TIDMJSS
JUPITER SECOND SPLIT TRUST PLC
RESULTS FOR THE YEAR ENDED 31 OCTOBER 2008
The following comprises extracts from the Company's Annual Financial
Report for the year ended 31 October 2008. The full Annual Financial
Report will shortly be available to be viewed on or downloaded from
the Company's website at www.jupiteronline.co.uk.
CHAIRMAN'S STATEMENT
The defensive stance your fund manager adopted ensured that the fall
in Net Assets of 16.0 per cent. was significantly less than the fall
in your Company's composite benchmark index of 34.5 per cent. The
composite benchmark index is weighted 75 per cent. to the FTSE
All-Share Index and 25 per cent. to the FTSE Actuaries World Index.
The geared split capital structure of the Company meant that the Net
Asset Value of the Company's Geared Growth shares fell by 39.3 per
cent. during the year under review.
The Packaged Units are not geared by the Company's split capital
structure since they comprise one Geared Growth share and one Zero
Dividend Preference share. The return on the Net Asset Value of the
Packaged Units declined by 16.0 per cent. over the period.
The Net Asset Value of the Zero Dividend Preference shares increased
by 7.5 per cent. over the year under review to 78.29p.
In November we received a VAT repayment amounting to GBP751,000 or
approximately 0.8p per Geared Capital share, the majority of which
has been accounted for as capital.
Dividend
A dividend was declared on 19 December 2008 of 1.0p per Geared Growth
share and paid on 30 January 2009 to the Geared Growth shareholders
(and to the holders of the Geared Growth shares within the Company's
Packaged Units) that appeared on the Company's register at the close
of business on 5 January 2009.
Dennis Thoy
It is with great sadness that I announce that Dennis Thoy, who has
served on the board since the Company's inception, took the decision
to resign as a director of the Company on the grounds of ill health.
On behalf of the board I would like to take this opportunity to thank
Mr Thoy for his enormous contribution over the many years that he has
served the Company. Mr Thoy shall be greatly missed and we wish him
a speedy recovery and the best of luck with any future endeavour.
End of Life
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 30 October 2009 or to continue or roll over
their investment have yet to be formulated. The directors are
actively considering the 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 our proposals.
Since any proposals for the continuation or reconstruction of the
Company will necessarily require the prior approval of Shareholders
at an Extraordinary General Meeting there can be no guarantee, at
this stage, that any such proposals will be implemented. Hence I
refer you to the comments in the auditor's report and in note 1 to
the accounts which relate to the going concern basis on which the
accounts have been prepared.
Annual General Meeting
This year's Annual General Meeting will be held at 1 Grosvenor Place,
London SW1X 7JJ at 12 noon on 24 March 2009. As part of the Annual
General Meeting business it is proposed that the Company should adopt
new Articles of Association in order to comply with the provisions of
the Companies Act 2006. Further details of the proposed changes are
set out in the Directors' Report of the Report and Accounts on pages
20 to 22.
Outlook
Since the period end there has been a substantial increase in the
liquidity of the portfolio, as the manager has correctly taken a very
cautious view of the outlook for equities. As at 31 January 2009,
Government and Corporate bonds amounted to 14 per cent. of total
assets and cash to a further 54 per cent. of total assets. This
decision resulted in the outperformance of the Company against its
composite benchmark index by 15.0 per cent. for the period since the
year end to 31 January 2009 which is a remarkable achievement given
the current economic crisis and the turbulence in World stock
markets.
Gordon Campbell
Chairman
24 February 2009
MANAGER'S REVIEW
Throughout the period we were concerned about the rapid deterioration
of the world economy and maintained a defensive stance. To the
extent that there has been some optimism it has been based on factors
such as the apparent cheapness of equities versus bonds and the
increasing determination of governments and central banks to cut
interest rates and encourage economic growth. However, we preferred
to focus on the deepening and spreading recession and the severe
threat to profits in so many sectors and parts of the world. The
recession took hold as a result of de-leveraging following a massive
accumulation of debt on the part of many consumers, corporations and
governments. Leverage in the financial sector has made it a
particularly vulnerable area but negative surprises and trends are
likely to become apparent in almost all sectors and parts of the
world.
The portfolio has become increasingly defensively positioned since
the summer of 2007, with an emphasis on government bonds and cash
and, to a smaller extent, gold and corporate bonds.
Overseas exposure has been kept high in the belief that sterling
would probably fall. This is because of the highly leveraged nature
of the UK economy, with its gearing into the financial services
industry. Gold should continue to attract interest as a safe haven
and government bonds should respond well to a deflationary
environment. Corporate bonds are obviously more risky but some
corporations remain extremely solid in their outlook but offer
extreme bond yields relative to government securities.
Through our investments in Jupiter Hyde Park Hedge Fund, we have been
able to take advantage of trading and relative value opportunities.
This fund appreciated materially during the calendar year 2008.
To the extent that we remain in equities we are focused on companies
with solid balance sheets, foreign currency earnings and defensive
business profiles.
Philip Gibbs
Fund Manager
Jupiter Asset Management Limited
24 February 2009
INVESTMENT OBJECTIVE
The objective of the Company is to achieve absolute returns from a
portfolio comprising predominantly the equity and equity related
securities of both UK companies and non-UK companies. The Company
aims to provide Geared Growth 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 planned 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 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.
The Investment Manager does not seek to track the performance of the
Company's Benchmark index and is not restricted in his investment
decisions as a consequence of the constituents of the Benchmark.
There could be significant variations between the allocation and
performance of the Company's assets and the Benchmark.
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.
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 Growth
Shareholders.
DIRECTORS' RESPONSIBILITIES
FOR THE FINANCIAL STATEMENTS
The Directors, confirm to the best of their knowledge that:
(a) 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
(b) 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.
By order of the Board
G A Campbell
Chairman
24 February 2009
RISKS AND UNCERTAINTIES
The principal risks the Group faces in its portfolio management
activities are:
(a) Foreign currency risk
(b) Market price risk i.e. movements in value of investment holdings
caused by factors other than interest rate or currency movement
(c) Interest rate risk
(d) Liquidity risk
(e) Credit and counterparty risk
The investment Manager's policies for managing these risks are
summarized below and have been applied throughout the year.
Policy
(a) Foreign Currency Risk
The Group may hedge against foreign currency movements affecting the
value of the investment portfolio where adverse movements are
anticipated otherwise takes account of this risk when making
investment decisions.
(b) Market Price Risk
By the very nature of its activities, the Group's investments are
exposed to market price fluctuations. Further information on the
investment portfolio and investment policy is set out in the Manger's
Review.
(c) Interest Rate Risk
Interest rate movements may affect the fair value of investments of
fixed interest securities and the level of income receivable from
interest-bearing securities and cash at bank and on deposit.
(d) Liquidity Risk
The Group's assets comprise mainly readily realizable securities
which can be sold to meet funding requirements if necessary. Short
term flexibility is achieved through the use of short term borrowings
and overdraft facilities.
(e) Credit and Counterparty Risk
The failure of the counterparty to a transaction to discharge its
obligations under that transaction could result in the Company
suffering a loss.
A detailed explanation of principal risks and uncertainties can be
found in the Annual Report and Accounts for the year ended 31 October
2008, which will be available on the Company's website shortly.
CONSOLIDATED INCOME STATEMENT
for the year ended 31 October 2008
Year ended Year ended
31 October 2008 31 October 2007
Revenue Capital Revenue Capital
Return Return Total Return Return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Loss)/gain on
investments at fair
value
through profit or
loss - (19,059) (19,059) - 12,404 12,404
Foreign exchange
gain - 520 520 - - -
Income from
investments 1,478 - 1,478 3,004 - 3,004
Bank interest 590 - 590 423 - 423
Dealing
(loss)/profit of
subsidiary (4,242) - (4,242) 562 - 562
Total income (2,174) (18,539) (20,713) 3,989 12,404 16,393
Investment
management
fee (552) - (552) (1,117) - (1,117)
Investment
performance
fee - 408 408 - (230) (230)
Other expenses (284) - (284) (233) - (233)
Total expenses (836) 408 (428) (1,350) (230) (1,580)
Net return before
finance costs and
taxation (3,010) (18,131) (21,141) 2,639 12,174 14,813
Interest payable (91) - (91) (196) - (196)
Zero Dividend
Preference
shares - (5,189) (5,189) - (4,816) (4,816)
Net return before
taxation (3,101) (23,320) (26,421) 2,443 7,358 9,801
Taxation 557 46 603 (440) (250) (690)
Net return after
taxation (2,544) (23,274) (25,818) 2,003 7,108 9,111
Earnings per Geared
Growth share
(pence) (2.68) (24.52) (27.20) 2.11 7.49 9.60
The total column of this statement is the statement of the Group,
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
acquired or discontinued in the year.
CONSOLIDATED BALANCE SHEET
as at 31 October 2008
31 October 31 October
2008 2007
GBP'000 GBP'000
Non Current assets
Investments held at fair value through profit
or loss 100,356 118,541
Current assets
Investments held at fair value through profit
or loss - 7,783
Receivables 5,089 2,369
Cash and cash equivalents 16,778 13,433
21,867 23,585
Total assets 122,223 142,126
Current liabilities (5,616) (3,277)
Zero Dividend Preference shares (74,303) -
Total assets less current liabilities 42,304 138,849
Non Current liabilities
Zero Dividend Preference shares - (69,114)
Net assets 42,304 69,735
Capital and reserves
Called up share capital 949 949
Share premium 493 493
Special reserve 36,232 36,232
Retained earnings 4,630 32,061
Total equity 42,304 69,735
Net Asset Value per Geared Growth share (pence) 44.58 73.48
Approved by the Board of directors and authorised for issue on 24
February 2009 and signed on its behalf by:
G A Campbell, Chairman
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 October 2008
Share Share Special Retained
Capital Premium Reserve Earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the year ended 31
October 2008
31 October 2007 949 493 36,232 32,061 69,735
Net loss for the year - - - (25,818) (25,818)
Dividends paid and
declared:
Interim dividend for year
ended
31 October 2007 - - - (1,613) (1,613)
Balance at 31 October 2008 949 493 36,232 4,630 42,304
For the year ended 31
October 2007
31 October 2006 949 493 36,232 24,278 61,952
Net profit for the year - - - 9,111 9,111
Dividends paid and
declared:
Interim dividend for year
ended
31 October 2006 - - - (750) (750)
31 October 2007 - - - (578) (578)
Balance at 31 October 2007 949 493 36,232 32,061 69,735
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 October 2008
Year ended Year ended
31 October 31 October
2008 2007
GBP'000 GBP'000
Cash flows from operating activities
Purchases of investments (325,882) (154,581)
Sales of investments 324,209 176,156
Realised gain on foreign currency 452 -
Investment income received 1,616 2,869
Deposit interest received 557 395
Investment management fee paid (894) (1,134)
Investment performance fee paid (230) (3,449)
Sales less purchases of dealing subsidiary 7,851 926
Other cash receipts - 4
Other cash expenses (4,575) (238)
Dividend paid (1,613) (1,328)
Net cash inflow from operating activities
before finance costs and taxation 1,491 19,620
Interest paid (91) (275)
Taxation (66) (159)
Net cash inflow from operating activities 1,334 19,186
Cash flows from financing activities
Short-term loan repaid - (10,000)
Increase in cash 1,334 9,186
Change in cash and cash equivalents
Cash and cash equivalents at start of period 13,433 4,247
Cash and cash equivalents at end of period 14,767 13,433
NOTES
1. The consolidated accounts have been prepared in accordance with
International Financial Reporting Standards, which comprise standards
and interpretations approved by the International Accounting
Standards Board and International Accounting Standards Committee, as
adopted by the European Union.
2. Income
2008 2007
Group Group
GBP'000 GBP'000
Income from investments
Dividends from United Kingdom companies 914 967
Dividends from overseas companies 234 2,033
Income from government stock 330 4
1,478 3,004
Other income
Interest on VAT recovery 49 -
Deposit interest 541 423
(Loss)/profit on dealings by subsidiary (4,242) 562
Total income (2,174) 3,989
Total income comprises:
Dividends 1,478 3,004
Interest 590 423
(Loss)/profit on dealings by subsidiary (4,242) 562
(2,174) 3,989
Income from investments
Listed in the UK 1,324 2,199
Listed overseas 154 805
1,478 3,004
3. Reconciliation of profit before finance costs and taxation to net
cash inflow from operating activities
2008 2007
Group Group
GBP'000 GBP'000
(Loss)/profit before finance costs and taxation (21,141) 14,813
Loss/(gain) on fixed asset investments through
profit or loss 19,059 (12,404)
Purchases of investments (325,882) (154,581)
Sales of investments 324,209 176,156
Increase in prepayments and accrued income (616) (171)
Decrease in current asset investments 7,783 365
Decrease in other creditors and accruals (308) (3,230)
Dividend paid (1,613) (1,328)
1,491 19,620
4. Current liabilities
2008 2007
Group Group
GBP'000 GBP'000
Investment performance fee - 230
Other creditors and accruals 259 337
Purchases awaiting settlement 3,155 1,912
Corporation tax - 164
Deferred tax 191 634
Overdraft 2,011 -
Zero Dividend Preference shares 74,303 -
79,919 3,277
Bank Loan
The Company's loan facility from Royal Bank of Scotland PLC, London
whereby it was able to borrow up to a maximum of GBP15 million was
cancelled in April 2008.The facility was not used during the year.
5. Dividends
2008 2007
GBP'000 GBP'000
Amounts recognised as distributions to equity holders in
the period:
2007 2nd Interim Geared Growth dividend 1.7p net 1,613 -
2007 1st Interim Geared Growth dividend 0.61p net - 578
2006 1st Interim Geared Growth dividend 0.79p net - 750
1,613 1,328
No provision has been made for the 2008 interim dividend on the
Geared Growth shares for the period ended 31 October 2008 of GBP949,057
(2007: GBP1,613,397). Under IFRS, dividends payable by the Company are
only recorded as a liability following a dividend declaration by the
Board and therefore the dividend of 1p per share (2007: 1.7p per
share), declared on 19 December 2008 (2007: 21 December 2007), is not
recognised as a liability of the Company as at 31 October 2008.
Also set out below is the total dividend payable in respect of the
financial year under review, which is the basis on which the
requirements of Section 842 Income and Corporation Taxes Act 1988 are
considered:
2008 2007
GBP'000 GBP'000
2008 1st Interim Geared Growth dividend 1p net
(2007: 0.61p net) 949 578
2008 2nd Interim Geared Growth dividend nil
(2007: 1.7p) - 1,613
949 2,191
6. Related parties
Mr. Gibbs is an employee of Jupiter Investment Management Group
Limited whose subsidiaries Jupiter Asset Management Limited and
Jupiter Administration Services Limited receive investment management
and administration fees as set out below.
Jupiter Asset Management Limited is contracted to provide investment
management services to the Company (subject to termination by not
less than 12 months notice by either party) for a quarterly fee of
0.1875 per cent. of the total assets less current liabilities of the
Group excluding the value of any Jupiter managed investments payable
in arrears on 31 January, 30 April, 31 July and 31 October in each
year. Management fees of GBP199,378 were outstanding as at 31 October
2008 (2007: GBP246,684).
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 (i) the Equity Proceeds (ii) Total
Assets less current liabilities at the end of the last financial
period in respect of which a performance fee was last paid (after
deduction of the performance fee paid to the Investment Manager in
respect of that period) and (iii) 1.10 multiplied by Total Assets
less current liabilities at the end of the previous accounting period
(after deduction of any performance fee paid to the Investment
Manager in respect of that period). In such circumstances, the
performance fee will amount to 15 per cent. of any such excess. The
calculation of the total amount of any performance fee will be
adjusted for the repurchase or redemption of shares in any accounting
period. The combined amount of any management and performance fees
payable in respect of any twelve month period will not exceed 5 per
cent. of the Total Assets less current liabilities of the Company. No
performance fee was payable for the year ended 31 October 2008 (2007:
GBP229,900)
Jupiter Administration Services Limited is contracted to provide
secretarial, accounting and administrative services to the Company
for an annual fee of GBP83,067 adjusted each year in line with the
Retail Price Index payable quarterly. None of the fee payable for the
year ended 31 October 2008 was outstanding at the year end (2007:
nil).
Mr Gibbs's directors fees for the provision of his services as a
director of the Group are paid to Jupiter Asset Management Limited.
GBP15,000 was payable for the year ended 31 October 2008 and GBP1,250 was
outstanding at the year end.
The Company has invested from time to time in funds managed by
Jupiter Investment Management Group Limited or its subsidiaries. As
at 31 October 2008 there were two investments, East European Food
Fund and Jupiter Hyde Park Hedge Fund representing 10.4 per cent. of
total investments.
7. Going concern
The Directors have considered the end of the Company's planned life
on 30 October 2009. Detailed proposals regarding the future of the
Company are yet to be formulated and are expected to be announced
later in the year. The Directors believe that any proposals for the
continuation or reconstruction of the Company have a good prospect of
shareholder support based on the strong demand for longer dated ZDPs,
of which there is a scarcity in the market; potential desire of
shareholders not to crystallise capital gains and the voting patterns
of shareholders in recent comparable proposals,.
Notwithstanding the end of the Company's planned life on 30 October
2009, after making enquiries the directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the forseeable future. The Directors,
having considered the prospects of shareholder support for any
proposed continuation of the Company, and the future cash flows and
resources of the Company, continue to adopt the going concern basis
in preparing the accounts. Further information may be found under
Basis of Accounting in Note 1 of the financial statements.
The Annual General Meeting of the Company has been convened for
Tuesday 24 March 2009 at 12 noon.
The preliminary announcement is prepared on the same basis as set out
in the Statutory Accounts for the year ended 31 October 2008 and was
approved by the Board of Directors on 24 February 2009. The above
financial information does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985. The Auditors have
reported on the Statutory accounts for the year ended 31 October
2008; their report was unqualified, and did not contain statements
under s237(2) or (3) Companies Act 1985. Statutory accounts for the
year ended 31 October 2008 including an unqualified audit report and
containing no statements under s237(2) or (3) of the Companies Act
1985 will be delivered to the Registrar of Companies in due course.
The statutory accounts for the year to 31 October 2007 have been
delivered to the Registrar of Companies.
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.
Monthly fact sheets for Jupiter's investment trust clients are
available for download from www.jupiteronline.co.uk and by post or
fax on request from the company secretarial department.
Enquiries:
Jenny Thompson
Company Secretarial Department
Jupiter Asset Management Limited
jthompson@jupiter-group.co.uk
0207-314-5565
=--END OF MESSAGE---
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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