Half-yearly Report

REGULATORY ANNOUNCEMENT Blue Planet Financials Growth & Income Investment Trusts No 1-10 Plc Half Yearly Report and Accounts For the six months ended 30 September 2009 Blue Planet Financials Growth and Income Investment Trusts plc Blue Planet Financials Growth and Income Investment Trust No 1 plc (Registered Number 162796) Blue Planet Financials Growth and Income Investment Trust No 2 plc (Registered Number 162797) Blue Planet Financials Growth and Income Investment Trust No 3 plc (Registered Number 162798) Blue Planet Financials Growth and Income Investment Trust No 4 plc (Registered Number 162799) Blue Planet Financials Growth and Income Investment Trust No 5 plc (Registered Number 162800) Blue Planet Financials Growth and Income Investment Trust No 6 plc (Registered Number 162801) Blue Planet Financials Growth and Income Investment Trust No 7 plc (Registered Number 162802) Blue Planet Financials Growth and Income Investment Trust No 8 plc (Registered Number 162803) Blue Planet Financials Growth and Income Investment Trust No 9 plc (Registered Number 162804) Blue Planet Financials Growth and Income Investment Trust No 10 plc (Registered Number 162805) 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 Half Yearly Report and Accounts, including the financial statements, applies equally to each of the ten Blue Planet Financials Growth and Income Investment Trusts (the "Trusts"), and reference to the "Company" shall be deemed to be a reference to each of them. 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, 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. Officers and Advisors Directors Investment Manager Victoria W Killay (Non-Executive Blue Planet Investment Management Ltd Chairman) Kenneth Murray (Non-Executive) 18A Locker Street Dr Michael Shea (Non-Executive) - Sliema Retired on 4th August 2009 Malta SLM 3124 Glenn Cooper (Non-Executive) - Telephone No: +356 2131 5219 Appointed on 5th October 2009 Facsimile No: + 356 2131 5219 Local call rate from UK: 0845 527 7588 e-mail: info@blueplanet.eu www.blueplanet.eu Administrator, Secretary and Registrars Registered Office Blue Planet Investment Advisers Ltd Capita Registrars Greenside House Northern House 25 Greenside Place Woodsome Park Edinburgh EH1 3AA Fenay Bridge Telephone No: +44 131 466 6666 Huddersfield HD8 0LA Facsimile No: + 44 131 466 6677 Shareholder Helpline No: 0871 664 0300 (calls cost 10p per minute plus e-mail: info@bpia.eu network extras) lines are open 8.30am - 5.30pm (Mon - Fri) www.bpia.eu Overseas: +44 208 639 3399 e-mail: ssd@capitaregistrars.com www.capitaregistrars.com Auditors Bankers Deloitte LLP Lloyds TSB Scotland Plc Saltire Court Henry Duncan House 20 Castle Terrace 120 George Street Edinburgh EH1 2DB Edinburgh EH2 4LH Stockbroker Custodians Fairfax Plc RBC Dexia Investor Services Trust 46 Berkeley Square, Mayfair 71 Queen Victoria Street London WIJ 5AT London EC4V 4DE Aic Logo Blue Planet Investment Management Ltd is authorised and regulated by the Malta Financial Services Authority. Blue Planet Investment Advisers Ltd is authorised and regulated by the Financial Services Authority Blue Planet Financials Growth and Income Investment Trust No.1-10 plc are members of the Association of Investment Companies. Investment Policy and Objectives The investment policy of the Company is to invest in securities (as defined by the Financial Services & Markets Act 2000) including equities and debt issued by quoted financial companies located anywhere in the world with the objective of providing investors with a total return greater than the Bloomberg World Financial Index. Not more than 15% of the Company's portfolio may be invested in any one entity at the time the investment is made. The maximum gearing that will be employed is set by the Directors from time to time and is currently 50% of shareholders funds (the Company's Articles permit a maximum gearing of 50%). The Company's benchmark index is the Bloomberg World Financial index and there is no restriction on the amount that may be invested in any one country. The actual number of investment holdings, the level of gearing and country allocations will depend on market conditions and the judgement of the Board of what is in the best interest of Shareholders. Financial Record Six months Six months Year ended ended ended 31 March 30 September 30 September 2009 2009 2008 (Audited) (Unaudited) (Unaudited) Shareholders' funds (£'000) 2,193 1,979 1,072 Net asset value per share (p) 16.05 14.49 7.85 Share price (p) (Bid) 10.20 8.7 4.2 Discount (%) 36.4 40.0 46.5 Gearing (%)* 47.6 46.8 6.5 Revenue available for (21) 111 136 shareholders (£'000)** Revenue return per share (p) (0.15) 0.81 1.00 Total return per share (p) 8.96 (11.07) (17.70) Dividend per share (p) - - 0.76 Dividend yield on our shares (%) - - 18.1 Dividend yield on Benchmark Index 2.55 4.07 5.76 (%) * Net debt as a percentage of shareholders' funds ** March 2009 includes VAT recovered of £27,000 Dividend No interim dividend has been declared. Capital Gains Tax Apportionment for capital gains tax between ordinary shares and warrants based on mid-market prices on the first day of dealings (25 April 1996) in the ordinary shares and the warrants: Each ordinary share 9.524p Each warrant 23.80p The Investment Manager Blue Planet Investment Management Ltd is a Malta based investment management company which specialises in managing investments in financial companies. Its corporate philosophy is that consistent out-performance is more likely to be achieved by specialisation than it is from the generalist approach, which currently prevails across most of the fund management industry. Stock markets comprise of many sectors and at any point in time a number of these sectors will be in economic decline and will produce below average returns to investors. The financial sector is not immune to these cycles. However, financial companies, and in particular banks, play a crucial and central role in free market economies. Money transmission is perhaps the single most important function performed in any free market economy and it is the banks' dominance of this function that gives them tremendous economic muscle. This role will ensure that banks endure whilst other sectors come and go. Blue Planet believes that investors should only invest in those sectors that have superior long-term economic prospects and, crucially, which are undervalued. It believes that the world's financial sector is one such sector. By focusing on only one sector Blue Planet believes that it is able to develop a level of expertise and understanding of that sector that generalist fund managers cannot. Blue Planet believes that in future pension funds and others will increasingly use specialist advisors to advise them specifically and solely on the allocation of their assets across sectors and will then place the designated funds with specialist investment managers in those sectors. This segregation of roles and increased specialisation will, it believes, reduce conflicts of interest and lead to better investment performance. Blue Planet Investment Management Ltd (a company registered in Malta) is appointed as the Investment Manager of the Company and receives an annual fee of 1.50% per annum of the total assets of the Company which is paid monthly. Mr Kenneth Murray is a Director of the Company which is controlled by an Employee Trust for the benefit of the employees of the Company. Blue Planet Investment Advisers Ltd provides administration and secretarial services to the Trust at an annual fee of £10,000 per annum (increased for the first time since the Company's inception in 1996 from £7,500 from 1 April 2009). Blue Planet Investment Advisers Ltd also provides an investment advisory service to Blue Planet Investment Management Ltd. The investment management, administration and secretarial services agreements may only be terminated on receipt of two years' notice. In addition to Blue Planet Financials Growth & Income Investment Trusts Nos 1-10 plc, Blue Planet Investment Management Ltd also manages the Blue Planet European Financials Investment Trust plc, the Blue Planet Worldwide Financials Investment Trust plc and the Blue Planet Global Financials Fund. Details of the Blue Planet Saving Scheme, investment trusts and other products can be obtained from the Fund Administrator and Company secretary Blue Planet Investment Advisers Ltd, Greenside House, 25 Greenside Place, Edinburgh, EH1 3AA (Tel no: +44 131 466 6666), email: info@bpia.eu, website: http://www.bpia.eu. Website Information Please take the time to visit our website: www.blueplanet.eu If you wish to receive a monthly fact sheet on the trusts please visit: http://www.blueplanet.eu/blueplanet_downloads.136.html To download historical Annual and Interim reports and past monthly fund fact sheets: http://www.blueplanet.eu/blueplanet_downloads.124.html Interim Management Report Performance The last six months has seen a substantial turnaround in your Company's net asset value per share ("NAV") and consequently its share price. The period through 2008 and stretching into 2009 will probably be remembered as the time of the greatest banking crisis of modern times, and during it the value of your Fund suffered. In the Annual Report we stated that we were well-positioned to take advantage of share price rises once confidence in the banks returned, and this has indeed been the case in the last six months. The NAV started the period at 7.85p per share, or 78.5p per Share Unit and rose to 16.05p per share, or 160.5p per Share Unit by the 30 September 2009. The Share Unit price rose from 42.0p to 102.0p, and with the dividend payment of 7.6p per Share Unit paid in August, the share price total return over the six months has been 169.2%. Our benchmark index the Bloomberg Worldwide Financials Index rose by 47.1% over the same period, in sterling terms. The NAV and share price figures ended this interim period at a higher level than they ended the interim period a year ago. Including the dividend payment, the total return of the NAV and Share Unit have been 16.1% and 30.0% respectively over the last year. In March 2009 a rally began in the heavily battered bank share prices, prompted by Citigroup, which let it be known through a publicised internal memo that it was profitable through the first two months of 2009. This was then reinforced by the results of the US bank stress tests results, which provided some reassurance that none of the major US banks were facing the risk of insolvency. The results season, starting in April 2009, showed bank profits were far more resilient than many had anticipated. In the first quarter of 2009 the actual profits of the top ten US and European banks in the Bloomberg Worldwide Financial Index exceeded profit estimates by almost 200%. Government support continued to be extended, including the use of quantative easing. At the same time the tone of the economic data took a turn for the better. There were signs of stabilisation in the housing market, in both the US and the UK and the outlook for production and manufacturing began to improve. During April we became confident that the economic indicators and bank results would herald the start of a sustained rally in share prices and quickly moved to increase equity investments. These investments are performing well as the balance of economic data and bank results continue to improve, and we are rebuilding the value in the Fund. It is our aim to continue this process by monitoring and anticipating future macro developments and by discerning stock selection. Portfolio The composition of the portfolio has been significantly changed over the past six months, as can been seen in figure 1. At the end of March 2009 the Fund held under 50% of its total investments in equities, with the other half of the portfolio being split between cash and bonds. The bond holdings were being reduced at the start of 2009, with the final bond holdings being sold by early May. The cash and bond proceeds were reinvested into equities. Figure 1: Portfolio movements - Security Type Security Type Sep-09 Mar-09 Equity 97.7% 48.8% Cash 2.3% 39.8% Bond 0.0% 11.4% Total 100.0% 100.0% Figure 2: Portfolio movements - Geography (excluding cash) Country Sep-09 Mar-09 USA 25.90% 7.00% Russia 19.90% 22.60% Eire 17.50% 18.40% India 9.70% 8.60% Other Europe 9.80% 11.00% UK 5.60% 16.00% Indonesia 3.40% 0.00% Spain 2.40% 1.10% Turkey 2.10% 0.00% Norway 1.00% 6.90% Ukraine 0.40% 2.80% Australia 0.00% 5.00% Brazil 0.00% 0.60% Total 100.0% 100.0% At the end of the interim period our largest geographical holding was in the US. In the last few months key leading economic indicators in the US related to housing, retail sales, order backlogs and manufacturing have been improving or stabilising. In particular the speed of the rebound in the housing market is pushing up expectations for a rebound in the US economy. In 2010 the Federal Reserve anticipates that GDP will grow between 2.1% and 3.3%. This economic recovery, in conjunction with the extensive support packages in place in the US for financial institutions, provides a positive outlook for continued improvement in the performance of the country's financial institutions. We see good investment opportunities in a number of US financial stocks. We believe that the insurers, in the US and elsewhere, will be beneficiaries of the rising economic sentiment and rising asset prices and there are some US insurers trading at very low price multiples. Similarly, the government sponsored mortgage entities are on very low valuations and in August Freddie Mac returned to profit for the quarter and provided an optimistic update on the company's outlook. At the end of the Company's interim period the most significant investments in the US were in Hartford Financial Services and American International Group, with further holdings in a the government sponsored mortgage entities Freddie Mac & Fannie Mae, Goldman Sachs, Bank of America, MBIA and a US financial tracker fund. The Commonwealth of Independent States (CIS) is now the Fund's second largest geographic holding. Russia like most other economies has experienced problems. The fall in commodity prices, and in particular oil, in 2008, along with the paralysis of global financial markets due to the credit crunch weakened the Russian economy and the Russian currency. The Russian economy contracted by 10.9% in the second quarter of 2009, but destocking was a large contributor to this number and it has been followed by small positive steps in GDP growth in June and July. This positive growth will be supported by recovering commodity prices, increasing industrial production, falling unemployment, money supply growth and a deceleration in inflation, which has meant further interest rate cuts. In the current environment banks are curtailing credit growth. However 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, so as the macroeconomic picture recovers, credit growth will return and bad debt charges will reduce. Going forward the banks will profit from renewed growth opportunities and increased efficiency. The Fund retained its two main long-term equity holdings in Russia, in URSA (MDM) Bank and Bank Vozrozhdenie. URSA bank has grown rapidly and has undertaken a number of key mergers in the past. It has itself now merged with MDM Bank to create the second largest private bank in Russia. It will be known as MDM Bank going forward. Vozrozhdenie is a well-managed, conservatively run bank that is also is a likely takeover candidate. The share prices of both these banks were very weak in 2008 however a solid recovery is being shown by both as 2009 progresses. The small holding in Raiffeisen Bank Aval in the Ukraine was reduced in size, but remained in the portfolio. It has subsequently been sold. The Fund holds quite a broad range of European equities. The largest geographic weighting is in the Republic of Ireland. This comprises two investments. The first is a holding in the Blue Planet Global Financials Fund, listed in Dublin. In 2008 this fund was largely invested in bonds, but has reinvested in equities in 2009 and its NAV has been rising. The remaining Irish investment is a holding in Allied Irish Bank. The global economic crisis has had a tremendous impact on Ireland, which has seen a house price collapse after many years of boom, rising unemployment, as well as a downgrade in its long-term sovereign credit rating. As a result, Irish banks saw their share prices drop to record lows, as investors questioned their solvency and feared the banks would be nationalised. Since then, the Irish Government has taken major positive steps towards restructuring and recapitalising the banks in Ireland, including introducing the new National Asset Management Agency (NAMA), which is set to play an important role in bolstering the financial health of the Irish financial system. These measures, combined with attractive valuations, have seen Allied Irish Banks' share price increase more than tenfold from its low point in March 2009, although recent concerns regarding the conditions the EU will impose on the Irish banks has reversed a significant portion of the gains. Elsewhere, the investments we hold are well-run banks either in, or with exposure to, economies that have the ability to make a rapid recovery from the global slowdown. We have been investing in banks serving economies that will be able to return to growth by increasing exports, or have a low level of leverage, as this will promote a return to domestic borrowing and spending. India and Indonesia are both examples of such economies. 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. The Indian economy is expected to grow around 6% in the fiscal year to March 2010, last quarter's growth was reported as 6.1%. Banks in India have remained in good financial shape throughout 2008/9. Average quarterly profits increased 48% year-on-year in the results issued up to the 30 June 2009 for the banks that we track. Indian banks remain on modest valuations compared to many other emerging market banks, and the return of the existing government coalition with a stronger mandate, following elections in May 2009, increases the likelihood of bank privatisation. The Fund ended the interim period with investments in Union Bank of India, LIC Housing Finance, Federal Bank and South Indian Bank. Your Fund invested in three of the major banks in Indonesia in July 2009. The Indonesian macro-economy is forecast to have the third strongest GDP growth in Asia in 2009, behind China and India, with growth of between 4% and 4.5% anticipated. The country has very low levels of banking penetration and its banks are well capitalised with strong provisioning in place and highly profitable. The Fund invested in Bank Rakyat Indonesia, Bank Mandiri and Bank Central Asia. In Europe there are a number of countries that we believe will be able to make a rapid recovery from the economic slowdown. For example in Turkey, the Turkish banking system has total loans-to-GDP of less than 40%, which will support domestic demand as confidence returns. Norway, Hungary, Poland and Cyprus are all well-placed to emerge from recession. In addition certain banks have footprints in strong economies, such as Santander with their attractive Latin American franchise and Erste bank with its broad south eastern European portfolio. Finally the Fund has some investment banking exposure in Europe, as well as holdings in financial companies that we feel have a potential for a significant recovery or are highly geared to the turnaround in the economy/market, such as Allied Irish bank, discussed above, and Aviva in the UK. Warrants The bid price of our Warrant Units fell by 11.1% to 180p over the six months to 30th September 2009. Over the full year the Warrant Units' bid price has fallen 67.2%. Each warrant unit entitles the holder to subscribe for 10 Ordinary Shares at an exercise price of 10 pence each. The warrants remain valid until July 2010. Borrowings, Gearing and Liquidity Generally gearing has been rising over the interim period, as equity investments are increased. At the year end gearing stood at 6.5% and had risen to 47.6% by the end of the interim period. The gearing level in the Fund is monitored closely and gearing can be significantly reduced if weak market conditions are anticipated. In general, gearing affects the Company's NAV beneficially when the value of its investments is rising, but affects it adversely in periods when the value of investments is falling. The Company's unsecured term loans total £1.122m, or £11.22m across the ten trusts. There are undrawn facilities of £2.14m, or £21.4m across the ten trusts, all repayable in January 2012. Dividend No interim dividend has been declared for the first half of the year. Investment income has been very low in the first half of the Fund's financial year, due to the removal of the bonds from the portfolio, the suspension of dividend payments by a number of banks in which we are invested and the one-off nature of the VAT refund received last year. The outlook for revenue for the remainder of the Fund's financial year is less certain. Banks are beginning to pay back the capital supplied by their respective governments and are returning to dividend payments. However, it remains in question if sufficient income will be available to continue to pay a dividend in 2010. Risk Your Company is exposed to a number of risks which are detailed in full in the Annual Report. The key market risk arises from the uncertainty regarding the future price performance of the equities held by your Company. If gearing is employed this risk is magnified. 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. In the last eighteen months the Financial Sector has been the focus of an unprecedented financial storm throughout the world. Nevertheless, the Financial Sector remains a large part of the market and constitutes over 22% of the Bloomberg World Index. Banks play a crucial and central role in free market economies, as the response of governments and central banks to the recent crisis has shown; a role that will ensure 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. When gearing is employed the potential impact of changes to interest rates is taken into consideration. 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 majority of the Company's assets are held in securities denominated in foreign currencies and movements in these currencies can significantly affect the total return and net assets. The Company currently has a portion of its loan facility as a multi-currency loan and our borrowings can be used as a "natural" hedge against investments in the matching currency. The fund manager tracks currency movements on a regular basis and hedging is considered on a case-by-case basis. 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 unit price on the London Stock Exchange website go to the Home page and type "BPFU" in the "Price Search" field. Blue Planet Investment Advisers Ltd offers a Blue Planet Investment Trust Savings Scheme via Equiniti Financial Services Limited (on behalf of Lloyds TSB) to enable lump sum investments or regular savings. A request form for the savings scheme application pack is enclosed with these accounts. Board Changes The Board is delighted to welcome a new director, Glenn Cooper, who joined in early October. An experienced corporate financier, Mr. Cooper has sat on the boards of a number of listed companies both in the UK and abroad. We look forward to working with him. Outlook In the Annual Report at the end of March we reported that we had begun to invest some of the Fund's cash reserves into equities, as we felt there was huge scope for share price increases for financial companies. We now know that March 2009 was the turning point that signalled a strong equity market rally, in particular, for financial stocks. There are still substantial problems ahead, ranging from rising bad debts to the pressing need for banks to rebuild capital, as well as the question of how and when governments will withdraw their economic stimulus packages. However, we took the view then that this was the start of a prolonged rally in equity share prices, supported by improving economic indicators, bank results that outstripped their very modest expectations and the continued strong support from governments and central banks. We remain confident that the worst of the economic downturn is behind us and the outlook for financial stocks is much improved. The share prices of many banks had fallen to such low levels that some very sharp rebounds in prices have been experienced. We have positioned ourselves into the banks and other financial companies that we feel represent the best value and whose share prices have the greatest scope for high returns. This has led your Fund's NAV to outperform its benchmark over the interim period. However, equity markets have remained very volatile. We maintain our conviction that the real investment opportunities lie in emerging markets where medium term prospects are so much better than in the developed markets. However we are taking steps to focus our portfolio on liquid stocks that can be readily traded, as we expect some turbulence in equity markets going forward. To that end we have reduced the size of our holding in MDM Bank and sold out of Raiffeisen Bank Aval subsequent to the end of the interim period. It remains our goal to continue to rebuild the value in the portfolio. I would like once again to thank all shareholders for their continuing support. Victoria Killay Chairman 19 November 2009 Income Statement (Unaudited) For the six months ended 30 For the six months ended 30 For the year ended 31 March 2009 September 2009 September 2008 Revenue Capital Total Revenue Capital Total Revenue Capital Total (£) (£) (£) (£) (£) (£) (£) (£) (£) Capital gains/(loss) on investment Net realised gains / - 30,373 30,373 - (630,061) (630,061) - (1,377,681) (1,377,681) (losses) Unrealised gains / - 1,220,986 1,220,986 - (927,531) (927,531) - (1,032,245) (1,032,245) (losses) Exchange losses - 15,854 15,854 - (42,865) (42,865) - (97,123) (97,123) Net capital gains / - 1,267,213 1,267,213 - (1,600,457) (1,600,457) - (2,507,049) (2,507,049) (losses) on investment Income from investments 22,924 - 22,924 150,105 - 150,105 221,505 - 221,505 Bank interest receivable 112 - 112 11,726 - 11,726 21,050 - 21,050 Gross revenue and capital 23,036 1,267,213 1,290,249 161,831 (1,600,457) (1,438,626) 242,555 (2,507,049) (2,264,494) gains / (losses) Administrative expenses (30,579) (10,731) (41,310) (14,079) 5,445 (8,634) (45,617) (5,738) (51,355) Net return before (7,543) 1,256,482 1,248,939 147,752 (1,595,012) (1,447,260) 196,938 (2,512,787) (2,315,849) interest payable and taxation Interest payable (11,750) (11,750) (23,500) (26,868) (26,868) (53,736) (41,384) (41,384) (82,768) Return on ordinary (19,293) 1,244,732 1,225,439 120,884 (1,621,880) (1,500,996) 155,554 (2,554,171) (2,398,617) activities before taxation Taxation on ordinary (1,412) - (1,412) (9,968) - (9,968) (19,534) - (19,534) activities (note 3) Return on ordinary (20,705) 1,244,732 1,224,027 110,916 (1,621,880) (1,510,964) 136,020 (2,554,171) (2,418,151) activities after taxation Return per ordinary share (0.15)p 9.11p 8.96p 0.81p (11.88)p (11.07)p 1.00p (18.70)p (17.70)p - basic (note 4) Return per ordinary share (0.15)p 9.11p 8.96p 0.78p (11.37)p (10.59)p 1.00p (18.70)p (17.70)p - diluted (note 4) 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 (Unaudited) At 30 At 30 At 31 March September September 2009 2009 2008 (£) (£) (£) Fixed assets Equity investments 3,279,031 2,226,038 955,603 Non - equity investments - 490,007 221,250 3,279,031 2,716,045 1,176,853 Current assets Debtors 86,632 396,823 47,214 Cash at Bank and in hand 77,870 189,426 778,896 Creditors: amounts falling due within (66,672) (207,843) (15,641) one year Net current assets 97,830 378,406 810,469 Total assets less current liabilities 3,376,861 3,094,451 1,987,322 Creditors: amounts falling due (1,184,273) (1,115,000) (915,058) after more than one year (note 7) Net assets 2,192,588 1,979,451 1,072,264 Capital and reserves Called-up share capital 136,621 136,609 136,609 Share premium account 1,179,611 1,179,474 1,179,474 Other reserves Capital reserve - realised 976,002 1,779,406 955,504 Capital reserve - investment holding (210,290) (1,326,135) (1,434,524) losses Capital redemption reserve 8,450 8,450 8,450 Warrant reserve 59,846 59,875 59,875 Revenue reserve 42,348 141,772 166,876 Shareholders' funds 2,192,588 1,979,451 1,072,264 Net asset value per ordinary share - 16.05p 14.49p 7.85p basic (note 4) Net asset value per ordinary share - 15.11p 13.79p 7.85p diluted (note 4) Statement of Directors' responsibilities The Directors confirm that this set of condensed financial statements has been prepared in accordance with the ASB's Statement " Half Yearly Financial Reports" and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 On behalf of the Board Victoria W Killay Chairman 19 November 2009 Cash Flow Statement (Unaudited) For the six For the six For the year months months ended ended ended 30 September 2008 31 March 30 September 2009 2009 (£) (£) (£) Operating activities Investment income received 64,651 141,465 175,155 Interest received 113 12,653 21,977 Investment management and (24,454) (44,443) (67,451) administration fees paid Cash paid to and on behalf of directors (2,060) (3,020) (5,120) Other cash payments (17,744) (18,993) 15,667 Net cash inflow from operating 20,506 87,662 140,228 activities (note 6) Servicing of finance Interest paid (23,369) (58,208) (88,491) Taxation Taxation recovered - - 648 Capital expenditure and financial investment Purchase of investments (8,721,748) (9,132,247) (11,723,399) Sale of investments 7,837,341 9,647,056 13,125,947 Cash (outflow) / inflow before financ (887,270) 544,263 1,454,933 ing Equity dividend paid (note 5) (103,823) - - Management of liquid resources Cash withdrawn from deposit - 255,143 5,636,844 Cash placed on deposit - - (5,431,318) Financing Sale of treasury shares - 100 100 Proceeds from share issue - 670 670 Repayment of Loan - (1,572,236) (1,840,941) Loan advanced 275,983 - - Decrease in cash (715,110) (772,060) (179,712) Reconciliation of Movements in Shareholders' Funds (Unaudited) Share Share Capital Capital Capital Warrant Revenue Total capital premium redemption reserve-realised reserve- reserve reserve shareholders' reserve investment funds £ £ £ holding £ £ £ losses £ £ For the six months ended 30 September 2009 Shareholders' funds at 1 136,609 1,179,474 8,450 955,504 (1,434,524) 59,875 166,876 1,072,264 April 2009 Proceeds of share issue 12 108 - - - - - 120 Transfer from warrant - 29 - - - (29) - - reserve Return on ordinary - - - 20,498 1,224,234 - (20,705) 1,224,027 activities after taxation Dividend paid during the - - - - - - (103,823) (103,823) period Shareholders' funds at 136,621 1,179,611 8,450 976,002 (210,290) 59,846 42,348 2,192,588 30 September 2009 For the six months ended 30 September 2008 Shareholders' funds 136,542 1,178,688 8,450 2,525,661 (450,510) 60,058 30,756 3,489,645 at 1 April 2008 Proceeds of share 67 603 - - - - - 670 issue Transfer from - 183 - - - (183) - - warrant reserve Return on ordinary - - - (746,255) (875,625) - 110,916 (1,510,964) activities after taxation Sale of treasury - - - - - - 100 100 shares Shareholders' funds 136,609 1,179,474 8,450 1,779,406 (1,326,135) 59,875 141,772 1,979,451 at 30 September 2008 For the year ended 31 March 2009 Shareholders' funds 136,542 1,178,688 8,450 2,525,661 (450,510) 60,058 30,756 3,489,645 at 1 April 2008 Proceeds of share 67 603 - - - - - 670 issue Transfer from - 183 - - - (183) - - warrant reserve Return on ordinary - - - (1,570,157) (984,014) - 136,020 (2,418,151) activities after taxation Sale of treasury - - - - - - 100 100 shares Shareholders' funds 136,609 1,179,474 8,450 955,504 (1,434,524) 59,875 166,876 1,072,264 at 31 March 2009 Notes 1. The financial statements for the six months to 30 September 2009 have been prepared on the basis of the accounting policies set out in the Company's Annual Reports and Accounts as at 31 March 2009 and in accordance with the statement on half year financial reports issued by the ASB and applicable UK law and accounting standards. 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 relief is charged to capital. 3. The taxation charge arises wholly from overseas withholding tax on investment income. 4. The return per ordinary share is based upon the following figures: 5. 30 Sept 2009 30 Sept 2008 31 Mar 2009 Revenue return (£) (20,705) 110,916 136,020 Capital return (£) 1,244,732 (1,621,880) (2,554,171) Weighted average 13,661,621 13,655,738 13,658,319 number of ordinary shares in issue during the period - basic Weighted average number of ordinary shares 13,661,621 14,263,413 13,658,319 in issue during the period - diluted At 1 April 2009 the Company had 251,660 warrants in issue. On 31 July 2009 120 warrants were exercised leaving 251,540 warrants in issue. Each warrant confers the right, exercisable on 31 July 2010, or, if later, 30 days after the distribution of the Annual Report and Accounts, to subscribe for 10 new ordinary shares at a price of £0.10 per share. The net asset value per ordinary share is calculated on the 13,662,100 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 asset value per share exceeds the exercise price of £0.10. 5. No interim dividend is proposed and a final dividend of 0.76p was paid for the year ended 31 March 2009 on 7 August 2009. 6. Cash Flow Statement Reconciliation of net revenue return to net 30 Sept 30 Sept 31 Mar cash inflow from operating activities 2009 2008 2009 £ £ £ Net return before interest payable and (7,543) 147,752 196,938 taxation Administrative expenses charged to Capital (10,731) 5,445 (5,738) Decrease/ (increase) in other debtors 38,829 (50,163) (27,664) Increase/ (decrease) in other creditors 1,467 (5,196) (6,093) Tax suffered on investment income (1,516) (10,176) (17,215) Net cash inflow from operating activities 20,506 87,662 140,228 Reconciliation of net cash flow to movement 30 Sept 30 Sept 31 Mar in net debt 2009 2008 2009 £ £ £ (Decrease) in cash balances (715,110) (772,060) (179,712) Cash withdrawn from deposit - (255,143) (205,526) Repayment of loan - 1,572,236 1,840,941 Loan advanced (275,983) - - Changes in net debt resulting from cash flows (991,093) 545,033 1,455,703 Exchange differences 15,854 (42,865) (97,123) Movement in net debt in the period (975,239) 502,168 1,358,580 7. Creditors falling due after more than one year include bank loans which are subject to a covenant which sets a maximum gearing threshold. Details of the loans outstanding at 30 September 2009 were as follows: Amount (£) Interest Rate Repayment Date (%) Sterling Loan 750,000 5.99 23 January 2012 Sterling Loan 372,273 1.02 23 January 2012 8. At 30 September 2009 the Company had authority to buy back 2,049,000 of its own shares in accordance with the authority granted at the Annual General Meeting on 4 August 2009. No shares were bought back during the period under review. 9. The figures and financial information for the year ended 31 March 2009 are extracted from the latest published accounts of the Company and do not constitute statutory accounts for the period as defined in section 434 of the Companies Act 2006. 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 498(2) or 498(3) of the Companies Act 2006. Portfolio Information As at 30 September 2009 Valuation % of Portfolio (£) Equities 8,966 BP Global Financials-A Class Eire £435,741 13.0% 14,264 Bank Vozrozhdenie Russia £356,940 10.6% 801,355 MDM Bank Russia £312,391 9.3% 13,381 Hartford Financial Services United £221,877 6.6% Group States 7,010 American International Group United £193,259 5.8% States 49,972 Allied Irish Banks Plc Eire £149,819 4.5% 118,177 Freddie Mac United £133,101 4.0% States 34,600 Union Bank India Ltd - IPC India £107,956 3.2% 10,375 LIC Housing Finance - IPC India £104,187 3.1% 21,530 Aviva Plc United £96,390 2.9% Kingdom 15,241 Prudential Plc United £91,675 2.7% Kingdom 741 Goldman Sachs Group Inc. United £85,331 2.5% States 8,050 Bank of America Corp United £85,025 2.5% States 1,596 Direxion Financial Bull 3X United £82,019 2.4% States 8,019 Banco Santander SA Spain £80,799 2.4% 148,050 Bank Rakyat Indonesia Indonesia £72,366 2.1% 18,954 Federal Bank Ltd - IPC India £62,146 1.9% 12,659 Bank of Cyprus Ltd Cyprus £58,906 1.8% 40,109 Asya Katilim Bankasi AS Turkey £52,462 1.6% 7,083 PKO Bank Polski SA Poland £51,740 1.5% 31,959 South Indian Bank - IPC India £51,729 1.5% 2,749 OTP Bank Nyrt. Hungary £49,083 1.5% 1,725 Erste Group Bank AG Austria £47,813 1.4% 45,932 Fannie Mae United £43,685 1.3% States 7,100 Dexia (Belgium Line) Belgium £40,972 1.2% 1,177 Credit Suisse Switzerland £40,828 1.2% 783 BNP Paribas France £39,160 1.2% 4,618 DNB NOR ASA Norway £33,359 1.0% 5,511 MBIA Inc. United £26,759 0.8% States 75,685 Bank Mandiri Indonesia £22,907 0.7% 65,560 Bank Central Asia Indonesia £19,524 0.6% 6,855 Turkiye Garanti Bankasi AS Turkey £16,197 0.5% 549,863 Raiffeisen Bank Aval Ukraine £11,825 0.4% 783 BNP Paribas Rights France £1,060 0.0% Listed £3,279,031 97.7% Investments Cash £77,870 2.3% Total £3,356,901 100.0% 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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