Half-yearly report
Jupiter European Opportunities Trust PLC
Announcement of Unaudited Interim Results for the half year to 30th November
2010
Financial Highlights for the six months to 30 November 2010
Capital Performance
 30-Nov 31-May
 2010 2010 % Change
Total Assets less Current Liabilities (£'000) 216,769 185,504 +16.9
FTSE World Europe ex UK Total Return Index* 671.79 633.12 +6.1
Ordinary Share Performance
 30-Nov 31-May
 2010 2010 % Change
Net Asset Value (pence) 271.57 232.4 +16.9
Mid Market Price (pence) 243 193.25 +25.7
Discount to Net Asset Value (%) 10.5 16.8
Performance since launch
  Net Asset
 Total Assets Value
 less per
 Current Ordinary
 Liabilities Share
Year ended 31 May £'000 p
20 November 2000 (launch) 93,969 94.66
2001 83,600 89.29
2002 91,028 91.12
2003 84,592 83.82
2004 97,915 109.25
2005 (restated)* 117,679 133.54
2006 154,927 167.47
2007 182,278 224.58
2008 188,519 230.56
2009 131,457 162.35
2010 185,504 232.4
30-Nov-10 216,769 271.57
*Prior to 2005, financial information was prepared under UK GAAP. From 2006 all
information is prepared under IFRS.
CHAIRMAN'S STATEMENT
and Interim Management Report
A few months ago we debated as to how markets might react when central bankers
began to reduce, or even reverse, the monetary stimulus commonly referred to as
"quantitative easing", or QE. As things turned out, the US authorities initiated
a further tranche of QE (popularly described as "QE2") and the European Central
Bank, which had given notice of its planned "exit strategy", was compelled to
join with the International Monetary Fund and bail out the Irish economy to the
tune of Euro 85 billion and even to increase its own programme of buying bonds
of peripheral Euro-zone members. Shortly after, President Obama struck an
agreement with congressional Republicans to extend the Bush-era tax cuts. The
latest round of Irish austerity measures may, or may not, be agreed by their own
parliament (elections are due next year) and the US tax concessions still have
to pass Congress. Â Nonetheless, stock markets have derived encouragement from
these events.
As a result even European equity markets have made further progress during the
period under review, albeit at a more modest pace than some other areas of the
world. Thanks to judicious stock selection the Net Asset Value ('NAV') of your
Company has risen by 16.9 per cent. in the six months to end-November, well over
twice that of our benchmark, the FTSE World Europe ex-UK Total Return Index. We
are not declaring an interim dividend, but we may once again be compelled to pay
a final, as we may not (under the Listing Rules) retain more than 15 per cent.
of our net distributable earnings.
We are sometimes asked why we do not benchmark ourselves against a European
Index which includes the UK, given that over 20 per cent. of the portfolio is
comprised of companies whose main listing is in London. One reason is that the
most relevant index (the Morgan Stanley Capital International, or MSCI index)
has a far greater UK weighting than your Company has. More generally we have
never operated on a benchmark-oriented basis. Our fund manager, Alexander
Darwall, selects companies with outstanding growth prospects, often on a global
scale, which just happen to have their principal listing on a European stock
exchange or in London.
Discount Management Policy
Over the period the discount between the share price has narrowed from 16.8 per
cent. to 10.5 per cent., as we have let it be known that we will buy shares, for
treasury or for cancellation, far more actively than hitherto.
Gearing
We have maintained our gearing at a relatively constant absolute level, but as
the portfolio has appreciated in value, so the gearing ratio has fallen. Our
borrowings are wholly denominated in Sterling.
Outlook
After a period of strong outperformance there is a risk of reversion to the mean
- in other words, that the indices outperform your Company's NAV rather than the
other way round. Your manager is fully aware of this possibility, and none of us
can afford to be complacent. But given the current economic and monetary
background there should still be upside for equities, even in markets as unloved
and under owned as those of mainstream Europe.
H M Priestley
Chairman
25 January 2011
MANAGER'S REVIEW
The Net Asset Value of the Company's Ordinary shares rose by 18.7 per cent.
during the six months to 30 November 2010. This compares with a 6.1 per cent.
increase, Sterling adjusted, of the FTSE World Europe ex-UK Index.
At the start of the period under review the Company's borrowings were £27
million. This figure had fallen to £22 million by the period end, less than half
the level of borrowings (£48.6 million) a year earlier. With rising asset values
obviously this gearing improved returns. Nevertheless, mindful of the
difficulties your Company faced with much higher levels of borrowings in
2008/9, an increase in the amount of debt should not be anticipated in the near
future.
The FTSE World (total return) Index rose by 4.7 per cent. The Company's
benchmark, the FTSE World Europe ex-UK Total Return Index rose by 6.1 per cent.
The MSCI Latin America Index was up 8.7 per cent.; the MSCI AC Asia ex-Japan
Index was up 11.7 per cent. In contrast to previous reporting periods there was
remarkably little dispersion between the different regions in terms of equity
performance, such that explaining Europe's very modest outperformance compared
with the FTSE World Index is puzzling. Europe's greater exposure to emerging
markets than Japan (the Nikkei 225 was up 4.2 per cent.) and the US (the S&P500
rose only 1.8 per cent.) as an explanation for its outperformance is a surmise.
The correlation with equity performance and economic growth appears to have been
a relatively good one in the six months under review. According to the IMF,
Developing Asia (26 countries including China and India) grew by 9.4 per cent.
in 2010; further growth of 8.4 per cent. is forecast in 2011. Latin America
maintained its impressive growth record: the IMF estimates that the Brazilian
economy grew by 7.5 per cent. in 2010 and it expects 4.1 per cent. growth in
2011. Expectations for the European Union (EU) are more modest: 1.7 per cent.
growth in both 2010 and 2011.
In fact, the outturn for GDP growth in the EU was better than previously
forecast (1 per cent.). The main reason for this was faster growth in Germany,
itself the result of stronger export demand. If buoyant demand for capital goods
from China and other emerging markets was the principal driver of the German
economy, it also had the effect of improving domestic consumer demand. Germany's
growth in 2010 is now estimated to have been 3.3 per cent., far ahead of the
0.3 per cent. forecast made only a year ago. Faster economic growth, then, is
one of the factors behind the better equity market. The credit crisis was a spur
to further cost cutting which was another factor driving the estimated 25 per
cent. growth in corporate profits in 2010. Notwithstanding the tribulations of
the Euro and European sovereign debt, the backdrop - strong corporate earnings
and low interest rates - has been positive for equities.
Your Company's relatively good performance was due mainly to stock picking
across a well diversified group of companies. The largest single contributor to
performance was the holding in Croda, the UK listed oleochemical company. It
benefitted from the general improvement in economic activity but even more
importantly from successful, new, innovative products. Intertek, one of the
world's leading testing and inspection companies, performed well. It is a
beneficiary of increasing world trade and more rigorous testing and inspection.
Other significant positive contributors included MTG, the Scandinavian-based TV
company, Experian, the global credit information business, and NovoNordisk, the
world's leading manufacturer of insulin for diabetics. Most of the strong
performers have a broad, even global, geographic exposure which has been helpful
in mitigating the generally slower economic growth in Europe. On the other hand,
a number of companies detracted from performance. The worst, in terms of share
price, was Inmarsat, the leading satellite company. The shares underperformed as
the company announced long-term plans that require investors' patience. We
believe that their plans are good and we are patient. Oriflame has produced
disappointing results. The company is a leading direct seller of cosmetics
operating mainly in Russia and other former CIS states. It is not yet clear
whether their challenges are structural, or temporary and fixable. BioMerieux, a
leader in diagnostics, reported slightly disappointing results as it felt the
effects of squeezed healthcare budgets. Halfords, the specialist UK retailer,
suffered a slowdown in line with the economy; management's poor execution also
weighed on the company's performance.
Turnover in the fund was markedly lower than in the corresponding period in
2009 as there were fewer mistakes than usual. The main sale was that of
Halfords, for the reasons described above. Shares in Telefonica were sold as the
economy in Spain deteriorated. The positions in Croda, Vopak, and DNB were
lightened for portfolio management reasons. The main purchase was that of Marine
Harvest. The company is the world's biggest salmon farmer, operating mainly in
Norway and Chile. Steady demand growth, limited capacity increases and
technological innovation combine to make this a compelling investment. Other
purchases include Grenkeleasing, a company that in offering leasing services
across Europe is benefiting from the weakened competitive position of the banks.
A new position was taken in Qiagen, a leader in molecular diagnostics, the
fastest growing segment in that area of healthcare.
Outlook
Periods of great change (and this is one such) present both huge challenges and
opportunities. Economic power is clearly shifting from the West to other parts
of the world. The problems of the Eurozone (inflexible labour markets, sovereign
debt and the complications that come from the single Euro currency) remain.
Indeed, these problems might yet get worse. The latest IMF forecasts indicate a
slight weakening in the rate of economic growth. Corporate profitability in
Europe is, in many sectors, at historically high levels, the obvious concern
being that such levels are unsustainable. Nevertheless, there are reasonable
grounds for optimism. Whilst some sectors such as utilities and financials (even
oil companies) are subject to political pressures which might effectively cap
profitability, many other companies can prosper. Technology and 'globalisation'
are two key factors enabling companies to take cost and revenue opportunities
more readily than in the past. Even in Europe there are some positive
developments. One to highlight is that European politicians have understood
better 'this time' that lower corporate tax rates represent the right policy for
enterprise. As ever, the opportunities for success and failure abound: the key
is identifying those companies which have sustainable advantages in delivering
products and services which are properly valued by customers in Europe, and
where appropriate, internationally.
Alexander Darwall
Jupiter Asset Management Limited
25 January 2011
Consolidated Statement of Comprehensive Income
For the six months to 30 November 2010 (unaudited)
 30-Nov-10 30-Nov-09
 Revenue Capital Revenue Capital
 Return Return Total Return Return Total
 £'000 £'000 £'000 £'000 £'000 £'000
Gains on investments at fair
value through profit or loss (Note
2) - 36,010 36,010 - 39,584 39,584
Foreign exchange losses on loans - - - - (869) (869)
Other exchange (loss)/gain - (133) (133) - 310 310
Investment income 2,085 - 2,085 2,237 - 2,237
Foreign exchange gain by
subsidiary - - - 7 - 7
Total income 2,085 35,877 37,962 2,244 39,025 41,269
Investment management fee (861) - (861) (758) - (758)
Investment performance fee - (3,519) (3,519) - - -
Other expenses (196) - (196) (189) - (189)
Total expenses (1,057) (3,519) (4,576) (947) - (947)
Return before finance costs
and tax 1,028 32,358 33,386 1,297 39,025 40,322
Finance costs (157) - (157) (350) - (350)
Return before taxation 871 32,358 33,229 947 39,025 39,972
Taxation (288) - (288) (219) - (219)
Return after taxation 583 32,358 32,941 728 39,025 39,753
Return per Ordinary share (Note 3) 0.73p 40.54p 41.27p 0.90p 48.20p 49.10p
The total column of this statement is the income statement of the Group prepared
in accordance with IFRS. Â The supplementary revenue return and capital return
columns are both prepared under guidance published by the Association of
Investment Companies ('AIC'). All items in the above statement derive from
continuing operations.
No operations were discontinued or acquired in the period.
The financial information does not constitute 'accounts' as defined in section
434 of the Companies Act 2006.
Consolidated Statement of Financial Position
As at 30 November 2010
 30-Nov 31-May
 2010 2010
 (unaudited) (audited)
 £'000 £'000
Non current assets
Investments held at fair value through profit or loss 245,237 210,972
Current assets
Receivables 470 1,493
Cash at bank - 1,233
 470 2,726
Total assets 245,707 213,698
Current liabilities (28,938) (28,194)
Total assets less current liabilities 216,769 185,504
Capital and reserves
Called up share capital 798 798
Share premium 41,286 41,286
Special reserve 34,376 34,376
Capital redemption reserve 42 42
Retained earnings (Note 6) 140,267 109,002
Total equity 216,769 185,504
Net Asset Value per Ordinary share (Note 7) 271.57p 232.40p
Consolidated Statement of Changes in Equity
For the six months to 30 November 2010
    Capital
 Share Share Special Redemption Retained
For the six months to Capital Premium Reserve Reserve Earnings Total
30-Nov-10 £'000 £'000 £'000 £'000 £'000 £'000
31-May-10 798 41,286 34,376 42 109,002 185,504
Net profit for the period - - - - 32,941 32,941
2010 interim dividend - - - - (1,676) (1,676)
Balance at 30 November 2010 798 41,286 34,376 42 140,267 216,769
    Capital
 Share Share Special Redemption Retained
For the six months to Capital Premium Reserve Reserve Earnings Total
30-Nov-09 £'000 £'000 £'000 £'000 £'000 £'000
31-May-09 810 41,286 36,676 30 52,655 131,457
Net profit for the period - - - - 39,753 39,753
2009 Special interim
dividend - - - - (688) (688)
Balance at 30 November 2009 810 41,286 36,676 30 91,720 170,522
Consolidated Cash Flow Statement
For the six months to 30 November 2010 (unaudited)
 2010 2009
 £'000 £'000
Cash flows from operating activities
Purchases of investments (22,684) (31,007)
Sales of investments 24,332 40,146
Realised (losses)/gains on foreign currency (133) 317
Investment income received 2,386 2,075
Interest received - 14
Other cash receipts - 111
Investment management fee paid (801) (709)
Other cash expenses (238) (206)
Dividend paid (1,676) (688)
Cash inflow from operating activities before finance costs
and taxation 1,186 10,053
Finance costs paid (163) (448)
Taxation (paid)/received (124) 405
Net cash inflow from operating activities 899 10,010
Financing activities
Short-term loans received 44,000 88,197
Short-term loans repaid (49,000) (102,754)
Decrease in cash (4,101) (4,547)
Cash and cash equivalents at start of period 1,233 6,280
Cash and cash equivalents at end of period (2,868) 1,733
Notes to the Financial Statements for the six months to 30 November 2010
1. Â Accounting Policies
The consolidated accounts comprise the unaudited financial results of the
Company and its subsidiary JEOT  Securities Limited for the  six  months  to 30
November 2010. The accounts are presented in pounds sterling, as this is the
functional currency of the Group.
The consolidated accounts have been prepared in accordance with International
Financial Reporting Standards (IFRS), which comprise standards and
interpretations approved by the International Accounting Standards Board (IASB)
and International Accounting Standards Committee (IASC), as adopted by the
European Union.
A summary of the principal accounting policies, all of which have been applied
consistently throughout the period, is set out below:
Revenue recognition
Revenue is measured at  the fair value of the consideration received or
receivable and represents amounts receivable for goods and services provided in
the normal course of business.
Revenue includes dividends from investments quoted ex-dividend on or before the
balance sheet date.
Deposit and other interest receivable is accounted for on an accruals basis.
Presentation of Statement of Comprehensive Income
In order to better reflect the activities of an investment trust company and in
accordance with guidance issued by the AIC, supplementary information which
analyses the Statement of Comprehensive Income between items of a revenue and
capital nature has been presented alongside the Statement of Comprehensive
Income. In accordance with the Company's status as a UK investment company under
section 404 of the Companies Act 2006, net capital returns may not be
distributed by way of dividend.
An analysis  of  retained  earnings  broken  down into revenue items, which may
be distributed as dividends and capital items is given in Note 6. The Company's
Articles prevent the distribution of capital profits. In arriving at this
breakdown, expenses have been presented as revenue items except for that part of
any Investment performance fee which is deemed by the Directors to relate to the
capital outperformance of the Company's investments. Any such amount is charged
to capital.
Investments
All investments are classified as held at fair value through profit or loss.
Changes in the fair value of investments held at fair value through profit or
loss and gains and losses on disposal are recognised in the statement of
comprehensive income 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. All purchases and sales are accounted for on a trade date basis.
2. Â Gains on investments
 Six months to Six months to
 30-Nov-10 30-Nov-09
 £'000 £'000
Net gains realised on sale of investments 7,574 7,866
Movement in investment holding gains 28,436 31,718
Gains on investments 36,010 39,584
3. Â Return per Ordinary Share
The return per Ordinary share figure is based on the net gain for the six months
of £32,941,000 (six months to 30 November 2009: Gain £39,753,000) and on
79,819,523 (six months to 30 November 2009: 80,969,523) Ordinary shares, being
the weighted average number of Ordinary shares in issue during the period.
The return per Ordinary share figure detailed above can be further analysed
between revenue and capital, as below.
 Six months to Six months to
 30-Nov-10 30-Nov-09
 £'000 £'000
Net revenue profit 583 728
Net capital profit 32,358 39,025
Net total profit 32,941 39,753
Weighted average number of Ordinary
shares in issue during the period 79,819,523 80,969,523
Revenue return per Ordinary share 0.73p 0.90p
Capital return per Ordinary share 40.54p 48.20p
Total return per Ordinary share 41.27p 49.10p
4. Â Transaction costs
During the period expenses were incurred in acquiring or disposing of
investments classified as fair value through profit or loss. These have been
expensed through capital and are included within gains/(losses) on investments
in the Statement of Comprehensive Income. The total costs were as follows:
 Six months to Six months to
 30-Nov-10 30-Nov-09
 £'000 £'000
Purchases 52 74
Sales 39 55
 91 129
5. Â Comparative information
The financial information contained in this interim report does not constitute
statutory accounts as defined in section 434 of the Companies Act 2006. The
financial information for the six months to 30 November 2010 and 30 November
2009 has not been audited.
The information for the year ended 31 May 2010 has been extracted from the
latest published audited financial statements. The audited financial statements
for the year ended 31 May 2010 have been filed with the Register of Companies.
The report of the auditors on those accounts contained no qualification or
statement under section 498(2) of the Companies Act 2006.
6. Â Retained earnings
The table below shows the movement in the retained earnings analysed between
revenue and capital items.
 Revenue Capital Total
 £'000 £'000 £'000
At 31 May 2010 5,989 103,013 109,002
Net return for the period 583 32,358 32,941
Dividend paid (1,676) - (1,676)
At 30 November 2010 4,896 135,371 140,267
7. Â Net Asset Value per Ordinary share
The Net Asset Value per Ordinary share is based on the net assets attributable
to the equity shareholders of £216,769,000 (31 May 2010: £185,504,000) and on
79,819,523 (31 May 2010: 79,819,523) Ordinary shares, being the number of
Ordinary shares in issue at the period end.
Directors' Responsibility Statement
Related Party Transactions
Mr. Darwall is a director of Jupiter Asset Management Limited which receives
investment management fees as set out below. Â Jupiter Administration Services
Limited is a sister company of Jupiter Asset Management Limited. Â Jupiter
Administration Services Limited receives administration fees as set out below.
Jupiter Asset Management Limited is contracted to provide investment management
services to the Company (subject to termination by not less than 1 years' notice
by either party) for a quarterly fee of 0.1875 per cent. of the net assets of
the Group excluding the value of any Jupiter managed investments payable in
arrears on 31 May, 31 August, 30 November and the last calendar day of February.
The total fees payable under this agreement are shown in the Consolidated
Statement of Comprehensive Income.
Jupiter Asset Management Limited is also entitled to a performance fee which is
based on the out-performance of the Net Asset Value per Ordinary share over the
total return on the Benchmark Index, the FTSE World Europe ex-UK Total Return
Index in an accounting period. Any performance fee payable will equal 15 per
cent. of the amount by which the increase in the Net Asset Value per Ordinary
share (plus any dividends per Ordinary share paid or payable and any accrual for
unpaid performance fees for the period) exceeds the higher of (a) the Net Asset
Value per Ordinary share on the last business day of the previous accounting
period; (b) the Net Asset Value per Ordinary share on the last day of a period
in respect of which a performance fee was last paid; and (c) 100p. In each case
the values of (a), (b) and (c) are to be adjusted by the percentage by which the
total return of the Benchmark Index increases or decreases during the
calculation period. The total amount of any performance fee payable in respect
of one accounting period is limited to 4.99 per cent. of the Total Assets of the
Company. The total fees payable under this agreement are shown in the
Consolidated Statement of Comprehensive Income.
Jupiter Administration Services Limited is contracted to provide secretarial,
accounting and administrative services to the Company for an annual fee of
£65,460 adjusted each year in line with the Retail Price Index payable
quarterly.
The Company has invested from time to time in funds managed by Jupiter
Investment Management Group Limited or its subsidiaries. The only such holding
as at 30 November 2010 was East European Food Fund representing 0.1 per cent. of
total investments.
Risks and Uncertainties
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. Other key
risks faced by the Company relate to foreign currency movements, interest rates,
use of derivatives, liquidity risk, gearing risk, the discount to Net Asset
Value, regulatory risk, loss of key personnel, operation and financial risks. A
detailed explanation of the Risks and Uncertainties facing the Company can be
found on page 13 under the heading 'Risks and Uncertainties' in the Company's
report and accounts for the year to 31 May 2010.
Directors' Responsibility Statement
In accordance with Chapter 4 of the Disclosure and Transparency Rules the
Directors confirm that to the best of their knowledge:
(a) the condensed set of financial statements has  been prepared in accordance
with applicable UK accounting standards and gives a true and fair view of the
assets, liabilities, financial position and return of the Company;
(b) the half-yearly report includes a fair review of the important events that
have occurred during the first six months of the financial year and their impact
on the financial statements;
(c) the Directors' Statement of Principal Risks and Uncertainties shown above is
a fair review of the principal risks and uncertainties for the remainder of the
financial year; and
(d) the half-yearly report includes details on related party transactions.
The half-yearly financial report for the six months to 30 November 2010
comprises the Chairman's Statement, Manager's Review, the Directors'
Responsibility Statement and a condensed set of financial statements, and has
not been audited or reviewed by the auditors pursuant to the Auditing Practices
Board guidance on Review of Interim Financial Information.
By Order of the Board
H M Priestley
Chairman
25 January 2011
The foregoing represents the full text of the Half-Yearly Report for the six
months to 30 November 2010, which will be posted to shareholders shortly. Â The
Report will also be available for download from the Company's website
(www.jupiteronline.co.uk) or on request from the Company Secretary.
The interim report for the 6 months ended 30 November 2010 has not been reviewed
by the Company's auditors.
By order of the Board
Jupiter Asset Management Limited
Secretaries
Enquiries:
Richard Pavry
Jupiter Asset Management Limited
020 7412 0703
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Source: Jupiter European Opportunities Trust PLC via Thomson Reuters ONE
[HUG#1482179]