Jupiter Green Investment Trust PLC : Half-yearl...

Jupiter Green Investment Trust Plc
Unaudited Half Yearly Results
for the six months to 30 September 2012

Chairman's Statement

In the six months to 30 September 2012 the investment backdrop remained very challenging with the crisis prevailing in southern Europe. The rise of marginal parties during the Greek election in May ignited concern that the country may contemplate leaving the eurozone. Meanwhile, Spain's beleaguered banking sector required an EU bailout. Sentiment improved, however, when ECB President Draghi pledged to "do whatever it takes" to save the euro, the policy detail surrounding which included the commitment to buy short-dated bonds of indebted countries with the aim of lowering borrowing costs and maintaining liquidity while economic reforms were introduced. The economic slowdown in China and the US also concerned markets during the period, although central bank policy announcements in both countries provided some relief.

During the period under review your Company's total assets, adjusted for share cancellations, decreased by 3.1 per cent. to £33,141,000. This compares with a fall in the Company's benchmark index, the MSCI World Small Cap Index of 2.0 per cent. over the same period. The Net Asset Value of the Company's Ordinary shares fell by 3.1 per cent. to 105.13p during the period under review, whilst their middle market price increased by 6.52 per cent. to 98.00p.

In April your Board announced a revised discount control policy with immediate effect. The essence of that policy is to use buybacks to seek to narrow the discount to net asset value at which the Company's shares trade over time, with a view to achieving a position where the Company's share price does not materially deviate from its net asset value by the time of the Company's Annual General Meeting in 2013. Since the introduction of the revised policy the discount has significantly reduced and as at 13 November 2012 was 6.5 per cent.

I recommend the manager's review in which he details the effects of a difficult economic backdrop on the portfolio. While these conditions have certainly created headwinds for some industries, such as waste management, they have also created opportunities for businesses offering economically competitive solutions in areas such as resource efficiency. Companies involved in organic foods have also enjoyed high levels of customer loyalty, despite tougher household budgets.

The June UN Conference on Sustainable Development in Rio de Janeiro (Rio + 20) ended largely as expected: there was little meaningful progress at the government level. A number of trends were underscored at the talks, however, which continue to shape the growth in the environmental economy. The two most notable of these were (i) the increased influence of the corporate sector in driving the environmental agenda and (ii) the broad recognition that a higher economic value should be given to environmental assets (such as water and biodiversity) in the wider global growth agenda.

Of particular note in the past six months have been the startling images of depleted corn crops in the US where the country has experienced its worst drought since 1956 and the warmest 12 month period to June since 1895. While incidents of extreme weather are certainly not uncommon, the prevalence and severity of extreme events appears to be growing across the globe. This year, drought also ravaged Brazil, record high temperatures were recorded in Europe in March and as many of you will no doubt be aware, here in the UK we experienced the wettest summer in 100 years. This list is far from exhaustive, but provides some indication of the sorts of weather a growing body of research suggests will occur more frequently in coming years as a result of climate change. As the spike in global grain prices this year shows, these events come at profound economic cost.

Finding solutions to help us adapt to and potentially mitigate the severity of extreme weather will take ingenuity and will involve companies from across many industries. These are businesses in which the Trust actively invests, under three key areas of focus: infrastructure, resource efficiency and demographics. The Trust continues to provide investors with an important vehicle for allocating capital to businesses providing cost-effective solutions to long term environmental challenges. It also provides investors with a highly diversified portfolio of investments underpinned by the transition of this once specialised area into the mainstream

P K O Crosthwaite
Chairman
19 November 2012

Manager's Review

Performance Review

For the six months ended 30 September 2012, the total return for the Trust was -3.1 per cent.* compared to returns of -2.0 per cent.* for the Trust's benchmark, the MSCI World Small Cap Index. During the same period the FTSE ET50 TR index returned -8.4 per cent.**. The FTSE ET50 index measures the performance of the largest 50 companies globally whose core business is the development and deployment of environmental technologies.

Market review

The six month period started poorly and this impacted the Net Asset Value of the Trust. Stock markets suffered heavy losses in April and May as an anti-austerity mood gathered momentum in Europe and investors feared the imminent exit of Greece from the monetary union. Spain's banking sector, meanwhile, required a bailout, which led to further market uncertainty at a time when economic data from the US and China showed a loss of momentum in both economies. With capital fleeing from southern Europe, the European Central Bank was once again forced to take extreme measures. This came in the form of a pledge to buy the bonds of highly-indebted countries, news of which drove down borrowing costs for Spain and Italy and helped lift stock market indices towards cyclical highs. However, by the time the US Federal Reserve announced its bold open-ended asset purchase programme ("QE3"), sentiment was tempered by concern about the deteriorating outlook for corporate earnings and generally weak economic data globally.

Fund review

The Trust lost some ground during the period. Holdings in areas most vulnerable to economic weakness were particularly tested by the conditions. Waste management companies, for example, were marked down to historically low levels due to weaker pricing and a deteriorating economic growth outlook. Notwithstanding the current headwinds that the sector faces, waste companies tend to be highly cash-generative businesses, supported by long term contracts, and current valuations underestimate the efforts being made by the management teams of some companies to strengthen operations. We took the opportunity to add to our holding in North American business Casella Waste Systems. Our exposure to Japan also proved a drag on performance due to broad market weakness, although our holding in Shimano made excellent progress with global demand for bicycle components remaining strong.

Organic and high welfare food holdings were again notable highlights during the period. The growth experienced by US companies United Natural Foods and Whole Foods Market is a testament to priority consumers are placing in natural and organic foods during difficult economic times. Elsewhere holdings exposed to the global drive towards greater resource efficiency, such as US recycled car parts company LKQ and food sorting technology business Tomra Systems, added value.

We established a holding in BorgWarner, a US business which specialises in fuel efficiency technology. The company has a strong and growing market position and was trading at an attractive valuation. Watts Water was also added to the portfolio during the period. This company has a very strong balance sheet and potential to grow operations in North America, Europe and Asia.  Longer term, we believe the water sector will offer investors considerable growth potential. The current market is worth some $500bn and is growing by about 6 per cent. a year, despite the challenging macroeconomic backdrop. Global supply and demand imbalances are so fierce in the sector that water is being considered the oil of the twenty-first century. Opportunities are emerging in businesses specialising in areas such as storage, transmission, treatment and efficiency.

The extreme weather seen this year, such as the drought in the US that destroyed crops and pushed up corn and soya bean prices, is a reminder of the increasing importance of environmental technologies to the long term growth of the economy. These weather events are expected to occur more frequently and with increased severity in coming years, requiring innovative solutions for mitigation and abatement. This is providing opportunities for companies from across our investment spectrum - infrastructure, resource efficiency and demographics.

Investment Outlook

We continue to see clear evidence of a structural shift occurring across many industries globally due to the ongoing convergence of environmental and economic needs. Demand continued for organic foods in the US, for example, has defied the widespread household deleveraging that has occurred in recent years. The tougher economic environment and quest for greater energy independence continue to underpin growth in businesses associated with fuel efficiency in vehicles and energy efficiency in buildings. Meanwhile, after several testing years of having to work hard to cut prices, wind and solar power companies are close to competing with conventional power on price, a fact which is making it easier for governments to consider this technology as an integral part of a country's energy mix. For example, Japan has introduced a solar incentives programme which could lead to some $9.6 billion in new installations as the country attempts to diversify away from nuclear power after the Fukushima disaster. Notwithstanding on-going eurozone risk, weaker prospects for the US economy and potential downturn in corporate profits, we believe there is a quiet revolution occurring in the environmental space which is sowing the seeds for long-term growth in our investment area.

Charles Thomas

Fund Manager

Jupiter Asset Management Limited

19 November 2012

* Source: Jupiter Asset Management.

**Source: Bloomberg.

Statement of ComprehensiveIncome for the six months to 30 September 2012 (unaudited)

		Six months to			Six months to
		30 September 2012			30 September 2011
	Revenue	Capital		Revenue	Capital
	Return	Return	Total	Return	Return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Loss on investments held at
fair value (Note 2)	-	(1,101)	(1,101)	-	(7,875)	(7,875)
Foreign exchange gain	-	20	20	-	10	10
Income	499	-	499	402	-	402
Total income	499	(1,081)	(582)	402	(7,865)	(7,463)
Investment management fee	(14)	(126)	(140)	(16)	(143)	(159)
Other expenses	(146)	(232)	(378)	(172)	-	(172)
Total expenses	(160)	(358)	(518)	(188)	(143)	(331)
Profit before taxation	339	(1,439)	(1,100)	214	(8,008)	(7,794)
Taxation	(37)	-	(37)	(28)	-	(28)
Profit and total comprehensive
income for the period	302	(1,439)	(1,137)	186	(8,008)	(7,822)
Return per Ordinary share
(Note 3)	0.93p	(4.44)p	(3.51)p	0.56p	(24.08p)	(23.52p)

The Company does not have any income or expense that is not included in profit for the period, and therefore the 'Profit for the period' is also the 'Total comprehensive income for the period' as defined in International Accounting Standard 1 (revised).

All of the profit and total comprehensive income for the period is attributable to the owners of the Company.

The total column of this statement is the income statement of the Company prepared in accordance with IFRS. The supplementary revenue return and capital return columns are both prepared under guidance produced by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations.

The financial information does not constitute 'accounts' as defined in section 434 of the Companies Act 2006.

Statement of Financial Position as at 30 September 2012

	30 September 2012	31 March 2012
	(unaudited)	(audited)
	£'000	£'000
Non current assets
Investments held at fair value through profit or loss	32,565	33,893
Current assets
Prepayments and accrued income	62	78
Cash and cash equivalents	862	2,297
	924	2,375
Total assets	33,489	36,268
Current liabilities
Accruals	(348)	(87)
Total net assets less current liabilities	33,141	36,181
Capital and reserves
Called up share capital	35	37
Share premium	27,285	27,285
Redemption reserve	236	234
Special reserve	24,292	24,292
Retained earnings (Note 5)	(18,707)	(15,667)
Total equity shareholders' funds	33,141	36,181
Net Asset Value per Ordinary share (Note 6)	105.13p	108.49p

Statement of Changes in Equity for the six months to 30 September 2012

For the six months to	Share	Share	Special	Redemption	Retained
30 September 2012	Capital	Premium	Reserve	Reserve	Earnings	Total
(unaudited)	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 Mar 2012	37	27,285	24,292	234	(15,667)	36,181
Net loss for the period	-	-	-	-	(1,137)	(1,137)
Ordinary shares   repurchased	2	-	-	2	(1,707)	(1,707)
Dividend paid	-	-	-	-	(196)	(196)
Balance at 30 Sept 2012	35	27,285	24,292	236	(18,707)	(33,141)

For the six months to	Share	Share	Special	Redemption	Retained
30 September 2011	Capital	Premium	Reserve	Reserve	Earnings	Total
(unaudited)	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 Mar 2011	37	26,229	24,292	233	(9,706)	41,085
Net loss for the period	-	-	-	-	(7,822)	(7,822)
Ordinary shares issued	1	1,056	-	-	-	1057
Ordinary shares repurchased	-	-	-	-	(1,474)	(1,474)
Dividend paid	-	-	-	-	(131)	(131)
Balance at 30 Sept 2011	38	27,285	24,292	233	(19,133)	32,715

Cash Flow Statement for the six months to 30 September 2012 (unaudited)

	Six months to 30 September 2012	Six months to 30 September 2011
	2012	2011
	£'000	£'000
Cash flows from operating activities
Investment Income received	498	401
Deposit interest received	1	2
Investment management fee paid	(142)	(135)
Realised gain on foreign currency	20	10
Other cash expenses	(152)	(351)
Cash generated from operations	225	(73)
Taxation	(37)	(28)
Net cash outflow from operating activities	188	(101)
Cash flows from investing activities
Purchase of investments	(565)	(1,251)
Sale of investments	990	3,779
Net cash inflow from investing activities	425	2,528
Cash flows from financing activities
Shares issued	-	1,057
Shares repurchased	(1,629)	(1,474)
Subscription rights reorganisation	(223)	-
Dividend paid	(196)	(131)
Net cash outflow from financing activities	(2,048)	(548)
(Decrease)/increase in cash	(1,435)	1,879
Cash and cash equivalents at start of period	2,297	683
Cash and cash equivalents at end of period	862	2,562

NOTES TO THE FINANCIAL STATEMENTS

1.        Accounting Policies
The accounts comprise the unaudited financial results of the Company for the six month period from 1 April 2012 to 30 September 2012. The accounts are presented in pounds sterling, as this is the functional currency of the Company.

The accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (IFRIC).

A summary of the principal accounting policies, all of which have been applied consistently throughout the period, is set out below:

Revenue, Expenses and Interest Payable
Revenue includes dividends from investments quoted ex-dividend on or before the date of the Statement of Financial Position. Income on fixed income securities is recognised on a time apportionment basis according to the period for which these investments are held. Deposit and other interest receivable, expenses and interest payable are accounted for on an accruals basis. An analysis of retained earnings broken down into revenue (distributable) items and capital (non-distributable) items is given in Note 5. In arriving at this breakdown, expenses have been presented as revenue items except as follows:

1. expenses which are incidental to the purchase or sale of an investment are included in the cost or deducted from the proceeds of the investment (see Note 4).  

2. any performance fees payable are allocated wholly to capital, reflecting the fact that, although they are calculated on a total return basis, they are expected to be attributable largely, if not wholly, to capital performance. 

3. 90 per cent. of the investment management fee is charged to capital. 

Investments
All investments are classified as held at fair value through profit or loss. All investments are measured at fair value with changes in their fair value recognised in the income statement. The fair value of listed investments is based on their quoted bid market price at the date of the Statement of Financial Position without any deduction for estimated future selling costs.

2.        Loss on Investments

	Six months to  30 September 2012	Six months to  30 September 2011
	£'000	£'000
Net (loss) / gain realised on sale of investments	(556)	639
Movement in unrealised gains	(545)	(8,514)
Loss  on investments	(1,101)	(7,875)

3.              Earnings per Ordinary share
The earnings per Ordinary share figure is based on the net loss for the six months of £1,137,000 (six months to 30 September 2011: loss £7,822,000) and on 32,433,897 (six months to 30 September 2011: 33,255,408) Ordinary shares, being the weighted average number of Ordinary shares in issue during the period.

The earnings per Ordinary share figure detailed above can be further analysed between revenue and capital, as below.

	Six months to  30 September 2012	Six months to  30 September 2011
	£'000	£'000
Net revenue profit	302	186
Net capital loss	(1,439)	(8,008)
Net total loss	(1,137)	(7,822)
Weighted average number of Ordinary shares in issue during the period	32,433,897	33,255,408
Revenue earnings per Ordinary share (p)	0.93	0.56
Capital earnings per Ordinary share (p)	(4.44)	(24.08)
Total earnings per Ordinary share (p)	(3.51)	(23.52)

4. Transaction Costs 

The following transaction costs were incurred during the period:

	Six months to  30 September 2012	Six months to  30 September 2011
	£'000	£'000
Purchases	1	3
Sales	1	4
Total	2	7

4. Retained earnings 

The table below shows the movement in the retained earnings between revenue and capital items.

	Revenue	Capital	Total
	£'000	£'000	£'000
At 31 March 2012	308	(15,975)	(15,667)
Movement during the period:
Net profit / (loss) for the period	302	(1,439)	(1,137)
Shares repurchased	-	(1,707)	(1,707)
Dividends paid	(196)	-	(196)
At 30 September 2012	414	(19,121)	(18,707)

4. Net Asset Value per Ordinary share 

The Net Asset Value per Ordinary share is based on the net assets attributable to the Ordinary shareholders of £33,141,000 (31 March 2012: £36,181,000) and on 31,522,345 (31 March 2012: 33,348,566) Ordinary shares, being the number of Ordinary shares in issue at the period end.

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 2012 and in this Half Yearly Financial Report.

Principal Risks and Uncertainties
The principal risks and uncertainties associated with the Company's business can be divided into the following areas:

-        investment policy and process
-        market movements
-        accounting, legal and regulatory
-        operational, and
-        financial, such as market price risk and foreign currency risk.

Information on these risks is set out in the Annual Report and Accounts 2012.

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 Green Investment Trust PLC confirm to the best of our knowledge:

1. the condensed set of financial statements have been prepared in accordance with the Accounting Standards Board's statement 'Half-Yearly Financial Reports'; 

2. 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 

3. 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

P K O Crosthwaite
Chairman
19 November 2012

Investment Objective

The Company's investment policy is to generate long-term capital growth through a diverse portfolio of companies providing environmental solutions.

Full details of the Company's investment policy can be found in the 2012 Interim Report.

The Interim Report will be available on the Company's website at http://www.jupiteronline.com/Financial-advisers-and-wealth-managers/Literature?browseby=Product Copies may also be obtained from the registered office of the Company at 1 Grosvenor Place, London SW1X 7JJ on request.

BY ORDER OF THE BOARD
JUPITER ASSET MANAGEMENT LIMITED
Secretaries

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Source: Jupiter Green Investment Trust PLC via Thomson Reuters ONE

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