Annual Financial Report

RNS Number : 5729B

JPMorgan Claverhouse IT PLC

05 March 2014

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN CLAVERHOUSE INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2013

Chairman's Statement

Performance and Manager Review

The year to 31st December 2013 was an excellent one for the UK equity market, for many active fund managers and for the Company. Following the positive performance in 2012, I am pleased to report that in 2013 the Company delivered very strong outperformance against its benchmark 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 +20.8%. The Company's total return on net assets was +33.8%, being 13.0% ahead of the benchmark index. Such excess return is unusual for a conventionally managed investment trust with consistently strong risk controls. The result is of considerable credit to our Manager, J.P. Morgan Asset Management ('JPMAM'), and particularly to the team of William Meadon and Sarah Emly who have jointly managed the Company since March 2012.

During the year the share price rose from 437p to 599p. The total return to shareholders was +42.9%, as the discount (with debt at par) of the share price to NAV narrowed over the course of the year from 10.7% to 5.4%. Since the year-end, the discount has narrowed further to 4.6%.

The Board is pleased to note the significantly improved performance following the detailed review that was undertaken early in 2012 and the resultant changes that were made to the investment process and the investment management team with effect from 1st March 2012. A year ago I wrote that the change of approach had got off to a good start but that with a much more concentrated portfolio consisting of between 60-80 stocks, shareholders must expect some ebb and flow in performance. In fact since March 2012 the tide has continued to flow strongly and for longer than we could have envisaged back then. Over those 22 months to 31st December 2013, the Company produced a total return on net assets of +41.7% and a share price total return of +49.6%, compared with the benchmark total return of +26.7% for the period. This has gone a long way towards restoring the Company's longer term performance record and the NAV total return has now outperformed the benchmark over three, five and ten years.

In their report, the Investment Managers provide a review of the market and portfolio performance for the year. I have taken a longer perspective and re-read my earlier Chairman's Statements and in particular the one that I signed out on 3rd March 2009. All then was gloom. I wrote that confidence was at a very low ebb and that it was impossible to predict when it would begin to return and that the outlook for company profits for 2009 was, in many cases, dismal. I then asked the question as to what investors should do? In those bleak times I suggested that investors should look at history which gave powerful support for the view that investors who invest in equities must keep faith with them when times look bleak and they could not afford to be out of the market when the market turned up.

Well, turned up it certainly has. What I did not understand until some time later than March 2009 was that the clear policy aim of the Bank of England in undertaking Quantitative Easing, which started that month, was to boost asset prices. Since that dark month, the All-Share index has more than doubled and in addition investors have received five years of dividends adding another 40% to the index return. The Company's NAV total return has been approximately +144.4% and the share price return was approximately +139.9%. However, both the Board and the Investment Managers are aware that there is no room for complacency. We remember that we are only human and know that stock markets always humble those buoyed up on hubris. A period of greater volatility for equities may well lie ahead. Nevertheless, as I wrote five years ago, it is important during more turbulent times that investors keep faith in the asset class. Successful market timing is a game for the few. Long-term equity investment is the opportunity for the many and the Company aspires to deliver that opportunity.

The Company's administration continues to be handled admirably by Jonathan Latter and his team. Simon Crinage had been our diligent and trusted Client Director since 2003. However, in April 2013 he was promoted to become Head of Investment Trusts at JPMAM and consequently James Glover has stepped into Simon's shoes. The Board wishes Simon very well in his new role.

Revenue and Dividends

In 2013 the revenue per share increased by 24.1% to 22.28p per share. The Board decided that the total dividend for the year should be increased from 18.85p to 19.50p, an above-inflation rise of 3.4%, thus increasing the total dividend for the 41st successive year. For the first time in five years, the total 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. However, the Board does not wish to see the Investment Manager constrained by the need to generate income and remains prepared to revert to utilising the revenue reserve to support the dividend should it be necessary.

The Board recognises the importance of quarterly dividends to our many individual shareholders, particularly when interest rates on cash savings have remained so low and it resolved to re-balance the quarterly payments in 2013 in order to reduce the disparity between them. Thus the dividend payable in each of the first three quarters increased from 3.5p to 4.5p and there was a reduction in the fourth quarter's dividend from 8.35p to 6.00p. However, taking the four quarters together, as reported above, the total dividend increased by 3.4%. 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.

Gearing

The Company ended the year approximately 17% geared. During the year the gearing varied between 13.7% and 17.5%. 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 £30 million to £40 million during the year and has been further increased to £50 million since the year end. 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 thus 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 hedging 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, reflecting the improvement in the Company's rating which we hope will continue. Those shares repurchased in previous years are held in Treasury for possible reissue should the Company's shares move to a premium. 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 reissued at less than NAV. No such authority exists currently and the Board does not intend to seek such authority at the present time.

Board of Directors

Directors conduct an 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 the 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, notwithstanding my length of service. The Board has agreed in principle that I will retire at the conclusion of the 2015 AGM.

As I reported last year, Andrew Sutch was appointed to the Board on 1st April 2013. We took a further step to refresh the Board with the appointment of Jane Tufnell on 1st October 2013. Jane brings considerable investment experience to the Board, having co-founded Ruffer LLP, a privately-owned investment management firm, in 1994. She is an independent non-executive director of The Diverse Income Trust Plc and of TR European Growth Trust Plc and was formerly the investment manager for the NatWest pension fund's exposure to UK small companies at County NatWest. Jane will stand for reappointment at the AGM and I look forward to introducing her to shareholders.

Virginia Holmes was appointed to the Board in 2004 and will stand down at the conclusion of this year's AGM. On behalf of the Board, I would like to thank Virginia for the substantial contribution that she has made to the Company during her tenure. Virginia's clear thinking and ability to question perceived wisdom with cogent analysis has added significantly to our Board's deliberations. She chaired the Audit Committee for eight years and took much of the burden of the work we undertook on the VAT case that was led by the Company and the Association of Investment Companies and which, ultimately, resulted in the removal of VAT from the payment of management fees by investment trust companies. As a result, in 2007 the Company received a refund of VAT which exceeded £4 million. Humphrey van der Klugt has succeeded Virginia as Chairman of the Audit Committee.

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

Directors' fees were last increased with effect from 1st January 2011. Led by the Senior Independent Director, the Board has reviewed the Directors' remuneration and that paid to directors of other investment trusts, both those managed by JPMAM and elsewhere. Consequently, the Board has resolved that the base Director's fee will be increased by £2,000 per annum to £23,000. The Chairman of the Audit Committee's fee will also rise by £2,000 to £27,000 as will the Chairman's to £34,000.

The total annual run-rate of remuneration payable to the six current Directors is £153,000. In 2010 shareholders resolved to increase the ceiling on total remuneration to £175,000. Thus the new fees will not be subject to a definitive vote at the AGM although there will, this year, be the first triennial vote on the Directors' remuneration policy as well as the usual advisory vote on the Directors' Remuneration Report for 2013. However, I will be happy to hear shareholders' views.

Alternative Investment Fund Managers Directive

Last year I reported that this EU Directive (the 'AIFMD') was in the wings but that it was impossible to spell out in detail how it would affect the Company other than to increase our expenses. A year later matters are clearer. The Company has the option of being self-managed or alternatively must appoint a manager authorised under the AIFMD. The Board has been advised, in conjunction with all other JPMAM managed trusts, by solicitors Dickson Minto. The Board has concluded that the appropriate route forward is to appoint a J.P. Morgan ('JPM') company as our manager. However, the AIFMD regulations do not permit JPMAM to be appointed as our manager as it is a 'MIFID' registered company. So, bizarrely, we are forced to enter into a new Investment Management Agreement ('IMA') with another JPM company, namely J.P. Morgan Funds Ltd ('JPMF'). JPMF will then delegate the actual management of the Company's portfolio to JPMAM and William and Sarah will continue to manage the portfolio as they have done this last 22 months.

The documentation to put this change into effect is in the process of being agreed and is expected to be signed off by the Board on 9th April 2014. In addition the Company is forced to appoint a Depositary in addition to our current Custodian, J.P. Morgan Chase Bank, and in common with all of the trusts managed by JPMAM has resolved to appoint the Bank of New York Mellon. This appointment is required to be made before 22nd July. I see no advantage of these changes other than the opportunity to review and update the IMA - a process that would have been undertaken periodically in any case. However, for the Company to continue to exist and to be managed by a JPM entity they are a requirement for which the bill must be paid.

Annual General Meeting

This year's AGM will be held at Trinity House, Tower Hill, London EC3N 4DH on Wednesday, 9th April 2014 at 12.00 noon.

Outlook

After a set-back in January, markets have recovered. The economic outlook continues to improve in the UK and in the US. There are modest signs of upturns in parts of the Eurozone although the structural deficiencies of the Euro as a currency have not been addressed and a return to crisis cannot be ruled out. Price/earnings ratios of shares have increased significantly over the last five years and equities no longer look outstandingly cheap. Nevertheless the improving economic outlook should enable successful companies to grow their profits and thus provide support for share prices. As always there are many uncertainties ahead including the possible negative effect on asset prices resulting from the tapering of Quantitative Easing, particularly in the United States.

Despite the rise in stock markets, equities continue to provide an income yield and this, together with their historic role as long-term stores of value, should encourage investors to stay with the asset class even if it is difficult to believe that 2014 will prove as fruitful as did 2013.

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, 5th March 2014

Investment Manager's Report

Market Review

2013 was another strong year for the UK equity market, with the FTSE All-Share Index producing a very handsome total return of +20.8%. Pleasingly, returns also came in a very steady way with the market rising in ten of the twelve months. Medium and small cap stocks were particularly strong, both returning more than 30%.

Such strong returns were a result of steadily improving investor confidence as it became increasingly apparent that many of the events investors feared at the start of the year were not actually going to happen. The Euro did not break up (in fact it proved quite a strong currency), the UK did not slip back into recession (rather it finished the year as one of the fastest growing economies in the developed world) and interest rates did not rise, but stayed at their historically low levels. Such positive 'surprises' coupled with the continued strength of most companies' trading created an almost perfect backdrop for equities.

The forward guidance from the new Governor of the Bank of England, Mark Carney, made it clear that short term interest rates are likely to stay low for the foreseeable future. Both consumer and business confidence received a fillip from this news and the year finished with the stock market approaching its all time high.

Performance Review

In the year to 31st December 2013 the Company delivered a total return on net assets (capital plus dividends reinvested) of +33.8%, ahead of the benchmark FTSE All-Share Index, which delivered a total return of +20.8%. A detailed breakdown of the performance is given in the Annual Report & Accounts. This strong absolute and relative performance was driven by strong stock selection during the year. Our decision to be geared into the rising equity market was also beneficial.

As was the case at the half year, our best performing stock in 2013 was easyJet, the low cost airliner that has taken advantage of the troubles of many of its European competitors and has achieved strong revenue and profits growth by attracting both business customers and holidaymakers. Its strategy of introducing allocated seating was highly successful, boosting profits and the company has recently announced another special dividend for its shareholders.

Another winning investment was ITV, which saw its share price rise more than 90% over the year as a result of both a dramatic improvement in profitability and cash generation which resulted in a special dividend payment of 4p to shareholders . Our long term holding in BT also performed very well, reporting very strong profit growth and cash generation, whilst also launching its new sports channel and enhanced broadband offering to attract even more customers. Dixons, the electrical retailer had a fantastic year, both operationally and strategically with its core UK business gaining market share and delivering strong profit growth. Dixons' share price rose by 71% over the year to reflect this success.

Our favoured life insurance stocks, Legal & General and Prudential, both performed well during 2013, with their share prices rising by 60% and 59% respectively. These financial stocks clearly benefited from the rising equity market, but more importantly, their focus on cash generation over recent years has enabled both companies to announce strong dividend growth in 2013, in excess of 15% dividend growth by each of them.

By contrast, our holding in Rio Tinto, the leading global iron ore producer, detracted from performance during 2013, its share price rising by less than 1% as it suffered from falling global commodity prices and fears over the slowing economic growth in China and other emerging markets. We still favour Rio Tinto, as a low cost producer with new management which is now focused on improving returns to shareholders. The shares remain lowly valued and their improving cashflow characteristics could enable decent dividend growth prospects. Our holding in the defensive and high dividend yielding Imperial Tobacco also underperformed the rising equity market, despite delivering dividend growth of 10%.

Overall it was a good year of performance, in both absolute and relative terms, with many of our key investments delivering strong profit growth, rising dividends and a good share price performance. JPMorgan Claverhouse remains a UK equity investment trust with sensible risk controls at its core. We will continue to maintain our agreed risk controls at both the stock and sector level, as we strive to deliver consistent outperformance for our shareholders.

Portfolio Review

Turnover in the portfolio was fairly low during the year, reflecting our preferred style of investing. Once we have identified and invested in good companies we generally leave them well alone in order to give management plenty of time to deliver on our expectations of them. Consequently, many of our significant holdings were the same throughout the year: Dixons, BT, Legal and General, Bodycote and Restaurant Group to name but a few, were left largely undisturbed since each of them continued to produce results which exceeded our expectations. Each of their share prices performed very well.

We did make a small handful of new investments during the year. For example, in June we started a new holding in Thomas Cook. Having only 18 months ago been on the brink of insolvency, a successful rights issue in June 2013 transformed the company's balance sheet and, under the dynamic leadership of Harriet Green, the new management team set about restructuring the company into a much leaner, more efficient, well-coordinated travel operator. The shares have performed very well for us but we continue to believe that there is more to come and so have not sold any shares yet. Another new holding was Ashtead, a leading rental equipment provider which has a strong presence in the US and is benefiting from the improving US construction and housing sector. Again, we were happy to run this successful position and were pleased to see the company enter the FTSE 100 at the end of the year.

Holdings which let us down included Partnership Assurance, the specialist annuity provider. Two disappointing sets of figures so soon after floating on the stock market pushed our patience too far and we sold the stock. We took profits on Rolls-Royce on valuation grounds and sold out of De la Rue as the prospects for its printing division had clearly deteriorated.

We kept gearing levels towards the top end of our permitted range throughout the year, reflecting the number of attractive stock opportunities we continued to find. As the Chairman has explained, if our view on the market changes we have the ability to use Index Futures to reduce the effective gearing level without reducing the portfolio yield.

To serve our shareholders best, we try to stay as unemotional as possible when making investment decisions. We try to resist falling in love with stocks, restrict the number of holdings so there is healthy competition for places in the portfolio and move quickly to sell investments which disappoint, of which thankfully there were few during the year.

Market Outlook

The UK economy continues to strengthen at quite a rapid rate and it is encouraging to hear just how upbeat the management of many our companies are. Corporate balance sheets are strong and dividend flows remain robust. The stock market has, however, anticipated much of this good news and the valuation of equities is no longer in the bargain basement category. Compared to many of the alternatives though, equities continue to look attractive to us on a medium term view.

Moreover, UK equities are significantly under-owned with many pension funds having substantially divested some years ago. This creates an opportunity for a company like ours which enjoys the benefits of having investors who are prepared to look beyond the short term.

We entered 2014 with gearing at 17.1% as we continue to find a number of investments where we think the prospective return will exceed the cost of borrowing to invest in them. Returns in 2014 are, however, unlikely to be as handsome as in 2013. Increasing concerns regarding the timing of short term interest rate rises and the slow down in emerging markets' growth are but two matters which are likely to make investors more cautious and returns more volatile. We will therefore need to tread carefully and invest only in the strongest of companies.

From these levels, however, we think UK equities will provide medium term investors, who are prepared to tolerate some degree of volatility in the price of their investments, with attractive real returns.

William Meadon

Sarah Emly

Investment Managers, 5th March 2014

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.

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.

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 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.

Michael Bunbury

Chairman

5th March 2014

Financial Statements

Income Statement

for the year ended 31st December 2013

		2013			2012
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments held at fair value
through profit or loss		-	85,006	85,006	-	25,990	25,990
Net foreign currency gains		-	1	1	-	3	3
Income from investments		14,336	-	14,336	11,733	-	11,733
Other interest receivable and similar income		35	-	35	50	-	50
Gross return		14,371	85,007	99,378	11,783	25,993	37,776
Management fee		(535)	(992)	(1,527)	(422)	(785)	(1,207)
Performance fee		-	(4,078)	(4,078)	-	-	-
Other administrative expenses		(742)	-	(742)	(700)	-	(700)
Net return on ordinary activities
before finance costs and taxation		13,094	79,937	93,031	10,661	25,208	35,869
Finance costs		(906)	(1,683)	(2,589)	(832)	(1,546)	(2,378)
Net return on ordinary activities
before taxation		12,188	78,254	90,442	9,829	23,662	33,491
Taxation credit/(charge)		7	-	7	(8)	-	(8)
Net return on ordinary activities
after taxation		12,195	78,254	90,449	9,821	23,662	33,483
Return per share (note 2)		22.28p	143.00p	165.28p	17.95p	43.24p	61.19p
Dividends declared and payable in
respect of the year (note 3)		19.50p			18.85p
Dividends paid during the year (note 3)		21.85p			18.25p

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 Movement 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 2011	14,192	149,641	6,680	64,874	13,031	248,418
Repurchase of shares into Treasury	-	-	-	(43)	-	(43)
Net return on ordinary activities	-	-	-	23,662	9,821	33,483
Dividends paid in the year	-	-	-	-	(9,987)	(9,987)
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

Balance Sheet

at 31st December 2013

		2013	2012
		£'000	£'000
Fixed assets
Investments held at fair value through profit or loss		411,231	312,336
Investments in liquidity funds held at fair value through profit or loss		3,781	3,921
Total investments		415,012	316,257
Current assets
Debtors		1,214	1,009
Cash and short term deposits		996	99
		2,210	1,108
Creditors: amounts falling due within one year		(34,111)	(15,710)
Derivative financial instruments		(215)	-
Net current liabilities		(32,116)	(14,602)
Total assets less current liabilities		382,896	301,655
Creditors: amounts falling due after more than one year		(29,811)	(29,784)
Provision for liabilities and charges		(2,719)	-
Net assets		350,366	271,871
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		166,747	88,493
Revenue reserve		13,106	12,865
Total equity shareholders' funds		350,366	271,871
Net asset value per share (note 4)		640.2p	496.8p

The Company's registration number is 754577.

Cash Flow Statement

for the year ended 31st December 2013

		2013	2012
		£'000	£'000
Net cash inflow from operating activities		11,850	10,259
Returns on investments and servicing of finance
Interest paid		(2,489)	(2,343)
Taxation
Overseas tax recovered		22	2
Capital expenditure and financial investment
Purchases of investments		(119,451)	(165,726)
Sales of investments		106,837	152,735
Settlement of futures contracts		(916)	-
Other capital charges		(3)	(6)
Net cash outflow from capital expenditure and financial investment		(13,533)	(12,997)
Dividends paid		(11,954)	(9,987)
Net cash outflow before financing		(16,104)	(15,066)
Financing
Repayment of short term loans		(25,000)	-
Bank loan drawn down		42,000	15,000
Repurchase of shares into Treasury		-	(97)
Net cash inflow from financing activity		17,000	14,903
Increase/(decrease) in cash and cash equivalents		896	(163)

Notes to the Accounts

for the year ended 31st December 2013

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 per ordinary share

      The revenue return per ordinary share is based on the earnings attributable to the ordinary shares of £12,195,000 (2012: £9,821,000) and on the weighted average number of shares in issue during the year of 54,723,979 (2012: 54,724,061).

      The capital return per ordinary share is based on the earnings attributable to the ordinary shares of £78,254,000 (2012: £23,662,000) and on the weighted average number of shares in issue during the year of 54,723,979 (2012: 54,724,061).

      The total return per ordinary share is based on the earnings attributable to the ordinary shares of £90,449,000 (2012: £33,483,000) and on the weighted average number of shares in issue during the year of 54,723,979 (2012: 54,724,061).

3.   Dividends

(a)  Dividends paid and declared

	2013	2012
	£'000	£'000
Unclaimed dividends refunded to the Company1	(4)	-
2012 fourth quarterly dividend of 8.35p (2011: 7.75p) paid in March 2013	4,569	4,242
First quarterly dividend of 4.50p (2012: 3.50p) paid in June 2013	2,463	1,915
Second quarterly dividend of 4.50p (2012: 3.50p) paid in September 2013	2,463	1,915
Third quarterly dividend of 4.50p (2012: 3.50p) paid in December 2013	2,463	1,915
Total dividend paid in the year of 21.85p (2012: 18.25p)	11,954	9,987

	2013	2012
	£'000	£'000
Fourth quarterly dividend of 6.00p (2012: 8.35p) paid on 3rd March 2014	3,283	4,569

      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 and paid in respect of the year ended 31st December 2013. In accordance with the accounting policy of the Company, this dividend will be reflected in the accounts for the year ending 31st December 2014.

(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 £12,195,000 (2012: £9,821,000). Brought forward revenue reserves amounting to £nil (2012: £493,000) have been utilised in order to finance the dividend.

	2013	2012
	£'000	£'000
First quarterly dividend of 4.50p (2012: 3.50p) paid in June 2013	2,463	1,915
Second quarterly dividend of 4.50p (2012: 3.50p) paid in September 2013	2,463	1,915
Third quarterly dividend of 4.50p (2012: 3.50p) paid in December 2013	2,463	1,915
Fourth quarterly dividend of 6.00p (2012: 8.35p) paid on 3rd March 2014	3,283	4,569
Total dividend declared in respect of the year of 19.50p (2012: 18.85p)	10,672	10,314

4.   Net asset value per share

      Net asset value per share is based on the net assets attributable to the ordinary shareholders of £350,366,000 (2012: £271,871,000) and on the 54,723,979 (2012: 54,723,979) shares in issue at the year end, excluding shares held in Treasury.

5.   Status of announcement

2012 Financial Information

The figures and financial information for 2012 are extracted from the published Annual Report and Accounts for the year ended 31st December 2012 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.

2013 Financial Information

            The figures and financial information for 2013 are extracted from the Annual Report and Accounts for the year ended 31st December 2013 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

5th March 2014

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 ASSET MANAGEMENT (UK) LIMITED

 

END

 

 

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