts, with the ten largest
contributors to portfolio income now generating approximately 45% of the total
dividend income, from 53% previously.
Purchases
High yielding companies
High yielding investments generate the lion's share of the portfolio income
and a high dividend yield can be a sign of an undervalued business. We focus
on identifying high yielders where we are confident that the dividend is not
just secure, but also has the potential to grow over time.
During the year we increased our holdings in banks, taking new positions in
Barclays and NatWest Group, as well as topping-up our existing holding in HSBC
Holdings.
Our investment in Barclays recognises the progress that has been made in
generating cost efficiencies and rebalancing towards the UK retail banking
operations and away from the downsized investment bank. This has already begun
to yield material improvements in returns. However, despite this, Barclays
continues to trade at the steepest discount to asset value of all the major
domestic UK banks.
During the year, we switched from holding Lloyds Banking Group to NatWest
Group, believing that similar valuations were not reflective of fundamentals.
NatWest's net interest income is likely to benefit significantly from being
able to refinance its assets at higher prevailing interest rates and is likely
to face less of a mortgage refinancing headwind through 2025 than Lloyds,
having written fewer mortgages at the very strong 2020 margins, which are now
due for refinancing at lower prevailing margins. Additionally, Lloyds faces a
risk related to historic motor finance conduct, whereas NatWest has had lower
exposure to this market.
We also increased the Company's holding in HSBC, the highest yielding of the
large banks and the bank with the highest earnings sensitivity to interest
rate changes. With 'higher for longer' interest rates, HSBC is likely to
benefit disproportionately. We have also noted material progress in their
simplification strategy, which has the potential to significantly boost
returns on assets and generate excess capital. This capital will be returned
to shareholders and reinvested into areas such as their Asian Wealth
Management business, which offers attractive growth rates and returns.
We are of the view that banks should be significantly more profitable over the
course of the next cycle, versus the past cycle, benefitting from higher
interest rates and lower exceptional costs. Having spent many years rebuilding
their capital buffers, they are now well positioned to accelerate lending
growth and increase shareholder distributions, positioning them well for our
strategy which looks to identify investments with strong dividend growth
characteristics.
'Compounders'(1)
We consider compounders to be businesses which deliver consistently attractive
levels of organic growth and are typically capital-light, meaning that they
can deliver this growth without the need to make large incremental
investments. As a result, their free cash flow conversion tends to be very
high and their primary use of cash flow is returns to shareholders, supporting
a healthy, growing dividend yield.
A new compounder addition to the portfolio was XPS Pensions, the pensions
consultant. We believe that the company is well positioned to benefit from
regulatory changes necessitating increased demand for advice from pension
schemes. XPS is also benefitting from a changing competitive landscape, with
scheme trustees now required to re-tender for services more regularly, which
has favoured medium-sized challengers such as XPS, over the large incumbents.
This has already begun to manifest in earnings delivery consistently ahead of
the market's expectations, alongside several hikes in the dividend.
(1) Compounders are those judged by the Investment Manager to be high
quality companies with differentiated businesses capable of delivering above
average earnings and dividend growth over a market cycle.
High dividend growth companies
Companies that exhibit high levels of growth are not always the most material
contributors to the portfolio income at the onset of the investment; however,
they may deliver strong total returns and are expected to become material
contributors to the dividend growth of the portfolio over a number of years.
A new high growth addition to the portfolio was Cranswick, the pork and
poultry processor, which supplies grocers and food-to-go operators in the UK.
The business has a strong track record for generating attractive returns on
invested capital from investments into processing capability. Following
several years of elevated investment Cranswick is well positioned to deliver
an acceleration in earnings growth, with the potential to build on its 30-year
track record of delivering double digit compound profit and dividend growth.
Sales
We exited our holdings in SSE and Centrica, the energy utilities. We
anticipate that both businesses are likely to become increasingly capital
intensive in coming years and this is likely to weigh on cash returns to
shareholders. Additionally, the energy price sensitivity of their earnings
means that returns on investments could have a wide range of outcomes. This
was evidenced by SSE's significant rights issue and dividend re-basing, in
order to fund elevated capital expenditure. We believe that the UK market
offers better opportunities for yield and growth elsewhere.
We reduced the portfolio's exposure to the mining sector, reducing holdings in
Glencore and Rio Tinto. Mining businesses tend to be highly capital
intensive, needing to replenish their reserves on an ongoing basis through
capital expenditure or acquisitions in order to maintain or grow production.
We reduced the portfolio's holding in Glencore amid weakening Chinese economic
data, weighing on commodity prices. We also reduced the portfolio's position
size in Rio Tinto, taking a view that production was unlikely to grow
materially in coming years, despite an elevated period for capital expenditure
and that there was a risk that management would allocate more to acquisitions,
rather than dividends.
We sold the portfolio's holding in JPMorgan UK Small Cap Growth & Income
plc following a decision to invest directly, rather than through a fund,
across the smaller end of the market. This reflects the broader market cap
expertise of the team following the addition of Anthony Lynch and Katen Patel,
both of whom have over ten years of experience in investing directly in medium
and smaller sized UK companies. We were opportunistic in our timing and
exited the holding at a low-to-mid single digit discount to net asset value
during July.
Portfolio positioning
The portfolio held 67 stocks at the end of the year, within the target range
of 60-80 holdings. This is a level of diversity that allows us to maximise
our breadth of opportunity, whilst also reducing the reliance on any one
company to generate a disproportionate portion of the portfolio's income.
One of the benefits of the investment trust structure is the ability to gear
the portfolio, enhancing returns over the medium to longer term. We reach our
chosen level of gearing on a bottom-up basis, assessing the prospects for
potential investments relative to the marginal cost of that gearing. Whilst
the outlook for economic growth once again looks challenging, we take comfort
in valuations which are towards historic lows and this is providing plenty of
opportunities to invest in high quality, growing businesses at lower than
usual multiples. The portfolio ended 2024 7.6% geared.
Top over-weight positions vs FTSE All Share Index
Top five overweight positions Active
3i Group +2.9%
Shell +2.3%
HSBC Holdings +1.8%
Intermediate Capital Group +1.8%
Dunelm Group +1.7%
Source: JPMAM, as at 31st December 2024.
One of the portfolio's largest overweight positions is in Shell, the
integrated oil major. Shell is benefitting from improved industry capital
discipline, following many years of industry under-investment, and a more
attractive valuation than many listed peers. Having rebased its dividend
during the Covid-pandemic following several years of no growth, the dividend
is now back to a level from which annual growth is more achievable, with any
negative oil price shocks likely to be absorbed by the share buyback, rather
than the dividend. Finally, as a beneficiary of rising oil prices, the
investment provides a natural hedge against some of our more domestically
sensitive investments.
One such domestic-focused investment is Dunelm, the homewares retailer. Dunelm
has a long track-record for delivering the majority of its sales growth
through market-share gains, rather than purely relying on the buoyancy of the
UK consumer. It has achieved this through ongoing investment into its online
capabilities and supply-chain partnerships, allowing it to achieve 'product
mastery' in new categories. With the upcoming increases in National Living
Wage and National Insurance Contributions, delivering volume-led sales growth
is an important lever with which to absorb these cost pressures and should
result in an improved competitive position, relative to retailers who turn
more readily to price. In addition, Dunelm's strong free cash flow conversion
and limited capital requirements have allowed the company to be a regular
special dividend payer, with special dividends paid in each of the past four
years.
The Company is also invested in Intermediate Capital Group, the alternative
asset manager focused on private market investments. The business has
demonstrated a very strong track record for fundraising, attracting investors
to recently seeded strategies, as well as successfully scaling up subsequent
vintages of well-established strategies. With the fundraising now more broadly
spread across a greater range of strategies, we are confident that this
momentum can be maintained, as evidenced by its continued strong performance
in the more difficult fundraising environment seen since 2022. We believe that
the market underappreciates the duration of management fees, with its
investors committing capital on a multi-year basis and we see the potential
for significant operating leverage, which feeds through to attractive levels
of dividend growth.
The Company's largest overweight positions also include holdings in 3i Group
and HSBC, which we have already discussed earlier in this report.
Market outlook
The economic recovery following the inflation spike in 2022 and subsequent
monetary policy tightening remains fragile across most developed markets, with
the UK being no exception. Through the course of 2024 we have observed
deteriorating trends in several economic indicators, such as new employment
trends, industrial purchasing intentions and consumer confidence. The timing
of a recovery in economic momentum remains uncertain but with policy rates
gradually easing from restrictive territory and economic activity already at
depressed levels, we are confident that in time companies will see better
opportunities for growth.
In the short term, we have also observed increased recent market volatility as
geopolitics take centre stage once again and markets wrestle with tariff risks
to specific companies and to general levels of economic growth.
Against this backdrop, investors are paid to wait, with valuations at low
multiples on cyclically depressed earnings. As a result, we are finding many
attractive valuation opportunities, allowing us to invest in high quality
businesses at historically attractive earnings multiples and dividend yields,
with the FTSE All Share dividend yield of 4% more than double that of MSCI All
Companies World Index, having de-rated following a period of below-trend
earnings growth.
While the catalyst remains uncertain, this combination of potential earnings
recovery alongside valuation re-rating bodes well for expected returns on UK
equities in the coming years.
For and on behalf of the Investment Manager
Anthony Lynch
Callum Abbot
Katen Patel
Portfolio Managers
20th March 2025
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 2024, including those that would threaten its business model,
future performance, solvency or liquidity.
With the assistance of the 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. During the
year under review, the Audit Committee worked extensively with the Manager to
review and update the risk matrix. 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. Given the difficulty of
identifying unknown emerging risks in a rapidly changing investment
environment, the Board have not listed any emerging risks in this document but
regularly discuss what might constitute important and relevant emerging risks.
These principal risks are listed below:
Movement
Principal risk Description Mitigating Activities During the Year
Geopolitical and macro- economic U.S. trade policy under the second Trump administration, adds complexity to The Investment Manager continuously monitors geopolitical developments and æ
the geopolitical landscape leading to a higher risk of market volatility. societal issues relevant to its business and the Board regularly interrogates
These trade and other tensions, alongside ongoing conflicts like the Investment Manager regarding its assessment of these risks and how it is The rise in geopolitical tensions contributed to volatility and economic
Russia-Ukraine as well as rising tensions in Southeast Asia and the Middle mitigating them through its investment decision making, including gearing. The disruption over the year.
East, could adversely affect investment performance and disrupt operations for Board notes that the Company is a closed-end vehicle and, unlike open- ended
the Company, its Manager, Investment Manager, and other service providers. funds has semi-permanent capital and does not have to sell investments at low
valuations in volatile markets due to share redemptions.
Share price discount to NAV The shares of the Company are traded freely and are therefore subject to the The Board seeks to narrow the discount by undertaking measured buybacks of the â
influences of supply and demand and investors' perception to the markets the Company's shares, taking account of market conditions and having established
Company invests in. The share price is therefore subject to fluctuations and guidelines and parameters. The Board continued to use targeted buybacks of the Company's own shares to
like all investment trusts may trade at a discount to the NAV which could lead
manage the discount at which the Company's shares traded.
to significant buyback activity and a reduction in the size of the Company. The Company and Manager work with the Corporate Broker to understand demand
for the Company's shares and in periods of unusual supply and demand, the
buyback policy may be used to mitigate large volume driven swings in share
price.
Cybersecurity Threat of cyber-attack, in all its guises such as hacking, malware, ransomware The Company benefits directly or indirectly from all elements of JPMorgan's â
etc. is regarded as at least as important as more traditional physical threats cyber security programme. The Directors scrutinise the Manager's internal
to business continuity and security. In addition to threatening the Company's controls to assure the Board that the Company's data is appropriately The Manager's comprehensive cybersecurity measures are currently in effect and
operations, such an attack is likely to raise reputational issues which may protected and give assurance over monitoring of outsourcers. The controls were reviewed by the Board over the year.
damage the Company's share price and reduce demand for its shares. around the physical security of JPMorgan's data centres, security of its
networks and security of its trading applications are tested by the
independent reporting auditor and reported on every six months against the
AAF 01/06 Standard.
Market factors such as interest rates, inflation and equity market performance Market factors such as interest rates, inflation and equity market performance The Board monitors the implementation and results of the investment process â
may impact the value of investments and the performance of the Company. and regularly discusses portfolio positioning with the portfolio management
team. The Board has set investment restrictions and guidelines, which are In the long term, the outlook for inflation and the interest rate cycle is
monitored and reported on by the Investment Manager. stable, as they are not expected to rise, maintaining a consistent level of
risk to asset pricing and economic performance.
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.
Strategy and Performance Inappropriate or poorly executed investment or business strategy, for example The Board manages these risks by setting its objectives carefully and through â
asset allocation or the level of gearing, may lead to underperformance against diversification of Investments. The Company operates various investment
the Company's benchmark index and peer companies, resulting in the Company's restrictions and guidelines designed to ensure that the mandate given to the The Company continues to pursue its investment objective in accordance with
shares trading at a widening discount. Investment Manager is properly executed and these guidelines are monitored and the agreed strategy.
reported on by the Manager.
The Board continued to monitor the performance of the portfolio over the year
The Board monitors the implementation and results of the investment process under review. The Board is aware that the Company has underperformed its
with the Portfolio Managers, who attend all Board meetings, and reviews data benchmark over the last 12 months and over the longer term but retains
which show statistical measures of the Company's risk profile. The Board has confidence in the Investment Managers and their investment strategy.
delegated powers to the Investment Manager to determine appropriate levels of
gearing within a strategic range but the Board monitors the use of gearing
closely, even within the delegated range.
The Board holds a separate meeting devoted to strategy each year which
includes a detailed review of the Company's mandate and the investment
environment.
Legal and Regulatory/ Corporate Governance As an investment trust, the Company's operations are subject to wide ranging The Company, through the Manager, has procedures to monitor the status of its â
regulations. The financial services sector continues to experience significant compliance with all requirements and regulations, including those relevant to
regulatory change at national and international levels and failure to act in maintaining its Investment Trust status and complying with the Board's duties The Company continued to comply with all relevant requirements and
accordance with these regulations could cause fines, censure or other losses under the Companies Act. These include receiving and reviewing information and regulations.
including taxation or reputational loss. A breach of Company Law or UK reporting from the Manager and Investment Manager relating to all aspects of
Listing Rules could result in the Company's suspension, underlining the corporate governance, the Listing Rules as applied to Investment Trust
importance of strong governance and regulatory compliance. Companies and the Companies Act. The Depositary (currently The Bank of New
York Mellon International Limited) reports regularly on third party service
providers and their compliance with expected standards of performance and
these reports are reviewed by the Audit Committee.
Climate change The risk or impact of climate change may be higher than currently estimated or The Board receives ESG reports from the Investment Manager on the portfolio â
the increase may be more significant than currently planned. This could have and how financially material ESG considerations have been integrated into
varying impacts on the business models, sustainability and viability of investment decision making. This should mitigate climate-related risk at the Whilst the Company is not a sustainable or ESG investment vehicle, review of
individual companies, whole sectors and even asset classes. stock selection and portfolio construction level, although the portfolio financially material ESG factors remains a part of the investment process.
remains exposed to wider societal and other changes which may be caused by Please see page 24 of the 2024 Annual Report for the Manager's ESG Report.
climate change.
The Board does consider 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 are under greater scrutiny.
Loss of Investment Team Loss of key staff by the Investment Manager, such as the Portfolio Managers, The Board keeps the services of the Manager, Investment Manager and â
could affect the performance of the Company. third-party service providers under continual review and these are formally
reviewed by the Management Engagement Committee. The Board regularly seeks This risk remains stable. The Portfolio Managers are supported by significant
assurances from the Investment Manager that the team is suitably resourced, resource within the Investment Manager and the recent changes to the
and appropriately remunerated and incentivised in its role as part of its investment team have reinforced the Company's investment capabilities.
ongoing risk management activities. The Board also considers and reviews the
Investment Manager's succession plan for the portfolio management team on an
annual basis.
Operational Disruption to, or failure of the accounting, monitoring, communications and Details of how the Board monitors the services provided by the Manager and its â
payments systems used by outsourced suppliers to the Company (including the associates and the key elements designed to provide effective internal control
Manager, Investment Manager, Depository and Custodian) could prevent accurate are included within the Risk Management and Internal Control section of the To date, the Manager's operations and controls have proven robust and the
reporting and monitoring of the Company's financial position. The risk of Corporate Governance report on page 50 of the 2024 Annual Report. The Audit Board's review process has been robust. The Company has not been impacted by
fraud or other control failures within the Manager or other service providers Committee receives independently audited reports all service providers' any operational issues.
could result in losses to the Company. internal controls, as well as regular reporting from JP Morgan'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 third party service
providers, of which one of the key protections is the Depositary's
indemnification for loss or misappropriation of the Company's assets held in
custody.
TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES
Details of the management contract are set out in the Directors' Report on
page 43 of the 2024 Annual Report. The management fee payable to the Manager
for the year was £1,838,000 (2023: £1,979,000) of which £nil (2023: £nil)
was outstanding at the year end.
Included in administration expenses in note 6 on page 79 of the 2024 Annual
Report are safe custody fees amounting to £7,000 (2023: £8,000) payable to
JPMorgan Chase Bank N.A. of which £1,000 (2023: £3,000) 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 £nil
(2023: £nil) of which £nil (2023: £nil) was outstanding at the year end.
The Company has sold its investment in JPMorgan UK Small Cap Growth &
Income plc (formerly JPMorgan UK Smaller Companies Investment Trust plc) which
is also managed by the Investment Manager. At the year end this was valued at
£nil (2023: £13.6 million) and represented nil% (2023: 3.1%) of the
Company's investment portfolio. During the year, the Company made £nil (2023:
£nil) purchases of this investment and sales with a total value of
£16,164,000 (2023: £501,000). Dividend income amounting to £467,000 (2023:
£357,000) was receivable during the year, of which £nil (2023: £nil) was
outstanding at the year end.
The Company also holds cash in the JPMorgan GBP Liquidity Fund, which is
managed by JPMorgan. At the year end this was valued at £8.3million (2023:
£7.7 million). Interest amounting to £583,000 (2023: £662,000) was
receivable during the year, of which £nil (2023: £nil) was outstanding at
the year end.
At the year end, total cash of £243,000 (2023: £611,000) was held with
JPMorgan Chase Bank N.A. A net amount of interest of £48,000 (2023: £32,000)
was receivable by the Company during the year from JPMorgan Chase Bank N.A. of
which £nil (2023: £nil) was outstanding at the year end.
Handling charges on dealing transactions amounting to £11,000 (2023: £4,000)
were payable to JPMorgan Chase Bank N.A. during the year of which £2,000
(2023: £1,000) was outstanding at the year end.
Full details of Directors' remuneration and shareholdings can be found on
pages 57 to 60 and in note 6 on page 79 of the 2024 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 Financial Statements are published on the www.jpmclaverhouse.co.uk
(http://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 Auditor does not involve consideration of
the maintenance and integrity of this website and, accordingly, the Auditor
accepts no responsibility for any changes that have occurred to the Financial
Statements since they were initially presented on the website. The financial
statements 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 41 of the
2024 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
20th March 2025
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31st December 2024
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments held at fair value through
profit or loss - 18,022 18,022 - 12,726 12,726
Net foreign currency (losses)/gains - (15) (15) - 6 6
Income from investments 18,745 704 19,449 19,816 - 19,816
Interest receivable and similar income 631 - 631 694 - 694
Gross return 19,376 18,711 38,087 20,510 12,732 33,242
Management fee (643) (1,195) (1,838) (693) (1,286) (1,979)
Other administrative expenses (801) - (801) (867) - (867)
Net return before finance costs and taxation 17,932 17,516 35,448 18,950 11,446 30,396
Finance costs (717) (1,331) (2,048) (757) (1,406) (2,163)
Net return before taxation 17,215 16,185 33,400 18,193 10,040 28,233
Taxation charge (7) - (7) (17) - (17)
Net return after taxation 17,208 16,185 33,393 18,176 10,040 28,216
Return per share 30.15p 28.36p 58.51p 30.69p 16.95p 47.64p
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).
The notes on page 76 to 92 of the 2024 Annual Report form part of these
financial statements.
STATEMENT OF CHANGES IN EQUITY
For the year ended 31st December 2024
Called up Share Capital Total
share premium redemption Capital Revenue Shareholders'
capital account reserve reserves(1) reserve(1) funds
£'000 £'000 £'000 £'000 £'000 £'000
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
Dividend paid in the year (note 2) - - - - (20,491) (20,491)
At 31st December 2023 15,037 176,867 6,680 188,588 20,625 407,797
Repurchase of shares into Treasury - - - (11,639) - (11,639)
Proceeds from share forfeiture(2) - - - 168 - 168
Net return - - - 16,185 17,208 33,393
Dividends paid in the year (note 2) - - - - (20,147) (20,147)
Forfeiture of unclaimed dividends (note 2)(2) - - - - 123 123
At 31st December 2024 15,037 176,867 6,680 193,302 17,809 409,695
(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 to reunite inactive shareholders with their shares and unclaimed
dividends. Pursuant to the Company's Articles of Association, the Company has
exercised its right to reclaim the shares of shareholders whom the Company,
through its previous Registrar, has been unable to locate for a period of 12
years or more. These forfeited shares were sold in the open market by the
Registrar and the proceeds, net of costs, were returned to the Company. In
addition, any unclaimed dividends older than 12 years from the date of payment
of such dividends were also forfeited and returned to the Company.
STATEMENT OF FINANCIAL POSITION
At 31st December 2024
2024 2023
£'000 £'000
Non current assets
Investments held at fair value through profit or loss 440,797 439,131
Current assets
Debtors 954 1,105
Cash and cash equivalents 8,506 8,296
Cash held at broker - 432
9,460 9,833
Current liabilities
Creditors: amounts falling due within one year (10,562) (11,010)
Derivative financial liabilities - (157)
Net current liabilities (1,102) (1,334)
Total assets less current liabilities 439,695 437,797
Non current liabilities
Creditors: amounts falling due after more than one year (30,000) (30,000)
Net assets 409,695 407,797
Capital and reserves
Called up share capital 15,037 15,037
Share premium account 176,867 176,867
Capital redemption reserve 6,680 6,680
Capital reserves 193,302 188,588
Revenue reserve 17,809 20,625
Total shareholders' funds 409,695 407,797
Net asset value per share 729.8p 705.7p
STATEMENT OF CASH FLOWS
For the year ended 31st December 2024
2024 2023
£'000 £'000
Cash flows from operating activities
Net return before finance costs and taxation 35,448 30,396
Adjustment for:
Net gains on investments held at fair value through profit or loss (18,022) (12,726)
Net foreign currency losses/(gains) 15 (6)
Dividend income (19,449) (19,816)
Interest income (631) (694)
Realised (loss)/gains on foreign exchange transactions (15) 6
Decrease/(increase) in accrued income and other debtors 5 (1)
(Decrease)/increase in accrued expenses (79) 211
Net cash outflow from operations before dividends, interest and taxation (2,728) (2,630)
Dividends received 19,519 19,804
Interest received 665 683
Overseas withholding tax recovered 35 -
Net cash inflow from operating activities 17,491 17,857
Purchases of investments (219,594) (109,200)
Sales of investments 236,225 129,024
Settlement of future contracts (431) (520)
Transfer of margin cash from/(to) the broker 432 (432)
Net cash inflow from investing activities 16,632 18,872
Dividends paid (20,147) (20,491)
Refund from forfeiture of unclaimed dividends 123 -
Repurchase of shares into Treasury (11,880) (15,484)
Proceeds from share forfeiture 168 -
Repayment of bank loan (25,000) (20,000)
Drawdown of bank loan 25,000 20,000
Interest paid (2,177) (2,014)
Net cash outflow from financing activities (33,913) (37,989)
Increase/(decrease) in cash and cash equivalents 210 (1,260)
Cash and cash equivalents at start of year 8,296 9,556
Cash and cash equivalents at end of year 8,506 8,296
Cash and cash equivalents consist of:
Cash at bank 243 611
Investment in JPMorgan GBP Liquidity Fund 8,263 7,685
Total 8,506 8,296
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st December 2024.
1. Significant accounting policies
The Company is a listed public limited company incorporated in England and
Wales. The registered office is detailed on page 107 of the 2024 Annual
Report.
(a) Basis of accounting
The financial statements are prepared under the historical cost convention,
modified to include fixed asset investments at fair value, 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 51 of the Directors' Report in the
2024 Annual 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
2024 2023
Pence £'000 Pence £'000
Dividends paid
Fourth quarterly dividend in respect of prior year 10.50 6,059 10.50 6,308
First quarterly dividend 8.25 4,721 8.00 4,775
Second quarterly dividend 8.25 4,704 8.00 4,731
Third quarterly dividend 8.25 4,663 8.00 4,677
Total dividends paid in the year 35.25 20,147 34.50 20,491
Forfeiture of unclaimed dividends over 12 years old(1) n/a (123) - -
Net dividends paid 35.25 20,024 34.50 20,491
Dividends declared
Fourth quarterly dividend declared 10.65 5,949 10.50 6,059
(1) During the period, the Company undertook an Asset Reunification
Program to reunite inactive shareholders with their shares and unclaimed
dividends. Pursuant to the Company's Articles of Association, the Company has
exercised its right to reclaim the shares of shareholders whom the Company,
through its previous Registrar, has been unable to locate for a period of 12
years or more. These forfeited shares were sold in the open market by the
Registrar and the proceeds, net of costs, were returned to the Company. In
addition, any unclaimed dividends older than 12 years from the date of payment
of such dividends were also forfeited and returned to the Company.
All dividends paid and declared in the period have been funded from the
Revenue Reserve.
The fourth quarterly dividend proposed and paid in respect of the year ended
31st December 2023 amounted to £6,059,000.
A fourth quarterly dividend of 10.65p has been declared and was paid on 3rd
March 2025 for the financial year ended 31st December 2024.
In accordance with the accounting policy of the Company, this dividend will be
reflected in the financial statements for the year ending 31st December 2025.
(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
£17,208,000 (2023: £18,176,000). Brought forward revenue reserves amounting
to £20,625,000 (2023: £22,940,000) have been utilised in order to finance
the dividend in respect of the year.
2024 2023
Pence £'000 Pence £'000
First quarterly dividend paid 8.25 4,721 8.00 4,775
Second quarterly dividend paid 8.25 4,704 8.00 4,731
Third quarterly dividend paid 8.25 4,663 8.00 4,677
Fourth quarterly dividend paid 10.65 5,949 10.50 6,059
Total dividends for Section 1158 purposes 35.40 20,037 34.50 20,242
The revenue reserve after payment of the fourth dividend will amount to
£11,860,000 (2023: £14,566,000).
3. Return per share
2024 2023
£'000 £'000
Revenue return 17,208 18,176
Capital return 16,185 10,040
Total return 33,393 28,216
Weighted average number of shares in issue during the year 57,065,999 59,232,911
Revenue return per share 30.15p 30.69p
Capital return per share 28.36p 16.95p
Total return per share 58.51p 47.64p
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
56,136,366 (2023: 57,785,140) Ordinary shares in issue at the year end
(excluding Treasury shares).
2024 2023
Net asset value attributable Net asset value attributable
£'000 pence £'000 pence
Net asset value - debt at par 409,695 729.8 407,797 705.7
Add: amortised cost of £30 million 3.22% private
placement loan March 2045 30,000 53.4 30,000 51.9
Less: fair value of £30 million 3.22% private
placement loan March 2045 (20,906) (37.2) (23,608) (40.8)
Net asset value - debt at fair value 418,789 746.0 414,189 716.8
JPMORGAN FUNDS LIMITED
20th March 2025
For further information, please contact:
Anmol Dhillon
For and on behalf of
JPMorgan Funds Limited
E-mail: jpmam.investment.trusts@jpmorgan.com
(mailto:jpmam.investment.trusts@jpmorgan.com)
Telephone: 0800 20 40 20 or or +44 1268 44 44 70
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 2024 Annual Report will be submitted to the National Storage
Mechanism and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
The 2024 Annual 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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