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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  European Opportunities Trust plc    JEO   GB0000197722

EUROPEAN OPPORTUNITIES TRUST PLC

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JUPITER EUROPEAN OPPORTUN TR : Annual Financial Report

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09/01/2010 | 11:40am EST




Annual Financial Report for the year ended 31 May 2010

The following is an extract from the Company's Annual Report and Accounts for
the year ended 31 May 2010. The full Annual Report will shortly be available to
be viewed on or downloaded at www.jupiteronline.co.uk.


CHAIRMAN'S STATEMENT

A year ago we had to report that, for the first time in your Company's short
history, we had underperformed the FTSE World Europe ex UK Index, inasmuch as
the Net Asset Value per share (NAV) of your shares had fallen by 30 per cent. in
that year, the benchmark by 25 per cent.. It is therefore pleasing to report
that, during the year under review, that deficiency was more than made good;
 the Benchmark Index recovered by 14.4 per cent. but NAV rebounded by no less
than 43.1 per cent.. The discount--the difference between the (higher) NAV and
(lower) share price--narrowed, although not greatly, even though a total of
1,145,000 shares were bought back for cancellation over the year.

Dividend

Last year, when reporting that the recovery of Value Added Tax from earlier
years had resulted in a special distribution to shareholders amounting to 0.85p
per share, I said that 'it is not expected that the Company will pay a regular
dividend in future years'. That remains the case, but since out income has risen
over the past year while expenses have fallen sharply (as borrowings have come
down), we have declared an interim dividend of 2.1p per share in respect of the
year just ended. As was the case last year, in order to retain our status as an
investment trust under section 1158 of the Corporation Taxes Act 2010 we are not
permitted to retain more than 15 per cent. of eligible investment income.

Performance Fees

The Board has recently reviewed the basis of remuneration of the Manager.
Despite the fact that the Net Asset Value per Ordinary Share has out performed
the Benchmark Index in eight of the ten years of your Company's existence, a
performance fee has only been paid to the Manager on two occasions (in 2005 and
in 2007). The Board has considered the comparable incentives payable to the
managers of the Company's peers and it has concluded that the current
arrangements for the payment of performance fees (described in the accounts)
should be revised to provide a better incentive for the Manager to continue to
deliver consistent long term outperformance for the benefit of the Company's
Shareholders.

Accordingly, the Company has amended the performance fee arrangements set out in
the Company' investment management agreement with the Manager (the IMA) such
that the entitlement to a performance fee will be based on the out-performance
of the Net Asset Value per Ordinary share over the total return on the Company's
Benchmark Index, the FTSE World Europe ex UK total return index, in the current
and future accounting periods.

No change has been made to the current high water mark provisions, which ensure
that performance fees may only be paid in circumstances in which the Manager
generates absolute (positive) returns in excess of the Benchmark for the
Company's Shareholders. We should also mention that at the same time as
implementing the aforementioned change to the performance fee, the overall cap
on the aggregate of annual management charges and performance fees payable to
the Manager has been reduced from its former level of 7.5 per cent. of the
Company's total net assets in any such period.

The Board has been advised by Cenkos Securities PLC that the proposed 'related
party transaction' (as defined in the Listing Rules of the UK Listing Authority)
between the Company and the Manager represented by the amendment to the IMA,
taken as a whole, is fair and reasonable insofar as Shareholders of the Company
are concerned. Furthermore the UK Listing Authority has agreed that this
amendment to the IMA represents a 'smaller related party transaction' for the
purposes of the Listing Rules and did not, therefore, require prior Shareholder
approval.

Full details of the new performance fee arrangements are set out in the Report
and Accounts.

Discount Management

The Board considers that it is not in Shareholders' interest for the Ordinary
shares to trade at a significant discount to their prevailing estimated Net
Asset Value.

The Board further believes that the most effective means of minimising any
discount at which its Ordinary shares may trade is for the Company to deliver
strong, consistent, long-term performance from the Company's investment
portfolio in both absolute and relative terms. However, wider market conditions
and other considerations will affect the rating of the Ordinary shares in the
short term and the Board is, therefore, committed to seeking to limit the level
and volatility of the discount to Net Asset Value at which the Ordinary shares
may trade by seeking to repurchase Ordinary shares when the Investment Manager
considers it to be in the interests of Shareholders to do so.

The Board does not consider share repurchases to be a long-term panacea to
discount levels unless they are supported by strong relative and absolute
performance. An inflexible buy back policy can result in a rapid reduction in
the size of an investment trust. Other considerations, such as the impact of
share repurchases on total expense ratios and on liquidity for remaining
Shareholders would influence the Company's policy from time to time. Ultimately
the Board would prefer the Company's Ordinary shares to be acquired by willing
third party investors ahead of any demand from the Company to buy in for
cancellation or treasury.

Nevertheless, the board intends to implement a new discount management policy
through Cenkos Securities PLC with immediate effect. Any purchases will be made
only through the market at prices below the prevailing estimated Net Asset Value
per Ordinary share and in circumstances where the Directors believe that such
purchases will enhance shareholder value and assist in narrowing any discount to
Net Asset Value at which the Ordinary shares trade. While the Board may
determine a target discount from time to time, which target may or may not be
announced to the market, any such purchases will nevertheless always be at the
absolute discretion of the Board.

Further information is set out in the Report and Accounts.
Gearing

Net borrowings fell from £48.6 million to £27.0 million over the year. Since the
value of gross assets rose from £174 million to £211 million, the ratio of
borrowings to total assets came down faster, from 28 per cent to 12 per cent..
Back in the late Spring our fund manager, Alex Darwall, took the view that
markets were vulnerable and that good shares would fall along with the bad as
investors tend to sell whatever is saleable when greed turns to fear. Hence your
Company was less severely hit during the subsequent turmoil than would have been
the case if no action had been taken.

We are delighted, but not surprised, that Alex was recently named "European
Manager of the Year" by the magazine Investment Week.

The Board

Sadly our former Director, Sir Marrack Goulding, died in July. He had an
excellent grasp of international affairs, and we benefited greatly from his
advice and contacts. Meanwhile we remaining Board members are reminded that none
of is either indispensible nor, regrettably, immortal. Shareholders should be
aware that we have the question of Board succession at the forefront of our
minds.
AIFM Directive

This Directive, which emanates from the European Commission, will create new
obligations--and costs-- for investment trusts. Fortunately the Commission's
initial proposals, which entailed an extra layer of management and a requirement
that shareholders should receive NAV when they sold as opposed to the prevailing
share price (in effect, therefore, turning them into unit trusts and removing
the great advantages of their present structure) appear to have been
considerably watered down, thanks in no small part to the valiant efforts of the
Association of Investment Companies, our trade body. We await the final version
and may be in a better position to comment by the time of our AGM.

Retail Distribution Review

By 2012, the Retail Distribution Review should have ended the so-called
"commission bias" whereby independent investment advisers (IFAs) must not
restrict their recommendations to those investment products (such as unit
trusts) which reward them with commission. Hitherto this practice has militated
against investment trusts which, being listed companies, are unable to offer
this inducement. Time will tell how the new arrangements will work in practice
but, other things being equal, the new regime should be beneficial to investment
trusts in general.

Outlook

At the time of writing, investors are fearful that the raft of austerity
measures being undertaken by European governments may kill off the somewhat
fragile recovery and bring about a second bout of recession, or "double-dip". As
a result, equity markets have made little progress and, in the United Kingdom at
least, shares currently yield more than medium-dated bonds. In the past, this
phenomenon has proved to be a good time to buy equities. As many shareholders of
this Company are aware, our portfolio is carefully selected from companies whose
business models should allow them to make progress in spite of problems
elsewhere, and in no way seeks to replicate a particular index. While concerned
that political interference in markets, such as the ban on short-selling of
leading German shares, and President Obama's intervention in the BP oil spill
saga, appears to be on the increase, we remain confident that your Company will
once again give a good account of itself in the current year.

H.M. Priestley
Chairman
1 September 2010

MANAGER'S REVIEW

The Net Asset Value of the Company's Ordinary shares rose by 43.1 per cent.
during the twelve months to 31 May 2010. This compares with a 14.4 per cent.
rise, in sterling, of the FTSE World Europe ex UK Total Return Index.

The level of the Company's borrowings decreased to £27million from £48.7million
over the period under review. Just as borrowings damaged performance last year,
in the period under review it improved returns. Nevertheless, the board decided
to use this recent strength to continue to reduce the level of borrowings. At
the time of writing borrowings are £22million.

While the companies held within the investment portfolio may be based in Europe,
the majority conduct their business activities wherever opportunities arise
around the world.  So as to put your Company's performance during the period
under review into a wider context, the  FTSE World (total return) Index rose by
18.4 per cent. during this period; the Company's benchmark, the FTSE World
Europe ex UK Total Return Index rose by 14.4 per cent.; the MSCI Latin America
Index was up 41.7 per cent., and the MSCI AC Asia ex-Japan Index was up 33.0 per
cent.  The strength of equities in emerging markets reflected two factors: the
fact that these economies effectively sidestepped the worst of the
subprime/credit crisis and the fact that their economic growth picked up
markedly over the course of 2009.  According to the IMF, Developing Asia (26
countries including China and India) grew by 6.6 per cent. in 2009; further
growth of 8.7 per cent. is forecast in 2010 and again in 2011.  Latin America
maintained its impressive growth record: the IMF expects the Brazillian economy
to grow at 5.5 per cent. in 2010 and by a further 4.1 per cent. in 2011.

Following the 25.3per cent. decline in the Company's Benchmark Index in the
previous financial year, there was a near-perfect set of factors for a strong
rebound in equity markets in the period under review. Concerted governments'
action to boost asset values and restore economic confidence (quantitative
easing, or 'QE') was the key. According to the IMF, after the 4 per cent.
contraction in the European Union economy in 2009, growth of 1 per cent. and
1.8 per cent. for 2010 and 2011 respectively can be expected. In addition, many
companies took advantage of the straitened times and cut costs. Taken with the
sharp economic rebound in developing economies, earnings for European companies
are expected to surge in 2010. Brokers estimate a 20 per cent. advance in
corporate earnings this year.

Your Company's relatively good performance was due to a combination of stock
picking and gearing. The largest single contributor to performance was the
holding in Vopak, the Dutch listed oil and chemical storage business which
continued to benefit from strong secular demand growth for storage. The next
biggest positive contributor to performance was NovoNordisk the world's leading
manufacturer of insulin drugs. It benefited from a significant new drug approval
as well the continuing structural demand drivers in its business. Other
significant positions that contributed to the performance included Novozymes, a
world leader in industrial enzymes. There is some correlation between demand for
industrial enzymes and higher oil prices where enzymes can be used to help
reduce energy costs. Rising oil prices are in this respect 'good' for Novozymes.
The other major contributors to performance were DNB Nor, the Norwegian bank,
and CGG Veritas the French listed seismic company. In both cases the shares
bounced back strongly after significant price weakness the previous year. DNB
Nor's profitability has been impressively robust, ducking most of the problems
that beset European banks, and CGG Veritas benefitted from the sharp rise in the
oil price over the last eighteen months. Three stocks in the portfolio stand out
as 'drags' on performance: Reed Elsevier, Syngenta and Neopost. Reed Elsevier
suffered management ructions. We viewed this as a temporary, fixable problem and
maintained our position. Positive news flow for Neopost and Syngenta was limited
and this accounted for lacklustre share price performance. Again, we maintained
our holdings.

The main outright sale was that of CGG Veritas. This was sold, once the share
price had rebounded, as we lost confidence in the management's strategy for the
business. The holding in Carphone Warehouse was sold on valuation grounds as was
that in Halfords; in both cases management is superb, in our opinion. A change
in circumstances - an excellent acquisition in the UK - was a key factor in our
decision to start rebuilding a position in Halfords. Disappointing results from
Eurofins Scientific and Saft caused us to question the quality of those
businesses.  We sold. The most important new investments were Aixtron and Modern
Times Group (MTG). Aixtron, a business we have followed for more than ten years,
is the world leader in the manufacture of machines that make light emitting
diodes (LEDs). This is a growth business. MTG is a Scandinavian television
company with both free-to-air and pay-TV in Scandinavia, Eastern Europe and
Russia. The company's profitability has been remarkably resilient through the
recession and still has considerable growth potential. Another new purchase was
that of shares in Inmarsat, the world's leading provider of global mobile
satellite communications. It is well placed to exploit multiple growth drivers.
We increased exposure to existing investments: Experian, NovoNordisk and
Wirecard. These companies all delivered impressive results through the credit
crisis thoroughly vindicating our confidence in their business models.

Outlook

Niels Bohr's view that ''Prediction is very difficult, especially if it is about
the future'' is particularly apposite for current circumstances. Our investment
style and our confidence in that approach fully recognise the difficulty of and
limitations to forecasting. It is important that we do not invest assuming a
particular outcome; rather we attempt to position our investments such that we
can prosper with a broad range of outcomes. This is vital to our understanding
of risk. A few broad themes underpin our investment ideas: there is evidence of
a shift in economic power from the West to developing economies like Brazil,
India and China; we favour companies (and their clients) with strong balance
sheets; productivity-enhancing and cost saving products and services are
attractive. Whatever the difficulties, whatever the uncertainty, some companies
will prosper. There is no doubt that 'winners' will emerge even in declining
economies. As 'our' companies typically have a global spread of businesses we
are well placed to benefit from growth opportunities around the world. At all
times (and especially in 'exotic' economies) attention to our core investment
disciplines is vital. We invest in specific investment opportunities rather than
simply in lazy macro economic assumptions. We remain confident that our
investment approach is an appropriate one for current circumstances.

Alex Darwall
Jupiter Asset Management Limited
1 September 2010

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 Portfolio
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 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 May 2010, which will be
available on the Company's website shortly at www.jupiteronline.co.uk.

Consolidated Statement of Comprehensive Income for the year ended 31 May 2010

--------------------------------------------------------------------------------
     31 May 2010 31 May 2009

    Revenue Capital       Revenue Capital

    Return Return   Total Return Return   Total

    £'000 £'000   £'000    £'000 £'000 £'000

Gains / (losses) on
 investments at fair - 54,676 54,676 - (48,358) (48,358)
value through profit or
loss

Foreign exchange losses on   - (869) (869) - (9,498) (9,498)
loans

Other exchange gain   201 390 591 149 769 918

Investment income   5,248 - 5,248 5,050 - 5,050

Other income   14 - 14 286 - 286

Dealing profits / (losses)   411 - 411 (952) - (952)
of subsidiary

Foreign exchange gain by   7 - 7 3 - 3
subsidiary
--------------------------------------------------------------------------------
Total income   5,881 54,197 60,078 4,536 (57,087) (52,551)
--------------------------------------------------------------------------------
Investment management fee   (1,548) - (1,548) (510) - (510)

Investment performance fee   - - - - 280 280

Other expenses   (396) - (396) (349) - (349)
--------------------------------------------------------------------------------
Total expenses   (1,944) - (1,944) (859) 280 (579)
--------------------------------------------------------------------------------
Return before finance   3,937 54,197 58,134 3,677 (56,807) (53,130)
costs and tax

Finance costs   (512) - (512) (2,538) - (2,538)
--------------------------------------------------------------------------------
Return before taxation   3,425 54,197 57,622 1,139 (56,807) (55,668)

Taxation   (587) - (587) (473) - (473)
--------------------------------------------------------------------------------
Return after taxation   2,838 54,197 57,035 666 (56,807) (56,141)
--------------------------------------------------------------------------------
Return per Ordinary share 3.52p 67.15p 70.67p 0.82p (69.85)p (69.03)p
--------------------------------------------------------------------------------

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 2010
--------------------------------------------------------------------------------
    2010 2009

    £'000 £'000

Non current assets

Investments held at fair value through profit
                                                            210,972 174,492
                              or loss
--------------------------------------------------------------------------------
Current assets

Receivables   1,493 1,107

Cash at bank   1,233 6,280
--------------------------------------------------------------------------------
    2,726 7,387
--------------------------------------------------------------------------------
Total assets   213,698 181,879

Current liabilities   (28,194) (50,422)
--------------------------------------------------------------------------------
Total assets less current liabilities   185,504 131,457
--------------------------------------------------------------------------------


Capital and reserves

Called up share capital   798 810

Share premium   41,286 41,286

Special reserve   34,376 36,676

Capital redemption reserve   42 30

Retained earnings   109,002 52,655
--------------------------------------------------------------------------------
Total equity   185,504 131,457
--------------------------------------------------------------------------------
Net Asset Value per Ordinary share   232.40p 162.35p
--------------------------------------------------------------------------------

Approved by the Board of Directors and authorised for issue on 1 September 2010.

H M Priestley
Chairman
Company Statement of Financial Position as at 31 May 2010

--------------------------------------------------------------------------------
    2010 2009

    £'000 £'000

Non current assets

Investments held at fair value through           profit or
loss 210,972 174,492
--------------------------------------------------------------------------------
Current assets

Receivables   1,493 1,062

Cash at bank   1,233 6,280
--------------------------------------------------------------------------------
    2,726 7,342
--------------------------------------------------------------------------------
Total assets   213,698 181,834

Current liabilities   (31,725) (53,489)
--------------------------------------------------------------------------------
Total assets less current liabilities   181,973 128,345
--------------------------------------------------------------------------------


Capital and reserves

Called up share capital   798 810

Share premium   41,286 41,286

Special reserve   34,376 36,676

Capital redemption reserve   42 30

Retained earnings   105,471 49,543
--------------------------------------------------------------------------------
Total equity   181,973 128,345
--------------------------------------------------------------------------------

Approved by the Board of Directors and authorised for issue on 1 September 2010.

H M Priestley
Chairman

Consolidated Statement of Changes in Equity

--------------------------------------------------------------------------------
        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
--------------------------------------------------------------------------------



--------------------------------------------------------------------------------
        Capital

  Share Share Special Redemption Retained

For the year ended 31 May Capital Premium Reserve Reserve Earnings Total
2009

  £'000 £'000 £'000 £'000 £'000 £'000

31 May 2008 818 41,286 37,597 22 108,796 188,519

Net profit for the year - - - - (56,141) (56,141)

Ordinary share cancellation (8) - (921) 8 - (921)
--------------------------------------------------------------------------------
Balance at 31 May 2009 810 41,286 36,676 30 52,655 131,457
--------------------------------------------------------------------------------




Company Statement of Changes in Equity

--------------------------------------------------------------------------------
        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
--------------------------------------------------------------------------------



--------------------------------------------------------------------------------
        Capital

  Share Share Special Redemption Retained

For the year ended 31 May Capital Premium Reserve Reserve Earnings Total
2009

  £'000 £'000 £'000 £'000 £'000 £'000

31 May 2008 818 41,286 37,597 22 105,067 184,790

Net profit for the year - - - - (55,524) (55,524)

Ordinary share cancellation (8) - (921) 8 - (921)
--------------------------------------------------------------------------------
Balance at 31 May 2009 810 41,286 36,676 30 49,543 128,345
--------------------------------------------------------------------------------





Consolidated Cash Flow Statement for the year ended 31 May 2010

--------------------------------------------------------------------------------
    2010 2009

    £'000 £'000

Cash flows from operating activities

Purchases of investments   (71,270) (80,991)

Sales of investments   88,398 91,243

Realised gains on foreign currency   598 921

Investment income received   5,209 4,787

Interest received   15 287

Other cash receipts   411 340

Investment management fee paid   (1,487) (1,470)

VAT recovery on investment management fee   - 837

VAT recovery on investment performance fee   - 280

Purchases by dealing subsidiary   - (5,402)

Sales by dealing subsidiary   - 16,149

Other cash expenses   (397) (326)
--------------------------------------------------------------------------------
Cash inflow from operating activities before finance costs
and taxation   21,477 26,655

Finance costs paid   (621) (2,859)

Taxation paid   (358) (688)
--------------------------------------------------------------------------------
Net cash inflow from operating activities   20,498 23,108



Financing activities

Ordinary shares cancelled   (2,300) (921)

Dividend paid   (688) -

Short term loans received   - 28,500

Short term loans repaid   (22,557) (46,556)
--------------------------------------------------------------------------------
(Decrease) / increase in cash   (5,047) 4,131

Cash and cash equivalents at start of year   6,280 2,149
--------------------------------------------------------------------------------
Cash and cash equivalents at end of year   1,233 6,280
--------------------------------------------------------------------------------


Company Cash Flow Statement for the year ended 31 May 2010

--------------------------------------------------------------------------------
  2010  2009

  £'000 £'000

Cash flows from operating activities

Purchases of investments (71,270) (80,991)

Sales of investments 88,398 91,243

Realised gains on foreign currency 591 918

Investment income received 5,209 4,466

Interest received 14 240

Investment management fee paid (1,487) (1,470)

VAT recovery on investment management fee - 837

VAT recovery on investment performance fee - 280

Other cash expenses (397) (326)
--------------------------------------------------------------------------------
Cash inflow from operating  activities before finance costs
and taxation 21,058 15,197

Finance costs (621) (2,859)

Taxation (403) (627)
--------------------------------------------------------------------------------
Net cash inflow from operating activities 20,034 11,711



Financing activities

Ordinary shares cancelled (2,300) (921)

Dividend paid (688) -

Short term loans received - 28,500

Short term loans repaid (22,557) (46,556)

Cash received from subsidiary 464 11,397
--------------------------------------------------------------------------------
(Decrease) / increase in cash (5,047) 4,131

Cash and cash equivalents at start of year 6,280 2,149
--------------------------------------------------------------------------------
Cash and cash equivalents at end of year 1,233 6,280
--------------------------------------------------------------------------------



NOTES:

1.     Income

-----------------------------------------------------------
   2010  2009
Group Group
£'000 £'000

Income from investments

Dividends from United Kingdom companies 1,300 1,320

Dividends from overseas companies 3,948 3,730
-----------------------------------------------------------
  5,248 5,050
-----------------------------------------------------------
Other income

Deposit interest 14 155

Foreign exchange gains 201 149

Interest on VAT recovery - 131

Profit / (loss) on dealings by subsidiary 411 (952)

Foreign exchange gains by subsidiary 7 3
-----------------------------------------------------------
  633 (514)
-----------------------------------------------------------
Total income 5,881 4,536
-----------------------------------------------------------


Total income comprises

Dividends 5,248 5,050

Interest 14 286

Other income 619 (800)
-----------------------------------------------------------
  5,881 4,536
-----------------------------------------------------------


Income from investments

Listed in the UK 1,300 1,320

Listed overseas 3,948 3,730
-----------------------------------------------------------
  5,248 5,050
-----------------------------------------------------------


2.    Reconciliation of net return before finance costs and taxation to net cash
inflow from operating activities

--------------------------------------------------------------------------------
  2010 2009
Group Group

  £'000 £'000

Net return before finance costs and taxation 58,134 (53,130)

(Gain) / loss on non current asset investments (54,676) 48,358

Foreign exchange loss on loans 869 9,498

Purchases of non current asset investments (71,270) (80,991)

Sales of non current asset investments 88,398 91,243

(Increase) /decrease in prepayments and accrued income (37) 57

Decrease in current asset investments - 12,182

Decrease in subsidiary purchases awaiting settlement - (450)

Increase / (decrease) in other creditors and accruals 59 (112)
--------------------------------------------------------------------------------
Net cash inflow from operating  activities
before interest and taxation 21,477 26,655
--------------------------------------------------------------------------------


3. Related parties


Mr. Darwall is a Director of Jupiter Asset Management Limited and 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 one years
notice by either party) for a quarterly fee of 0.1875 per cent. of the net
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. Management fees of £396,152outstanding as at 31 May 2010 (2009:
£335,617).

Jupiter Asset Management Limited is also entitled to an investment performance
fee which is based on the out-performance of the lower of the price of an
Ordinary share or 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 lower of the price of an Ordinary share
(plus any dividends per Ordinary share paid during the period) or 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 closing price of an Ordinary share or the Net Asset Value per
Ordinary share on the last business day of the previous accounting period
(whichever is the lower); (b) the lower of the price of an Ordinary share or the
Net Asset Value per Ordinary share (as the case may be) 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 7.5 per cent. of the Total Assets of the
Company. No performance fee was payable for the year ended 31 May 2010 (2009:
Nil).

Jupiter Administration Services Limited is contracted to provide secretarial,
accounting and administrative services to the Company for an annual fee of
£62,284 adjusted each year in line with the Retail Price Index payable quarterly
(2009: £62,977). None of the fee payable for the year ended 31 May 2010 was
outstanding at the year end (2009: 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 2010 was East European Food Fund representing 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 in 2011, and at every third annual general meeting
thereafter, an ordinary resolution shall be proposed that the Company shall
continue in existence as an investment trust.
After making enquiries the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence for the
foreseeable future. For this reason they continue to adopt the going concern
basis in preparing the accounts.

5. Directors' Responsibilities For The Financial Statements

The Directors are responsible for preparing the Directors' Report and financial
statements in accordance with applicable law and those International Financial
Reporting Standards ('IFRS') as adopted by the European Union.
The Directors are required to prepare financial statements for each financial
year which 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 those financial statements, the Directors are required
to:
 (i)select suitable accounting policies and then apply them consistently;
 (ii)present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
 (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; and
 (iv)state that the Group has complied with IFRS, subject to any material
departures disclosed and explained in the financial statements.
The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and of the Group and enable them to ensure that the 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.
So far as each Director is aware at the time the report is approved, there is no
relevant audit information of which the auditors are unaware and that each
Director has taken all reasonable steps to make themselves aware of any relevant
information and to establish that the auditors are aware of that information.

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


ii. the Management Report includes a fair view of the development and
performance of the business and the position of the Company, together with
a description of the principal risks and uncertainties that the Company
faces.


By Order of the Board
H M Priestley
Chairman
1 Grosvenor Place



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 on 18
October 2010 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


[HUG#1442097]








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

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