Annual Financial Report

RNS Number : 8209G

JPMorgan Claverhouse IT PLC

06 March 2015

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN CLAVERHOUSE INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2014

The Directors of JPMorgan Claverhouse Investment Trust plc announce the Company's results for the year ended 31st December 2014.

Chairman's Statement

Performance and Manager Review

Following the very strong returns enjoyed by investors in the UK stock market in 2013, the year to 31st December 2014 proved again to be positive, but less spectacular. In last year's annual report I cautioned that a period of greater volatility for equities might well lie ahead and indeed the modest positive total return from the market over the year masks periods of volatility. Our Investment Managers provide more details in their report which follows.

I am pleased to report that for the third year in succession the Company outperformed against its benchmark over the year, both in terms of Net Asset Value ('NAV') per share and share price. The total return, taking capital growth and income together, of the UK stock market as measured by the Company's benchmark, the FTSE All-Share Index was +1.2%. The components of this total return were a small decline of -2.1% in the capital level of the Index which was more than made up by positive income of +3.3%. The Company's total return on net assets was +2.1% which was made up of -1.0% of capital loss and 3.1% of dividend return.

During the year the share price rose marginally from 599p to 602.5p. The total return to shareholders was +4.0%, as the discount (with debt at par) of the share price to NAV narrowed over the course of the year from 5.4% to 3.4%.

The Board is pleased that the significantly improved performance has been sustained, following the detailed review that was undertaken in early 2012 and the resultant changes that were made to the investment process and the investment management team. Over the 34 months since those changes were implemented, the Company has produced a total return on net assets of +44.6% and a share price total return of +55.5%, compared with the benchmark total return of +28.1%. This performance is a credit to our Manager, JPMorgan Asset Management ('JPMAM'), and in particular to William Meadon and Sarah Emly who jointly manage the Company's portfolio. It has restored the Company's longer term performance record; the NAV total return has materially outperformed the benchmark over three, five and ten years. The establishment of a strong three year record since 1st March 2012 is important and the Board hopes it will assist in improving the Company's rating, in terms of the discount to NAV at which the shares trade.

Revenue and Dividends

In 2014 the revenue per share increased by 4.6% to 23.31p per share. The Board decided that the total dividend for the year should be increased from 19.5p to 20.0p, an above-inflation rise of 2.6%, thus growing the total dividend for the 42nd successive year. The dividend was more than covered by the revenue generated by the Company's portfolio, which included several special dividends, and did not require a transfer from the Company's revenue reserve. It remains the Board's aim to increase the dividend each year and, taking a run of years together, we continue to aspire to deliver increases in dividends that will at least match the rate of inflation. However, the Board reiterates that it does not wish to see the Investment Managers constrained by the need to generate income and it remains prepared to revert to utilising the revenue reserve to support the dividend should it be necessary.

Gearing

Taking account of borrowings, net of cash balances held, and hedging through the use of Index Futures, the Company ended the year approximately 11.9% geared. During the year the gearing varied between 6.6% and 16.7%. Gearing existed by way of a combination of the £30 million 7% 2020 debenture and a short term bank borrowing facility, which was increased from £40 million to £50 million during the year and then refinanced in April with a new, £50 million three year revolving credit facility. As reported in previous years, the Board has agreed with the Investment Managers that gearing of 10% is considered as 'normal' and that they have discretion to vary the tactical level of gearing in a range of +/- 7.5% around that normal level, with maximum total gearing under normal market conditions of 20%. The tactical range of +/- 7.5% on top of the normal 10% is kept under review and any move outside of that range requires the Board's prior consent. However, the Company's formal overall policy remains to operate within the limits of a gearing range of 5% net cash to 20% geared in normal market conditions.

The Investment Managers are permitted to use Index Futures as a tool with which to manage the level of exposure to the market and the level of gearing. The use of futures obviates the need to sell stocks and has less of an effect on the Company's income account than would significant variations in the level of conventional debt. Futures are only used for portfolio management purposes and exposure is limited automatically by the gearing limits within which the portfolio is managed.

Share Repurchases

The Company did not repurchase any shares during the year, which reflects the improvement in the Company's rating. Indeed, we have not repurchased any of the Company's shares since January 2012. However, the Board continues to monitor the discount closely and is prepared to repurchase shares when it feels that it is appropriate, taking into account market conditions and whether it is out of line with its peers. Those shares repurchased in previous years are held in Treasury for possible re-issue should the Company's shares move to a premium.

Board of Directors

I became Chairman of the Company in April 2005 and, as I indicated last year, I will retire at the conclusion of the forthcoming AGM. I have thoroughly enjoyed serving on the Board of JPMorgan Claverhouse since my appointment in 1996 and it has been a privilege to be Chairman for the past ten years. I would like to thank shareholders, my fellow Directors and the team at JPMAM for their many years of support.

As I reported last year, Andrew Sutch, who was appointed to the Board in April 2013, will succeed me as Chairman. Refreshing the Board has continued with the appointment of David Fletcher as a Director on 1st February this year. David is a Chartered Accountant and is currently Group Finance Director of Stonehage Fleming Family & Partners Limited, a multi family office. He joined FF&P in 2002 and became Chief Financial Officer in 2009. Prior to FF&P, he spent 20 years in investment banking in London, Hong Kong and Japan with JPMorgan, Robert Fleming & Co. and Baring Brothers & Co Limited. David will stand for reappointment at the AGM and I look forward to introducing him to shareholders.

Directors conduct an assessment of their performance each year and this is normally followed up by a conversation with me as Chairman. In the light of my impending retirement, on this occasion those conversations have been with my successor. The Chairman's performance is assessed by the Senior Independent Director after he has consulted with all of the other Directors. A report is made to the Nomination Committee which meets annually to evaluate the performance of the Board, its Committees and the individual Directors.

All Directors, save for myself, will as usual stand for reappointment at the AGM.

Board Apprentice

Last year the founder of a not-for-profit company, Board Apprentice, approached me to ask whether Claverhouse would consider appointing an apprentice to shadow the Board in order to gain experience of the workings of a company at Board level. We considered this approach and discussed it with JPMAM and were in favour of the initiative. Accordingly we asked Board Apprentice to let us have CVs of candidates who were interested in a board apprenticeship at an investment trust.

The Board reviewed a number of CVs and asked the Chairman-elect to meet with a number of candidates. On his recommendation, the Board have invited Sharon Mavin to join with us as our board apprentice for 12 months from the date of the AGM in April. Sharon is an academic and is a Professor of Organisation and Human Resource Management from the Newcastle Business School, Northumbria University. She has been involved in issues relating to diversity, senior women at work, and is leading research in support of the Davies Report (2011) on Women on the Board in the UK. The appointment is strictly for a 12 month period to give Sharon further experience and it is not intended or expected to lead to a directorship of the Company. As apprentice Sharon will not be a Director of the Company. However, she will have access to all of the papers that are seen by Directors (save in the unlikely event of such secrecy or conflict of interest such that papers will be withheld) and it is intended that she will attend all Board meetings as an observer. She will not be paid, although the Company will reimburse travel costs and incidental expenses.

The Board hopes that shareholders will find favour with this initiative and I look forward to introducing Sharon at the AGM.

Annual General Meeting

This year's AGM will be held at Trinity House, Tower Hill, London EC3N 4DH on Wednesday, 15th April 2015 at 12.00 noon.

Conclusion

As this is my final Statement as Claverhouse's Chairman, rather than write my usual Outlook, I have chosen to sign off with a Conclusion. It has been a privilege and a pleasure to have been a director of Claverhouse since 1996 and Chairman since 2005. I have the good fortune to be stepping down at a time when both NAV per share and share price are nudging their all-time highs and the Company has experienced three years of very creditable performance.

There have been occasions in my time as a Director when markets have sorely tried the patience and resolve of the Board and the Investment Managers. A year ago I referred back to the dark days of March 2009 when there was no obvious light at the end of the tunnel. Since then, as shareholders are aware, as they have profited from handsomely, the UK stock market has been on an apparently unstoppable rising trend, albeit, as always with markets, with periods of doubt and short-term corrections. The past five years have amply supported my guiding tenet. Long-term investors in equities must keep faith with the asset class when everything looks black. Few people have the ability to call the turning points in markets and it is all too easy for emotion to overtake analysis. In such circumstances the most reliable guide is that of history which demonstrates the importance for long-term shareholders of remaining invested.

In addition to returns from capital gains, dividends are an extremely important component of return to equity investors and are generally more predictable than market movements. I have been very pleased to have been able to preside over a further period of continued dividend increases for the Company which now extends to 42 years.

Stock markets in the UK and in the USA, which country remains a powerful driver of economic activity and market sentiment, have powered forward despite significant geo-political and economic uncertainties, some of which are without precedent in modern memory. Any report I have written, or indeed any investment meeting I have attended since I started in the City in 1968, has always had uncertainties to analyse and consider. That is no different today. At present it seems to me that any of Eastern Europe, the Middle East or the Eurozone have the capacity to shake confidence, or possibly even worse. Then there are future events which are invisible at present and cannot be predicted but are nevertheless out there ahead of us. So I feel that I am standing down as Chairman at a time of very considerable uncertainty, possibly even of political or economic danger. Nevertheless personally I will stick with my mantra that investors in equities should keep faith with the asset class. I look forward to remaining a shareholder and watching Claverhouse's progress in the years to come.

Michael Bunbury

Chairman                                                                                        

6th March 2015

Investment Managers' Report

Market Review

The UK stock market delivered a modestly positive total return of +1.2% in the 12 months to 31st December 2014. Mid cap companies outperformed their small and large cap peers, with the FTSE Mid 250 index delivering a total return of +3.7%, while the FTSE 100 returned +0.7% and the FTSE Small Cap index returned +0.9%. The market's positive return was entirely generated by dividend income, as the capital value of the All Share index delivered a return of -2.1% during 2014, thus demonstrating again the importance of dividends to total returns.

The UK economy continued to improve, growing 2.7%, making it one of the fastest growing in the developed world. Unemployment fell to a six year low of 5.8% and consumer confidence continued to improve on the back of low interest rates and an improving housing market. Despite the strength of the economy, expectations on the timing of an increase in interest rates continued to be pushed back as fears of impending deflation (which arrived in the Eurozone during the year) gripped investors' minds. The UK's headline consumer price index was up just 0.5% in the year to December, down from 1% in November and marking a 14-year low. Falling inflation expectations were reflected in lower gilt yields with 10 year gilts yielding just 1.8% by the end of 2014, down from 3.0% at the start of the year.

2014 saw increasing bouts of volatility in share price movements. In the spring, there was a sharp rotation out of mid cap stocks into large FTSE 100 stocks although those movements partly reversed towards the end of the year. In the autumn, general market movements became more volatile on the back of increasing geo-political tensions in the Ukraine and the Middle East and the US Federal Reserve finally ending its quantitative easing programme. The rapid fall in oil prices during the second half added to fears that world economic growth, led by China, was slowing. Unsurprisingly, commodity-related sectors experienced considerable weakness, with significant share price falls in the oil and gas sector. The likely benefit to consumers from lower heating costs and petrol prices was reflected in the improved performance of consumer-related stocks. Although the stock market ended the year slightly up, investors were in nervous mood by the year end.

Performance Review

In the year to 31st December 2014 the Company delivered a total return on net assets (capital plus dividends re-invested) of +2.1%, ahead of the benchmark FTSE All-Share Index, which delivered a return of +1.2%. Like the market itself, the Company's positive total return was a result of dividend income, rather than capital gains in 2014. A detailed breakdown of the performance is given in the accompanying table. After the strong returns delivered in 2013, returns in 2014 were more muted for UK equity investors and, whilst it is pleasing to deliver another year of outperformance, returns were on a more modest scale than those of 2013. Stock selection was again positive over the year, being particularly strong in the second half of 2014. The cost of debt employed for gearing exceeded the modest equity returns.

It is pleasing to report that the Company's NAV total return has outperformed that of the benchmark total return by +4.2% per annum on a rolling three year basis to 31st December 2014, which is ahead of our outperformance objective of +2% per annum.

Our best performing stock in 2014 was Dixons Carphone, the electrical retailer that we had originally bought in late 2012 as Dixons Retail, a turnaround story under new management. Since our initial purchase, Dixons has delivered a strong profit recovery as the group became price competitive to online retailers of white goods and televisions and the management team refocused the business and improved the customer offering. The success of this turnaround became more widely recognised by investors during 2014. In May, the company announced a merger with Carphone Warehouse to create a retail powerhouse of electrical goods and mobile phones.

Other successful stocks included our long term overweight position in the premium dividend yielder Imperial Tobacco; this stock outperformed the market during 2014, particularly during the periods of increased market volatility during the second quarter. Another defensive stock that outperformed was United Utilities which rose in value by over 40% during 2014. We have been long term holders of AstraZeneca and this company's share price was boosted by bid speculation from Pfizer during the first half. Although Pfizer's offer was not successful, AstraZeneca's share price performed well during 2014 as a whole, rising over 30% as the company made good progress on its strategy. We also benefited from our holding in the growth pharmaceutical stock, Shire.

As important as selecting the winners, in 2014 avoiding the losers added considerable relative value. Our long standing zero holding in Tesco was a positive contributor as the food retailer announced multiple profit warnings, an accounting scandal and cut its dividend. Tesco's share price fell by over 40% during the year and the management team were replaced. Claverhouse also benefited from not owning the low yielding oil and gas major, BG Group, which consistently delivered disappointing results, even before the sharp fall in the price of oil during the second half of 2014.

By contrast, not owning the utility group National Grid was detrimental to performance as this relatively defensive stock outperformed the lacklustre equity market, delivering a return of over 20% in the year. Our holding in Barclays was unhelpful, as its share price fell in response to ongoing concerns about potentially adverse regulatory issues, despite its cheap valuation. Our long term holding in Rio Tinto, the leading global iron ore producer, was adversely impacted by falling commodity prices, especially during the second half. The portfolio did, however, benefit from being underweight in the poorly performing mining sector throughout the year.

Overall however, against a lacklustre return on the index, 2014 was a reasonable year of performance for Claverhouse. We continue to manage the portfolio within fairly tight risk controls, believing that such an approach will produce more consistent medium term returns for our shareholders.

Portfolio Review

Portfolio turnover was slightly higher this year than last, reflecting our response to the sharp rotation in the late spring out of mid caps stock into larger more international FTSE 100 stocks. We used this rotation as an opportunity to take some significant profits on some mid cap stocks which have served us so well. For instance, we sold our holding in the travel agent Thomas Cook on the basis that much of the good news from the management led turnaround was now in the price. So it proved, as later in the year the company's chief executive Harriet Green resigned and the company issued a profit warning, blaming a slowing in bookings. We also sold our holding in Foxtons, which proved correct as subsequently they suffered from a slow down in the London residential property market.

Our most successful transaction was the purchase of Shire on the basis of its attractive drug profile. We were very fortunate when a few months later the American company Abbvie made a bid at a significant premium. When, at £54, the Shire share price sat at a very small discount to the Abbvie offer we exited the stock. The following month, in the light of threatened US legislation on tax-driven deals, Abbvie abandoned its offer. The subsequent slump in the Shire price allowed us to recommence a holding at £42 from which level we have continued to add to our position.

During the year we sold out of Royal Mail, Tui Travel and Sports Direct and started new holdings in the construction company Galliford Try, the brewer SAB Miller and Shaftesbury, the London focused real estate company with a strong presence in Covent Garden, Carnaby Street and Chinatown, where tenant demand continues to be strong. We added to our holding in Aviva where the restructuring under the new chief executive, Mark Wilson, continues to make good progress and the recent proposed takeover of Friends Life looks attractive.

Many of our holdings, however, remained untouched as we continued to run our winning stocks. Our inactivity in stocks such as Dixons, Imperial Tobacco, Restaurant Group and ITV, was an indication of our satisfaction with those companies' performance, rather than any sloth on our part.

Top Over and Under-weight positions vs FTSE All Share Index

Top Five Overweight Positions
Dixons Carphone	+2.0%
Imperial Tobacco	+1.9%
ITV	+1.7%
Aviva	+1.6%
Rio Tinto	+1.6%
Top Five Underweight Positions
Diageo	-1.9%
National Grid	-1.8%
Reckitt Benckiser	-1.7%
Glencore	-1.6%
BG Group	-1.5%
Source: JPMAM, as at 31st December 2014.

The Claverhouse portfolio is constructed principally from bottom-up stock selection; our sector and macro views have a lesser influence on the portfolio. We aim to run a fairly focused (62 stocks at the year end) but well diversified portfolio. We kept gearing levels in the low teens for most of the year, reflecting our continuing positive views on markets and the number of attractive stock opportunities we continued to find. We occasionally use FTSE 100 futures to hedge the portfolio, but do not use futures to gear up the portfolio.

Market Outlook

We remain positive on the outlook for UK equities if only because the consensus amongst investors is so negative. We entered 2015 with the portfolio 11.9% geared.

There are, as ever, no end of things to worry about: the Greek Euro crisis, the impending UK general election, the slowing Chinese economy and fears of spreading global deflation, to name but a few. But there are always things to worry about and consensual fears, by definition, are known and must surely therefore be priced in. What is not priced in is that the consensual view may be wrong and that not all these worries may come to pass. The contrarian in us leads us to be more optimistic, recognising that both the US and UK economies continue to grow in a non inflationary way, allowing interest rates to stay lower for longer. Even with the Greek chaos, the large economies of Europe are starting to look a little less bad, particularly as the ECB has now launched a quantitative easing programme of significant proportions.

We view the recent dramatic fall in the oil price to be a net positive for world growth. The cost of production for companies will benefit and lower petrol and heating bills will be akin to a significant tax cut for consumers. This is a non consensual view, with markets preferring to believe that oil at $60 a barrel is a gloomy harbinger of ever-spreading Japanese-like deflation. We believe that the combination of the sheer size of the stimulus from central banks together with (albeit slow) structural reform in European economies will bear fruit for economies and investors alike.

We expect current uncertainties, both political and economic, to make markets more volatile this year than recently, but we aim to use such volatility to our advantage by picking up more of the shares we like at lower prices. We are fortunate indeed to have many long-standing shareholders who are prepared to look through short term price movements to the medium term opportunity that undoubtedly exists in a well-diversified portfolio of strong, reasonably-priced UK equities.

William Meadon

Sarah Emly

Investment Managers                                                                                                                                    

6th March 2015

Principal Risks

With the assistance of the Manager, the Board has drawn up a risk matrix, which identifies the key risks to the Company. These key risks fall broadly under the following categories:

•   Investment and Strategy: an inappropriate investment strategy, for example asset allocation or the level of gearing, may lead to underperformance against the Company's benchmark index and peer companies, resulting in the Company's shares trading on a wider discount. The Board manages these risks by diversification of investments through its investment restrictions and guidelines which are monitored and reported on by the Manager. JPMF provides the Directors with timely and accurate management information, including performance data and attribution analyses, revenue estimates, liquidity reports and shareholder analyses. The Board monitors the implementation and results of the investment process with the Investment Managers, who attend all Board meetings, and reviews data which show statistical measures of the Company's risk profile. The Investment Managers employ the Company's gearing within a strategic range set by the Board. The Board holds a separate meeting devoted to strategy each year.

•   Market: market risk arises from uncertainty about the future prices of the Company's investments. It represents the potential loss that the Company might suffer through holding investments in the face of negative market movements. The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines, which are monitored and reported on by JPMF. The Board monitors the implementation and results of the investment process with the Manager.

•   Accounting, Legal and Regulatory: in order to qualify as an investment trust, the Company must comply with Section 1158 of the Corporation Tax Act 2010 ('Section 1158'). Were the Company to breach Section 1158, it might lose investment trust status and, as a consequence, gains within the Company's portfolio could be subject to Capital Gains Tax. The Section 1158 qualification criteria are continually monitored by the Manager and the results reported to the Board each month. The Company must also comply with the provisions of the Companies Act and, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules and Disclosure & Transparency Rules ('DTRs'). A breach of the Companies Act could result in the Company and/or the Directors being fined or the subject of criminal proceedings. Breach of the UKLA Listing Rules or DTRs could result in the Company's shares being suspended from listing which in turn would breach Section 1158. The Board relies on the services of its Company Secretary and its professional advisers to ensure compliance with The Companies Act and the UKLA Listing Rules and DTRs.

•   Corporate Governance and Shareholder Relations: details of the Company's compliance with Corporate Governance best practice, including information on relations with shareholders, are set out in the Corporate Governance report within the Annual Report.

•   Operational: disruption to, or failure of, the Manager's accounting, dealing or payments systems or the depositary's or custodian's records could prevent accurate reporting and monitoring of the Company's financial position. On 1st July 2014, the Company appointed BNY Mellon Trust & Depositary (UK) Limited to act as its depositary, responsible for overseeing the operations of thecustodian, JPMorgan Chase Bank, N.A., and the

Company's cash flows. Details of how the Board monitors the services provided by the Manager and its associates and the key elements designed to provide effective internal control are included within the Risk Management and Internal Control section of the Corporate Governance report within the Annual Report.

•   Financial: the financial risks arising from the Company's financial instruments include market price risk, interest rate risk, liquidity risk and credit risk. Further details are disclosed in note 24 within the Annual Report.

Related Parties Transactions

During the year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the annual report and accounts 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 elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom AccountingStandards) and applicable law. Under Company law the Directors must not approve the financial statements unless they are satisfied that, taken as a whole, the annual report and accounts are fair, balanced and understandable, provide the information necessary for shareholders to assess the Company's performance, business model and strategy and that they give a true and fair view of thestate of affairs of the Company and of the total return or loss of the Company for that period. In order to provide these confirmations, and in preparing these financial statements, the Directors are required to:

•       select suitable accountingpolicies and then apply them consistently;

•       make judgements and 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 a 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 Directors are responsible for keepingproper accounting records that are sufficientto show and explain the Company's transactions and disclose with reasonableaccuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the preventionand detection of fraud and other irregularities.

The accounts are published on the www.jpmclaverhouse.co.uk website, which is maintained by the Company's Manager. The maintenance and integrity of the website maintained by the Manager is, so far as it relates to the Company, the responsibilityof the Manager. The work carried out by the auditors does not involveconsideration of the maintenance and integrity of this website and, accordingly, the auditors accept no responsibility for any changes that have occurred to the accounts since they were initially presented on the website. The accounts are prepared in accordance with UK legislation, which may differ from legislation in other jurisdictions.

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 in the annual report, confirms that, to the best of their knowledge the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and return or loss of the Company.

The Board confirms that it is satisfied that the annual report and accounts taken as a whole are fair, balanced and understandable and provide the information necessary for shareholders to assess the strategy and business model of the Company.

For and on behalf of the Board

Michael Bunbury

Chairman

6th March 2015

Income Statement

for the year ended 31st December 2014

			2014			2013
		Revenue		Capital	Total	Revenue	Capital	Total
		£'000		£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments held at
fair value through profit or loss		-		(2,479)	(2,479)	-	85,006	85,006
Net foreign currency (losses)/gains		-		(12)	(12)	-	1	1
Income from investments		15,149		-	15,149	14,336	-	14,336
Interest receivable and similar income		34		-	34	35	-	35
Gross return/(loss)		15,183		(2,491)	12,692	14,371	85,007	99,378
Management fee		(608)		(1,128)	(1,736)	(535)	(992)	(1,527)
Performance fee		-		(325)	(325)	-	(4,078)	(4,078)
Other administrative expenses		(828)		-	(828)	(742)	-	(742)
Net return/(loss) on ordinary activities
before finance costs and taxation		13,747		(3,944)	9,803	13,094	79,937	93,031
Finance costs		(993)		(1,846)	(2,839)	(906)	(1,683)	(2,589)
Net return/(loss) on ordinary activities
before taxation		12,754		(5,790)	6,964	12,188	78,254	90,442
Taxation credit		-		-	-	7	-	7
Net return/(loss) on ordinary activities
after taxation		12,754		(5,790)	6,964	12,195	78,254	90,449
Return/(loss) per share (note 2)		23.31p		(10.58)p	12.73p	22.28p	143.00p	165.28p
Dividends declared and payable in
respect of the year (note 3)		20.00p				19.50p
Dividends paid during the year (note 3)		19.50p				21.85p

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. The Total column represents all the information that is required to be disclosed in a Statement of Total Recognised Gains and Losses ('STRGL'). For this reason a STRGL has not been presented.

Reconciliation of Movements in Shareholders' Funds

	Called up		Capital
	share	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31st December 2012	14,192	149,641	6,680	88,493	12,865	271,871
Net return on ordinary activities	-	-	-	78,254	12,195	90,449
Dividends paid in the year	-	-	-	-	(11,954)	(11,954)
At 31st December 2013	14,192	149,641	6,680	166,747	13,106	350,366
Net (loss)/return on ordinary activities	-	-	-	(5,790)	12,754	6,964
Dividends paid in the year	-	-	-	-	(10,667)	(10,667)
At 31st December 2014	14,192	149,641	6,680	160,957	15,193	346,663

Balance Sheet

at 31st December 2014

		2014	2013
		£'000	£'000
Fixed assets
Investments held at fair value through profit or loss		402,912	411,231
Investments in liquidity funds held at fair value through profit or loss		25,141	3,781
Total investments		428,053	415,012
Current assets
Debtors		1,009	1,214
Cash and short term deposits		1,845	996
		2,854	2,210
Creditors: amounts falling due within one year		(2,230)	(34,111)
Derivative financial liabilities		(600)	(215)
Net current assets/(liabilities)		24	(32,116)
Total assets less current liabilities		428,077	382,896
Creditors: amounts falling due after more than one year		(79,838)	(29,811)
Provision for liabilities and charges		(1,576)	(2,719)
Net assets		346,663	350,366
Capital and reserves
Called up share capital		14,192	14,192
Share premium		149,641	149,641
Capital redemption reserve		6,680	6,680
Capital reserves		160,957	166,747
Revenue reserve		15,193	13,106
Total equity shareholders' funds		346,663	350,366
Net asset value per share (note 3)		633.5p	640.2p

The Company's registration number is 754577.

Cash Flow Statement

for the year ended 31st December 2014

		2014	2013
		£'000	£'000
Net cash inflow from operating activities		11,458	11,850
Returns on investments and servicing of finance
Interest paid		(2,768)	(2,489)
Taxation
Overseas tax recovered		-	22
Capital expenditure and financial investment
Purchases of investments		(220,447)	(119,451)
Sales of investments		205,370	106,837
Settlement of futures contracts		(80)	(916)
Other capital charges		(5)	(3)
Net cash outflow from capital expenditure and financial investment		(15,162)	(13,533)
Dividends paid		(10,667)	(11,954)
Net cash outflow before financing		(17,139)	(16,104)
Financing
Repayment of short term loans		(40,000)	(25,000)
Bank loan drawn down		58,000	42,000
Net cash inflow from financing activity		18,000	17,000
Increase in cash and cash equivalents		861	896

Notes to the Accounts

for the year ended 31st December 2014

1.    Accounting policies

(a)  Basis of accounting

The accounts are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the AIC in January 2009. All of the Company's operations are of a continuing nature.

The accounts have been prepared on a going concern basis.

The policies applied in these accounts are consistent with those applied in the preceding year.

2.   Return/(loss) per ordinary share

The revenue return per ordinary share is based on the earnings attributable to the ordinary shares of £12,756,000 (2013: £12,195,000) and on the weighted average number of shares in issue during the year of 54,723,979 (2013: 54,723,979) excluding shares held in Treasury.

The capital loss per ordinary share is based on the earnings attributable to the ordinary shares of £5,792,000 (2013: £78,254,000 return) and on the weighted average number of shares in issue during the year of 54,723,979 (2013: 54,723,979) excluding shares held in Treasury.

The total return per ordinary share is based on the earnings attributable to the ordinary shares of £6,964,000 (2013: £90,449,000) and on the weighted average number of shares in issue during the year of 54,723,979 (2013: 54,723,979) excluding shares held in Treasury.

3.   Dividends

(a)  Dividends paid and declared

	2014	2013
	£'000	£'000
Unclaimed dividends refunded to the Company1	(5)	(4)
2013 fourth quarterly dividend of 6.00p (2012: 8.35p) paid in March 2014	3,283	4,569
First quarterly dividend of 4.50p (2013: 4.50p) paid in June 2014	2,463	2,463
Second quarterly dividend of 4.50p (2013: 4.50p) paid in September 2014	2,463	2,463
Third quarterly dividend of 4.50p (2013: 4.50p) paid in December 2014	2,463	2,463
Total dividend paid in the year of 19.50p (2013: 21.85p)2	10,667	11,954

¹Represents dividends which remain unclaimed after a period of 12 years and thereby become the property of the Company.

²The total dividend declared in respect of 2013 was 18.85p. However, the Board has since spread the total dividend payment more evenly and hence the comparative figure for 2013 of 21.85p appears higher because it includes the payment of the fourth quarterly dividend in respect of 2012.

	2014	2013
	£'000	£'000
Fourth quarterly dividend of 6.50p (2013: 6.00p) paid on 2nd March 2015	3,557	3,283

The fourth quarterly dividend has been declared and paid in respect of the year ended 31st December 2014. This dividend will be reflected in the accounts for the year ending 31st December 2015.

(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, as shown below. The revenue available for distribution by way of dividend for the year is £12,756,000 (2013: £12,195,000). Brought forward revenue reserves amounting to £nil (2013: £nil) have been utilised in order to finance the dividend.

	2014	2013
	£'000	£'000
First quarterly dividend of 4.50p (2013: 4.50p) paid in June 2014	2,463	2,463
Second quarterly dividend of 4.50p (2013: 4.50p) paid in September 2014	2,463	2,463
Third quarterly dividend of 4.50p (2013: 4.50p) paid in December 2014	2,463	2,463
Fourth quarterly dividend of 6.50p (2013: 6.00p) paid on 2nd March 2015	3,557	3,283
Total dividend declared in respect of the year of 20.00p (2013: 19.50p)	10,946	10,672

4.   Net asset value per share

Net asset value per share is based on the net assets attributable to the ordinary shareholders of £346,663,000 (2013: £350,366,000) and on the 54,723,979 (2013: 54,723,979) shares in issue at the year end, excluding shares held in Treasury.

5.   Status of announcement

2013 Financial Information

The figures and financial information for 2013 are extracted from the published Annual Report and Accounts for the year ended 31st December 2013 and do not constitute the statutory accounts for that year.  The Annual Report and Accounts has been delivered to the Registrar of Companies and included the Report of the Independent Auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

2014 Financial Information

            The figures and financial information for 2014 are extracted from the Annual Report and Accounts for the year ended 31st December 2014 and do not constitute the statutory accounts for the year. The Annual Report and Accounts includes the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The Annual Report and Accounts will be delivered to the Registrar of Companies in due course.

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement

JPMORGAN FUNDS LIMITED

6th March 2015

For further information:

Jonathan Latter,

JPMorgan Asset Management (UK) Limited              020 7742 4000

ENDS

A copy of the annual report will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM

The annual report will also shortly be available on the Company's website at www.jpmclaverhouse.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

JPMORGAN FUNDS LIMITED

 

END

 

 

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