Final Results
Jupiter European Opps. Trust PLC
21 August 2003
Jupiter European Opportunities Trust PLC
CHAIRMAN'S STATEMENT
Although markets rallied strongly in the latter part of the year under review,
overall equity returns were negative. Your Company once again achieved a
performance that was significantly better than its benchmark index. Net asset
value per share declined by 8.0%, from 91.12p to 83.82p, having been as low as
64.82p at the end of March. Over the year the FTSE World Europe ex-UK Index fell
by no less than 21.2%.
The share price, however, declined by 23.8% over the year, and the discount to
net asset value therefore widened from less than 1% to 17.7% even though a total
of 2,275,000 shares (2.74% of the total) were bought for cancellation at an
average price of 54.6p and discount of 16.5%. Fund managers tend to concentrate
on net asset value, shareholders on share price, and nobody enjoys the
combination of a falling net asset value and widening discount. Buying shares
for cancellation should reduce the discount; it also has the effect, from the
fund manager's point of view, of adding to every portfolio holding without
paying the bid-offer spread or dealing commission. Earlier share purchases were
made at the suggestion of your manager who felt that the prices of many shares
in the portfolio had fallen to absurd levels. Subsequent events have proved that
his judgement was correct.
By the time we report to you next year, investment trusts should have been
granted permission to hold shares in "treasury", that is to buy shares in for
subsequent reissue, as opposed to cancellation. This facility, if used
correctly, should allow greater flexibility in the management of investment
trust discounts.
Over the year the Company has made use of its borrowing facilities, being
de-geared during part of the market fall and running a leveraged position as
prices recovered. Given that such borrowing was in euros, there was a small
element of dilution for UK shareholders of the euro's strength against sterling,
but the rise in share prices more than compensated. Over the year, the euro
strengthened from 1.57 to 1.39 against sterling, an appreciation of over 11%.
Indeed the euro's appreciation against the dollar, and dollar-linked currencies
such as the Chinese renminbi, has been even more marked. Western European
manufacturers of commodity-type products will find it hard to compete with low
wage areas such as Eastern Europe or the Pacific Region. However your Company's
portfolio is built around companies whose products or services are in universal
demand and not especially price-sensitive, while the companies just happen to be
based in Europe. Markets have regained much of their erstwhile confidence. The
greatest risk to sentiment is arguably the threat of deflation, particularly in
Europe; but Mr Bush is determined to be re-elected, Mr Greenspan has read the
history books, and the US and UK authorities still have weapons in the locker to
prevent the onset of deflation. All being well, they will carry Europe too.
H M Priestley
Chairman
21st August 2003
CONSOLIDATED STATEMENT OF TOTAL RETURN
(INCORPORATING THE REVENUE ACCOUNT)
for the year ended 31st May 2003
Audited
31st May 2003 31st May 2002
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Realised losses on investments - (468) (468) - (5,910) (5,910)
Decrease/(increase) in unrealised ______- (5,670) (5,670) ______- 9,322 9,322
appreciation of fixed asset investments
Total capital (losses)/gain on - (6,138) (6,138) - 3,412 3,412
investments
Foreign exchange losses on loan - (1,798) (1,798) - (928) (928)
Other exchange gains - 12 12 - 115 115
Income 2,942 - 2,942 815 - 815
Investment management fee (649) - (649) (744) - (744)
Other expenses (382) ______- (382) (451) _____- (451)
NET RETURN /(LOSS) BEFORE FINANCE COSTS AND 1,911 (7,924) (6,013) (380) 2,599 2,219
TAXATION
Interest payable (471) ______- (471) (609) _____- (609)
RETURN/(LOSS) ON ORDINARY ACTIVITIES BEFORE 1,440 (7,924) (6,484) (989) 2,599 1,610
TAX
Tax on ordinary activities (229) ______- (229) (89) _____- (89)
RETURN /(LOSS) ON ORDINARY 1,211 (7,924) (6,713) (1,078) 2,599 1,521
ACTIVITIES AFTER TAX
RETURN/(LOSS) PER ORDINARY SHARE 1.48p (9.67)p (8.19)p (1.30)p 3.13p 1.83p
The revenue column of this statement is the profit and loss account of the
Group.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued during the year.
CONSOLIDATED BALANCE SHEET
as at 31st May 2003
Audited
2003 2002
£'000 £'000
FIXED ASSETS Restated
Investments 80,578 85,753
CURRENT ASSETS
Investments 4,145 3,166
Debtors 1,689 450
Cash at bank 130 2,019
5,964 5,635
CREDITORS: amounts falling due within
one year (1,950) (360)
NET CURRENT ASSETS 4,014 5,275
TOTAL ASSETS LESS CURRENT LIABILITIES 84,592 91,028
CREDITORS: amounts falling due after more than one year (16,977) (15,454)
NET ASSETS 67,615 75,574
CAPITAL AND RESERVES
Called up share capital 807 829
Share premium 38,843 38,843
Special reserve 37,597 38,843
Redemption reserve 22 -
Capital reserve - realised (7,541) (7,085)
Capital reserve - unrealised (1,981) 5,487
Revenue reserve (132) (1,343)
TOTAL EQUITY SHAREHOLDERS' FUNDS 67,615 75,574
NET ASSET VALUE PER ORDINARY SHARE 83.82p 91.12p
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31st May 2003
Audited
2003 2002
£'000 £'000
OPERATING ACTIVITIES
Net cash inflow/(outflow) from operating activities 928 (2,010)
_______ _______
SERVICING OF FINANCE
Interest paid (525) (627)
_______ _______
Net cash outflow from servicing of finance (525) (627)
_______ ______
TAXATION
Net tax paid (106) (311)
_______ _______
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of fixed asset investments (56,147) (48,223)
Sale of fixed asset investments 53,950 50,013
_______ _______
Net cash (outflow)/inflow from capital expenditure and financial (2,197) 1,790
investment
_______ ________
Net cash outflow before financing (1,900) (1,158)
_______ _______
FINANCING
Long term loan received 10,016 10,007
Long term loan repaid (10,291) (5,028)
Shares repurchased and cancelled (1,246) -
_______ _______
Net cash (outflow)/inflow from financing (1,521) 4,979
_______ _______
(Decrease)/increase in cash (3,421) 3,821
NOTES:
1. INCOME
2003 2002
Group Group
£'000 £'000
INCOME FROM INVESTMENTS
Dividend from United Kingdom companies 262 228
UK unfranked investment income 130 -
Dividend from overseas companies 930 1,243
1,322 1,471
OTHER INCOME
Deposit interest 31 45
Other - 52
Profit/(losses) on dealings by subsidiary 1,589 (753)
1,620 (656)
TOTAL INCOME 2,942 815
TOTAL INCOME COMPRISES
Dividends 1,192 1,471
Interest 161 45
Other income 1,589 (701)
2,942 815
INCOME FROM INVESTMENTS
Listed in the UK 392 228
Listed overseas 930 1,243
1,322 1,471
2. RECONCILIATION OF CONSOLIDATED OPERATING PROFIT TO NET CASH OUTFLOW FROM
OPERATING ACTIVITIES
2003 2002
Group Group
£'000 £'000
Net revenue before finance costs and taxation 1,911 (380)
Decrease in prepayments and accrued income 9 36
Increase in current asset investments (979) (1,690)
(Decrease)/increase in other creditors and accruals (13) 24
928 (2,010)
3. CREDITORS : AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
2003 2002
Group & Company Group & Company
£'000 £'000
Bank loan 16,977 15,454
The Company's bank loan is with Commerzbank AG, London with a loan facility
available up to a maximum of 45% of the Group's total assets but not exceeding
£30 million. The amount outstanding at 31st May 2003 was £16.977 million (€23.65
million) (2002: £15.454 million (€24.2 million)). The interest rate is variable
and is linked to Euribor plus a margin of 0.8% p.a. The latest all-in rate
being applied to the loan is 3.276% p.a. (2002: 4.198% p.a.)
There have been no dividends paid during the year and the directors are not
recommending the payment of a final dividend.
On 23rd January 2001, pursuant to a special resolution passed on 17th January
2001, court approval was granted for the reduction of the share premium account
by 50%. The reduction was made to enable the Company to repurchase its own
shares from the funds held in the special reserve created as a result of the
reduction in the share premium account as and when deemed appropriate by the
board. The reduction in the share premium account by £38,843,000 and the
creation of the special reserve has not previously been reflected in the
accounts as a result of a preparatory error. This error had no effect on the
statement of total return or on the balance sheet total, which were correctly
stated in the audited accounts to 31st May 2002.
The Annual General Meeting of the Company has been convened for Monday 22nd
September 2003.
The above financial information does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985. Statutory accounts for the
year ended 31st May 2002, which contained an unqualified audit report, have been
delivered to the Registrar of Companies. Statutory accounts for the year ended
31st May 2003 including an unqualified audit report will be delivered to the
Registrar of Companies in due course.
The Annual Report and Accounts are expected to be posted to all registered
shareholders shortly and copies may be obtained from the registered office of
the Company at 1 Grosvenor Place, London SW1X 7JJ.
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