TIDMJCH
RNS Number : 8458I
JPMorgan Claverhouse IT PLC
10 August 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN CLAVERHOUSE INVESTMENT TRUST PLC
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHSED
30TH JUNE 2023
Legal Entity Identifier: 549300NFZYYFSCD52W53
Information disclosed in accordance with the DTR 4.2.2
The Directors of JPMorgan Claverhouse Investment Trust plc (the
"Company") announce the Company's results for the half year ended
30th June 2023.
Chairman's Statement
Performance
Over the six months to 30th June 2023, the UK's economic outlook
remained blighted by persistently high inflation, forcing the Bank
of England to maintain its aggressive monetary tightening stance.
The base rate rose from 3.5% at the end of December 2022, to 5.0%
at the end of June 2023. This was further increased to 5.25% on 3rd
August 2023.
This combination of stubbornly high inflation, interest rate
hikes, and the associated risk of recession, was a drag on UK
equity markets. Investor sentiment was dented further by industrial
action across the public sector, as workers sought wage increases
to counteract the rising cost of living. The Company's benchmark,
the FTSE All Share Index, rose by just 2.6% over the first half of
the year, underperforming global markets, where inflation pressures
are easing more rapidly. For example, US CPI inflation has declined
from its peak above 9% in mid-2021 to just 3% in May 2023. The UK
market's lack of large technology stocks also detracted from
relative performance, as these and other growth stocks have
returned to favour with investors in recent months.
During the past six months, the Portfolio Managers made changes
to the portfolio to reflect the various challenges generated by
high inflation, rising interest rates, the associated
cost-of-living crisis and the possibility that the UK will slip
into recession later this year, as higher rates take effect.
Specifically, the Portfolio Managers focused on companies with
robust balance sheets, low debt levels, strong competitive
positions and price power to pass on rising costs to end
customers.
Despite these changes, the Company underperformed its benchmark
over the period by 1.9% on a net asset value ('NAV') basis (with
debt at par), and 6.9% in share price terms. While this
underperformance is disappointing, it does reflect a market that
has been driven by macro concerns and sentiment, rather than
individual stock fundamentals, which are the Portfolio Managers'
focus. The share price discount to NAV (with debt at fair) moved
from a discount of 0.3% at the start of the period to a discount of
5.7% at 30th June 2023.
The Investment Manager's Report below provides more detail on
performance during the period.
When assessing the Company's performance, shareholders should
bear in mind that the Portfolio Managers invest for the long-term,
so it is more meaningful to judge performance over a longer
timeframe. On this basis, the Company continues to do well in
absolute terms and remains ahead of its benchmark over the ten
years to 30th June 2023.
As at 30th June 2023, the Company's NAV per share (with debt at
par value) was 678.4p and the share price was 652.0p. Since the end
of the period, the NAV has decreased to 674.78 and the share price
has remained unchanged at the time of writing*.
*as at 8(th) August 2023.
Revenue and Dividends
Revenue per share for the six months to 30th June 2023 was
15.80p, compared with 17.38p earned in the same period in 2022, but
significantly higher than in the same period in 2021, reflecting
the weak UK economy over the period. The Company declared a total
dividend of 33.00p in respect of the financial year ended 31st
December 2022. This dividend comprised three quarterly interim
dividends of 7.50p and a fourth quarterly interim dividend of
10.50p. A first quarterly dividend of 8.00p per share in respect of
the current financial year was paid on 13th June 2023. It remains
the Board's intention that the first three quarterly dividends
should be of equal size, and to this end, it has declared a second
quarterly dividend of 8.00p per share to be paid on 1st September
2023 to shareholders on the register at the close of business on
28th July 2023.
The Company has increased its dividend for 50 successive years.
The Board's dividend policy is to seek to increase the total
dividend each year and, taking a run of years together, to increase
dividends at a rate close to or above the rate of inflation. With
UK inflation remaining stubbornly high, the Board will continue to
monitor carefully the outlook for dividend income, and will take
into account the Company's revenue reserves, which have accumulated
over a number of years, and its ability, as an investment trust, to
utilise these reserves if necessary to support the dividend.
Discount, Share Repurchases
Discounts generally in the investment trust sector have widened
over the last 12 months with investors switching their equity
exposure to fixed income and money market funds. The Company has
not been immune to this trend, with the discount to NAV (with debt
at fair value) widening to close on 30th June 2023 at 5.7%. During
the period the discount touched on 6.8% as a result of selling from
a significant shareholder, JPMorgan Elect plc, following that
company's combination with JPMorgan Global Growth & Income plc.
Since the period end the discount has narrowed and is currently
5.2%*.
*as at 8(th) August 2023.
The Board's objective is to use its repurchase and allotment
authorities to manage imbalances between the supply and demand of
the Company's shares, with the intention of reducing the volatility
of the discount or premium, in normal market conditions. Over the
review period, the Board utilised the Company's buy back authority,
buying a total of 785,935 shares, at a cost of GBP5.4 million.
Since the end of the period, the Company has bought back a total
of 223,085 shares at a cost of GBP1.4 million at the time of
writing*.
*as at 8(th) August 2023.
Gearing/Long Term Borrowing
The Portfolio Managers can use FTSE 100 index futures to effect
reductions in the level of gearing by reducing the portfolio's
market exposure. The Company's gearing policy (excluding the effect
of any futures) is to operate within a range of 5% net cash and 20%
geared in normal market conditions. The Portfolio Managers have
discretion to vary the gearing level between 5% net cash and 17.5%
geared (including the effect of any futures). The Board believes
that over the long-term, a moderate level of gearing is an
efficient way to enhance shareholder returns.
Taking into account borrowings, net of cash balances held and
the effect of futures, the Company ended the review period
approximately 4.9% geared, compared to gearing of approximately
7.2% at the end of December 2022. The Company has a GBP30 million
3.22% private placement loan, maturing in March 2045 and a
revolving credit facility with Mizuho Bank Limited, of which GBP30
million was drawn down as at 30th June 2023.
Investment Management Fees
During the period, the Board agreed with the Manager to reduce
the Company's investment management fees. With effect from 1st July
2023, the investment management fee is charged on a tiered basis at
an annual rate of 0.45% of the Company's net assets on the first
GBP400 million and at 0.40% of net assets above that amount. This
compares with the previous arrangement under which the management
fee was charged at an annual rate of 0.55% on the first GBP400
million of Company assets and 0.40% thereafter. The fee will
continue to be calculated and paid monthly.
Outlook
Good news has been scarce since our last report. The
geopolitical and economic environment remains worrying, exacerbated
by the weight of global governments' debt to be financed. The war
in Ukraine drags on, with no prospect of resolution in sight, while
China's post-lockdown economic rebound has disappointed
expectations. At home, UK inflation has surprised on the upside
although the latest inflation rate figures have shown improvement,
while growth has been disappointingly weak. This is beginning to
impact corporate margins, and profits are likely to decline this
year. The recent interest rate rises have increased the risk of
recession, as higher rates begin to bite and mortgage holders and
others struggle to meet their monthly repayment commitments. There
are also concerns by some that the current widespread industrial
action will fuel a wage/price spiral that may see the UK revisit
the stagflation of the 1970s. The government's finances are also
weak, due in part to generous support packages implemented during
the pandemic and more recently in initiatives to help households
cope with sharply higher energy prices. This means that there is
currently limited scope for the government to implement fiscal
stimulus measures to boost activity.
However, looking beyond the gloomy near-term macroeconomic
outlook, there are still encouraging reasons to be positive about
the longer-term prospects of UK equities, and of the Company. As
the Portfolio Managers observe in their report on the following
pages, much of the bad news is now discounted by the market, and UK
equity valuations are still extremely attractive in absolute terms
and relative to other markets. This represents a rare opportunity
for investors to enter this market at historically low valuations
and suggests there is scope for significant market gains, as and
when the economic backdrop improves, and investors once again focus
on long-term fundamentals.
In the meantime, we believe the Portfolio Managers' current
prudent, long-term investment approach remains appropriate for
these challenging times. The Company's diversified portfolio
comprises mainly large, high-quality, FTSE 100 stocks which have
been selected for their strong balance sheets, capacity to grow
significantly over the medium term and their pricing power, which
allows them to pass on higher input costs to end customers - an
especially valuable attribute in the current inflationary
environment.
In sum, we believe the portfolio represents a balanced mix of
quality companies, which leaves the Company well-positioned to
continue delivering steady and consistent returns and a growing
income, over the long-term.
Task Force on Climate-related Financial Disclosures
The Investment Manager published its first UK Task Force on
Climate-related Financial Disclosures Report for the Company in
respect of the year ended 31st December 2022 on 30th June 2023. The
report discloses the portfolio's climate-related risks and
opportunities according to the Financial Conduct Authority
Environmental, Social and Governance Sourcebook and the Task Force
on Climate-related Financial Disclosures Recommendations. The
report is available on the Company's website: here
This is the first report under the new guidelines and disclosure
requirements and the Board will continue to monitor as these
reports evolve.
Keeping in Touch
The Board and the Portfolio Managers are keen to increase
dialogue with the Company's shareholders and other interested
parties. If you wish to sign up to receive email updates from the
Company, including news and views and latest performance
statistics, please click here
The Board appreciates the ongoing support of its
shareholders.
David Fletcher
Chairman
9th August 2023
INVESTMENT MANAGER'S REPORT
Investment Approach
We aim to construct a diversified portfolio of our best ideas,
comprising quality, growth and value stocks. For the patient
investor, such an approach will, we believe, over a run of years
produce outperformance of the index in a steady, risk-controlled
manner irrespective of market conditions. We also strive to
maintain Claverhouse's enviable dividend record by biasing the
portfolio towards attractive dividend stocks.
Market Review
UK equities lagged well behind global equities over the six
months ended 30th June 2023. The absence of (now back in favour
with investors) large technology stocks, together with stubbornly
high inflation, detracted from the UK's appeal.
Despite a further fall in oil and gas prices, UK inflation
continued to disappoint with the May CPI printing at 8.7%, and Core
inflation showing another worrying rise from 6.8% to 7.1% - the
highest since 1992. The Bank of England responded by raising short
rates for the 13th consecutive month, to 5.0% at the end of June
2023. The pound rallied to finish the period at $1.27, the highest
level in twelve months. In the spring, markets wobbled on the rapid
collapse of Credit Suisse and the collapse of the West coast,
American bank, Silicon Valley Bank (SVB). But investors soon took
the view that another systemic banking crisis was unlikely.
Political turmoil was a feature of the period. In the UK, former
Prime Minister Boris Johnson stood down as a member of Parliament
(MP) in disgrace, following a report that found he deliberately
misled MPs over lockdown parties in Downing Street. In the US,
Donald Trump became the first former president to face criminal
charges after a New York court indicted him on 34 counts of
falsifying business records. France was plagued by a series of
widespread, violent riots triggered by a police shooting.
The Ukraine war remained locked in a bloody stalemate. Wagner, a
mercenary army supporting Russia's war effort, threatened to march
on Moscow to challenge Russia's military leaders, but soon backed
down, with its leader seemingly retreating to exile in Belarus.
At the end of the period, the mood amongst investors was
fragile. A combination of UK high inflation and continuing
industrial unrest led some commentators to draw parallels with the
country's economic woes of the 1970s.
By the end of June, the total return on the FTSE All-Share index
from the start of the year was +2.5%.
Portfolio review
The portfolio struggled to make absolute or relative headway
during the period. The magnitude of the current economic and
geo-political challenges dampened investors' enthusiasm for many
attractively valued, good quality UK companies. Glencore and
Watches of Switzerland were two such examples of companies in the
portfolio which we believe were under-appreciated by the market
over the past six months.
The principal transactions we undertook during the period are
detailed below.
Purchases
The global travel industry was absolutely decimated by the
pandemic. However, companies that are well capitalised, like
Premier Inn owner Whitbread, and packaged holiday provider JET2,
are now well placed to take advantage of the resultant supply
shortage. Surging demand has led to a very favourable pricing
environment for airlines and hotels which we expect to continue,
especially in the budget part of the market where these two
companies operate, as consumers become more price sensitive.
Georgia has benefitted from a huge influx of affluent Ukrainians
and Russians fleeing the war. This has led to a surge in the
Georgian economy and a thriving banking sector as deposits have
grown. Bank of Georgia and TBC Bank operate a duopoly in this
market, which lends itself to very favourable economics for both
banks. As a result, both earn returns on equity of between 20-30%
and have consistently created value for shareholders. Their balance
sheets are in strong positions, with core equity tier 1 ratios in
the high teens, which should allow them to continue to return
substantial capital to shareholders. Both positions were bought at
under 5x PE.
Another bank we added to the portfolio was Standard Chartered as
it traded at around 50% of its book value, a level at which we
viewed as good value. In addition, around 80% of Standard
Chartered's operating income is generated in Asia, which is
benefitting from China's reopening.
We added Flutter, a market leader in the rapidly expanding US
gambling market following regulatory reforms. We decided to
initiate with a relatively small position as results have
positively surprised even versus the market's high
expectations.
We also topped up several existing positions which are
continuing to deliver operationally. For example, Centrica is
benefitting from the benign competitive environment for British
Gas, after many of its competitors went bust in 2022, while the
high volatility in energy prices is a prime environment for
Centrica's energy trading division.
Ashtead is an equipment rental business which looks extremely
well placed to capitalise on the wave of the so called
'mega-projects' which are taking place in the US to facilitate,
among other themes, onshoring and the energy transition. 3i Group
announced that its portfolio company, discount retailer Action,
continues to take market share as price sensitive consumers look
for cheaper places to shop. Historically this sort of environment
has been ideal for discounters, and customers have been
surprisingly loyal once the backdrop improves.
Sales
Barclays has had significant issues with internal controls in
recent years, so it was the obvious name to reduce as we looked to
reduce our bank exposure following the failure of SVB. We also sold
out of the asset manager M&G, as we reduced our broader
financial exposure in response to rising interest rates.
Bunzl is a distributor of single use products, which can pass
through all cost inflation to its end customers, which leaves it
well placed in the current inflationary environment. However, price
deflation would be a significant headwind for earnings and the
stock is trading at close to peak multiples, so we decided to exit
our holding in response to evidence that inflation may have
peaked.
We exited UK water company Severn Trent as we continue to prefer
utility companies, such as SSE, which have greater exposure to the
energy transition.
We sold some small holdings in UK domestic companies which we
suspect may struggle in the face of a weakening UK economy,
including Morgan Sindall, a construction and regeneration company,
and homebuilders Crest Nicholson, and Redrow.
The government outsourcer, Serco, is undergoing a period of
change after the departure of its CEO. The Company's new management
team is relatively untested and faces some large contract
renegotiations in its first year, so we thought it prudent to sell
the stock.
Serica , an oil and gas explorer and producer, announced a large
acquisition of another oil & gas E&P which called into
question the capital discipline of the management team. So, after
collecting the quarterly dividend, we sold the stock.
Performance Review: six months to 30th June 2023 - Stock
Attribution (actives ex-futures)
Average
Top 5 Stocks Active Attribution Explanation
% %
------------------ --------- -------------- -----------------------------------------------------------------
The European retailer, Action
(3i's largest holding) continued
to post excellent results on the
back of improving market share
and the continuing roll out of
3i Group +2.6 +0.98 new stores.
Supernormal profits in its energy
trading division have transformed
Centrica's balance sheet. Furthermore,
a more benign competitive environment
for British Gas is also proving
Centrica +1.0 +0.3 beneficial.
The backlog of large US infrastructure
projects provides a strong tailwind
Ashtead +1.4 +0.20 for this equipment rental business.
The valuation gap vs the global
defence peers closed as BAE's
results continued to impress.
BAE +1.4 +0.19 Future growth seems well underpinned.
SSE has an essential role in the
transition to renewable energy
through its development and ownership
of assets which are integral to
SSE +2.5 +0.18 the UK's energy infrastructure.
------------------ --------- -------------- -----------------------------------------------------------------
Average
Bottom 5 stocks Active % Attribution % Explanation
----------------- ---------- -------------- -----------------------------------------------------------------
Glencore +2.1 -0.44 This strong, diversified global mining company benefited
significantly from last year's surge
in coal prices, but underperformed over the period on the back
of a weakening coal price.
Watches of +0.9 -0.29 A perception of a weaker growth outlook in
Switzerland America for this retailer of luxury watches led to its shares
de-rating.
Flutter -0.9 -0.29 Shares in this international gambling company
Entertainment outperformed as they continued to deliver better than expected
results in the US.
Telecom Plus +1.3 -0.28 Despite the continued strong results and improved competitive
landscape, the shares of this
utility were surprisingly weak.
Rolls-Royce -0.5 -0.20 After several lacklustre years, full year results at this
aerospace engine manufacturer showed
some improvement.
----------------- ---------- -------------- -----------------------------------------------------------------
Top Over and Under-weight positions vs FTSE All-Share Index
Top Five Overweight Positions Top Five Underweight Positions
------------------------------- ------ ------------------------------- ------
3i Group +2.8% Barclays -1.1%
SSE +2.7% National Grid -1.1%
BP +1.8% Reckitt Benckiser -1.1%
JD Sports +1.7% Flutter Entertainment -0.9%
Glencore +1.7% Unilever -0.9%
------------------------------- ------ ------------------------------- ------
Source: JPMAM, as at 30th June 2023.
Market Outlook
The global economy continues to face a number of significant
challenges: worryingly high inflation, rapidly rising interest
rates and an ongoing and brutal war on the edge of Europe, to name
just three.
In the UK, the spectre of stagflation looms large. Economic
growth remains anaemic and stubbornly high inflation had led to 13
consecutive monthly increases in base rates to 5.0% (from a low of
0.1%). The market is expecting rates to keep rising until next
spring, peaking at an eye-watering 6.5%. At least savers will
receive some comfort from rising rates on their deposits.
Whilst the overwhelming majority of mortgages are on fixed
terms, there is nevertheless considerable pain to come for
borrowers: roughly 35,000 mortgages are coming to the end of their
term each week, the vast majority of them paying below 2.5% per
annum. Current fixed two-year mortgage rates are 6.5% and
rising.
Nor is the UK government immune from the impact of higher rates:
with the national debt now in excess of 100% of GDP (for the first
time since 1961), government annual interest payments of circa
GBP100 billion per annum. are set to rise further still. With an
election quite likely next year, it is difficult to see how the
government can afford any pre-election tax cuts - quite the
reverse, in fact.
Having for a long time insisted that inflationary pressures were
'transitory', the very credibility of the Bank of England is now in
question. The rapid growth in wages (and continuing industrial
unrest) suggests that the public thinks that inflation will stay
higher for longer than previously forecast and are fighting to
protect their own interest. Moreover, the government's strategy for
growth is also under scrutiny, not just from opposition parties but
increasingly from those on its own side.
Whilst recognising that UK equities have priced in a lot of this
bad news, until we see some marked abatement of the current
significant economic and geo-political woes, it is quite possible
that many UK investments will remain lowly-rated. Our portfolio is
geared, reflecting the range of attractive stock opportunities that
we see; however, it is predominantly in liquid large caps that give
us greater flexibility to deal with macro uncertainty. Meanwhile,
we trust that shareholders will appreciate the attractive dividends
which your Company continues to pay, confident that in time such
anomalous value will be realised.
At the time of writing, the Company is 6.5% geared, with an
overweighting to international FTSE 100 'blue chip' stocks.
For and on behalf of the Investment Manager
William Meadon
Callum Abbot
Portfolio Managers 9th August 2023
Interim Management Report
The Company is required to make the following disclosures in its
half yearly report.
Principal Risks and Uncertainties
The Board has an ongoing process for identifying, evaluating and
managing the principal risks, emerging risks and uncertainties of
the Company. The principal risks and uncertainties faced by the
Company fall into the following broad categories: cybercrime;
geopolitical and macro-economic; share price volatility; investment
and strategy; market factors such as interest rates, inflation and
equity market performance; operational; loss of investment team;
strategy and performance; climate change; legal and
regulatory/corporate governance; and financial. Detailed
information on each of these areas is given in the Strategic Report
within the Annual Report and Accounts for the year ended 31st
December 2022.
Related Parties Transactions
During the first six months of the current financial year, no
transactions with related parties have taken place which have
materially affected the financial position or the performance of
the Company.
Going Concern
The Directors believe, having considered the Company's
investment objectives, risk management policies, capital management
policies and procedures, liquidity and nature of the portfolio, and
expenditure projections, that the Company has adequate resources,
an appropriate financial structure and suitable management
arrangements in place to continue in operational existence for the
foreseeable future and, more specifically, that there are no
material uncertainties pertaining to the Company that would prevent
its ability to continue in such operational existence for at least
12 months from the date of the approval of this half yearly report.
In reaching that view, the Board has considered the impact of
heightened market volatility since the Russian invasion of Ukraine,
the inflationary environment and other geopolitical and financial
risks. However, it does not believe the Company's going concern
status is affected. For these reasons, the Board considers that
there is sufficient evidence to continue to adopt the going concern
basis in preparing the financial statements.
Statement of Directors' Responsibilities
The Board of Directors of the Company, who are listed in the
Company information section, confirms that, to the best of its
knowledge:
(i) the condensed set of financial statements contained within
the half year financial report has been prepared in accordance with
FRS 104 'Interim Financial Reporting' and gives a true and fair
view of the state of affairs of the Company, and of the assets,
liabilities, financial position and net return of the Company as at
30th June 2023 as required by the Disclosure Guidance and
Transparency Rules 4.2.4R; and
(ii) the interim management report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the Disclosure
Guidance and Transparency Rules.
In order to provide these confirmations, and in preparing these
financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business;
and the Directors confirm that they have done so.
The half yearly financial report for the six-month period to
30th June 2023 has not been audited or reviewed by the Company's
Auditor.
For and on behalf of the Board
David Fletcher
Chairman 9th August 2023
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30th June 2023
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 2023 30th June 2022 31st December 2022
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- --------- --------- -------- ---------- ---------- -------- ---------- ----------
Losses on
investments
held
at fair value
through
profit or loss - (4,658) (4,658) - (68,379) (68,379) - (53,403) (53,403)
Net foreign
currency
gains - 4 4 - 275 275 - 285 285
Income from
investments 10,358 - 10,358 11,393 - 11,393 22,346 - 22,346
Interest
receivable
and
similar income 291 - 291 90 - 90 339 - 339
---------------- -------- --------- --------- -------- ---------- ---------- -------- ---------- ----------
Gross
return/(loss) 10,649 (4,654) 5,995 11,483 (68,104) (56,621) 22,685 (53,118) (30,433)
Management fee (389) (723) (1,112) (403) (749) (1,152) (778) (1,444) (2,222)
Other
administrative
expenses (423) - (423) (385) - (385) (716) - (716)
---------------- -------- --------- --------- -------- ---------- ---------- -------- ---------- ----------
Net
return/(loss)
before
finance costs
and taxation 9,837 (5,377) 4,460 10,695 (68,853) (58,158) 21,191 (54,562) (33,371)
Finance costs (376) (699) (1,075) (298) (555) (853) (658) (1,222) (1,880)
---------------- -------- --------- --------- -------- ---------- ---------- -------- ---------- ----------
Net
return/(loss)
before
taxation 9,461 (6,076) 3,385 10,397 (69,408) (59,011) 20,533 (55,784) (35,251)
Taxation (8) - (8) 1 - 1 3 - 3
---------------- -------- --------- --------- -------- ---------- ---------- -------- ---------- ----------
Net
return/(loss)
after
taxation 9,453 (6,076) 3,377 10,398 (69,408) (59,010) 20,536 (55,784) (35,248)
---------------- -------- --------- --------- -------- ---------- ---------- -------- ---------- ----------
Return/(loss)
per share
(note 3) 15.80p (10.16)p 5.64p 17.38p (115.99)p (98.61)p 34.27p (93.10)p (58.83)p
---------------- -------- --------- --------- -------- ---------- ---------- -------- ---------- ----------
All revenue and capital items in the above statement derive from
continuing operations.
The 'Total' column of this statement is the profit and loss
account of the Company and the 'Revenue' and 'Capital' columns
represent supplementary information prepared under guidance issued
by the Association of Investment Companies.
The net return/(loss) after taxation represents the
profit/(loss) for the period/year and also the total comprehensive
income for
the period/year.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Called Capital
up
share Share redemption Capital Revenue
capital premium reserve reserves(1) reserve(1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------- --------- ----------- ------------ ----------- ----------
Six months ended 30th
June 2023 (Unaudited)
At 31st December 2022 15,037 176,867 6,680 194,276 22,940 415,800
Repurchase of shares into
Treasury - - - (5,375) - (5,375)
Net (loss)/return - - - (6,076) 9,453 3,377
Dividends paid in the period
(note 4) - - - - (11,083) (11,083)
------------------------------ -------- --------- ----------- ------------ ----------- ----------
At 30th June 2023 15,037 176,867 6,680 182,825 21,310 402,719
------------------------------ -------- --------- ----------- ------------ ----------- ----------
Six months ended 30th
June 2022 (Unaudited)
At 31st December 2021 14,859 171,863 6,680 250,060 21,560 465,022
Issue of Ordinary shares 130 3,713 - - - 3,843
Net (loss)/return - - - (69,408) 10,398 (59,010)
Dividends paid in the period
(note 4) - - - - (10,162) (10,162)
------------------------------ -------- --------- ----------- ------------ ----------- ----------
At 30th June 2022 14,989 175,576 6,680 180,652 21,796 399,693
------------------------------ -------- --------- ----------- ------------ ----------- ----------
Year ended 31st December
2022 (Audited)
At 31st December 2021 14,859 171,863 6,680 250,060 21,560 465,022
Issue of ordinary shares 178 5,004 - - - 5,182
Net (loss)/return - - - (55,784) 20,536 (35,248)
Dividends paid in the year
(note 4) - - - - (19,156) (19,156)
------------------------------ -------- --------- ----------- ------------ ----------- ----------
At 31st December 2022 15,037 176,867 6,680 194,276 22,940 415,800
------------------------------ -------- --------- ----------- ------------ ----------- ----------
1 This reserve forms the distributable reserve of the Company
and may be used to fund distributions to investors.
CONDENSED STATEMENT OF FINANCIAL POSITION
At 30th June 2023
(Unaudited) (Unaudited) (Audited)
At 30th At 30th June At 31st December
June 2023 2022 2022
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------- -----------------
Fixed assets
Investments held at fair value
through profit or loss 443,181 427,465 445,552
--------------------------------------- ------------ ------------- -----------------
Current assets
Derivative financial assets 215 - -
Debtors 2,904 1,800 1,098
Cash held at broker 844 1,894 -
Cash and cash equivalents 16,390 28,989 9,556
--------------------------------------- ------------ ------------- -----------------
20,353 32,683 10,654
Current liabilities
Creditors: amounts falling due
within one year (30,815) (379) (10,406)
--------------------------------------- ------------ ------------- -----------------
Derivative financial liabilities - (76) -
--------------------------------------- ------------ ------------- -----------------
Net current (liabilities)/assets (10,462) 32,228 248
--------------------------------------- ------------ ------------- -----------------
Total assets less current liabilities 432,719 459,693 445,800
--------------------------------------- ------------ ------------- -----------------
Creditors: amounts falling due
after more than one year (30,000) (60,000) (30,000)
--------------------------------------- ------------ ------------- -----------------
Net assets 402,719 399,693 415,800
--------------------------------------- ------------ ------------- -----------------
Capital and reserves
Called up share capital 15,037 14,989 15,037
Share premium 176,867 175,576 176,867
Capital redemption reserve 6,680 6,680 6,680
Capital reserves 182,825 180,652 194,276
Revenue reserve 21,310 21,796 22,940
--------------------------------------- ------------ ------------- -----------------
Total shareholders' funds 402,719 399,693 415,800
--------------------------------------- ------------ ------------- -----------------
Net asset value per share (note
5) 678.4p 666.6p 691.3p
CONDENSED STATEMENT OF CASH FLOWS
For the six months ended 30th June 2023
(Unaudited) (Unaudited) (Audited)
Six months Six months Six months
ended ended ended
30th June 30th June 31st December
2023 2022(1) 2022(1)
GBP'000 GBP'000 GBP'000
------------------------------------------- ------------ ------------ --------------
Cash flows from operating activities
Net return/(loss) before finance
costs and taxation 4,460 (58,158) (33,371)
Adjustment for:
Net loss on investments held at
fair value through profit or loss 4,658 68,379 53,403
Net foreign currency gains (4) (275) (285)
Dividend income (10,358) (11,393) (22,346)
Interest income (291) (90) (339)
Realised gains on foreign exchange
transactions 4 275 312
Decrease/(increase) in accrued income
and other debtors 11 (14) (1)
Increase/(decrease) in accrued expenses 210 (28) 18
------------------------------------------- ------------ ------------ --------------
Net cash utilised in operating activities (1,310) (1,304) (2,609)
------------------------------------------- ------------ ------------ --------------
Dividends received 10,068 11,011 22,677
Interest received 314 90 316
Overseas withholding tax recovered - - 1
------------------------------------------- ------------ ------------ --------------
Net cash inflow from operating activities 9,072 9,797 20,385
------------------------------------------- ------------ ------------ --------------
Purchases of investments (53,943) (133,414) (226,611)
Sales of investments 50,486 190,615 280,403
Settlement of foreign currency contracts - (2) -
Settlement of futures contracts (603) (724) (504)
Transfer of Company cash (from)/to
the Broker (844) 3,075 4,969
------------------------------------------- ------------ ------------ --------------
Net cash (outflow)/inflow from investing
activities (4,904) 59,550 58,257
------------------------------------------- ------------ ------------ --------------
Dividends paid (11,083) (10,162) (19,156)
Issue of Ordinary Shares - 3,843 5,182
Repurchase of the Company's shares (5,370) - -
into Treasury
Repayment of bank loan - (80,000) (100,000)
Drawdown of bank loan 20,000 40,000 40,000
Interest paid (881) (925) (1,971)
------------------------------------------- ------------ ------------ --------------
Net cash inflow/(outflow) from financing
activities 2,666 (47,244) (75,945)
------------------------------------------- ------------ ------------ --------------
Increase in cash and cash equivalents 6,834 22,103 2,697
Cash and cash equivalents at start
of period/year 9,556 6,886 6,886
Unrealised loss on foreign currency
cash and cash equivalents - - (27)
------------------------------------------- ------------ ------------ --------------
Cash and cash equivalents at end
of period/year 16,390 28,989 9,556
------------------------------------------- ------------ ------------ --------------
Cash and cash equivalents consist
of:
Cash and short term deposits 269 262 157
Cash held in JPMorgan Sterling Liquidity
Fund 16,121 28,727 9,399
------------------------------------------- ------------ ------------ --------------
Total 16,390 28,989 9,556
------------------------------------------- ------------ ------------ --------------
1 The presentation of the Cash Flow Statement, as permitted
under FRS 102, has been changed so as to present the reconciliation
of 'net return/(loss) before finance costs and taxation' to 'net
cash utilised in operating activities' on the face of the Cash Flow
Statement. Previously, this was shown by way of note. Other than
consequential changes in presentation of the certain cash flow
items, there is no change to the cash flows as presented in
previous periods.
Reconciliation of net debt
As at Other As at
31st December Cash flows non-cash charges 30th June
2022 2023
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------------- ----------- ----------------- ----------
Cash and cash equivalents
Cash 157 112 - 269
Cash equivalents 9,399 6,722 - 16,121
----------------------------- -------------- ----------- ----------------- ----------
9,556 6,834 - 16,390
----------------------------- -------------- ----------- ----------------- ----------
Borrowings
Debt due within one year (10,000) (20,000) - (30,000)
Debt due after one year
GBP30 million 3.22% Private
Placement loan (30,000) - - (30,000)
----------------------------- -------------- ----------- ----------------- ----------
(40,000) (20,000) - (60,000)
----------------------------- -------------- ----------- ----------------- ----------
Net debt (30,444) (13,166) - (43,610)
----------------------------- -------------- ----------- ----------------- ----------
Notes to the financial statements
for the six months ended 30th June 2023
1. Financial statements
The condensed financial information contained in this half
yearly financial report does not constitute statutory accounts as
defined in Section 435 of the Companies Act 2006. The financial
information for the six months ended 30th June 2023 and 30th June
2022 has not been audited or reviewed by the Company's Auditor.
The figures and financial information for the year ended 31st
December 2022 are extracted from the latest published financial
statements of the Company and do not constitute statutory accounts
for that year. Those financial statements have been delivered to
the Registrar of Companies including the report of the auditor
which was unqualified and did not contain a statement under either
section 498(2) or 498(3) of the Companies Act 2006.
2. Accounting policies
The financial statements have been prepared in accordance with
the Companies Act 2006, FRS 102 'The Financial Reporting Standard
applicable in the UK and Republic of Ireland' of the United Kingdom
Generally Accepted Accounting Practice ('UK GAAP') and with the
Statement of Recommended Practice 'Financial Statements of
Investment Trust Companies and Venture Capital Trusts' (the 'SORP')
issued by the Association of Investment Companies in July 2022.
FRS 104, 'Interim Financial Reporting', issued by the Financial
Reporting Council ('FRC') in March 2015 has been applied in
preparing this condensed set of financial statements for the six
months ended 30th June 2023.
All of the Company's operations are of a continuing nature.
The accounting policies applied to this condensed set of
financial statements are consistent with those applied in the
financial statements for the year ended 31st December 2022.
3. Return/(loss) per share
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
30th June 2023 30th June 2022 31st December
2022
GBP'000 GBP'000 GBP'000
------------------------------- --------------- --------------- --------------
Return/(loss) per share is
based on the following:
Revenue return 9,453 10,398 20,536
Capital loss (6,076) (69,408) (55,784)
------------------------------- --------------- --------------- --------------
Total return/(loss) 3,377 (59,010) (35,248)
------------------------------- --------------- --------------- --------------
Weighted average number of
shares in issue, excluding
shares
held in Treasury 59,810,159 59,839,438 59,917,311
Revenue return per share 15.80p 17.38p 34.27p
Capital loss per share (10.16)p (115.99)p (93.10)p
------------------------------- --------------- --------------- --------------
Total return/(loss) per share 5.64p (98.61)p (58.83)p
------------------------------- --------------- --------------- --------------
4. Dividends paid
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
30th June 2023 30th June 2022 31st December
2022
GBP'000 GBP'000 GBP'000
--------------------------------- --------------- --------------- --------------
2022 fourth quarterly dividend
of 10.50p (2021: 9.50p) paid
in
March 2023 6,309 5,665 5,665
2023 first quarterly dividend
of 8.00p (2022: 7.50p) paid
in June 2023 4,774 4,497 4,497
2022 second quarterly dividend
of 7.50p paid in September
2022 n/a n/a 4,497
2022 third quarterly dividend
of 7.50p paid in December 2022 n/a n/a 4,497
--------------------------------- --------------- --------------- --------------
Total dividends paid in the
period/year 11,083 10,162 19,156
--------------------------------- --------------- --------------- --------------
All dividends paid in the period/year have been funded from the
revenue reserve.
A second quarterly dividend of 8.0p (2022: 7.50p) per share,
amounting to GBP4,731,000 (2022: GBP4,497,000) has been declared
payable in respect of the year ending 31st December 2023. It will
be paid on 1st September 2023 to shareholders on the register at
the close of business on 28th July 2023.
5. Net asset value per share
The net asset value per Ordinary share and the net asset value
attributable to the Ordinary shares at the period/year end are
shown below. These were calculated using 59,359,718 (June 2022:
59,955,653; December 2022: 60,145,653) Ordinary shares in issue at
the period/year end (excluding Treasury shares).
(Unaudited) (Unaudited) (Audited)
30th June 2023 30th June 2022 31st December
2022
Six months Six months ended Year ended
ended
Net asset value Net asset value Net asset value
attributable attributable attributable
GBP'000 pence GBP'000 pence GBP'000 pence
------------------------------ ---------- -------- ---------- -------- ---------- --------
Net asset value - debt at
par 402,719 678.4 399,693 666.6 415,800 691.3
Add: amortised cost of GBP30
million 3.22% private
placement loan March 2045 30,000 50.5 30,000 50.1 30,000 49.9
Less: fair value of GBP30
million 3.22% private
placement loan March 2045 (22,243) (37.5) (28,853) (48.1) (23,466) (39.0)
------------------------------ ---------- -------- ---------- -------- ---------- --------
Net asset value - debt at
fair value 410,476 691.4 400,840 668.6 422,334 702.2
------------------------------ ---------- -------- ---------- -------- ---------- --------
6. Fair valuation of instruments
The fair value hierarchy analysis for financial instruments held
at fair value at the period end is as follows:
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30th June 2023 30th June 2022 31st December 2022
Assets Liabilities Assets Liabilities Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- ------------ --------- ------------ --------- ------------
Level 1(1) 443,396 - 427,465 (76) 445,552 -
---------------------------- --------- ------------ --------- ------------ --------- ------------
Total value of investments 443,396 - 427,465 (76) 445,552 -
---------------------------- --------- ------------ --------- ------------ --------- ------------
1 Includes future currency contracts.
JPMORGAN FUNDS LIMITED
10th August 2023
For further information, please contact:
Emma Lamb
For and on behalf of
JPMorgan Funds Limited
020 7742 4000
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of, this
announcement.
ENDS
A copy of the half year report will shortly be submitted to the
FCA's National Storage Mechanism and will be available for
inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The half year report will also shortly be available on the
Company's website a t www.jpmclaverhouse.co.uk w here 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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END
IR FLFVETAIAIIV
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August 10, 2023 02:00 ET (06:00 GMT)
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