Interim Results
Interim Results
For the six months ended 30 September 2003
Blue Planet Financials Growth and Income Investment Trust No 1 plc
Blue Planet Financials Growth and Income Investment Trust No 2 plc
Blue Planet Financials Growth and Income Investment Trust No 3 plc
Blue Planet Financials Growth and Income Investment Trust No 4 plc
Blue Planet Financials Growth and Income Investment Trust No 5 plc
Blue Planet Financials Growth and Income Investment Trust No 6 plc
Blue Planet Financials Growth and Income Investment Trust No 7 plc
Blue Planet Financials Growth and Income Investment Trust No 8 plc
Blue Planet Financials Growth and Income Investment Trust No 9 plc
Blue Planet Financials Growth and Income Investment Trust No 10 plc
Each of the investment trusts is a separate limited company,
but otherwise they are to all intents and purposes identical.
The information contained in this Interim Report, including the
financial statements, applies equally to each of the ten
Trusts.
Trading in the shares and warrants of the Trusts
The Trusts' shares and warrants can be traded in share or
warrant units. Each unit comprises 10 shares or warrants
respectively, 1 in each of the 10 trusts. It is generally
cheaper for investors to trade in the units rather than the
underlying shares or warrants.
Objective
The objective of the ten Blue Planet Financials Growth and
Income Investment Trusts is to offer investors a high level of
income combined with capital growth and the opportunity to
profit from the ongoing rationalisation of the Financial
Services sector.
Financial Highlights
Six months ended Six months ended Year ended 31
30 September 30 September March 2003
2003 (unaudited) 2002 (unaudited) (audited)
Shareholders' funds (£'000) 1,698 1,390 1,346
Net asset value per share (p) 125.01 101.94 98.72
Share price (p) 101.75 87.25 80.65
Discount (%) 18.61 14.41 18.30
Revenue available for
shareholders (£'000) 31 37 50
Revenue return per share (p) 2.25 2.65 3.65
Dividend per share (p) 1.25 1.35 3.60
Dividend yield on our shares (%) - - 4.46
Dividend yield on FTSE All Share Index (%) 3.36 3.73 3.87
Dividend
An interim net dividend of 1.25p per ordinary share has been declared,
payable on 21 January 2004, to shareholders on the register as at the
close of business on 17 December 2003. The Trusts' shares will be
quoted ex-dividend on 17 December 2003.
Capital Gains Tax
Apportionment for capital gains tax between ordinary shares and warrants
based on mid-market prices on the first day (25 April 1996) of dealings
in the ordinary shares and the warrants:
Each ordinary share 95.24p
Each warrant 23.80p
Chairman's Statement
Performance
I am pleased to report that your Company continues to perform much
better than its Benchmark Index and the main UK stock market indices.
In the six months to 30 September 2003 our undiluted net asset value per
share (NAV) rose 26.6% to 125.01p compared to a rise of only 8.3% in our
Benchmark Index which comprises of a 50% weighting in the FTSE Banks
Index (up 18.3%), and a 50% weighting in the FT Fixed Interest Index
(down 1.7%). To give shareholders a broader measure of, and feel for,
our performance the FTSE100 rose by 13.2% over the same period.
To put our performance in context, we generated over £3 of value for
shareholders for every £1 generated by our Benchmark Index. Even by
comparison with the FTSE100 index, for every £1 of value that index
added, we added over £2.
Our share price also rose sharply to £10.175 per ordinary share unit -
an increase of 26.2 % in six months. However, because the rise in our
share price failed to keep pace with the rise in our NAV, the discount
to NAV at which our shares traded widened slightly from 18.3% to 18.6%.
The board and the managers are committed to reducing the discount on the
company's shares by the use of buy backs and treasury shares when they
are available.
The best performing stocks in £ terms in the portfolio over the period
under review were:
· HypoVereinsbank, (Germany) + 118.3%
· Commerzbank, (Germany) + 105.3%
· Dexia, (Belgium) + 52.4%
· Abbey National, (UK) + 50.2%
· Amvescap, (UK) + 48.5%
The worst performing holding in the period under review were the
following bonds:
· Cheshire Building Society Floating Rate PIBS, (UK) +2.2%
· First Active 11.5% Subordinated Bonds, (Ireland) -1.2%
Gearing
Gearing for the Company is provided by a £750,000 loan facility. The
purpose of the loan is to acquire investments in the expectations that
the returns from these will exceed the cost of financing the loan. As
at the end of the interim period, the loan, net of cash deposits,
represented 42.4% of NAV.
Blue Planet ISA and low cost dealing service
To take out an ISA with Blue Planet Investment Management Ltd call 0131
466 6666. They also offer investors a low cost stock-market dealing
service. Full details of these services were given in the last annual
report and are given on their website www.blueplanet.eu.com.
Alternatively, they may be obtained by contacting Blue Planet on 0131
466 6666.
Operating efficiency
The board regularly reviews with the Investment Manager the operating
efficiency of the Company to see if costs can be reduced in a manner
that does not damage the Company in order that any savings can be passed
onto shareholders. It has led us to reduce the number of newspapers in
which we published our share price and it is now only published in "The
Times". Shareholders can also view the Company's share price and other
information about it on the websites of Blue Planet Investment
Management Limited (www.blueplanet.eu.com) and the London Stock Exchange
(www.londonstockexchange.com). To find the Company's share price on the
London Stock Exchange's website go to their home page and type "BPFU" in
the "Stock Search" field.
Dividend
In our last report and accounts, our investment managers, Blue Planet,
expressed the view that "we are now at or near the bottom of the
interest rate cycle and that equities are undervalued and are well
placed to show appreciation over the coming years". They also advised
the Board to increase the equity element of the portfolio and reduce the
fixed interest element in order to maximise future returns for
shareholders. This we have done, increasing the percentage of the
portfolio invested in equities from 53.6% to 71.5%. Subsequent rises in
UK interest rates and equities and falls in the value of bonds have
fully justified this move.
However, as I have indicated in the past, this rebalancing of the
portfolio unavoidably reduces our income and our dividend paying
capacity in the short term. Nevertheless, we are committed to managing
this in such a manner as to minimise its adverse effect on our dividend
and an interim dividend of 1.25p per share (12.5p per unit) will be paid
on 21 January 2004 to shareholders on the register on 17 December 2003.
This represents a very modest reduction on last year's interim dividend
of 1.35p per share (13.5p per unit).
Outlook
Your board believes that the outlook for your Company is better now than
it has been for several years. The American economy has just posted its
fastest rate of growth in nearly twenty years. There are strong
indications that the German and other major economies are also
recovering after a long period of low or no growth. Stock markets have
recovered from their lows and there are growing indications that a
sustained recovery may be on the way. We are invested in a sector which
your board believes will be one of the main beneficiaries of any such
recovery and, if this recovery does come to pass, our high level of
gearing should allow us to produce returns to investors that are above
that of the main stock market indices.
The recent reporting season for UK banks has mostly shown increased pre-
tax profits, earnings per share and dividends. Elsewhere in Europe,
banks also continue to fare well. Recovering stockmarkets will also help
the earnings of other financial companies such as stockbrokers, fund
managers and life companies. They will also lead investors to switch
from bonds and cash into equities and encourage more takeovers both of
which will further fuel the recovery in share prices and generate
increased fees and commissions for financial companies.
Time and time again the banking sector demonstrates its ability to
deliver good growth both in earnings and dividends. We believe that all
well constructed portfolios should have at their core a quality
portfolio of shares in banks and other financial companies. We believe
that your fund provides this and should be seen as a core holding for
investors. We look forward to the future with a great deal of
confidence and would like to thank you for your continuing support.
Philip Court
Chairman
27 November 2003
Statement of Total Return
(incorporating the revenue account)
For the six months For the six months For the year ended 31 March 2003
ended 30 September ended 30 September
2003 (unaudited) 2002 (unaudited)
Revenue Capital Total Revenue Capital Total Revenue Capita Total
£ £ £ £ £ £ £ £ £
Capital gains/(losses)
on investments
Net realised gains - 15,808 15,808 - 129,641 129,641 - 288,424 288,424
Unrealised gains/(losses)
on investments - 347,289 347,289 - (660,567) (660,567) - (833,002) (833,002)
Exchange gain/(loss) - (3,587) (3,587) - - - - 2,013 2,013
_________________________ _____________________________ _______________________________
Net capital gains/(losses)
on investments - 359,510 359,510 - (530,926) (530,926) - (542,565) (542,565)
Gross revenue
Income from investments 68,769 - 68,769 77,758 - 77,758 122,845 122,845
Other interest receivable 851 - 851 3,433 - 3,433 6,905 6,905
_________________________ _____________________________ _______________________________
Gross revenue and capital
gains/(losses) 69,620 359,510 429,130 81,191 (530,926) (449,735) (129,750) (542,565) (412,815)
Administrative expenses (24,136) (7,209)(31,345) (28,977) (7,573) (36,550) (49,079) (14,252) (63,331)
__________________________ _____________________________ _______________________________
Net return before interest
payable and taxation 45,484 352,301 397,785 52,214 (538,499) (486,285) 80,671 (556,817) (476,146)
Interest payable (11,253) (11,252)(22,505) (11,255) (11,255) (22,510) (22,446) (22,446) (44,892)
__________________________ _____________________________ _______________________________
Return on ordinary
activities before taxation 34,231 341,049 375,280 40,959 (549,754) (508,795) 58,225 (579,263) (521,038)
Taxation on return on
ordinary activities (3,570) 2,690 (880) (4,291) 4,524 233 (8,091) 6,535 (1,556)
Return on ordinary
activities after taxation 30,661 343,739 374,400 36,668 (545,230) (508,562) 50,134 (572,728) (522,594)
Dividends declared
Interim dividend of 1.25p
(2003 - 1.35p) per share (16,981) - (16,981) (18,406) - (18,406) (18,406) - (18,406)
Final dividend of - p
(2003 - 2.25p) per share - - - - - - (30,676) - (30,676)
__________________________ _____________________________ _______________________________
(16,981) - (16,981) (18,406) - (18,406) (49,082) - (49,082)
__________________________ _____________________________ _______________________________
__________________________ _____________________________ _______________________________
Transfer to reserves 13,680 343,739 357,419 18,262 (545,230) (526,968) 1,052 (572,728) (571,676)
__________________________ _____________________________ _______________________________
Return per ordinary share
- basic (note 3) 2.25p 25.23p 27.48p 2.65p (39.44)p (36.79)p 3.65p (41.72)p (38.07)p
__________________________ _____________________________ _______________________________
Return per ordinary share
- diluted 2.25p 25.23p 27.48p 2.65p (39.43)p (36.78)p 3.65p (41.72)p (38.07)p
__________________________ _____________________________ _______________________________
The Revenue column of the statement represents the profit & loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
Balance Sheet
At 30 At 30 At 31
September September March
2003 2002 2003
(unaudited) (unaudited)
£ £ £
Fixed asset investments
Listed investments 2,395,735 2,057,588 1,535,306
____________ ____________ ____________
Current assets 84,810 128,267 604,767
Creditors: amounts falling due
within one year (32,298) (46,049) (44,185)
____________ ____________ ____________
Net current assets 52,512 82,218 560,582
Total assets less current
liabilities 2,448,247 2,139,806 2,095,888
Creditors: amounts falling due
after more than one year (note 5) (750,000) (750,000) (750,000)
____________ ____________ ____________
Net assets 1,698,247 1,389,806 1,345,888
____________ ____________ ____________
Capital and reserves
Called-up share capital (note 4) 135,850 136,338 136,338
Share premium account 1,168,744 1,168,608 1,168,609
Other reserves
Capital reserve - realised 408,870 271,091 414,012
Capital reserve - unrealised (131,893) (305,965) (475,595)
Capital redemption reserve 8,450 7,950 7,950
Warrant reserve 63,375 63,403 63,403
Revenue reserve 44,851 48,381 31,171
____________ ____________ ____________
Equity Shareholders' Funds 1,698,247 1,389,806 1,345,888
____________ ____________ ____________
Net Asset Value per Ordinary
Share - basic 125.01p 101.94p 98.72p
____________ ____________ ____________
Net Asset Value per Ordinary
Share - diluted 120.91p 101.62p -
____________ ____________ ____________
Cashflow
For the For the For the year
six months ended six months ended ended
30 September 30 September 31 March 2003
2003 2002
(unaudited) (unaudited)
£ £ £
Operating activities
Cash received from
investments 51,119 62,294 125,859
Interest received 1,435 3,957 7,440
Investment management
and secretarial fees (15,740) (17,121) (32,280)
Cash paid to and on
behalf of directors - 47 (2,733)
Other cash payments (19,408) (24,967) (32,853)
_________________ _________________ _____________
Net cash inflow from
operating activities 17,406 24,210 65,433
Servicing of finance
Interest paid (22,259) (22,263) (44,891)
Taxation
Tax paid - - (10,057)
Capital expenditure and
financial investment
Purchase of investments (553,833) (664,794) (696,720)
Sale of investments 56,499 391,097 931,654
Equity dividend paid (30,676) (34,698) (53,103)
Financing
Purchase of own shares
for cancellation (5,181) (25,138) (25,138)
Proceeds from share
issue 120 480 480
_________________ _________________ _____________
(Decrease)/increase in
cash (537,924) (331,106) 167,658
Notes
1. These interim accounts have been prepared under the historical cost
convention, modified to include the revaluation of investments, and in
accordance with applicable Accounting Standards. The Company follows
the recommendations of the 1995 Statement of Recommended Practice
'Financial Statements of Investment Trust Companies' (SORP). The
interim accounts have also been prepared on the assumption that approval
as an investment trust continues to be granted and using the accounting
policies applied in the annual accounts.
2. All expenses are charged to the revenue account with the exception
of management fees and interest charges on borrowings, one half of
which, less the appropriate tax, are charged to capital.
3. The return per ordinary share is based upon the following figures:
30 30 31
Sept Sept March
2003 2002 2003
Revenue return £30,661 £36,668 £50,134
Capital return £343,739 £(545,230) £(572,728)
Weighted average number of 1,362,109 1,382,459 1,372,946
ordinary shares in issue
during the period - basic
Weighted average number of 1,362,109 1,382,791 1,372,946
ordinary shares in issue
during the period - diluted
4.During the first half of the year the Company purchased 5,000 of its
own shares, which were then cancelled. An amount equal to the nominal
value of the cancelled shares has been transferred to Capital Redemption
Reserve.
At 1 April 2003, the Company had 266,400 warrants in issue. Each
warrant confers the right, exercisable normally on 31 July in any of the
years from 2000 to 2010 inclusive, to subscribe for one new ordinary
share at a price of £1.00 per share. On 31 July 2003, 120 warrants were
exercised and 120 ordinary shares were issued. 266,280 warrants remain
in issue. The net asset value per ordinary share is calculated on the
1,358,500 ordinary shares in issue at the end of the period. Net asset
dilution arises from the potential exercise of outstanding warrants and
is assumed only to take place if the net assets exceed the exercise
price of £1.00.
5. The sterling loan is subject to a covenant which sets a maximum
gearing threshold. Details of the loan outstanding at 30 September 2003
were as follows:
Amount Interest Repayment Date
(£) Rate
(%)
Sterling loan 750,000 5.99 23 January 2012
There are no undrawn facilities and no early repayment penalties.
6. The figures and financial information for the year ended 31 March
2003 are extracted from the latest published accounts of the Company and
do not constitute statutory accounts for the period. Those accounts have
been delivered to the Registrar of Companies and include the report of
the auditors which was unqualified and did not contain a statement
either under section 237(2) or 237(3) of the Companies Act 1985.
Portfolio Inormation At 30 September 2003
Equities Valuation %age of Total
Portfolio
16,000 Alliance & Leicester 50p Shares 134,480 5.6%
18,679 HBOS Plc Ordinary 25p Shares 128,512 5.4%
3,200 Societe Generale Eur 1.25 128,400 5.4%
28,000 Amvescap Ord. GBP0.25 127,540 5.3%
26,000 Lloyds TSB Group plc ord. GBP0.25 107,575 4.5%
9,764 ABN-Amro Holdings NV Eur0.56 108,087 4.5%
15,000 Schroders Vtg Shs GBP1.00 100,650 4.2%
20,000 Abbey National Ordinary 10p Shares 98,800 4.1%
3,166 BNP Paribas 93,500 3.9%
10,600 Irish Life & Permanent Ordinary IR£0.25 Shares 83,952 3.5%
9,000 Dexia NPV (French line) 79,043 3.3%
16,732 Barclays PLC Ordinary £0.25 77,260 3.2%
77,490 Legal & General GroupOrd Shares GBP0.025 71,485 3.0%
13,500 Aviva Plc Ord GBP0.25 63,045 2.6%
20,000 Bradford & Bingley Ordinary Shares GBP0.25 60,200 2.5%
40,000 Friends Provident Ordinary Shares 51,400 2.1%
7,500 Northern Rock Ordinary 25p Shares 50,138 2.1%
4,600 Bayerische Hypo-Und Vereinsbank 47,112 2.0%
5,000 Commerzbank AG 43,913 1.8%
15,000 Edinburgh Fund Managers Group Ord .05 21,225 0.9%
37,500 Blue Planet European Financials Investment Trust plc GBP0.50 18,188 0.8%
7,000 Britannic Group Plc - ord share 18,795 0.8%
_______________________________
Total Equities 1,713,297 71.5%
_______________________________
Debt Securities
80,000 First Active 11.75% Subordinated Bonds £128,400 5.4%
80,000 BUPA Finance 10 1/2% Subordinated Guaranteed Bonds 2018 £99,126 4.1%
40,500 Coventry Building Society 12 1/8% PIBS £71,240 3.0%
70,000 Friends Provident 9 1/8% Subordinated Bond £72,120 3.0%
38,000 Skipton Building Society 12 7/8% PIBS £72,153 3.0%
70,000 NPI 9 5/8% Subordinated Bonds £72,373 3.0%
70,000 Scottish Life 9% Subordinated Bond £66,198 2.8%
20,000 Leeds & Holbeck Building Society 13 3/8% PIBS £39,415 1.6%
26,500 Abbey National 10.375% Preference Shares £36,570 1.5%
7,000 Newcastle Building Society 12 5/8% PIBS £13,056 0.6%
10,000 Cheshire Building Society Floating Rate PIBS £11,750 0.5%
40 Halifax Non Cumulative Preference Shares 3.0625% £37 0.0%
_______________________________
Total Debt Securities 682,438 28.5%
_______________________________
Total 2,395,735 100.0%
_______________________________
(PIBS - Permanent Interest Bearing Shares)
The yield represents the year to date income as a percentage of the cost of the investments.
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