Jpmorgan Clav Regulatory News (JCH)

LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN CLAVERHOUSE INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2022

Legal Entity Identifier: 549300NFZYYFSCD52W53

Information disclosed in accordance with the DTR 4.1.3

The Directors of JPMorgan Claverhouse Investment Trust plc (the "Company") announce the Company's results for the year ended 31st December 2022.

CHAIRMAN'S STATEMENT

Performance and Manager Review

2022 proved to be another very challenging year in general for investors. Just as it seemed that the worst of the pandemic was behind us, and the way was clear for economies to recover from the virus' severe economic impact, Russia's invasion of Ukraine in February 2022 dealt a fresh blow to the economic outlook and investor confidence. As well as escalating geopolitical tensions to post WWII highs, the war added to upward pressures on energy and commodity prices, driving already rising inflation even higher. Markets were shocked by central banks' aggressive policy response and fears that high and still rising rates would push the major economies, including the UK, into recession this year now seem more likely to be realised.

These developments weighed heavily on financial markets. The MSCI Word Index closed the year down 17.7%, and the FTSE All Share Index also dropped sharply during the first half of the year. UK domestic political instability was an additional source of uncertainty during this period, but the appointment of Rishi Sunak as Prime Minister in October calmed investors' jitters and the UK market experienced a steep recovery, outperforming other major markets, to close the year up slightly +0.3%. The Company underperformed its benchmark over the 12 months to end December 2022, declining by 4.6% on a net asset value ('NAV') basis (with debt at fair value), and 5.1% in share price terms over the period, compared to a positive return of 0.3% for the benchmark.

This is clearly a disappointing result; however, it is important to understand that this underperformance occurred in the first half of the year, during the worst of the financial turmoil. Portfolio performance improved in the second half of the year and the Company outperformed its benchmark in this six-month period, recouping some of its underperformance, as market conditions steadied, and the portfolio changes implemented by the Portfolio Managers to strengthen its resilience to the year's challenges began to pay off.

The year was also characterised by a small percentage of stocks outperforming the relevant index. For example, only 23% of stocks outperformed the FTSE All Share Index over the year. This made it particularly challenging for active managers operating for risk management reasons within agreed investment guidelines and restrictions. These are summarised in the Strategic Report in the full annual report. During the year, the Board reviewed these guidelines with the Portfolio Managers, in particular the range of 60 to 80 stocks, and confirmed that they remained appropriate.

Shareholders should also bear in mind that the Portfolio Managers invest for the long-term, so they should be judged by their performance over a longer timeframe. Over the ten years to 31st December 2022, the Company achieved an average annual return of 7.9% on an NAV basis and 9.1% in share price terms, outperforming the benchmark return of 6.5% on the same basis.

The Investment Manager's report below provides more detail on performance during 2022, and how the Portfolio Managers have adapted the Company's portfolio in light of the new lower growth, higher inflation environment. They also discuss the outlook for 2023.

As at 10th March 2023, the Company's NAV per share (with debt at fair value) was 722.54p and the share price was 684.00p.

Revenue and Dividends

The Directors have declared a fourth quarterly interim dividend of 10.5p per share for the year ended 31st December 2022, to be paid on 17th March 2023, which brought the total dividend per share for the year to 33.0p (2021 total: 30.5p), an increase of 8.2% on the year. I am very pleased to say that this is the 50th successive year in which the dividend has been raised - a record which very few investment trusts have achieved. The dividend has grown each year from 0.48p per share in 1972 to 33.0p per share in 2022, a compound dividend growth of 8.8% per annum, comfortably exceeding inflation and UK dividend growth.

At a time when rising inflation is making dramatic inroads into household budgets, I am sure shareholders will be equally appreciative of the fact that following payment of the fourth quarterly interim dividend, the Company will have continued to pay dividends in excess of inflation over each of the past 3, 5 and 10 year periods, and above the dividend growth of the UK market as a whole (as measured by the constituents of the FTSE All-Share Index) as illustrated in the chart in the full annual report and table below.

Source: Bloomberg.

Source: Office of National Statistics.

The Board's dividend policy remains to seek to increase the dividend each year and, taking a run of years together, to increase dividends at a rate close to or above the rate of inflation. With UK inflation now at a 30 year high, the Board will continue to monitor carefully the outlook for dividend income. However, given the Company's revenue reserves, built up over a number of years, and its ability, as an investment trust, to utilise these reserves if necessary to support the dividend, the Board currently expects future dividend increases to enable the Company to continue to meet its dividend policy objectives. The Board intends to increase the first three quarterly interim dividends in 2023 to 8.0p per share from 7.5p per share in the previous financial year.

Premium/Discount and Share Issuance/Repurchases

During 2022, the discount to NAV at which the shares traded ranged from a premium of +3.7% to a discount of -3.6%. As a result, in the year to 31st December 2022, the Company issued 710,000 new shares at times when the shares were trading at a premium. The Company did not repurchase any of its shares during the year. The Board's objective is to use the repurchase and allotment authorities to manage imbalances between the supply and demand of the Company's shares, with the intention of reducing the volatility of the discount or premium, in normal market conditions.

As at 31st December 2022, the Company's discount (to its cum-income, debt at fair value, NAV) was -0.3%, and at the time of writing it currently stands at -5.33%.

At this year's Annual General Meeting ('AGM'), to be held on 28th April 2023, the Company will be seeking renewed authority from shareholders to sell shares from Treasury at a small discount, to issue new shares and to repurchase its own shares.

Since the year end, the Company's discount at which its shares trade has widened, the Board has deemed it necessary to utilise the Company's buy back authority, buying in a total of 465,000 shares as at the date of this report.

The comparison between the debt at par and fair value NAV reflects the difference between the interest paid on the Company's long-term debt (the 3.22% £30 million private placement loan) and current interest rates. The two calculations of NAV will therefore vary in accordance with prevailing interest rates and will change over the life of the long-term debt. At present, the difference between the two methods of calculation is approximately 2%. The Investment Manager's contribution to NAV performance should be assessed without regard to the long-term debt interest rate, over which it has no control; the cum income NAV with debt at par will therefore continue to be reported in the annual and interim reports. However, as mentioned above, the cum income NAV, with debt at fair value, will be used for the purposes of decisions on share buybacks and issues, as it is the basis upon which the NAV is announced to the market.

Gearing/Long Term Borrowing

The Portfolio Managers can use FTSE 100 index futures to effect reductions in the level of gearing by reducing the portfolio's market exposure. The Company's gearing policy (excluding the effect of any futures) is to operate within a range of 5% net cash and 20% geared in normal market conditions. The Investment Manager has discretion from the Board to vary the gearing level between 5% net cash and 17.5% geared (including the effect of any futures). The Board believes that over the long-term a moderate level of gearing is an efficient way to enhance shareholder returns.

In order that the Portfolio Managers could retain the flexibility to maintain gearing up to the maximum permitted level, in May 2022 the Company secured a new two-year revolving credit facility of £80 million with Mizuho Bank following the expiry of the Company's loan facility with the National Australia Bank.

Taking into account borrowings, net of cash balances held and the effect of futures, the Company ended 2022 approximately 7.2% geared. During the year gearing varied between 1.8% net cash and 9.7% geared. Gearing is currently 8.0%. The Company has a £30 million 3.22% private placement loan, maturing in March 2045. In addition, £10 million of the Mizuho revolving credit facility was drawn down as at 31st December 2022. See note 13 in the full annual report.

Environmental, Social and Governance ('ESG')

ESG considerations are integrated into the Investment Manager's investment process and within the broader decision making framework. This annual report includes a separate Environmental, Social and Governance Report from the Investment Manager in the full annual report. During the year, the Investment Manager became a new signatory to the UK Stewardship Code.

Investment Management Fees and Manager Evaluation

Since the year end, the Board has agreed with the Manager to amend the Company's investment management fees.

With effect from 1st July 2023, the investment management fee will be charged on a tiered basis at an annual rate of 0.45% of the Company's net assets on the first £400 million and at 0.40% of net assets above that amount. The fee will continue to be calculated and paid monthly.

During the year under review, the Management Engagement Committee undertook a formal review of the Manager and Investment Manager, covering the investment management, performance of the Portfolio Managers and company secretarial, administrative and marketing services provided to the Company. The review took into account the Investment Manager's investment performance record, management processes, investment style, resources and risk control mechanisms. I am pleased to report that the Board agreed with the Committee's recommendation that the continued appointment of the Manager is in the interests of shareholders.

Keeping in Touch

The Board would like to increase dialogue with the Company's existing shareholders. Investors holding their shares through online platforms will shortly receive a letter inviting them to sign up to receive email updates from the Company. These updates will deliver regular news and views, as well as the latest performance statistics. If shareholders wish to sign up to receive these communications, please visit https://web.gim.jpmorgan.com/emea_investment_trust_subscription/welcome?targetFund=JCH.

Annual General Meeting

We are planning to hold this year's AGM in person at JPMorgan's offices at 60 Victoria Embankment, London EC4Y 0JP, on Friday, 28th April 2023 at 12 noon. The Company's Portfolio Managers; William Meadon and Callum Abbot will give a presentation to shareholders, review the past year and comment on the outlook for the current year. The meeting will be followed by a sandwich lunch and provide shareholders with the opportunity to meet the Directors and representatives of the Manager. We look forward to welcoming as many shareholders as possible at the AGM.

For shareholders wishing to follow the AGM proceedings but choosing not to attend, we will be able to welcome you through conferencing software. Details on how to register, together with access details, will be available on the Company's website: www.jpmclaverhouse.co.uk, or by contacting the Company Secretary at invtrusts.cosec@jpmorgan.com.

As is normal practice, all voting on the resolutions will be conducted by a poll. Shareholders viewing the meeting via conferencing software will not be able to vote on the poll and we therefore encourage all shareholders, and particularly those who cannot physically attend, to exercise their votes in advance of the meeting by completing and submitting their form of proxy.

If you have any detailed or technical questions, it would be helpful if you could raise them in advance with the Company Secretary at 60 Victoria Embankment, London EC4Y 0JP or via the 'Ask a Question' link on the Company's website. Shareholders who are unable to attend the AGM are encouraged to use their proxy votes.

If there are any changes to the arrangements for the AGM, the Company will update shareholders through the Company's website and, if appropriate, through an announcement on the London Stock Exchange.

Board Succession

This is my first Annual Report since becoming Chairman following the retirement of Andrew Sutch at the conclusion of the AGM on 29th April 2022. Andrew had served as a Director of the Company since 2013, holding the position of Chairman from 2015. I would like to once again take this opportunity, on behalf of the entire Board, to thank him for all his hard work and his effective stewardship of the Board and the Company during his tenure.

At the time of Andrew's retirement, Jill May became the Senior Independent Director, Nicholas Melhuish took over as Audit Committee Chair and Victoria Stewart became Chair of the Remuneration Committee. Led by the Nomination Committee, following a search for a suitably qualified candidate to replenish the Board after Andrew's departure, I am delighted to welcome Joanne Fintzen as a Non-Executive Director of the Company with effect from 3rd October 2022. Joanne brings a wealth of experience to her new role, and my Board colleagues and I look forward to working with her. The Board therefore recommend that shareholders vote in favour of her appointment at the forthcoming AGM.

Outlook

While it has been very challenging over recent months and years, I share the Portfolio Managers' cautious optimism regarding the outlook for UK equity markets. The likelihood of recession in 2013 is already well-discounted by investors at current market levels and should sentiment continue to improve substantially investors may be further tempted by the attractive valuations of many UK stocks relative to their foreign peers.

We are also positive about the Company's prospects. It is invested predominantly in large, high-quality, well-diversified FTSE 100 stocks, many of which are continuing to pay growing dividends. Attributable in part to the portfolio adjustments implemented by the Portfolio Managers, the portfolio's holdings began to recover in the second half of 2022 once equity market conditions stabilised, and in the new lower growth, higher inflation environment, stocks offering high, predictable and rising income should continue to do especially well, benefitting our shareholders over coming years.

We are pleased to have experienced Portfolio Managers who are working hard to preserve and grow shareholders' assets and their success in doing so is evident in their long-term record of outperformance.

David Fletcher

Chairman 13th March 2023

INVESTMENT MANAGER'S REPORT

Investment Approach

Claverhouse is a diversified portfolio of JPMorgan's best UK ideas, comprising both quality growth and value stocks. A handful of very large stocks, which represent a significant part of the benchmark, are held for risk-control reasons.

We adopt a long-term, patient investment perspective and we believe that this approach will produce outperformance of the index in a steady, consistent manner, irrespective of market conditions. We also aim to maintain Claverhouse's multi-decade dividend growth record.

Market Review

2022 was a significant and sobering year in many ways. Asset prices tumbled as a veritable witches' brew of unexpected global challenges were thrown at investors and policy makers alike.

Encouraged by the final lifting of Covid-19 restrictions, the new year started in good heart. Such optimism was, however, short lived, as Russia shocked the world by its invasion of Ukraine in February, and the economic consequences were immediate. Russian gas pipelines to Europe closed, sparking the Continent's biggest ever energy crisis. Inflation, which was already becoming a problem, soon rose to multi decade highs, fuelled by increases in both energy and commodity prices. This in turn precipitated the fastest interest rate rises for decades, as central banks scrambled to curb surging prices. The decade-long era of easy, cheap money came to an abrupt and painful end. Such events were toxic for most assets. Unusually, equities and bonds fell in tandem. For much of the year there were no safe investment havens in which to hide.

To add to UK investors' woes, as the cost of living crisis deepened, politicians struggled to maintain authority. In a surreal three-month period, the UK had three Prime Ministers and four Chancellors of the Exchequer! A badly judged mini-budget in September triggered turmoil - bond prices plummeted and sterling dropped to a historic low of $1.03 - forcing the Bank of England to intervene to stabilise markets.

Global equities experienced their worst year since 2008, with US tech stocks and emerging markets being particularly badly hit. Many crypto currencies collapsed. The UK equity market, however, did relatively well by comparison. Investors welcomed the appointment of Rishi Sunak as Prime Minister in October, and a strong rally in the final quarter saw the FTSE All-Share Index finish just ahead for the year (+0.3%), led by a handful of large oil and mining stocks which investors saw as being beneficiaries of surging commodity prices. China maintained harsh lockdowns for most of the year as it struggled to contain the spread of the Covid-19 virus. The end of the year, however, saw some loosening of restrictions, and an associated resumption of economic activity, which gave further impetus to equities' year-end market rally.

Performance Review

We are bottom-up stock pickers. Developments at the sector and macroeconomic levels generally have less influence on the portfolio than our assessment of the companies themselves. For much of 2022, geopolitical and macro issues were of much more concern to investors than usual and this explains, in part, our under-performance. The portfolio struggled in the first half of the year as markets nose-dived in the wake of the unexpected Russian invasion of Ukraine. It declined by 12.8% on an NAV basis, 8.2 percentage points below the benchmark decline of 4.6%. However, some significant portfolio changes (discussed below), intended to improve the Company's resilience to the year's many unexpected challenges, combined with our risk-controlled approach to sizing positions at both a stock and sector level, helped the portfolio navigate the storm. Performance improved in the second half and the portfolio clawed back some of its H1 underperformance. In sum, in the year to 31st December 2022 as a whole, Claverhouse delivered a total return on net assets (capital plus dividends re-invested) of -4.6%, 4.3 percentage points weaker than the benchmark return of +0.3%. With the Company's shares moving from a premium of +0.2% to a small discount of -0.3% at the year end, the total annual return for shareholders was -5.1%.

Further detail of Claverhouse's performance over the year is given in the accompanying table below.

Performance attribution

Year ended 31st December 2022

Source: JPMAM/Morningstar. All figures are on a total return basis.

Performance attribution analyses how the Company achieved its recorded performance relative to its benchmark.

A Alternative Performance Measure ('APM').

A list of APMs, with explanations and calculations, and a glossary of terms are provided on pages 96 to 98 in the full annual report.

The Company delivered a dividend increase for the 50th consecutive year, a notable milestone. Dividends in respect of the financial year ended 31st December 2022 (FY22) totalled 33.0p per share, an 8.2% rise on the previous year's dividend of 30.5p per share. The dividend yield in respect of the year is 4.7% (based on the share price as at 9th March 2023).

Across the market, the year's outperformers were very limited, mainly comprising commodity companies and traditionally defensive names investors thought could benefit from, or at least cope with, the challenging economic environment. By contrast, financials and consumer stocks were particularly hard hit, as were very small companies. Accordingly, the most significant positive contributors to the Company's performance over the year included several energy and commodity companies as illustrated in the table below.

Top Contributors and Detractors to Performance vs FTSE All-Share Index

Source: JPMAM, as at 31st December 2022.

Oil stocks continued to outperform in all major markets, and BP and Shell were no exception, making them the largest contributors to returns over the year. The Russian invasion of Ukraine exposed the fragility of global energy markets and caused oil and gas prices to soar. Years of underinvestment has led to capacity constrained supply issues which were compounded by the closure of Russia's pipelines. The resultant supernormal cash flows generated by BP and Shell are being returned to shareholders. Additionally, management teams are investing in the energy transition and have recently increased capex guidance for upstream oil and gas projects. However, management teams are aware that investors want to see strong returns on investment and will not tolerate squandering of capital chasing volumes, as has been the case historically. Focusing on shareholder returns rather than growing volumes should provide a good outcome for shareholders over the medium term.

Pharmaceutical companies, including portfolio holding AstraZeneca, performed strongly as investors sought out companies with reliable earnings streams. AstraZeneca is finally reaping the reward of a decade long strategy shift towards improving R&D efficacy in high margin areas such as oncology. A number of the drugs developed as a result have proved extremely effective, and earnings growth should be boosted for many years ahead as these drugs come to market.

Glencore is a diversified mining company with substantial exposure to metals such as copper, zinc and nickel which are essential to the electrification of vehicles. Higher commodity prices have led to an improvement in Glencore's trading division, allowing the company to pay down debt and return excess capital to shareholders. In addition, a change in the management team has seen a substantial improvement in the company's ESG credentials, marking a new, greener era for this miner. Many outstanding legal cases against Glencore have been settled, including one involving the US Department of Justice.

It was a tale of two halves for the Asian insurance company, Prudential. For most of the year, China's harsh zero Covid-19 policies prevented Chinese nationals from travelling into Hong Kong to buy insurance products. However, towards the end of the year, when the Chinese government began to re-open the economy, we bought shares in Prudential at a very depressed valuation and they have since enjoyed a meaningful recovery.

The Company's position in JPMorgan's Smaller Companies Investment Trust, run by JPMAM's in-house small companies' team, was the largest detractor from returns during the year. It underperformed as investors sought the perceived safety of larger, more liquid stocks. However, over the years, this fund has not only contributed materially to the performance of Claverhouse, but as stocks have grown out of the smaller companies' index and into the FTSE 350, it has also provided a rich source of new direct investment ideas for us. We therefore intend to maintain our holding.

General market panic at the start of 2022, combined with rapidly rising interest rates, led to a substantial sell off in many financials such as private market specialist, Intermediate Capital and ESG-focused asset manager, Impax. Intermediate Capital remains in the portfolio as we continue to be happy with the company's operational performance. However, we sold our holding in Impax as we became concerned about the high level of the business's operating leverage and the potential for outflows.

The sharp pickup in inflation led to a severe sell off in consumer stocks, as the cost of living crisis limited discretionary spending and investors began to fear an imminent recession. While Dunelm and the retailer of luxury watches, Watches of Switzerland sold off on these fears, both companies are coping well with this challenging backdrop and remain holdings.

Highlighted Company: Natwest

Rising rates are beneficial for banks' net interest margins, which have been severely depressed throughout the past decade of low/zero interest rates. Higher rates should thus pave the way for Natwest to deliver double digit returns on equity after years of economic suppression. Accompanying this, stringent post GFC banking regulations have left NatWest's balance sheet very well capitalised and able to weather downturns in the macro environment.

Highlighted Company: Shell

This oil major is undergoing a significant restructuring to position itself as a diversified energy company. Part of the strategic shift involves returning surplus capital to shareholders, rather than growing volumes through low return projects, as it has done in previous cycles. This marks an important change to their capital discipline and signals an improvement in the quality of the business. In addition, the company has benefited from soaring energy prices as years of underinvestment by the sector has led to supply constraints which has been compounded by the closure of Russia's pipelines. Shell trades at a significant discount to Exxon Mobil, a US listed peer, and the broader UK market.

Portfolio Review

The portfolio held 63 stocks at the end of the year, towards the lower end of our normal range, as we focused on the very limited number of companies which could cope with the year's economic storm. Indeed, less than a quarter of shares in the FTSE All Share outperformed compared to a more normal year, where this number is generally closer to 50%. While we are stock-focused, we do run a sector-diversified portfolio, as the following discussion on the year's portfolio activity illustrates.

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

Source: JPMAM, as at 31st December 2022.

Purchases

Some significant portfolio changes were necessary to ensure it was best-placed to weather the year's many challenges.

For the past three years, the Asian life insurance company Prudential has been hamstrung by the covid-induced closure of China's borders. As discussed above, this prohibited Chinese nationals crossing into Hong Kong to take out insurance policies. This business provides a significant portion of the revenues of Prudential. Now the Chinese border has re-opened, there should be plenty of pent-up demand for Prudential's products.

JD Sports is an international retailer of sports and leisure wear. The company has exclusive relationships with big brands like Nike, adidas and Levi Jeans which give them security of supply and a strong competitive advantage versus peers. We sold out of the shares at beginning of 2022 as consumer spending pressures loomed, but after the sharp fall in the share price, we reopened the position.

Oil and gas companies were some of the few beneficiaries of events, due to the energy supply shock. We therefore added to our existing holdings in BP and Shell, and opened new holdings in other energy names such as Drax, SSE, Centrica and Serica, which we thought would also benefit from higher gas and oil prices. Glencore's exposure to copper, nickel and zinc also means it is well positioned to benefit from the global transition to EVs and other clean energy users and we opened a position/added to our position.

As the economy turned down, we added to several defensive businesses including Tesco, Imperial Brands and Unilever, which we expected to be relatively resilient.

Higher defence budgets following the Russian invasion of Ukraine will be beneficial for BAE and this prompted us to add a new holding.

We added a new position in the catering services company Compass Group, which struggled during the pandemic, however, its diverse client base (offices, hospitals and sports venues, to name a few) means revenues are relatively immune to normal economic slowdowns. The company has emerged from the pandemic stronger than ever, and recent results showed continued operational momentum.

We also added to several utilities names which have inflation-linked, regulated asset bases. These included National Grid and Severn Trent.

We also added a new position in Bunzl, a B2B distributor of non-food consumable products such as food packaging and cleaning and hygiene supplies, across a diverse range of end markets. Its contracts are typically on a cost plus basis.

Man Group, a new position, is an alternative asset manager which continues to deliver strong operational momentum, despite the challenging backdrop. Its recent good performance in key strategies has attracted new business, particularly in its higher fee absolute return strategies. As a purely institutional manager, its asset base is likely to be relatively sticky and we expect the company to return significant amounts of excess cash to its shareholders if performance remains strong.

4imprint, a new position, produces promotional merchandise and is benefitting from the continuing shift away from physical catalogues towards online merchandising.

The UK insurer, Aviva, has been on a multi-year restructuring to sell off non-core assets and re-focus on markets where they have a strong (top 3) market position. The disposals are now complete, and the business is extremely well capitalised as a result, so we added a new position.

Telecom Plus is a multiservice utilities provider to residential and small business customers in the UK. The company can price at a discount to the government price cap due to its scale and long-term supply contracts with partners. The competitive environment has greatly improved, as many of their smaller, aggressive competitors have not survived the recent period of energy price volatility.

Sales

Even before the Russian invasion of Ukraine, we had, thankfully, sold our holdings in Polymetal and EVRAZ both of which have operations in Russia. EVRAZ shares have subsequently been suspended.

After the Russian invasion, we sold a number of cyclicals as we looked to position the portfolio more defensively. These companies were either directly exposed to the economic cycle or lack the pricing power to pass through cost inflation. They included software company AVEVA, Breedon, a supplier of building materials, fashion house Burberry, B&M, owner of variety stores, and retailer Marks and Spencer.

In addition, we also closed our exposure to bus company National Express, budget airline WIZZ Air, Synthomer, a producer of specialist chemicals, Unite Group, a diversified REIT, and asset managers Scottish Mortgage Investment Trust, Polar Capital and Liontrust Asset Management, which have exposure to highly rated growth names.

We sold several highly-rated companies where we grew concerned about their expensive rating in a rising rate environment. These included Ergomed, a biotech company, Games Workshop, which sells toys and games, and Oxford Instruments, a producer of semiconductor equipment and materials.

We also sold Rightmove, a provider of online information related to UK residential real estate, Spirax-Sarco, a specialist industrial machinery and Team 17, a video game designer.

Although global media platform Future and ad agency WPP are quite different businesses, they are both exposed to economic cycles, as expenditure on marketing is one of the first areas to be cut in a downturn. Commentary from several large US tech names suggests that media budgets are already being cut and we expect more to follow. As a result, we sold out of both.

We also closed positions in international gambling companies Flutter and Entain. We still think that the US gambling market is an attractive structural growth story. However, these are consumer-exposed companies and they both have significant European operations which may struggle in the current macroeconomic environment.

Asset management is a highly operationally geared business, and we grew increasingly concerned about the downside risk at Impax, as poor performance may lead to outflows. Although we think they are well-placed in the ESG space, we sold our position due to these near term headwinds.

Hilton Food Group processes, packs and distributes meat and fish products to international food retailers. We bought Hilton on the premise that is had many long-dated, cost-plus contracts, which should have given visibility of revenues and protection from inflation. Management commentary in meetings and in shareholder communications supported these beliefs. However, at the time of their H1 results, management announced that they had been unable to pass on rampant cost inflation in some of their contracts, and interest costs had ballooned. This led to a material profit warning and the shares sold off sharply. We sold the stock on the news, together with our exposure to the producer of chicken and pork products, Cranswick, which we expected to experience similar issues.

We sold out of our residual holdings in Vodafone and BT, as price competition in the telecoms industry intensified.

Reluctantly, we sold out of two good companies, BHP and Ferguson, both of which delisted from the main UK stockmarket.

Claverhouse's portfolio was geared throughout the year, but much less so than usual. We use FTSE 100 futures to manage gearing and, to a slightly greater extent than usual, to protect income. At the year-end the Company was 7.2% geared, compared to 8.8% at the end of the previous year, but by the time of writing, this had risen to 8.0%.

Highlighted Company: Ashtead Group

Ashtead is a rental company servicing industrial and construction end markets. We expect Ashtead to continue to benefit from the structural trend of increased rental penetration, and to win market share in what is a highly fragmented industry. Ashtead current market share is only just over 10% and management is hoping to double this over the medium term. The company's scale and technology give it a competitive advantage over small operators, as they have better equipment availability and utilisation rates are better. This has allowed Ashtead to generate returns well ahead of its cost of capital and it has a long runway for reinvestment of that capital - the perfect recipe for the business to keep creating value for shareholders.

Highlighted Company: 3i Group

3i is a private equity investor. It owns companies that operate in four core sectors: Business and Technology Services, Consumer, Healthcare and Industrial Technology. The company targets investments which it believes can double in size over their holding period, and it has an excellent track record of achieving this goal. Its largest portfolio company is Action, a discount retailer, which is rapidly rolling out its stores across Europe. Action has been phenomenally successful, yet its expansion is still in its early stages. While many private equity companies have been doing bigger and more expensive deals, 3i has focused on smaller transactions and bolt-on deals for existing portfolio companies. This acute focus on valuation should enhance returns over the long run. Current CEO, Simon Borrows, took over in 2012 and has consistently grown the value of the portfolio.

Environmental, Social, and Governance ('ESG') factors

Whilst Claverhouse holds stocks based primarily on companies' fundamentals, we also consider the potential impact of ESG factors on a company's ability to deliver shareholder value. We assess each company's strategy for dealing with these important matters and the consequent risks arising from them. Our analysis helps determine whether relevant ESG factors are financially material and, if so, whether they are reflected in the valuation of the company. Such analysis may influence not only our decision to own a stock but also, if we do, the size of that position in the portfolio.

For example, we own several stocks in the mining, energy and tobacco sectors, all of which face significant ESG challenges. Our analysis suggests that the risks posed by these ESG challenges are currently adequately reflected in most of those companies' valuations and do not outweigh the investment attractions of the shares. As owners of these companies, we strive to influence management in their efforts to address these important issues and we hold them accountable for their ESG targets.

We explained our case for holding mining companies in our 2020 annual report. Our view remains that many of the commodities that miners' produce are not only the building blocks of economic growth but are essential to facilitating electrification of the global economy. Hence, while the sector undoubtedly faces many ESG challenges, there are good reasons to believe it has a key role to play in developing a more sustainable future.

Accordingly, we added Glencore to the portfolio in early 2022. Whilst the company has had a chequered past, culminating in fines from several regulators relating to corruption and bribery, it has since undergone a significant transformation, including changes to senior management. We are now observing much improved ESG credentials. At a recent capital markets day, Glencore set itself ambitious climate targets, including reaching net zero emissions from its own activities (Scope 1 and 2 emissions) and emissions generated indirectly by its actions (Scope 3 emissions) by 2050. At the same event, the new CEO, Gary Nagle, committed to strengthening the company's Value and Code of Conduct and firmly embedding its principles in the business. In the years to come we will, of course, closely monitor management's progress in reaching these targets. With a much-improved approach to ESG considerations, the production of metals essential for electrification of the global economy and consequent exceptional cash generation, we now believe Glencore to be an attractive investment.

Company meetings continue to be an important opportunity to engage with our portfolio companies on ESG issues. As an example, we recently engaged with both Lloyds Banking Group and NatWest Group regarding their progress towards realising their climate goals. The meetings provided us with the chance to understand the challenges these two banks face in achieving their net zero targets. Both companies are significant providers of mortgages. Decarbonising the UK housing stock presents one of the greatest challenges for the UK in reducing the country's carbon emissions and will require commitment from multiple stakeholders. Understanding the role that mortgage lenders can play in addressing this challenge was insightful.

Market Outlook

We continue to observe a fragile world characterised by heightened risks. Global growth will be slower in 2023 and some economies, including the UK, may slip into recession. The end of the decade-long era of cheap money will require investors to factor in structurally higher inflation and interest rates than those they have enjoyed for so long. In addition, the UK economy faces several unique challenges (some of them self-inflicted!).

However, despite these negatives, a likely peaking of both inflation and interest rates this year, combined with the long-awaited re-opening of China, and the sheer depth of universal investor pessimism, makes us more optimistic on markets than we have been for some time. We are particularly attracted to large, blue chip FTSE 100 stocks, many of which are genuinely global in their operations, but whose shares continue to trade on significant discounts to their international peers. Indeed, the attractive valuations of many UK stocks could see the UK market continuing to be one of the better performing global markets over the coming year and beyond.

In a lower growth environment, dividend income is likely to comprise a higher proportion of future total returns. Consequently, stocks offering high, predictable income should be re-rated - as, hopefully, will high income Investment Trusts like Claverhouse, which have a long track record of dividend growth. This trend is likely to be supported by investors' increased need for income given the current cost of living crisis.

The dangerous 'get rich quick' era of recent years, which placed crypto currencies, Nasdaq stocks and profitless technology names in the ascendancy, is well and truly over. In this new, more challenged world, investors will need to extend their time horizons and re-learn to appreciate traditional investment virtues such as slow, steady compounding and the certainty of access to their money.

Further tough economic times no doubt lie ahead. But the arrival of a new, more cautious era should play to Claverhouse's strengths - its long-term prudent approach of investing in good value, dividend-paying, quality UK companies - and we are confident that shareholders will be rewarded for their patience.

For and on behalf of the Investment Manager

William Meadon

Callum Abbot

Portfolio Managers 13th March 2023

PRINCIPAL AND EMERGING RISKS

The Board, through delegation to the Audit Committee, has undertaken a robust assessment and review of the principal risks facing the Company, together with a review of any new and emerging risks that may have arisen during the year to 31st December 2022, including those that would threaten its business model, future performance, solvency or liquidity.

With the assistance of the Investment Manager, the Audit Committee has drawn up a risk matrix, which identifies the key risks to the Company, as well as emerging risks. The risk matrix, including emerging risks, are reviewed formally by the Audit Committee every six months or more regularly as appropriate. At each meeting, the Board considers emerging risks which it defines as potential trends, sudden events or changing risks which are characterised by a high degree of uncertainty in terms of occurrence probability and possible effects on the Company. As the impact of emerging risks is understood, they may be entered on the Company's risk matrix and mitigating actions considered as necessary. In assessing the risks and how they can be mitigated, the Board has given particular attention to those risks that might threaten the viability of the Company. These key and emerging risks are listed below, in alphabetical order:

TRANSACTIONS WITH THE MANAGER AND RELATED PARTIES

Details of the management contract are set out in the Directors' Report on page 44 in the full annual report. The management fee payable to the Manager for the year was £2,222,000 (2021: £2,206,000) of which £nil (2021: £nil) was outstanding at the year end.

Included in administration expenses in note 6 on page 76 in the full annual report are safe custody fees amounting to £8,000 (2021: £11,000) payable to JPMorgan Chase Bank N.A. of which £2,000 (2021: £3,000) was outstanding at the year end.

The Manager may carry out some of its dealing transactions through group subsidiaries. These transactions are carried out at arm's length. The commission payable to JPMorgan Securities Limited for the year was £31,000 (2021: £19,000) of which £nil (2021: £nil) was outstanding at the year end.

The Company holds an investment in JPMorgan Smaller Companies Investment Trust plc which is also managed by JPMAM. At the year end this was valued at £13.3 million (2021: £20.4 million) and represented 3.0% (2021: 3.7%) of the Company's investment portfolio. During the year, the Company made £nil (2021: £nil) purchases of this investment and sales with a total value of £811,000 (2021: £8,940,000). Dividend income amounting to £334,000 (2021: £292,000) was receivable during the year, of which £nil (2021: £nil) was outstanding at the year end.

The Company also holds cash in the JPMorgan Sterling Liquidity Fund, which is managed by JPMorgan. At the year end this was valued at £9.4 million (2021: £4.7 million). Interest amounting to £325,000 (2021: £6,000) was receivable during the year, of which £nil (2021: £nil) was outstanding at the year end.

Handling charges on dealing transactions amounting to £8,000 (2021: £6,000) were payable to JPMorgan Chase Bank N.A. during the year of which £1,000 (2021: £2,000) was outstanding at the year end.

At the year end, total cash of £157,000 (2021: £2,188,000) was held with JPMorgan Chase Bank N.A. A net amount of interest of £14,000 (2021: £nil) was receivable by the Company during the year from JPMorgan Chase Bank N.A. of which £nil (2021: £nil) was outstanding at the year end.

Full details of Directors' remuneration and shareholdings can be found on pages 56 to 57 in the full annual report and in note 6 on page 76 in the full annual report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', and applicable law).

Under company law, directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing the financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• state whether applicable United Kingdom Accounting Standards, comprising FRS 102 have been followed, subject to any material departures disclosed and explained in the financial statements;

• make judgements and accounting estimates that are reasonable and prudent; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The Directors are responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006.

The Directors are responsible for the maintenance and integrity of the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

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

The Strategic Report and Directors' Report include 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 the Company faces.

Under applicable law and regulations the Directors are also responsible for preparing a Directors' Report and Directors' Remuneration Report that comply with that law and those regulations.

Each of the directors, whose names and functions are listed on page 43 in the full annual report, confirm that to the best of their knowledge:

• the Company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards, comprising FRS 102, give a true and fair view of the assets, liabilities, financial position and return of the Company; and

• the Strategic Report and Directors' 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 faces.

The Board confirms that it is satisfied that the Annual Report and Financial Statements taken as a whole are fair, balanced and understandable and provide the information necessary for shareholders to assess the performance, business model and strategy of the Company.

For and on behalf of the Board

David Fletcher

Chairman

13th March 2023

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31st December 2022

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.

Net return/(loss) after taxation represents the return/(loss) for the year and also Total Comprehensive Income/(Expense).

STATEMENT OF CHANGES IN EQUITY

For the year ended 31st December 2022

1 This reserve is distributable. The amount that is distributable is not necessarily the full amount as disclosed in these financial statements of £22,940,000 as at 31st December 2022. This reserve may be used to fund distributions to shareholders.

STATEMENT OF FINANCIAL POSITION

At 31st December 2022

STATEMENT OF CASH FLOWS

For the year ended 31st December 2022

Reconciliation of net debt

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31st December 2022

1. Accounting policies

(a) Basis of accounting

The financial statements are prepared under historical cost convention, modified to include fixed asset investments at fair value, and in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting Practice ('UK GAAP'), including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' (the 'SORP') issued by the Association of Investment Companies in July 2022.

All of the Company's operations are of a continuing nature.

The financial statements have been prepared on a going concern basis. In making their assessment, the Directors have reviewed income and expense projections, the liquidly of the investment portfolio and considered the impact of stressed conditions on the portfolio liquidity and income. In addition, the Directors have also considered the measures in place with key service providers, including the Manager, to maintain operational resilience. The disclosures on going concern on page 50 of the Directors' Report form part of these financial statements.

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

2. Dividends

(a) Dividends paid and declared

All dividends paid and declared in the period have been funded from the Revenue Reserve.

The dividend proposed in respect of the year ended 31st December 2021 amounted to £5,646,000. However, the amount paid amounted to £5,665,000 due to new shares issued after the balance sheet date but prior to the record date.

The fourth quarterly dividend has been declared and paid in respect of the year ended 31st December 2022. This dividend will be reflected in the financial statements for the year ending 31st December 2023.

(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, shown below.

The revenue available for distribution by way of dividend for the year is £20,536,000 (2021: £18,102,000). Brought forward revenue reserves amounting to £nil (2021: £nil) have been utilised in order to finance the dividend in respect of the year.

The revenue reserve after payment of the fourth dividend will amount to £16,625,000 (2021: £15,914,000).

3. Return/(loss) per share

4. Net asset value per share

The net asset value per Ordinary share and the net asset value attributable to the Ordinary shares at the year end follow. These were calculated using 60,145,653 (2021: 59,435,653) Ordinary shares in issue at the year end (excluding Treasury shares).

 5. Non-statutory accounts

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2022 but is derived from those accounts. Statutory accounts for the year ended 31 December 2022 will be delivered to the Registrar of Companies in due course. The Auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditors' report can be found in the Company's full Annual Report and Accounts on the Company's website at www.jpmclaverhouse.co.uk.

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

JPMORGAN FUNDS LIMITED

 13 March 2023

For further information, please contact:

Emma Lamb

For and on behalf of

JPMorgan Funds Limited

020 7742 4000

ENDS

A copy of the annual report will shortly be submitted to the Financial Conduct Authority's National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

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

JPMORGAN FUNDS LIMITED