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BLUE PLANET INTERNATIONAL FINANCIALS INVESTMENT TRUST PLC - Half-yearly Report

Friday, December 7, 2012 8:51 AM


Blue Planet International Financials Investment Trust plc

Half Yearly Report and Accounts

For the six months ended 31 October 2012

Officers and Advisors                                                          
                                                                               
Directors                             Investment Manager, Administrator and    
                                      Secretary                                
                                                                               
John Tyce (Non-Executive Chairman)    Blue Planet Investment Management Ltd    
                                                                               
Victoria Killay (Non-Executive) -     18a Locker Street                        
appointed on 13 June 2012                                                      
Kenneth Murray (Non-Executive) -      Sliema                                   
appointed on 13 June 2012                                                      
David Thomas (Non-Executive) -        SLM 3124, Malta                          
resigned on 13 June 2012                                                       
Kay Bendall (Non-Executive) -         Telephone No: +356 2131 4309         
   
resigned on 13 June 2012                                                        
                                      Facsimile No: +356 2131 5219             
                                      Local call rate from UK 0845 527 7588      
                                      Email: info@blueplanet.eu                  
                                      www.blueplanet.eu                        
                                                                               
Registered Office                     Registrars               
Greenside House                       Capita Registrars                        
25 Greenside Place                    The Registry                                                                                   Edinburgh EH1 3AA                     34 Beckenham Road    
Telephone No: +44 131 466 6666        Beckenham                              
Facsimile No: +44 131 466 6677        Kent BR3 4TU                         
   
                                                                               
E-mail: info@blueplanet.eu            Shareholder Helpline No: 0871 664 0300   
                                      (calls cost 10p per                      
www.blueplanet.eu                     minute plus network extras, lines are    
                                      open 8.30am-5.30pm (Mon-Fri))              
                                      Overseas: +44 208 639 3399               
                                      E-mail: ssd@capitaregistrars.com             
                                      www.capitaregistrars.com                 
                                                                               
Chartered Accountants & Statutory     Bankers                              
   
Auditors                                                                       
Deloitte LLP                          Lloyds TSB Bank plc                       
Saltire Court                         1st Floor                                 
20 Castle Terrace                     48 Chiswell Street                        
Edinburgh EH1 2DB                     London EC1Y 4XX                            
Stockbroker                           Custodians                                
Fairfax Plc                           RBC Investor Services Trust                
46 Berkeley Square, Mayfair           Riverbank House, 2 Swan Lane 
London W1J 5AT                        London EC4R 3AF            
              

Blue Planet Investment Management Ltd is authorised and regulated by the Malta Financial Services Authority.

Blue Planet International Financials Investment Trust plc is a member of the Association of Investment Companies.

Investment Policy and Objectives

The investment policy of the Company is to invest in securities (including equities, exchange traded funds, equity-related securities, bonds and derivatives) issued by companies, Governments and other types of issuers located throughout the world with the objective of providing investors with a combination of capital growth and income.

The Company has not set maximum exposures for any type of issuer, geographical
regions or sectors which will depend on market conditions and the judgement of
the Board of what is in the best interest of Shareholders. However, a part of
the Company's investments is expected to remain in the financial sector. It
would normally be expected that most of the Company's investments will be in
equities, exchange traded funds, equity-related securities, bonds and
derivatives. However, the Company is not prohibited from investing in other
types of securities. Not more than 15 per cent of the Company's portfolio may
be invested in any one entity at the time the investment is made. There is no
restriction on the amount that may be invested in any one country.
The Company may use derivatives (including, but not limited to, contracts for
differences, futures and options), principally, but not exclusively, for
efficient portfolio management, that is to reduce, transfer or eliminate
investment risk in its investments, including protection against currency
risks. Any use of derivatives for investment purposes will be made on the basis
of the same principles of risk spreading and diversification that apply to the
Company's direct investments.
The Company's Articles permit borrowing up to an amount not exceeding 75% of
Shareholders' funds. The Board will utilise borrowing up to this limit from
time to time to enhance income and capital returns over the long term and may
borrow in Sterling and other currencies.

Financial Record                          Six months  Six months        Year
                                            ended 31    ended 31    ended 30
                                             October August 2011  April 2012
                                                2012 (unaudited)   (audited)
                                         (unaudited)                        
                                                                            
Shareholders' funds (£'000)                   18,975       6,969       5,944
                                                                            
Net asset value per share (p)                  38.35       43.44       37.05
                                                                            
Share price (p) (Bid)                          23.00       26.00        22.0
                                                                            
Discount (%)                                   40.03       40.15       40.60
                                                                            
Gearing (%)*                                   35.23           -       51.00
                                                                            
Return available for shareholders (£             190         132         
93
'000)                                                                       
                                                                            
Revenue return per share (p)                    0.46        0.82        0.58
                                                                            
Total return per share (p)                      2.54     (10.03)     (16.42)
                                                                            
Dividend per share (p)                             -           -           -
                                                                            
Dividend yield on our shares (%)                   -           -           -
                                                                            
Dividend yield on Benchmark Index (%)           4.98        3.01        4.30
                                                                            
Ongoing Charges (%) **                          4.44        5.45        5.55

* Net debt as a percentage of shareholders' funds

** Ongoing charges figure has been prepared in accordance with the AIC's recommended methodology.

Dividend

No interim dividend has been declared.

The Investment Manager

Blue Planet Investment Management Ltd is a Malta based investment management
company. It is an independent firm that specialises in managing investment
trusts and family trusts and has a great deal of experience of managing
investments in the financial sector on a worldwide basis. It is regulated by
the Malta Financial Services Authority.
Blue Planet Investment Management Ltd is 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. Blue Planet Investment Management Ltd also
receives £196,000 per annum in respect of administration and secretarial
services. The investment management, administration and secretarial services
agreements may only be terminated on receipt of two years notice.

Website Information

Please take the time to visit our website:

www.blueplanet.eu

Subscribe to our monthly fact sheet service:

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

To view stock market RNS announcements:

http://www.blueplanet.eu/blueplanet_news.8.html

Interim Management Report

Performance

Over the six months to 31st October 2012 our net asset value ("NAV") rose 3.5%
to 38.35p per share while our share price (bid) rose 4.6%, to 23.0p. The Fund's
benchmark index, the Bloomberg World Financials Index, returned 4.3% over the
same period in Sterling terms.
A key event that took place over the period was the successful completion of
our merger with Blue Planet Financials Growth & Income Investment Trusts No's
1-10 plc and Blue Planet Worldwide Financials Investment Trust plc on 13th June
2012. The costs of that merger were fully provided at 30th April 2012 and were
paid during the period; this was money well spent and the benefits of the
merger, including much lower operating costs, are now feeding through to our
investment performance. In addition, the new, wider investment mandate, which
was introduced at the time of the merger, has reduced the volatility in the
value of our investments.

In the period since the merger our net asset value has risen by 13.1%. This compares with a 6.8% rise in the benchmark index over the same period. Whilst it is early days, the Fund's lower expense ratio and the ability to hold a wider range of investments have so far proved to be successful, and have provided us with a return which is almost double that of the benchmark index.

As well as diversifying the portfolio and targeting stocks that will provide us
with capital growth we have also been focusing on growing our income in order
that we can resume dividend payments to shareholders and I am pleased to say
that we anticipate being able to resume dividend payments at the end of this
financial year.
Portfolio

At the end of the period the Trust had gearing net of cash equal to 35.2% of NAV and its capital was deployed as follows: 88.5% of NAV was invested in equities; 19.2% in preference shares; 29.2% in bonds and 1.7% in cash.

Since the merger we have reduced our exposure to equities and invested a
significant part of our portfolio in preference shares and bonds in order to
provide us with a high and stable income stream. Those investments have also
provided us with good capital growth. By way of example, our holdings of
Santander UK 8.625% and 10.375% preference shares rose in value by 23.2% and
18.6% respectively over the period. Our bonds have also provided us with good
capital gains, with our Lloyds TSB 7.625% 2025 bonds rising by 27.6%, our Aviva
6.875% 2058 by 23.8 and our RBS 5.25% 2049 by 19.1%. Figure 1 shows the
movement in security types during the period.

Figure 1: Portfolio movements - by security type

Security Type                 Oct-12         Apr-12
                                                   
Equity                         63.9%          95.6%
                                                   
Bonds                          21.0%           3.6%
                                                   
Preference Shares              13.9%              -
                                                   
Cash                            1.2%           0.8%
                                                   
Total                         100.0%         100.0%
We have also reduced our exposure to financials since the merger and now have
35.1% of our NAV invested in other sectors. We have added investments in the
energy, telecommunications, utilities and information technology sectors to add
diversity to the portfolio. This has reduced both volatility and the risk
profile of the Fund.
As regards our geographic allocation of capital, 57.4% of NAV was invested in
stocks listed in the UK at the end of the period, of which 31.7% of NAV was in
high yielding bonds and preference shares issued by banks and insurers, the
balance being invested in the equity of insurers, oil stocks, utilities and
asset managers. While we remain wary of the serious problems facing the UK
economy, we were able to buy those stocks on valuations that more than
reflected that risk and which offered attractive dividend yields.
Our second most important geographical market is the US where we have invested
30.3% of NAV. US financial companies suffered badly, although generally
speaking not as badly as their UK and European counterparts, as a result of the
financial crisis and from the severe contraction in the value of US housing
that had until recently persisted for many years. However those institutions
are now well capitalised and have by and large provided for the bad debts that
arose as a result of the financial crisis. They have also met most of the huge
and often spurious legal claims made against them. Consequently much of the
problems that they faced have now been dealt with and with the US housing
market, which is critical to their fortunes, and economy now firmly on the road
to recovery their future prospects are much better. US banks with capital
market businesses also stand to gain from the withdrawal of foreign
participants, such as UBS, from those markets. This will ease competitive
pressures and boost the profitability of those investment banks that remain
especially as the recovery in the US economy gathers pace. Finally, once U.S
banks and insurers have rebuilt their capital ratios, which many already have,
they will be generating excess capital and we would expect to see them hike
dividend payments over the coming years which should help drive their share
prices higher. The Fund is well positioned to benefit from the recovery in the
fortunes of those companies.
By contrast with America, the economic situation in Europe remains bleak with
on-going private sector deleveraging, tight financial conditions, political
chaos and fiscal drag continuing to weigh on the region's economic outlook.
Governments, who have mismanaged their public finances for years are now having
to deal with their monumental errors of judgement and it will be some time
before Europe recovers from those mistakes. There is, however, good value
amongst European stocks and we have focussed what investments we have there on
undervalued, large and solid companies selling products or services for which
there is a low elasticity of demand and that offer high yields. We have done
so, in the hope that those high yields will provide support to the share prices
of those companies until such time as Europe's fortunes start to improve.
With the slowdown in advanced economies in 2012, we have limited our exposure
to emerging markets in the period under review. At the end of the period, we
had 12.0% of NAV invested in the Russian financial and energy sectors. Bank
penetration in Russia is low and as disposable income increases across Russia's
population of 125 million, retail lending will see strong growth for many years
to come.
Dividend

No interim dividend has been declared for the first half of the year although as was mentioned earlier in this report we anticipate being able to resume dividend payments to shareholders at the end of this financial year.

Risk

Your Company is, and will continue to be, exposed to a number of risks which
are detailed in full in the Investment Managers Report in the Annual Report.
The key market risk arises from the uncertainty regarding the future price
performance of the securities held by your Company. If gearing is employed this
risk is magnified.
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 assets
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.

Where investments are made in emerging markets there is a risk of higher volatility in the price performance of these equities and their associated currencies. Political risk and adverse economic circumstances are more likely to arise, putting the value of the investment at a higher risk. The registration and settlement arrangements in emerging markets may be less developed than in more mature markets so operational risks of investing are higher.

Going Concern

The Company's business activities, together with the risk factors likely to
affect its future position are set out in this report. The Directors consider
that the Company has adequate financial resources in the form of readily
realisable listed securities, including cash and loan facilities to continue in
operational existence for the foreseeable future. For this reason they continue
to use the going concern basis in preparing the accounts

Borrowings, Gearing and Liquidity

The Fund ended the interim period with gearing net of cash of 35.2%. At the start of the period, we had no gearing as we were concerned about the very unstable situation that had developed in Europe and in capital markets in general and we wanted to limit our exposure to those risks. Since then things have improved and we re-introduced gearing in July 2012.

The Company financed its gearing by means of a £7m multi-currency, revolving
loan facility which it had with the German bank, HSH Nordbank AG. This matured
on 30th November 2012 and regrettably HSH Nordbank AG has decided to withdraw
from the UK lending market. Consequently, the Board has negotiated a credit
facility with KAS Bank N.V. which will allow the company to continue to gear
its portfolio.
Generally, gearing beneficially affects the Company's NAV when the value of the
portfolio is rising, but adversely affects it in periods when the value of the
portfolio is falling.

Blue Planet Price Information Sources

Shareholders can view the Company's share price and additional information
about the Fund on the website of Blue Planet Investment Management Ltd
(www.blueplanet.eu) and the London Stock Exchange
(www.londonstockexchange.com). To find the Company's share price on the London
Stock Exchange website go to the Home page and type "BLP" in the "Price Search"
field.
Change of Directors
Ms. Victoria Killay and Mr. Kenneth Murray joined the Board of Directors on the
13th June 2012. Ms. Killay was formerly the Chairman of the Blue Planet
Financials Growth & Income Investment Trusts No1-10 plc. Mr. Murray was
previously a non-executive director of Blue Planet Worldwide Financials
Investment Trust plc. Kay Bendall and David Thomas resigned from the Board
on
completion of the merger.
Outlook
The recovery from the debt crises continues, but sluggish global economic
growth, which is an unavoidable consequence of deleveraging, is restricting the
pace of that recovery. Nevertheless, progress is being made and economies and
companies are slowly but surely recovering and stock markets will follow suit.
Governments with large deficits have little option but to reduce their
expenditures to avoid insolvency and bring their finances onto a sustainable
and viable footing. Given the large number of countries that fall into that
category this was always going to have a serious impact on the global economy.
However the process of addressing those deficits, deleveraging and
strengthening balance sheets is now quite well advanced. The critical question
is when the maximum negative effects of those policies will be felt; once that
point has been reached the situation will start to improve with the rate of
improvement accelerating over time.
One peculiarity of the debt crisis was the manner in which it drove
unprecedented numbers of investors to sell assets that they perceived to be
risky, such as equities, and buy so called "risk free" assets such as
Government bonds. This drove yields on those assets down to historically
unprecedented levels and, in some cases even resulted in investors knowingly
accepting negative rates of return on them. That strategy may have appeared
justifiable when risks were perceived as being very high but as risks recede
that flow will reverse and given the very low yields on those assets, it will
give rise to very large losses for the holders of those assets. For example, a
10 year Government bond bought on a yield of 3% could see 33% of its value
wiped out if investors demand an additional one per cent per annum return for
holding such assets. In an environment where returns on equities accelerate
away from those of risk free assets and it is seen as safe to get back into
those higher yielding assets, such an outcome is highly likely. As investors
realise this, it will lead to a stampede out of "risk free" assets and into
riskier assets such as equities both to avoid losses and to obtain higher
returns and this will fuel and accelerate the recovery in equities. That flow
will be further fuelled over the medium to long term as Governments reduce
their deficits and repay the bonds that they issued to finance them. This will
not only reduce the overall pool of assets available for investors to invest in
(i.e. the supply of investments), but it will also increase liquidity as
investors receive back the cash they had tied up in Government securities, some
of it newly printed by central banks specifically for that purpose. This will
have the effect on increasing the supply of money available for investment at
the same time as the pool of possible investments is shrinking and that money
will have to be reinvested somewhere and a large part of it will end up in
equities. This is why we are very bullish about equities over the medium to
long term.
Investor anxiety may persist for a while, until these issues are resolved, but
levels of anxiety have fallen noticeably over recent months and confidence is
returning to the markets. Furthermore, there is still plenty of upside in this
market and with a portfolio of good quality, high yielding stocks with strong
cash-generation abilities and good recovery prospects we are well placed to
profit from that recovery. Consequently, we look forward to the future with
confidence.

I would like to thank all shareholders for your continuing support.

John Tyce
Chairman
7 December 2012
Balance Sheet
                                       At 31 October  At 31 August  At 30 April
                                                2012          2011         2012
                                                   £             £            £
                                                                               
                                         (unaudited)   (unaudited)    (audited)
                                                                               
Fixed assets                                                                   
                                                                               
Listed equity investments                 20,430,767     5,098,517    8,330,920
                                                                               
Listed non - equity investments            5,543,442     2,025,455      321,471
                                                                               
                                          25,974,209     7,123,972    8,652,391
                                                                               
Current assets                                                                 
                                                                               
Debtors                                      202,399        84,294      433,021
                                                                               
Cash at bank and in hand                     314,384     3,397,200       70,314
                                                                               
Creditors: amounts falling due           (7,515,569)     (535,988)  (3,211,949)
within one year (note 7)                                                       
                                                                               
Net current (liabilities) / assets       (6,998,786)     2,945,506  (2,708,614)
                                                                               
Total assets less current                 18,975,423    10,069,478    5,943,777
liabilities                                                                    
                                                                               
Creditors: amounts falling due                     -   (3,100,000)         

-

after more than one year (note 7)                                          
   
                                                                               
Net assets                                18,975,423     6,969,478    5,943,777
                                                                               
Capital and reserves                                                           
                                                                               
Called-up share capital                      497,820     8,288,535    8,021,235
                                                                               
Share premium account                     18,426,406     6,758,327    6,758,327
                                                                               
Other reserves                                                                 
                                                                               
Capital reserve - realised               (9,650,231)   (8,078,198)  (8,638,146)
                                                                               
Capital reserve - investment holding       1,311,974     (145,843)    (572,627)
losses                                                                         
                                                                               
Capital redemption reserve                 8,167,389             -      267,300
                                                                               
Revenue reserve                              222,065       146,657      107,688
                                                                               
Shareholders' funds (note 8)              18,975,423     6,969,478    5,943,777
                                                                               
Net asset value per ordinary share            38.35p        43.44p       

37.05p

(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
John Tyce
Chairman
7 December 2012
Income Statement
                    For the six months ended 31        For the six months ended 31      For the period ended 30 April  
                            October 2012                       August 2011                          2012               
                            (unaudited)                        (unaudited)                        (audited)            
                                                                                                                       
                    Revenue     Capital       Total   Revenue     Capital       Total   Revenue     Capital       Total
                          £           £           £         £           £           £         £           £           £
                                                                                                                       
Capital gains                                                                                                          
/ (losses) on                                                                                                          
investment                                                                                                             
                                                                                                                       
Net realised              - (1,041,140) (1,041,140)         - (2,176,209) (2,176,209)         - (2,613,777) (2,613,777)
losses                                                                                                                 
                                                                                                                       
Unrealised                -   1,859,788   1,859,788         -     601,770     601,770         -     187,873     187,873
gains                                                                                                                  
                                                                                                                       
Exchange                  -     212,427     212,427         -    (94,541)    (94,541)         -    (91,960)    (91,960)
gains /                                                                                                                
(losses)                                                                                                               
                                                                                                                       
Net capital               -   1,031,075   1,031,075         - (1,668,980) (1,668,980)         - (2,517,864) (2,517,864)
gains / (losses)                                                                                                       
on investment                                                                                                          
                                                                                                                       
Income from         521,838           -     521,838   340,433           -  
  340,433   596,100           -     596,100
investments                                                                                                            
                                                                                                                       
Bank interest            97           -          97     4,300           -       4,300    10,827           -      10,827
receivable                                                                                                             
                                                                                                                       
Gross revenue       521,935   1,031,075   1,553,010   344,733 (1,668,980) (1,324,247)   606,927 (2,517,864) (1,910,937)
and capital                                                                                                            
gains / (losses)                                                                                                       
                                                                                                                       
Administrative    (273,559)   (128,087)   (401,646) (172,676)    (45,042)   (217,718) (439,691)   (153,360)   (593,051)
expenses                                                                                                               
                                                                                                                       
Net return          248,376     902,988   1,151,364   172,057 (1,714,022) (1,541,965)   167,236 (2,671,224) (2,503,988)
before interest                                                                                                        
payable and                                                                                                            
taxation                                                                                                               
                                                                                                                       
Interest payable   (30,472)    (30,472)    (60,944)  (26,944)    (26,944)  

(53,888) (56,259) (56,259) (112,518)

                                                                                                                       
Return on           219,204     872,516   1,091,720   145,113 (1,740,966) (1,595,853)   110,977 (2,727,483) (2,616,506)
ordinary                                                                                                               
activities                                                                                                             
before taxation                                                                                                        
                                                                                                                       
Taxation on        (27,841)           -    (27,841)  (13,000)           -    (13,000)  (17,833)       (215)    (18,048)
ordinary                                                                                                               
activities                                                                                                             
(note 3)                                                                                                               
                                                                                                                       
Return on           190,063     872,516   1,062,579   132,113 (1,740,966) (1,608,853)    93,144 (2,727,698) (2,634,554)
ordinary                                                                                                               
activities                                                                                                             
after taxation                                                                                                         
                                                                                                                       
Return per            0.46p       2.09p       2.54p     0.82p    (10.85)p    (10.03)p     0.58p    (17.00)p    (16.42)p
ordinary                                                                                                               
share (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.
Cash Flow Statement
                                          For the six  For the six      For the
                                               months       months       period
                                             ended 31     ended 31        ended
                                         October 2012  August 2011     30 April
                                                    £            £         2012
                                          (unaudited)  (unaudited)            £
                                                                      (audited)
                                                                               
Operating activities                                                           
                                                                               
Investment income received                    556,668      314,091      465,341
                                                                               
Interest received                                  97        2,140       10,827
                                                                               
Investment management and administration    (301,945)    (143,102)    (312,662)
fees paid                                                                      
                                                                               
Cash paid to and on behalf of directors      (21,500)     (21,500)     (52,981)
                                                                               
Other cash payments                         (143,737)     (67,131)    (169,204)
                                                                               
Exchange differences on foreign currency      212,427    (107,391)    (102,001)
cash balances                                                                  
                                                                               
Net cash inflow / (outflow) from              302,010     (22,893)    (160,680)
operating activities (note 6)                                                  
                                                                               
Servicing of finance                                                           
                                                                               
Interest paid                                (52,672)     (55,733)    (122,083)
                                                                               
Taxation                                                                       
                                                                               
Taxation recovered                              8,557            -        1,057
                                                                               
Capital expenditure and financial                                          
   
investment                                                                     
                                                                               
Purchase of investments                  (26,569,045) (22,507,411) (65,425,282)
                                                                               
Sale of investments                       22,466,445   26,565,142    66,362,016
                                                                               

Cash (outflow) / inflow before financing (3,844,705) 3,979,105 655,028

Management of liquid resources                                             
   
                                                                               
Cash withdrawn from deposit                         -            -    1,532,546
                                                                               
Cash placed on deposit                              -  (1,020,813)  (1,522,505)
                                                                               
Financing                                                                      
                                                                               
Loan drawn down / (repaid)                  3,900,000  (1,000,000)  (1,000,000)
                                                                               
Purchase of treasury shares                  (75,686)            -            -
                                                                               
Cash received from merger less merger         264,461            -         
  -
costs paid                                                                     
                                                                               
Increase / (decrease) in cash                 244,070    1,958,292    

(334,931)

Reconciliation of Movements in Shareholders' Funds

For the six months ended 31 October 2012 (unaudited)                       
                               
                                                                                                           
                        Called-up    Share        Capital       Capital    Capital   Revenue      Total    
                          Share     premium   reserve-realised  reserve- 

Redemption reserve shareholders'

                         capital                               investment  reserve                funds    
                                      (£)           (£)         holding                (£)                 
                           (£)                                   losses      (£)                   (£)     
                                                                                                           
                                                                  (£)                                      
                                                                                                           
Shareholders' funds at   8,021,235  6,758,327      (8,638,146)  (572,627)  
 267,300  107,688     5,943,777
1 May 2012                                                                                                 
                                                                                                           
Return on ordinary          -          -           (1,012,085)  1,884,601     -       190,063     1,062,579
activities after                                                                                           
taxation                                                                                                   
                                                                                                           
Restructuring of share (7,253,415) 11,668,079        -             -      
7,900,089    -        12,314,753
capital (note 8)                                                                                           
                                                                                                           
Treasury shares             -          -             -             -          -      (75,686)      (75,686)
purchased                                                                                                  
                                                                                                           

Shareholders' funds at 497,820 18,426,406 (9,650,231) 1,311,974 8,167,389 222,065 18,975,423 31 October 2012

For the six months ended 31 August 2011 (unaudited)                        
                                       
                                                                                                                   
              Called-up   Share       Capital       Capital    Capital   Revenue     Total                         
                Share    premium  reserve-realised  reserve-  Redemption
reserve shareholders'                     
               capital                             investment  reserve               funds                         
                           (£)          (£)         holding                (£)                                     
                 (£)                                 losses      (£)                  (£)                          
                                                                                                                   
                                                      (£)                                                          
                                                                                                                   
Shareholders' 8,288,535 6,758,327      (5,722,232)  (760,843)     -       14,544     8,578,331                     
funds at 1                                                                                                         
March 2011                                                                                                         
                                                                                                                   
Return on     -             -          (2,355,966)    615,000     -      132,113   (1,608,853)                     
ordinary                                                                                                           
activities                                                                                                         
after                                                                                                              
taxation                                                                                                           
                                                                                                                   
Shareholders' 8,288,535 6,758,327      (8,078,198)  (145,843)     -      146,657     6,969,478                     
funds at 31                                                                                                        
August 2011                                                                                                        
For the period ended 30 April 2012 (audited)                               
                            
                                                                                                        
                        Called-up   Share       Capital       Capital    Capital   Revenue     Total    
                          Share    premium  reserve-realised  reserve- 

Redemption reserve shareholders'

                         capital                             investment  reserve               funds    
                                     (£)          (£)         holding                (£)                
                           (£)                                 losses      (£)                  (£)     
                                                                                                        
                                                                (£)                                     
                                                                                                        
Shareholders' funds at  8,288,535 6,758,327      (5,722,232)  (760,843)     -       14,544   8,578,331  
1 May 2012                                                                                              
                                                                                                        
Return on ordinary          -         -          (2,915,914)    188,216     -       93,144  (2,634,554) 
activities after                                                                                        
taxation                                                                                                
                                                                                                        
Treasury shares         (267,300)     -            -             -        
267,300    -          -      
cancelled                                                                                               
                                                                                                        
Shareholders' funds at  8,021,235 6,758,327      (8,638,146)  (572,627)    267,300 107,688   5,943,777  
30 April 2012                                                                                           
Notes

1. The financial statements for the six months to 31 October 2012 have been

prepared on the basis of the accounting policies set out in the Company's

Annual Report and Accounts as at 30 April 2012 in accordance with the

statement on half yearly financial reports issued by the ASB and applicable

to 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:

   
                                            31 October   31 August   30 April  
                                               2012        2011        2012    
                                                                               
                                            (unaudited) (unaudited)  (audited) 
                                                                               
Revenue return                                 £190,063    £132,113     £93,144
                                                                               
Capital return                                 £872,516           £           £
                                                        (1,740,966) (2,727,698)
                                                                               

Weighted average number of ordinary shares 41,771,346 16,042,469 16,042,469 in issue during the period

The net asset value per ordinary share is calculated on 49,474,863 ordinary shares in issue at the end of the period after deducting treasury shares.

5. No interim dividend is proposed.

6. Cash Flow Statement

Reconciliation of net revenue return to net 31 October 31 August 30 April cash inflow / (outflow) from operating

              2012        2011       2012
activities                                             £           £          £
                                             (unaudited) (unaudited)  (audited)
                                                                               
Net return before interest payable and           248,376     172,057    167,236
taxation                                                                       
                                                                               

Administrative expenses charged to capital (128,087) (45,042) (153,360)

                                                                               
Decrease / (increase) in other debtors            52,267    (19,421)  

(110,083)

(Decrease) / increase in other creditors (54,434) (8,825) 56,272

  
                                                                               
Tax suffered on investment income               (28,539)    (14,271)   

(18,744)

                                                                               
Exchange differences on foreign currency         212,427   (107,391)  (102,001)
cash balances                                                                  
                                                                               
Net cash inflow / (outflow) from operating       302,010    (22,893)  (160,680)
activities                                                   
                  
Reconciliation of net cash flow to movement   31 October   31 August    30 April
in net (debt) / funds                               2012        2011        2012
                                                       £           £           £
                                                                                
                                             (unaudited) (unaudited) (unaudited)
                                                                                
Increase / (decrease) in cash balances           244,070   1,958,292   

(334,931)

                                                                                
Increase / (decrease) in cash on deposit               -   1,020,813    (10,041)
                                                                                
Loan (drawn down) / repaid                   (3,900,000)   1,000,000   1,000,000
                                                                                
Changes in net (debt) / funds resulting from (3,655,930)   3,979,105     655,028
cash flows                                                                      
                                                                                
Exchange differences                                   -      12,850      10,041
                                                                                

Movement in net (debt) / funds in the period (3,655,930) 3,991,955 665,069

7. The unsecured sterling loan of £7,000,000 was subject to a covenant which

sets a maximum gearing threshold. The interest rate was 2.05% and the loan

was repaid on 6 December 2012. The Company was in compliance with its

banking covenants as at 31 October 2012. The Company has agreed a new

credit facility with KAS Bank N.V.

8. The merger of the Company with Blue Planet Worldwide Financials Investment

Trust plc (BPW) and Blue Planet Financials Growth & Income Investment

Trusts No's 1-10 plc (BPFU) was completed on 13 June 2012. To effect the

merger 37,667,403 shares were issued to acquire the net assets of BPW and

BPFU, of which 3,927,884 were issued to Investments Company LLP, a vehicle

    used to complete the merger by eliminating cross shareholdings. These
    shares were cancelled following the merger to leave new shares in issue of
    33,739,519 which together with the Companys' original shares in issue of
    16,042,469 give total shares in issue of 49,781,988. As a consequence of
    the restructuring of the Companys' share capital carried out during the

merger the par value of the Companys' ordinary share is now 1p (formerly

50p)

9. The total number of shares held in treasury is 307,125. These shares have

no voting rights, do not rank for dividend and are excluded from the

calculation of net asset value and return per ordinary share. At 31 October

2012 the Company had the authority to purchase further 9,692,875 of its own

shares. A resolution to renew this authority will be proposed at the Annual

General Meeting in 2013.

10. The figures and financial information for the period ended 30 April 2012

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. The half yearly Report and Account have not been

audited or reviewed by the Company's Auditors.

   
Portfolio Information
As at 31 October 2012                          Country      Valuation      % of
                                                                      Portfolio
                                                                  (£)          
                                                                               
Ordinary                                                                       
Shares                                                                         
                                                                               
    210,800 Bank of America Corporation        United       1,217,711       4.6
                                               States                          
                                                                               

6,250 Zurich Insurance Group AG Switzerland 955,295 3.6

                                                                               
     25,500 Capital One Financial Corporation  United         950,995       3.6
                                               States                          
                                                                               
    778,600 RSA Insurance Group plc            United         874,368       3.3
                                               Kingdom                         
                                                                               
    699,629 Henderson Group plc                United         818,566      
3.1
                                               Kingdom                         
                                                                               
    341,600 Enel S.P.A.                        Italy          796,270       3.0
                                                                               
      1,873 Samsung Electronics Co. Ltd        United         697,702       2.7
                                               States                          
                                                                               
     83,577 Genel Energy plc                   United         676,138       2.6
                                               Kingdom                         
                                                                               
     76,380 CNP Assurances                     France         668,885       2.5
                                                                               
     30,800 American International Group       United         666,627       2.5
                                               States                          
                                                                               
     45,500 GDF Suez SA                        France         647,518       2.5
                                                                               
    144,900 BP plc                             United         642,342       2.4
                                               Kingdom                         
                                                                               
     30,260 Wells Fargo & Company              United         631,870       2.4
                                               States                          
                                                                               
     25,400 iShares S&P U.S. Preferred Stock   United         626,420       2.4
            Index                              States                          
                                                                               
     18,162 Total SA                           France         566,714       2.2
                                                                               
    231,400 Resolution Ltd                     United         505,146       1.9
                                               Kingdom                         
                                                                               
     24,440 U.S. Bancorp                       United         503,070       1.9
                                               States                          
                                                                               
    270,000 Sberbank OAO                       Russia         489,885       1.9
                                                                               
     17,700 JP Morgan Chase & Company          United         457,036       1.7
                                               States                          
                                                                               
     95,500 Banco Santander SA                 Spain          443,686      
1.7
                                                                               
     77,360 Inmarsat plc                       United         438,244       1.7
                                               Kingdom                         
                                                                               
     30,240 SSE plc                            United         437,875       1.7
                                               Kingdom                         
                                                                               
     26,260 SCOR SE                            France         434,606       1.7
                                                                               
      3,110 Komercni Banka AS                  Czech          394,061       1.5
                                               Republic                        
                                                                               
     35,900 Bank Vozrozhdenie                  Russia         390,507      
1.5
                                                                               
     27,800 EDF SA                             France         364,790       1.4
                                                                               
     54,150 Catlin plc                         United         255,155       1.0
                                               Kingdom                         
                                                                               
     64,000 Amlin plc                          United         238,848       0.9
                                               Kingdom                         
                                                                               
                                                           16,790,330      63.9
                                                                               
Preference                                                                     
Shares                                                                         
                                                                               
    880,000 TNK-BP Holding                     Russia         964,715       3.7
                                                                               
    793,000 Lloyds Banking Group 9.25%         United         856,440       3.3
                                               Kingdom                         
                                                                               
    500,000 Natwest Bank 9%                    United         540,000       2.1
                                               Kingdom                         
                                                                               
     17,000 Bashneft OAO                       Russia         425,382       1.6
                                                                               
    300,000 Standard Chartered plc 8.25%       United         352,500       1.3
                                               Kingdom                         
                                                                               
    284,000 Santander UK plc 10.375%           United         312,400       1.2
                                               Kingdom                         
                                                                               
    200,000 Santander UK plc 8.625%            United         189,000      
0.7
                                               Kingdom                         
                                                                               
                                                            3,640,437      13.9
                                                                               
Debt                                                                           
Securities                                                                     
                                                                               
    620,000 Lloyds Banking Group 04/25 7.625%  United         664,535       2.5
                                               Kingdom                         
                                                                               
    711,000 Aviva plc 6.875% 20/05/58          United         652,399       2.5
                                               Kingdom                         
                                                                               
    541,000 Co-Op Bank 9.25% 28/04/21          United         597,329       2.3
                                               Kingdom                         
                                                                               
    427,000 Yorkshire Building Society 13.5%   United         564,498       2.1
            04/25                              Kingdom                         
                                                                               
    832,000 BNP Paribas 4.875% 10/49           France         477,024      

1.8

                                                                               
    769,000 Royal Bank of Scotland Group plc   United         411,543       1.6
            5.25% 06/49                        Kingdom                         
                                                                               

600,000 Societe Generale 8.75% Perpetual France 376,348 1.4

                                                                               
    459,000 ING Groep 8% 04/49                 Netherlands    372,638       

1.4

                                                                               
    350,000 Santander UK plc 10.0625% 10/49    United         358,750       1.4
                                               Kingdom                         
                                                                               
    551,000 Credit Agricole Preferred Fund     France         294,898       1.1
            Trust 7% 01/49                                                     
                                                                               
    237,000 Friends Life Group 12% 05/21       United         291,387       1.1
                                               Kingdom                         
                                                                               

250,000 Credit Agricole SA 7.375% 12/23 France 265,413 1.0

                                                                               
    391,000 Royal Bank of Scotland Group plc   United         216,680       0.8
            5.5% 11/49                         Kingdom                         
                                                                               
                                                            5,543,442      21.0
                                                                               
Listed                                                     25,974,209      98.8
Investments                                                                    
                                                                               
Cash                                                          314,384       1.2
                                                                               
Total                                                      26,288,593     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

Blue Planet InternationalFinancials Investment Trust plc

(Source: PR Newswire )
(Source: Quotemedia)

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