Half-yearly report

Jupiter Second Enhanced Income Trust Plc Unaudited Interim Results for the six months to 30 April 2009 Chairman's Statement Performance The six months to 30 April 2009 was a period of poor performance for your Company in continuing difficult and challenging market conditions. The total assets less current liabilities of your Company fell by 8.5 per cent. during the period. By comparison the return on the Company's Benchmark Index, the FTSE All-Share, was -0.5 per cent. (in capital terms) over the same period. The Net Asset Value of the Company's Geared Income shares fell by 74.4 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 -50.1 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 78.29p to 81.15p. The modest discount on the Zero Dividend Preference shares narrowed from 9.3 per cent. at 31 October 2009 to 4.5 per cent. at the end of the period. The Packaged Units are not geared by the Company's split capital structure since they are each comprised of one Geared Income share and one Zero Dividend Preference share. The return on the Net Asset Value of the Packaged Units was -8.5 per cent. over the period. Revenues and Dividends Revenues after tax for the period amounted to £986,000 (which compares with £1,560,000 in respect of the first six months of the 2008 accounting year). The Board has declared two interim dividends of 1.5p and 2.0p in respect of the current financial year. These payments compare favourably with the first two interim dividends of 1.7p in total paid in respect of the 2008 year of account. End of Life The Directors are actively considering the options for continuation or reconstruction of the Company at the end of its life on 30 October 2009. Details are expected to be announced later in the year and a circular will be sent to all shareholders in due course containing full details of our proposals. Outlook The Manager's Review gives information on market conditions and investments and outlines the circumstances faced by shareholders during the worst financial crisis for many decades. The portfolio will continue to adjust to the prevailing market conditions, seeking reliable sources of income. Jimmy West Chairman 26 June 2009 Manager's Review Market Review In the period under review, global financial markets have slowly come to grips with the immense damage done after the US Treasury permitted the collapse of Lehman Brothers last September. This event caused panic in markets, not only because of the multiplicity of transactions which embedded Lehman into the financial system, but also because it caused increased distrust between market counterparties. At a stroke, all banks and insurance companies once considered to be "too big to fail" became vulnerable. As banks sought more capital to strengthen their balance sheets either privately or via the government's rescue package, existing shareholders saw the value of their stakes severely diluted. This resulted in a significant fall in bank shares which drove a more general downturn in the equity market. The prospect of a deep recession caused sharp falls in the value of cyclical stocks in sectors such as real estate, industrial metals and automobile parts. Financial markets again experienced turmoil in January and February as banks on both sides of the Atlantic came under heavy selling pressure. The US and UK authorities were pushed into a second round of bail-outs. The Bank of England continued to cut interest rates aggressively from 4.5 per cent., at the start of November, to an effective floor of 0.5 per cent. in March. But since the transmission mechanism whereby cheaper money diffused into the economy had already broken down, the Bank switched to unorthodox methods to increase the supply of money to the economy. It hoped that by buying a vast quantity of 5-25 year gilts and other assets (£75bn by the end of May), it would ease the deflationary effects of deleveraging and stimulate lending. During the period under review your Company underperformed the FTSE All-Share Index because it was overweight in defensive, income-paying stocks such as BP, Royal Dutch Shell (B), GlaxoSmithKline and AstraZeneca. These were among the main detractors to index returns. Nor did your Company hold low yielding mining stocks such as BHP Billiton and Xstrata which contributed positively to the index towards the end of the period under review. Your Company also carried a high cash weighting (over 20 per cent.) in an attempt to protect the interests of all shareholders against unusually high levels of market volatility. We added further to positions in Admiral, where insurance rates are hardening, GlaxoSmithKline, Tullet Prebon, Centrica and FirstGroup. While not immune to the effects of a slowing economy, some 55 per cent. of the latter's profits are contract-backed. It remains a defensive play capable of growing its dividend. Outlook One notable feature of the current downturn is the degree of synchronisation across economies. We have experienced not so much a crisis within the financial system as a crisis of the financial system. According to an IMF study of 122 recessions, those associated with financial crises tend to be unusually severe, while globally synchronised recessions tend to be long and deep. The current downturn is a rare combination of both, so recovery is likely to be sluggish and reliant on a revival of the US economy. More specifically, besides the restoration of confidence in the financial sector, we need to see signs of stabilisation in the US housing market because the American household represents nearly 20 per cent. of the global economy. Set against this gloomy prognosis, governments have been quick to react with aggressive easing of monetary policy in tandem with fiscal measures (where possible) to support economic activity in the short-term. These actions could help move the recovery forward. While the economic outlook is not great, equity markets have already discounted much of the bad news. A good case can be made for shares at current levels. Earnings multiples are low and yields are high, particularly compared with government bonds. Good quality companies with strong market positions and sound balance sheets are trading at levels not seen for many years. In a year when many companies are reducing (or even suspending) dividends, reliable sources of yield have become harder to find, being concentrated among a smaller proportion of very large companies. Oils, gas, beverages, insurers, pharmaceuticals and certain transport stocks are best placed to support dividends with their strong cash flows and low levels of debt. These tend to be diversified global businesses. Those with dollar revenues can also provide additional protection against Sterling weakness in the face of poorer growth prospects. Anthony Nutt Fund Manager Jupiter Asset Management Limited 26 June 2009 INCOME STATEMENT for the six months to 30 April 2009 (Unaudited) Six Six months to months to 30 30 April 2008 April 2009 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Loss on investments held at fair value through profit or loss - (1,828) (1,828) - (13,735) (13,735) 1,398 Income ______ ______- 1,398 2,053 ________- 2,053 Gross return 1,398 (1,828) (430) 2,053 (13,735) (11,682) Investment management fee (228) - (228) (314) - (314) Other expenses (166) - (166) (179) - (179) ______ ______ ______ ______ ______ ______ Net return on ordinary activities before finance costs and taxation 1,004 (1,828) (824) 1,560 (13,735) (12,175) Finance costs - (1,793) (1,793) - (1,677) (1,677) ______ ______ ______ ______ ______ ______ Net return on ordinary activities before taxation 1,004 (3,621) (2,617) 1,560 (15,412) (13,852) Tax on ordinary activities (18) - (18) - - - ______ ______ ______ ______ ______ ______ Net return on ordinary activities after taxation 986 (3,621) (2,635) 1,560 (15,412) (13,852) ______ ______ _______ ______ ______ _______ Net return per Geared Income share 1.57 p (5.76)p (4.19)p 2.48p (24.53)p (22.05)p ===== ====== ====== ====== ====== ====== 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 2009 30 April 2009 31 October 2008 (unaudited) (audited) £'000 £'000 Fixed asset investments Investments at fair value through profit or loss 42,227 44,593 _______ _______ Current assets Debtors 672 1,479 Cash at bank 11,987 12,336 _______ _______ 12,659 13,815 Creditors: amounts falling due within one year (1,595) (192) Zero Dividend Preference shares (50,977) (49,184) ______ _______ Net current assets (39,913) (35,561) _______ _______ Total net assets 2,314 9,032 ====== ====== Capital and reserves Called up share capital 628 628 Share premium 3,141 3,141 Special reserve 21,681 21,681 Capital reserve (22,726) (19,105) Revenue reserve (410) 2,687 ________ _______ Total shareholders' 2,314 9,032 funds ====== ====== Net Asset Value per Geared Income 3.68p 14.38p share _______ _______ RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the six months to 30 April 2009 Share Share Special Capital Revenue Total Capital Premium Reserve Reserve Reserve £'000 £'000 £'000 £'000 £'000 £'000 For the six months to 30 April 2009 (unaudited) Balance at 1 628 3,141 21,681 (19,105) 2,687 9,032 November 2008 Net return for - - - (3,621) 986 (2,635) the period Dividends paid and declared 4th interim - - - - (1,885) (1,885) dividend for year ended 31 October 2008 1st interim - - - - (942) (942) dividend for period ending 30 October 2009 Dividend declared and unpaid 2nd interim dividend for period ending 30 October 2009 (payable on - - - - (1,256) (1,256) 30 June 2009) ______ _____ _____ ______ ______ ______ Balance at 30 628 3,141 21,681 (22,726) (410) 2,314 April 2009 ______ _____ _____ ______ ______ ______ For the six months to 30 April 2008 (unaudited) Balance at 1 628 3,141 21,681 15,450 1,660 42,560 November 2007 Net return for - - - (15,412) 1,560 (13,852) the period Dividends paid and declared 4th interim - - - - (785) (785) dividend for year ended 31 October 2007 1st interim - - - - (503) dividend for (503) year ended 31 October 2008 ______ _____ _____ ______ ______ ______ Balance at 30 628 3,141 21,681 1,932 27,420 April 2008 38 ______ _____ _____ ______ ______ ______ CASH FLOW STATEMENT for the six months to 30 April 2009 (Unaudited) 2009 2008 £'000 £'000 Operating activities Net cash inflow from 1,492 716 operating activities Taxation Net tax 6 (paid)/received (18) Capital expenditure and financial investment (5,079) (9,578) Purchase of investments Sale of investments 20,765 6,083 ______ ______ Net cash inflow from 1,004 11,187 capital expenditure and financial investment Equity dividends (2,827) (1,288) paid _____ _____ (Decrease)/increase (349) 10,621 in cash _____ _____ Notes to the Condensed Financial Statements Accounting policies The principal accounting policies all of which have been applied consistently throughout the period are set out below. (a) Basis of Preparation The Financial Statements for the six months to 30 April 2009 have been prepared in accordance with UK Generally Accepted Accounting Principles ('UK GAAP') and with the Statement of Recommended Practice ('SORP') for Investment Trust Companies issued by the Association of Investment Companies ('AIC') in January 2003 and revised in December 2005. The Company continues to adopt the going concern basis in the preparation of the financial statements, although there are uncertainties that the Directors have had to consider in deciding to prepare the financial statements on this basis, which are set out below. The Company has a planned life until 30 October 2009, on which date 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 that obligation by the Company's shareholders. It is the Directors' intention to put proposals to shareholders later in the year for the continuation or reconstruction of the Company. The validity of the going concern basis would depend on the Directors proposing the continuation of the Company and such a continuation vote being passed by shareholders. This condition indicates the existence of a material uncertainty which may cast significant doubt on the ability of the Company to continue as a going concern. The primary purpose of a continuation vote is to determine whether shareholders are satisfied to continue the operations of the Company, or whether shareholder interests would be better served by a liquidation or re-organisation of the Company. The Directors will consider the form of proposals to be put to Shareholders over the coming months. The Directors, having considered the prospects of shareholder support for any proposed continuation of the Company, and the future cash flows of the Company, are satisfied that it is appropriate to prepare the financial statements on a going concern basis. (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 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, and in accordance with the provisions of Financial Reporting Standard 25 'Financial Instruments' and are 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 Preference shares are classified as a liability in the accounts and 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 can not 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 * foreign exchange gains and losses * unrealised gains and losses on investments The capital reserve is not available for the payment of dividends. (h) 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 held at fair value through profit or loss. 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. 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 (a) the Equity Proceeds (b) 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 (c) 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. No performance fee was payable for the six months to 30 April 2009 (2008: nil). Jupiter Administration Services Limited is contracted to provide secretarial, accounting and administrative services to the Company for an annual fee of £86,556 adjusted each year in line with the Retail Price Index payable quarterly. Interim Management Report Related Party Transactions During the first six months of the current financial year no transactions with related parties have taken place which have materially affected the financial position or performance of the Company during the period. Details of related party transactions are contained in the Annual Report and Accounts 2008 and in this Report. Principal Risks and Uncertainties The principal risks and uncertainties associated with the Company's business can be divided into the following areas: - market movements - interest rate, liquidity and credit risk, and - loss of investment trust status. Information on these risks is set out in the Annual Report and Accounts 2008. In the view of the Board these principal risks and uncertainties are applicable to the remaining six months of the year as they were to the six months under review. 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 Interim Management Report include a fair review of the information required by Disclosure and Transparency Rule 4.2.7R, and c) the Interim Management Report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.8R on related party transactions. The half-yearly financial report has not been audited or reviewed by the Company's auditors. By order of the Board Jimmy West Chairman 26 June 2009 Investment Objectives The objectives of the Company are to repay the capital entitlement of the Zero Dividend Preference shareholders and to maximise the income and return of capital to the Geared Income shareholders Full details of the Company's investment policy can be found in the 2008 Annual Report and Accounts. The Interim Report will be sent to all shareholders and will be available on the Company's website at www.jupiteronline.co.uk. Copies may also 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 ---END OF MESSAGE--- This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.

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