Final Results

RNS Number : 2710Z

JPMorgan Claverhouse IT PLC

13 March 2012

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN CLAVERHOUSE INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2011

Chairman's Statement

Performance and Manager Review

The year to 31st December 2011 proved to be another difficult one for equity markets and, following a recovery in relative performance in 2010, it is disappointing to report that the Company underperformed its benchmark, the FTSE All-Share Index. The total return on net assets was negative at -7.6%, compared with the total return on the benchmark of -3.5% for the year. In their report, the Investment Managers provide a review of the market and portfolio performance. The total return to shareholders was -7.9%, as the discount widened slightly over the course of the year from 7.0% to 7.1%.

This result is particularly disappointing, especially since I reported in August that for the first six months of the year total return on net assets was marginally ahead of the benchmark which itself had shown modest positive performance. However, the seeds of the summer turmoil were already planted. In July Eurozone leaders failed to grasp the critical risks facing the Euro and a few days later the crisis in the bond markets of the weaker members of the Eurozone spilled over into equity markets which, once again tumbled amidst considerable volatility.

The Company was by no means alone amongst actively managed funds in failing to outperform its benchmark in 2011. However, the results for the full year show that the Net Asset Value ('NAV') per share has underperformed its benchmark for four years out of the last five, which is not satisfactory. As shareholders will be aware, your Board has accepted the Manager, J.P. Morgan Asset Management's ('JPMAM') assurance that their behavioural finance investment process would, over the long-term, deliver superior performance. However, we did not feel it possible to accept an unchanged approach in the light of the record for the past five years; however well the JPMAM behavioural finance process may have worked in an earlier era, it did appear to be unsuited to the market environment in the United Kingdom since 2007.  The Board therefore formally asked JPMAM to reconsider the manner in which Claverhouse's portfolio would be managed in the future.

This resulted in JPMAM putting a proposal to your Board detailing a revised investment management approach. The Board reviewed the proposal with the assistance of an independent consultant. Following a series of discussions and meetings involving JPMAM and the consultant, your Board has accepted JPMAM's proposal that they should continue as Manager but that a number of material changes designed to improve the investment performance would take effect from 1st March 2012.

Henceforth the portfolio will be constructed in a more fundamentally driven way, expressing greater conviction for the individual stocks. The Board welcomes this development, as we have always had a high regard for JPMAM's analytical skills. In the future, Claverhouse's portfolio is likely to consist of between 60 and 80 individual stocks for which JPMAM has high conviction as compared with the 100-plus holdings that have made up the portfolio at times in the past. The Board has agreed with JPMAM that the performance target will continue to be to achieve a total return on the underlying portfolio, before taking account of the effect of gearing, fees and the expenses of running the Company, of 2% per annum over the benchmark, the FTSE All-Share Index, averaged over a three year period.

It is not intended that these changes will have a material effect on the income yield of the investment portfolio and thus the future dividend policy is likely to remain unchanged. At present the Company's shares yield 4.2%, which is amongst the highest in the Association of Investment Companies ('AIC') UK Growth sector and is well within the range of yields exhibited by other investment companies within the AIC UK Growth & Income sector. The Board and JPMAM have, therefore, agreed that the Company will apply to move from the AIC UK Growth sector to the AIC Growth & Income sector, being a sector more representative of companies similar to Claverhouse. 

As a result of the more fundamentally driven investment approach, the Board and JPMAM have agreed that William Meadon, head of JPMAM's UK institutional business will assume joint responsibility for the investment management of the Company together with Sarah Emly, who has been co-manager for the last six years. It has also been agreed that the notice period under the Company's contract with JPMAM will be shortened from six months to three, but only if that notice results from poor investment performance. Otherwise it will remain at 12 months.

The Board can confirm that all other services provided to the Company by JPMAM are of an exceptionally high standard; in particular, we continue to have great faith in the quality of the research and economic analysis which is available within the J.P. Morgan group. I am happy to report to shareholders that all discussions have taken place in a thoroughly constructive and professional manner with one single aim, namely to optimise shareholder value, consistent with Claverhouse remaining a core UK equity focussed investment company which is well placed to be at the centre of a conservative portfolio. James Illsley, your Company's lead manager for the past ten years remains a key member of JPMAM's UK investment management team and will continue to manage other investment mandates; I wish to express my thanks to James and to wish him well for the future.

Revenue and Dividends

In 2011 the revenue per share increased significantly, by 22.7%, to 16.73p per share. The Board decided that the total dividend for the year should be increased from 17.50p to 18.25p, a rise of 4.3%, thus increasing the total dividend for the 39th successive year. The Board remains of the opinion that it is appropriate to draw on the revenue reserve which has been built up over a number of years in order to maintain its progressive dividend policy. It also recognises the importance of quarterly dividends to our many individual shareholders, particularly when interest rates on cash savings are so low, as they are at present.

The payment of the annual dividend necessitated a transfer from the revenue reserve, albeit a small one, for the third consecutive year. The Company still has a revenue reserve equivalent to 16.0p per share after the latest transfer and, based on JPMAM's forecasts of future earnings, we hope to return soon to a position of our revenue covering our own dividends.

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 as long as the present increase in the rate is temporary and that we do not return to the high inflation era epitomised by the 1970s.

Gearing

The Company ended the year approximately 7.3% geared. During the year the gearing varied between 7.3% and 12.6%. Following discussions with JPMAM, it has been agreed that repayment of the Company's £30 million 7% 2020 debenture would be excessively expensive at present and therefore the neutral gearing position will be to have this fully invested. JPMAM, through William Meadon, will be accountable for tactically managing the gearing, normally within a +/-5% range around the 'neutral' gearing position. Thus, as in the past, the Company is likely always to have an element of gearing.

Share Repurchases and Discount

During the year the Company repurchased 635,504 shares at an average discount to NAV (with debt at par value) of 8.5%. These shares are all held in Treasury for possible re-issue, should the Company's shares move to premium to NAV. The Board's objective remains to use the share repurchase authority to assist in managing any imbalance between supply and demand for the Company's shares, thereby reducing the volatility of the discount. Shares held in Treasury will only be re-issued at a premium to NAV unless shareholders were to grant authority for them to be re-issued at less than NAV. No such authority exists currently and the Board does not intend to seek such authority at the present time.

Should it not prove possible to re-issue shares held in Treasury at a premium to NAV then a sufficient number of shares so held will be cancelled so as to keep the Treasury holding within 5% of the issued share capital.

Board of Directors

Directors conduct a self-assessment of their performance each year and this is followed up by a conversation with me as Chairman. My own performance is assessed by the Senior Independent Director after he has consulted with all 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. I became Chairman of your Company in April 2005. In my absence, the members of the Nomination Committee considered my service and confirmed that they recommend that I should continue as Chairman.

In 2011 the Company adopted corporate governance best practice by requiring all Directors to stand for annual reappointment and therefore all Directors will stand for reappointment at the forthcoming AGM.

I am aware that a number of Directors, including myself, have served for quite a number of years and that we have not appointed a new director since 2008. In the light of the changes in the investment process which I have detailed above, the Board are of the view that stability of the make-up of the Board is at present important. However, I am mindful of the need to look to the future and possible retirements and thus expect to appoint a further director within the next 12 months.

Annual General Meeting

This year's AGM will be held at J.P. Morgan's offices at 20 Moorgate, London EC2R 6DA on Friday, 20th April 2012 at 2.00 p.m. William Meadon and Sarah Emly 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 afternoon refreshments, thus providing shareholders with the opportunity to meet the Directors and the Investment Managers. We look forward to seeing as many shareholders as possible at the AGM which we consider to be an important annual event, allowing the Board and the Manager to interact directly with shareholders and to receive their feed-back.

The Future

The UK stock market has got off to a better start in 2012 with the FTSE All-Share Index rising by some 7.8%. In my view this performance has resulted principally from a significant easing, for the time being at least, of the Eurozone crisis combined with central banks continuing to flood money into the system to reduce the risks both of renewed recession and of major banking collapse. However, such action can only buy time. What is urgently needed is a return to sustainable growth in developed economies such that the debt burdens of governments, banks and their customers become manageable. Although government deficits have to be reined back, there seems insufficient focus in many countries on plans for growth in the private sector - the engine of prosperity. Some governments have preferred to support populist policies rather than encouraging entrepreneurs and innovators on whom long-term growth depends.

The last ten years have often been extremely difficult ones for equity investors and 2011 was no exception. However, many companies have prospered and have strong balance sheets and cash reserves. Company valuations do not look stretched and dividends provide a yield at a time when that has almost disappeared on bank deposits. Monetary policy looks likely to remain very loose in many countries and that, combined with action already taken, causes me to worry about a resurgence of inflation at some point in the future. It remains my view that equities will reassert their role as stores of long-term value, albeit that volatility looks likely to continue to be much more prevalent than in earlier periods. Portfolio management needs to adapt to changing conditions and JPMAM have confidence that the changes agreed between them and the Board will prove appropriate for the future. The Board will continue to monitor the performance closely and to support William Meadon and Sarah Emly as they strive to deliver value for shareholders.

All of my fellow Directors and I look forward to meeting shareholders at the AGM and discussing the prospects further at that time.

Michael Bunbury

Chairman

13th March 2012

Investment Managers' Report

Market Review

Investors have had a challenging year. With stubbornly high inflation to contend with, weak macroeconomic data and a rise in market volatility, achieving a real return on capital has been difficult. The FTSE All-Share Index fell 3.5%, although performance varied widely across the market cap range. The large cap FTSE 100 index was down 2.2% in the year, while mid to small cap stocks suffered much worse from investor risk aversion, with the FTSE 250 Index falling 10.1% and the FTSE Small Cap Index falling 12.5%.

Persistent Eurozone sovereign debt concerns weighed on the UK market throughout the year as policymakers failed to find a solution to the crisis. In August, worries that Greece could default on its debt and fears of contagion to Italy and Spain undermined confidence and led to a sharp increase in stock market volatility. Towards the end of the year, a more aggressive policy response from European Union leaders and action by the European Central Bank to alleviate the rising stress in the European banking system helped boost sentiment, although a long-term solution to the crisis remained out of reach.

Other external factors also had a negative impact on UK investor sentiment. Political unrest in the Middle East and North Africa caused disruptions to the production of oil. This rise in fuel costs contributed to a spike in UK inflation. The Japanese earthquake in March resulted in considerable supply chain disruption globally as many Japanese factories were seriously damaged by the disaster. Nuclear power concerns also shook confidence amid fears that the Fukushima nuclear plant would go into meltdown.

Against this uncertain global backdrop, and with the UK government embarking on a programme of austerity measures, the UK economy struggled to gain traction. The unemployment rate rose to its highest in 17 years in November, while house price data did not fair much better, with prices dropping to a 19-month low in July. Manufacturing activity started to contract, with the purchasing managers' index dropping below 50 for the first time in almost three years in November, to 47.6, although it has since bounced back.

UK inflation, as measured by the consumer price index, remained high for much of the year, peaking at 5.2% in September. This was well above the Bank of England's ('BoE') 2.0% target, and, although inflation did come down towards the year end, it meant the BoE had to walk a difficult line between sluggish growth and high inflation for much of the year.

With fears growing that the economy may be heading back into recession, in October the BoE announced another round of quantitative easing, committing to buy a further £75 billion of Gilts over the next four months. In a precautionary measure against any deterioration in the Eurozone debt crisis, the BoE also announced a new short-term lending facility for use in times of severe market stress. The BoE said the move underlined its 'commitment to take appropriate measures to maintain monetary and financial stability'.

The Government also had to tread carefully for much of the year, as it tried to maintain control of the country's deficit without stifling growth. In March, despite downward revisions to growth forecasts, The Chancellor stuck to his plan to cut public sector borrowing in his 2011 budget. This was a necessary move to maintain confidence in UK credit worthiness and retain the UK's AAA credit rating, which the major rating agencies warned was at risk if the Government eased efforts to reduce the deficit. By the end of 2011, UK borrowing costs had fallen to record lows, with ten-year Gilts yielding just 2%.

Performance Review

In the year to 31st December 2011 the Company delivered a total return on net assets (capital plus dividends re-invested) of -7.6%, behind the less negative return of the benchmark FTSE All-Share Index, which delivered a total return of -3.5%. In contrast to last year, both stock selection and gearing during the volatile and declining equity market negatively impacted the Company's performance. The performance of both the Company and its benchmark was highly volatile during 2011, with a modestly encouraging first half being followed by much more turbulent market conditions during the second half, especially over the summer months. The Company was broadly in line with the modestly rising benchmark return during the first six months of the year, before declining more markedly during the second half, particularly from July to October 2011.

In terms of the underlying performance of the equity portfolio, the combination of the two styles that we focus on to deliver outperformance (being overweight in both value and growth/momentum) contributed mixed returns. During the first half of the year, those stocks that were beating the market's profit expectations generally outperformed the market, whilst those that announced disappointing results underperformed, hence earnings momentum was a positive contributor to performance. However, during the second half of the year, particularly during the third quarter, returns to both value and to price momentum were highly volatile and negative. Shares that were trading at cheap valuations, as measured by the price/earnings ratio, substantially underperformed the wider market during the second half of 2011. This was particularly the case during the torrid months of August and September when investors took fright from the Eurozone sovereign crisis and possible default of Greece and switched to defensive stocks, whatever their valuation.

Some of the value stocks, particularly those with premium and sustainable dividend yields, such as Royal Dutch Shell and Vodafone, did outperform the volatile and falling market in the second half of the year, but overall value struggled, as did price momentum.

At a stock level, the most significant contributor to performance was the overweight position in Royal Dutch Shell. The Company has long held a significant position in this major oil company due to its attractive valuation, premium dividend yield and strong cash generation. During 2011 Royal Dutch Shell delivered a total return of +22%, in comparison with the FTSE All-Share's return of -3.5%. Other strong performers included the general retailer Next, which continued to deliver profits ahead of market expectations, despite the very challenging UK consumer environment. This consistency of profits delivery resulted in the shares returning +43% to shareholders during 2011, in stark contrast to a number of other retail stocks which fell by more than 50%, including Kesa Electricals and Home Retail Group, neither of which we owned. Being underweight in two banks, Lloyds Banking Group and Standard Chartered, benefited us, with the relative position in Lloyds Banking Group contributing positively to returns as it consistently missed profit forecasts and underperformed significantly the volatile market.

Although we benefited from our overweight positions in some of the relatively defensive stocks during 2011, such as AstraZeneca, Vodafone and Drax Group, not owning a number of the most defensive stocks during the turbulent market conditions of the summer and autumn hurt performance. Such detractors from performance included underweight positions in British American Tobacco and Diageo, whilst not owning National Grid hindered performance. We were underweight in these stocks as their valuations were not attractive and their prospects, although solid, were not sufficiently compelling. However, during the market turbulence caused by the Eurozone sovereign debt crisis, investors rushed to safety, irrespective of valuations and such defensive stocks outperformed the falling market. Other negative contributors to performance in 2011 were the overweight positions in some of the cheap cyclical stocks, such as the diversified miner, Rio Tinto, and Ferrexpo, the industrial metals group. Both of these stocks underperformed the market substantially in the second half, when cyclicals fell out of fashion as the global economic outlook worsened, amidst uncertainty over the future demand for their products. Unusually, the Company's positions in our two in-house UK smaller companies funds were negative contributors to performance during 2011. They both outperformed their own benchmarks in 2011, but the small-cap index significantly underperformed the wider UK market, delivering a return of -12.5% over the 12 months.

Portfolio Review

The full impact of the Euro crisis will take years to become clear, but the immediate effect during August and September 2011 was a flight of investors from any perceived 'risk' asset into hoped-for safe havens. For us this was a double-edged sword; we benefited from our holdings in undervalued 'blue-chip' companies that were held throughout 2011 such as Royal Dutch Shell, AstraZeneca, GlaxoSmithKline, Vodafone and BP which all outperformed, but more economically sensitive stocks, including many lowly valued stocks, were sold down by investors worried about economic growth prospects.

To protect the portfolio in the early part of the crisis, when the outlook was particularly uncertain, our gearing was reduced in July and August to less than 10%, representing the investment from the long term debenture, with up to £10 million of cash being held as an investment reserve.

Despite the turmoil engulfing Europe, we still viewed the UK market as an attractively valued equity market and selective opportunities were taken to add to companies that were viewed as particularly over-sold. Within the mining sector, we had sold our exposure to the pure play copper producers during 2010 and the first half of 2011 to focus on Rio Tinto and BHP Billiton, which gave a greater exposure to iron-ore. Like most mining companies, Xstrata's share price fell sharply in the second half on concerns over slowing global growth. Despite these fears, we continued to believe in the longer term strengths of the sector, and Xstrata, due to the ongoing industrialisation and urbanisation of China which has generated tight supply and elevated prices in many key commodities. With the sharp fall in the Xstrata share price creating an opportunity, we bought a significant position in the company through the fourth quarter of the year. Subsequent to the year end we have now seen Glencore propose a merger with Xstrata, and the Xstrata share price rise substantially.

In addition to the mining sector, we continue to believe that many lowly valued stocks remain attractive companies for the longer term, despite the fears over economic growth. Within the portfolio we express that view with significant positions in companies such as the automotive supplier GKN, in which we bought further shares in the second half of the year. It is the world's leading supplier of driveline components to motor manufacturers, with demand once again being fuelled by the rising numbers of middle class consumers in emerging economies such as China, India and Brazil.

Within the industrial sector we built a position in the electronics control company Spectris, whose products are used to increase productivity across many industries. We continue to hold our position in pump specialist Weir, which is benefiting from demand from the mining and energy sectors.

Another out of fashion area that is trading very cheaply is the UK house building sector. Whilst the UK consumer is undoubtedly over-borrowed, there still exists an underlying demand for new housing . UK house builders are trading at less than 75% of the value of their land and current housing stock and we have added to our exposure with purchases of Bellway and Berkeley Group.

The FTSE All-Share Index is more a play on global growth than it is on the UK domestic economy. Around 70% of the sales of UK quoted companies arise overseas. Allied to the global nature of the UK equity market is its current very low absolute and relative valuation.

Market Outlook

The first 2011 fourth-quarter GDP estimate for the UK confirmed worries that the economy had contracted in the last three months of the year, shrinking at an annualised rate of 0.8%. The industry breakdown showed that only the Government sector expanded, contributing 0.3% to total growth. This small gain was more than offset by a 0.7% drop in the manufacturing and production sector.

Economic growth forecasts for 2012 have been repeatedly reduced, to levels at which a dip back into recession cannot be ruled out. Fortunately, the US economy is beginning to show signs of revival and domestic inflationary pressures are starting to wane, both of which may provide the UK with a little respite. China is also now setting policy to accelerate growth. Current UK economic expectations are very low, so even small positive surprises should be well received.

UK company valuations are cheap by historical standards, both in relation to UK Government bonds, with the equity dividend yield almost double ten-year Gilt yields, and in relation to inflation. The UK market is also cheap in comparison to other developed equity markets globally. Current consensus expectations are for earnings growth in both 2011 (to be delivered by the end of March) and 2012, of 13% and 4% respectively (source: IBES aggregates). Some of this growth may prove optimistic, but with an improving outlook for the US and Chinese economies this year, and the recent stabilisation in the Eurozone, there may be room for positive surprises.

The UK stock market's income attractions are also well protected by high levels of dividend cover and high levels of cash on UK company balance sheets. If the economic outturn is more benign, the case for UK equities will be all the stronger; they are currently under-owned institutionally and sentiment is fragile, but this has created an opportunity.

James Illsley

Sarah Emly

Investment Managers

13th March 2012

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. JPMAM 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 JPMAM. 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 JPMAM 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, JPMAM, 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, JPMAM's accounting, dealing or payments systems or the custodian's records could prevent accurate reporting and monitoring of the Company's financial position. Details of how the Board monitors the services provided by JPMAM 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 22 within the Annual Report.

Directors' Responsibilities

The Directors each confirm to the best of their knowledge that:

(a) the financial statements, 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 profit or loss of the Company; and

(b) the Annual 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 face.

Michael Bunbury

Chairman

13th March 2012

Income Statement

for the year ended 31st December 2011

	2011			2010
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments held at  fair value through profit or loss	-	(27,158)	(27,158)	-	35,257	35,257
Net foreign currency losses	-	(3)	(3)	-	-	-
Income from investments	11,129	-	11,129	9,374	-	9,374
Other interest receivable and similar income	8	-	8	63	-	63
Gross return/(loss)	11,137	(27,161)	(16,024)	9,437	35,257	44,694
Management fee	(447)	(831)	(1,278)	(431)	(802)	(1,233)
Other administrative expenses	(643)	-	(643)	(610)	-	(610)
Net return/(loss) on ordinary activities before  finance costs and taxation	10,047	(27,992)	(17,945)	8,396	34,455	42,851
Finance costs	(812)	(1,508)	(2,320)	(770)	(1,430)	(2,200)
Net return/(loss) on ordinary activities before taxation	9,235	(29,500)	(20,265)	7,626	33,025	40,651
Taxation	(9)	-	(9)	(15)	-	(15)
Net return/(loss) on ordinary activities after taxation	9,226	(29,500)	(20,274)	7,611	33,025	40,636
Return/(loss) per share (note 2)	16.73p	(53.50)p	(36.77)p	13.63p	59.12p	72.75p
Dividends declared and payable in respect of the year (note 3)	18.25p			17.50p
Dividends paid during the year	17.50p			16.90p

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 2009	14,192	149,641	6,680	68,504	15,313	254,330
Repurchase of shares into Treasury	-	-	-	(4,334)	-	(4,334)
Net return on ordinary activities	-	-	-	33,025	7,611	40,636
Dividends appropriated in the year	-	-	-	-	(9,460)	(9,460)
At 31st December 2010	14,192	149,641	6,680	97,195	13,464	281,172
Repurchase of shares into Treasury	-	-	-	(2,821)	-	(2,821)
Net (loss)/return on ordinary activities	-	-	-	(29,500)	9,226	(20,274)
Dividends appropriated in the year	-	-	-	-	(9,659)	(9,659)
At 31st December 2011	14,192	149,641	6,680	64,874	13,031	248,418

Balance Sheet

at 31st December 2011

	2011	2010
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	266,673	305,450
Investments in liquidity funds held at fair value through profit or loss	10,546	5,046
Total investments	277,219	310,496
Current assets
Debtors	1,474	1,334
Cash and short term deposits	259	207
	1,733	1,541
Creditors: amounts falling due within one year	(777)	(1,134)
Net current assets	956	407
Total assets less current liabilities	278,175	310,903
Creditors: amounts falling due after more than one year	(29,757)	(29,731)
Net assets	248,418	281,172
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	64,874	97,195
Revenue reserve	13,031	13,464
Total equity shareholders' funds	248,418	281,172
Net asset value per share (note 4)	453.9p	507.8p

The Company's registration number is 754577.

Cash Flow Statement

for the year ended 31st December 2011

	2011	2010
	£'000	£'000
Net cash inflow from operating activities	8,989	7,143
Returns on investments and servicing of finance
Interest paid	(2,287)	(2,180)
Taxation
Overseas tax recovered	4	7
Capital expenditure and financial investment
Purchases of investments	(192,304)	(156,528)
Sales of investments	198,452	165,456
Other capital charges	(6)	(13)
Net cash inflow from capital expenditure and financial investment	6,142	8,915
Dividends paid	(9,659)	(9,460)
Net cash inflow before financing	3,189	4,425
Financing
Repurchase of shares into Treasury	(3,134)	(4,392)
Net cash outflow from financing activity	(3,134)	(4,392)
Increase in cash and cash equivalents	55	33

Notes to the Accounts

for the year ended 31st December 2011

1.  Accounting policies

     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 share

     The revenue return per ordinary share is based on the earnings attributable to the ordinary shares of £9,226,000 (2010: £7,611,000) and on the weighted average number of shares in issue during the year of 55,140,654 (2010: 55,860,096).

     The capital loss per ordinary share is based on the capital loss attributable to the ordinary shares of £29,500,000 (2010: £33,025,000 return) and on the weighted average number of shares in issue during the year of 55,140,654 (2010: 55,860,096).

     The total loss per ordinary share is based on the total loss attributable to the ordinary shares of £20,274,000 (2010: £40,636,000 return) and on the weighted average number of shares in issue during the year of 55,140,654 (2010: 55,860,096).

3.  Dividends declared and payable in respect of the year

	2011	2010
	£'000	£'000
Unclaimed dividends refunded to the Company1	(3)	(1)
2010 fourth quarterly dividend of 7.0p (2009: 6.4p) paid in March 2011	3,876	3,607
First quarterly dividend of 3.5p (2010: 3.5p) paid in June 2011	1,938	1,959
Second quarterly dividend of 3.5p (2010: 3.5p) paid in September 2011	1,924	1,951
Third quarterly dividend of 3.5p (2010: 3.5p) paid in December 2011	1,924	1,944
Total dividends paid in the year	9,659	9,460

	2011	2010
	£'000	£'000
Fourth quarterly dividend of 7.75p (2010: 7.0p) payable on 1st March 2012	4,242	3,876

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

     The fourth quarterly dividend has been declared in respect of the year ended 31st December 2011. In accordance with the accounting policy of the Company, this dividend will be reflected in the accounts for the year ending 31st December 2012.

4.  Net asset value per share

     Net asset value per share is based on the net assets attributable to the ordinary shareholders of £248,418,000 (2010: £281,172,000) and on the 54,733,979 (2010: 55,369,483) shares in issue at the year end, excluding shares held in Treasury.

      5. Status of announcement

2010 Financial Information

The figures and financial information for 2010 are extracted from the published Annual Report and Accounts for the year ended 31st December 2010 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.

2011 Financial Information

         The figures and financial information for 2011 are extracted from the Annual Report and Accounts for the year ended 31st December 2011 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 ASSET MANAGEMENT (UK) LIMITED

13th March 2012

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.hemscott.com/nsm.do

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 ASSET MANAGEMENT (UK) LIMITED

 

END

 

 

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