TIDMJSS
RNS Number : 9839K
Jupiter Second Split Trust PLC
30 June 2014
Jupiter Second Split Trust PLC
Unaudited Half Yearly Financial Report for the six months to 30
April 2014
Financial Highlights for the six months to 30 April 2014
Capital Performance
30.04.14 31.10.13 % Change
---------------------------------------- -------- -------- --------
Total assets less current liabilities
(GBP'000) 232,492 232,692 -0.1
---------------------------------------- -------- -------- --------
Benchmark Index: 3 month Sterling LIBOR
(%) 0.5271 0.51381
---------------------------------------- -------- -------- --------
Share Performance
30.04.14 31.10.13 % Change
-------------------------------- -------- -------- --------
Zero Dividend Preference shares
-------------------------------- -------- -------- --------
Mid market price (pence) 39.50 38.75 +1.9
-------------------------------- -------- -------- --------
Net Asset Value (pence) 39.16 37.88 +3.4
-------------------------------- -------- -------- --------
Premium (%) 0.9 2.3
================================ ======== ======== ========
Geared Ordinary shares
-------------------------------- -------- -------- --------
Mid market price (pence) 25.50 26.63 -4.2
-------------------------------- -------- -------- --------
Net Asset Value (pence) 29.14 31.79 -8.3
-------------------------------- -------- -------- --------
Discount (%) -12.5 -16.2
================================ ======== ======== ========
Packaged Units
-------------------------------- -------- -------- --------
Mid market price (pence) 103.75 102.25 +1.5
-------------------------------- -------- -------- --------
Net Asset Value (pence) 107.46 107.55 -0.1
-------------------------------- -------- -------- --------
Discount (%) -3.5 -4.9
-------------------------------- -------- -------- --------
Revenue Performance
Six months Six months
to to
30.04.14 30.04.13 % Change
------------------------------------- ---------- ---------- --------
Revenue after taxation (GBP'000) 1,905 232 +721.1
------------------------------------- ---------- ---------- --------
Return per Geared Ordinary share (p) 0.88 0.11 +700.0
===================================== ========== ========== ========
Underlying Currencies as a percentage of Gross Currency
Exposure*
as at
30 April 2014
(%)
-------------------- -------------
GBP (base currency) 93
-------------------- -------------
USD 7
-------------------- -------------
100
-------------------- -------------
Country Allocation as a percentage of Total Assets*
as at
30 April
2014
Long Short Long Short
Bonds Bonds Equities Equities
(%) (%) (%) (%)
--------------- ----- ----- -------- --------
United Kingdom 29 -5 2 0
--------------- ----- ----- -------- --------
Australia 4 0 0 0
--------------- ----- ----- -------- --------
Belgium 1 0 0 0
--------------- ----- ----- -------- --------
Canada 0 0 1 0
--------------- ----- ----- -------- --------
Denmark 3 0 0 0
--------------- ----- ----- -------- --------
France 5 -5 0 0
--------------- ----- ----- -------- --------
Germany 2 0 0 0
--------------- ----- ----- -------- --------
Japan 0 0 4 0
--------------- ----- ----- -------- --------
Netherlands 8 0 0 0
--------------- ----- ----- -------- --------
Norway 2 0 1 0
--------------- ----- ----- -------- --------
Switzerland 5 0 0 0
--------------- ----- ----- -------- --------
Supranational 2 0 0 0
--------------- ----- ----- -------- --------
United States 4 0 1 0
--------------- ----- ----- -------- --------
Other 4 0 0 0
--------------- ----- ----- -------- --------
69 -10 9 0
--------------- ----- ----- -------- --------
*The Fund is Sterling based. This table aggregates physical and
synthetic exposures in the portfolio.
Chairman's Statement
In the six months to 30 April 2014, your Company's total assets
decreased by 0.1 per cent. This compared with a rise of 0.3 per
cent. for your Company's Benchmark, three month sterling LIBOR, and
the cost of the accrued entitlement of the Company's Zero Dividend
Preference shares at 2.4 per cent. of total assets for the same
period.
Due to the Company's geared capital structure, any fall in the
Company's total assets is borne first by the Geared Ordinary
shares. The effect of gearing is that in rising markets the asset
value of the Geared Ordinary shares benefits from any
outperformance of the Company's investment portfolio over and above
the cost of the fixed entitlements of the Company's Zero Dividend
Preference shares. Conversely, when the Company's total assets
fall, the Geared Ordinary shares suffer to the extent of any
shortfall between the return on the Company's investment portfolio
and the cost of the fixed entitlements of the Company's Zero
Dividend Preference shares.
The geared split capital structure of the Company resulting from
the prior entitlement of the Zero Dividend Preference shares meant
that the Net Asset Value of the Company's Geared Ordinary shares
decreased by 8.3 per cent. during the period under review.
The Packaged Units are not geared by the Company's split capital
structure since they each comprise one Geared Ordinary share and
two Zero Dividend Preference shares (the rights of which balance
one another). The Net Asset Value of the Packaged Units decreased
in line with the Company's total assets by 0.1 per cent. over the
period under review to 107.46p per Packaged Unit from 107.55p.
The Net Asset Value of the Zero Dividend Preference shares
increased by 3.4 per cent. from 37.88p to 39.16p over the period
under review.
Revenues after tax for the half year to 30 April 2014 amounted
to GBP1,905,000 representing 0.88p per Geared Ordinary share
(compared to GBP232,000 for the same period last year).
Gordon Campbell CBE
It is with great sadness that the Board of Jupiter Second Split
Trust PLC announced on 29 April 2014 the death of Gordon Campbell,
CBE, Chairman of the Company. His fellow Directors, along with his
friends at Jupiter Asset Management Limited, extend their
condolences and deepest sympathy to his family.
Harry Hill
Mr. Harry Hill decided to retire as a non-executive Director of
the Company with effect from the conclusion of the Annual General
Meeting. Accordingly, Ordinary Resolution 5, that Mr. Hill be
re-elected a Director of the Company, was not put to the meeting on
2 April 2014.
The Board would like to thank Mr. Hill for his contribution to
the Board and the Company over the years. Harry was also a director
of the Company's predecessor, Jupiter Second Enhanced Income Trust
PLC, and has therefore contributed more than nine years of service
to Shareholders through both companies.
New Board Appointments
The Rt. Hon. Lord Lamont of Lerwick has been appointed Chairman
of the Company with effect from 29 April 2014 and both David Hince
and Jonathan Carey have been appointed as independent non-executive
directors of the Company with effect from 12 May 2014 and 29 April
2014 respectively.
David is the Chief Investment Officer of RAB Capital Ltd where
he has worked as a fund of funds manager since 2002. He also serves
on the RAB Risk Committee and historically was responsible for
asset raising for RAB's fund of hedge funds. David has been
advising on hedge funds/managing hedge fund of funds since 1998,
first at the Bank of Bermuda in London, where he headed up the
Mutual Funds Selection Service, and then at London & Capital
Asset Management. A former Captain in the Blues & Royals, David
studied Politics and International Relations at Aberdeen University
in the UK and at Bloomsberry University in the USA.
Jonathan is a non-executive director of JP Morgan Overseas
Investment Trust plc. He is also a non-executive director of BNY
Mellon Trust & Depositary (UK) Ltd and of BNY Mellon Trust
Company (Ireland) Ltd. Jonathan was previously a director of RBS
(Luxembourg) SA and of a number of offshore investment companies,
including hedge funds, funds of funds and Luxembourg mutual funds.
He was Joint Group Chief Executive of Jupiter Investment Management
Group Limited until 2007 and he retired from Jupiter in 2010.
End of Life
The Company has a planned life to 31 October 2014, whereupon
holders of both Geared Ordinary and Zero Dividend Preference shares
have an entitlement under the Company's Articles to redeem their
holdings for cash.
Hurdle rates between now and the end of the Company's planned
life
Between now (16 June 2014) and the end of the Company's planned
life on 31 October 2014, the Investment Manager estimates that the
Company's investment portfolio (total assets) would need to grow by
approximately 2.6 per cent. (annualised, after meeting the cost of
the accruing entitlements of the Company's Zero Dividend Preference
Shareholders and the operating expenses of the Company) in order
for the Company's Geared Ordinary Shareholders to expect a final
entitlement on that date equal to their Net Asset Value, as at 16
June 2014, of 28.97p. This hurdle should be considered in the
context of the benchmark for the management of the Company's
investment portfolio, being the return on cash (3 month LIBOR).
The hurdle rate refers to capital growth only and does not take
into account any further dividend payable to Geared Ordinary
shareholders which may be declared between now and 31 October 2014
of income.
Reconstruction proposals
Detailed proposals for the continuation or reconstruction of the
Company and information about the arrangements for shareholders
wishing to either cash in their investment at the end of the
Company's planned life on 31 October 2014 or to continue or 'roll
over' their investment in a UK capital gains tax efficient manner
have yet to be formulated. The directors are considering various
options and proposals are expected to be announced later in the
year. A circular will be sent to all shareholders in due course
containing full details of the proposals. All shareholders will, in
any event, be given an opportunity to elect for cash should they
wish to conclude their investment in the Company on 31 October 2014
rather than roll over.
Alternative Investment Fund Managers' Directive
The Alternative Investment Fund Managers' Directive ('AIFMD') is
a European Union Directive creating a European wide framework for
the regulation of managers of Alternative Investment Funds ('AlF'),
of which investment trusts are included. The AIFMD was implemented
on 22 July 2013 with a one year transitional period for UK
registered AIF's.
The Directive requires all AIF's to appoint an Alternative
Investment Fund Manager ('AIFM'). The Board is in the process of
making the necessary arrangements to appoint Jupiter Unit Trust
Managers Limited as AIFM to the Company and seek the requisite
authorisation from the Financial Conduct Authority prior to the end
of the transitional period being 22 July 2014. The Board is also
finalising negotiations to appoint a depository to the Company.
Shareholders can be assured that the Board will endeavour to keep
any additional operational costs to a minimum.
I recommend the manager's review in which Miles reflects further
on the events that drove markets in the six months to 30 April.
Miles's focus on reducing volatility and preserving capital
combines a value-driven security selection process with strategic
asset allocation based on macroeconomic analysis and is appropriate
in an era where central banks have moved from being referees to
being players.
The Rt. Hon. Lord Lamont of Lerwick
Chairman
30 June 2014
Investment Manager's Report
For the period from 1 November 2013 to 30 April 2014, the
Company's Total Assets decreased by 0.1 per cent. compared to 0.3
per cent. for the three month sterling LIBOR.
Market review
In November, the S&P 500 index was pushed to a new record
high in the wake of a temporary resolution to the US debt ceiling
debate. The European Central Bank surprised markets by cutting
rates by 25bps to 0.25% to support domestic demand as inflation, at
0.8%, remained well below the ECB's target of "below but close to
2%".
By December, the way was clear for the US Federal Reserve to
commence winding down its regular asset purchases. The move was
greeted positively by equity and bond markets. However, the actual
commencement of modest tapering of US monetary policy at the start
of 2014 triggered a turbulent month for global equities,
particularly in emerging markets. Domestic vulnerabilities in the
latter created a chaotic situation which resulted in an Argentine
devaluation, certain countries spending much of their forex
reserves in defence of their currencies and a defensive raising of
interest rates in Turkey from 4.5% to 10%.
In advanced economies, equity markets remained fully valued,
credit spreads were narrow and the sizeable issuance of high yield
bonds at record low yields continued. IPO activity hit levels last
seen in 1999. Of particular concern was the exuberance seen in
"concept" equities in the biotechnology and internet sectors, i.e.
companies that promised highly optimistic blue sky futures
unsupported by profits or, in some cases, even sales.
In March, US Federal Reserve Chair Janet Yellen declared that
interest rates could potentially be raised as early as six months
after the central bank's asset purchases had been tapered to zero.
In the eurozone, inflation continued to be remarkably weak although
the euro remained strong. The European Central Bank president
dropped a series of hints that there were several measures which
could be taken to address this. In a dramatic softening of his
views, Jens Weidmann, Bundesbank president, said that quantitative
easing was not "out of the question". In April, bonds were up,
especially peripheral eurozone sovereigns which reached all-time
lows in yields, while major equity indices ended the month
generally flat, having made new highs at the start of the
month.
Policy review
The Company began the period under review with a significant
amount of cash following the unwinding of several positions by the
previous fund manager. Our first priority was to diversify the
holdings and scale back the large concentrations in certain fixed
income securities, notably the Barclays 14% VRN Perpetual and the
two Lloyds Capital issues, to reduce security-specific risks. The
Barclays VRN in particular was a very large proportion of the
portfolio so we reduced it from 14% to below 5%. It still remains
the largest holding in the portfolio. Following this, approximately
45% of the portfolio was diversified across a range of short dated
corporate and financial bonds. The reorganisation of the portfolio
incurred bid-offer costs which offset gains in other areas during
November such as the short South Africa Rand position. The largest
gain was made on the short Australian dollar, which fell very
quickly. The latter position was then closed.
We also liquidated the short 10-year Japanese Government Bond
position. The long-term risk to the Japanese bond market from the
high level of debt to GDP and generally poor fiscal situation is
undeniable, however we believe that the combination of a
domestically-controlled bond market and a central bank determined
to keep yields low should support that bond market for longer than
others. To reflect our view that sovereign bonds were overvalued we
focused our short positions on US, UK, French and Italian
government bonds. Monetary policy normalisation through the gradual
reduction in QE, and a return of risk premia to sovereign bond
markets, remained our most significant view.
January was a month of two halves. US and European markets had a
powerful start, but then they joined the sell-off in other markets
during the final two weeks. Risk assets fell sharply and bonds
rallied. This resulted in the Trust unfortunately giving back about
half of December's gains, particularly those in our modest holding
of Japanese equities as the Topix was down more than 6% during the
month. This was the largest detractor from performance, though the
exposure had been reduced. Set against this, the fall in emerging
currencies was the largest positive contributor to the Trust's
returns, thanks to the short position in South African Rand.
Developed market sovereign bonds rose during the month.
Euro-peripheral yields were lower than they had been before the
2011 crisis. We reduced the short positions in French and US bonds,
however the rise in those bonds negatively impacted the Trust.
During the month we established a short Sterling position
(against the Dollar) as the currency has risen sharply due to the
UK economic rebound. UK PMIs were the highest of any major country
and unemployment had fallen more than the Bank of England
predicted; both of which were supportive of monetary policy
normalisation. However the current account deficit was 5.4%, the
second worst since records began, and the recovery continued to be
consumption-driven on the back of resurgent house prices. In our
view the UK recovery is of a lower quality, and less enduring, than
the US. At the end of January we initiated a relative value
position in which we were short the Russell 2000 Index and long the
S&P 500 Index. This reflected a view that the large divergence
of valuations between small cap and large cap would reverse.
February saw a rebound in some emerging market assets in a month
when modest gains on bonds were offset by losses on the short South
Africa Rand position. In March, falls in previously strong equity
sectors such as biotechs and smaller companies provided gains for
our short Russell 2000/long S&P 500 strategy; we took profits
on this position. In April, bonds holdings, net of futures hedges,
contributed positively to performance. These can continue to add
value in the near term in this yield-deprived environment. The
short position in Sterling versus the Dollar subtracted slightly
from performance. There is no doubt that the British economy is the
strongest in Europe, but the US has more robust structural
underpinnings than the UK. Speculative positioning was at extremes
but for the time being, Sterling seemed to be benefiting in the
least ugly currency contest.
Outlook
Although financial markets are in far better shape than in 2011
and PMIs are recovering, the underlying employment and growth
environment remains poor with core inflation across Europe,
including Germany, ranging around 0.7%. Given where German yields
currently trade, the potential for further large gains for bonds in
Spain, Italy, Portugal and France appears limited.
Relative to bonds, equities offer value in our view, but after
strong rallies in 2013, with investors less confident about growth
projections and ongoing tensions with Russia, enthusiasm for
equities has moderated. We continue to focus on areas such as
Japan, where we expect a rise in equities, once uncertainty about
the effects of the higher sales tax has passed. Japan remains the
only large country where analysts are increasing their estimates
for company earnings and profits have exceeded analysts'
expectations and company guidance for the past five quarters.
Miles Geldard
Fund Manager, Jupiter Asset Management Limited
2 June 2014
Investments held as at 30 April 2014
30 April 2014 31 October 2014
Market value Market value
Company GBP'000 GBP'000
S&P 500 Index Futures June 2014** 11,567 -
Barclays Bank 14% Var Sub Perp 10,934 32,832
UBS 4.75% Var 12/02/2026 6,448 -
LBG Capital 2 15% 21/12/2019 5,488 7,300
LBG Capital 2 6.385% 12/05/2020 5,129 15,251
ING Bank 3.875% 23/12/2016 4,739 -
European Investment Bank FRN 17/02/2020 4,713 -
JP Morgan Chase 6.128% FRN 30/05/2017 4,692 -
Australia (Commonwealth of) 5.5%
21/04/2023 4,687 933
Stagecoach Group 5.75% 16/12/2016 4,684 -
Royal Bank of Scotland Var 22/09/2021 4,673 -
London Stock Exchange Var 07/01/2016 4,667 -
National Australia Bank FRN 12/11/2016 4,617 -
BPCE FRN 13/01/2016 4,605 -
Citigroup 4.75% FRN 31/05/2017 4,596 -
Vodafone Group 4.625% 08/09/2014 4,558 -
Volkswagen 2.125% 19/12/2014 4,534 -
FCE Bank 5.125% 16/11/2015 4,527 -
Daimler 1.375% 10/12/2015 4,516 -
Heineken 7.25% 10/03/2015 4,516 -
Eksportfinans 5.5% 26/06/2017 4,436 -
Nokia Siemens Networks 6.75% 15/04/2018 4,424 -
UBS 6.375% 20/07/2016 4,418 -
Campagnie de Saint-Gobain 5.625%
15/12/2016 4,381 -
Reed Elsevier Investments 5.625%
20/10/2016 4,365 -
Imperial Tobacco Finance 5.5% 22/11/2016 4,352 -
United Utilities Water 6.125% 29/12/2015 4,307 -
Danske Bank 5.75% Perp 3,536 -
Nationwide Building Society 6.875%
FRN Perp 3,506 -
AA Bond 3.781% 31/07/2019 3,503 -
BFCM FRN 20/03/2019 3,442 -
KBC Groep 5.625% Var Perp 3,406 -
ORO Negro Drilling 7.5% 24/01/2019 3,268 -
Abbey National Treasury Services
FRN 20/01/2017 3,004 -
Rhino Bondco FRN 15/12/2019 2,311 -
Danske Bank 4% 09/12/2015 2,286 -
Lloyds Banking Group 7.875% Var Perp 1,850 -
William Hill 7.125% 11/11/2016 1,552 -
CP Foods Holdings 0.5% 15/01/2019 1,434 -
De La Rue 1,115 -
Statoil 1,112 -
NTT DoCoMo 1,100 -
Kurita Water Industries 1,060 -
BP 1,048 -
Novarlis 1,026 -
SSE 1,021 -
ARC Land Sakamolo 1,003 -
Abbott Laboratories 977 -
Agnico Eagle Mines 961 -
Hoya 959 -
Cisco Systems 958 -
Familymart 958 -
Marubeni 957 -
Samsung Electronics 950 -
Yara International 948 -
Sumitomo Forestry 944 -
Fairfax Financial Holdings 927 -
Tokio Marine Holdings 890 -
AIlianz 820 -
Uranium Participation 765 -
Kajima 744 -
Lloyds Banking Group 6.375% Var Perp 588 -
Datawind UK* 362 362
East European Food Fund* 15 15
Russell 2000 Index Future June 2014** (11,179) -
Euro-Oat Future 06/06/2014** (11,658) -
Long Gilt Future 26/06/2014** (12,136) -
BP Currency Future June 2014** (16,308) -
Total investments 143,598
Add back Futures notional values 39,714
183,312
*Unquoted
**Notional values for long and short futures and options
positions held at 30 April 2014.
The gains and losses on the long and short futures and options
positions held at 30 April 2014 have been included in amounts
Receivable and Creditors falling due within one year on the face of
the Statement of Financial Position.
Cross Holdings in other Investment Companies
It is the Company's stated policy that not more than 10 per
cent. in aggregate of Total Assets may be invested in other UK
listed investment companies (including listed investment trusts).
As at 30 April 2014, none of the Company's Total Assets were
invested in UK listed investment companies.
Half-Yearly Management Report
Related Party Transactions
Mr Richard Pavry is an employee of Jupiter Asset Management
Limited which receives investment management fees as detailed
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 0.1875% of the Total Assets less current
liabilities 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. The total fees payable under this
agreement are shown in the Statement of Comprehensive Income.
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 Initial Total
Assets; (b) the Total Assets on the last business day of a
calculation period in respect of which a performance fee was last
paid (after deduction of any performance fee paid to the Investment
Manager in respect of that period); and (c) the Total Assets on the
last business day of the previous calculation period (after
deduction of any performance fee paid to the Investment Manager in
respect of that period) increased by the total return on the
Benchmark Index over the course of the calculation period, the
Benchmark Index being the higher of (i) the annualised cost of the
ZDP Share accrual expressed as a percentage of Total Assets; (ii)
the Hurdle Rate on the ZDP shares and (iii) 3 month sterling LIBOR
calculated as at the first business day of each calendar month.
In such circumstances, the performance fee will amount to 15% 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 given accounting period and/or for the change in
any borrowings by the Company in any given accounting period. The
performance fee will be calculated by reference to the Adjusted
Total Asset Value as at the last day of the relevant calculation
period. The combined amount of any management and performance fees
payable in respect of any twelve month period will not exceed 4.99%
of the Net Asset Value of the Geared Ordinary shares and the ZDP
shares (as at the last day of the relevant period) and, to the
extent any such fees would otherwise exceed 4.99% of such Net Asset
Value, they would be waived by the Investment Manager and will not
be carried forward.
The Company has invested from time to time in funds managed by
Jupiter Investment Management Group Limited or its subsidiaries. As
at 30 April 2014 there was one investment, East European Food Fund
with a market value of GBP15,000 representing 0.01 per cent. of
total investments including cash.
Principal Risks and Uncertainties
The principal risks to the Company are investment strategy and
share price movement, foreign currency movements, interest rates,
use of derivatives, liquidity risk, gearing risk, the discount to
Net Asset Value, regulatory risk, credit and counterparty risk,
operational, financial and loss of key personnel and investment
trust status. A detailed explanation of the Risks and Uncertainties
facing the Company can be found on page 13 of the Company's
published report and accounts for the year to 31 October 2013.
Directors' Responsibility Statement
We the Directors of Jupiter Second Split Trust PLC confirm to
the best of our knowledge:
(a) The condensed set of financial statements contained within
the half-yearly financial report has been prepared in accordance
with applicable UK accounting standards and gives a true and fair
view of the assets, liabilities, financial position and return of
the Company;
(b) the half-yearly management report includes a fair review of
the important events that have occurred during the first six months
of the financial year and their impact on the financial
statements;
(c) the Directors' Statements of Principal Risks and
Uncertainties shown above is a fair review of the principal risks
and uncertainties for the remainder of the financial year; and
(d) the half-yearly management report includes details on related party transactions.
The half-yearly financial report for the six months to 30 April
2014 comprises the Chairman's Statement, Manager's Review, the
Directors' Responsibility Statement and a condensed set of
financial statements, and has not been audited or reviewed by the
auditors pursuant to the Auditing Practices Board guidance on
Review of Interim Financial Information.
By Order of the Board
The Rt. Hon. Lord Lamont of Lerwick
Chairman
30 June 2014
Statement of Comprehensive Income
For the six months to 30 April 2014 (unaudited)
Six months to 30 April Six months to 30 April
2014 2013
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Loss)/gain on investments
at fair value through
profit or loss (Note
2) - (3,451) (3,451) - 3,151 3,151
Foreign exchange gain/(loss) - 2,963 2,963 - (4,442) (4,442)
Income from investments 3,336 - 3,336 1,446 - 1,446
Bank Interest 149 - 149 314 - 314
------------------------------ -------- -------- -------- -------- -------- --------
Total Income 3,485 (488) 2,997 1,760 (1,291) 469
------------------------------ -------- -------- -------- -------- -------- --------
Investment management
fee (875) - (875) (873) - (873)
Other expenses (204) - (204) (183) - (183)
Total expenses (1,079) - (1,079) (1,056) - (1,056)
------------------------------ -------- -------- -------- -------- -------- --------
Net return before
finance costs and
taxation 2,406 (488) 1,918 704 (1,291) (587)
Finance costs of Zero
Dividend Preference
shares - (5,527) (5,527) - (5,170) (5,170)
------------------------------ -------- -------- -------- -------- -------- --------
Net return before
taxation 2,406 (6,015) (3,609) 704 (6,461) (5,757)
------------------------------ -------- -------- -------- -------- -------- --------
Taxation (501) 114 (387) (472) - (472)
------------------------------ -------- -------- -------- -------- -------- --------
Net return after taxation 1,905 (5,901) (3,996) 232 (6,461) (6,229)
------------------------------ -------- -------- -------- -------- -------- --------
Return per Geared
Ordinary share (p) 0.88 (2.73) (1.85) 0.11 (2.99) (2.88)
------------------------------ -------- -------- -------- -------- -------- --------
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.
No operations were discontinued or acquired in the period.
The financial information does not constitute 'accounts' as
defined in section 434 of the Companies Act 2006.
Statement of Financial Position
As at 30 April 2014
30 April 31 October
2014 2013
(unaudited) (audited)
GBP'000 GBP'000
Non current assets
Investments held at fair value through
profit or loss 183,312 60,052
Current assets
Receivables 9,813 4,119
Open forward currency contracts 79,456 117,563
Cash and cash equivalents 49,901 171,481
------------------------------------------- ------------ -----------
139,170 293,163
------------------------------------------- ------------ -----------
Creditors: amounts falling due within one
year (10,763) (2,608)
Open forward currency contracts (79,227) (117,915)
Net current assets 49,180 172,640
------------------------------------------- ------------ -----------
Total assets less current liabilities 232,492 232,692
------------------------------------------- ------------ -----------
Creditors: amounts falling due after more
than one year
Zero Dividend Preference shares (169,444) (163,917)
------------------------------------------- ------------ -----------
Total net assets 63,048 68,775
------------------------------------------- ------------ -----------
Capital and reserves
Share capital 1,237 1,237
Share premium 26,321 26,321
Special reserve 30,530 30,530
Retained earnings (Note 6) 4,960 10,687
------------------------------------------- ------------ -----------
Total equity 63,048 68,775
------------------------------------------- ------------ -----------
Net Asset Value per Geared Ordinary share
(p) 29.14 31.79
------------------------------------------- ------------ -----------
Company Registration Number 5207714
Statement of Changes in Net Equity
For the six months to 30 April 2014 (unaudited)
Capital
Share Share Redemption Retained
Capital Premium Reserve Earnings Total
For the six months to
30 April 2014 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
31 October 2013 1,237 26,321 30,530 10,687 68,775
Net return for the period - - - (3,996) (3,996)
Dividend paid - - - (1,731) (1,731)
--------------------------- -------- -------- ----------- --------- --------
Balance at 30 April 2014 1,237 26,321 30,530 4,960 63,048
--------------------------- -------- -------- ----------- --------- --------
Capital
Share Share Redemption Retained
Capital Premium Reserve Earnings Total
For the six months to
30 April 2013 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
31 October 2012 1,237 26,321 30,530 22,410 80,498
Net return for the period - - - (6,229) (6,229)
Dividend paid - - - (1,623) (1,623)
--------------------------- -------- -------- ----------- --------- --------
Balance at 30 April 2013 1,237 26,321 30,530 14,558 72,646
--------------------------- -------- -------- ----------- --------- --------
Cash Flow Statement
For the six months to 30 April 2014 (unaudited)
Six months Six months
to 30 April to 30 April
2014 2013
GBP'000 GBP'000
Cash flows from operating activities
Purchases of investments (173,046) (56,380)
Sales of investments 51,980 37,666
Realised gain/(loss) on foreign currency 2,963 (4,442)
Investment income received 2,085 97
Deposit interest received 137 313
Investment management fee paid (875) (873)
Receipts from Contracts for Difference (CFD)
Counterparty - 2,869
Change in Open Forward Currency Contracts (582) (1,243)
Receipts from Futures & Options Counterparty (2,171) 178
Other cash expenses (198) (241)
------------------------------------------------- ------------- -------------
Net cash (outflow)/inflow from operating
activities before finance costs and taxation (119,707) (22,056)
Taxation (142) (261)
------------------------------------------------- ------------- -------------
Net cash (outflow)/inflow from operating
activities (119,849) (22,317)
Dividend paid (1,731) (1,623)
Receipts from liquidator of JSST Securities
Limited - 290
------------------------------------------------- ------------- -------------
Decrease in cash (121,580) (23,650)
Change in cash and cash equivalents
Cash and cash equivalents at start of period 171,481 189,119
------------------------------------------------- ------------- -------------
Cash and cash equivalents at end of period 49,901 165,469
------------------------------------------------- ------------- -------------
Notes to the Financial Statements for the six months to 30 April
2014
1. Accounting Policies
A summary of the principal accounting policies, all of which
have been applied consistently throughout the period, is set out
below:
(a) Basis of Preparation
The accounts have been prepared in accordance with International
Financial Reporting Standards (IFRS), which comprise standards and
interpretations approved by the International Accounting Standards
Board (IASB) and International Accounting Standards Committee
(IASC), as adopted by the European Union.
Where presentational guidance set out in the Statement of
Recommended Practice (SORP) for investment trusts issued by the
Association Of Investment Companies (AIC) in January 2009 is
consistent with the requirements of IFRS, the Directors have sought
to prepare the financial statements on a basis compliant with the
recommendations of the SORP.
The company continues to adopt the going concern basis in the
preparation of the financial statements.
All values are rounded to the nearest thousand pounds (GBP'000)
except where indicated.
The accounts are presented in pounds sterling, as this is the
functional currency of the Company
(b) Revenue Recognition
Dividends receivable from equity shares are taken to the revenue
return column of the statement on an ex-dividend basis except
where, in the opinion of the Directors, the dividend is capital in
nature in which case it is taken to the capital return column.
Income from fixed interest debt securities and preference shares is
recognised using the effective interest rate method. Bank interest
is accounted for on an accruals basis. All gains or losses
resulting from Contracts for Difference (CFDs) and Futures and
Options are taken to capital and are shown as part of the gain on
investments at fair value through profit or loss.
(c) Presentation of Statement of Comprehensive Income
In order to better reflect the activities of an Investment Trust
Company and in accordance with guidance issued by the AIC,
supplementary information which analyses the Statement of
Comprehensive Income between items of a revenue and capital nature
has been presented alongside the Statement of Comprehensive
Income.
An analysis of retained earnings broken down into revenue items,
which may be distributed as dividends and capital items is given in
Note 6. The Company's Articles prevent the distribution of capital
profits.
(d) Investments
Investments are recognised and derecognised on a 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 held at
fair value through profit or loss and gains and losses on disposal
are recognised in the Statement of Comprehensive Income as
'Gains/(losses) 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 reporting date without any deduction
for estimated future selling costs. All purchases and sales are
accounted for on a trade date basis.
Foreign exchange gains and losses on fair value through profit
or loss on investments are included within the changes in the fair
value of investments.
2. (Loss) / gain on investments
Six months
Six months to to
30 April 2014 30 April 2013
GBP'000 GBP'000
Net (loss)/gain realised on sale
of investments (566) 874
Gain on contracts for difference - 314
(Loss)/gain on Futures and Options (761) 1,575
Movement in investment holdings
(loss) gains (2,124) 388
------------------------------------ -------------- --------------
(Loss)/gain on investments (3,451) 3,151
------------------------------------ -------------- --------------
3. Return per Geared Ordinary Share
The earnings per Geared Ordinary share figure is based on the
net loss for the six months of GBP3,996,000 (six months to 30 April
2013: Net loss GBP6,229,000) and on 216,361,793 Geared Ordinary
shares (six months to 30 April 2013: 216,361,793 Geared Ordinary
shares), being the weighted average number of shares in issue
during the period.
The earnings per Geared Ordinary share figure detailed above can
be further analysed between revenue and capital, as below.
Six months to Six months to
30 April 2014 30 April 2013
GBP'000 GBP'000
---------------------------------- -------------- --------------
Net revenue return 1,905 232
---------------------------------- -------------- --------------
Net capital return (5,901) (6,461)
---------------------------------- -------------- --------------
Net total return (3,996) (6,229)
---------------------------------- -------------- --------------
Weighted Average number of Geared
Ordinary
shares in issue during the period 216,361,793 216,361,793
---------------------------------- -------------- --------------
pence pence
------------------------------------- ------ ------
Revenue earnings per Geared Ordinary
share 0.88 0.11
------------------------------------- ------ ------
Capital earnings per Geared Ordinary
share (2.73) (2.99)
------------------------------------- ------ ------
Total earnings per Geared Ordinary
share (1.85) (2.88)
------------------------------------- ------ ------
4. Transaction Costs
During the period expenses were incurred in acquiring or
disposing of investments classified as fair value through profit or
loss. These have been expensed through capital and are included
within gains/losses on investments in the Statement of
Comprehensive Income. The total costs were as follows:
Six months to Six months to
30 April 2014 30 April 2013
GBP'000 GBP'000
---------- -------------- --------------
Purchases 27 26
---------- -------------- --------------
Sales 8 17
---------- -------------- --------------
35 43
---------- -------------- --------------
5. Comparative Information
The financial information contained in this Half-Yearly
Financial Report does not constitute statutory accounts as defined
in section 434 of the Companies Act 2006. The financial information
for the six months to 30 April 2014 and 30 April 2013 have not been
audited.
The information for the year ended 31 October 2013 has been
extracted from the latest published audited financial statements.
The audited financial statements for the year ended 31 October 2013
have been filed with the Registrar of Companies. The report of the
auditors on those accounts contained no qualification or statement
under section 498(2) or (3) of the Companies Act 2006.
6. Retained Earnings
The table below shows the movement in the retained earnings of
the Company analysed between revenue and capital items.
Revenue Capital Total
GBP'000 GBP'000 GBP'000
---------------------------- ------- ------- -------
At beginning of the period 1,840 8,847 10,687
---------------------------- ------- ------- -------
Movement during the period:
---------------------------- ------- ------- -------
Net return for the period 1,905 (5,901) (3,996)
---------------------------- ------- ------- -------
Dividend paid (1,731) - (1,731)
---------------------------- ------- ------- -------
At 30 April 2014 2,014 2,946 4,960
---------------------------- ------- ------- -------
7. Net Asset Value per Geared Ordinary share
The Net Asset Value per Geared Ordinary share is based on the
net assets attributable to the equity shareholders of GBP63,048,000
(31 October 2013: GBP68,775,000) and on 216,361,793 (31 October
2013: 216,361,793) Geared Ordinary shares, being the number of
Geared Ordinary shares in issue at the period end.
Investment Objective
The objective of the Company is to achieve absolute returns. The
Company aims to provide Geared Ordinary shareholders with capital
growth, with income as a secondary objective and to provide Zero
Dividend Preference shareholders with a predetermined final capital
entitlement on the Winding-Up Date.
Investment Policy
The investment policy of the Company is to invest in listed
equities and equity related securities (such as convertible
securities, preference shares, convertible unsecured loan stock,
warrants and other similar securities).
The Investment Manager ('Jupiter Asset Management Limited') is
not limited in the asset allocation of the Company's investment
portfolio between sectors, geographic regions or the types of
equities and equity related securities in which the Company may
invest, but instead the Investment Manager considers each potential
investment on its own merits. The Investment Manager focuses on the
sectors that he considers to be the most undervalued areas of the
market from time to time and the allocation of assets between
different sectors will be determined by the Investment Manager in
his absolute discretion.
In addition to equities, and equity related securities
(including derivatives),the types of investment and assets in which
the property of the Company may be invested include cash, near
cash, fixed interest securities, currency exchange transactions,
index linked securities, money market instruments (MMIs) and
deposits.
These instruments may be used for the purposes of both efficient
portfolio management* and, where it is considered to be appropriate
for investment purposes by the Investment Manager and the Board, to
adopt an investment strategy aimed at achieving positive returns
across market cycles with low levels of volatility. This strategy
will seek to take advantage of specific macroeconomic circumstances
and market pricing anomalies.
At times the portfolio may be concentrated in any one or a
combination of such assets and as well as holding physical long
positions the Investment Manager may create synthetic long and
short positions through the use of equity related securities.
The Investment Manager will seek to limit volatility through
diversified portfolio holdings and sector exposures, active
management of the Company's net and gross portfolio exposure to the
market, and through the use of derivatives.
The Company's investment portfolio is focused on companies
where, in the opinion of the Investment Manager, valuations are low
and growth in earnings or assets is not fully appreciated. The
Investment Manager seeks to identify companies within growth
industries which enjoy certain key characteristics, including an
imaginative, proven and incentivised management team and balance
sheet strength.
The Company manages an adequate spread of investment risk, with
no one investment making up more than 15% of the Total Assets of
the Company at the time of investment.
The Board has not set an objective of a specific Portfolio Yield
for the Company and the level of such yield is expected to vary
with the sectors and geographical regions to which the Company's
portfolio is exposed at any given time. However, substantially all
distributable revenues that are generated from the Company's
investment portfolio are expected to be paid out in the form of
annual dividends.
It is the Company's stated policy that not more than 10%, in
aggregate, of Total Assets may be invested in other UK listed
investment companies unless such companies have stated investment
policies to invest no more than 15% of their Total Assets in other
UK listed investment companies (including listed investment
trusts).
The Company may make use of short-term borrowings such as an
overdraft facility for liquidity and investment purposes in order
to gear the returns on the Company's investment portfolio but in
any event borrowings will not exceed, at any one time, 25% of Total
Assets without shareholder approval by ordinary resolution.
The Company may also hedge currency exposures. The Company may
also purchase unlisted securities (up to a maximum of 5% of Total
Assets).
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 and the separate class approval of Geared
Ordinary shareholders.
*Efficient Portfolio Management refers to techniques and
instruments used with the view to reduce risks specific to a
Portfolio and also to generate additional capital or income for the
Company with a risk level that is consistent with the level
approved by the Board.
Benchmark Index
3 month sterling LIBOR calculated as at the first business day
of each calendar month.
By order of the Board
Richard Pavry
Head of Investment Trusts
Jupiter Asset Management Limited, Company Secretary
rpavry@jupiter-group.co.uk
020 7314 4822
30 June 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
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