Interim Results
Jupiter European Opps. Trust PLC
29 January 2003
Jupiter European Opportunities Trust PLC - Stock Exchange Announcement
Preliminary announcement of unaudited results for the half year to 30th November 2002
CHAIRMAN'S STATEMENT
Market conditions remained difficult during the period under review, although once again your Company outperformed
its benchmark; net asset value per share fell by 16.2%, compared with a drop of 21.1% in the FTSE World Europe ex-UK
Index. The market price discount to the net asset value, hitherto minimal, became unusually volatile during the six
months under review and on occasion widened to 18%. The opportunity was taken by the board to buy in a total of
975,000 shares at discounts ranging from 15.4% to 16.1%. As at 30 November the discount had narrowed to 10.9%.
Borrowings were reduced over the period from £15.4 million to £10.3 million, but taking account of the Company's
holdings of cash and gilts against the sums drawn down under the facility, the effective level of gearing was lower
still, with £6.3 million held in UK long dated gilts at 30th November 2002. This figure has since been reduced by the
sale of one of the gilt holdings.
A small number of equity short positions were established within the trading subsidiary which thus far have enhanced
its profitability. However, your Board has set strict limits for this activity and keeps a close eye on the overall
short position.
The immediate market outlook does not look especially propitious as we move into 2003. However, our ability to
increase the level of gearing, at a time when other investing institutions are forced to liquidate positions, should
stand us in good stead.
H Priestley
Chairman
29th January 2003
MANAGER'S REVIEW
The economic background in Europe continued to deteriorate in the period under review. According to the OECD's latest
forecasts the euro area grew by only 0.8% in 2002 and is expected to grow by 1.8% in 2003. Whilst this is better than
Japan (-0.7% and 0.8% respectively), it is markedly worse than the 2.3% and 2.6% for the United States, and worse
than the UK (1.5% and 2.2% respectively). Within Europe, Germany and Italy continue to suffer sluggish growth. At the
other end of the scale, Denmark, Norway, Spain and particularly Ireland are performing well in broad economic terms.
The reasons for Europe's continuing poor economic performance remain: restrictive fiscal and monetary policies,
worsening budget deficits, poor productivity, lack of labour flexibility and damaging political interference. The
euro's strength against the US dollar and sterling this year is not a reflection of changing economic fortunes.
Rather it is due to the absence of the massive acquisition of North American assets by European companies that marked
the late 1990s and 2000. That said there is the possibility that the European Central Bank will change its monetary
policies and reduce interest rates. However, whatever the short term benefits, such a change could exacerbate the
underlying problems in Europe.
The economic performance was matched by the equity markets. In the six month period the FTSE World Europe ex-UK index
was down 21.1%, better than Japan, but worse than the FTSE All Share, which fell by 17.8% and worse than the S&P
Composite which was down by 17.3%. Likewise, within Europe, the German index was the worst performing (down 31.5% in
sterling) with Spain and Sweden amongst the best (down 16.4% and 12.3% respectively). The better performing sectors
within Europe included electricity and gas utilities, real estate, transport, retailers and sundry 'consumer
non-cyclicals'. The worse performing sectors included financials, industrials, and technology. There were remarkable
divergences: construction stocks in Italy and Spain were as strong as the German ones were weak. Similarly,
Scandinavian banks performed well just as German, Swiss and Italian banks were weak.
Your Company's investment approach remains the same. We seek to identify companies with a good record, proven product
and business model, combined with evidence of entrepreneurial endeavour and the prospect of above average growth
opportunities. Almost invariably your Company invests in companies whose prospects depend as far as reasonably
possible on their own efforts and not on exogenous factors beyond their control. Unsurprisingly, as the investment
approach remains the same there has been relatively little activity in the portfolio. The most significant disposal
was that of Air Liquide which was sold because of the slowdown in demand from their customer base. The other major
disposal was Royal Dutch Shell. Like Air Liquide this was sold as the demand background weakened. Other disposals
included Adidas-Salomon and Uponor, sold on valuation grounds. The holding in Euler-Hermes was sold as this company
failed to meet our expectations. Positions were reduced in Reed Elsevier, AB Ports and Essilor. All these remain good
businesses. The holding in The Health Clinic was sold before its bankruptcy. We also sold our holding in Scottish and
Newcastle, a position that was acquired as a result of that company's takeover of the Finnish company Hartwall. We
increased our holding in Intertek Testing Services, the UK verification and inspection company. Further purchases of
the Danish medical supplies company Coloplast were also made. This company continues to deliver consistently
impressive results. Most purchases were also building on existing holdings such as Waterford Wedgwood, Stedim, DNB,
Matalan, NovoNordisk, Medion, Techem and Soitec. New holdings were taken in Gehe, Imerys and Ryanair.
Whilst geographic weightings play little part in the investment strategy, it should nevertheless be noted that the UK
weighting rose to 22%. This marked increase was due to the purchase of UK long dated gilts. These positions were
taken in the absence of compelling equity opportunities at the time. Fixed interest investments are not expected to
be important parts of the investment portfolio over a longer period of time. The manager's focus remains on equities.
Accordingly, the UK portion of the portfolio is likely to fall. Half the gilt position has been sold after the period
end at a profit. Gearing too is a function of the manager's ability to identify good investment opportunities and
accordingly the level of borrowings changed against a background of a volatile equity market. Borrowings at the start
of the period under review were £15.5m, dropping to £5m at the end of June. At the period end borrowings stood at
just over £10m. The trading subsidiary made a profit of £513,000 in the six month period. This included a first time
positive contribution from short positions.
It may be that the expansion of the European Union brings to a head a number of deep rooted problems on the
continent. Certainly these problems (as outlined above) are likely to become more acute as growth rates remain
sluggish. Nevertheless, even with this backdrop there is no doubt that investment opportunities exist in Europe and
it is the manager's ability, or otherwise, to uncover such opportunities that is likely to be the greatest
determinant of your Company's success.
A F C Darwall
Manager
Jupiter Asset Management Limited
29th January 2003
CONSOLIDATED STATEMENT OF TOTAL RETURN
(incorporating the revenue account)
for the six months to 30th November 2002
(Unaudited)
2002 2001
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Realised losses on investments - (2,101) (2,101) - (5,600) (5,600)
(Decrease)/increase in unrealised appreciation of - (10,310) (10,310) - 2,163 2,163
fixed asset investments
______ ______ ______ ______ ______ ______
Total capital losses on investments (12,411) (12,411) - (3,437) (3,437)
Foreign exchange losses on loan - (178) (178) - (545) (545)
Other exchange (losses)/gain - (11) (11) - 16 16
Income 372 - 372 369 - 369
Gain/(loss) on dealings by subsidiary 513 - 513 (638) - (638)
Investment management fee (309) - (309) (352) - (352)
Other expenses (210) - (210) (246) - (246)
______ ______ ______ ______ ______ ______
NET RETURN/(LOSS) BEFORE FINANCE COSTS AND TAXATION 366 (12,600) (12,234) (867) (3,966) (4,833)
Interest payable (198) - (198) (269) - (269)
______ ______ ______ ______ ______ ______
RETURN/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAX 168 (12,600) (12,432) (1,136) (3,966) (5,102)
Tax on ordinary activities (22) - (22) (26) - (26)
______ ______ ______ ______ ______ ______
RETURN/(LOSS) ON ORDINARY ACTIVITIES AFTER TAX FOR 146 (12,600) (12,454) (1,162) (3,966) (5,128)
THE FINANCIAL PERIOD ====== ====== ====== ====== ====== ======
TRANSFER TO RESERVES 146 (12,600) (12,454) (1,162) (3,966) (5,128)
====== ====== ====== ====== ====== ======
RETURN/(LOSS) PER ORDINARY 0.18p (15.25)p (15.07)p (1.40)p (4.78)p (6.18)p
SHARE ====== ====== ====== ====== ====== ======
CONSOLIDATED BALANCE SHEET
as at 30th November 2002
(restated)
30th November 2002 31st
(Unaudited) May
2002
£'000 (Audited)
£'000
FIXED ASSETS
Investments 71,029 85,753
______ ______
CURRENT ASSETS
Investments 1,467 3,166
Debtors 1,135 450
Cash at bank 622 2,019
_______ _______
3,224 5,635
CREDITORS: amounts falling due within one year (1,348) (360)
_______ ______
NET CURRENT ASSETS 1,876 5,275
_______ _______
TOTAL ASSETS LESS CURRENT 72,905 91,028
LIABILITIES
CREDITORS: amounts falling due after more than one year (10,325) (15,454)
_______ ______
NET ASSETS 62,580 75,574
====== =====
CAPITAL AND RESERVES
Called up share capital 820 829
Share premium 38,386 38,843
Special reserve 38,303 38,843
Redemption reserve 466 -
Capital reserve - realised (9,197) (7,085)
Capital reserve - unrealised (5,001) 5,487
Revenue reserve (1,197) (1,343)
______ ______
TOTAL SHAREHOLDERS' FUNDS 62,580 75,574
===== =====
NET ASSET VALUE PER ORDINARY SHARE 76.35p 91.12p
CONSOLIDATED CASH FLOW STATEMENT
for the 6 months to 30th November 2002
(unaudited)
30th November 2002 30th November 2001
£'000 £'000
OPERATING ACTIVITIES
Net cash inflow / (outflow) from operating activities 1,877 (2,525)
_______ _______
SERVICING OF FINANCE
Interest paid (238) (316)
_______ _______
Net cash outflow from servicing of finance (238) (316)
_______ _______
TAXATION
Net tax received / (paid) 98 (43)
_______ _______
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of fixed asset investments (37,735) (28,348)
Sale of fixed asset investments 39,426 32,609
_______ _______
Net cash inflow from capital expenditure and financial investment 1,691 4,261
_______ _______
Net cash inflow before financing 3,428 1,377
_______ ________
FINANCING
Long term loan received 4,985 4,958
Long term loan repaid (10,292) (5,028)
Cost of share repurchase (540) -
_______ _______
Net cash outflow from financing (5,847) (70)
_______ _______
(Decrease)/increase in cash (2,419) 1,307
====== ======
The interim report will be sent to all registered shareholders and copies may be obtained from the registered office
of the Company at 1 Grosvenor Place, London, SW1X 7JJ.
BY ORDER OF THE BOARD
JUPITER ASSET MANAGEMENT LIMITED
SECRETARIES
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