Final Results

Jupiter European Opportunities trust Plc Annual Financial Report for the year ended 31 May 2011 The following is an extract from the Company's Annual Report and Accounts for the year ended 31 May 2011. The full Annual Report will shortly be available to be viewed on or downloaded from the Company's website at www.jupiteronline.co.uk. CHAIRMAN'S STATEMENT Performance I am pleased to report another successful year for your Company. Net asset value per share rose from 232.4p to 316.7p, an increase of 36.3 per cent. The discount - the difference between the price of our shares and their (higher) net asset value, halved from 16.8 to 8.4 per cent, thanks to strong performance, energetic marketing and the policy of active discount management to which I referred in my Statement a year ago. As a result the price of your shares appreciated by no less than 50.1 per cent. You will, I am sure, feel that our Managers have earned the performance fee of £4.24 million which has accrued to them in respect of the year under review, given that our benchmark (the FTSE World Europe ex UK Index) went up by just 24.2 per cent. As a matter of interest the FTSE All-Share Index, whence some 15 per cent. of the portfolio is represented, rose by just under 16 per cent. over the same period, so that the Europe ex UK Index was a hard one to beat given our exposure to the United Kingdom stock market. Dividend Once again our investment income has risen substantially, from £5.88 million to £8.90 million. Even after paying a higher investment management fee (higher, because total assets rose, and the fee is calculated on an ad valorem basis) plus the performance fee, but with lower borrowing costs, net distributable income has jumped from £2.84 million to £5.46 million. Out of this latter sum, which equates to 6.8p per share, your Directors announced on 12 August 2011 the payment of an interim dividend of 5.3p per share, which compares with 2.1p per share a year ago. There is no guarantee that this dividend will be repeated next year as your Company is managed on a total return basis, and in the original Prospectus it was stated that there would be no dividend; it is generally expected that company dividends will increase further this year. Gearing Net borrowings rose over the year from £27.0 million to £32.0 million, but total assets rose too, so our gearing ratio rose marginally from 12 to 13 per cent. This is a level with which our Investment Manager, Alexander Darwall, feels comfortable. None of us wish to live through a period where we go into a bear market with what - with the great advantage of hindsight - turns out to be an excessively geared investment portfolio. Throughout the year your Company's borrowings were wholly denominated in sterling, which weakened against the euro, to the benefit of both the income and capital accounts of your Company. On 5 September 2011 your Company's existing £60 million loan facility is due to expire. The board has been seeking an alternative to your Company's loan facility and have agreed, in principal, the terms of a new 364 day revolving credit facility with Scotia Europe plc. Discount Management We stated a year ago that we were taking a more dynamic approach to managing the discount at which your Company's shares trade. Rather than set a declared limit (say 10 per cent.) above which we would automatically buy in shares, either for treasury (and possibly subsequent reissue) or for cancellation, we felt it best to use our firepower on an ad hoc basis. As it happens, we did not need to buy in any shares during the year under review, and thanks to an active marketing programme (and to excellent performance) the discount halved in any case, but we have plenty of powder left in our magazine should the need arise, and we will not hesitate to use it if, in our view, existing shareholders will benefit. Nor did we issue any new shares, which we would only have done at a premium to net asset value. The Board Jack Robinson, who has been a member of your Company's Board since its inception, as well as having been a Director of its predecessor Company, retires at the Annual General Meeting. Jack has been an inspirational Board member, never hesitating to challenge our investment managers (but always politely) and, being based in Boston (Massachusetts), bringing an American angle to our discussions. He will continue to have an ongoing relationship with Jupiter Asset Management. We are now engaged in the difficult task of finding a replacement for Jack. Meanwhile we wish him every success with his various "green" projects. Continuation Vote At the Annual General Meeting on 10 October an Ordinary Resolution will be proposed to the effect that the Company will continue in existence as an investment trust. Should the Resolution be passed, a similar Ordinary Resolution will be proposed at the 2014 Annual General Meeting and at every third such occasion thereafter. Your Directors urge you to vote on this Resolution, ideally in favour. Outlook In recent months, as first Ireland, then Portugal and Greece, have been bailed out by their European partners - and others - rather than be allowed to default (with potentially damaging consequences for the euro and the Eurozone), many column inches have been devoted to whether or not the European Community and its currency will survive, and if so, in what form. History tells us that currency unions have been tried before. In Europe we had the Snake, the European Monetary System (EMS), and the Exchange Rate Mechanism (ERM) - where are they now? By contrast Bismarck founded the Reichsbank in 1875 to provide a common currency across all the German states, and his creation survived hyperinflation and two world wars and became the stolid and trustworthy Bundesbank - but thereafter Germany adopted the euro. The CFA franc zone, which includes the former French colonies of West and Central Africa, started life in 1945 and still exists. By contrast the Latin Monetary Union (LMU), another French initiative covering France, Belgium, Italy, Greece and Bulgaria, lasted for much of the nineteenth century but failed when some members, notably the Papal State, began to debase their currency. Your Company has in general eschewed investment in the weakest of the European periphery members, and will continue to invest in outstanding companies with worldwide franchises and first-class managements, as it has done successfully hitherto. H.M. Priestley Chairman 18 August 2011 MANAGER'S REVIEW The Net Asset Value of the Company's Ordinary shares rose by 36.3 per cent. during the twelve months to 31 May 2011. This compares with a 24.2 per cent. rise, in sterling, of the FTSE World Europe ex UK index. The FTSE World (total return) index rose by 13.9 per cent. in sterling.  The Company's benchmark, the FTSE World Europe ex UK Total Return index rose by 24.2 per cent. The MSCI Latin America index was up 8.1 per cent.; the MSCI AC Asia ex-Japan index was up 15.6 per cent. According the IMF, Developing Asia (26 countries including China and India) grew by 9.6 per cent. in 2010; further growth of 8.4 per cent. is forecast in 2011 and again in 2012. Latin America maintained its impressive growth record: the IMF expects the Brazilian economy to grow at 4.1 per cent. in 2011 and by a further 3.6 per cent. in 2012. It is, at first sight, extraordinary that the better performing economies (economies which exceeded in almost every case the IMF's earlier growth predictions) had underperforming stock markets. Europe's underperforming economies, on the other hand, had outperforming stock markets; the well documented travails of the euro and the sovereign debt markets belie the health of corporate Europe.  It is a reminder that the correlation between national economic growth and stock market performance is, certainly in the short term, a poor one. There are many distortions between broad economic growth and shareholder returns. The split of profits between capital (and the various vested interests), labour and the state is crucial. Moreover, quoted companies derive proportionally more earnings from international operations than ever before meaning that local GDP performance is a commensurately weaker indicator of corporate profits. The good performance of European stock markets reflects strong international operations, as much as committed cost-cutting, and lower corporate tax rates (in the UK). Furthermore, to generalise, European companies continue to increase their value added. The main reason for the strong equity markets performance was ongoing government and central bank policies which have kept interest rates at historically low levels. (The European Central Bank's refinancing rate is 1.25 per cent.). This is the Continental European equivalent of the Anglo-Saxons' QE (quantitative easing) policy and helped stimulate economic growth. According to the IMF, after 1.8 per cent. growth in the European Union economy in 2010, a further expansion of 2.0 per cent. and 2.1 per cent. for 2011 and 2012 respectively can be expected. Low interest rates also underpinned attractive valuations for equities. Strong companies did not only enjoy relatively cheap capital costs: there were two other important drivers of corporate profitability. First, many European companies were able to tap into the continuing robust economic growth in the large developing economies. Second, European companies showed an admirable ability to cut costs. The upshot of these factors was that margins widened. European companies' profits are expected to advance again in 2011.  Brokers estimate that European corporate earnings should increase by 10.7 per cent. this year and by a further 14.8 per cent. in 2012. Your Company's relatively good performance was due to a combination of stock picking and gearing. The level of the Company's borrowings increased to £32 million from £27 million over the period under review.  These borrowings, representing 12.8 per cent. of net assets at year end, improved returns. The largest single contributor to performance was the holding in Croda. British based, Croda operates across the world selling its specialist (mainly oleochemical) chemical products. The company's value-added focus has served it well. NovoNordisk (the world's leading manufacturer of insulin drugs) was, again, a significant contributor to returns. Diabetes is a global pandemic; NovoNordisk's best-in-class drugs therefore have global and growing appeal. Novozymes (the world leader in industrial enzymes), too, is a perennial contributor to returns. Higher energy costs indirectly drive demand for their products in their many and diverse markets. Other stocks that made the biggest positive contribution to performance included Johnson Matthey, the UK listed manufacturer of catalysts, pharmaceutical materials and pollution control systems. Its global reach was an important factor in capturing strong demand for their products in the automotive and energy sectors. In addition, Wirecard (internet payment and processing services), DNB (Norwegian bank) and Tomra (recycling and sorting technology) all helped improve returns. Whilst it should be noted that our patience with previous 'underperformers' (notably Syngenta and Reed Elsevier) has been rewarded with a marked improvement in their fortunes, the same can not be said of Neopost. The lack of positive news flow is disappointing, but we believe that further patience will be rewarded. Three other stocks in the portfolio stand out as 'drags' on performance: Inmarsat, Oriflame, and Kudelski. Inmarsat, the world's leading provider of global mobile satellite communications, has faced tougher competition. We believe that their initiatives will, in due course, pay off. Oriflame continues to make progress albeit at a slower pace than formerly. Shares in Kudelski, the Swiss-listed TV encryption technology company, were weak suffering from the perception that new media models, notably 'Over The Top TV', represent a fundamental threat to their prospects. We are yet to be convinced of this so maintain the position. There were a number of outright sales. The Halfords position was sold as profits failed to meet our expectations. This remains, in our view, a good quality business but trading conditions are challenging. The sale of the shares held in BioMerieux was prompted by signs that their markets had deteriorated slightly in the wake of the US healthcare reform. The challenge of their American business was, too, the reason for selling the holding in Coloplast. This is another excellent company but one struggling now with the challenge of growing its US business. We also sold the position in Ryanair. There is a concern that the business model is maturing which, together with weaker economic growth, will make progress more difficult to achieve. Other positions, such as those in Croda, Vopak and DNB, were reduced on valuation grounds. Shares in Neopost were sold for portfolio management reasons. Of new additions to the portfolio the most important is Marine Harvest, the leading Norwegian salmon farmer. Demand for farmed salmon has been remarkably resilient; this, together with natural supply constraints, underpins our view that Marine Harvest enjoys good prospects.  Another notable new investment is that of Edenred, the world's leading, French-based, vouchers business. This is a well established business which is now a separate, listed company. It appears to have many growth opportunities in many different countries, a prospect which is not fully reflected in the valuation. The other significant fresh investment is Pearson, publisher of the Financial Times and leading publisher of educational material. The company should be a significant beneficiary of the widespread migration to digital testing and assessment methods. The holding in Tomra was increased. This is an example of a company that exemplifies well the attractive business characteristics that meet our investment criteria: a strong core business (the leader in the sale of reverse vending machines) with reliable recurrent demand; proven, leading, differentiated 'sorting' technology; and a good number of realistic ways of using that special technology in new growth areas. Outlook The aspect of the outlook where greatest confidence is justified is the commitment to continue to manage the portfolio in the same, consistent fashion: identifying 'special' companies with superior, differentiated products or services; companies which enjoy a structural advantage and the reasonable prospect of long term growth. The 'macro' outlook, on the other hand, depends to a great extent on the trend towards more trade, globalisation and productivity. This is the best way to mitigate the impact of high debt levels in the West. We approach this issue with vigilance rather than confidence. It is sensible to be optimistic on this point for now, but the protectionist pressures (in their many and varied forms) will mount. Nevertheless, we continue to see compelling investment opportunities. We remain confident that our investment approach is an appropriate one for current circumstances. Alex Darwall Jupiter Asset Management Limited 18 August 2011 OBJECTIVE The objective of the Company is to invest in securities of European companies and in sectors or geographical areas which are considered by the investment manager to offer good prospects for capital growth, taking into account economic trends and business development. INVESTMENT POLICY The Investment Manager adopts a stock picking approach in the belief that a thorough analysis and understanding of a company is the best way to identify long-term superior growth prospects. This understanding begins with identifying those companies where the ownership structure and incumbent management are conducive to the realisation of the aim of achieving superior long-term earnings growth. The Investment Manager will seek to identify companies which enjoy certain key business characteristics including some or all of the following: · a strong management record and team, and the confidence that the Investment Manager has in that management's ability to explain and account for its actions; · proprietary technology and other factors which indicate a sustainable competitive advantage; · a reasonable expectation that demand for their products or services will enjoy long-term growth; and · an understanding that structural changes are likely to benefit rather than negatively impact that company's prospects. There may be sectors which do not enjoy the business characteristics described above and in such circumstances the Investment Manager will seek to identify companies that are expected to generate superior earnings growth within that sector.  In analysing potential investments, the Investment Manager will employ differing valuation techniques depending on their relevance to the business characteristics of a particular company. However, the underlying feature will be the sustainability and growth of free cashflow in the long-term. Any material change in the investment policy of the Company described above may only be made with the approval of Shareholders by an ordinary resolution. RISKS AND UNCERTAINTIES The principal risk factors that may affect the Company and its business can be divided into the following areas: Investment strategy and share Price Movements - The Company is exposed to the effect of variations in the price of its investments. A fall in the value of its portfolio will have an adverse effect on shareholders' funds. It is not the aim of the Board to eliminate entirely the risk of capital loss, rather it is its aim to seek capital growth. The Board reviews the Company's investment strategy and the risk of adverse share price movements at its quarterly board meetings taking into account the economic climate, market conditions and other factors that may have an effect on the sectors in which the Company invests. There can be no assurances that appreciation in the value of the Company's investments will occur but the Board seeks to reduce this risk. Foreign Currency Movements - The Company has exposure to foreign currency through its overseas investments. The Board considers carefully factors which may affect the foreign currency in which the Company has an exposure at its quarterly board meetings taking into account the economic and political climate of various regions and the prospects for sterling. Interest Rates - The Company has exposure to cash which generates interest through interest bearing accounts. The Board is mindful of interest rates when setting limits on the Company's exposure to cash. Derivatives - The Company invests in derivatives from time to time.  Derivatives may be a riskier investment than equities as they can exaggerate the return that can be achieved than investing directly in equities. The Board has set limits on the amount of exposure the Company has to derivatives and it reviews these limits at its quarterly board meetings. Liquidity Risk - This risk can be viewed as the liquidity of the securities in which the Company invests and the liquidity of the Company's shares. The Company may invest in securities that have a very limited market which will affect the ability of the Company's fund manager to dispose of securities when he no longer feels they offer the potential for future returns. Likewise the Company's shares may experience liquidity problems when shareholders are unable to realise their investment in the Company because there is a lack of demand for the Company's shares. At its quarterly meetings the Board considers the current liquidity in the Company's investments when setting restrictions on the Company's exposure. The Board also reviews on a quarterly basis the Company's buy back programme and in doing so it is mindful of the liquidity in the Company's shares. In addition, the Board seeks the advice of the Company's brokers, Cenkos, who give advice on ways in which the Board can influence the liquidity in the Company's shares. Gearing Risk - The Company's gearing can impact the Company's performance by accelerating the decline in value of the Company's total assets at a time when the Company's portfolio is declining. Conversely gearing can have the effect of accelerating the increase in the value of the Company's total assets at a time when the Company's portfolio is rising. The Company's level of gearing is under constant review by the Board who take into account the economic environment and turbulent market conditions when setting the level. Discount to net asset Value - A discount in the price at which the Company's shares trade to Net Asset Value would mean that shareholders would be unable to realise the true underlying value of their investment. As a means of controlling the discount to Net Asset Value the board has established a buy back programme which is under constant review as market conditions change. Regulatory Risk - The Company operates in a complex regulatory environment and faces a number of regulatory risks. A breach of section 1158 of the Corporation Tax Act 2010 could result in the Company being subject to capital gains on portfolio movements. Breaches of other regulations such as the UKLA listing rules, could lead to a number of detrimental outcomes and reputational damage. Breaches of controls by service providers such as the Manager could also lead to reputational damage or loss. Loss of Key Personnel - The day-to-day management of the Company has been delegated to the Investment Manager. The person at Jupiter Asset Management Limited who manages the assets of the Company on a daily basis is Alexander Darwall. Loss of the Manager's key staff members could affect investment return. The Manager develops its recruitment and remuneration packages in order to retain key staff, has training and development programmes in place and undertakes succession planning. Operational - failure of the Manager's core accounting systems, or a disastrous disruption to its business, could lead to an inability to provide accurate reporting and monitoring. The Manager is contractually obliged to ensure that its conduct of business conforms to applicable laws and regulations. The Manager has confirmed that reliable back-up systems are in place. Financial - inadequate financial controls could result in misappropriation of assets, loss of income and debtor receipts and inaccurate reporting of Net Asset Value per share. The Board annually reviews the Manager's statements on its internal controls and procedures. Consolidated Statement of Comprehensive Income for the year ended 31 May 2011 --------------------------------------------------------------------------------    31 May 2011 31 May 2010   Revenue Capital   Revenue Capital   Return Return Total Return Return Total   £'000 £'000 £'000 £'000 £'000 £'000 Gains  on  investments at fair value - 67,971 67,971 - 54,676 54,676 through profit or loss Foreign exchange losses on loans - - - - (869) (869) Other exchange gain / (loss) 89 (209) (120) 201 390 591 Investment income 8,810 - 8,810 5,248 - 5,248 Other income 2 - 2 14 - 14 Dealing profits of subsidiary - - - 411 - 411 Foreign exchange gain by - -   7 - 7 subsidiary -------------------------------------------------------------------------------- Total income 8,901 67,762 76,663 5,881 54,197 60,078 -------------------------------------------------------------------------------- Investment management fee (1,910) - (1,910) (1,548) - (1,548) Investment performance fee - (4,237) (4,237) - - - Other expenses (477) - (477) (396) - (396) -------------------------------------------------------------------------------- Total expenses (2,387) (4,237) (6,624) (1,944) - (1,944) -------------------------------------------------------------------------------- Return before finance costs and 6,514 63,525 70,039 3,937 54,197 58,134 tax Finance costs (354) - (354) (512) - (512) -------------------------------------------------------------------------------- Return before taxation 6,160 63,525 69,685 3,425 54,197 57,622 Taxation (700) - (700) (587) - (587) -------------------------------------------------------------------------------- Return after taxation 5,460 63,525 68,985 2,838 54,197 57,035 -------------------------------------------------------------------------------- Return per Ordinary share 6.84p 79.58p 86.42p 3.52p 67.15p 70.67p -------------------------------------------------------------------------------- The total column of this statement is the statement of comprehensive income of the Group prepared in accordance with IFRS. The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies ('AIC'). All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. Consolidated Statement of Financial Position as at 31 May 2011 -----------------------------------------------------------------------------   2011 2010   £'000 £'000 Non current assets Investments held at fair value through profit or loss 290,438 210,972 ----------------------------------------------------------------------------- Current assets Receivables 2,238 1,493 Cash at bank 488 1,233 -----------------------------------------------------------------------------   2,726 2,726 ----------------------------------------------------------------------------- Total assets 293,164 213,698 Current liabilities (40,351) (28,194) ----------------------------------------------------------------------------- Total assets less current liabilities 252,813 185,504 ----------------------------------------------------------------------------- Capital and reserves Called up share capital 798 798 Share premium 41,286 41,286 Special reserve 34,376 34,376 Capital redemption reserve 42 42 Retained earnings 176,311 109,002 ----------------------------------------------------------------------------- Total equity 252,813 185,504 ----------------------------------------------------------------------------- Net Asset Value per Ordinary share 316.73p 232.40p ----------------------------------------------------------------------------- Company Statement of Financial Position as at 31 May 2011 -----------------------------------------------------------------------------   2011 2010   £'000 £'000 Non current assets Investments held at fair value through profit or loss 290,438 210,972 ----------------------------------------------------------------------------- Current assets Receivables 2,238 1,493 Cash at bank 488 1,233 -----------------------------------------------------------------------------   2,726 2,726 ----------------------------------------------------------------------------- Total assets 293,164 213,698 Current liabilities (43,882) (31,725) ----------------------------------------------------------------------------- Total assets less current liabilities 249,282 181,973 ----------------------------------------------------------------------------- Capital and reserves Called up share capital 798 798 Share premium 41,286 41,286 Special reserve 34,376 34,376 Capital redemption reserve 42 42 Retained earnings 172,780 105,471 ----------------------------------------------------------------------------- Total equity 249,282 181,973 ----------------------------------------------------------------------------- Consolidated Statement of Changes in Equity --------------------------------------------------------------------------------         Capital   Share Share Special Redemption Retained For the year ended 31 May Capital Premium Reserve Reserve Earnings Total 2011   £'000 £'000 £'000 £'000 £'000 £'000 31 May 2010 798 41,286 34,376 42 109,002 185,504 Net profit for the year - - - - 68,985 68,985 Dividends paid and declared - - - - (1,676) (1,676) -------------------------------------------------------------------------------- Balance at 31 May 2011 798 41,286 34,376 42 176,311 252,813 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------         Capital   Share Share Special Redemption Retained For the year ended 31 May Capital Premium Reserve Reserve Earnings Total 2010   £'000 £'000 £'000 £'000 £'000 £'000 31 May 2009 810 41,286 36,676 30 52,655 131,457 Net profit for the year - - - - 57,035 57,035 Ordinary share cancellation (12) - (2,300) 12 - (2,300) Dividends paid and declared - - - - (688) (688) -------------------------------------------------------------------------------- Balance at 31 May 2010 798 41,286 34,376 42 109,002 185,504 -------------------------------------------------------------------------------- Company Statement of Changes in Equity --------------------------------------------------------------------------------         Capital   Share Share Special Redemption Retained For the year ended 31 May Capital Premium Reserve Reserve Earnings Total 2011   £'000 £'000 £'000 £'000 £'000 £'000 31 May 2010 798 41,286 34,376 42 105,471 181,973 Net profit for the year - - - - 68,985 68,985 Dividends paid and declared         (1,676) (1,676) -------------------------------------------------------------------------------- Balance at 31 May 2011 798 41,286 34,376 42 172,780 249,282 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------         Capital   Share Share Special Redemption Retained For the year ended 31 May Capital Premium Reserve Reserve Earnings Total 2010   £'000 £'000 £'000 £'000 £'000 £'000 31 May 2009 810 41,286 36,676 30 49,543 128,345 Net profit for the year - - - - 56,616 56,616 Ordinary share cancellation (12) - (2,300) 12 - (2,300) Dividends paid and declared - - - - (688) (688) -------------------------------------------------------------------------------- Balance at 31 May 2010 798 41,286 34,376 42 105,471 181,973 -------------------------------------------------------------------------------- Consolidated Cash Flow Statement for the year ended 31 May 2011 --------------------------------------------------------------------------------   2011 2010   £'000 £'000 Cash flows from operating activities Purchases of investments (58,320) (71,270) Sales of investments 49,455 88,398 Realised (loss) / gain on foreign currency (120) 598 Investment income received 8,538 5,209 Interest received 1 15 Other cash receipts - 411 Investment management fee paid (1,257) (1,487) Other cash expenses (400) (397) -------------------------------------------------------------------------------- Cash (outflow) / inflow from operating activities before finance costs and taxation (2,103) 21,477 Finance costs paid (353) (621) Taxation paid (1,613) (358) -------------------------------------------------------------------------------- Net cash (outflow) / inflow from operating activities (4,069) 20,498 Financing activities Ordinary shares cancelled - (2,300) Dividend paid (1,676) (688) Short term loans received 113,000 142,197 Short term loans repaid (108,000) (164,754) -------------------------------------------------------------------------------- Decrease in cash (745) (5,047) Cash and cash equivalents at start of year 1,233 6,280 -------------------------------------------------------------------------------- Cash and cash equivalents at end of year 488 1,233 -------------------------------------------------------------------------------- Company Cash Flow Statement for the year ended 31 May 2011 --------------------------------------------------------------------------------   2011 2010   £'000 £'000 Cash flows from operating activities Purchases of investments (58,320) (71,270) Sales of investments 49,455 88,398 Realised (loss) / gain on foreign currency (120) 591 Investment income received 8,538 5,209 Interest received 1 14 Investment management fee paid (1,257) (1,487) Other cash expenses (400) (397) -------------------------------------------------------------------------------- Cash (outflow) / inflow from operating  activities before finance costs and taxation (2,103) 21,058 Finance costs (353) (621) Taxation (1,613) (403) -------------------------------------------------------------------------------- Net cash (outflow) / inflow from operating activities (4,069) 20,034 Financing activities Ordinary shares cancelled - (2,300) Dividend paid (1,676) (688) Short term loans received 113,000 142,197 Short term loans repaid (108,000) (164,754) Cash received from subsidiary - 464 -------------------------------------------------------------------------------- Decrease in cash (745) (5,047) Cash and cash equivalents at start of year 1,233 6,280 -------------------------------------------------------------------------------- Cash and cash equivalents at end of year 488 1,233 -------------------------------------------------------------------------------- NOTES: 1. Income ---------------------------------------------------------    2011  2010 Group Group £'000 £'000 Income from investments Dividends from United Kingdom companies 1,585 1,300 Dividends from overseas companies 7,225 3,948 ---------------------------------------------------------   8,810 5,248 --------------------------------------------------------- Other income Deposit interest 2 14 Foreign exchange gains 89 201 Profit on dealings by subsidiary - 411 Foreign exchange gains by subsidiary - 7 ---------------------------------------------------------   91 633 --------------------------------------------------------- Total income 8,901 5,881 --------------------------------------------------------- Total income comprises Dividends 8,810 5,248 Interest 2 14 Other income 89 619 ---------------------------------------------------------   8,901 5,881 --------------------------------------------------------- Income from investments Listed in the UK 1,819 1,300 Listed overseas 6,991 3,948 ---------------------------------------------------------   8,810 5,248 --------------------------------------------------------- 2 Reconciliation of profit before finance costs and taxation to net cash inflow from operating activities   2011 2010   Group Group   £'000 £'000 Net return before finance costs and taxation 70,039 58,134 Gain on non current asset investments (67,971) (54,676) Foreign exchange loss on loans - 869 Purchases of non current asset investments (58,320) (71,270) Sales of non current asset investments 49,455 88,398 Increase in prepayments and accrued income (277) (37) Increase in other creditors and accruals 4,971 59 -------------------------------------------------------------------------------- Net cash (outflow) / inflow from operating  activities  before (2,103) 21,477 interest and taxation -------------------------------------------------------------------------------- 3. Related parties Mr Darwall is a Director of Jupiter Asset Management Limited. Jupiter Asset Management Limited and Jupiter Administration Services Limited , a company within the same group as Jupiter Asset Management 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 one year's notice by either party) for a quarterly fee of 0.1875 per cent. of the total assets of the Group, excluding the value of any Jupiter managed investments, payable in arrears on 31 May, 31 August, 30 November and the last calendar day of February. The Management fee for the year was £1,910,000 (2010: £1,548,000) with £1,049,350 outstanding as at 31 May 2011 (2010: £396,152). Jupiter Asset Management Limited is also entitled to an investment performance fee which is based on the out-performance of the Net Asset Value per Ordinary share over the total return on the Benchmark Index, the FTSE World Europe ex UK total return index in an accounting period. Any performance fee payable will equal 15 per cent. of the amount by which the increase in the Net Asset Value per Ordinary share (plus any dividends per Ordinary share paid or payable and any accrual for unpaid performance fees for the period) exceeds the higher of (a) the Net Asset Value per Ordinary share on the last business day of the previous accounting period; (b) the Net Asset Value per Ordinary share on the last day of a period in respect of which a performance fee was last paid: and (c) 100p.  In each case the values of (a), (b) and (c) are increased by the percentage by which the total return of the Benchmark Index increases or decreases during the calculation period.  The total amount of any performance fee payable in respect of one accounting period is limited to 4.99 per cent. of the Total Assets of the Company. A performance fee of £ 4,236,703 was payable for the year ended 31 May 2011 (2010: Nil), and was outstanding at the year end. Jupiter Administration Services Limited is contracted to provide secretarial, accounting and administrative services to the Company for an annual fee of £65,459 adjusted each year in line with the Retail Price Index payable quarterly (2010: £62,284). None of the fee payable for the year ended 31 May 2011 was outstanding at the year end (2010: Nil). The Company has invested from time to time in funds managed by Jupiter Investment Management Group Limited or its subsidiaries. The only such holding as at 31 May 2011 was East European Food Fund representing 0.2 per cent. of total investments. (2010: 0.2 per cent. of total investments). 4. Going Concern The Articles of Association provide that at the annual general meeting of the Company to be held this year, and at every third annual general meeting, an ordinary resolution shall be proposed that the Company shall continue in existence as an investment trust. The board reviewed the likelihood of the continuation vote failing and believe that, in light of the Company's recent strong performance and the number of shareholders who voted in favour when the continuation vote was last put to shareholders at the Annual General Meeting held on 23 September 2008, it was likely that the resolution would be successfully carried. The Company's business activities, capital structure and borrowing facilities, together with the factors likely to affect its future development, performance and position are set out in the Managers' Report and the Report of Directors of the full Report and Accounts. The Company's assets consist mainly of securities which are readily realisable, its ongoing expenses are low relative to its net assets and therefore the Directors consider that the Company has appropriate financial resources to enable it to meet its day-to-day working capital requirements. The Directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements. 5. Directors' Responsibilities For The Financial Statements The Directors are responsible for preparing the Annual Report and financial statements in accordance with applicable United Kingdom law and those International Financial Reporting Standards ('IFRS') as adopted by the European Union. Under Company law the Directors must not approve the Group financial statements unless they are satisfied that they present fairly the financial position of the Company and of the Group and the financial performance and cash flows of the Company and of the Group for that period. In preparing the Group financial statements, the Directors are required to: (i) select suitable accounting policies in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and then applying them consistently; (ii) present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandableinformation; (iii) provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; (iv) state that the Group has complied with IFRS, subject to any material departures disclosed and explained in the financial statements; and (v) make judgements and estimates that are reasonable and prudent. The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Groups transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the Group financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. The work carried out by the Auditor does not include consideration of the maintenance and integrity of the website and accordingly the Auditor accepts no responsibility for any changes that have occurred to the financial statements when they are presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The Directors confirm to the best of their knowledge that: (i) the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company, and the consolidation taken as a whole; and (ii) the Management Report includes a fair view of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that the Company faces. So far as each of the directors are aware at the time the report is approved: (i) There is no relevant audit information of which the Company's auditors are not aware; and (ii) The Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. By Order of the Board H M Priestley Chairman 18 August 2011 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. The Annual General Meeting of the Company is scheduled to take place at 12.00 noon on 10 October 2011 at the Company's registered office. By order of the Board Jupiter Asset Management Limited Secretaries Enquiries: Jenny Thompson Jupiter Asset Management Limited 020 7412 0703 Richard Pavry Jupiter Asset Management Limited 020 7412 0703 This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Jupiter European Opportunities Trust PLC via Thomson Reuters ONE [HUG#1539434]

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