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JPMorgan Claver IT (JCH)

  Print      Mail a friend       Annual reports

Thursday 06 March, 2008

JPMorgan Claver IT

Final Results

JPMorgan Claverhouse IT PLC
06 March 2008


Chairman's Statement

Performance and continuing appointment of the Manager

After four years of out-performance against the FTSE All-Share Index, I regret
to report that 2007 was not a successful year for the Company. Total return to
shareholders was -1.6% and the total return on net assets -0.2%, whereas the
total return on the benchmark index was +5.3%.

2007 was a year in which the Manager's investment process did not deliver added
value.  When considering whether or not to recommend the continuing appointment
of JPMorgan Asset Management ('JPMAM') as Manager of the Company, the Board
considered in detail both the short term and long term results of JPMAM's
investment process. The Board noted that over the last ten years it has added
material value in six years, two years were flat and two years (2007 and 1998)
significantly negative. The Board has reviewed and discussed with JPMAM the
theory and practice and remains of the view that, over an investment cycle of
three to five years, the outcome of this investment approach should continue to
be positive for shareholders. That is supported by the results of the last five
years which, even taking into account 2007, show annualised out-performance of
+1.2%. Consequently, despite the disappointing 2007, the Board decided that the
continuing appointment of JPMAM as Manager of the Company on the terms agreed is
in the interests of shareholders as a whole.

Revenue and Dividends

Once again I am pleased to be able to report a strong revenue account where
underlying dividend increases have been boosted by share buy-backs and the
revenue per share has grown by 9.7%. Total dividends for the year have increased
from 13.5p to 15.3p, an increase of 13.3%. Ten years ago the dividend was 6.8p
per share. Although the Board expects some slowing of dividend growth in 2008
and 2009, the Company has a substantial revenue reserve and we expect to
continue to increase the Company's dividend ahead of the rate of inflation.

VAT Case

Together with the Association of Investment Companies ('AIC'), the Company
brought an action initially in the British courts and then in the European Court
for a declaration that VAT should not be charged on management fees for
investment trusts. The costs of this action were fully funded by the industry
through the AIC.

I am pleased to report that in June 2007 the European Court ruled
comprehensively in favour of the joint Claverhouse/AIC action and referred the
matter back to the UK for determination. After four months, HM Revenue & Customs
('HMRC') confirmed in early November that VAT should not be charged on
investment trust company management fees.  In the light of the ruling JPMAM
ceased to charge VAT on management fees with effect from 1st October 2007. In
the nine months to 30th September 2007 VAT of £493,000 was paid and in 2006 the
total was £462,000.

So the position for the future is unequivocally good for the Company. There will
be a significant saving in the costs levied for the management of the Company
and the disadvantage at which investment trusts were placed in relation to unit
trusts and open ended investment companies has been eliminated.

In addition, the Board is now taking steps to recover at least part of the VAT
paid for the period running back, possibly as far as 1990. The sums are
substantial and amount to over £4.5 million over that long period. It is
unlikely that all of this will be recoverable. However, the Board will be
disappointed if it is not possible to recover materially in excess of £2.5
million, although the timetable for recovery is, at present, uncertain.

It is probable that the process of recovery will be long and tortuous. The
Company may have a right of recovery direct against HMRC. In the first instance
though, the Board is relying upon JPMAM to recover all it can from HMRC,
together with interest, and to pass on that recovery to the Company.
Unfortunately, the calculations and the legal position in relation to recovery
of VAT paid between 1990 and 2007 are extremely complicated. Discussions with
JPMAM are continuing. However, difficult uncertainties persist which will only
be clarified once the outcome of another legal case currently before the UK
courts is known.


The Company ended the year 7.7% geared, its lowest level over the last ten
years. During the year the gearing varied between this level and 12%. As
reported last year, it is the Board's intention to keep gearing within the range
of 0-15% under normal market conditions, whilst reserving the right to allow
gearing to increase should a serious setback in markets provide a buying

Share Repurchases

During the year the Company repurchased a total of 2,732,477 shares for
cancellation, at an average discount to net asset value (with debt at par value)
of 5.7%. This has added approximately 1.6p per share to net asset value for
continuing shareholders. The Board's objective remains to use the share
repurchase authority to manage any imbalance between supply and demand for the
Company's shares, thereby minimising the volatility of the discount. At the year
end the discount with debt valued at par was 6.3% and ranged between 3.9% and
7.8% during the year. With the Company's debt at market value, the discount at
the year end was 5.2%.

Performance Fee

Under the arrangements whereby the payment of any performance fee earned is
phased over three years and that due in years two and three can be clawed back
in the event of underperformance, the accrual for the unpaid performance fee of
£1.8m at 31st December 2006 has been reversed in its entirety. Indeed, there is
now a negative balance of some £1.7m in the calculation of the performance fee,
which will have to be made up in future by out-performance before any further
performance fee can either be paid or accrued.

Board of Directors

The Nomination Committee meets annually to evaluate the performance of the
Board, its Committees and the individual Directors.

Both Peter Lilley and I have served as Directors of your Company for more than
ten years. There is then a significant gap to Virginia Holmes, who has served
four years. With an eye to the future and to provide more balance to the spread
of service, Peter Lilley will retire at the AGM. The Board has commenced the
process of seeking a new Director.

Peter Lilley will be a hard act to follow. His experience as a City analyst,
followed by service as a Minister at the very highest levels of Government, have
given him an insight into so much of what impinges on our affairs. He has
provided wide counsel to colleagues and has steadfastly promoted shareholders'
interests. On behalf of all shareholders I wish to thank Peter for his valuable
contribution over such turbulent years in stock markets.

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. As I have served as a Director for more than
nine years, I am required to seek re-election on an annual basis and a
resolution to that effect will be put to the AGM.

Directors' fees were last increased with effect from 1st January 2006. The time
commitment and the responsibility of directors do not reduce and fees paid to
non-executive directors of investment trust companies have increased materially
since 2006. Under normal circumstances, the Board would have put a proposal to
the AGM for an increase in Directors' fees. However, given the disappointing
investment results of 2007, there will be no proposal to increase fees this

The Chairman of the Audit Committee,Virginia Holmes, and I have spent a
considerable amount of time dealing with the VAT issue. In our absence the other
Directors, led by the Senior Independent Director John Scott, decided that the
VAT workload has been significantly beyond what would normally have been
expected of a director and they have awarded Virginia and myself an extra
payment in relation to 2007 of £5,000 each. These payments do not require
shareholders' approval but we will be happy to answer questions in relation to
them at the AGM.

Companies Act 2006 and new Articles of Association

It is proposed that the Company adopts new Articles of Association in order to
comply with the provisions of the Companies Act 2006 that have been brought into
effect already and those that will be effective from 1st October 2008. The new
Act is being introduced in stages and is expected to be fully enacted by 1st
October 2009. More details on the proposed changes to the Articles are given in
the Annual Report to be published shortly. One of the principal changes will
allow the Company to use electronic communications to send interim and annual
reports to shareholders, although shareholders will have the right to opt to
continue to receive hard copies if they wish and will continue to receive hard
copy forms of proxy. The Board is also considering whether to take advantage of
new regulations which allow companies not to post the interim report to
shareholders, but instead direct shareholders to the Company's website. Both of
these measures would reduce the Company's administrative expenses and the Board
would welcome shareholder feedback on these possible changes.

Annual General Meeting

This year's AGM will be held at Trinity House, Tower Hill, London EC3N 4DH on
Thursday 10th April 2008 at 12.00 noon.

The Future

The uncertainty of last autumn has continued into 2008, with equity markets
being extremely volatile.Where companies have disappointed in any way, their
stock prices have been hit very hard. Even where there has been no visible
disappointment, investors have been very wary of certain sectors, some of which,
on any historic basis, look cheap. That is not to say they will not get cheaper
until confidence returns.

The UK economy continues to grow, albeit at a slower pace than in recent years.
That growth will probably continue, but the Government's recent management of
events has shaken confidence in the UK, both at home and abroad. The combination
of the mishandling of the Northern Rock crisis, the Capital Gains Tax changes
that were so ill thought-out and the changes to taxation of people who are
non-domiciled in the UK, have all conspired to make the UK appear a less
attractive country in which to prosper in business than it has been for many
years. Interest rates are expected to continue to fall in the US and in the UK.
However, policymakers in both countries will need to keep a careful eye on
inflation, the risks of which have increased.

I have written before that equities are a volatile asset class and I am afraid
that is proving to be the case again at present. However, as an asset class,
they are one of the few stores of long term value and the Board is confident
that the Company will deliver shareholders long term performance, together with
a rising dividend.

Michael Bunbury
6th March 2008

Investment Manager's Report

Market Background

2007 proved to be much more difficult for the UK stock market than the previous
three years, as investors were faced with a stream of bad news. Risk aversion
and nervous sentiment caused large cap stocks to outperform small cap over the
year. The FTSE All-Share Index delivered a return of +5.3% over the year, while
the FTSE 100 large-cap index delivered +7.4%, and the FTSE Mid 250 and Small Cap
indices fell by 2.5% and 10.5% respectively.

The year began with weak UK stock market performance in January and February,
before rallying from March through until May, shrugging off a quarter point
interest rate rise in May, which took interest rates to 5.5%. Strong merger and
acquisition activity played a significant role in the stock market's rise,
including a headline grabbing private equity bid for Alliance Boots. Indeed, the
FTSE 100 reached a series of post-2000 highs in May, before retreating slightly
in June as the first signs of credit market trouble emerged.

The real sell-off got underway in July and continued into August, when an
increase in global risk aversion caused investors to take profits or close out
positions in risky assets. The UK stock market, along with most other major
equity markets, experienced a pronounced decline, with equities tumbling as
problems related to the US sub-prime mortgage crisis spilled over into credit
markets, causing liquidity to evaporate. However, the Bank of England raised
interest rates by 0.25% in July to 5.75% as it deemed inflationary pressures to
be significant and growth to be robust.

The sub-prime crisis led to a widening in credit spreads and, with banks' risk
aversion rising, an increase in inter-bank lending rates. In the UK, the effects
were embodied by the near collapse of Northern Rock amid scenes of investors
queuing around the block to withdraw their savings from the mortgage bank. It
was eventually bailed out by the Government after failing to raise capital in
the money markets to continue its operations. The UK market then rallied through
until mid October, as global equity markets were supported by expectations of
reductions in US interest rates, which subsequently occurred for the first time
in more than four years.

UK share prices declined sharply in November as fears surrounding the global
credit crisis reasserted themselves, and doubts grew over the resilience of the
UK economy as weak housing market data contributed to weak consumer confidence
surveys. December was also volatile and the Bank of England finally changed its
policy stance, cutting interest rates by 0.25% to 5.5%, despite inflationary

Performance Review

In the year to 31st December 2007 the Company produced a total return on net
assets (growth in the value of net assets with dividends re-invested) of -0.2%
against the total return of the benchmark FTSE All-Share Index of +5.3%. With
the modest rise in the index, the effect of the Company's gearing was broadly
neutral given the cost of the debt used to implement the gearing strategy. The
majority of the performance shortfall was a result of the underlying
underperformance of the equity portfolio.

2007 was a difficult year for our investment process, which combines both value
and growth styles in the same portfolio, due to the severe underperformance of
value stocks. Across a number of sectors, particularly those that were interest
rate sensitive, stocks that were trading at low valuations underperformed the
wider market. This was most apparent in the case of financials and house
builders, where cheaply rated stocks were significantly de-rated during the
course of the year, especially after the difficulties faced by Northern Rock
during the autumn of 2007. Unusually, the growth factors in our research process
that normally act as a counterweight to the value stocks, have not offset the
value underperformance. Indeed some of the more growth or momentum oriented
stocks were also de-rated, due to fears over the economic outlook in both the UK
and overseas. Notwithstanding the difficulties faced in 2007, our 'barbell'
investment strategy, that combines both value and growth stocks in one
portfolio, has added considerable value over the longer term with annualised
outperformance of 1.2% over the last five years.

At a stock level the most significant detractors from performance included
Northern Rock, which at the start of 2007 was attractively valued with strong
earnings upgrades.  However, by the middle of the year, as financial conditions
rapidly deteriorated due to the emerging credit crunch, the company could no
longer raise finance through the normal wholesale channels and in September
management had to turn to the Bank of England for emergency funding. The degree
of this strain was evident in the 'spread' or difference between the 3 month
LIBOR rate (a benchmark interest rate at which banks will lend to each other)
and the Bank of England base rate. In the summer of 2007 this spread spiked up
to 1.15% and Northern Rock was no longer able to raise financing through this

Whilst Northern Rock was the highest profile casualty of the global credit
problems experienced during the second half of 2007, investor fears over the
outlook for growth meant that many economically sensitive, but cheaply valued
stocks, underperformed on fears over their future profit delivery. The Company's
holdings in other banking stocks, particularly domestic mortgage banks such as
HBoS, suffered and house builders including Barratt Developments, also saw
significant share price falls as investors worried that there might be a
significant slowdown in the UK housing market in 2008 and 2009.

The mining stocks combine undemanding valuations with positive earnings momentum
due to strong demand for commodities and rising commodity prices. Through the
course of 2007 the Company's holdings in the sector outperformed. In particular,
the diversified miner, BHP Billiton and the copper miner Antofagasta, performed
strongly, contributing to performance. Energy stocks continued benefit from
rising oil and gas prices and BG Group performed particularly strongly. As
demand for oil continues to grow and sources of incremental new oil become
progressively more difficult to exploit, so oil service companies are seeing
increased demand from the major oil companies to help commercialise their oil
reserves. The Company has a holding in Petrofac which continued to win new
contracts and saw substantial earnings progression in 2007.

Once again, the Company's holdings in the JPMorgan UK Smaller Companies Fund and
the JPMorgan Smaller Companies Investment Trust continued to outperform the
small cap index.

Portfolio Review

Our ongoing stock selection process continues to focus on identifying stocks
that have those attributes which we seek: fundamentally sound companies trading
at attractive valuations and companies offering superior earnings growth,
supported by positive newsflow, as they outperform market expectations. This
process is grounded in the science of behavioural finance and underpinned by
stock market data going back over 55 years.

This academic research demonstrated with very long term back-tests that
investing in the cheapest stocks each year (for example, investing in only the
cheapest 10% of stocks), would have resulted in out-performance of 3.9% per
annum over a 55 year period (ie: the difference between decile 1, the cheapest
10% of stocks, and the All Stocks average). Similarly, growth/momentum investing
delivered 3.3% annual out-performance over the same period. The Company targets
both value and growth/momentum in order to deliver long term out-performance of
its benchmark.

Against these critera, during 2007 we reduced the Company's exposure to banking
stocks, as the effects of the global credit tightening and contagion from the US
sub-prime write downs caused earnings expectations to fall and indeed resulted
in asset write-downs in the second half of the year. Early in the year we
reduced the Company's position in the real estate sector with sales of British
Land, Hammerson and Big Yellow Group. These stocks had performed very strongly
through 2006 and had moved onto premiums to their underlying asset values,
thereby removing any further valuation upside.

The year saw most commodity prices continue to rise, driven by supply
constraints and increasing demand from emerging economies such as China and
India. Crude oil also saw significant price increases, rising from $60 to over
$90 a barrel by the end of the year. Following its production problems in 2006,
including the Thunder Horse project in the Gulf of Mexico, BP's operational
performance in 2007 significantly improved. Combined with the benefits of the
increased oil price, this led to earnings forecasts rising and we consequently
added to our BP holding as well as the position in Royal Dutch Shell.Within the
mining sector we also purchased Rio Tinto and Xstrata. Towards the end of the
year consolidation within the sector moved into the large-cap arena, with BHP
Billiton's approach to Rio Tinto. As mentioned in the Performance Review,
companies that are supplying services and products into the oil and extractive
industries are seeing very strong demand, leading to increased volumes and
better pricing terms. To further exploit the growth opportunities on offer,
purchases were made of Amec and Weir Group. Amec is a leading project manager in
the oil and gas sector, whilst Weir is a global leader in the supply of pumps
and valves, with a strong position in the energy sector.

For 2008 we continue to ensure that the Company's portfolio demonstrates those
key characteristics that we seek: attractive valuation, superior earnings growth
and positive newsflow from fundamentally sound companies.

Market outlook

The outlook for investors in the UK stock market is becoming increasingly
uncertain at the beginning of 2008. It is difficult to predict how long it will
take for the current financial shocks to be absorbed by the economy and
impossible to say at this stage when the tide of negative news will slow.
Furthermore, no one can currently know the full extent of sub-prime related

Whilst undoubtedly economic growth will ease in the near term, monetary
authorities are already reducing interest rates. Indeed, so far in 2008, the US
has reduced the Federal Reserve funds rate by 1.25% and the Bank of England has
cut the UK base rate by another 0.25% to 5.25%. Clearly there is still a risk
that the US will fall into recession despite these rate cuts and there are short
term pressures on inflation in the UK.

Counterbalancing the uncertain economic outlook is the cheap rating of the UK
equity market, both in absolute terms (a prospective price earnings ratio of
11.3x and a dividend yield of 3.6%) and relative to other assets such as bonds
and international equity markets. The UK market is currently trading at a very
attractive historic price earnings ratio, relative to its own historic valuation

The UK equity market is trading at its lowest valuation since the recession of
the early 1990s, a time when unemployment touched 3 million (10% of the
workforce) and interest rates were at 15%. This is in sharp contrast to the
current economic situation, with today's much lower levels of unemployment
(below 1 million) and base rates of 5.25%.

As economic growth forecasts are reduced, causing uncertainty in the outlook for
corporate earnings growth, the most likely outcome in the short term is
continued volatility, at least until lower interest rates begin to take effect
later in the year. However, the UK market is still expected to deliver earnings
and dividend growth in 2008, whilst being supported by the very undemanding
valuation of UK companies. The UK equity market therefore continues to be an
attractive investment for those investors prepared to look beyond any short term
volatility and participate in the long term growth potential of the UK stock

James Illsley
Sarah Emly
Investment Managers
6th March 2008

JPMorgan Claverhouse Investment Trust plc
Unaudited figures for the year ended 31st December 2007

Income Statement

                               (Unaudited)                                         (Audited)

                               Year ended 31st December 2007             Year  ended 31st December 2006
                                   Revenue      Capital         Total    Revenue     Capital         Total
                                     £'000        £'000         £'000      £'000       £'000         £'000
    (Losses)/gains from
investment held at fair value
through profit or loss                   -      (9,234)       (9,234)          -      53,443        53,443
Net foreign currency losses              -          (6)           (6)          -           -             -
Income from investments             12,198            -        12,198     11,436           -        11,436
Other interest receivable and
similar income                          22            -            22        102           -           102
                                   _______     ________       _______    _______    ________       _______

Gross return/(loss)                 12,220      (9,240)         2,980     11,538      53,443        64,981

Management fee                       (679)      (1,261)       (1,940)      (669)     (1,242)       (1,911)
Performance fee writeback/
(charge)                                -        2,138         2,138          -      (1,777)       (1,777)
Other administrative expenses        (752)            -         (752)      (602)           -         (602)

                                   _______      _______       _______    _______     _______       _______

Net return/ (loss) on ordinary
activities before finance
costs and taxation                 10,789      (8,363)         2,426     10,267      50,424        60,691

Finance costs                      (1,054)      (1,958)       (3,012)    (1,010)     (1,876)       (2,886)

                                   _______      _______       _______    _______     _______       _______

Net return / (loss) on
ordinary activities before
taxation                             9,735     (10,321)         (586)      9,257      48,548        57,805

Taxation                              (21)            -          (21)        (1)           -           (1)

                                    ______      _______       _______     ______     _______       _______

Net return / (loss) on
ordinary activities after
taxation                             9,714     (10,321)         (607)      9,256      48,548        57,804

                                     =====        =====         =====      =====       =====         =====

Return / (loss) per share
(note 2)                            16.28p     (17.30)p       (1.02)p     14.84p      77.81p        92.65p

Dividend per share                       -            -        15.30p          -           -        13.50p

                                     =====        =====         =====      =====       =====         =====

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. 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.

JPMorgan Claverhouse Investment Trust plc
Unaudited figures for the year ended 31st December 2007

Reconciliation of Movements in Shareholders' Funds (Unaudited)

                                        Called up                   Capital
                                            Share        Share   redemption     Capital     Revenue
                                          capital      premium      reserve     reserve     reserve      Total
                                            £'000        £'000        £'000       £'000       £'000      £'000

At 31st December 2005                      16,053      149,641        4,819     136,377      11,564    318,454
Repurchase and cancellation of shares       (785)            -          785    (15,838)           -   (15,838)
Total return from ordinary activities           -            -            -      48,548       9,256     57,804
Dividends appropriated in the year              -            -            -           -     (7,677)    (7,677)
                                          _______      _______     ________     _______     _______   ________
At 31st December 2006                      15,268      149,641        5,604     169,087      13,143    352,743
Repurchase and cancellation of shares       (683)            -          683    (15,249)           -   (15,249)
Total (loss)/return from ordinary               -            -            -    (10,321)       9,714      (607)
Dividends appropriated in the year              -            -            -           -     (8,975)    (8,975)
                                          _______      _______     ________     _______     _______   ________
At 31st December 2007                      14,585      149,641        6,287     143,517      13,882    327,912
                                            =====        =====        =====       =====       =====      =====

JPMorgan Claverhouse Investment Trust plc

Unaudited figures for the year ended 31st December 2007

Balance sheet                                                           (Unaudited)            (Audited)
                                                                 31st December 2007   31st December 2006
                                                                              £'000                £'000
Non current assets
Investments at fair value through profit or loss                            363,519              400,902

Current assets
Debtors                                                                         807                  998
Cash at bank and in hand                                                         24                   99
                                                                            _______              _______
                                                                                831                1,097

Creditors: amounts falling due within one year                              (6,788)             (17,494)
                                                                            _______              _______
Net current liabilities                                                     (5,957)             (16,397)
                                                                            _______              _______
Total assets less current liabilities                                       357,562              384,505

Creditors: amounts falling due after more than one year                    (29,650)             (29,624)

Provision for liabilities and charges                                             -              (2,138)
                                                                            _______              _______
Total net assets                                                            327,912              352,743
                                                                              =====                =====
Capital and reserves
Called up share capital                                                      14,585               15,268
Share premium                                                               149,641              149,641
Capital redemption reserve                                                    6,287                5,604
Capital reserve                                                             143,517              169,087
Revenue reserve                                                              13,882               13,143
                                                                            _______              _______
Shareholders' funds                                                         327,912              352,743
                                                                              =====                =====

Net asset value per share (note 3)                                           562.1p               577.6p
                                                                              =====                =====

JPMorgan Claverhouse Investment Trust plc
Unaudited figures for the year ended 31st December 2007

Cash Flow Statement
                                                                        (Unaudited)            (Audited)
                                                                 31st December 2007   31st December 2006
                                                                              £'000                £'000

Net cash inflow from operating activities                                     7,951                7,516

Returns on investment and servicing of finance
Interest paid                                                               (3,028)              (2,838)

Overseas tax recovered                                                            -                    1

Capital expenditure and financial investment
Purchases of investments                                                  (262,276)            (237,635)
Sales of investments                                                        290,434              251,319
Other capital charges - handling charges                                        (9)                  (3)
Net cash inflow from capital expenditure and financial
                                                                             28,149               13,681

Dividends paid                                                              (8,975)              (7,677)

Net cash inflow before financing                                             24,097               10,683

Repurchase of shares                                                       (15,166)             (16,507)
Repayment of short term loan                                               (15,000)                    -
Drawdown of short term loan                                                   6,000                    -
                                                                            _______              _______
Net cash outflow from financing activity                                   (24,166)             (16,507)
                                                                            _______              _______
Decrease in cash for the year                                                  (69)              (5,824)
                                                                              =====                =====

Notes to the Accounts

1. Accounting policies

The accounts are prepared in accordance with the Companies Act 1985, United
Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the
Statement of Recommended Practice 'Financial Statements of Investment Trust
Companies' (the 'SORP') issued by the AIC in December 2005. The preliminary
announcement is prepared on the same basis as set out in the previous year's
annual accounts.

2. Dividends

                                                                                  2007            2006
Dividends paid and declared                                                      £'000           £'000
2006 Fourth quarterly dividend of 4.9p (2005: 3.7p) paid in March
2007 1
                                                                                 2,978           2,347
First quarterly dividend of 3.3p (2006: 2.8p) paid in June                       1,987           1,752
Second quarterly dividend of 3.3p (2006: 2.8p) paid in September                 1,953           1,736
Third quarterly dividend of 3.5p (2006: 3.0p) paid in December                   2,057           1,842
                                                                               _______        ________
Total dividends paid in the year                                                 8,975           7,677

1 The fourth quarterly dividend declared in respect of the year ended 31st
December 2006 amounted to £2,992,000 (2005: £2,362,000). However, the amount
paid amounted to £2,978,000 (2005: £2,347,000) due to share repurchases after
the balance sheet date but prior to the record date.

                                                                                  2007            2006
                                                                                 £'000           £'000
Fourth quarterly dividend of 5.2p (2006: 4.9p) paid in March                     3,034           2,992

The fourth quarterly dividend declared has been declared and paid in respect of
the year ended 31st December 2007. In accordance with the accounting policy of
the Company, this dividend will be reflected in the accounts for the year ending
31st December 2008.

3. Return/(loss) per share

                                             (Unaudited)               (Audited)
                                             Year ended               Year ended
                                     31st December 2007       31st December 2006
Return/ (loss) per share is based                 £'000                    £'000
on the following:

Revenue return                                   9,714                     9,256
Capital (loss)/return                          (10,321)                   48,548
                                                _______                   ______
Total (loss)/return                               (607)                   57,804
                                                 ======                    =====

Weighted average number of shares in issue   59,675,969               62,389,503
Revenue return per share                         16.28p                   14.84p
Capital (loss)/return per share                (17.30)p                   77.81p
                                                _______                   ______
Total (loss)/return per share                   (1.02)p                   92.65p
                                                 ======                    =====


4. Net asset value per share

                 Net asset value                         Net assets
                   per share                           attributable

             2007               2006                2007                2006
            pence              pence                £000                £000
            562.1              577.6             327,912             352,743

Net asset value per share is based on the net assets attributable to the
ordinary shareholders of £327,912,000 (2006: £352,743,000) and on the 58,338,568
(2006: 61,071,045) shares in issue at the year end.

5. Status of preliminary announcement

The financial information set out in this preliminary announcement does not
constitute the Company's statutory accounts for the years ended 31st December
2006 or 2007 as defined in Section 240 of the Companies Act 1985. The
comparative financial information is an extract from the statutory accounts for
the year ended 31st December 2006. Those accounts, upon which the auditors
issued an unqualified opinion and which contained no statement under Section 237
(2) or 237 (3) of the Companies

Act 1985, have been delivered to the Registrar of Companies. The statutory
accounts for the year ended 31st December 2007 have not been delivered to the
Registrar of Companies, nor have the auditors yet reported on them.. The
statutory accounts for the year ended 31st December 2007 have not been delivered
to the Registrar of Companies, nor have the auditors yet reported on them. The
statutory accounts for the year ended 31st December 2007 will be finalised on
the basis of the information presented by the Directors in this preliminary
announcement and will be delivered to the Registrar of Companies following the
approval of the accounts by the Board of Directors.

6th March 2008

                      This information is provided by RNS
            The company news service from the London Stock Exchange      FR UNRARWKRORAR                                                                                                                                                                                                                                                

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