Blue Planet Worldwide Financials Investment Trust plc
Preliminary Announcement
for year ended 31 July 2007
Financial Record
As at 31 July
2007 2006 2005 2004 2003
Net assets less other current
liabilities (�'000) 50,850 40,382 23,759 18,163 19,275
Loans (�'000) (19,884) (13,897) (7,000) (7,000) (7,000)
Shareholder's funds (�'000) 30,966 26,485 16,759 11,163 12,275
Net asset value per share (p) 216.76 185.79 117.56 78.31 86.11
Share price (p) - (Bid) 180.00 162.00 86.00 52.00 65.00
Discount (%) 17.0 12.8 26.8 33.6 24.5
Gearing (%)* 63.8 40.7 41.4 49.5 32.0
Year to 31 July 2007 2006 2005 2004 2003
Revenue available for shareholders (�'000) (427) 385 202 385 440
Revenue return per share (p) (3.00) 2.70 1.42 2.70 3.09
Total return per share (p) 32.89 69.33 41.56 (5.30) 3.96
Total dividends per share (net) (p) - 2.10 1.40 2.50 3.00
Dividend yield on our shares (%) - 1.30 1.63 4.81 4.62
Dividend yield on FTSE All Share Index (%) 3.65 2.68 3.17 3.22 3.30
Expenses ratio - net basis (%) ** 3.69 3.79 3.82 4.06 4.22
Expenses ratio - gross basis (%) *** 2.19 2.21 2.52 2.54 2.58
* Net debt as a percentage of shareholders' funds
** Net basis - Administrative expenses as a percentage of the average net asset value of the Company
*** Gross basis - Administrative expenses as a percentage of the average gross asset value of the Company
Portfolio Information
As at 31 July 2007 Valuation(�) 2007 2006
% of Portfolio % of Portfolio
Equities
6 ,847,274 URSA Bank Russia 7,416,124 15.0%
93,844 BP Global Financials - A Class Eire 6,176,890 12.5%
1,810,456 Bank Millennium SA Poland 4,114,936 8.4%
107,681 Erste Bank Der Osterreichische Austria 4,013,173 8.1%
938,225 Unicredito Italiano SPA Italy 3,950,514 8.0%
74,660 Bank Zachodni WBK SA Poland 3,725,284 7.6%
225,584 Piraeus Bank S.A. Greece 3,699,058 7.5%
307,162 PKO Bank Polski SA Poland 3,152,539 6.4%
361,699 Bank of Cyprus Ltd Cyprus 3,041,085 6.2%
124,817 Commerzbank AG Germany 2,660,583 5.4%
1,275,000 Sberbank Russia 2,576,677 5.2%
2,949,982 Bank VTB North-West Russia 2,512,477 5.1%
32,584 Hypo Real Estate Holding Germany 988,272 2.0%
50,440,924 Ural-Siberian Bank Russia 665,510 1.4%
2,666,667 Raiffeisen Bank Aval Ukraine 305,735 0.6%
10,824 ICICI BANK LTD ADR India 236,170 0.5%
4,930 Banco Nossa Caixa SA Brazil 40,494 0.1%
115 Nordea Bank AB Sweden 920 0.0%
20 VTB Bank OJSC-GDR-REG S/W1 Russia 105 0.0%
Total 49,276,546 100% 100%
Yield 0.92% 3.1%
The yield represents the income from investments as a percentage of the cost of the portfolio.
Classification of Investments
At 31 July 2007
Investment Total Total
Banks Companies Others 2007 2006
% % % % %
Poland 22.4 - - 22.4 19.7
France - - - - 22.5
Russia 26.7 - - 26.7 17.7
Brazil 0.1 - - 0.1 14.5
Austria 8.1 - - 8.1 7.5
Switzerland - - - - 3.5
Denmark - - - - 2.4
Ireland - - - - 4.6
Ukraine 0.6 - - 0.6 -
India 0.5 - - 0.5 -
Italy 8.0 - - 8.0 -
Germany 7.4 - - 7.4 -
Eire - 12.5 - 12.5 -
Cyprus 6.2 - - 6.2 -
Greece 7.5 - - 7.5 7.6
Totals 2007 87.5 12.5 - 100.0 -
Totals 2006 94.5 4.6 0.9 - 100.0
Benchmark* 63.8 3.1 33.1 100.0 -
* Our benchmark is the Bloomberg World Financials index.
Chairman's Statement
The past year has been a difficult and erratic one in the stock markets. Despite this your Fund has been able to report
a total return of 17.8% (net asset value appreciation plus reinvested dividends) for the year to 31st July 2007. The net
asset value per share ("NAV") of the Fund was 185.79p at the start of the financial year and had risen to 216.76p by the
end. When this figure is added to the exceptional growth achieved for the previous two years, the three year total
return of the Fund's NAV is 197.0%.
We began the year with a share price of 162.0p and ended it with one of 180.0p per share. This is a rise of 11.1% over
the year. If dividends are included the total return on the share price was 12.3%. This compares to a 5.3% total return
by the Fund's benchmark index the Bloomberg Worldwide Financial Index.
In the Autumn of 2006 the markets were going from strength-to-strength and your Fund's share price climbed swiftly
through into 2007, when it reached a high of 314.0p (bid price) towards the end of January 2007. However the climate of
rising interest rates and early warning signs of problems in the property and unsecured lending sectors in the US and
the UK, led us to anticipate problems in the market and the gearing in the Fund was reduced through November 2006.
Indeed a sharp sell-off occurred in the markets at the end of February and the start of March 2007. Your Fund positioned
itself for further problems arising from the US sub-prime problem filtering through to the mainstream economy, by
reducing gearing to zero and putting hedging in place to protect the portfolio. Default rates for US sub-prime mortgages
were rising and at that time 45 major US mortgage lenders had stopped new lending, many because they had gone bankrupt
or been bought out. The dollar weakened significantly and the British pound broke through the $2 level for the first
time in fourteen and a half years. However, as markets continued to rise we responded to pressures to re-enter the
market. This left us in a position of the Fund being geared as volatility in the markets increased rapidly in July and
markets fell sharply, impacting in particular financial stocks. Your Fund's share price was adversely affected and had
dropped back to 180p/share by the end of the financial year.
Portfolio
The financial results of the companies we have invested in have been very strong in 2006 and have remained strong
year-to-date in 2007. The Net Income in the 2006 financial year grew between 24% and 192% for nine of our top ten
investments (The Blue Planet Global Financials Fund has only been in existence since April 2006). In the first half of
2007 our top ten investments reported profit increases of between 17% and 68%. The performance of investments is
discussed in more detail in the Investment Manager's Report.
The chart below shows the changes in the geographic distribution of the portfolio over the year. The changes in the
holdings were made in order to reposition the portfolio to capture the best growth opportunities in strong economies. In
the past year changes have been more frequent as the gearing in the Fund has been adjusted to match the prevailing
market conditions. At the end of August 2007 we were ungeared, with �22m of cash and undrawn loans facilities that we
will invest in the market once we think it has reached the bottom.
With regards to geographic distribution, we continue to have a sizeable proportion of the fund invested in Central and
Eastern Europe. Our two key markets in this region at the end of the financial year were Russia and Poland. The
Investment Manager visited Russia most recently in July 2007 and met with a number of banks. These banks all reported
that business was booming. Most banks are focusing on the very rapid growth in retail banking. The macroeconomic
background in Russia remains strong. It has a large and very asset rich land mass, commodity prices are high, it has
huge foreign exchange reserves, and there has been a significant increase in real household income. At the end of the
financial year we held investments in four Russian banks. The Company increased its investments in Poland during 2006.
Poland's GDP growth was 6.1% in 2006 and in the first quarter of 2007 growth reached 7.4%, the fastest growth rate in
ten years. This means that GDP growth has accelerated in each of the last eight quarters. It is being driven by strong
domestic demand and rising business confidence. At the end of the year we were invested in three banks in Poland, one of
which has subsequently been sold.
Your Company continued to invest in South Eastern Europe. In addition to an existing investment in Greece we invested in
Cyprus. Both countries had GDP growth in 2006 of approximately 4% and banking sectors that are expanding rapidly. The
Greek banking sector is gradually being deregulated, and banking penetration is low versus other EMU countries. Cyprus
is an established and growing international business centre, particularly for companies from Russia and South-East
Europe.
The investment in Raiffeisen in Austria was sold as its principle attraction was its banking operations in Russia, and
we continue to think that direct investment in Russian banks is a better strategy to this end. However your Fund
invested in The Unicredit Group in Italy and Erste Bank in Austria, both of which have a broad coverage of Emerging
European markets, as well as a leading presence in their home countries. These investments have subsequently been
substantially sold to remove gearing in the Fund and in anticipation of further falls in stock markets. We also sold our
investments in France, Sweden and in Brazil for similar reasons.
A fuller analysis of the portfolio movements is provided in the Investment Manager's Report.
Independent Rating of Your Fund
In April 2007 your Fund was awarded the prestigious "Best Specialist Trust" award for 2006 by the Investment Trust
magazine. This is the second year in the row that the award has been given to a Trust managed by Blue Planet Investment
Management Ltd. A sister fund, Blue Planet European Financials Investment Trust, won the award last year. We are
grateful to Investment Trust Magazine for the recognition of our performance.
Even with the more challenging market conditions, the fund ranks well against its peers. Trustnet is an independent
company providing factual, unbiased assessments of fund's performance to private investors and Independent Financial
Advisers. At the Fund's year end it was ranked 4th out of all 212 investment trusts analysed by Trustnet for NAV
performance over the three year period to the end of July 2007 in the conventional investment trust category. This
equates to a 3.3% percentile ranking. Over one year, difficulties in the financial markets mean that the Fund has
dropped down the rankings to the 33.7% percentile for NAV performance over one year, however we are committed to, and
feel confident that we will, return to being amongst the best performing investment trusts in the next upturn in the
credit cycle.
Dividend
The board has recommended that no final dividend is paid this year. In the interim accounts we were hopeful that
sufficient income would be received to support paying a dividend. However, the level of investment income received by
your Company fell by 53% over the year, due to the timing of sales and purchases of investments. The costs that were set
against that income rose. As a result the revenue return per share turned negative. The company continues to provide a
total return well above its benchmark through its strong element of capital gains. The appreciation of your Fund's share
price was 11.1% against a benchmark appreciation of 2.4%. This is the first time in five years that a dividend has not
been paid and, as we appreciate the importance of dividends to shareholders, we plan to resume a dividend payment when
it is possible to do so.
Borrowings and gearing
Gearing for the fund is currently provided by a �19.9 m revolving unsecured loan facility, in place until 28 January
2008. The purpose of the loan is to fund the acquisition of investments in the expectation that the returns from these
will exceed the cost of the loan. The gearing levels in the Fund are monitored closely and all gearing can be removed
from the Fund if weak market conditions are anticipated, as gearing tends to magnify the performance of the underlying
fund, positively when investments rise, but negatively when investments fall.
Blue Planet Services and Price Information Sources
Blue Planet Investment Management offers a Blue Planet Savings Plan to enable lump sum investments or regular savings.
This is administered on their behalf by Lloyds TSB plc and has recently been updated and may be obtained by completing
and returning the form enclosed with these accounts or from Blue Planet by calling them on 0131 466 6666. Blue Planet
has also arranged a low cost stock-market dealing service via Stocktrade. Full details of these services, which are
proving very popular with investors, can be found in this annual report, and are also given on their website
www.blueplanet.eu.
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 "BPW" in the "Price Search"
field. Our share price is also published in the Financial Times.
Outlook
Over the past year the growth in the Fund's share price and underlying net asset value exceeded its benchmark index. We
aim to stay ahead of the markets in the remainder of 2007, which we predict will continue to be a difficult time for
equities. We have locked in profits we have made in recent years, by selectively selling investments and holding cash,
as well as ensuring we have hedging in place on the portfolio. This is in anticipation of further stock market weakness
as those banks and hedge funds exposed to the US mortgage market and liquidity problems continue to dispense bad news to
the market.
The rise in US house prices over the preceding years has tallied with a corresponding decline in the savings rate as
individuals used their positive housing equity to fuel the consumer boom, and as these gains evaporate, consumers will
need to return to more traditional means of savings, which will mean a significant reduction in consumer spending. The
strength of consumer spending in the US over the past few years has been a key driver of growth in the US economy.
Without it, recession seems much more likely.
The fallout in the mortgage market and the associated slowdown in the US will affect share prices globally, despite the
sharp rise in profitability of many banks. According to The Banker banks around the world continued to produce record
profits and increased profitability for the fourth successive year in 2006. The Banker survey showed that aggregate
pre-tax profits for the top 1000 banks in 2006 rose almost 22% to reach $786bn, more than three times the $223bn
aggregate profits in their 2002 survey. The banks we are invested in increased profits by considerably more than the
average, as can be seen from the Investment Manager's Report.
Since the end of the Fund's financial year our share price has fallen further, below the levels at the start of this
financial year, as the stock markets have indeed continued to be weak. Over time we expect markets to settle down. We
are confident that the share prices of our portfolio of dynamically expanding retail banks in strong economies, none of
which, to the best of our knowledge, has any exposure to the US sub-prime issues, will gain rapidly as their earnings
momentum is appreciated, and with it our share price. We will also use the cash resources we have at our disposal to buy
selective banks once the market has bottomed.
We believe that our approach of specialising in only the financial sector and running a relatively concentrated
portfolio of well researched stocks is set continue to deliver good returns, and we look forward to the future with
confidence.
I thank you for your continuing support and look forward to welcoming you to the Annual General Meeting on the 15th
November 2007.
Philip Court
Chairman
27th September 2007
Investment Manager's Report
Portfolio Performance Analysis
As has already been highlighted in the Chairman's Statement, the Trust's shares provided a total return of 12.3% over
the year, more than twice the Fund's benchmark index which had a total return of 5.3% in Sterling terms. The Fund's NAV
made a total return of 17.8% and ended the period at 216.76p.
Blue Planet Investment Management is a specialist financials only manager who achieves outperformance through
specialisation. Our goal is to become the best manager of financial portfolios in the world. We back our investment
process with our own money, and the manager is the largest investor in all of our long-only funds.
Asset Allocation
Blue Planet Investment Management's investment process is top down. First, we identify countries with good economic
prospects and acceptable levels of 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.
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 we are contemplating
investing in. 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 India, Italy,
Poland, Russia, Sweden and Ukraine. In addition, we had meetings in the UK with the management of many overseas
financial institutions.
In 2007 we again looked primarily to the global banking sector for our investments. In particular we are invested in
retail banks in strong, soundly run, emerging economies. Most of the Fund's capital has been invested in Europe over the
past year.
In Eastern Europe Russia was our key market being our largest geographic holding. The Russian economy and the Russian
banking sector are growing strongly. In a mid-year visit to the country, the nine banks visited by the Investment
Manager all reported that business was booming. In 2006 corporate lending was growing at a rate of 30% per annum and
retail loans at 80%. Retail loans had already grown by a factor of 12 from 2001 to 2005 and reached 19% of total bank
loans. Russia has a population of 143m, which is almost half the total Euro area population, meaning the underdeveloped
banking sector has huge growth potential. The Russian banking market is also highly fragmented, with 1,293 banks
licensed by the central bank as of the end of 2006. This provides considerable scope for consolidation, as the vast
majority of banks are small regional banks and many are `pocket-banks' that primarily do business with their own
industrial group. In March 2007 the Fund sold its investment in Sberbank. The initial investment was made in June 2005
and was added to several times. The revenue from the sale was nearly 3.5 times the total investment costs, meaning that
the share price had increased nearly 350% from the average purchase price. The Fund has since re-invested in Sberbank,
and at the end of the financial year the Fund was also invested in Ursa Bank, Bank VTB Northwest and Ural-Siberian
Bank..
At the year end Poland was our second largest geographic holding. Poland's GDP growth was 6.1% in 2006 and accelerated
further to 7.4% in the first quarter of 2007. Domestic demand and exports were both strong and are forecast to remain
so. Inflation remained at a low level for 2006, but is now rising, however it remains modest at 2.3% at the end of the
first quarter of 2007. The labour market is very tight, with the number of vacancies with no one to fill the roles
increasing, which is pushing up wage growth. As disposable income increases, across the whole banking market in 2006,
deposits were up almost 10% and loans up 33%, with mortgage loans increasing by more than 50%. Your Company held
investments in Bank Millenium, Bank Zachodni WBK and PKO Bank Polski at the end of the financial year. The holding in
PKO Bank Polski has subsequently been sold to remove gearing from the Fund.
During the year the Fund invested in Cyprus in South East Europe. This increased our holdings in the region, which
already included a holding in Piraeus Bank in Greece. Greece has one of the highest GDP growth rates in the EU, at 4% in
2006. The fund invested in Cyprus for the first time in January 2007, in Bank of Cyprus. Cyprus is experiencing healthy
economic growth and it is building its status as an international business centre, fuelled by a corporate tax rate of
10% and favourable double taxation treaties, especially with Russia.
Additional exposure to European Emerging Markets was provided through investments in banks with a wide portfolio of
subsidiaries in these markets. During the year investments were made in The Unicredit Group in Italy and Erste Bank in
Austria, both of which meet this criteria. The Erste Bank holding has subsequently been sold and the Unicredit Group
holding reduced considerably to remove gearing from the Fund and build up cash balances. The investment in Raiffeisen in
Austria was sold as its principle attraction was its banking operations in Russia, and we continue to think that direct
investment in Russian banks is a better strategy to this end.
The Fund made an investment in Blue Planet's Global Financials Fund, listed in Dublin, which has been added to during
the year. A key motivation for this investment is protection against falling stock markets in 2007. As a hedge fund this
investment provides an opportunity to benefit from periods of market weakness as well as market strength through its
ability to take short positions.
Despite the continued strength of the Latin American economies the Fund sold down its investment in Nossa Caixa in
Brazil. During 2006 Nossa Caixa undertook a major expansion programme, which appeared to be overly ambitious and
expensive. In addition it paid a very high price to renew its contract to service the State of Sao Paolo's 1.1million
public servant payrolls for the next five years. Both of these badly affected the stock's share price and we could not
see a recovery taking place in the foreseeable future.
During the year investments were made in Sweden as the Swedish election result in 2006 gave power to Sweden's
opposition, who have a reform and tax cutting mandate. However the rising concerns over an overheating in the Baltic
State economies, to which all the major Swedish banks are exposed, and concerns about the markets in general, led to the
Fund taking profits from these investments. Other investments that your company took profits in this year were those in
France, as revenues dwindled in retail banking in a slowing French economy and also in Investment Bank UBS, in
Switzerland, as the investment banking environment became tougher.
Small investments were made in both India and Ukraine before the end of the Fund's financial year, following investment
research trips to both these countries. In India a small investment was made in ICICI Bank. India has significant growth
potential. In April 2007 the Reserve Bank of India forecast GDP growth of 8.5% yoy for 2007. The rate of inflation
picked up earlier this year, but ended July at 4.45%. Indian banks are growing at a fast pace. Results for the period
April to June 2007 showed the largest 30 banks in India saw a 41% growth in profits year-on-year. We believe that India
will present a number of excellent long-term investment opportunities, and some further investment has been made since
the year end. The Ukraine has a population of 47 million. At the end of 2006 there were 169 registered banks in the
country, with the largest five controlling only 38% of the market. This gives considerable scope for consolidation and
merger and acquisition activity. The country reported GDP growth of 7.9% year-on-year for the first half of 2007 and its
banking system is currently underpenetrated. The Fund has made a small investment in Raiffeisen Bank Aval in the
Ukraine.
Over the Fund's financial year its most profitable unrealised investment has been Millenium Bank in Poland, which
returned 124% over the period. Its most profitable realised investment was Sberbank that made a total return of 102%
from the start of the year until the point it was sold in March 2007. This stock has subsequently been repurchased for
the portfolio. Its least successful investment was Kazkommertzbank Bank in Kazachstan that was sold at a loss of 18% in
Sterling terms.
Currency
The fund is exposed to a range of currencies, with the greatest exposure being to the Euro. The table below shows the
percentage of the portfolio holdings in each currency at the end of the fund's financial year and how those currencies
have performed against the British pound over the period of the year in which the investments have been held in the
Trust.
Currency % of equity portfolio Appreciation/depreciation
in currency against � for the length of
time the related stocks have been
held in the portfolio
Euro 49.7% -1.5%
USD 27.2% -8.8%
Polish Zloty 22.4% 2.3%
Others 0.7% n/a
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 Company's assets are almost
exclusively held in securities denominated in foreign currencies, the largest exposure is to the Euro currency. The US
dollar has been very weak in 2006 and 2007. It is the currency in which our Russian shares are denominated. However, as
the currency underlying these stocks is the Russian Rouble the US dollar currency fluctuations should be reflected by
corresponding changes in the share price.
Risk
Market risk arises mainly from the uncertainty regarding the future price performance of the equities held by your
Company. This risk is magnified by gearing that is used from time to time to bolster performance and the fact that 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. Interest-rate risks arise through the loans
that the company uses to gear the Fund.
In mitigation the specialist expertise of Blue Planet Investment Management Ltd reduces risk. Blue Planet Investment
Management Ltd believes that more knowledge equals less risk. The financials sector in which we are invested is the
largest sector of the market and constitutes approximately a quarter of the Bloomberg World Index. The prices of the
individual securities invested in are monitored on a daily basis and the Board, which meets quarterly, imposes borrowing
limits to ensure gearing levels are appropriate to market conditions. 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 fund manager tracks currency movements on a regular basis and
hedging is considered on a case-by-case basis.
Credit risk arises from the exposure to non-delivery of an investment that has been purchased. The Company only buys
and sells investment through Blue Planet Investment Management's approved list of brokers.
Top 10 Holdings at year end (Excl. Cash)
1. URSA Bank OJSC (formerly Sibacadembank CLS).
URSA Bank OJSC ("URSA Bank") was established in 1990. It has rapidly expanded over the past 16 years and is now a full
service bank. It is partly owned by international financial institutions, and partly owned by the founders of the bank
and management. Historically it was largely based in the Siberian Federal District which comprises 30% of Russian
territory and has 21 million inhabitants. As of 1st October 2006 it had 153 branches and 260 ATMs. In 2006 it
initiated a merger with Uralvneshtorgbank, a leader in the Urals Federal District. This was completed on 22nd December
2006, and has considerably expanded the scope of the bank with Uralvneshtorgbank's 80 branches and 80 ATMs, and has led
to the renaming of the bank to URSA Bank. This new combined entity is now one of the top 20 Russian banks.
The Russian economy continues to surge ahead. GDP growth was 6.7% in 2006 and the current account surplus exceeds 10%
with its vast population of 143m and its huge reserves of natural resources the underdeveloped banking sector, is, and
will continue, to expand rapidly. URSA has released its 2006 IFRS financials which show that total loans increased 133%
year-on-year in 2006 with retail loans increasing 136%, against a banking sector retail loan growth rate of 80%. Retail
deposits increased 46% and corporate deposits increased 81%. Net profits increased 192% in the year. This increase is
not reflected in the earnings per share figure as the number of shares in issue also increased in 2006. The bank is
significantly outgrowing the market, and due to this rate of growth it is expected to follow its 2005 and 2006 share
issues with a further share issue this year. The bank forecasts continued strong performance in 2007 when it plans to
expand its range of retail products, place an emphasis on gaining business from small and medium sized enterprises and
improve its cross-selling to corporate customers, as well as continuing to expand the size of the bank through branch
and ATM network expansion.
URSA's first half 2007 results reported net income of $55m. This compares to a full year profit in 2006 of $68m and is a
68% increase to the combined half year profit for the two separate banks (Sibacadembank & Uralvneshtorgbank). So far
this year its mortgage portfolio, which constitutes 30% of its retail loans, increased 2.5-fold to end June 2007 at
$540m, up from $214m at the end of 2006. Its growth in consumer loans and car lending was also spectacular. The bank has
sufficient funding in place to support its rapid growth until mid-2009.
We purchased our holding in the bank in January 2007. In its eight months in the portfolio the shares total return was
-5% in sterling terms. We do not expect this share price weakness to continue longer-term as the bank continues to
rapidly grow its profits and its earnings per share grow.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2006 2005 Change
Total Assets Rouble 111.6bn Rouble 44.5bn +150.8%
Cost : Income Ratio 48.3% 61.7% -13.4pp
Net Profit after Taxation Rouble 1,464m Rouble 501m +192.2%
Earnings per Share Rouble 1.38 Rouble 1.44 -4.2%
Dividends per Share 0 0 -
Dividend Cover n/a n/a -
Return on Equity 31.6% 28.6% +3.0pp
2. Blue Planet Global Financials
The Blue Planet Global Financials Fund, is an open-ended Cayman Islands exempted company. The Company listed on the
Irish Stock Exchange on 31st March 2006. 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.
The Blue Planet Global Financials Fund reported its first year end figures on 31st December 2006. The NAV price for the
Class B EURO restricted shares was Euro116.990 at the end of the company's financial year. Over the period since its
launch on 31st March 2006, the Fund has returned 16.99% gross and 13.59% net. If annualised the net return of 13.59%
would equate to an annual return of 18.12%. The fund's performance led it to be ranked as the second best performing
hedge fund over six months to the end of December in the Euro Global Equity category in the Eurohedge magazine January
2007 edition.
Investing in the Blue Planet Global Financials Fund provides your Company with the opportunity to take advantage of this
fund's ability to make both strategic and tactical assets allocations that can profit from both rising and falling
market conditions.
First half 2007 financials have not yet been released, but the NAV for the class B EURO restricted shares stood at
Euro100.21 at the end of the June 2007. This is an increase of 21% from June 2006.
Your Company has been invested in this fund since its launch. The size of its holding was increased in December 2007.
Its total return in sterling terms for the 12 month period it has been held in the portfolio is 10%.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2006 2005 Change
Total Assets Euro35.7m n/a -
Cost : Income Ratio n/a n/a -
Net Profit after Taxation Euro2.8m n/a -
Net Asset Value per Share (Class B Euro shares) Euro113.592 n/a -
Dividends per Share Euro 0 n/a -
Dividend Cover n/a n/a -
Return on Equity n/a n/a -
3. Bank Millenium SA.
Bank Millennium SA was founded in Poland in 1989. It is principally a commercial bank, but has four separate business
lines, Millennium for retail customers, Millennium Biznes for small businesses, Millennium PRESTIGE for affluent
customers and Bankowosc Predsiebiorstw for medium and large sized businesses. It offers core banking services,
brokerage, investment funds, leasing services and pension and savings plans and is the fifth largest bank in Poland.
Millennium bcp of Portugal increased its ownership share of Millennium at the end of 2006 to 65.51% from its previous
50% holding.
In Poland GDP growth accelerated through 2006. The full year figure for GDP growth was 6.1%, reaching 6.5% in the final
quarter of 2006 and 7.4% in the first quarter of 2007. The Polish banking sector has huge development potential. The
penetration of residential mortgages, mutual funds and credit cards, as a percentage of GDP, are less than half those
found in the more developed European Union countries.
Millennium has a strong organic growth strategy that is particularly focused on the retail sector. It is investing in a
branch expansion and upgrading programme that began in 2006, and is due to complete in mid-2008. This programme was
originally planned to add 158 new branches to its network. This has now been extended by a further 100 branches. The
company is growing its market share of the mortgage market by capturing 14% of the new mortgage production in Poland.
This has led its market share of the Polish mortgage market to increase from 7.1% at the end of 2005 to 9.7% at the end
of 2006 and 10.9% at the end of the first half of 2007. Their total loan portfolio grew 57% year-on-year to the end of
June 2007.
Millennium's 2006 results showed an impressive 44% increase in net earnings per share over 2005, once the gain from the
sale of its subsidiary PZU has been excluded from the 2005 results. The growth in business was achieved with a 12%
increase in operating costs, as a result of the branch expansion and remodelling programme. Millennium anticipate that
continued strong domestic consumption will drive performance in 2007, and that a slowing in the growth in the mortgage
market in 2007 will be offset by an increase in corporate lending.
The first half 2007 results were excellent. Loans continued to grow strongly as did Millenium's share of the mutual fund
market. Net income for the first half of 2007 was up 52% on the first half of 2006.
We held Millennium in the investment portfolio throughout the year. We added to the holding during the year. The total
return for the portion of the investment held for the entire year is 124% in sterling terms.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2006 2005 Change
Total Assets PLN 24.7bn PLN 22.2bn +11.3%
Cost : Income Ratio 67.7% 74.4% -6.7pp
Net Profit after Taxation (Underlying Net Profit)* PLN 300.8m PLN 567.1m (208.3m) -47.0% (+44.4%)
Earnings per Share PLN 0.35 PLN 0.67 -47.8%
Dividends per Share PLN 0.17 PLN 0.54 -68.5%
Dividend Cover 2.1x 1.2x -
Return on Equity (underlying Return on Equity)* 13.6% 28.0% (10.5%) -14.4pp (+3.1pp)
* Underlying excludes gain of PLN 465m before tax on the sale of PZU in 2005.
4. Erste Bank Der Osterreichische
Erste Bank Der Osterreichische ("Erste Bank") is the 3rd largest bank in Austria with an approx 17% market share and is
a major retail bank in Central Europe with businesses in Romania, The Czech Republic, Slovakia, Hungary, Croatia, Serbia
and now in Ukraine. Its businesses in Romania, Czech & Slovakia hold dominate market positions. Erste Bank conducted an
initial public offering in 1997. In recent years it has grown its business primarily by acquisitions, the largest of
which was BCR in Romania, which it completed in October 2006.
Its operations in Czech, Slovakia and its home business in Austria are currently its main profit drivers. It is hoping
this year to add BCR to this list, which in terms of operating income (excluding restructuring charges) at the end of
the first half of 2007 is 25% of its business and is thus crucial to Erste Bank's long-term growth strategy. BCR was a
major acquisition for Erste Bank last year and required a significant restructuring effort, which is still ongoing. In
Romania GDP growth in the first quarter of 2007 was 5.8%, driven by domestic demand which is booming. There is great
growth potential as the percentage of banking assets to GDP is low in Romania, it stood at about 50% in 2006, compared
to nearly 200% in Austria. Loan growth rates in mid-2007 were above 50% and deposit rates above 25%. Croatia, Serbia and
Ukraine are all in investment phases for Erste Bank. The bank is also putting a new organisation structure in place and
are targeting major efficiency gains through this process.
In 2006 Erste Bank reported a profit growth of 30%, with loans increasing 68% in its Central European operations. It
achieved a 4% increase in earnings per share, despite a 25% increase in the average number of shares in issue, following
its capital increase in 2006.
The bank's results for the first half of 2007 showed a 25% increase in net income. Its results included significantly
higher costs in 2006 over 2005 as the reorganisation in BCR continues. However the results from BCR were strong, with
loans up 23% year to date and Erste Bank reiterating its target of a 40% increase in net profit in BCR in 2007.
We have held this stock in our portfolio since June 2007. In its one month in the portfolio it has provided a total
return of -7%. The markets have been weak during this period and we would expect a much stronger performance from this
stock longer-term.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2006 2005 Change
Total Assets Euro 181.7 bn Euro 152.7 bn +19.0%
Cost : Income Ratio 59.5% 61.7% -2.2pp
Net Profit after Taxation Euro bn Euro bn +61.3%
Earnings per Share Euro 3.10 Euro 2.98 +4.0%
Dividends per Share Euro0.65 Euro0.55 +18.2%
Dividend Cover 4.8x 5.4x
Return on Equity 13.7% 19.5% -5.8pp
5. Unicredito Italiano SPA
Unicredito Italiano (UCI) is the largest banking group in Italy by assets. It is a universal bank that currently has a
network of over 7,200 branches in over 40 countries worldwide. It has expanded rapidly beyond Italy in the last 15
years. In 2005 UCI acquired the HVB Group in Germany, which included Bank Austria-Creditanstalt and a number of Eastern
European banks which were added to its own already extensive coverage in Eastern European markets. At the time this deal
was the largest cross-border merger in the financial sector in Europe. More than half of Group's revenues are derived
from the combined Italy and Germany. Other important markets are that of Austria and Poland, which between them account
for more then 20% of the group's revenue. UCI have recently announced the acquisition of Capitalia in Italy. This
acquisition is due to be completed in October 2007.
UCI are active on many fronts. Their acquisition in Italy will give them an approximately 16% share of Italy's
profitable retail banking market. At the same time the company has pending acquisitions going through in the Ukraine
(Ukrotsbank) and Kazachstan (ATF), as well as being in the process of merging a major part of its own bank in Poland,
Bank BPH, with Bank Pekao, which it attained control of when it acquired the HVB Group. All this activity gives UCI many
opportunities in high growth markets, as well as restructuring and revenue growth opportunities in the more established
European markets.
In 2006 UCI's net profit increased by 61%, while ROE rose to 16.7%, from 10.7% in 2005. Group revenue rose by 13%,
boosted by revenue growth of over 20% in the CEE countries. In 2007 their plan was to finalise their organisational
model and create a strong, shared new group identity and corporate culture, whilst continuing to seize any opportunities
for growth that are presented by the market.
The Group's net profit increased by 17% in the first half of 2007, as revenues increased 10% and costs were kept under
control. Operating income was up 22%, but fewer one-off items and higher taxes brought the net income figure down to
17%. The contribution from the CEE division was a 73% year-on-year increase in net income. These results were ahead of
UCI targets and bode well for the remainder of 2007.
We held UCI in the portfolio for 2 months, from May 2007. In this time the total return of the shares has been a
disappointing -12% in sterling terms. Apart from the volatile market conditions, shareholders appear to be concerned
about whether UCI's acquisition plans are over-ambitious. We feel that the bank has a strong integration track record
and a very well-placed set of subsidiaries, which will benefit the share price in the longer term.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2006 2005 Change
Total Assets Euro 823.3 bn Euro 787.3 bn +4.6%
Cost : Income Ratio 56.5% 61.7% -5.2pp
Net Profit after Taxation Euro 5.45 bn Euro 3.38bn +61.2%
Earnings per Share Euro 0.53 Euro 0.33 +60.6%
Dividends per Share Euro0.24 Euro0.22 +9.1%
Dividend Cover 2.2x 1.5x
Return on Equity 16.7% 10.7% +6.0pp
6. Bank Zachodni WBK SA.
Bank Zachodni WBK S.A. ("BZW") is a universal bank that provides a wide range of banking services. Historically its
niche was business banking. BZW was formed as a result of a merger between Bank Zachodni WBK S.A. and Wielkopolski Bank
Kredytowy S.A. on 13th June 2001. Concentrated mainly in the western part of Poland, it has approximately a 5% market
share. Its major shareholder is Allied Irish Banks Group, who holds 70.5% of BZW's stock.
BZW has a highly regarded management team who have an aggressive expansion plan in place. The bank is developing its
presence in large cities throughout the country and plans to increase its distribution network from 400 branches to 450
by mid-2008. In 2006 BZW increased its profits by 47%. Revenue grew by 24% as BZW sold more mutual funds and its
brokerage business had a very successful year. Total loans at the bank grew by 22% in 2006, with mortgages increasing by
36%. Costs rose by almost 12% as personnel expenses increased.
BZW's first half 2007 results continued on the same positive trend as their 2006 results. They reported record profits,
up 32% on the first half of 2006 as business continued to grow strongly in all areas, especially mutual funds and
brokerage. Loans increased, with cash loans up 51%, mortgage loans up 46% and business loans increasing 35%. Costs
increased in line with their plans as their expansion programme continued.
We purchased this stock in August 2006 and increased our holdings in both December 2006 and January 2007. The total
return for the part of the holding held since August 2006 is 56% in sterling terms.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2006 2005 Change
Total Assets PLN 33.0bn PLN 29.3bn +12.6%
Cost : Income Ratio 55.1% 61.4% -6.3pp
Net Profit after Taxation PLN 758 m PLN 516 m +46.9%
Earnings per Share PLN 10.39 PLN 7.08 +46.8%
Dividends per Share PLN 6.0 PLN 6.0 0%
Dividend Cover 1.7x 1.2x
Return on Equity 23.7% 18.0% +5.7pp
7. Piraeus Bank SA
Piraeus Bank SA ("Piraeus") is the fifth largest bank in Greece. They offer universal banking services to consumers and
businesses in Greece and South Eastern Europe via a rapidly expanding network. At the end of 2006, they had 536
branches, of which 301 are in Greece and 235 abroad, and they also have the electronic banking network of Winbank.
In 2006 Greek GDP grew by 4%. The fundamental engines of growth for the banking sector remain in place: it is one of
the fastest growing economies of Europe, the banking sector is gradually being deregulated, and credit penetration is
low versus other EMU countries. Outside Greece, Piraeus is active in Albania (estimated GDP growth for 2007: 6%),
Romania (6%), Bulgaria (6.5%), Serbia (5%) and Egypt (6%), all of which are offer high credit and deposit growth from an
under-penetrated base. They have also indicated interest in buying a bank in the Ukraine.
In 2006, Piraeus published underlying earnings growth of 28%, driven by an overall growth of 31% in customer loans and
good control of costs despite the increase in the number of branches. They outperformed the market in all loan
categories, with growth of 31% in mortgage loans, 25% in unsecured consumer loans, 36% in loans to small businesses and
26% in loans to large corporate clients. Asset quality improved significantly, with the ratio of Loans in Default to
Total Loans one of the lowest in the market. They remain well-capitalised and highly profitable.
In the newly-published Business Plan for 2007-2010, they target a compound annual growth rate of 24% in net income and
26% in loans as well as further improvement in the profitability, cost:income and asset quality ratios. They aim to
increase the return on equity invested in their international operations and to have 25% of profit coming from outside
Greece by 2010, via continued branch expansion and selected acquisitions.
In the first half of 2007 Piraeus reported a substantial 44% increase in earnings per share, as net income increased
43%, and the company increased its earnings forecast for the end of 2007.
We have held the stock since the start of the year and added to it several times. The entire holding was sold in March
2007, at which point it had provided a total return of 34% in sterling terms for the year at this point. The stock was
purchased for the Fund again in June 2007. Its total return in this on month in the portfolio was -8% in sterling terms,
due to the weakness in the markets in this month.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2006 2005 Change
Total Assets Euro 30.9bn Euro23.5bn 31.5%
Cost : Income Ratio 48.4% 57.9% -9.5pp
Net Profit after Taxation (Underlying Net Profit)* Euro435m(Euro337m) Euro 264m 64.8%(27.7%)
Earnings per Share (Underlying Earnings per Share )** Euro 1.66(Euro1.28) Euro 1.33 24.8%(-3.8%)
Dividends per Share Euro 0.64 Euro 0.50 28.0%
Dividend Cover 2.6x 2.7x
Return on Equity 29.0% 21.0% +8.0pp
* Piraeus booked a gain on the sale of their stake in a joint venture with ING Group in the first quarter of 2006.
** Underlying earnings per share fell due to the issuance of shares in 2006.
8. PKO Bank Polski SA
PKO Bank Polski SA (PKO BP) is the largest and one of the oldest Polish banks. It has an extensive branch network with
more than 1,200 branches around the country. It is particularly dominant in retail banking with an approximately 27%
market share and a 35% share of the mortgage lending market. PKO BP is also developing in the promising Ukrainian market
through investment into Kredobank, of which it owns almost 70%. PKO BP is itself owned 51% by the Polish government.
With its dominant position in the retail banking market PKO BP is well positioned to benefit from the rapid growth in
retail banking in Poland. 2007 is the first year of the introduction of its new strategy: `New Opening, Growth Strategy
for PKO BP 2007-2012'. Its main aims include a further strengthening of the banks position in retail banking through
improved cross-selling of a simplified product portfolio through its current branch and agent network as well as
improving its position in the SME market. It will reduce headcount more aggressively, focusing on the middle and back
office, as its new IT platform is rolled out. The bank aims to double its income and net profit and intends to maintain
its position as one of the most profitable banks in Poland and the regions with the gross ROE of 30% and the C/I index
maintained at 40%.
At the end of 2006 PKO BP reported a net profit increase of 24%. It ended the year with over 6 million accounts, as its
deposit base grew 10% and consumer loans increased 20%, SME loans by 42% and corporate loans by 11%.
PKO's net profit increased by 35% in the first half of 2007 compared to the corresponding period in 2006. Consumer loans
increased 18% year-on-year and total outstanding mortgages increased 37%. The bank's Return on Equity jumped 4.4
percentage points, to 25.6%, over the year to 30th June 2007.
We have held the stock since the start of the year and the holding was sold in November 2006. In these four months the
stock made a total return of 7% in sterling terms. The stock was repurchased for the portfolio in May 2007. In its two
months in the portfolio it has made a 15% return in sterling terms.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2006 2005 Change
Total Assets PLN 101.3 m PLN 91.6 m 10.6%
Cost : Income Ratio 60.3% 64.4% -4.1pp
Net Profit after Taxation PLN 2.15 bn PLN 1.73 bn +24.3%
Earnings per Share PLN 2.15 PLN 1.73 +24.3%
Dividends per Share PLN 0.98 PLN 0.80 +22.5%
Dividend Cover 2.2x 2.2x
Return on Equity 22.7% 19.7% +3.0pp
9. Bank of Cyprus Ltd.
Bank of Cyprus is the largest bank in Cyprus and offers universal banking services to retail and corporate clients.
Their banking operations are in Cyprus (46%), Greece (43%), UK and Australia and they are due to commence operations in
Romania and Russia from 2007.
Cyprus' GDP grew by 3.8% in 2006 having recovered strongly from a dip in 2002/3. Growth in corporate lending has jumped
to 9% from 1-2% in 2004/5 and retail lending has accelerated to nearly 30% over the same period. It has low inflation
and unemployment, a corporate tax rate of 10%, an educated workforce, strong legal and accountancy systems, and
accession to EMU is projected for 2008. Due to double-taxation treaties with various countries, Cyprus is an
established and growing international business centre, particularly for companies from Russia and South-Eastern Europe.
Its international business accounts for almost half the bank's profits from Cyprus.
The bank has a market share of 4% in Greece where it has a young network (120 branches). Another 70 branches are
planned by the end of 2009, and growth in Greek profit is expected to accelerate rapidly as the network matures.
In 2006, Bank of Cyprus achieved growth in net profit of 153% (following 88% growth in 2005) and set a target of 31%
profit growth for 2007. The increase in 2006 was driven by strong revenue growth, good control of costs and an
improvement in the quality of the loan book. The bank also published its strategy and targets for the next three years.
The targets include: net profit growth of at least 25% per year, loans to grow at least 20% per year, and continued
improvement in the cost:income, asset quality and return on equity ratios. They aim to have 20% of a significantly
larger total loan portfolio outside Greece and Cyprus by 2011, and are interested in selected acquisitions in the
Ukraine as well as Romania and Russia. Marfin Popular Bank unsuccessfully attempted a merger with Bank of Cyprus this
year. This did not find favour with the Bank of Cyprus management who prefer to pursue their organic growth strategy.
In the first half of 2007 Bank of Cyprus reported strong financial results, with profits up 58%, as revenues increased
22% and its Greek operations increased considerably in profitability.
We purchased Bank of Cyprus for the investment portfolio in January 2007. The total return of the investment is
currently 16% in sterling terms.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2006 2005 Change
Total Assets Euro25.2bn Euro22.1bn 14.0%
Cost : Income Ratio 46.7% 56.7% -10.0pp
Net Profit after Taxation Euro317m Euro125m 153.6%
Earnings per Share (diluted) 57.7c 24.9c 131.7%
Dividends per Share 29.0c 12.0c 143%
Dividend Cover 2.0x 2.1x
Return on Equity 21.7% 11.9% +9.8pp
10. Commerzbank.
Commerzbank is Germany's second-largest quoted bank with approximately 36,000 employees. It has primarily a domestic
focus, but also operates in other European country and has a small presence in the US and Asia. It has more than 8
million customers worldwide. In 2006 Commerzbank acquired Eurohypo, Europe's largest institution specialising in
financing real-estate and public-sector projects.
Germany is enjoying an economic recovery. GDP growth is forecast to be 3.0% in 2007. Unemployment fell 17% between April
2006 and April 2007. Business confidence has increased significantly, with German companies planning to increase their
investments in the next twelve months and there is a renewed growth in consumer spending. This growth should fuel
increased demand for bank loans and savings products.
In 2006 Commerzbank reported record profit figures, up 35% on 2005 profits. The SME, Corporates and Commercial Real
Estate segments were the highest contributors. This strong result was achieved through a combination of revenue growth
and a curbing of costs. This led to a cost efficiency ratio below 60% for the first time.
At the end of the first half of 2007 profits had increased by 28% over the first half of 2006. These results improved
the efficiency ratio of the bank still further to a cost/income ratio of 53.9%. The bank forecasts that it will beat its
published full year targets for 2007.
We purchased Commerzbank for the portfolio in May 2007. In its two months it provided a disappointing total return of
-14%, as the German banking sector suffered heavily in the market sell-off in July 2007. A continuation of these
excellent financial results should see its share price recover longer-term.
Key statistics relating to this investment are given below:
For the year ended 31 December: 2006 2005 Change
Total Assets Euro608.3bn Euro444.9bn +36.7%
Cost : Income Ratio 59.7% 67.2% -7.5pp
Net Profit after Taxation Euro1,597m Euro1,187m +34.5%
Earnings per Share Euro2.43 Euro1.97 +23.4%
Dividends per Share Euro0.75 Euro0.50 +50.0%
Dividend Cover 3.2x 3.9x
Return on Equity 14.1% 12.8% +1.3pp
Transactions
Over the year, sales of investments realised �77.5m and purchases totalled �84.6m
Blue Planet Investment Management Limited
27th September 2007
Income Statement
(incorporating the revenue account) 2007 2006
for the year ended 31 July 2007
Notes Revenue(�) Capital(�) Total(�) Revenue(�) Capital(�) Total(�)
Capital gains / (losses) on investments
Net realised gains - 12,453,739 12,453,739 - 7,600,765 7,600,765
Unrealised (losses) / gains on investments
- (6,014,942)(6,014,942) - 2,594,255 2,594,255
Exchange (losses) / gains - (588,140) (588,140) - (205,463) (205,463)
Net capital gains on investments - 5,850,657 5,850,657 - 9,989,557 9,989,557
Income from investments 433,521 - 433,521 1,222,075 - 1,222,075
Bank interest receivable 153,485 - 153,485 32,099 - 32,099
Gross revenue and capital gains 587,006 5,850,657 6,437,663 1,254,174 9,989,557 11,243,731
Administrative expenses (662,446) (416,100) (1,078,546) (480,943) (258,034) (738,977)
Net return before interest payable and taxation
(75,440) 5,434,557 5,359,117 773,231 9,731,523 10,504,754
Interest payable (313,576) 313,576) (627,152) (233,392)(233,392) (466,784)
Return on ordinary activities before taxation
(389,016) 5,120,981 4,731,965 539,839 9,498,131 10,037,970
Taxation on net return on ordinary activities
(38,421) - (38,421) (154,823) - (154,823)
Return on ordinary activities after taxation
(427,437) 5,120,981 4,693,544 385,016 9,498,131 9,883,147
Return per ordinary share 2 (3.00)p 35.89p 32.89p 2.70p 66.63p 69.33p
The total columns of the statement represent the profit & loss accounts 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 July 2007
Notes(�) 2007(�) 2006 (�)
Fixed assets
Equity investments 49,276,546 37,572,421
Current assets
Debtors 1,591,067 302,999
Cash at bank 130,896 3,114,817
1,721,963 3,417,816
Creditors: amounts falling due within one year (20,032,647) (608,316)
Net current (liabilities) / assets (18,310,684) 2,809,500
Total assets less current liabilities 30,965,862 40,381,921
Creditors: amounts falling due after more than one year - (13,896,878)
Net assets 30,965,862 26,485,043
Capital and reserves
Called-up share capital 7,142,859 7,127,576
Share premium account 6,021,360 5,950,010
Other reserves
Capital reserve - realised 15,732,209 4,828,524
Capital reserve - unrealised 2,029,436 7,812,140
Revenue reserve 39,998 766,793
Equity shareholders' funds 30,965,862 26,485,043
Net asset value per ordinary share 216.76p 185.79p
The financial statements on pages 25 to 34 were approved by the Board of Directors on 27 September 2007 and were signed
on its behalf by:
Philip Court
Chairman
Reconciliation of Movements in Shareholders' Funds
For the year ended 31 July 2007
Share Share Capital �Capital Revenue Total
capital premium reserve reserve reserve shareholders
-realised -unrealised funds
� � � � � �
Shareholders' funds
at 1 August 2006 7,127,576 5,950,010 4,828,524 7,812,140 766,793 26,485,043
Return on ordinary
activities after taxatio - - 10,903,685 (5,782,704) (427,437) 4,693,544
Proceeds of Share issues 15,283 71,350 - - - 86,633
Dividend paid during
the period - - - - (299,358) (299,358)
Shareholders' funds
at 31 July 2007 7,142,859 6,021,360 15,732,209 2,029,436 39,998 30,695,862
For the year ended 31 July 2006
Share Share Capital �Capital Revenue Total
capital premium reserve reserve reserve shareholders
-realised -unrealised funds
� � � � � �
Shareholders' funds
at 1 August 2005 7,127,576 5,950,010 (2,075,352) 5,217,885 538,584 16,758,703
Return on ordinary
activities after taxation - - 6,903,876 2,594,255 385,016 10,205,513
Dividend paid during
the period - - - - (156,807) (156,807)
Shareholders' funds
at 31 July 2006 7,127,576 5,950,010 4,828,524 7,812,140 766,793 26,485,043
Cash Flow Statement Notes 2007 2006
� � � �
Operating activities
Investment income received 390,921 1,025,193
Interest received 153,485 32,099
Investment management and
administration fees paid (760,187) (497,504)
Cash paid to and on behalf of directors (44,000) (41,800)
Other cash payments (251,408) (182,087)
Net cash (outflow)/inflow from operating activities (511,189) 335,901
Servicing of finance
Interest paid (602,043) (473,160)
Taxation
Taxation recovered 9,237 6,560
Capital expenditure and financial investment
Purchase of investments (84,571,951) (30,290,540)
Sale of investments 77,505,704 26,939,807
(7,066,247) (3,350,733)
Cash (outflow) / inflow before financing (8,170,242) (3,481,432)
Equity dividend paid (299,358) (156,807)
Management of liquid resources
Cash placed on deposits (191,902,960) (7,473,717)
Cash withdrawn from deposit 195,017,651 4,399,732
3,114,691 (3,073,985)
Financing
Proceed from share issue 86,633
Loans advanced 6,519,638 6,970,138
6,606,271
Increase in cash 1,251,362 257,914
Notes
1. The financial information set out in this announcement does not constitute the Company's statutory accounts for the
years ended 31 July 2007 or 31 July 2006 but is derived from those accounts. Statutory accounts for 2006 have been
delivered to the Registrar of Companies and those for 2007 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
2007 2006
The return per ordinary share is based upon the following figures:
Revenue return �(427,437) �385,016
Capital return �5,120,981 �9,498,131
Weighted average number of ordinary shares in issue during the year 14,268,753 14,255,151
The net asset value per ordinary share is calculated on 14,285,718 being the number of ordinary shares in issue at the
year end.
3. The board have decided that no final dividend will be declared this year (2.10p - 2006).
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.
For more information, please visit www.blueplanet.eu
You can also contact the Company on 0131 466 6666 or by emailing info@blueplanet.eu
END
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