TIDMBPFU
Preliminary Announcement
Final Accounts of Blue Planet Financials Growth & Income Investment Trust No 1 plc for year ending 31 March 2009
Financial Record and Key Performance Indicators
As at 31 March 2009 2008 2007 2006 2005
Net assets less other
current liabilities (GBP'000) 1,987 6,058 6,402 5,827 2,924
Creditors (915) (2,569) (1,925) (1,923) (750)
> 1 year (GBP'000)
Shareholder's funds (GBP'000) 1,072 3,490 4,477 3,904 2,174
Net asset value per share(p) 7.85 25.56 32.86 28.76 16.08
Share price (p) - (Bid) 4.2 15.60 23.00 19.20 11.58
Discount (%) 46.5 39.0 30.0 33.2 28.0
Gearing (%)* 6.5 - 28.9 46.5 28.7
Year to 31 March 2009 2008 2007 2006 2005
Revenue available for
shareholders (GBP'000)**** 136 13 0 1 16
Revenue return per share (p) 1.00 0.09 0.00 0.01 0.16
Proposed final dividend per
share(net)(p) 0.76 - - - 0.225
Dividend yield on our
shares (%) 18.1 - - - 1.94
Dividend yield on 5.76 3.42 3.23 3.35 3.51
Benchmark Index (%)
Expenses ratio - net basis
(%) ** 2.57 3.51 3.38 2.95 3.27
Expenses ratio - gross
basis (%) *** 1.44 2.53 2.29 1.72 2.35
The Board believes the above KPI's are of most interest to shareholders in monitoring the performance of the company.
* Net debt as a percentage of shareholders' funds
** Net basis - Administrative expenses as a percentage of average net asset value of the Company
***Gross basis - Administrative expenses as a percentage of average gross asset value of the Company
**** 2009 Includes VAT recovered of GBP27,000
Portfolio Information
At 31 March 2009 Valuation % of Portfolio
(GBP) 2009
Equities
8,966 BP Global Financials - A Class Eire 359,781 18.4
861,613 URSA Bank Russia 146,342 7.5
44,754 Federal Bank Ltd - IPC India 84,072 4.3
14,264 Bank Vozrozhdenie Russia 74,206 3.8
2,084,563 New Star Asset Management United Kingdom 41,691 2.1
1,329 JP Morgan Chase & Co United States 24,625 1.3
332 Goldman Sachs Group Inc United States 24,575 1.3
4,766 Bank of America Corp United States 22,593 1.2
31,959 South Indian Bank - IPC India 22,563 1.2
1,403 Morgan Stanley United States 22,225 1.1
11,842 Citigroup Inc United States 20,834 1.1
4,319 Banco Santander SA Spain 20,736 1.1
2,787 Axis Bank Ltd - IPC India 15,775 0.8
5,226 Bank of India - IPC India 15,679 0.8
7,724 Union Bank of India - IPC India 15,466 0.8
4,820 LIC Housing Finance - IPC India 14,895 0.7
2,354 DNB Nor ASA Norway 7,381 0.4
915 Banco Bradesco SA - ADR Brazil 6,337 0.3
797 Itau Unibanco Banco - ADR Brazil 6,104 0.3
1,043 Direxion Financial Bull 3X United States 4,005 0.2
549,863 Raiffeisen Bank Aval Ukraine 3,720 0.2
21 BNP Paribas France 605 0.0
82 UBS AG Switzerland 538 0.0
42 National Bank of Greece SA Greece 443 0.0
218 Intesa Sanpaolo SPA Italy 412 0.0
955,603 48.9
Debt Securities
4,900,000 Rosbank 8% Bonds 09/09 Russia 95,719 4.9
3,827,000 Bank Kedr-2 12.30% Bonds 09/09 Russia 71,611 3.7
1,256,000 Rusfinans Bank 4 7.74% Bonds 02/10 Russia 23,760 1.2
30,000 AK Bars 8.25% Bonds 06/10 Russia 19,269 1.0
26,000 Promsvyazbank 9.58% Bonds 05/12 Russia 10,891 0.5
221,250 11.3
Listed Investments 1,176,853 60.2
Cash 778,896 39.8
Total 1,955,749 100.0
At 31 March 2009 the portfolio yield, as reported to the Association of Investment Companies, was 12.09% (2008 - 2.28%)
Classification of Portfolio
At 31 March 2009
Investment Other Cash Total Total
Banks Companies Finance 2009 2008
% % % % % %
Russia 22.6 - - - 22.6 18.2
Eire - 18.4 - - 18.4 33.2
United Kingdom 2.1 - - 13.9 16.0 0.2
Europe - - - 11.0 11.0 13.1
India 7.9 - 0.7 - 8.6 0.8
United States 6.0 - 0.2 0.8 7.0 -
Norway 0.4 - - 6.5 6.9 8.2
Australia - - - 5.0 5.0 -
Ukraine 0.2 - - 2.6 2.8 0.9
Spain 1.1 - - - 1.1 -
Brazil 0.6 - - - 0.6 -
France 0.0 - - - 0.0 -
Switzerland 0.0 - - - 0.0 -
Italy 0.0 - - - 0.0 -
Greece 0.0 - - - 0.0 11.1
Poland - - - - - 14.0
Austria - - - - - 0.3
Totals 2009 40.9 18.4 0.9 39.8 100.0
Totals 2008 74.0 4.5 2.5 19.0 100.0
Benchmark* 64.2 4.8 31.0 - 100.0
* Our benchmark is the Bloomberg World Financials index (sterling denominated).
Chairman's Statement
Performance
The performance of your Fund in the last year has been very disappointing. This is perhaps not surprising in a year when
unprecedented events have rocked the banking industry worldwide. It will be remembered as probably the greatest banking
crisis of modern times. Nevertheless, we are unhappy with the Fund's performance. In the year to 31 March 2009, the net
asset value per share ("NAV") of the Fund provided a negative total return of 69.3% ending the period at 7.85p per
share, or 78.5p per Share Unit. Our performance benchmark, the Bloomberg Worldwide Financials Index, fell 52.6% in US
Dollar terms, but due to the weakness of Sterling relative to the dollar, in Sterling terms the index fell by only
34.1%. The price of the Share Unit of your Fund has fallen 73.1% over the year and ended March 2009 at a bid price of
42p a share. This larger fall in the share price, relative to the NAV, widened the discount to NAV to 46.5% by the end
of the year. As of the end of April 2009 the share price increased to 50p, up by almost 20%.
In the past year equity prices have plummeted, corporate bond values have plunged, commodity prices have collapsed and
currencies have experienced huge volatility, whilst interest rates around the world have been slashed as recession has
bitten. A year ago we believed that the falls that had already been experienced by the financial sector, would minimise
the future downside risks for these stocks. This has not been the case. When Lehman Brothers was allowed to fail in
September 2008, this started a new wave of panic and risk aversion, further eroding confidence in banks. In the US, the
UK and Western Europe it was only a matter of weeks before governments were rushing to shore up banks with huge loans.
These unprecedented circumstances quickly led to the partial nationalisation of many banks. The effect on the equity and
bond prices of banks throughout the world was devastating. Despite the efforts of Governments and Central Banks to
support the banking system, sentiment remains tentative.
We believed that we had constructed a defensive portfolio but in hindsight, it was not defensive enough. In addition to
the general weakness of financial equities and bonds that affected all regions of the world, we experienced some
specific problems within the portfolio. URSA Bank, our largest equity holding at the start of the reporting period,
suffered from rumours regarding its financial position. This drove the share price down, until it announced a merger
with MDM Bank in Russia in December 2008. In addition, the general corporate bond sell-off in October 2008 adversely
affected the prices of the bonds we held, and this was compounded by a specific problem with the Fund's holding in
Eurokommerz. The bank failed to pay its bond coupons on time, or meet a redemption option on one of its bonds. Bonds
from this company were also held by the Blue Planet Global Financials Fund. Finally, the rapid depreciation of the
Russian rouble against sterling at the start of 2009, negatively impacted the NAV of the Fund, despite some hedging that
was in place.
Share Trading
From time to time we receive investor queries regarding the wide bid-offer spread (the difference between the price at
which shares may be sold or bought), particularly for the Blue Planet Financials Growth and Income Investment Trust
Number 1. Although the Blue Planet Growth and Income Investment Trusts numbers 1 through to 10 are each separate legal
entities, to all intents and purposes each is an identical company. The Blue Planet Financials Growth and Income Share
Unit was created to trade the shares in the ten trusts as one unit. The volume of trading in the Financials Growth and
Income Share Unit (Ticker: BPFU) is considerably higher than for any of the individual trusts and historically the
spread on the Unit has been much narrower than that of the No.1 Trust's shares. In other words, it has been
significantly easier to buy or sell the Share Unit and this has been accomplished at keener prices.
Portfolio
We have ended this financial year with a similar level of equity investments to our holding at the start of the year.
The exposure is less than 50% of the portfolio. During the year, as reported in the interim accounts, investments in
equities were much higher. Bond holdings have increased over the financial year and the remainder of the portfolio is
held in cash. Figure 1 shows the geographical movements in the portfolio over the period (including cash holdings).
Figure 2 shows the movement in the security types.
Figure 1: Portfolio movements 2008 to 2009 - by geography
Country 20092008
Russia 22.618.2
Republic of Ireland18.433.2
UK 16.0 0.2
Other Europe 11.013.1
India 8.6 0.8
USA 7.0 0.0
Norway 6.9 8.2
Australia 5.0 0.0
Ukraine 2.8 0.9
Spain 1.1 0.0
Brazil 0.6 0.0
Greece 0.011.1
Figure 2:Portfolio movements 2008 to 2009 - by security type
Security Type 20092008
Equities 48.8 44.4
Cash 39.819.0
Bonds 11.4 7.9
Liquidity Funds 0.028.7
Russia has remained a key focus. It has an under-leveraged and under-penetrated economy. Its foreign debts are almost
completely covered by reserves. Penetration levels for goods and services are very low compared to Western Europe and
there is a great deal of scope for productivity gains in Russia. In addition, it still has vast natural resources, for
which demand will increase again in time. In addition to equity holdings in URSA Bank and Bank Vozrozhdenie, the Fund
has corporate bond holdings in five Russian banks, Rosbank, Bank Kedr, Rusfinance Bank, AK Bars and Promsvyazbank. The
bonds are short or medium dated bonds, with high yields.
Unfortunately, Russia has been the main source of underperformance in this financial period. The fall in the oil price
from $142 in July to $32 in December, and the Russian invasion of Georgia dramatically reversed international confidence
in Russia, prompting massive sales of Russian assets and its currency. The Russian stock market fell 73% in the six
months to December 2008 and experienced such a shortage of liquidity, that the market was actually closed for several
days during this period. This was capped in January 2009, by a sharp devaluation in the Rouble, despite the best
defensive efforts of the Russian government. The collapse of Lehman Brothers in September 2008, and the ensuing crisis
of confidence in all banks, adversely affected our Russian bond prices that until then, had been relatively stable
Our largest individual equity holding at the start of the reporting period was URSA Bank. Considering the market
sentiment existing at the end of 2008, it was not surprising that it suffered, along with other banks, from rumours
regarding its financial health. These were partially dispelled when URSA reported a 61% increase in profits for the
first half of 2008. In December 2008, a merger with MDM Bank was announced, that has provided the foundation for some
degree of recovery in the share price. However, this was counterbalanced in December by the emergence of a problem with
one of our bond holdings. The bond was issued by Eurokommerz, Russia's largest factoring company. Despite the company's
credit rating being confirmed by Moody's at the end of October, the company announced in December that it was delaying
payment of the coupons due on its bonds, and missed the deadline to respond to a put option on one of its bonds.
Following this set-back, a thorough review of all the bonds held in the portfolio was made and some bonds were sold and
others replaced.
In January 2009 the Rouble lost 17% of its value against Sterling in one month. Despite hedging in place in the latter
part of the month, this had a negative impact on the NAV of the Fund. Whilst January's devaluation was painful for
those, like us, with investments denominated in Roubles, Russia will benefit from the devaluation of its currency.
Competitiveness and profitability for export companies will increase, boosting demand in the domestic market, and
bringing the return of credit to the real economy.
The investment in the Republic of Ireland is in Blue Planet's Global Financials Fund, listed in Dublin. The size of this
holding was increased in September 2008. This Fund has a broad remit to invest in instruments in financial companies on
a worldwide basis. It has largely been invested in high yielding corporate bonds over the past year, and has thus
significantly outperformed financial equity indices with its total return of -17% in the year to March 2009.
India's economy is driven by domestic demand. It has suffered in the global slowdown, but to a lesser degree than many
other of the world economies, especially those that have a high dependence on strong commodity prices. Growth forecasts
for the Indian economy for the fiscal year to March 2010 are in the region of a 6%. Although corporate earnings in India
have slowed, the financial performance of banks has remained strong. Average profits increased 31% year-on-year in the
results issued up to the 31st December 2008. At their current low valuations, Indian banks remain an attractive
long-term investment opportunity.
Elsewhere, the Company sold its investments in Poland and Greece, as exposure to equities in the portfolio was reduced.
In March 2009, as economic indicators improved, and with them the outlook for banks, the Fund has bought selected US and
European banking stocks.
Further details of the portfolio are provided in the Investment Manager's Report.
Our Warrants
The price of our warrants fell by 79.5% over the year to a bid price of GBP2.00 for the Warrant Unit on the 31 March 2009.
Shareholders can view the warrant price on the website of Blue Planet Investment Management (www.blueplanet.eu). The
warrants are exercisable on 31 July or, if later, 30 days after the distribution of the Annual Report and Accounts in
either 2009 or 2010. Each warrant costs GBP1 to exercise and will entitle the holder to 10 shares in the corresponding
Growth and Income Trust. In a similar fashion to the shares, considering the warrant in terms of a Unit, where a Unit
represents one warrant in each of the trusts numbered 1 through to 10, then each Warrant Unit confers the right to
subscribe for 10 Financials Growth & Income Share Units at a price of GBP10.
Dividend
Up until now there has been some very sobering financial reporting. I am pleased therefore to relate that, as
anticipated in the Interim Report and Accounts, the Directors have declared a dividend for this year. Last year no
dividend was paid. This year a dividend of 7.6p per Share Unit has been proposed, to be paid to shareholders on the
register on 10 July 2009, payable on 7 August 2009. At the closing bid price of the Share Unit on 31 March 2009 of 42p,
this equates to an 18.1% dividend yield. Income from investments almost doubled this year, and the decrease in the
company's assets meant Asset Management fees were lower, providing a strong revenue return from which to pay a dividend.
A rare windfall benefited the Fund in the form of a one-off VAT refund. This was received in this accounting period for
overpaid VAT on Investment Management fees over the past seven years, after a protracted tussle between the Inland
Revenue and the Investment Trust industry. This alone has boosted the dividend per Share Unit amount by approximately
2.0p.
The outlook going forward for revenue from both bonds and equities is strong. The Directors hope that it will be
possible to continue dividend payments going forward, providing the portfolio remains structured in this way.
Borrowing, Gearing and Liquidity
The Fund's level of gearing net of cash deposits ended the financial year at 6.5%. Gearing levels were increased in the
middle of 2008 as the Fund increased its exposure to equities. However, they have been very low since the start of 2009,
as many of the equity positions were sold. Generally, gearing beneficially affects the Company's NAV when the value of
its investments is rising, but adversely affects it in periods when the value of investments is falling.
The Fund has access to a fixed GBP750,000, unsecured Sterling loan and a multi-currency unsecured, revolving loan facility
of GBP2.5m, per trust until 2012. The Sterling loan and a small portion of the multi-currency loan were drawn down at the
year end. The multi-currency loan was drawn in Euros. GBP2.4m of the facility was undrawn as of the end of March 2009.
This amount is available to be drawn when market conditions are right to increase the levels of gearing in the Fund once
again.
Blue Planet Services and Price Information Sources
Shareholders can view the Company's share price and additional information about the Fund on the website of Blue Planet
Investment Management Ltd (www.blueplanet.eu) and the London Stock Exchange (www.londonstockexchange.com). To find the
Company's share price on the London Stock Exchange website go to the Home page and type "BPFU" in the "Price Search"
field.
Blue Planet Investment Advisers offers a Blue Planet Savings Plan via Equiniti Financial Services Limited (on behalf of
Lloyds TSB) to enable lump sum investments or regular savings. A request form for the Savings Plan application pack is
enclosed with these accounts.
Outlook
In January and February 2009 confidence in markets entirely evaporated. Bad news stories abounded and good news stories
were treated with scepticism. This mood lightened in March. The question is whether the nadir has been reached, or
whether this is a relief rally that will not be sustained. There is still a lot of bad news to wade through. Many of the
World economies are already in, or are slipping into recession and GDP growth estimates for 2009 are being revised
downwards. However, there are some hopeful indicators. In the US and the UK there were signs of stabilisation in the
housing markets, as US new home sales and housing starts have levelled out over the past few months, after plunging for
most of 2008. Mortgage approvals for the first three months of 2009 in the UK were up 24% over the previous quarter and
the Nationwide reported a 0.9% increase in UK house prices in March 2009. US Durable goods orders have been stronger,
suggesting that as orders increase and inventories shrink, production will start to gain ground in the second half of
2009. In addition, action from governments and central banks continued. In the US progress was made on the TALF (Term
Asset-Backed Securities Loan Facility) plan, which started on the 25 March 2009.
Results from banks for the fourth quarter of 2008 showed a wide divergence in performance. The bad results were very
bad. Royal Bank of Scotland announced that it had made a GBP24.1bn loss in 2008, Citigroup made a loss of $27.7bn in 2008,
equivalent to GBP18.5bn, the Swiss investment and private bank UBS reported a loss of CHF 17.9bn, equivalent to GBP10.5bn,
and Deutsche Bank reported a loss of ?3.9bn, or about GBP3.4bn in 2008. However, there are many banks that have fared much
better, including European and Russian banks. As described above, Indian banks increased profits by 31% on average in
their results to the 31 December 2008. During March a number of banks, including Citigroup and Deutsche Bank informed
the market that they were performing much better in the first two months of 2009, and in April the initial sets of first
quarter 2009 results from banks have been stronger than anticipated.
Governments and Central Banks continue to do all they can to revive the fortunes of banks in order to revitalise their
economies. We have begun investing some of our cash reserves in the better banks in some of the stronger economies. The
share prices of banks have fallen to such low levels, that there is huge scope for share price increases once confidence
in banks is restored. When we are convinced that sentiment really has turned then we will be well positioned with our
existing investments and have cash available to re-invest in the market. The severe falls in the stock markets present
excellent opportunities that we can take advantage of.
Finally, it is with sadness that we announce the retirement from the Board of our Director Michael Shea at this year's
AGM. I would like to place on record the Board's thanks to Michael for his five years of diligent service to the
Company. His knowledge, experience and wisdom have been invaluable.
I thank you for your continuing support and look forward to welcoming you to the Annual General Meeting on the 4 August
2009.
Victoria Killay
Chairman
26 May 2009
Investment Manager's Report
Portfolio Performance Analysis
As has already been highlighted in the Chairman's Statement, the Fund's NAV made a total return of -69.3% over the year,
compared to a fall of 34.1% by the Fund's benchmark index in Sterling terms. The Trust's Share Unit price fell 73.1%
over the same period. This past year has been one of disappointing performance by the Fund and our substantial out
performance in 2006 and 2007 has been reversed in the past two years. The fault has not lain with our economic analysis,
but in our conviction that if we were selective with the economies and stocks in which we invested that the financial
strength of the countries and their banks would shield the stocks from the dramatic share price falls. This has not been
the case. Citigroup, whose financial results swung from a $3.6bn profit in 2007 to a $27.7bn loss in 2008 had a share
price return of -83% from March 2008 to March 2009 in Sterling terms. Vozrozhdenie, in which the Fund is invested, saw
its profits increase 65% in 2008, however its share price was hit just as badly, it also had a return of -83% in
Sterling terms over the same period.
Asset Allocation
Blue Planet Investment Management's investment process is top down. Much of our focus this year has been on analysing
the economic situation and prospects for the major economies, and in particular the United States, as the problems it is
experiencing have such a major impact on the rest of the world. We continue to identify countries with the strongest
economic prospects and acceptable levels of political risk. The economic backdrops in these countries are assessed in
detail and ranked accordingly. The listed banks and other financial institutions in the highest ranked countries are
then investigated. When appropriate, capital is allocated to those banks and other financial institutions which we
believe are likely to offer the best total returns over the long term. This process involves meeting with the senior
management of companies in which we are contemplating investing. Where possible, we also like to meet with local
Central Banks to discuss the economic policies being pursued in the countries concerned. Once we are invested in a
company, we aim to meet regularly with its senior management to monitor its progress. Since the last year end we have
visited financial institutions in the Czech Republic, Greece, Hungary, Romania and Russia. In addition, we had meetings
in the UK with the management of many overseas financial institutions.
Russia has become our largest geographic holding this year and like most other economies, it has experienced problems.
The fall in commodity prices, and in particular oil, along with the paralysis of global financial markets due to the
credit crunch have weakened the Russian economy and the Russian currency, pushed up unemployment to above 6 million, and
led to forecasts of an economic contraction in the country in 2009. In our opinion the concerns about Russia's inability
to repay its debts are overdone. Foreign debt to GDP in Russia at the end of 2008 was 31%. This is a far lower level
than most other CIS or Central and Eastern European countries, some of which, such as the Baltics and Hungary, have
ratios of over 100%. To set against this Russia has significant foreign assets, including US$433 billion in government
reserves. We believe that the Russian banking sector is far more robust than the prices of its assets would suggest,
which provides excellent investment opportunities. Levels of indebtedness in Russia remain low. Corporate debt is 50% of
GDP in Russia, compared to 120% in the UK. Household sector debt is 9% of GDP in Russia, compared to almost 110% in the
UK. Russian banks start from a very highly capitalised position and the State has considerable reserves to enable it to
support the sector. Indeed the State controls 47% of total banking sector assets. The excessive number of very small
banks in Russia has meant casualties, and there will likely be more to come, but the larger banks are confident that
they can weather the current economic climate and profit from renewed growth opportunities and increased efficiency
going forward.
The Trust's Russian investments are in both equities and bonds. In equities your Fund is invested in URSA Bank and Bank
Vozrozhdenie. URSA bank has grown rapidly and has undertaken a number of key mergers in the past. It is now itself
merging with MDM Bank to create the second largest private bank in Russia. Vozrozhdenie is a well-managed,
conservatively run bank that is also is a likely takeover candidate. Unfortunately the share prices of both banks have
suffered in the global financial sell-off, although, since the MDM merger was announced URSA's share price has been
rising. The Fund also holds corporate bonds from five medium sized Russian banks. These banks are Rosbank, Bank Kedr,
Rusfinance, AK BARS Bank and Promsvyzbank. These are all short to medium dated, high yielding bonds, and have coupons
ranging from 7.74% to 12.3%. The bonds are denominated in either Roubles or US Dollars.
Geographically, the Republic of Ireland is our second largest investment location. Our investment here is in the Blue
Planet's Global Financials Fund, listed in Dublin. The size of this holding was increased in September 2008. This fund
has largely been invested in high yielding corporate bonds during the year, and had performed well compared to financial
indices during most of 2008, despite a fall in bond prices in October 2008. However the Global Financials Fund held two
bonds issued by Eurokommerz and the problems experienced by this company in December, referred to in the Chairman's
Statement, made this a very poor month for the fund. The fund's share price has risen over the first three months of
2009, despite the extreme falls in financials globally.
Your Fund began investing in Indian banks in 2007. The Indian economy has been growing fast, with an average expansion
rate of 8.6% over the past five years. Growth in the fiscal year to March 2010 is projected to slow, but to hold up well
at a growth rate of about 6%. The Indian banking market is very under penetrated with ratios of consumer loans and
mortgages to GDP lower than most of the other Asian economies. Banks in India have about 20% of their balance sheets in
government bonds due to statutory liquidity requirements. This means that as interest rates have fallen the banks have
generated significant profits on treasuries. At the same time, loan growth, whilst slowing, has remained strong in 2008
at 24% growth year-on-year, boosting income from banking operations. Loan growth is expected to remain in the high teens
in 2009. Concerns persist on how high the level of non-performing loans will rise due to the general weakening of the
economy, but these concerns appear to be overdone, and banks in India remain in very good shape.
As some signs of economic stabilisation have appeared in the US economy and as the banks appear to be in a better
financial state than are implied by the very low valuations that the banks reached during early March 2009, your Fund
added some investments in US Banks during March 2009.
The small investment in Raiffeisen Bank Aval based in the Ukraine has been maintained. This is despite the difficulties
the country is experiencing. Raiffeisen Bank Aval is supported by its parent company, Raiffeisen International and is
the countries second-largest bank by assets. It is the foreign-owned banks in Ukraine that will ride out the current
economic and banking problems there and will be well-placed to return to strong growth rates once the country's fortunes
are back on track.
The remaining investments, located in Spain, Brazil, Norway and France are banks that are in our opinion undervalued.
The investment in the UK is in New Star Asset Management Group plc that has now been acquired by Hendersons.
At the start of the year the Company had significant investments in banks in both Poland and Greece. A key concern in
Poland has been that its banks have been extending loans in foreign currencies. Of all corporate lending, about a
quarter is in foreign currencies. In individual lending about 40% of the total lending is in currencies other than the
Zloty. The depreciation of the Zloty against most major currencies has led to problems within the banks on funding their
foreign currency loan books and problems for the end customers in making repayments on their loans. The situation has
been exacerbated by companies in Poland that have appeared to borrow speculatively in foreign currencies as the Zloty
was appreciating. As these companies were not using the loan to hedge against foreign currency revenue streams, they are
now unable to service the loans they have taken out. The Greek holdings were sold during the Fund's year to reduce the
equity exposure in the portfolio. However, in Poland and Greece and other Central and Southern Eastern countries the
banking systems are underleveraged and the banks have not been involved in the purchase of asset-backed securities such
as those that have taken their toll on their Western counterparts. They will therefore provide good investment
opportunities going forward
Currency
The fund is exposed to a range of currencies. The table below shows the percentage of the portfolio holdings in each
currency and how those currencies have performed against the pound over the period in which the investments have been
held in the Trust during the financial year
Currency% of total portfolio in Appreciation/depreciation against GBP
for the length of time the currency
has been held in the portfolio
Euro 30.5% +14.0%
Russian Rouble 21.1% -4.4%
US Dollar 9.1% +27.8%
Indian Rupee 8.6% +8.7%
Norwegian Kroner 6.9% +1.5%
Australian Dollar 5.0% +1.5%
Ukrainian Hryvnia 2.8% -16.4%
The positive currency movements had a beneficial impact on our performance. The negative currency movements reduced the
performance of the shares denominated in that currency when translated into sterling. The Russian Rouble was very weak
against most currencies, including Sterling, at the start of 2009 as it went through a sharp devaluation. This more than
cancelled out its previous strength. This devaluation was largely prompted by the lower oil prices already in place and
forecast to continue through 2009. Providing oil prices remain stable, or, as has been the case recently, start to
gradually rise, the Rouble should not experience further sharp depreciation, and indeed could start to rise. The US
Dollar is the currency in which two of our Russian bonds are denominated and we also had some cash in this currency,
which has strengthened significantly against Sterling this year. The fiscal position of the UK economy, with its large
deficits and ballooning government spending plans, is very precarious and is likely to see Sterling weaken further
against many major currencies going forward. The risks associated with this exposure to a range of currencies are
discussed below.
Risk
Market risk arises mainly from the uncertainty regarding the future price performance of the equities and bonds held by
your Company. This risk is magnified when gearing is used and because the company is invested in a single industry
sector. Being invested in a single sector exposes the Fund to the risk that the Financial Sector will under perform
relative to other sectors of the market. Market risk is a factor beyond the control of the Company.
In mitigation of these risks the financials sector in which we are invested is a large sector of the market. This sector
has indeed underperformed relative to other sectors of the market this year, but we have held substantial amounts of the
Fund's assets in cash or near-cash entities through the year to reduce our exposure to the sector. Banks play a crucial
and central role in free market economies; a role that will underpin the prosperity of the banking sector as a whole
over time. The prices of the individual securities in the portfolio are monitored on a daily basis and the Board, that
meets quarterly, imposes borrowing limits to ensure gearing levels are appropriate to market conditions. The gearing in
the Fund has been at very low levels this year. The securities dealt in are all listed on recognised exchanges and are
readily realisable.
The Fund is exposed to currency risk, due to the range of currencies in which investments are held. The largest risks
are in the Euro and the Rouble currency. The Euro exposure was large as some of our cash reserves were held in this
currency. This cash is readily exchanged into another currency. Currency risk is a risk that can partially be controlled
by employing appropriate hedging strategies. The Company currently has a multi-currency loan facility and our borrowings
can be used as a "natural" hedge against investments in the matching currency. In addition hedging is considered on a
case-by-case basis. Over the past year hedging has been used at times against our exposure to the US Dollar. More
recently Rouble hedging has been in place. The fund manager has been tracking currency movements on a daily basis in the
current volatile environment.
Credit risk arises from the exposure to non-delivery of an investment that has been purchased. The Company only buys and
sells investment through brokers approved by Blue Planet Investment Management and so considers this risk is adequately
controlled.
Factors Affecting the Company Going Forward
Clearly the stabilisation of the banking system, the revitalisation of credit markets and progress in resolving the
worldwide financial crisis will have a significant impact on the Company going forward. As will the pace of recovery
from recession, both globally, and in particular in the countries in which we are invested. The way these matters are
addressed will also impact sentiment. The more effectively these issues are seen to be addressed, the more rapidly
sentiment will turn positive and the faster stock prices are likely to recover.
Review of the Top 10 Investments at year end
1. Blue Planet Global Financials
The Blue Planet Global Financials Fund ("BP Global") is an open-ended Cayman Islands exempted company. It is listed on
the Irish Stock Exchange and has been in existence for three years. Its objective is to achieve a high level of capital
growth by taking long and/or short positions in securities issued by or relating to banks and other financial
institutions on a worldwide basis. Shares are available denominated in Euros and US Dollars. Your Company is invested in
the Class A Euro shares.
The Blue Planet Global Financials Fund most recent financial results for the half-year to June 2008 results reported a
9.8% fall in the fund's NAV to ?62.865, whilst the Bloomberg Worldwide Financials Index fell 27.8% in Euro terms in the
same period. Subsequently the NAV for the Class A shares has fallen a further 31.0% to end March 2009 at ?43.377. The BP
Global has predominantly been invested in bonds during 2008. In the early part of the year this helped BP Global NAV to
remain relatively stable. However the general weakening in bond prices in October 2008 had an adverse impact on the NAV.
Then in December two of its bond holdings depreciated sharply when the bond issuer, Eurokommerz in Russia, failed to pay
its bond coupons on time, or meet a redemption option on one of its bonds. Eurokommerz has subsequently confirmed its
willingness to use any available instrument to achieve the restructuring of its debts and the fund manager is actively
pursuing the collection of monies owed to BP Global.
Blue Planet Investment Management Ltd receives a fee of 1.5% of the monthly NAV of the BP Global and the investment we
hold across all ten of the Trusts represents 43% of the total investments in the BP Global.
Your Company has been invested in this fund since its launch. The size of the holding was increased in September 2008.
Its total return in Sterling over the 12 month period is -17%.
Key statistics relating to this investment are given below:
For the year ended December 2007 June 2008 2007 Change
& interim ended June 2008 :
Total Assets ? 8.2m ? 9.2m -10.9%
Net Loss after Taxation ? -0.9m ? -10.4m N/A
Net Asset Value per Share (Class A Euro shares) ? 62.865 ? 69.705 -9.8%
2. URSA Bank
URSA Bank ("URSA") was established in 1990 as Sibacadembank and has rapidly expanded through organic growth and
acquisition and is now one of the top 15 banks in Russia. It is a universal bank and its loan book is split evenly
between retail and corporate loans. It is partly owned by international financial institutions and partly owned by the
founders of the bank and management. It is the strongest regional bank in Siberia and the Urals which comprises 40% of
Russian territory and has 34 million inhabitants. URSA announced at the end of 2008 that it will merge with MDM Bank in
2009 and will operate under the MDM brand. This merger will create the second largest private bank by assets in Russia
and the merged bank will possess the fifth largest banking network in the country.
The Russian banking sector remains very fragmented and some of the very small Russian banks have encountered problems in
the sharp economic downturn. However URSA is a very well-capitalised bank and the merger will increase its financial
strength. The Russian government has a comprehensive range of support packages in place for banks, and so far has
pledged nearly $300billion of support, of which over $135bn has already been provided.
MDM bank is the 13th largest bank in Russia in terms of assets. It is predominantly a corporate bank with a strong
presence in Central and Western Russia. The merger between the two banks will combine URSA's retail banking strength
with MDM's strength in the corporate sector to provide a stronger more diversified bank. The banks have very little
geographic overlap. A major advantage for URSA of the forthcoming merger with MDM Bank will be that it provides funding
support for URSA, which, due to its rapid loan growth, has a high loan-to-deposit ratio, last reported as almost 200%,
and is currently highly dependent on wholesale funding. Igor Kim, the largest single shareholder in URSA, who has
overseen the series of bank mergers that have created URSA, will be managing the merger of the two banks.
URSA's most recent financial results were for the first nine months of 2008 when it reported a 50% increase in profits
year-on-year. These results have been audited and will become the basis for the valuation of the merger of the two
banks. During the second half of 2008 the bank has been focusing on liquidity and credit risks rather than growth and
has accumulated a cash cushion of over $2billion.
We have held this stock in the portfolio throughout the Fund's financial year and the shares total return was -67% in
sterling terms. The share price of this stock has been extremely weak in 2008, but the price has made a degree of
recovery since the announcement of the merger and the dividend yield on these preferred shares is very attractive.
Key statistics relating to this investment are given below:
For the year ended December 2007
& nine months ended September 2008 September 2008 2007 Change
Total Assets Rouble 186.7bn Rouble 165.8bn +12.6%
Cost:Income Ratio 48.3% 45.1% +3.2pp
Net Profit after Taxation Rouble 1,191m Rouble 3,771m N/A
Earnings per Share N/A Rouble 2.80 N/A
Dividends per Preferred Share $0.08(declared) $0.081 0%
Dividend Cover N/A N/A -
Return on Equity 6.9% 26.9% -20.0pp
3. Rosbank 8% 09/09
Rosbank has the largest banking network in Russia amongst all the privately-owned banks and is the 9th largest bank in
Russia in terms of assets. It has over 17,000 employees serving around 3 million individual customers, 55,000 SMEs and
5,000 corporate clients. Societe Generale has held a stake in Rosbank since 2006. This was converted into a majority
holding of 57.57% after Societe Generale finalised its $2.3bn acquisition of a controlling stake in February 2008.
From its inception in 1992 the Rosbank was primarily a corporate bank. Its recent strategy has been to expand its retail
business. Its loan book is now split 60% corporate and 40% retail and it plans to further expand on the retail side. The
bank has been actively integrating its operations with its controlling shareholder, Societe Generale. The bank has very
little external debt, with its funding coming largely from its deposit base. It also has local-issued domestic and
eurobonds, one of which is the Rosbank 8% coupon bond we hold, that matures in September 2009. The size of the bond was
Rouble 7bn, which represents a very small proportion of the banks total liabilities. Its bonds are all rated
BB+/Baa3/BBB+. The bank redeemed its Rosbank-1 Rouble 3bn issue on 16 February 2009. The bank has lines of liquidity
open from the Russian government and Societe Generale. The bank has not reported English-language IFRS accounts since
Societe Generale took control. However the bank has said that it expects to meet its forecast of 30% growth in 2008.
We have held this bond in the portfolio since April 2008 and the holding period return in its own currency is 9%,
although with the recent weakness of the Rouble to Sterling reduces this gain.
4. Federal Bank Ltd.
Federal Bank is an "old" private bank that was founded in 1931. Old private banks represent around 8% of the banking
sector in India, with about 20 medium-scale banks fitting into this bracket including Federal Bank and South Indian
Bank. Federal Bank is the second largest old private sector bank and is concentrated in the region of Kerala. It has
over 600 branches, 75% of which are in Kerala. It has been modernising itself and underwent a significant capital
raising in January 2008 to support the ambitious future growth plans of the bank. Around 20% of the bank's deposit base
is in the form of Non-Resident Indian Deposits (NRIs), in particular from Indian expatriates based in the Gulf.
In its results to 31st December 2008 Federal Bank reported a 98% year-on-year growth in net income, based on a very
strong growth in net interest income, despite the bank being cautious and restricting new lending. The bank has used its
strong revenues to raise provisioning levels, in anticipation of rising non-performing loans going forward. Following
the capital raising at the beginning of 2008 the bank's Tier-I capital adequacy ratio is high at 17.2%. These factors
will put the bank in a strong position going into 2009, although the return of Indian expatriates from the Gulf does
raise some concerns about a reduction in its deposit base.
The investment in Federal Bank is held via P-notes. The current holding has made a return of -28% in the portfolio in
sterling terms. We expect this loss to be reversed as the bank continues to grow its profits and equity markets settle
down.
Key statistics relating to this investment are given below:
For the year ended 31 March
& nine months ended December 2008: December 2008 2008 Change
Total Assets INR 657.3bn INR 325.1bn +102.2%
Cost : Income Ratio 30.8% 37.1% -6.3pp
Net Profit after Taxation INR 3,863 mINR 3,680m N/A
Earnings per Share INR 22.6 INR 32.4 N/A
Dividends per Share N/A INR 4.0 N/A
Dividend Cover N/A 8.1x
Return on Equity 12.6% 13.6% -1.0pp
5. Vozrozhdenie Bank
Vozrozhdenie Bank is one of the top 25 banks in Russia in terms of assets. In March 2009 it had approximately 1.3
million clients, the vast majority of which are retail customers, and 176 branches. It is a privately owned business
based primarily in the Moscow region. The bank's initial focus was on corporate banking; however it has developed into a
strong niche player in the SME and retail segments. The bank has issued shares 20 times since its inception in 1991, a
considerable portion of which are controlled by the bank's management.
The final months of 2008 were difficult ones for Russian banks, yet Vozrozhdenie's profits grew a highly impressive 65%
in 2008. The bank, like most Russian banks, experienced an outflow of deposits in the last quarter of 2008, which has
now been replenished by an inflow since December that has taken their deposit base back to its initial level in Rouble
terms. The bank has always been conservatively managed and has a low dependence on market funding; it has a high Capital
Ratio of 15.7%, has access to the Central Bank of Russia support, and expects non performing loans to rise no higher
than 5% of total loans. The bank is restricting itself to new business with existing customers at the present time and
does not expect its loan portfolio to grow again until the second half of 2009. The bank feels it is very well placed to
weather the current economic and financial climate.
The stock has been held for the entire period, although the its weighting has been adjusted a couple of times. The
portion of the stock held for the full year has returned a very disappointing -83% to the portfolio in Sterling terms.
We hope that the bank's excellent financial results will support the stock price going forward.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2008 2007 Change
Total Assets Rouble 141.2bn Rouble 111.4bn +26.8%
Cost : Income Ratio 52.7% 62.7% -10pp
Net Profit after Taxation Rouble 3.1bn Rouble 1.9bn +64.8%
Earnings per Share Rouble 125 Rouble 80 +56.3%
Dividends per Share 0.5 0.5 +0.0%
Dividend Cover 285x 190x
Return on Equity 23.3% 21.0% +2.3pp
6. Kedr Commercial Bank 12.3% 09/09
Kedr Commercial Bank ("Kedr") is a full service, regional Russian bank operating since 1991. It is listed as the 113th
bank in the country by total assets. The bank is headquartered in Krasnoyarsk in Siberia, with branches in Moscow,
Vladivostok, Rostov-on-Don, the Krasnoyarsk region and Khakassia. The bank has approximately 120 outlets. Krasnoyarsk is
the second largest city in Siberia and a powerful industrial centre. There are 16 shareholders in Bank Kedr, including
an 18.75% holding by both the European Bank for Reconstruction and Development and the East Capital Financials Fund AB.
The Development and East Capital Financials Fund AB is a private equity fund which makes equity investments within the
financial sector in Eastern Europe.
At the end of 2007 Kedr's loan book was split 76% corporate loans and 24% retail loans. It has a strong base in retail
deposits, due to its wide branch network in the Krasnoyarsk region and the Republic of Khakassia. It has a low level of
reliance on wholesale funding, with 70% of its liabilities made up of deposit funding as of April 2008 and its loan to
deposit ratio at 100% at that time. Its bonds are rated B2 by Moody's Investors Service. The Bank Kedr 12.3%
rouble-denominated bond matures in September 2009. The amount issued was Rouble 1bn. The bank has Rouble 2.5bn of
outstanding bonds in total.
The bank's last full year results were for 2007, when profits grew 64%. It has only reported quarterly results in 2008
in the Russian language under Russian Accounting Standards. Full year 2008 IFRS results are being prepared by the
company.
We purchased this bond in April 2008 and the holding period return for this bond in its own currency is 4.8%, although
with the recent weakness of the Rouble to Sterling reduces this gain.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2007 2006 Change
Total Assets Rouble 18bn Rouble 12bn +50%
Cost:Income Ratio N/A N/A -
Net Profit after Taxation Rouble 337m Rouble 206m +63.6%
Earnings per Share Rouble 4.18 N/A
Dividends per Share N/A N/A -
Dividend Cover N/A N/A -
Return on Equity N/A N/A -
7. New Star Asset Management Group plc
New Star Asset Management Group plc ("New Star") was founded in 2000 and began trading in January 2001. It is a fund
management company that manages retail funds, institutional funds and alternative investments. The company grew rapidly,
both by acquisitions and by launching a wide range of funds. New Star was floated on the AIM stock exchange in the
second half of 2005 and gained a full listing on the London Stock Exchange (LSE) in 2007. At the time of its conversion
into a full listing on the LSE the company made a capital repayment of some GBP364 million to its shareholders to remove
excess liquidity from the balance sheet. At this point funds under management had reached almost GBP25 billion.
As stock markets weakened in 2008 New Star began to suffer. Its profits and funds under management began to fall. Its
large debt burden that it carried following the capital repayment became the company's undoing, as it was unable to meet
its banking covenants. In December 2008 the company announced a restructuring, where the majority of the bank's debt
(GBP240m) would be converted to equity and the bank syndicate would own 75% of New Star's enlarged ordinary share capital,
as well as new convertible, redeemable preference shares. New Star also announced that it would seek to delist its
shares. The share price of the company had by this point fallen from a peak of GBP4.85 a share in mid-2007 to a low of
1.5p on 4 December 2008 and its funds under management had dropped to GBP12.4bn by the end of 2008. This announcement was
followed in January 2009 by an offer by Henderson Group plc to acquire New Star and the acquisition was completed on 9
April 2009.
We purchased a very modest holding in New Star in January 2009 as we believed that the share price significantly
undervalued the assets of the company and the ability of the company to return to profitability. The offer by
Henderson's was, in our opinion, rather disappointing at 2p per share, but the shareholders voted in favour of the
merger and the money from this offer has now been received. This investment made a total return of 10%.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2008 2007 Change
Total Assets GBP 135.8m GBP185.4m -26.8%
Cost:Income Ratio N/A N/A
Net Profit after Taxation -GBP45.5m GBP46.5m -197.8%
Earnings per Share -GBP20.43 GBP18.45 -210.7%
Dividends per Share 2p 9p -77.8%
Dividend Cover N/A 20.0x
Return on Equity N/A N/A
8. JP Morgan Chase & Co
JP Morgan Chase ("JP Morgan") is a global financial services firm, headquartered in New York, with assets of $2.2
trillion. It operates in more than 60 countries and has over 200,000 employees. It has grown both organically and by
acquisition. In 2008 it made two significant acquisitions - Bear Stearns and Washington Mutual. JP Morgan agreed to
acquire Bear Stearns in March 2008 after Bear Stearns clients and lenders lost confidence in the bank and it no longer
appeared viable for the bank to remain independent. Bear Stearns was the fifth largest US investment bank, with 14,000
employees and had greater strengths than JP Morgan in the areas of prime brokerage and commodities. The transaction was
supported by aid from the Federal Reserve and was completed in May 2008. JP Morgan purchased Washington Mutual bank and
its assets from the Federal Deposit Insurance Corporation ("FDIC") for $1.9bn in a bidding process after Washington
Mutual's assets were seized by the FDIC due to the bank's failure. JP Morgan issued $11.5bn of common stock to support
the purchase. This purchase has significantly increased JP Morgan's number of retail branches, especially in California,
Washington and Florida.
JP Morgan weathered the financial turbulence in 2008 better than many of its U.S. banking counterparts. It reported a
net profit of nearly $6bn in 2008, down 64% on its 2007 profit, as credit costs increased and it had to take large
writedowns in its investment banking operations. The bank's balance sheet remained strong throughout the year, and was
boosted in the final quarter of 2008 with a government injection of $25bn capital as part of the US Government's
Troubled Asset Relief Program ("TARP"). In its first quarter 2009 results the bank reported net income of $2.1bn and a
further strengthening of its capital ratios as it increased its reserves for loan losses and reduced risk exposures. Its
investment banking division reported a record quarterly profit, as fixed income trading was very strong and staff
compensation costs were lower.
We purchased the stock on the 25 March 2009 as we see a great deal of potential for the share price to recover from this
low level as the banking environment and the economic environment in the U.S. recover through 2009. The stocks total
return in Sterling terms over the first few days in the portfolio was -6%.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2008 2007 Change
Total Assets $ 2,175bn $ 1,562bn +39.2%
Cost:Income Ratio N/A N/A
Profits after Taxation $ 5.61bn $ 15.37bn -63.5%
Earnings per Share $1.37 $4.38 -68.7%
Dividends per Share $1.52 $1.48 +2.7%
Dividend Cover 0.9x 3.0x
Return on Equity 2.0% 13.0% -11.0pp
9. Goldman Sachs Group Inc
Goldman Sachs Group Inc ("Goldman Sachs") is a global financial services firm founded in 1869 and headquartered in New
York. It has assets of over $900bn and its business is divided into three core segments, Investment Banking, Trading and
Principal Investments and Asset Management and Security Services. The company was operating as an independent investment
bank, until September 2008, when the bank changed to become a bank holding company. This allows the bank to gather
deposits and it also brings it under the supervision of the Federal Reserve. The bank has no immediate plans to move
into retail banking.
Like JP Morgan, Goldman Sachs came through the financial turbulence in 2008 in better shape than many of its U.S.
banking counterparts. Its risk management has been robust. It reported a net profit of just over $2bn in 2008, down 82%
on its 2007 profit. The bank received $10bn of TARP capital from the US Government, which the bank is already talking of
repaying as soon as is practical, as the bank's capital ratios are high. At the year end its total capital ratio stood
at 18.9%. The bank reported strong results for the first quarter of 2009, with net income of $1.8bn, largely due to
record quarterly net revenues in its fixed income, currency and commodities division. The bank announced a $5bn public
offering of common stock at the same time as its results were issued.
We purchased the stock on 25 March 2009, as we see a great deal of potential for the share price to recover from this
low level as the banking environment and the economic environment in the U.S. recover through 2009. The stocks total
return in Sterling terms over the first few days in the portfolio was -5%.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2008 2007 Change
Total Assets $ 885bn $ 1,120bn -21.0%
Cost:Income Ratio N/A N/A
Profits after Taxation $ 2.04bn $ 11.41bn -82.1%
Earnings per Share $4.47 $24.73 -81.9%
Dividends per Share $1.4 $1.4 +0%
Dividend Cover 3.2x 17.7x
Return on Equity 4.9% 32.7% -27.8pp
10. Rusfinance Bank
Rusfinance Bank was originally called Promek-Bank and was created in 2004. It is a medium-sized Russian bank
specialising in retail financing. It has offices and points of sale across Russia, but its operations are dominant in
the Volga Federal District, which includes Samara, the bank's home region. It is a 100% owned subsidiary of Societe
Generale S.A. in France. The bank has concentrated on car loans and consumer loans. It receives funding from the
International Finance Corporation, which is part of the World Bank, and the European Bank for Reconstruction and
Development. In September 2008 Societe Generale increased Rusfinance's capital by R6bn, almost doubling the shareholder
equity of the bank.
The Rusfinan4 bond we hold is a local bond denominated in Roubles. It is rated BB+/ Baa2 and the size of this bond is
Rouble 4bn. It matures on 12 February 2010. Rusfinance does not report English-language standalone financial results.
Its results are incorporated into Societe Generale's results, under its International Retail Banking Division.
We previously held the Rusfinan Bank3 bond. This bond was sold in January 2009, a few months prior to the bonds
redemption date, and in March 2009 we bought the longer-dated Rusfin Bank4 bond. This bond has only been held in the
portfolio for two weeks and its holding period return so far is 1%.
Transactions
Over the year, sales of investments realised GBP13.1m and purchases totalled GBP11.7m.
Blue Planet Investment Management Ltd
Edinburgh
26 May 2009
Income Statement
(incorporating the revenue account)
for the year ending 31 March 2009
2009 2008
Revenue Capital Total Revenue Capital Total
(GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
Capital losses on investment
Net realised losses
- (1,377,681) (1,377,681) - (291,945) (291,945)
Unrealised losses
- (1,032,245) (1,032,245) - (519,959) (519,959)
Exchange losses
- (97,123) (97,123) - (101,922) (101,922)
Net Capital losses on investments
- (2,507,049) (2,507,049) - (913,826) (913,826)
Income from investments
221,505 - 221,505 110,090 - 110,090
Bank interest receivable
21,050 - 21,050 31,367 - 31,367
Gross revenue and capital losses
242,555 (2,507,049) (2,264,494) 141,457 (913,826) (772,369)
Administrative expenses
(45,617) (5,738) (51,355) (82,461) (46,746) (129,207)
Net return before interest payable and taxation
196,938 (2,512,787) (2,315,849) 58,996 (960,572) (901,576)
Interest payable
(41,384) (41,384) (82,768) (42,526) (42,526) (85,052)
Return on ordinary activities before taxation
155,554 (2,554,171) (2,398,617) 16,470 (1,003,098) (986,628)
Taxation on return on ordinary activities
(19,534) - (19,534) (3,533) - (3,533)
Return on ordinary activities after taxation
136,020 (2,554,171) (2,418,151) 12,937 (1,003,098) (990,161)
Return per ordinary share - basic
1.00p (18.70)p (17.70)p 0.09p (7.35)p (7.26)p
Return per ordinary share - diluted
1.00p (18.70)p (17.70)p 0.09p (6.75)p (6.66)p
The Total column of the income statement represents the profit & loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
There were no recognised gains and losses other than those disclosed above. Accordingly a statement of total recognised
gains and losses is not required
Balance Sheet
As at 31 March 2009 2009 2008
GBP GBP GBP GBP
Fixed assets
Listed Equity investments 955,603 4,372,970
Non-Equity investments 221,250 475,626
1,176,853 4,848,596
Current assets
Debtors 47,214 179,864
Cash at bank 778,896 1,140,898
826,110 1,320,762
Creditors: amounts falling due within (15,641) (111,073)
one year
Net current assets 810,469 1,209,689
Total assests less current liabilities 1,987,322 6,058,285
Creditors: amounts falling due after (915,058) (2,568,640)
more than one year
Net assets 1,072,264 3,489,645
Capital and reserves
Called-up share capital 136,609 136,542
Share premium account 1,179,474 1,178,688
Other reserves:
Capital reserve-realised 955,504 2,525,661
Capital reserve-investment (1,434,524) (450,510)
holding losses
Capital Redemption 8,450 8,450
Warrant Reserve 59,875 60,058
Revenue reserve 166,876 30,756
Shareholders' funds 1,072,264 3,489,645
Net asset value per ordinary share - basic 7.85p 25.56p
Net asset value per ordinary share - diluted 7.85p 23.13p
The financial statements were approved by the Board of Directors on 26 May 2009 and were signed on its behalf by:
Victoria W Killay
Chairman
Reconciliation of Movements in Shareholders' Funds
For the year ended 31 March 2009
Share Share Capital Capital Capital Warrant Revenue Total
Capital Premium redemption reserve- reserve- reserve reserve shareholders'
reserve realised unrealised funds
GBP GBP GBP GBP GBP GBP GBP GBP
Shareholders' funds at 1 April 2008
136,542 1,178,688 8,450 2,525,661 (450,510) 60,058 30,756 3,489,645
Proceeds of share issue
67 603 - - - - - 670
Transfer from/(to) warrant reserve
- 183 - - - (183) - -
Return on ordinary activities after taxation
- - - (1,570,157) (984,014) - 136,020 (2,418,151)
Sale of treasury shares
- - - - - - 100 100
Shareholders' funds at 31 March 2009
136,609 1,179,474 8,450 955,504 (1,434,524) 59,875 166,876 1,072,264
For the year ended 31 March 2008
Share Share Capital Capital Capital Warrant Revenue Total
Capital Premium redemption reserve- reserve- reserve reserve shareholders'
reserve realised unrealised funds
GBP GBP GBP GBP GBP GBP GBP GBP
Shareholders' funds at 1 April 2007
136,226 1,175,092 8,450 2,956,042 122,207 60,810 18,018 4,476,845
Proceeds of share issue
316 2,844 - - - - - 3,160
Transfer from/(to) warrant reserve
- 752 - - - (752) - -
Return on ordinary activities after taxation
- - - (430,381) (572,717) - 12,937 (990,161)
Purchase of treasury shares
- - - - - - (199) (199)
Shareholders' funds at 31 March 2008
136,542 1,178,688 8,450 2,525,661 (450,510) 60,058 30,756 3,489,645
Cash Flow Statement
for the year ended 31 March 2009
2009 2008
GBP GBP GBP GBP
Operating activities
Investment income received 175,155 91,969
Interest received 21,977 30,439
Investment management and (67,451) (93,623)
administration fees paid
Cash paid to and on behalf (5,120) (3,430)
of Directors
VAT refund received 48,000 -
Other cash payments (32,333) (31,858)
Net cash inflow/(outflow) from 140,228 (6,503)
operating activities
Servicing of finance
Interest paid (88,491) (81,031)
Taxation
Taxation recovered 648 1,826
Capital expenditure and financial investment
Purchase of investments (11,723,399) (16,393,290)
Sale of investments 13,125,947 16,446,253
1,402,548 52,963
Cash inflow/(outflow) before financing 1,454,933 (32,745)
Management of liquid resources
Cash placed on deposit (5,431,318) (31,819,986)
Cash withdrawn from deposit 5,636,844 31,578,645
205,526 (241,341)
Financing
Issue/(purchase) of 100 (199)
treasury shares
Proceeds from share issue 670 3,160
Loan advanced - 542,767
Purchase of Treasury shares (1,840,941) -
(1,840,171) (545,728)
(Decrease)/increase in cash (179,712) 271,642
Notes
1. The financial information set out in this announcement does not constitute the Company's statutory accounts for the
years ended 31 March 2009 or 31 March 2008 but is derived from those accounts. Statutory accounts for 2008 have been
delivered to the Registrar of Companies and those for 2009 will be delivered following the Company's Annual General
Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain a statement
under s237 (2) or (3) Companies Act 1985.
2. Return and Net Assets per ordinary share
The return per ordinary share is based upon the following figures:
2009 2008
Revenue return GBP136,020 GBP12,937
Capital return GBP(2,554,171) GBP(1,003,098)
Weighted average number of ordinary shares in issue during the year-basic 13,658,319 13,643,369
Weighted average number of ordinary shares in issue during the year-diluted 13,658,319 14,860,306
The difference between the basic and diluted number of ordinary shares is derived from the total number of warrants in
issue multiplied by a factor based on the average price of the ordinary shares in the year and the exercise price of the
warrants, as required by FRS 14. No dilution occurred in the current year as the warrant exercise price exceeded the
average market price of one share during the year. The net asset value per ordinary share is calculated on 13,660,900
(2800 - 13,653,200) being the number of ordinary shares in issue. Net asset dilution occurs from the potential exercise
of the 251,660 outstanding warrants and is assumed only to take place if the net assets per share exceed the exercise
price of GBP0.10.
3. The board have proposed the final dividend of 0.76p for this year (2008 - Nil).
4. The financial information set out in this announcement has been prepared on the basis of the accounting policies as
stated in the previous year's financial statements, and are consistent with the current year's full financial statements
which are yet to be published.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors
have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable law). The financial statements are required by law to give
a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In
preparing these financial statements, the Directors are required to:
·select suitable accounting policies and then apply them consistently;
·make judgments and estimates that are reasonable and prudent;
·state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and
explained in the financial statements;
·prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company
will continue in business.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time
the financial position of the Company and enable them to ensure that the financial statements comply with the Companies
Act 1985. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors confirm that to the best of their knowledge that:
·The accounts, prepared in accordance with applicable UK accounting standards, give a true and fair view of the assets,
liabilities, financial position and return of the Company; and
·The Directors and Investment managers' reports include a fair review of the development, performance and position of
the company together with a description of the principal risks and uncertainties that the company faces.
On behalf of the Board
Victoria Killay
Chairman
26 May 2009
The above announcement applies equally to each of the following ten Trusts
Company Name ISIN SEDOL PIC Code
Blue Planet Financials Growth & Income
Investment Trust No.1 plc GB00B19PPL85 B19PPL8 GB BPFA LN
Blue Planet Financials Growth & Income
Investment Trust No.2 plc GB00B19PPN00 B19PPN0 GB BPFC LN
Blue Planet Financials Growth & Income
Investment Trust No.3 plc GB00B19PPP24 B19PPP2 GB BPFE LN
Blue Planet Financials Growth & Income
Investment Trust No.4 plc GB00B19PPQ31 B19PPQ3 GB BPFG LN
Blue Planet Financials Growth & Income
Investment Trust No.5 plc GB00B19PPT61 B19PPT6 GB BPFI LN
Blue Planet Financials Growth & Income
Investment Trust No.6 plc GB00B19PPV83 B19PPV8 GB BPFK LN
Blue Planet Financials Growth & Income
Investment Trust No.7 plc GB00B19PPW90 B19PPW9 GB BPFM LN
Blue Planet Financials Growth & Income
Investment Trust No.8 plc GB00B19PPX08 B19PPX0 GB BPFO LN
Blue Planet Financials Growth & Income
Investment Trust No.9 plc GB00B19PQ150 B19PQ15 GB BPFQ LN
Blue Planet Financials Growth & Income
Investment Trust No.10 plc GB00B19PQG08 B19PQG0 GB BPFS LN
For more information, please visit www.blueplanet.eu You can also contact the Company on 0845 527 7588 or by emailing
info@blueplanet.eu
END
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