BLUE PLANET FINANCIALS GROWTH & INCOME INVESTMENT TRUSTS PLC
Preliminary Announcement of Results
for the year ended 31st March 2003
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 above named investment trusts is a separate limited company
registered in Scotland, but otherwise they are to all intents and purposes
identical. Unless otherwise stated, the information contained in this
Preliminary Announcement (including the Notes) 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
Financial Record
As at 31 March 2003 2002 2001 2000
Shareholders' funds (�'000) 1,346 1,942 1,947 1,848
Net asset value per share (p) 98.72 139.94 139.43 128.27
Share price (p) 80.65 107.25 99.75 72.50
Discount 18.3% 23.4% 28.5% 43.5%
Year to 31 March 2003 2002 2001 2000
Revenue available
for shareholders (�'000) 50 66 55 71
Return per share (p) 3.65 4.72 3.87 4.93
Dividends per share (net) (p) 3.60 4.00 4.30 4.60
Dividend
A final dividend of 2.25p net has been proposed, payable on 27 June 2003 to
shareholders on the register on 13 June 2003. The ex-dividend date is 11 June
2003. This dividend, together with the interim dividend of 1.35p net paid during
the year, makes a total of 3.60p net (2002 4.0p net) per ordinary share costing
�49,082 (2002 - �55,659). This gives rise to a transfer of �1,052
(2002 - �10,302) to revenue reserve.
Portfolio Information
At 31 March 2003
Top 10 Holdings
% of % of
Equities Valuation Portfolio Portfolio
� 2003 2002
16,000 Alliance & Leicester Ordinary 50p Shares 124,080 8.1 6.2
3,166 BNP Paribas 80,144 5.2 4.7
10,600 Irish Life & Permanent 69,271 4.5 4.0
2,000 Societe Generale Eur 1.25 65,278 4.3 -
Other holdings 483,801 31.5 34.2
822,574 53.6 49.1
Debt Securities
80,000 First Active 11.75% Subord Bonds 129,944 8.5 5.2
80,000 BUPA Finance 10 *% Subord Guar Bonds 2018 95,955 6.2 5.2
70,000 Scottish Life 9% Subordinated Bond 77,070 5.0 3.4
43,000 Skipton Building Society 75,888 4.9 5.3
45,500 Coventry Building Society 12 1/8% PIBS 74,760 4.9 5.4
70,000 NPI 9 5/8% Subordinated Bonds 68,110 4.4 3.9
Other holdings 191,005 12.5 22.5
712,732 46.4 50.9
1,535,306 100.0 100.0
Classification of Investments
At 31 March 2003
Life Investment Fixed Total Total
Banks Assurance Companies Other Interest 2003 2002
% % % % % % %
Austria - - - - - - 6.9
Belgium 3.4 - - - - 3.4 -
France 9.5 - - - - 9.5 4.7
Germany 2.8 - - - - 2.8 5.3
Eire - 4.5 - - 8.5 13.0 9.2
United Kingdom 23.3 9.3 0.7 0.1 37.9 71.3 73.9
Totals 2003 39.0 13.8 0.7 0.1 46.4 100.0
Totals 2002 43.9 5.2 - - 50.9 100.0
Chairman's Statement
Stockmarket Overview & Performance of the Trust.
I have pleasure in announcing a relatively good set of results when compared to
the background of disappointing stock markets. Shareholders will be all too
aware of the impact that the war with Iraq had on markets. Falling stock
markets also placed significant challenges on insurance companies to maintain
solvency requirements in the face of declining equity values. In the UK this
impacted the FTSE 100 Index, which fell 31% for the year to March 31, 2003. The
UK was not alone in experiencing significant falls. The Dow Jones Industrial
Average Index in the United States fell 31% over the same period.
As a result of the challenges mentioned above, the insurance sector was a
notable under performer in this period. In the UK the FTSE 350 Life Assurance
Sector fell 53% whilst the Eurotop Insurance Index in sterling terms fell 61.6%.
The unit price of Blue Planet Financials Growth and Income Investment Trust fell
24.8%, which was less than the reduction in its net asset value per share of
29.4%. These movements allowed the discount of the share price to the net asset
value at the year end to improve to 18% from 23% last year.
Despite difficult equity markets, I am delighted to tell shareholders that your
Trust continues to be the best performing fund in its sector and has received
two awards from Standard and Poor's in 2003. It was awarded first place out
of all of the funds in the Financials sector over 1 year and 3 years.
Furthermore, its outstanding performance was also recognised by Trustnet who
ranked it third out of forty-one investment trusts in the Growth and Income
sector over one year and third out of thirty-seven over three years. Trustnet
(www.trustnet.co.uk) is an independent company which measures the performance
of individual investment trusts.
In addition, the performance of your Trust when measured against the performance
of all other investment trusts listed on the London Stock Exchange also
continues to be very good. Figures from Trustnet, shows that your Trust was
twelfth out of two hundred and forty-three investment trusts listed on the
London Stock Exchange over three years. This puts it in the top decile of all
investment trusts.
Outlook
The outlook for stock markets and, in particular the financial sector, has
improved in recent weeks following the cessation of hostilities in Iraq. In our
view, the stock market was materially oversold and we expect further recovery
from these levels.
This will be assisted by steps taken by regulatory authorities to reduce the
solvency requirements of insurance companies and the high levels of liquidity
currently being held in low interest bearing money market accounts some of which
will be switched into equities over the coming months.
We have started the new year well and as we anticipated, our net asset value has
risen by 14% in the month to 30 April 2003 as compared to an 9% rise in the
FTSE 100 index.
The outlook for the financial sector and your Trust is excellent. We expect
continuing dividend growth; appreciating share prices; improved efficiencies
and more takeovers and consolidation. We have a good portfolio of high quality
stocks, a record of outperformance and a market that is seriously undervalued
on a historical basis. We are therefore very confident that we will do very
well over the next 12 to 24 months.
Dividend
The Company increased the equity element of the portfolio from 49% to 54% in
anticipation of a recovery in equity markets. The recovery in equity markets
has since materialised and we are benefiting from this. As I have mentioned in
my previous Annual Statements, this switch is aimed at obtaining higher capital
gains and total returns in the long term, but will reduce income in the short
term. This has resulted in a modest reduction in the dividend for the current
year.
Operating Efficiency
The Board regularly reviews with the Investment Manager the operating efficiency
of the Company to see if costs can be reduced in order to pass any savings on to
shareholders. This review of costs has resulted in the decision to change
custodians and consolidate the information published in newspapers so that the
share price is only published in The Times. Shareholders can view the share
price on the Blue Planet website (www.blueplanet.eu.com) and the London Stock
Exchange website (www.londonstockexchange.com). The Companys' custodian was
changed to Royal Trust Corporation of Canada and their contact details are in
the Trusts Report and Accounts that will be sent to shareholders shortly.
Shareholder Services
I would again take the opportunity to remind shareholders of the services
available to them which include a full range of ISA facilities and a low cost
stock market dealing facility. Full details of these services can be reviewed
on our Investment Managers website at www.blueplanet.eu.com or by contacting
them on 0131 466 6666.
We constantly review the value for money of services to shareholders. A review
of the costs of the Company has resulted in two initiatives to reduce expenses.
The Company has recently changed custodians and has already consolidated the
information published in newspapers so that the share price is only published
in The Times. Shareholders can also view the share price on the Blue Planet
website (www.blueplanet.eu.com) and the London Stock Exchange website
(www.londonstockexchange.com).
Authority to Purchase Shares
Share buy back powers approved at last year's AGM have been used during the
period when 25,000 shares were bought back. These purchases have been
beneficial to the share price and the net asset value per share. A resolution
will be submitted at the Annual General Meeting which would permit the Directors
to make share repurchases where appropriate. The Directors recommend that the
authority for share buy backs be renewed.
Philip Court
Chairman
30 May 2003
Investment Manager's Report
Investment Policy and Objective
The objective of the ten Blue Planet Financials Growth and Income Investment
Trusts is to provide investors with a high level of income combined with capital
growth and the opportunity to profit from the ongoing rationalisation of the
Financial Services sector.
Investments
The Trusts invest in UK and European equities and bonds issued by quoted
financial companies (including former mutuals), and PIBS and bonds issued by
building societies and life assurance companies or their subsidiaries with the
objective of obtaining both capital growth and a dividend yield in excess of the
FTSE All-Share Index.
Portfolio Performance Analysis
As noted in the Chairman's report, this has been a relatively good period for
the Trust against the major equity indices, as the table below clearly
illustrates:
Index name Change year to Change 31 March 2003
31 March 2003 to 30 April 2003
BP Financials G&I Investment Trusts plc NAV -29% +14%
FTSE 100 -31% +9%
Eurotop 100 -34% +12%
Eurotop Financials -39% +18%
Dow Jones Industrial -31% +5%
FT Fixed Interest +4% 0%
as at May 14 2003
Returns are expressed in Sterling Terms
Source: Data from Bloomberg, Table by Blue Planet Investment Management Ltd.
Over the period, the Net Asset Value has fallen 29% and the share price 25%.
In the period March 2003 to April 2003, the Net Asset Value has increased 14%
and the share price is unchanged.
It is encouraging to note that despite such a disappointing environment, the
Trust had a number of outstanding successes. Notable amongst them were:
* Credit Lyonnais which rose 35.1% from last year end until the holding was
sold. The holding benefited from the agreed merger with Credit Agricole of
France.
* Erste Bank which rose 21.1%. This holding has performed very well in the
previous year and was sold following the announcement of a rights issue.
* First Active subordinated bonds rose 6% slightly outperforming the trend in
other corporate bonds.
It is therefore reassuring to see that despite the difficult markets the
majority of banks have continued to see growth both in earnings and dividends.
The Trust has performed extremely well both relative to the major stockmarket
indices and against other similar investment trusts. This record of
outperformance has been steadily built up over a number of years and has now
been recognised by Standards & Poor's and Trustnet, to which the Chairman has
already referred.
Transactions
As you are aware, the Board, advised by the Investment Manager, believe that
long term returns will be maximised by building up the equity element of the
portfolio and reducing the fixed interest element. This is because your Board
believes 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. Holdings of fixed interest securities were reduced over the
period and holdings of equities increased. Transactions during the period
reflect this policy.
Gearing
Blue Planet Financials Growth and Income Investment Trusts employ gearing in
anticipation that returns from stock markets over the medium term will exceed
the cost of borrowing money. When portfolio values fall as they have done in
the last year the gearing acts to amplify the reduction in value. The total
portfolio fell 22.1% before the impact of gearing is taken into account. With
the gearing adjustment the net value of the portfolio fell 30.7%.
Outlook
Your Investment Manager feels very positive about the outlook for stock markets
and, in particular, the financial sector. The UK equity market has reacted
positively to the end of military action in Iraq, bouncing significantly from
its oversold mid-March position. Valuations, however, remain undemanding by any
conventional yardstick, with many Blue Chip financial stocks yielding in excess
of cash deposits and government bonds.
To exploit this opportunity, we will continue to increase the overall equity
component of the Trusts over the coming months. We anticipate that the
financial sector will be in the vanguard of a steady equity market re-rating,
which augurs well for the performance of the Trusts over the coming years.
We believe that the prospects for steady medium term performance by the Trusts
are exceptional.
Blue Planet Investment Management Ltd
30 May 2003
Statement of Total Return
(incorporating the revenue account)
for the year ended 31 March 2003
2003 2002
Notes Revenue Capital Total Revenue Capital Total
(�) (�) (�) (�) (�) (�)
Capital gains
/(losses) on investments
Net realised gains - 288,424 288,424 - 78,664 78,664
Unrealised (losses) - (833,002) (833,002) - (56,511) (56,511)
Exchange gain - 2,013 2,013
Net capital (losses)
/gains on investments - (542,565) (542,565) - 22,153 22,153
Income from investments 122,845 - 122,845 141,280 - 141,280
Bank interest receivable 6,905 - 6,905 4,594 - 4,594
Gross revenue and
capital gains/(losses) 129,750 (542,565) (412,815) 145,874 22,153 168,027
Administrative expenses (49,079) (14,252) (63,331) (45,059) (16,013) (61,072)
Net return before
interest payable
and taxation 80,671 (556,817) (476,146) 100,815 6,140 106,955
Interest payable (22,446) (22,446) (44,892) (21,028) (21,028) (42,056)
Return on ordinary
activities before
taxation 58,225 (579,263) (521,038) 79,787 (14,888) 64,899
Taxation on return
on ordinary activities (8,091) 6,535 (1,556) (13,826) 8,789 (5,037)
Return on ordinary
activities after
Taxation 50,134 (572,728) (522,594) 65,961 (6,099) 59,862
Dividends
Interim dividend
of 1.35p paid
(2002 - 1.5p) (18,406) - (18,406) (20,961) - (20,961)
Final dividend
of 2.25p
(2002 - 2.5p) (30,676) - (30,676) (34,698) - (34,698)
(49,082) - (49,082) (55,659) - (55,659)
Transfer to/(from)
reserves 1,052 (572,728) (571,676) 10,302 (6,099) 4,203
Return per ordinary
share - basic 2 3.65 (41.72) (38.07) 4.72 (0.44) 4.28
Return per ordinary
share - diluted 2 3.65 (41.72) (38.07) 4.71 (0.44) 4.27
The Revenue column of this 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 31 March 2003
2003 2002
(�) (�) (�) (�)
Fixed assets
Equity investments 822,574 1,136,405
Non - equity investments 712,732 1,178,414
1,535,306 2,314,819
Current assets
Debtors 32,834 44,741
Cash at bank 571,933 402,262
604,767 447,003
Creditors: amounts falling
due within one year (44,185) (69,600)
Net current assets 560,582 377,403
Total assets less current liabilities 2,095,888 2,692,222
Creditors: amounts due after
more than one year 750,000 750,000
Net assets 1,345,888 1,942,222
Capital and reserves
Called-up share capital 136,338 138,790
Share premium account 1,168,609 1,168,062
Other reserves
Capital reserve - realised 414,012 180,889
Capital reserve - unrealised (475,595) 355,395
Capital redemption reserve 7,950 5,450
Warrant reserve 63,403 63,517
Revenue reserve 31,171 30,119
Equity shareholders' funds 1,345,888 1,942,222
Net asset value per ordinary share - basic 98.72 139.94
Net asset value per ordinary share - diluted n/a 133.50
Cash Flow Statement
for the year ended 31 March 2003
2003 2002
(�) (�) (�) (�)
Operating activities
Investment income received 125,859 138,369
Interest received 7,440 3,419
Investment management and
secretarial fees paid (32,280) (31,826)
Cash paid to and on behalf of
directors (2,733) (2,700)
Other cash payments (32,853) (27,698)
Net cash inflow from operating
activities 65,433 79,564
Servicing of finance
Interest paid (44,891) (47,315)
Taxation
Taxation recovered - 17,090
Corporation tax paid (10,057) -
Capital expenditure and
financial investment
Purchase of investments (696,720) (42,775)
Sale of investments 931,654 331,291
Net cash inflow from capital
expenditure and financial investment 234,934 288,516
Equity dividends paid (53,103) (60,057)
Financing
Purchase of own shares for
cancellation (25,138) (2,538)
Proceeds from share issue 480 1,120
Net cash outflow from financing (24,658) (1,418)
Increase in cash 167,658 276,380
NOTES:
1. The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 March 2003 or 2002, but is derived
from those accounts. Statutory accounts for 2002 have been delivered to the
Registrar of Companies and those for 2003 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 statements
under s237(2) or (3) Companies Act 1985.
2. Return per ordinary share
2003 2002
The return per ordinary share is
based upon the following figures:
Revenue return 50,134 65,961
Capital return (572,728) (6,099)
Weighted average of ordinary shares
in issue during year - basic 1,372,946 1,396,787
Weighted average of ordinary shares
in issue during year - diluted 1,372,946 1,399,157
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 1,363,380 being the number of ordinary shares in issue at the year end. Net
asset dilution occurs from the potential exercise of outstanding warrants and is
assumed only to take place if the net assets per share exceeds the exercise
price of �1.
[END]