Interim Results

Jupiter Second Enhanced Inc.Tst.PLC 01 July 2005 JUPITER SECOND ENHANCED INCOME TRUST PLC Preliminary announcement of the unaudited results for the half year to 30th April 2005. CHAIRMAN'S STATEMENT I would like to take this opportunity on behalf of my board to welcome you as shareholders in the Company following our successful launch on 1st November 2004. I am pleased to confirm that the net asset value of your Company's Geared Income shares rose by 6.1 per cent. from their opening net asset value of 39.6p on 1st November 2004 to 42.0p during the first six months of the Company's life. This compares favourably with the performance of the Company's benchmark, the FTSE All Share Index, which appreciated by 4.3 per cent. over the same period. The Company's Packaged Units (each comprising one Geared Income share and one Zero Dividend Preference share) produced a net asset value return of 4.6 per cent. over the same period. The Company's Zero Dividend Preference shares have also attracted a modest premium rating on the London Stock Exchange since launch in comparison with their accrued entitlement under the Company's Articles of Association. Revenues Revenue after tax for the period amounted to £954,000. Interim dividends of 0.45p and 1.0p have been declared in respect of the period under review and a special dividend of 0.45p was declared on 15th June 2005 in conjunction with your Company's participation in the scheme of reconstruction of Martin Currie Enhanced Income Trust plc. We anticipate that the Company should be in a position to pay an aggregate dividend amounting to between 2.8p and 3.0p in respect of the current financial year to 31st October 2005. We announced on 26th May 2005 that the Company is being offered as a recommended rollover vehicle for the shareholders in Martin Currie Enhanced Income Investment Trust plc at the end of that company's life on 30th June 2005. Any new shares that are issued by the Company pursuant to that rollover will increase your Company's market capitalisation and therefore both increase its potential liquidity on the London Stock Exchange and reduce the ratio of the Company's total annual expenditure to its total assets (its 'total expense ratio'). The issue will not be dilutive to the net asset value of the existing Geared Income shares in issue. An issue of new shares will also have no effect on the cover of the Company's existing Zero Dividend Preference shares. Market Review In the six months since the launch of your Company the US stock market has continued to make slow but stable progress. The re-election of President Bush to the White House, produced, as expected, further fiscal tightening in an economy that has been massively stimulated post the events of 11 September 2001. The rise in US interest rates since June last year has slowed the rate of consumer consumption and discouraged equity investors from pursuing stock prices during the traditional spring reporting season. The impact of weaker overseas share prices has also influenced the UK stock market. The combination of rising domestic interest rates and seasonal election slow down has put investor demand on hold. During this quiet period company profits have continued to produce few surprises. Importantly, strong dividend growth has reflected the efforts of company directors to return cash to shareholders. The FTSE 100 broached the psychologically important level of 5,000 in early February, but, since that time, house prices and retail sales have both been hit by slowing demand and weaker confidence. The best performing market sectors over six months have been in food production and healthcare. Towards the end of 2004 the market had been led by mining and oil, driven largely by demand for commodities in China. Outperforming stocks in these sectors included Antofagasta, BP and Shell, all of which were held within the Company's investment portfolio. The formation of the Company's portfolio last October took place against a background of rising dividends and an ongoing recovery from the low stock market levels of March 2003. Significant positions have been taken in the oil, construction, leisure, water and insurance sectors. This can be seen from a review of the individual stocks in the interim report. In April this year one of our largest positions, the RAC, was acquired by the insurance group Aviva at a substantial premium to the share price at the time. In recent years cash flow from the UK corporate sector has too often been diverted into value destroying acquisitions. The downturn in technology related areas of the economy served to undermine this trend and encouraged companies to give greater focus to returning cash to shareholders in the form of dividends or share buy back programmes. It is the aim of the Company to invest in companies with specific focus upon total returns to shareholders. Outlook There are a number of uncertainties within Anglo Saxon economies currently. The outlook for UK interest rates will depend upon the ability of consumers to finance debt. This concern coincides with a desire within the Government to raise the amount of tax paid. The rise in the price of crude oil has substantially improved the profitability of the large oil companies and the Chancellor can fairly expect this area of the economy to contribute a higher amount of tax. The slowdown in retail activity and housing sales should not lead to the gloomy scenario many headlines and some commentators have been forecasting. The expansion of the Chinese economy should aid economic activity in developed markets, but not without the potential of inflationary consequences at a later date. During the latter half of the calendar year, it will become clearer the degree to which economies have slowed in response to tighter economic policies. Dividend growth has once again become an important part of shareholder returns and your Company will continue to target those stocks able to pay a high and growing dividend. While market sentiment may remain volatile, companies seen by the Manager remain positive on the outlook. The Manager remains focused on finding companies that are capable of producing a positive total return for investors and is confident on the prospects for further growth in profits and dividends for the stocks held within the investment portfolio. Jimmy West Chairman 1st July 2005 STATEMENT OF TOTAL RETURN (Incorporating the Revenue Account) for the period 17th August 2004 to 30th April 2005 (Unaudited) Revenue Capital Total £'000 £'000 £'000 -------- -------- -------- Realised gains on investments - 716 716 Unrealised appreciation of investments - 1,681 1,681 -------- -------- -------- Total capital gains on investments - 2,397 2,397 Income from fixed asset investments 1,290 - 1,290 Bank interest 125 - 125 Investment management fee (293) - (293) Other expenses (161) - (161) -------- -------- -------- Net return before finance costs and taxation 961 2,397 3,358 Interest payable (6) - (6) -------- -------- -------- Return on ordinary activities before taxation 955 2,397 3,352 Tax on ordinary activities (1) - (1) -------- -------- -------- Return on ordinary activities after taxation 954 2,397 3,351 Dividends in respect of equity shares (814) - (814) Other appropriations in respect of non-equity shares - (1,180) (1,180) -------- -------- -------- Transfer to reserves 140 1,217 1,357 ======== ======== ======== Return per Geared Income share 1.70p 2.17p 3.87p The revenue column of this statement is the profit and loss account of the Company. All revenue and capital 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 240 of the Companies Act 1985. The Company was incorporated on 17th August 2004 and its shares were listed on the London Stock Exchange on 1st November 2004, on which date it commenced business. Consequently, the Statement of Total Return above reflects the returns from 1st November 2004 to 30th April 2005. BALANCE SHEET at 30th April 2005 (Unaudited) £'000 --------- Fixed assets Investments 57,689 --------- Current assets Cash at bank 153 Debtors 669 --------- 822 Creditors: amounts falling due within one year (793) --------- Net current assets 29 --------- Total assets less current liabilities 57,718 ========= Capital and reserves Called up share capital 1,123 Special reserve 54,058 Capital reserve - realised (464) Capital reserve - unrealised 1,681 Redemption reserve 1,180 Revenue reserve 140 --------- Total shareholders' funds 57,718 ========= Net asset value per Geared Income share 42.03p --------- CASH FLOW STATEMENT for the period from 17th August 2004 to 30th April 2005 (Unaudited) £'000 --------- Operating activities Net cash inflow from operating activities 487 --------- Servicing of finance Interest paid (3) --------- Net cash outflow from servicing of finance (3) --------- Taxation Net tax paid (3) --------- Capital expenditure and financial investment Purchase of fixed asset investments (61,985) Sale of fixed asset investments 6,693 --------- Net cash outflow from capital expenditure and financial investments (55,292) --------- Equity dividends paid (252) --------- Net cash outflow before financing (55,063) --------- Financing Share issue 56,157 Cost of share issue (941) --------- Net cash inflow from financing 55,216 --------- Increase in cash 153 ========= Reconciliation of net cash flow to movement in net cash £'000 Increase in cash in period 153 --------- Net cash at 30th April 2005 153 ========= The interim 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 By order of the Board Jupiter Asset Management Limited Secretaries This information is provided by RNS The company news service from the London Stock Exchange

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