Annual report & accounts

JUPITER SECOND ENHANCED INCOME TRUST PLC Preliminary announcement of the audited results for the year ended 31st October 2006. CHAIRMAN'S STATEMENT I am pleased to report that your Company has enjoyed another successful year. The total assets less current liabilities of your Company rose by 18.6 per cent. during the year to 31st October 2006. By comparison the performance of the Company's benchmark index, the FTSE All-Share Index, was 17.9 per cent. (in capital terms). The geared split capital structure of the Company meant that the return on the Net Asset Value of the Company's Geared Income shares was enhanced by 33.2 per cent. during the year under review. Taking the dividend payments into account the Company provided Geared Income shareholders with a total return of 39.9 per cent., which compares favourably with a total return on the FTSE All-Share Index of 22.1 per cent. over the same period. The Zero Dividend Preference shares enjoyed an increase in their Net Asset Value of 7.5 per cent. over the year under review from 63.03p to 67.75p. The Packaged Units are not geared by the Company's split capital structure since they each comprise one Geared Income share and one Zero Dividend Preference share. The return on the Net Asset Value of the Packaged Units was 18.6 per cent. over the period. I am pleased to report that, as anticipated in the Interim Report, your Company has been able to increase the total dividend paid for the year from 3.05p in the year to 31st October 2005 to 3.15p in the year under review which represents a 3.3 per cent. increase in dividends on last year. This represented a yield of 5.9 per cent. on the middle market price of the Geared Income shares of 53.5p on 31st October 2006. It is hoped by your Board that the Company will be in a position to continue to improve dividend payments to shareholders year on year. At the AGM your Board is seeking to renew its powers to buy back shares for cancellation. This can be a useful tool for enhancing the Net Asset Value of the Geared Income shares and/or enhancing the cover on Zero Dividend Preference shares in certain circumstances. The repurchase of shares will only be undertaken after taking into consideration the interests of both classes of the Company's shares at the time that the opportunity arises. The Company has recently appointed Cenkos Securities PLC as its corporate brokers. Shares in the Company are available through Jupiter's dedicated Investment Trust ISA, PEP and Saving Schemes and through Cenkos and a number of other brokers on the London Stock Exchange. I commend to you the Manager's Review, which outlines the performance of the Company's portfolio in some detail. The Company faces a complex market on both global and domestic levels during the coming year, however, the portfolio will continue to adjust to the prevailing market conditions seeking income where it is to be found. The Company is well placed to take opportunities in the market and I look forward to another successful year. Jimmy West Chairman 21st February 2007 MANAGER'S REVIEW The Company has performed well during the year under review declaring four interim dividends of 0.60p, 0.75p, 0.75p and 1.05p amounting to a total of 3.15p for the financial year. Revenue after tax for the year amounted to £2,412,000. Total assets rose broadly in line with the FTSE All-Share Index. Equities have performed substantially better than either cash or bonds over the year. Within the equity market the strongest returns once again came from mid- cap stocks (where private equity buyers have been active) while smaller companies had a similar performance as blue chip shares. Among the constituent sectors the strongest relative contributions to the FTSE All-Share's performance came from a broad-based range of sectors including general financials, real estate, industrial metals, industrial transportation, mining, chemicals and construction. Near-static returns came from food producers, oil and gas producers and pharmaceuticals. Purchases made during the period included: Legal & General, Davenham, F&C Asset Management, Ladbrokes, Bank of Ireland and Vodafone. Principal sales included: Antofagasta, Mowlem, Raymarine, Queens Walk, Raven Mount and Inmarsat. Market Review The UK stock market continued to make excellent progress during the second year of the Company's life. The FTSE All-Share Index rose 17.9 per cent. (in capital terms) from 2664.40 to 3140.47 during the year. This performance was a reflection of strong global economic growth and robust company profitability buoyed by a very high level of M&A activity and supported by reasonable share valuations. Private equity operators have been particularly vigorous in taking advantage of low borrowing costs when set against the strong cash flows of target companies. The UK economy has performed well, which is to say that by performing slightly ahead of its long-term growth rate it has confounded the pessimists. Moreover, the split of economic activity has become more balanced than in previous years. Consumer exuberance has been restrained though not choked, while public spending growth is reducing as business investment and corporate activity rise. Recent interest rate rises have served to steady inflationary trends and settle the housing market. The world economy continues to grow rapidly and export prospects remain good. However, the price of oil (high but currently stable) has fed through to UK households via higher petrol and utility bills. This contributed to a minor rise in the rate of inflation but does not yet appear to have fed through to any great extent into second round effects, whereby people's long-term inflation expectations markedly change. Nevertheless, the Bank of England remains concerned about the lack of spare capacity in the economy. It remains unclear about how the overall impact of migration will affect inflation in the medium term given that uncertainty over the number of migrants from central Europe has clouded estimates over the supply capacity of the economy. The Governor of the Bank has said that although unemployment is rising, this may be merely a reflection of a higher overall population as an unprecedented number of migrants from central Europe increase the supply capacity of the economy. Outlook Towards the end of 2006 equity market volatility, as measured by the VIX index of implied volatility of S&P 500 Index options, fell to its lowest level for 13 years. This suggests that the appetite for risk in equity markets remains strong. It certainly does so for bonds and property, which look expensive on most measures, yet curiously, equities have not followed suit. Valuations here can hardly be described as reflecting exuberance. Markets discount an ever-changing future and the UK equity market tends to look westwards for guidance. In the United States all attention is focused on the rapidly slowing residential property market and the possible implications of this for the wider economy. Towards the end of November the dollar fell sharply against most major currencies. This event, widely expected for years, may have been triggered by fears of a mid-cycle slowdown in the US but might also be a reflection of the growing attractions of currencies of those economies where interest rates are rising. At the time of writing, markets appear to fear a US slowdown rather more than does the Federal Reserve. In the UK, the current Treasury economic forecast predicts that growth for 2007 will be 2.75 - 3.25 per cent. before falling back towards the long-term growth rate of 2.50 - 2.75 per cent. for 2008 and 2009, because of the lack of spare capacity in the economy. Yet, by mid 2007, consumer price inflation is expected to be back down at its 2 per cent. target and remain there for 2008. Given that the Bank of England in its quarterly inflation report last November expressed concerns that the economy was approaching full capacity, it would seem likely that the medium-term outlook for UK interest rates is therefore probably biased towards increases above the 5 per cent. base rate seen at the end of December 2006, borne out by the recent interest rate increases. Consensus earnings growth expectations for the UK in 2007 currently stand at 6.7 per cent. (12.3 per cent. for 2006) with overall dividend growth forecast to be 5 per cent., down on the 13.8 per cent. for 2006. This is, of course, an aggregate figure for the FTSE All-Share Index. Part of the deceleration in dividend growth is a reflection of the activity of private equity operators who have been busy retiring the equity of mid-cap companies with strong free cash flows. This thinning out of interesting mid-250 businesses means that the hunt for value is going to become harder in 2007. Nevertheless, equities still look more attractive than either bonds or property. Private equity funds have already raised a lot of capital to date and, as long as the gap between the low cost of debt and the higher cost of equity remains, M&A activity is likely to continue. So long as other major economic blocs are able to take up the baton of growth as the US slows, and here we can be optimistic about Asia in particular, equity markets ought to be able to make progress. The UK stock market is fortunate in this respect in that its companies operate in many areas around the world. Anthony Nutt Fund Manager Jupiter Asset Management Limited 21st February 2007 INCOME STATEMENT for the year ended 31st October 2006 Year Ended Period Ended 31st October 2006 31st October 2005 (Restated)* Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Realised gains on investments held at fair value through profit or loss - 5,405 5,405 - 2,148 2,148 Unrealised appreciation of investments held at fair value through profit or loss - 8,496 8,496 - 4,831 4,831 Income 3,558 - 3,558 2,901 - 2,901 _____ _____ _____ _____ _____ _____ Gross return 3,558 13,901 17,459 2,901 6,979 9,880 Investment management fee (797) - (797) (643) - (643) Investment performance fee - (1,651) (1,651) - (560) (560) Other expenses (348) - (348) (352) - (352) _____ _____ _____ _____ _____ _____ Net return on ordinary activities before finance costs and taxation 2,413 12,250 14,663 1,906 6,419 8,325 Finance costs (1) (2,966) (2,967) (6) (2,528 (2,534) _____ _____ _____ _____ _____ _____ Net return on ordinary activities before taxation 2,412 9,284 11,696 1,900 3,891 5,791 Tax on ordinary activities - - - (1) - (1) _____ _____ _____ _____ _____ _____ Net return on ordinary activities after tax 2,412 9,284 11,696 1,899 3,891 5,790 ====== ====== ====== ====== ====== ====== Net return per Geared Income share 3.84p 14.78p 18.62p 3.25p 6.66p 9.91p 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 period. 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. *Restated in accordance with Revised UK GAAP. BALANCE SHEET at 31st October 2006 Year ended Period ended 31st October 31st October 2006 2005 (Restated) £'000 £'000 Investments Investments at fair value through profit or loss 80,783 69,184 _____ _____ Current assets Debtors 216 133 Cash at bank 3,282 1,544 _____ _____ 3,498 1,677 Creditors: amounts falling due within one year (1,891) (1,374) _____ _____ Net current assets 1,607 303 _____ _____ Total assets less current liabilities 82,390 69,487 Creditors: amounts falling due after more than one year Zero Dividend Preference shares (42,562) (39,596) _______ _______ Total net assets 39,828 29,891 _______ _______ Capital and reserves Called up share capital 628 628 Share premium 3,141 3,141 Special reserve 21,681 21,681 Capital reserve - realised (152) (940) Capital reserve - unrealised 13,327 4,831 Revenue reserve 1,203 550 _______ _______ Total shareholders' funds 39,828 29,891 ======= ======= Net Asset Value per Geared Income share 63.40p 47.58p RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS For the year ended 31st October 2006 Capital Capital Share Share Special Reserve Reserve Redemption Revenue Capital Premium Reserve Realised Unrealised Reserve Reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 For the year ended 31st October 2006 Balance at 1st November 2005 as previously stated 1,256 7,180 54,082 (940) 4,867 2,528 110 69,083 Restatements (628) (4,039) (32,401) - (36) (2,528) 440 (39,192) _______ _______ _______ _______ _______ _______ _______ _______ Balance at 1st November 2005 628 3,141 21,681 (940) 4,831 - 550 29,891 Net profit for the year - - - 788 8,496 - 2,412 11,696 Dividends paid and declared 4th interim dividend for period ended 31/10/05 - - - - - - (440) (440) 1st interim dividend for year ended 31/10/06 - - - - - - (377) (377) 2nd interim dividend for year ended 31/10/06 - - - - - - (471) (471) 3rd interim dividend for year ended 31/10/06 - - - - - - (471) (471) _______ _______ _______ _______ _______ _______ _______ _______ Balance at 31st October 2006 628 3,141 21,681 (152) 13,327 - 1,203 39,828 ======= ======= ======= ======= ======= ======= ======= ======= For the period ended 31st October 2005 Shares issued 628 24,822 - - - - - 25,450 Reserve transfer - (21,681) 21,681 - - - - - Net profit for the period - - - (940) 4,831 - 1,899 5,790 Dividends paid and declared 1st interim dividend for period ended 31/10/05 - - - - - - (252) (252) 2nd interim dividend for period ended 31/10/05 - - - - - - (562) (562) Special dividend for period ended 31/10/05 - - - - - - (252) (252) 3rd interim dividend for period ended 31/10/05 - - - - - - (283) (283) _______ _______ _______ _______ _______ _______ _______ _______ Balance at 31st October 2005 (restated) 628 3,141 21,681 (940) 4,831 - 550 29,891 ======= ======= ======= ======= ======= ======= ======= ======= CASH FLOW STATEMENT for the year ended 31st October 2006 Year ended Period ended 31st October 2006 31st October 2005 £'000 £'000 £'000 £'000 Operating activities Net cash inflow from operating activities 1,797 2,028 Servicing of finance Returns on investments and finance costs (1) (6) Taxation Net tax paid (1) (5) Capital expenditure and financial investment Purchase of investments (23,372) (80,037) Sale of investments 25,111 18,395 _______ _______ Net cash inflow/(outflow) from capital expenditure and financial investment Equity dividends paid 1,739 (61,642) (1,759) (1,349) _______ _______ Net cash inflow/(outflow) before financing 1,775 (60,974) _______ _______ Financing Share issue - 63,470 Cost of share issue (37) (952) _______ _______ Net cash (outflow)/inflow from financing (37) 62,518 _______ _______ Increase in cash 1,738 1,544 ======= ======= NOTES: 1. Income 2006 2005 £'000 £'000 Income from investments UK dividend income (net) 3,274 2,618 Dividends from overseas companies 89 68 Bond interest 108 19 _____ _____ 3,471 2,705 Other income Deposit interest 69 188 Underwriting commission 18 8 ______ ______ Total income 3,558 2,901 ====== ====== Total income comprises: Dividends 3,363 2,686 Interest 177 207 Other income 18 8 _______ _______ 3,558 2,901 ====== ====== Income from investments Listed in the UK 3,438 2,705 Listed overseas 33 - _______ _______ 3,471 2,705 ====== ====== 2. Reconciliation of operating profit to net cash inflow from operating activities 31st October 2006 31st October 2005 £'000 £'000 Net income before finance costs and taxation 14,663 8,325 Gains on investments (13,901) (6,979) Increase in prepayments and accrued income (82) (129) Increase in accruals and other creditors 1,117 811 ______ ______ 1,797 2,028 ====== ====== 3. Analysis of changes in net funds 1st November 2005 Cashflow 31stOctober 2006 £'000 £'000 £'000 Cash at bank 1,544 1,738 3,282 Reconciliation of net cash flow to movement in net funds 2006 2005 £'000 £'000 Increase in cash for the year 1,738 1,544 Net cash at beginning of year 1,544 - ______ ______ Net cash at end of year 3,282 1,544 ====== ====== The preliminary announcement is prepared on the same basis as set out in the statutory accounts of the year ended 31st October 2006 and was approved by the Board of Directors on 21st February 2007. The above financial information does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. Statutory accounts for the period ended 31st October 2005 have been delivered to the Registrar of Companies. The auditors report on those accounts was unqualified and did not contain statements under S237(2) or (3) of the Companies Act 1985. Statutory accounts for the year ended 31st October 2006 including an unqualified audit report and containing no statements under S237(2) or (3) of the Companies Act 1985 will be delivered to the Registrar of Companies in due course. The annual 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 Enquiries: Richard Pavry Jupiter Asset Management Limited 020 7412 0703

Companies

Jadestone Energy (JSE)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today