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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Jup Ord. | LSE:JDT | London | Ordinary Share | GB00B0M3FZ66 | ORD INC SHS 8.98274742P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.155 | 0.01 | 0.30 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMJDT
RNS Number : 7394K
Jupiter Dividend & Growth Trust PLC
20 April 2015
Jupiter Dividend & Growth Trust plc ('the Company')
Annual Report & Accounts for the year ended 31 December 2014
This announcement contains regulated information
Financial Highlights
Performance As at As at 31.12.14 31.12.13 % change Total assets less current liabilities (GBP'000) 50,465 49,315 +2.3 FTSE All-Share Index (Capital)* 3,532.74 3,609.63 -2.1 FTSE All-Share Index (Total Return)* 5,449.09 5,385.63 +1.2 Share Performance As at As at 31.12.14 31.12.13 % change Zero Dividend Preference shares Mid market price (p) 111.13 97.50 +14.0 Net Asset Value (p) 123.10 115.04 +7.0 Discount (%) (9.7) (15.2) - Ordinary Income shares Mid market price (p) 4.50 4.75 -5.3 Net Asset Value (p) 1.10 3.38 -67.5 Premium (%) 307.2 40.53 - Total dividends declared and paid during the year (p) 0.72 0.72 +0.0 Total Return (NAV & dividends) (p) 1.82 4.10 -55.6 Common shares Mid market price (p) 111.25 106.50 +4.5 Net Asset Value (p) 124.48 116.07 +7.2 Discount (%) (10.6) (8.2) - Total dividends declared and paid during the year (p) 2.00 2.00 +0.0 Total Return (NAV & dividends) (p) 126.48 118.07 +7.1 Revenue Performance Year to Year to 31.12.14 31.12.13 % change Revenue after taxation due to Ordinary Income shareholders (GBP'000) 748 742 +0.8 Return per Ordinary Income share (p) 0.82 0.81 +1.2 Return per Common share (p) (shown within revenue finance costs) 2.36 2.23 +5.83
* This announcement contains information based on the FTSE All-Share Index. 'FTSE(R)' is a trade mark owned by the London Stock Exchange Plc and is used by FTSE International Limited ('FTSE') under licence. The FTSE All-Share Index is calculated by FTSE. FTSE does not sponsor, endorse or promote the product referred to in this announcement and is not in any way connected to it and does not accept any liability in relation to its issue, operation and trading. All copyright and database rights in the index values and constituent list vest in FTSE.
Strategic Report
Chairman's Statement
Investment Performance
Your Company maintained an investment policy of focusing on large, stable companies in sectors that are benefiting from the resurgence of the UK consumer economy and which have shown the capacity discipline necessary to secure pricing power, grow profits and reward shareholders. This approach helped it to beat its benchmark in 2014.
The total assets less current liabilities of your Company increased by 2.3 per cent. during the year to 31 December 2014. By comparison, the Company's benchmark index, the FTSE All-Share Index, decreased by 2.1 per cent. (in capital terms) during the same period.
The Net Asset Value of the Common shares increased by 7.2 per cent. during the period under review from 116.07p to 124.48p (including income and expenses), while the discount on the Common shares widened from 8.2 per cent. to 10.6 per cent.
The Net Asset Value of the Zero Dividend Preference shares increased by 7.0 per cent. during the period under review from 115.04p to 123.10p*, while the discount on the Zero Dividend Preference shares narrowed from 15.2 per cent. to 9.7 per cent.
Revenue & Dividends
The Company's revenue after tax for the period amounted to GBP748,000. Dividends totalling 0.72p (net) per Ordinary Income share and 2.00p (net) per Common share were paid to the respective shareholders for the year ending 31 December 2014.
For the current year the Directors have declared a fourth interim dividend of 0.18p per Ordinary Income share and 0.50p per Common share. Both dividends will be paid on 20 February 2015 to the shareholders on the register as at 23 January 2015 and these are in accordance with the relative entitlements of the Ordinary Income shares and the Common shares to the distributable profits of the Company under the Company's Articles of Association.
Ordinary Income shares are entitled to share in all of the distributable revenues arising from assets attributable to both the Zero Dividend Preference shares and Ordinary Income shares, whereas the Common shares are entitled only to distributable revenues attributable to the proportion of the Company's total assets that they represent.
Dividends on the Ordinary Income and Common shares are paid in Sterling, quarterly in arrears. From time to time, subject to the requirements of the Corporation Tax Act 2010 the Directors may retain income in the revenue reserves of the Company with a view to producing a consistent level of dividend for Ordinary Income and Common shareholders in subsequent accounting periods.
Annual General Meeting
The Company's Annual General Meeting ('AGM') will be held on Wednesday, 10 June 2015 at the offices of Jupiter Asset Management Limited, 1 Grosvenor Place, London SW1X 7JJ. In addition to the formal business, the Investment Adviser will provide a short presentation to shareholders on the performance of the Company over the past year as well as an outlook for the future. The Board would welcome your attendance at the AGM as it provides shareholders with an opportunity to ask questions of the Board and Investment Adviser.
Outlook
Advanced economies remain hampered by heavy debt burdens, a lack of company investment and wage growth. The global economy is healing but it remains unbalanced and growth prospects for 2015 are being revised down. Although the collapse in the oil price should be highly beneficial to consumers and much of the corporate sector, it has continued to fuel fears of deflation and push down government bond yields. But, for the moment, your fund manager remains confident that prospects for the UK are set fair and should continue to be so for the next 12-18 months. Your Company's equity positions are in companies which are well positioned for further growth and which are believed to have the potential to deliver consistent performance and rising dividends.
Martin Boase
Chairman
20 April 2015
* The notional accrued entitlement of the Zero Dividend Preference shares at 31 December 2014 was 123.10p.
Investment Adviser's Review
Review
The period under review started with optimism around economic growth but overall was characterised by a period of risk aversion and nervousness over the strength of the global economy. Worries over a potential rise in interest rates in the UK, concerns over economic growth and geo-political worries (Syria, Russia/Ukraine) were some of the main causes cited. Towards the end of the year sharp falls in oil and commodity prices in general caused significant share price reductions in commodity related areas. The FTSE All-Share Index and the FTSE 350 Index both returned 1.2 per cent. while smaller companies (excluding investment companies) returned -2.7 per cent. having risen very sharply over the past two years. The total assets of your Company rose by 2.3 per cent.
At first, financial markets continued to dance to the tunes of the world's major central banks. In the US, the end of an extraordinary period of stimulatory monetary policy came into view whereas, in the UK, the success of the government's mortgage guarantee scheme fuelled anticipation for an increase in interest rates. In contrast, the European Central Bank moved as slowly as it dared towards zero interest rates and hence the endgame of politically contentious quantitative easing. In Japan, the central bank's remit was to create inflation.
However, as time progressed, central banks looked increasingly as if they might be hoist by their own petard. Perhaps more than at any time in the past, the financial market tail appeared to be wagging the economic dog. Thus, having pumped up financial asset prices, central banks seemed to find themselves having to take ever greater account of financial market conditions when evaluating monetary policy. Against such a background the domestic UK economy - to which your Company retains a strong focus - remained one of the few bright spots.
2014 was a year of heightened merger and acquisition activity, notably in the pharmaceutical sector. Your Company enjoyed the benefit of interest in AstraZeneca after Pfizer's approach highlighted the inherent value in the sector, as did an asset swap between GlaxoSmithKline and Novartis. Our holding in Sinclair Pharma gained after taking steps to release the value in its drugs portfolio. We took profits and sold Shire (speciality biopharmaceuticals) after its shares soared following a bid from a US company which aimed to use Shire to adopt a controversial, tax-advantageous UK address. The bid was later withdrawn. We took profits in pub operator Spirit Group following a bid by Greene King. Our holding in Friends Life also benefited from a bid from Aviva.
In 2014 we actively reshaped the portfolio. We opened new positions in ITV (economic recovery should boost advertising spend), Ryanair (cost control, better yields) and Playtech (key B2B partner for online gambling operators). Other new holdings included Barclays, retailer Next and tobacco groups British American Tobacco and Imperial Tobacco.
Our decision to avoid mining stocks proved correct; the price of iron ore plummeted during the period as demand from China waned. We favoured insurance companies (e.g. Brit, Prudential and Legal & General), over banks because they already offered attractive, rising dividends and operate under a less repressive regulatory regime. That said, in the latter part of the year, we took a position in Barclays which as one of the cheapest banks in Europe we considered to be a special situation value play. Its new chairman comes from Aviva where he has demonstrated his ability to turn around the company. Barclays has passed its stress tests and has the potential to substantially improve its dividends.
Capacity discipline, which then creates pricing power, is one of our major investment themes which should serve investors well in a low growth environment. We have positions in airlines (Ryanair and International Airlines Group), motor underwriters (esure), housebuilders (Crest Nicholson and Galliford Try) and packaging company Mondi. All these companies have shown disciplined use of their capital and in common with ITV (media) and Friends Life (insurance) have increased returns to shareholders in the absence of better alternative investment opportunities.
In the first half of the year we cut holdings in Halma and Spirax-Sarco. Both had significant international exposure and we were concerned about the speed at which sterling had strengthened against the dollar. We also reduced positions in BBA Aviation and Babcock International. In the latter half of the year we sold Lancashire Holdings, Mitie and most of Tate & Lyle. We added to holdings in Brit, Conviviality Retail, esure, GKN, KCOM, Playtech, Ryanair and Vodafone. Following the sharp fall in the oil price towards the year end we reduced our exposure to the sector by trimming positions in BP and IMI. We also trimmed back positions in AstraZeneca, BT, Cineworld, Micro Focus International and Sinclair IS Pharma.
Outlook
The sharp drop in the oil price alongside politically-inspired reductions in future household energy bills, lower food prices and a smidgeon of real wage growth all sit comfortably alongside the unacknowledged pre-election boom carefully engineered by the Chancellor. As such, we can expect a consumer-dominated economy to continue to tick along well enough for now, albeit against headwinds which include slower growth in the eurozone and Asia. Manufacturing exporters look particularly sensitive to the latter. Nevertheless, our equity holdings in airlines, housebuilders, consumer stocks and specialty financials have continued to benefit from a broadly benign domestic environment.
In an ideal world, further investment and rising exports could take up the baton of the Chancellor's domestically-generated growth which successfully kick-started the economy in 2013. But, for the time being, we think shorter term momentum in the UK economy versus its developed nation peers looks set to continue. Furthermore, the low cost of borrowing for corporations and their serial underinvestment makes us think that M&A activity could be a big feature of 2015 which should provide some additional support.
Quantitative easing has succeeded in pushing up the prices of numerous asset classes. Central bank determination to suppress bond yields suggests to us that the total return from investment grade bonds is therefore likely to be limited. In a world where many government bond yields are close to zero or have turned negative, it seems to us that the search for yield is likely to continue, if not to intensify. Fortunately, we are able to identify companies with good individual growth prospects which have the ability to pay attractive and rising dividends. As such, your Company remains fully invested.
Alastair Gunn
Fund Manager
Jupiter Asset Management Limited*
20 April 2015
*Appointed as Investment Manager to the Company until 21 July 2014. Subsequently appointed as Investment Adviser to JUTM, who were appointed as AIFM to the Company on 22 July 2014.
Investment Portfolio
Market value Percentage Company Sector GBP'000 of Portfolio AstraZeneca Health Care 2,478 5.1 Royal Dutch Shell 'B' Oil & Gas 2,477 5.1 GlaxoSmithKline Health Care 2,367 4.8 WPP Consumer Services 1,900 3.9 Vodafone Group Telecommunications 1,893 3.9 BP Oil & Gas 1,848 3.8 BT Group Telecommunications 1,807 3.7 Plus500 Financials 1,783 3.6 Cineworld Group Consumer Services 1,660 3.4 HSBC Holdings Financials 1,615 3.3 Imperial Tobacco Group Consumer Goods 1,418 2.9 Friends Life Group Financials 1,410 2.9 Galliford Try Industrials 1,222 2.5 Crest Nicholson Consumer Goods 1,204 2.5 Mondi Basic Materials 1,050 2.1 Playtech Consumer Services 1,029 2.1 Barclays Financials 974 2.0 ITV Consumer Services 968 2.0 International Airlines Group Consumer Services 960 2.0 esure Group Financials 919 1.9 Ryanair Holdings Consumer Services 911 1.9 Sinclair IS Pharma Health Care 910 1.9 British American Tobacco Consumer Goods 875 1.8 ISG Industrials 822 1.7 Babcock International Group Industrials 794 1.6 Verizon Communications Telecommunications 784 1.6 CRH Industrials 772 1.6 GKN Consumer Goods 757 1.5 IMI Industrials 756 1.5 William Hill Consumer Services 753 1.5 Prudential Financials 746 1.5 Micro Focus International Technology 716 1.5 Greencore Group Consumer Goods 715 1.5 KCOM Group Telecommunications 710 1.4 Melrose Industries Industrials 696 1.4 Legal & General Group Financials 684 1.4 Next Consumer Services 680 1.4 Brit Financials 676 1.4 Amec Foster Wheeler Oil & Gas 576 1.2 Centrica Utilities 558 1.1 Brown (N.) Group Consumer Services 516 1.0 Tullett Prebon Financials 426 0.9 Aga Rangemaster Group Consumer Goods 425 0.9 Tate & Lyle Consumer Goods 421 0.8 BBA Aviation Industrials 360 0.7 Conviviality Retail Consumer Services 348 0.7 Ricardo Industrials 281 0.6 Balfour Beatty Industrials 264 0.5 --------------------------- --------------------- ------------- ------------- Total Investments 48,914 100.0 -------------------------------------------------- ------------- -------------
Cross Holdings in other Investment Companies
It is the Company's policy to invest no more than 10 per cent., in aggregate, of the value of the Total Assets of the Company in other listed closed-ended investment funds or closed-ended investment funds other than those which themselves have published investment policies to invest no more than 15 per cent. of their total assets in other closed-ended investment funds. As at 31 December 2014, none of the Company's assets were invested in listed closed-ended investment funds.
Sector Analysis of Investments
Overseas UK 2013 2014 Percentage Percentage % % Equities of Portfolio of Portfolio 12.2 10.1 Oil & Gas 10.4 8.9 Oil & Gas Producers 8.9 Oil Equipment, Services and 1.8 1.2 Distribution 1.2 2.0 2.1 Basic Materials 2.0 2.1 Forestry & Paper 2.1 24.9 12.1 Industrials 3.2 4.6 Construction Materials 1.6 3.0 1.1 - Electronics & Electrical Equipment - 7.2 2.9 Industrial Engineering 2.9 10.1 3.9 Support Services 3.9 3.3 0.7 Industrial Transportation 0.7 7.8 11.9 Consumer Goods - 1.5 Automobiles & Parts 1.5 5.0 2.3 Food Producers 1.5 0.8 2.8 3.4 Household Goods 3.4 - 4.7 Tobacco 4.7 13.1 11.8 Health Care 13.1 11.8 Pharmaceuticals & Biotechnology 11.8 15.5 19.9 Consumer Services 0.7 0.7 Food & Drug Retailers 0.7 3.5 5.9 Media 5.9 3.4 2.4 General Retailers 2.4 7.9 10.9 Travel & Leisure 3.9 7.0 11.0 10.6 Telecommunications 6.4 3.9 Mobile Telecommunications 3.9 4.6 6.7 Fixed Line Telecommunications 1.6 5.1 1.4 1.1 Utilities 1.4 1.1 Gas, Water & Multiutilities 1.1 10.1 14.4 Financials 4.5 5.3 Banks 5.3 3.2 5.8 Life Insurance 5.8 2.4 3.3 Nonlife Insurance 3.3 1.9 4.5 Financial Services 1.9 4.5 General Financial 3.6 0.9 0.1 1.5 Technology 0.1 1.5 Software & Computer Services 1.5 100.0 100.0 Total Equities 12.2 87.8 ----- ----- -------------------------------------- ------------ ------------
Strategic Review
The Strategic Report has been prepared in accordance with the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013.
The Strategic Report seeks to provide shareholders with the relevant information to enable them to assess the performance of the Directors of the Company during the period under review.
Business and Status
During the year the Company carried on business as an investment trust with its principal activity being portfolio investment. The Company has been approved by HM Revenue & Customs as an investment trust subject to the Company continuing to meet the eligibility conditions of sections 1158 and 1159 of the Corporation Taxes Act 2010 and the ongoing requirements for approved companies as detailed in Chapter 3 of Part 2 of the Investment Trust (Approved Company) (Tax) Regulations 2011. In the opinion of the Directors, the Company has conducted its affairs in the appropriate manner to retain its status as an investment trust.
The Company is an investment company within the meaning of section 833 of the Companies Act 2006.
The Company is not a close company within the meaning of the provisions of the Corporation Tax Act 2010 and has no employees.
The Company was incorporated in England & Wales on 28 September 1999 and started trading on 30 November 1999, immediately following the Company's launch.
Reviews of the Company's activities are included in the Chairman's Statement and Investment Adviser's Review.
There has been no significant change in the activities of the Company during the year to 31 December 2014 and the Directors anticipate that the Company will continue to operate in the same manner during the current financial year.
Planned life of the Company
The life of the Company was extended in January 2009 from 30 November 2010 to 30 November 2017. On 30 November 2017 the directors are required to convene an Extraordinary General Meeting and propose a resolution requiring the Company to be wound up voluntarily unless the directors have previously been released from the obligation by the Company's shareholders.
The limited life of the Company is designed to ensure that all shareholders can realise the underlying Net Asset Value of their shares (after liquidation costs), irrespective of their market price on the winding-up date.
Investment Objective
The objective of the Company is to provide Ordinary Income and Common shareholders with a high and rising income together with the possibility of capital appreciation and to provide Zero Dividend Preference and Common shareholders with a predetermined level of capital growth.
Strategy
The Investment Adviser is not currently limited in the asset allocation between sectors, geographic regions or the types of equities and equity elated securities in which the Company may invest, but will consider each potential investment on its own merits. The Investment Adviser will focus on the sectors that it considers to be the most undervalued areas of the market from time to time and the allocation of assets between different sectors will be determined by the Investment Adviser in its absolute discretion.
The Company concentrates on generating capital growth and income rather than adhering closely to the Benchmark or any other indices. It focuses on investing in companies where, in the opinion of the Investment Adviser, valuations are low and growth in earnings or assets is not fully appreciated. The Investment Adviser seeks to identify companies within growth industries which enjoy certain key characteristics, including an imaginative, proven and incentivised management team and balance sheet strength. The portfolio also concentrates on situations which can be easily analysed and understood. The Investment Adviser intends to exercise caution with respect to purchase prices and a strong sell discipline is maintained where target valuations are exceeded.
The Board has not set an objective of a specific portfolio yield for the Investment Adviser as the level of such yield is expected to vary with the sectors and geographical regions to which the Company's portfolio is exposed at any given time. However, substantially all distributable revenues that are generated from the Company's investment portfolio will be paid out in the form of quarterly dividends.
Business Model & Investment Policy
The investment policy of the Company is to invest mainly in a portfolio of UK listed equities, UK equity-related securities (such as convertible securities, preference shares, convertible unsecured loan stock, warrants and other similar securities) and UK fixed interest securities.
The Company may invest in unlisted securities (up to a maximum of 5 per cent. of Total Assets) and derivatives but it is not the Investment Adviser's present intention to do so (save, in respect of derivatives for the purposes of efficient portfolio management).
It is the Company's policy to invest no more than 10 per cent., in aggregate, of the value of the Total Assets of the Company in other listed closed-ended investment funds or closed-ended investment funds other than those which themselves have published investment policies to invest no more than 15 per cent. of their total assets in other closed-ended investment funds. As at 31 December 2014, none of the Company's assets were invested in listed closed-ended investment funds.
Benchmark Index
The Company's benchmark index is the FTSE All-Share Index.
Capital Structure
Zero Dividend Preference Shares
The Zero Dividend Preference shares are designed to provide a pre-determined capital entitlement of 150p on 30 November 2017 which ranks alongside the Common shares, behind the Company's creditors (if any), but in priority to the capital entitlements of the Ordinary Income shares. The Zero Dividend Preference shares are not entitled to income and their entire return will take the form of capital.
The Zero Dividend Preference shares entitle their holders to vote at all general meetings of the Company. In addition, they carry the right to vote as a class on certain proposals which would be likely to materially affect their position.
Ordinary Income Shares
The Ordinary Income shares are designed to provide holders with income and the possibility of capital growth alongside the Common shares in the Ordinary Income Share Proportion*.
Ordinary Income shareholders are entitled to share alongside the Common shares in the Company's surplus assets in the Ordinary Income share proportion after satisfying the pre-determined entitlements of the Zero Dividend Preference shares, the Common shares and the Company's creditors (if any) on the planned winding-up date of 30 November 2017. Any such surplus will be shared with the holders of Common Shares in the Ordinary Income Share Proportion*.
The Ordinary Income shares are geared by the Zero Dividend Preference shares and Common shares both in terms of income, where the Zero Dividend Preference shares have no entitlement and the Common shares which have the entitlement in the Common Share Proportion**, and capital, where the Zero Dividend Preference shares and Common shares have a fixed entitlement.
The Ordinary Income shares entitle their holders to vote at all general meetings of the Company. In addition, they carry the right to vote as a class on certain proposals which would be likely to materially affect their position.
Common Shares
The Common shares are designed to provide a pre-determined capital entitlement of 150p on 30 November 2017, which ranks alongside the Zero Dividend Preference shares, behind the Company's creditors (if any), but in priority to the capital entitlements of the Ordinary Income shares.
Common shares are also entitled to share in the Company's surplus assets, after satisfying the pre-determined entitlements of the Zero Dividend Preference shares and Common shares, (referred to above) and the Company's creditors (if any) on the planned wind-up date of 30 November 2017. Any such surplus will be shared alongside the holders of Ordinary Income shares in the Common Share Proportion**.
Common shareholders have the right to vote at general meetings of the Company. In addition they carry the right to vote as a class in certain circumstances. The Common shares are designed to provide holders with income, alongside the Ordinary Income shares in the Common Share Proportion**.
Dividend Policy
Dividends on the Ordinary Income Shares and the Common Shares will be paid quarterly in arrears. From time to time, subject to the requirements of the Corporation Tax Act 2010, the Directors may retain income in the revenue reserves of the Company with a view to producing a consistent level of dividends for Ordinary Income Shareholders and Common Shareholders in subsequent accounting periods.
Management
The Company has no employees and most of its day-to-day responsibilities are delegated to Jupiter Asset Management Limited, who act as the Company's Investment Adviser and Company Secretary.
* Ordinary Income Share Proportion - the proportion of dividend and capital distributions to which Ordinary Income shares are entitled to share pari passu with the Common shares, calculated as at 30 November 2010 as 80.41 per cent.
** Common Share Proportion - the proportion of dividends and capital distributions to which the Common shares are entitled to share pari passu with Ordinary Income shares, calculated as at 30 November 2010 as 19.59 per cent.
Key Performance Indicators
At the quarterly board meetings the Directors consider a number of performance indicators to help assess the Company's success in achieving its objectives. The key performance indicators used to measure the performance of the Company over time are as follows:
-- Net Asset Value changes and the premium or discount of share price to Net Asset Value over time;
-- Ordinary Income, Zero Dividend Preference and Common share price movement;
-- Zero Dividend Preference and Common share cover and Ordinary Income and Common share yield and dividend rates; and
-- Peer group comparative performance.
A history of the Net Asset Value, Ordinary Income, Zero Dividend Preference and Common share price and Benchmark Index are shown in the monthly factsheets which can be viewed on the Company's section of the Investment Adviser's website www.jupiteram.com/JDT and which are available on request from the Company Secretary.
Gearing
Gearing is defined as the ratio of a company's total assets to its net assets, expressed as a percentage. The effect of gearing is that in rising markets a geared share class tends to benefit from any out-performance of the relevant company's investment portfolio above the cost of payment of the prior ranking entitlements of any lenders and other creditors. Conversely, in falling markets the value of the geared shares class suffers more if the Company's investment portfolio under-performs the cost of those prior entitlements.
The Company is geared by its Zero Dividend Preference and Common shares. As at 31 December 2014, the gearing was 98.0 per cent. (31 December 2013: 93.7 per cent.).
Risks and Uncertainties
The principal risk factors that may affect the Company and its business can be divided into the following areas:
Investment Strategy and Share Price Movement - The Company is exposed to the effect of variations in the price of its investments. A fall in the value of its portfolio will have an adverse effect on shareholders' funds. It is not the aim of the Board to eliminate entirely the risk of capital loss, rather it is its aim to seek capital growth. The Board reviews the Company's investment strategy and the risk of adverse share price movements at its quarterly board meetings taking into account the economic climate, market conditions and other factors that may have an effect on the sectors in which the Company invests.
Liquidity Risk - This risk can be viewed as the liquidity of the securities in which the Company invests and the liquidity of the Company's shares. The Company may invest in securities that have a very limited market which will affect the ability of the Company's Investment Adviser to dispose of securities when he no longer feels they offer the potential for future returns. Likewise the Company's shares may experience liquidity problems when shareholders are unable to realise their investment in the Company because there is a lack of demand for the Company's shares. At its quarterly meetings the Board considers the current liquidity in the Company's investments when setting restrictions on the Company's exposure. The Board also reviews, on a quarterly basis, the Company's buy back programme and in doing so is mindful of the liquidity in the Company's shares.
Gearing Risk - The Company's gearing (which includes the Company's Zero Dividend Preference and Common shares) can impact the Company's performance by accelerating the decline in value of the Company's Total Assets at a time when the Company's portfolio is declining. Conversely gearing can have the effect of accelerating the increase in the value of the Company's Total Assets at a time when the Company's portfolio is rising. At its quarterly meetings the Board is mindful of the outlook for equity markets when reviewing the Company's gearing.
Discount to Net Asset Value - A discount in the price at which the Company's shares trade to Net Asset Value would mean that shareholders would be unable to realise the true underlying value of their investment. The Directors have powers granted to them at the last Annual General Meeting to purchase Geared Ordinary shares and Zero Dividend Preference shares as a method of controlling the discount to Net Asset Value and enhancing shareholder value.
Regulatory Risk - The Company operates in a complex regulatory environment and faces a number of regulatory risks. A breach of section 1158 of the Corporation Tax Act 2010 could result in the Company being subject to capital gains on portfolio movements. Breaches of other regulations, such as the UKLA Listing Rules, could lead to a number of detrimental outcomes and reputational damage. Breaches of controls by service providers such as the Investment Adviser could also lead to reputational damage or loss. The Board relies on the services of its Company Secretary, Jupiter Asset Management Limited, and its professional advisers to ensure compliance with, amongst other regulations, the Companies Act 2006, the UKLA Listing Rules and the Alternative Investment Fund Managers Directive.
Credit and Counterparty Risk - The failure of the counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss.
Loss of Key Personnel - The day-to-day management of the Company has been delegated to the Investment Adviser. Loss of the Investment Adviser's key staff members could affect investment return. The Board is aware that Jupiter Asset Management Limited recognises the importance of its employees to the success of its business. Its remuneration policy is designed to be market competitive in order to motivate and retain staff and succession planning is regularly reviewed. The Board also believes that suitable alternative experienced personnel could be employed to manage the Company's portfolio in the event of an emergency.
Operational - Failure of the Investment Adviser's core accounting systems, or a disastrous disruption to its business, could lead to an inability to provide accurate reporting and monitoring. The Investment Adviser is contractually obliged to ensure that its conduct of business conforms to applicable laws and regulations. Details of how the Board monitors the services provided by Jupiter Asset Management Limited and its associates are included within the Internal Control section of the Report of the Directors.
Financial - inadequate financial controls could result in misappropriation of assets, loss of income and debtor receipts and inaccurate reporting of Net Asset Value per share. The Board annually reviews the Investment Adviser's and the Administrator's statements on its internal controls and procedures.
Social and Environmental Matters
The Investment Adviser considers various factors when evaluating potential investments. While an investee company's policy towards the environment and social responsibility, including with regard to human rights, is considered as part of the overall assessment of risk and suitability for the portfolio, the Investment Adviser does not necessarily decide to, or not to, make an investment on environmental and social grounds alone.
All of the Company's activities are outsourced to third parties. As such it does not have any physical assets, property, employees or operations of its own and does not generate any greenhouse gas or other emissions.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from its operations as its day-to-day management and administration functions have been outsourced to third parties and it neither owns physical assets, property nor has employees of its own. It therefore does not have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report on Directors' Reports) Regulations 2013.
Board Diversity
It is seen as a prerequisite that each member of the Board must have the skills, experience and character that will enable each Director to contribute individually, and as part of the Board team, to the effectiveness of the Board and the success of the Company. Subject to that overriding principle, diversity of experience and approach, including gender diversity, amongst Board members is of great value, and it is the Board's policy to give careful consideration to issues of overall Board balance and diversity in appointing new directors.
The Board currently comprises of four male directors.
For and on behalf of the Board
Martin Boase
Chairman
20 April 2015
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and Accounts in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws).
Under Company law the 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 and loss of the Company for that period. In preparing those financial statements, the Directors are required to:
(a) select suitable accounting policies and then apply them consistently;
(b) make judgments and estimates that are reasonable and prudent;
(c) state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
(d) 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 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 comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Statement of Corporate Governance that comply with that law and those regulations.
The financial statements are published on www.jupiteram.com/JDT which is a website maintained by Jupiter.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. The work carried out by the auditor does not include consideration of the maintenance and integrity of the website and accordingly the auditor accepts no responsibility for any changes that have occurred to the financial statements when they are presented on the website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Each of the Directors, confirm to the best of their knowledge that:
(a) the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
(b) the Strategic Report and Report of the Directors include a fair review of the development and performance of the Company, together with a description of the principal risks and uncertainties that the Company faces; and
(c) that in the opinion of the Board, the Annual Report and Accounts taken as a whole, is fair, balanced and understandable and it provides the information necessary to assess the Company's performance, business model and strategy.
So far as each Director is aware at the time the report is approved:
(a) There is no relevant audit information of which the company's auditors are unaware; and
(b) The Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.
By Order of the Board
Martin Boase
Chairman
20 April 2015
Income Statement
31 December 2014 31 December 2013 Revenue Capital Revenue Capital Return Return Total Return Return Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Gains from investments held at fair value through profit or loss - 1,049 1,049 - 11,096 11,096 Foreign exchange gain - 23 23 - - - Income 1,766 - 1,766 1,646 - 1,646 Gross return 1,766 1,072 2,838 1,646 11,096 12,742 Investment management fee (371) - (371) (336) - (336) Other expenses (427) (10) (437) (388) - (388) Net return on ordinary activities before finance costs and taxation 968 1,062 2,030 922 11,096 12,018 Finance costs (190) (3,238) (3,428) (180) (8,166) (8,346) Net return on ordinary activities before taxation 778 (2,176) (1,398) 742 2,930 3,672 Tax on ordinary activities (30) - (30) - - - ---------------------------- -------- -------- -------- -------- -------- -------- Net return on ordinary activities after tax 778 (2,176) (1,428) 742 2,930 3,672 ---------------------------- -------- -------- -------- -------- -------- -------- Net return per Ordinary Income share 0.82p (2.37)p (1.55)p 0.81p 3.20p 4.01p ---------------------------- -------- -------- -------- -------- -------- -------- Net return per Common share 2.36p 8.06p 10.42p 2.23p 20.80p 23.03p ---------------------------- -------- -------- -------- -------- -------- --------
The total column of this statement is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year.
A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above statement.
Balance Sheet
2014 2013 GBP'000 GBP'000 Fixed Assets Investments held at fair value through profit or loss 48,914 47,798 Current assets Debtors 148 205 Cash at bank 1,757 1,588 1,905 1,793 Creditors: amounts falling due within one year (354) (276) Net current assets 1,551 1,517 Total assets less current liabilities 50,465 49,315 Creditors: amounts falling due after more than one year Zero Dividend Preference shares and Common shares (49,452) (46,214) -------------------------------------------- --------- --------- Total net assets 1,013 3,101 -------------------------------------------- --------- --------- Capital and reserves Called up share capital 8,235 8,235 Share premium 21,864 21,864 Special reserve 62,062 62,062 Capital reserve (91,572) (89,396) Revenue reserve 424 336 -------------------------------------------- --------- --------- Total shareholders' funds 1,013 3,101 -------------------------------------------- --------- --------- Net Asset Value per Ordinary Income share 1.10p 3.38p -------------------------------------------- --------- ---------
Approved by the Board of Directors and authorised for issue on 20 April 2015 and signed on its behalf by:
Martin Boase
Chairman
Company Registration Number 3852295
Reconciliation of Movements in Shareholders' Funds
Share Share Special Capital Revenue For the year ended Capital Premium Reserve Reserve Reserve Total 31 December 2014 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Balance at 1 January 2014 8,235 21,864 62,062 (89,396) 336 3,101 Net return for the year - - - (2,176) 748 (1,428) Equity dividends paid and declared - - - - (660) (660) ------------------------ -------- -------- -------- --------- -------- -------- Balance at 31 December 2014 8,235 21,864 62,062 (91,572) 424 1,013 ------------------------ -------- -------- -------- --------- -------- -------- Share Share Special Capital Revenue For the year ended Capital Premium Reserve Reserve Reserve Total 31 December 2013 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Balance at 1 January 2013 8,235 21,864 62,062 (92,161) 254 254 Repurchase of Zero Dividend preference shares - - - (165) - (165) Net return for the year - - - 2,930 742 3,672 Equity dividends paid and declared - - - - (660) (660) ------------------------ -------- -------- -------- --------- -------- -------- Balance at 31 December 2013 8,235 21,864 62,062 (89,396) 336 3,101 ------------------------ -------- -------- -------- --------- -------- --------
Cash Flow Statement
2014 2013 GBP'000 GBP'000 Operating activities Net cash inflow from operating activities 1,083 956 Net tax paid (26) - ---------------------------------------- --------- --------- 1,057 956 ---------------------------------------- --------- --------- Net cash flows from investing activities Purchases of investments (17,235) (13,067) Sale of investments 17,168 12,656 Net cash outflow from investing activities (67) (411) Equity dividends paid (660) (660) Finance costs on Common shares (161) (180) ---------------------------------------- --------- --------- Net cash flow before financing 169 (295) ---------------------------------------- --------- --------- Repurchase of Zero Dividend Preference shares - (165) ---------------------------------------- --------- --------- Net cash inflow/(outflow) 169 (460) ---------------------------------------- --------- ---------
Notes to the Accounts
1. Accounting policies
A summary of the principal accounting policies all of which have been applied consistently throughout the year are set out below.
(a) Basis of Preparation
The Financial Statements for the year ended 31 December 2014 have been prepared in accordance with UK Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice ('SORP') for Investment Trust Companies and Venture Capital Trusts issued by the Association of Investment Companies ('AIC') in January 2009 and replaced in November 2014. The Company continues to adopt the going concern basis in the preparation of the financial statements.
(b) Revenue
Dividends on investments are included in revenue when the investment is quoted ex-dividend. UK dividends are shown net of tax credits. Interest on deposits is accounted for on an accruals basis. The fixed return on a debt security is recognised on a time apportionment basis so as to reflect the effective yield on the debt security. Where the Company has elected to receive its dividends in the form of additional shares rather than in cash, the amount of the cash dividend is recognised as income. Any excess in the value of the shares received over the amount of the cash dividend is recognised in capital reserves.
(c) Expenses
Expenses are accounted for on an accruals basis. Management fees, administration and other expenses are charged fully to the revenue column of the income statement. That part of any Investment performance fee which is deemed by the Directors to relate to the capital outperformance of the Company's investments will be charged to capital and that part relating to revenue outperformance will be charged to revenue. Expenses which are incidental to the purchase or sale of an investment are charged to capital.
(d) Finance costs
Finance costs are accounted for on an accruals basis in accordance with the effective interest rate. Common share revenue return is charged in full to the revenue column of the Income Statement.
In accordance with the provisions of Financial Reporting Standard 25 'Financial Instruments' the Zero Dividend Preference shares and Common shares are classified as liabilities in the accounts and held at amortised cost and finance costs of Zero Dividend Preference shares and Common shares are charged to the capital column of the Income Statement.
(e) Taxation
Withholding tax deducted at source from income received is treated as part of the taxation charge in the income account, in instances where it cannot be recovered. Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more, or right to pay less, tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences between the Company's taxable profits and its results as stated in the financial statements which are capable of reversal in one or more subsequent periods.
(f) Foreign Currency
Assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the balance sheet date.
Foreign currency transactions are translated at the rates of exchange applicable at the transaction date.
Foreign currency differences are dealt with in the capital reserve.
(g) Capital Reserve
The following are accounted for in this reserve:
-- gains and losses on the realisation of investments -- changes in fair value of investments held at the year end -- performance fee relating to capital outperformance -- finance costs of ZDP and Common shares -- transaction costs and reconstruction costs -- foreign currency difference
The capital reserve is not available for the payment of dividends.
(h) Special reserve
This reserve is used to finance the Company's share buy back facility.
(i) Investments
Investments are recognised and derecognised on the trade date where a purchase and sale of an investment is under contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at cost, being the consideration given.
All investments are classified as fair value through profit or loss and subsequently measured at fair value. Changes in the fair value of investments listed at fair value through profit or loss and gains and losses on disposal are recognised in the income statement as 'Gains on investments at fair value through profit or loss'. The fair value of listed investments is based on their quoted bid market price at the balance sheet date without any deduction for estimated future selling costs.
Foreign exchange gains and losses on fair value through profit and loss investments are included within the changes in the fair value of the investment.
2. Income
2014 2013 GBP'000 GBP'000 Income from investments UK dividend income (net) 1,481 1,506 Dividends from overseas companies 280 122 -------------------------- -------- -------- 1,761 1,628 -------------------------- -------- -------- Other income Deposit interest - 4 Underwriting commission 5 14 -------------------------- -------- -------- 5 18 -------------------------- -------- -------- Total income 1,766 1,646 -------------------------- -------- -------- Total income comprises Dividends 1,761 1,628 Interest - 4 Other income 5 14 -------------------------- -------- -------- 1,766 1,646 -------------------------- -------- -------- Income from investments Listed in the UK 1,481 1,506 Listed overseas 280 122 -------------------------- -------- -------- 1,761 1,628 -------------------------- -------- --------
3. Return per share
2014 2013 Return per Ordinary Income share Net revenue return applicable to Ordinary Income shares (GBP'000) 748 742 Net capital return (GBP'000) (2,176) 2,930 ------------------------------------------------ ----------- ----------- Net total return (GBP'000) (1,428) 3,672 ------------------------------------------------ ----------- ----------- Number of Ordinary Income shares in issue during the year 91,675,333 91,675,333 Net revenue return per Ordinary Income share 0.82p 0.81p Net capital return per Ordinary Income share (2.37)p 3.20p ------------------------------------------------ ----------- ----------- Net return per Ordinary Income share (1.55)p 4.01p ------------------------------------------------ ----------- ----------- Return per Common share Net revenue return applicable to Common shares (GBP'000) 190 180 Capital growth entitlement (GBP'000) 649 1,675 ------------------------------------------------ ----------- ----------- Net total return (GBP'000) 839 1,855 ------------------------------------------------ ----------- ----------- Number of Common shares in issue during the year 8,054,045 8,054,045 Net revenue return per Common share 2.36p 2.23p Net capital return per Common share 8.06p 20.80p ------------------------------------------------ ----------- ----------- Net total return per Common share 10.42p 23.03p ------------------------------------------------ ----------- ----------- Return per Zero Dividend Preference share Capital growth entitlement (GBP'000) 2,589 6,491 Number of Zero Dividend Preference shares in issue during the year 32,119,031 32,119,031 ------------------------------------------------ ----------- ----------- Net return per Zero Dividend Preference share 8.06p 20.21p ------------------------------------------------ ----------- -----------
4. Net Asset Value
The Net Asset Value per Ordinary Income and Common share as at 31 December 2014, calculated in accordance with the Articles of Association, was as follows:
2014 2013 Net Net Asset Value Asset Value per share Net assets per share Net assets attributable attributable attributable attributable pence GBP'000 pence GBP'000 Ordinary Income shares 1.10 1,013 3.38 3,101 -------------------- ------------- ------------- ------------- ------------- 2014 2013 Net Net Asset Value Asset Value per share Net assets per share Net assets attributable attributable attributable attributable pence GBP'000 pence GBP'000 -------------------- ------------- ------------- ------------- ------------- Common shares 124.48 10,025 116.07 9,348 -------------------- ------------- ------------- ------------- ------------- 2014 2013 Net Net Asset Value Asset Value per share Net assets per share Net assets attributable attributable attributable attributable pence GBP'000 pence GBP'000 -------------------- ------------- ------------- ------------- ------------- Zero Dividend Preference shares 123.10 39,538 115.04 36,949 -------------------- ------------- ------------- ------------- -------------
5. Related parties
During the financial year under review, Reef Hogg(1) was a director of Jupiter Investment Management Group Limited and Jupiter Asset Management Limited ('JAM') companies within the same group as Jupiter Unit Trust Managers Limited ('JUTM') the Alternative Investment Fund Manager.
The Company appointed JUTM as its Alternative Investment Fund Manager ('AIFM') with effect from 22 July 2014. In order to facilitate this appointment, the Company terminated the investment management agreement (the 'IMA') with JAM and entered into a new investment management agreement with JUTM (the 'new IMA'). The new IMA contains no substantive changes to the previous IMA other than to reflect regulatory changes, changes to service providers to the Company and to update the agreement to reflect current market practice. Under these new agreements, certain investment management functions have been delegated by the AIFM.
JUTM is contracted to provide investment management services to the Company (subject to termination by not less than twelve months' notice by either party) for an annual fee of 0.75 per cent. of total assets less current liabilities payable quarterly in arrears.
The management fee paid to JAM for the period 1 January 2014 to 21 July 2014 was GBP206,523 and to JUTM for the period 22 July 2014 to 31 December 2014 was GBP164,478 respectively.
Management fees of GBP95,000 were outstanding as at 31 December 2014 (2013: GBP93,000).
JAM was also entitled to receive a performance fee of 15 per cent. of the amount by which audited total assets less current liabilities on the last day of each accounting period exceed the higher of (a) 110 per cent. of the total assets less current liabilities at the end of the immediately preceding accounting period and (b) the total assets less current liabilities at the end of the last accounting period for which a performance fee was paid ('the high water mark'). In the event of, inter alia, a reduction of capital or bonus issue the calculation of the performance fee shall be adjusted in such a manner as the Company's auditors shall determine is appropriate to take account of such events. No performance fee was payable for the year (2013: GBPnil).
(1) Reef Hogg retired from Jupiter on 27 February 2015.
6. Contingent liabilities and capital commitments
There were no contingent liabilities or capital commitments as at 31 December 2014 (2013: GBPnil).
7. Post Balance Sheet Event
There were no post balance sheet events at the year end.
Availability of Annual Report
The Annual Report & Accounts will be posted to shareholders shortly. Copies will also be available from the Company's registered office at 1 Grosvenor Place, London SW1X 7JJ. An electronic version of the Annual Report & Accounts will also be available for download from the Company's section of Jupiter Asset Management's website www.jupiteram.com/JDT.
For further information, please contact:
Richard Pavry
Head of Investment Trusts
Jupiter Asset Management Limited, Company Secretary
investmentcompanies@jupiteram.com
020 3817 1496
20 April 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
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