Half-yearly report

Jupiter Second Enhanced Income Trust Plc Announcement of Unaudited Interim Results for the half year to 30th April 2008 CHAIRMAN'S STATEMENT The total assets less current liabilities of your Company fell by 15.2 per cent. during the six months to 30 April 2008. By comparison the return on the Company's benchmark index, the FTSE All-Share, was -10.3 per cent. (in capital terms) over the same period. The Net Asset Value of the Company's Geared Income shares fell by 35.6 per cent. during the six months under review. Taking the dividend payments into account, the Company provided Geared Income shareholders with a total return of -33.1 per cent. The Zero Dividend Preference shares saw an increase in their Net Asset Value of 3.7 per cent. over the six months under review from 72.82p to 75.49p. The Zero Dividend Preference shares have also continued to attract a modest premium rating on the London Stock Exchange during the period relative to their accrued capital entitlement under the Company's Articles of Association. 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 -15.2 per cent. over the period. Revenues Revenues after tax for the period amounted to £1,560,000 (which compares with £1,479,000 in the previous six months). Two interim dividends of 0.8p and 0.9p have been declared in respect of the period. Subject to unforeseen circumstances, the Board anticipates that the Company should be in a position to pay an increased aggregate dividend in respect of the current financial year to 31 October 2008 compared with the 3.65p paid in respect of the year ended 31 October 2007. Outlook I commend to you the Manager's Review, which outlines the difficult circumstances of income seekers in a year when markets were particularly driven by complex macroeconomic factors as opposed to fundamentals. The portfolio will continue to adjust to the prevailing market conditions, seeking income where it is to be found. The board believe that the Company is well placed to take advantage of opportunities thrown up by a much more volatile market. Jimmy West Chairman 27 June 2008 MANAGER'S REVIEW In the period under review, the share prices of many UK equities declined as markets grew increasingly fragile, with the nominal levels of the FTSE 100 and FTSE All Share indices supported mainly by a handful of low yielding mining stocks and oil majors. UK equities, particularly financials, fell sharply towards the end of 2007 as the evaporation of liquidity threatened the financial system and fears grew that banks would report further losses from the subprime debacle. Since then, central banks in the US, UK and Eurozone have addressed these problems with a number of measures. However the spread of three month inter-bank rates over base rates remained elevated as banks continued to be distrustful of each other. Towards the end of the period under review the Bank of England's financial stability report indicated that the worst of the credit crunch appeared to be over. While this may prove correct, the effects of tighter lending have yet to work their way through the US and UK economies. In the portfolio we increased exposure to interdealer brokers which were likely to benefit from higher levels of market volatility. We also increased our holdings in defensive life assurers such as Legal & General and Standard Life while reducing exposure to a range of other financials. After several difficult months, April provided some respite for global stock markets as investors decided that a series of aggressive cuts in US interest rates would stimulate the global economy later this year. But a closer look at the US and UK markets confirms the underlying situation remains unchanged. Major mining stocks (buoyed by rumours of further corporate activity) continue to provide the main support to otherwise declining markets, although other energy stocks, such as oil, gas and related support services, are performing well. For example, in its first quarter results BP raised its dividend by 33 per cent. in sterling terms while Royal Dutch Shell managed a double digit increase. Meanwhile, oil surged to new highs, hitting US$119 per barrel in April on concerns about disruptions to supply. Since April the price per barrel had increased to US$139 (as at the date of this review). The dividend cuts, capital raisings and lack of further bad debts that were noticeably absent in the banks' February reporting season started to appear in April. Royal Bank of Scotland and HBOS both announced rights issues (with implicit dividend cuts) to strengthen their balance sheets. The main drag on returns during the period came, once again, from our decision not to hold major mining stocks such as BHP Billiton, Rio Tinto and Xstrata. News that mortgage approval levels had fallen to their lowest level in a decade, along with downgrades to the sector, hit shares in house builder Bellway. Over the 12 months prior to 30 April 2008, the Company has generated a capital return on total assets of -17.4 per cent., compared to a return of -7.6 per cent. for the FTSE All-Share. It is worth noting, however, that the index was supported by just a few large mining stocks during the period. Over three years, the Company has provided a capital return on total assets of 29.7 per cent., against 29.3 per cent. for the index. Outlook The Bank of England progressively lowered the base rate from 5.75 per cent. in November to 5 per cent. by the end of April even as higher oil and food prices helped push CPI inflation from 2.1 per cent. to 3 per cent. This has left the Bank with a tricky policy dilemma. Raising base rates to quash inflation will hit consumers hard, whereas cutting them to offset the credit contraction could easily engender further price increases, raise inflationary expectations and create longer term economic problems. Set against this, most of the bad debts arising from the credit crunch have been declared and a number of major financial institutions have begun to raise fresh capital. The Bank of England has implemented a scheme to boost liquidity by as much as £90bn - £100bn in an attempt to restore normality in the interbank money markets. At the time of writing, however, LIBOR spreads remain stubbornly high. We expect a marked slowdown in the UK economy as autumn approaches and the effects of the contraction in credit markets moves into the wider economy. This time around, unlike 2001-03, British consumers look set to bear the full brunt of the slowdown. But, unless unemployment rises sharply, we do not expect a recession in the near term. The big question is how far Western economies will slow at a time when interest rates are on the rise in emerging economies grappling with inflationary pressures. I consider the Company's holdings to be in good shape but market jitteriness is likely to continue for a while longer. However, it will take most of this year for the consequences of careless lending practices to work through the financial system. Anthony Nutt Investment Manager 27 June 2008 INCOME STATEMENT for the six months to 30 April 2008 (Unaudited) Six months to Six months to 30 April 2008 30 April 2007 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Realised gains on investments held at fair value through profit or loss - 801 801 - 3,334 3,334 Unrealised appreciation of investments held at fair value through profit or loss - (14,536) (14,536) - 5,207 5,207 Income 2,053 - 2,053 1,783 - 1,783 _______ ______ ______ _______ ______ ______ Gross return 2,053 (13,735) (11,682) 1,783 8,541 10,324 Investment management fee (314) - (314) (445) - (445)Investment performance fee - - - - (255) (255)Other expenses (179) - (179) (185) - (185) ______ ______ ______ ______ ______ ______ Net return before finance costs and taxation 1,560 (13,735) (12,175) 1,153 8,286 9,439 Finance costs - (1,677) (1,677) (1) (1,552) (1,553) ______ ______ ______ ______ ______ ______ Net return on ordinary activities before taxation 1,560 (15,412) (13,852) 1,152 6,734 7,886 Tax on ordinary activities - - - (6) - (6) ______ ______ ______ ______ ______ ______ Net return on ordinary activities after taxation 1,560 (15,412) (13,852) 1,146 6,734 7,880 ______ ______ _______ ______ ______ _______ Net return per Geared Income share 2.48p (24.53)p (22.05)p 1.82p 10.72p 12.54p ===== ====== ====== ====== ====== ====== 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. The financial information does not constitute `accounts' as defined in section 240 of the Companies Act 1985. BALANCE SHEET at 30 April 2008 30 April 2008 31 October 2007 (unaudited) (audited) £'000 £'000 Fixed assets Investments at fair value through profit or loss 57,956 83,672 _______ _______ Current assets Cash at Bank 15,237 4,616 Debtors 1,859 297 _______ _______ 17,096 4,913 Creditors: amounts falling due within one year (206) (276) _______ _______ Net current assets 16,890 4,637 _______ _______ Total assets less current liabilities 74,846 88,309 Creditors: amounts falling due after more than one year Zero Dividend Preference shares (47,426) (45,749) _______ _______ Net assets 27,420 42,560 ====== ====== Capital and reserves Called up share capital 628 628 Share premium 3,141 3,141 Special reserve 21,681 21,681 Capital reserve - realised 2,965 3,841 Capital reserve - unrealised (2,927) 11,609 Revenue reserve 1,932 1,660 ________ _______ Total shareholders' funds 27,420 42,560 ====== ====== Net Asset Value per Geared Income share 43.65p 67.75p _______ _______ RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the six months to 30 April 2008 Capital Capital Share Share Special Reserve Reserve Revenue Capital Premium Reserve Realised Unrealised Reserve Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 For the six months to 30 April 2008 (unaudited) Balance at 1 November 2007 628 3,141 21,681 3,841 11,609 1,660 42,560 Net profit for the period - - - (876) (14,536) 1,560 (13,852) Dividends paid and declared 4th interim dividend for year ended 31 October 2007 - - - - - (785) (785) 1st interim dividend for year ended 31 October 2008 - - - - - (503) (503) ______ _____ _____ ______ ______ ______ ______ Balance at 30 April 2008 628 3,141 21,681 2,965 (2,927) 1,932 27,420 ______ _____ _____ ______ ______ ______ ______ For the six months to 30 April 2007 (unaudited) Balance at 1 November 2006 628 3,141 21,681 (152) 13,327 1,203 39,828 Net profit for the period - - - 1,527 5,207 1,146 7,880 Dividends paid and declared 4th interim dividend for year - - - - - (660) (660) ended 31 October 2006 1st interim dividend for year - - - - - (503) (503) ended 31 October 2007 ______ _____ _____ ______ ______ ______ ______ Balance at 30 April 2007 628 3,141 21,681 1,375 18,534 1,186 46,545 ______ _____ _____ ______ ______ ______ ______ CASH FLOW STATEMENT for the six months to 30 April 2008 (Unaudited) 2008 2007 £'000 £'000 Operating activities Net cash inflow / (outflow) from operating 716 (1,194) activities Servicing of finance Returns on investments and finance costs - (1) Taxation Net tax received / (paid) 6 (9) Capital expenditure and financial investment Purchase of fixed asset investments (9,578) (8,432) Sale of fixed asset investments 20,765 10,475 ______ ______ Net cash inflow from capital expenditure and financial investment 11,187 2,043 Equity dividends paid (1,288) (1,163) _____ _____ Increase / (decrease) in cash 10,621 (324) _____ _____ Note: 1. DIRECTORS' RESPONSIBILITY STATEMENT We the Directors of Jupiter Second Enhanced Trust PLC confirm to the best of our knowledge: a) The condensed set of financial statements have been prepared in accordance with the Accounting Standards Board's statement `Half-Yearly Financial Reports'; b) The Chairman's Statement, Manager's Review and the condensed financial statements includes a fair review of the information required by the Disclosure and Transparency Rules 4.2.7 during the six months to 30th April 2008; and c) A fair review of the information required by the Disclosure and Transparency Rules 4.2.8R (disclosure of related party transactions and changes therein) can be found in note 2 below. By order of the Board Jimmy West Chairman 27 June 2008 2. RELATED PARTIES Mr Nutt is a director of Jupiter Asset Management Limited and Jupiter Investment Management Group Limited whose subsidiaries Jupiter Asset Management Limited and Jupiter Administration Services Limited receive investment management and 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 12 months notice by either party) for a quarterly fee of 0.2125 per cent. of the net assets of the Company excluding the value of any Jupiter managed investments payable in arrears on 31 January, 30 April, 31 July and 31 October in each year. Jupiter Asset Management Limited is also entitled to an investment performance fee if Total Assets less current liabilities (after adding back any dividends paid or performance fee accrued) at the end of any given accounting period have increased over the greatest of three `high water marks', being (i) the Equity Proceeds (ii) Total Assets less current liabilities at the end of the last financial period in respect of which a performance fee was last paid (after deduction of the performance fee paid to the Investment Manager in respect of that period) and (iii) 1.10 multiplied by Total Assets less current liabilities at the end of the previous accounting period (after deduction of any performance fee paid to the Investment Manager in respect of that period). In such circumstances, the performance fee will amount to 15 per cent. of any such excess. The calculation of the total amount of any performance fee will be adjusted for the repurchase or redemption of shares in any accounting period. The combined amount of any management and performance fees payable in respect of any twelve month period will not exceed 5 per cent. of the Total Assets less current liabilities of the Company. Jupiter Administration Services Limited is contracted to provide secretarial, accounting and administrative services to the Company for an annual fee of £83,067 adjusted each year in line with the Retail Price Index payable quarterly. RISKS AND UNCERTAINTIES The risks to the Company are foreign currency movements, market price movements, interest rates, use of derivatives, liquidity risk, credit risk, the discount to Net Asset Value and loss of investment trust status. A detailed explanation of the Risks and Uncertainties facing the Company can be found in note 15 on pages 44 to 45 of the Company's published report and accounts for the year to 31 October 2007. The interim report will be sent to all 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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