Half Yearly Report

RNS Number : 4938E

Hansa Trust PLC

21 December 2009

 



Hansa Trust Plc

Half-Yearly Report for the Six Months to 30 September 2009

Key Information

INVESTMENT POLICY AND BENCHMARK

To achieve growth of shareholder value, Hansa Trust PLC invests in a portfolio of special situations, where individual holdings or specific sectors may constitute a significant proportion of the portfolio or that of the equity of the companies concerned. This investment approach may produce returns which are not replicated by movements in any market index. Performance is measured against an absolute benchmark derived from the three-year average rolling rate of return of a five year UK government bond, plus two percent with interest being re-invested semi-annually. Investments are intended to add value over the medium to longer term through a non-market correlated, conviction based investment style.

STATISTICS

	30 September 2009		31 March 2009	% change
Shareholders' Funds	£209.2m		£152.4m	37.3
Net Asset Value (NAV) per share
Opening NAV	635.0p		924.5p	-
Dividends paid in period	(14.5p)		(13.0p)	-
Revenue and capital return	251.1p		(276.5p)	-
Closing NAV	871.6p		635.0p	37.3
Performance Benchmark	3.2%		6.7%	-
Ordinary Share Price
Opening share price	510.0p		820.0p	-
Dividends paid in period	(14.5p)		(13.0p)	-
Revenue and capital return	251.1p		(276.5p)	-
Movement in discount	8.4p		(20.5p)	-
Closing share price	755.0p		510.0p	48.0
'A' non-voting Ordinary Share Price
Opening share price	490.0p		815.0p	-
Dividends paid in period	(14.5p)		(13.0p)	-
Revenue and capital return	251.1p		(276.5p)	-
Movement in discount	21.4p		(35.5p)	-
Closing share price	748.0p		490.0p	52.7
FTSE All-Share Index	2,635		1,984	32.8
Discount
Ordinary shares	13.4%		19.7%	-
'A' non-voting Ordinary shares	14.2%		22.8%	-
Total Return
Ordinary Shares	51.3%		(36.7%)	-
'A' non-voting Ordinary shares	56.2%		(38.8%)	-
FTSE All-Share Index Total Return Index	35.9%		(29.0%)	-

  Chairman's Statement

THE FINANCIAL CRISIS

After the quite remarkable recovery in stock markets all over the world during the first half of our own year to 31 March 2010 - ranging all the way from Hungary which more than doubled in value (+106%) through to Brazil (+74%) and the UK (+33%) down to China (+5%) - it would be quite reasonable for the man from Mars to ask "what crisis?". Given the huge quantities of money thrown at the global economy by the world's central banks and the rescue of much of the world's banking system by tax payers, it should not have been - with the benefit of hindsight - surprising that what has happened, would happen. The money flows at first into the stock markets and thereafter into the various economies, so at the very least they have stopped receding. The issue that we have to question is whether or not it is sustainable and that John Alexander, our portfolio manager, addresses in his report which follows this brief statement.

THE HALF YEAR RESULTS

NAV	Ord sh: 871.6p	'A' Ord sh: 871.6p
Share Price	Ord sh: 755.0p	'A' Ord sh: 748.0p
Discount	Ord sh: 13.4%	'A' Ord sh: 14.2%

The recovery referred to above has been reflected in the performance of our own net asset value, rising as it did from 635.0p per share to 871.6p per share - an increase of 37.3%. It should be remembered that these figures are struck after the payment of a 14.5p dividend, so that the total return was a rather greater 39.5%. The big driver behind it was, once again, our holding in Ocean Wilsons Holdings (its share price rose 53%); it made the largest contribution to the recovery in our net asset value, adding 114p of the 251.1p increase. Brazil is very much in vogue amongst international investors and quite rightly so it would seem. The Brazilian economic barometer would seem to be set "fair".

However, the rest of the portfolio played its part in the increase in the net asset value rising by 137.1p per share. After accounting for the payment of the dividend, that increase amounted to circa 32%. A good number of our holdings made significant contributions to the improvement, led by Hargreaves Services (+14.2p), HSBC (+12.2p) and Cape (+11.6p).

It is pleasing to be able to report that the prices of the two classes of shares (the ordinary and the "A" ordinary) did even better rising by 48.0% and 52.7% over the six months with the result that the discounts narrowed from the very high levels at the end of March 19.7% & 22.8% respectively, down to a little more respectable 13.4% and 14.2%.

These improvements can be set against our benchmark (based on the return of a 5 year government bond) which returned 3.2% and also against the FTSE All-share Index (a proxy for the British stock market) of 32.8% and can, we believe, be regarded as reasonable in the circumstances.

DIVIDEND

Our revenue account produced a net income (for the purposes of paying dividends) of £3.6 million (see page 16). Most of our income tends to be earned in the first half of the year so the final dividend, payable next August, will depend on what is earned in the balance of this financial year. The Board is declaring an unchanged interim dividend of 3.5p per share payable on both Ordinary and 'A' non-voting Ordinary shares amounting to £840,000. The dividend will be paid on 18 December 2009 to shareholders on the register of members on 4 December 2009.

PROSPECTS

As he always does, John has presented a good review in the investment manager's report of the outlook and there is not much more that we the Directors, through this Chairman's Statement, can add to it. I would add a note of caution to his comments with the concern that I - and many others have - being encapsulated in the question: how can the most severe financial crisis in circa 80 years be over in just six months? And yet, judging by the stock market euphoria of the last few months, it seems that much of the City is of that view. Opinions are rather more sharply divided on the outlook than they have been for many years - with the bulls saying that the pump priming has done the trick, we are back to the good old days (if from a lower base) and the bears saying that the fundamental causes of the crisis - living beyond our means (collectively), incompetent government, poor corporate governance and insatiable greed - are still largely intact and that another bubble/bust is in the offing down the line. You can take your pick but I think it fair to say that we are in uncharted waters.

The final paragraph in John's report quite rightly concentrates on what has been going on in the corporate world. It is that which is important to both investors generally and to Hansa Trust's shareholders in particular. He reiterates comments made in previous reports about the strong getting stronger and about the excellent manner in which so many companies have cut costs to ensure survival in these difficult times. As is so often the case, the external environment is only half the issue; what we make of it is the other half. Our ability to identify and back those high quality companies with the characteristics he refers to, is what will earn us excellent returns over the longer term. We have done so in the past and we expect to do so in the future.

Alex Hammond-Chambers
Chairman
19 November 2009

  Interim Management Report

The Directors present their Report and Condensed Financial Statements for the six months to 30 September 2009.

THE BOARD'S OBJECTIVES

The Board's primary objective is to achieve growth of shareholders value over the medium to long-term.

THE BOARD

Your Board consists of the following persons each of whom brings certain individual and complementary skills and experience to the Board's workings. Individual profiles for each member of the Board can be found in the Company's Annual Report and on our website.

Mr Hammond-Chambers - (Chairman)    Mr Salomon
Lord Borwick    Professor Wood

BUSINESS REVIEW FOR THE FINANCIAL YEAR TO DATE

The business review for the financial year to date is covered in the Chairman's Statement and the Investment Manager's Report.

KEY RISKS FOR THE FINANCIAL YEAR TO 31 MARCH 2010

The key risks and uncertainties relating to the six months ending 30 September 2009 and for the six months to 31 March 2010 are covered in the Chairman's Statement and the Investment Manager's Report.

RELATED PARTY TRANSACTIONS

During the period Hansa Capital Partners LLP charged investment management fees and company secretarial fees to the Company amounting to £664,000 (2008: £780,000). Amounts outstanding at 30 September 2009 were £119,000 (2008: £118,000).

THE BOARD'S RESPONSIBILITIES

The Board is charged by the shareholders with the responsibility for looking after the affairs of the Company. It involves the 'STEWARDSHIP' of the Company's assets and liabilities and 'THE PURSUIT OF GROWTH OF SHAREHOLDER VALUE'. Except for the items detailed below these responsibilities remain unchanged from those detailed in the last Annual Report.

The Directors confirm to the best of their knowledge that:

•    the condensed set of financial statements contained within the half-yearly financial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'; and

•    this interim management report includes a fair review of the information required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules.

The above Interim Management Report including the Responsibility Statement was approved by the Board on 19 November 2009 and was signed on its behalf by:

Alex Hammond-Chambers
Chairman
19 November 2009

  Investment Manager's Report

The Investment Manager presents its report for the six months ended 30 September 2009.

BACKGROUND

September 15 saw the first anniversary of the bankruptcy of Lehman Brothers when the fundamental ideas about free markets were severely discredited as the integrated wholesale banking system collapsed because far too much money had been lent to the wrong borrowers at the wrong price. Irresponsible lending, borrowing and spending by banks, governments, companies and consumers across the world caused the credit crisis, which has resulted in a balance sheet recession. Regulators are now attempting to reconnect the interests of bankers with the rest of society and bankers and regulators are struggling to find ways of controlling risks. Stockmarkets have rallied hard since the beginning of March, fuelled by a flood of government liquidity around the world in the form of a massive global monetary stimulus policy, the biggest liquidity injection in modern history. Investors are hoping for a lasting recovery, on the back of unexpectedly strong corporate profits, a pick up in M&A activity with Kraft's unsolicited £10bn bid from Cadbury, and on expectations that interest rates will be held at extraordinarily low levels for sometime yet. The global economic news has generally been encouraging, with rising industrial production, retail sales better than feared, and housing markets around the world showing signs of a pick up. The International Monetary Fund has raised its forecast for 2010 global growth from 2.5% to 3.0%, declaring "the recovery is stronger than initially forecast". Investors are feeling nervous after a record run in markets, and are left asking if the recovery is sustainable or mainly due to the introduction of exceptional measures that will wear off next year as they are phased out. Sustainable global private sector demand can only return once the balance sheets of over-indebted households, overborrowed businesses and undercapitalised financial sectors are repaired, and government borrowing reduced, or when countries with high savings rates like China, Japan and Germany consume or invest more. Deleveraging is a lengthy process and could take years given the extraordinary debt accumulations of the past decade. Hence our general preference towards business-to-business over business-to-consumer companies and our very limited exposure to consumer discretionary sectors, although the current sharp decline in variable household mortgage burdens is providing some temporary relief to the consumer, as are initiatives like the government's car scrappage scheme. However the necessary reduction in the level of household debt has only just begun. We have also avoided the more discretionary areas of government spending, which will be massively reduced over the next few years regardless of political party, as the soaring public deficit is brought under control.

OVERALL PERFORMANCE

During the six months under review, the capital and revenue returns per Ordinary and "A" non-voting Ordinary shares amounted to 236.6p an increase of 37.3% and increased to 251.1p after including the 14.5p dividend paid in the period, giving a total rise of 39.5%. The share prices of the Ordinary and "A" non-ordinary shares rose by 48.0% and 52.7% respectively, as both classes of share traded at a narrower discount to their net asset value. This compares with a rise of 3.2% in the company's Benchmark and a rise of 32.8% in the FTSE All-Share Index over the period. The Net Asset Value per share excluding Ocean Wilsons Holdings and after including the 14.5p dividend, increased by 137.1p a rise of 31.7%. The two largest positive contributors were Ocean Wilsons Holdings Limited +114.0p and Hargreaves Services +14.2p.

  SECTOR WEIGHTING AND PERFORMANCE

	Sector Weighting	Sector Weighting	Six months' Performance
Sector	at 30 September 2009	at 30 September 2008	to 30 September 2009
	%	%	%
Strategic	35.5	31.5	57.0
Smaller Cap/AIM	19.6	19.2	54.0
Natural Resources	14.2	13.4	19.4
Property	7.4	7.4	20.6
Large Cap	8.5	8.5	47.8
Utilities	4.3	4.9	12.1
Mid Cap	3.6	2.4	28.8
Insurance	2.9	2.7	21.4
Investment Trusts	2.1	1.9	59.7
Cash & Cash Funds	1.9	7.3	0.3
Hedge	-	0.8	(91.1)

OVERALL PERFORMANCE

The activity of the portfolio has followed a similar pattern to that of the second half of the Company's last financial year, namely taking up rights entitlements in stocks held or adding to existing holdings via placings or open market purchases. Right entitlements taken up were in HSBC Holdings, Lloyds Banking Group, Wolseley, Great Portland Estates and Hansteen. Existing holdings in Melrose Resources and Goal Soccer Centres were increased by placings and open market purchases were made in All Leisure Group, Superglass and Premier Foods. On 31 March 2009 the Company had £12.4m cash, representing 8.2% of total assets and by the end of the half year ending September the Company had £4.1m cash, representing 2.0% of assets.

THEMATIC REVIEW:

EMERGING MARKETS and OVERSEAS EARNERS

The "global de-coupling" investment theme gathered strength over the half year, betting that the New World and the demands of the growing middle class in China, India, Indonesia, Brazil and other large developing countries will grow faster than the Old World ones, as investors realise the emerging economies have stronger banking systems, less debt, better fiscal balances and higher reserves than the developed countries of the OECD, leaving them in a stronger position to commence a sustainable domestic credit cycle. Emerging markets, with some 70% of the world population, now represent 30% of the market capitalisation of the world index, reflecting the shift of financial power from West to East which has been accelerated by the credit crisis. The continued prominence of the big overseas earnings groups in the sector performance tables reflects this shift, as well as benefiting from the translation effects of a weak USD, Euro and sterling. The charge is led by China, with its high fixed investment and credit led growth. When the global economic crisis hit last year Beijing responded by unveiling a £368bn stimulus package, of which 38% was to be spent on infrastructure, particularly railway infrastructure. The Chinese government can swiftly expand the fixed investment share of GDP, which has now surged beyond 45%, but it is harder to introduce policies that raise levels of consumption. Household consumption as a share of total economic output has dropped from 52% of GDP in the early 1980's to 36% currently, the lowest level in China's post-reform history and well below any other of the major economies. The consumption share of real GDP in the US is at a record high of 71%. Chinese household savings rates have risen to provide for healthcare, housing, education and pension benefits, as the old communist safety nets have fallen away. There is now the opportunity for the government to accelerate various consumption-boosting initiatives in these areas. There is enormous unmet demand for goods and services amongst the populations of the emerging markets and satisfying this demand could allow the global economy to grow substantially for many years. In the next phase of their development, these economies need to rely more on domestic consumption of goods and services, rather than supplying the US and Europe with cheap consumer goods. It's going to take time to normalise the financial system, see an increase in the savings rate in the US and UK and rebalance global trade.

Brazil's decade of stellar growth has been recognised by Rio de Janeiro becoming the host city of the 2016 Olympics. A 1.9% rise in second-quarter GDP makes it among the world's best performing big economies. With high real interest rates and a small budget deficit, Brazil has followed monetary and fiscal policies directly opposite those of the US and UK. Domestic demand has revived, inflation has remained subdued and the budget deficit stands at 2.6% of GDP, compared with the UK's figure of 13% next year. A flood of public offerings is coming to Brazil's stockmarket, including the initial public offering of Banco Santander Brasil, the largest ever IPO in Brazil and the biggest in the world since March 2008. On that note, the strategic holding in Ocean Wilsons Holdings rose 60.0% over the half year and represented 35.5% of assets at period end, fitting sweetly with this emerging market theme, with the two parts to its business, namely its 58.25% holding in quoted Wilson Sons, the Brazilian operator of ports, tugs and other maritime services, which is gradually increasing its exposure to the oil and gas industry through both its towage and offshore businesses, and Ocean Wilsons Investments, a diversified portfolio of investments with a focus on emerging markets. Wilson Sons Limited has formed a 50/50 joint venture vehicle with Chile's Ultratug Group, whose business activity is to operate vessels to support oil and gas exploration and production activities in Brazil. The main objective of the joint venture is to expand both groups' operations in the offshore segment, thereby achieving economies of scale, while also taking advantage of growth opportunities in Brazil's oil and gas industry.

The portfolio's 14.2% exposure to the natural resources sector plays to China's insatiable and strategic demand for energy and metals, as well as playing to the theme that commodities and real assets can be regarded as a better store of value than USD, Euros or sterling, at a time when confidence in paper money is collapsing. It is easier for governments to print money to relieve the financial crises than it is for oil companies and metals producers to ramp up production. It is also fair to say that prices of metals and other commodities are being supported by excess liquidity and the low cost of holding them. BG Group (+4.2%) has just announced another huge discovery offshore Brazil in the Santos Basin, and BP (+21.3%), which announced a giant discovery in the Gulf of Mexico after drilling a well six-and-a-half miles deep. Fortunately the technology of oil extraction is moving fast. Royal Dutch Shell (+17.0%), is, like BP, a notable dividend payer and Melrose Resources (+55.1%) made progress, as did BHP Billiton (+25.2%), the largest mining company in the world. Knight Vinke Asset Management have invested in ENI (+25.1%) the Italian energy company where the Italian state holds 30%. Knight Vinke has started a debate on the structure of ENI, which unlike any other national oil company in Europe encompasses both a fast-growing oil and gas exploration operation and a classic dividend paying utility and which if split could release a huge amount of value. Interestingly Deutsche Bank has published research that focuses more on the idea of peaking demand rather than supply, as the 21st Century will be the age of electricity thanks to the arrival of the electric car, thus suggesting technology will make hydrocarbons redundant before we run out of oil. Meanwhile there have been huge advances in technology for extracting gas from shale and methane beds, altering the global balance of energy faster than almost anybody expected. So there you have 50% of the Trust's assets and it's possible to grow that figure. 

HSBC's (+90.9%) relocation of its chief executive to Hong Kong points to a vision of China as the main source of future growth as well as expansion. HSBC is already the dominant foreign bank in China with U$752m of profits generated there in the first half, nearly a sixth of group total, and could be generating U$2bn of profits in five to ten years time. HSBC launched a massive £12bn rights issue earlier this year to build a war chest to fund acquisitions, while HSBC's future will remain firmly rooted in trade finance after the Household debacle. HSBC has a loan-to-deposit ratio of just 84%, reflecting its status as a magnet for savers seeking safety. GlaxoSmithKline (+16.4%) is a big overseas earner with a disciplined M&A record, a restructuring story, and a diversified portfolio with consumer products, vaccines and emerging market exposure. Wolseley (+95.1%), with leading competitive positions and strong customer franchises in its market places, recently announced strong operating cash flow and net debt reduction to £959m (£2469m) due to the net proceeds of a capital raising and significant working capital inflow of £846m in its full year period. In 2007 Experian (+22.6%) acquired a controlling interest in Serasa, Brazil's largest credit bureau, leaving Experian controlling three of the largest credit bureaux worldwide, in Britain, America and Brazil, selling to clients in over 60 countries. SSL (+44.2%) continues to strengthen its two main brands and expand their geographical footprint through Europe and Asia and is confident of achieving its goal of growing earnings per share by 50% in the three years to March 2012. Andor (+100.0%) is the leading developer and manufacturer of high performance digital cameras for academic, industrial and government applications globally. Delta (+71.8%) an international engineering group with a heavy exposure to Australia, continues to generate high quality earnings and good operating cash flows. Quinetiq (+5.9%) is confident that it can carry on producing underlying double-digit growth in the US where it has bought fourteen companies in four years, with America now accounting for half of sales. These holdings represent 11.4% of assets, bringing the emerging market and overseas earners to 61.1% of the portfolio.

REAL ASSETS

Continuing on from the theme of commodities being regarded as real asset plays and a store of value, the property weighting has risen from 7.4% to 11.5% over the last twelve months after asset values have fallen by about 50% over the past couple of years, with share prices falling even further because of the effect of leverage. The large Scottish and Irish banks have £225bn of outstanding loans to UK property. Lloyds, carrying the loans that HBOS aggressively made during the boom, has around £60bn outstanding to the commercial property and construction sectors, while RBS has a UK commercial property loan book of about £50bn. Some commentators regard them as highly leveraged commercial property companies. The market is entering a new phase in terms of the workout of problem loans, although real estate bankers are not expecting to see the sort of mass disposals of property that caused such distress in the early 1990's. In fact one new entrant has described the market as being "constipated" because there is so little stock on the market. Interestingly the number of banks prepared to lend significant amounts for real estate investment has almost doubled in the past six months because of more favourable funding conditions. There are now 23 lenders prepared to lend more than £20m for real estate investment and about six willing to lend more than £100m to the sector. City rents are at their lowest level for more than 20 years, while West End rents are at a 13-year low, according to research by Knight Frank. As construction has ground to a halt on many sites, with developers unable to secure finance or unwilling to spend money at a time of low tenant demand, the supply of new office space has contracted. Occupiers are now beginning to compete for prime locations in the City, while prime yields in the West End have hardened and now stand at 5.5%, having reached 6% earlier this year. There are more powerful forces at work than the fundamentals of declining rental values and tenant attrition, namely the demand for a reasonable cash yield by investors who do not initially need high levels of debt to purchase assets, particularly if they are overseas buyers who can take advantage of weak sterling. The imbalance between limited supply and increased demand has resulted in yields hardening, particularly on the best let assets.

Entitlement rights were taken up in Hammerson (+58.2%), Great Portland Estates (+34.9%) and Hansteen (+66.9%) as their enhanced financial strength positioned them to make attractively priced additions to their portfolios. All three companies are well managed and have high quality portfolios, focusing on maintaining occupancy levels at existing properties and letting developments. Hammerson has a prime portfolio with 85% exposure to retail, one third of its assets in Paris, which benefits NAV as Sterling continues to weaken against the Euro, an interesting development pipeline, and a progressive dividend policy because of its robust income. Great Portland Estates is 83% exposed to the West End, has a 75%/25% split between office and retail, and a focused development pipeline. Hansteen raised £194m net to take advantage of exceptional opportunities to buy industrial properties in the UK and has announced its decision to move from AIM to the Official List and its intention to become a REIT. Unquoted DV3 is making good progress on a number of asset management initiatives and has given a generally encouraging picture for the fund in terms of occupier demand and strength of rental income. As at 30 June 2009, approximately £185m, representing 17% of total commitments to DV4, had been drawn down, leaving the fund in a very strong financial position at this stage of the cycle, and the management are beginning to see opportunities where there is less competition from other purchasers or where vendors are under extreme pressure. The Trust has an outstanding commitment of £8.3m to DV4, whose largest investment is Alpha Plus Schools. These holdings represent 11.5% of assets, so we have now touched on 72.6% of the portfolio.

OUTSOURCING and SERVICES

Hargreaves Services (+80.0%), a leading supplier of products and services to the energy, mineral and waste sectors announced full year revenue ahead by 24%, earnings per share ahead by 47% and a dividend increase of 15%, while "the board continues to view the current year with significant confidence". Since flotation in November 2005, the Group has grown underlying operating profit and underlying diluted earnings per share by compound annual growth rates of 64.4% and 51.5% respectively. In addition to this the Group has completed a successful re-financing and has attracted interest from a very broad and high quality group of banks with a new £115m banking facility. The Group is looking to push harder into Europe, building on its recently opened port facility in Ghent with plans for another in Poland. It is also expecting to expand into open-cast coal mining in Wales. NCC Group (+52.4%) is the world's largest software escrow provider. Many organisations run software applications that are business critical, yet are controlled by a third party, normally a software designer. NCC holds these assets with the suppliers agreement, on the end user's behalf, ensuring that if the supplier goes into administration or does not maintain its contractual obligations then the user can carry on running the software without disruption. In addition NCC has the largest group of ethical hackers/penetration testers in the UK making it a major force in IT security. Latest final results showed cash conversion of 140% and a 32% increase in the dividend. CAPE (+293.1%), the international provider of essential support services to the energy and resources sectors announced strong interim figures with 73% of profits generated outside the UK, and strong earnings growth and cash generation. Maintenance spending is an essential operating expense of plant operators and therefore impacted less by short term changes in the macro environment. Morson (+85.8%), established in 1969, is the UK's leading provider of technical contract staffing, supplying over 9000 highly skilled personnel to the aerospace, defence, nuclear, power and rail industries. Goals Soccer Centres (+53.2%) is the premier operator of next generation outdoor 5-a-side soccer centres in the UK with a current estate of 33 units. 60-75 year leases are taken from local authorities/schools on prime sites on the basis that the schools have use of the pitches during week days, while Goals operates them for profit in the evenings and at weekends, a kind of outsourcing relationship. £11m of placing proceeds are being used to open six new units in both 2010 and 2011. We have outsourced some of our exposure to the technology sector to Herald Investment Trust (+59.7%), which has a large number of holdings to spread stock-specific risks as well as having a large part of the portfolio exposed to operating expenditure in areas like business process outsourcing, maintenance, data centres, disaster recovery, software subscription, all often predictable and cash generative businesses.

We suspect the most substantial retrenchment in public sector spending possibly ever seen will drive an acceleration in outsourcing and create significant opportunities for private sector companies which can bring their operating skills and efficiencies to the table. We also believe that the capex/new build element will be much more heavily impacted than opex/maintenance spend. Eaga (-1.2%), established in 1991, is a "green" support services company and the UK's leading provider of residential energy solutions, working with government and energy suppliers to combat climate change and poverty. Fuel poverty funding is expected to remain resilient, whether from government or the power companies, due to its political sensitivity and given the material rise in the number of fuel poor households. The UK Government has a target to reduce carbon emissions by 80% by 2050, and a significant proportion of the savings will be made in the residential sector which represent Eaga's focus. Eaga reported earnings per share growth of 26% for the full year and a 17% increase in the dividend. Straight (+115.5%) is the UK's leading supplier of recycling containers and announced a 27% increase in revenue and a 30% rise in the interim dividend. Camco (+166.7%) has a 20-year track record in advisory services and has built one of the largest and most diversified portfolios of carbon credits, making it a premier climate change and sustainable development company, as reflected in its interim figures and healthy net cash balance. Superglass (+157.2%) is one of the UK's leading manufacturers of glass mineral fibre insulation products and is performing satisfactorily despite challenging market conditions, as well as continuing to be strongly cash generative. These holdings represent 14.9% of assets, so we have now alighted upon 87.5% of the portfolio.

NON-DISCRETIONARY REVENUE

Our two utility holdings best fit the bill here. Scottish & Southern (+10.0%) is the biggest and broadest-based energy company in the UK, with its balanced range of regulated and non-regulated businesses offering attractive long-term growth prospects in a structurally tight UK energy market. The Group continues to progress investment of around £6.7bn in the five years to March 2013 to drive future growth and confirms that it remains on course to deliver at least 4% annual real growth in the dividend for 2010 and is committed to a policy of sustained real dividend growth thereafter. Centrica (+14.7%), the owner of British Gas, released a sound set of interim figures, with the weighting of results heavily influenced by movements in the wholesale gas market. In 2006 Centrica's own gas resources made up just 20% of the energy it supplied to customers. Now, following the Venture Production deal and the acquisition of a stake in British Energy, the ratio lies closer to the company's 55% target. Premier Foods (+18.9%) has addressed its balance sheet issues with a rights issue and the Campbell's/RHM integrations are largely complete, leaving it in a position to concentrate on top-line growth and market share gains for its key iconic brands such as Hovis bread, Kipling cakes, and Bisto gravy. Ark Therapeutics (+12.5%) is a specialist healthcare group addressing high value areas of unmet medical need within vascular disease, wound care and cancer, with three lead pharmaceutical products in late stage clinical development. Further results from its Phase III study of Cerepro, the company's leading novel gene-based therapy for the treatment of malignant glioma, were presented at the American Society of Neuro-Oncology Conference in New Orleans on 22nd October 2009. ImmuPharma (+1.2%) is a specialist discovery and development pharmaceutical company with a strong cash position of £27m. It is a new and relatively small addition to the portfolio at 0.5% of assets. Its valuation is currently concentrated on one drug, Lupozor, which was recently out-licensed to Cephalon for $45m, with the potential for various future cash milestone payments totalling up to U$500m as well as royalties on any future sales. Final Lupuzor Phase II-b data is expected in October-November. These holdings represent 7.0% of assets, taking us to 94.5% of the portfolio.

OTHER

BRIT Insurance (+21.4%) delivered 24% growth in underlying PBT at the interim stage, with the main driver being an improved investment return, while the underwriting result was a little weaker than expected. The reported result was distorted by an expected £74m adverse foreign exchange move on non monetary assets. Management were clear that current underwriting margins do not reflect the benefit of improved rates, as less than 20% of earned premiums in the first half relate to the 2009 underwriting year. The insurance industry's capital base has recovered more quickly in 2009 than expected, because decent investment returns and a benign claims environment should drive strong profits for the Lloyd's insurers, which will put pressure on pricing for many lines in 2010. Brit should more than double reported profits in 2010, leaving it trading at 0.8x net tangible assets, supported by a sector leading 7.6% yield. We are taking up our rights in Galliford Try (+47.7%) which is raising £119m to double the size of its house building business, having secured terms on plot numbers equivalent to 85% of its existing landbank, and since Galliford has less than 4 years of legacy land to unwind, it will be building 90% of its units on new land within 3-4 years while increasing volumes to over 4000 units from the current 1700. The contracting business will get tougher as public spending dries up, but as housing becomes the key driver the group is likely to crystallise value in this side of the group. All Leisure Group (+16.0%) is a destination-led, niche cruise operator with strong brands including Swan Hellenic, Voyages of Discovery and Discover Egypt, focused on the market for mature passengers, which has seen the market stabilise since February. Lloyd's Banking Group (+79.6%) has been sounding out investors, the Treasury, the Financial Services Authority and the European Commission about a very large capital raising which could allow the bank to withdraw completely from the Government sponsored Asset Protection Scheme as well as persuade Brussels that the bank should not be forced to shed 10% of its accounts, where it is the No.1 player with a 31% market share following its ill-fated takeover of HBOS. Under the current arrangement, Lloyds would pay £15.6bn in non-voting "B" shares to insure £260bn of toxic assets, raising the government's stake from 43% to 62%. Meanwhile the Financial Services Authority is introducing new liquidity standards once the recession is over, requiring UK banks and investment companies to increase their holdings of low-returning cash and government bonds by £110bn, and cut their reliance on short-term wholesale funding by 20%, the cost of which will almost certainly be passed on to the consumer. So it looks as though the commercial banks will soon take over from the Bank of England as the biggest purchaser of gilts. These holdings represent 5.3% of assets, taking us to 99.8% of the portfolio.

OUTLOOK

The rebound from the freefall in output that followed the Lehman bankruptcy is now over, and growth is levelling out at a rate that implies very gradual expansion despite bad unemployment numbers. In many repects a very gradual expansion is preferable to a sharp rebound, because it suggests that the fear of inflation will be less of a concern as the great de-leveraging process gets under way. This is a balance sheet recession and banks, corporates, households and governments are intent on repairing their balance sheets. Bank lending is currently flat and even though bank earnings are recovering, they are not expected to be big enough to offset fully the anticipated writedowns over the next eighteen months or so, preventing banks from assuming their role as money multipliers and supporters of the economic recovery. The relationship between the banking system and the wider economy hinges on the level of debt. Because the mechanism for money creation is debt, broad money supply cannot be inflated without increasing debt levels outside the banking system. For the corporate sector massive worldwide bond issuance and equity placings is reducing reliance on bank debt, while companies are continuing to reduce employment costs and working capital while keeping a tight rein on capital investment. Households are starting to pay down mortgage loans and credit card balances at a time when earnings are under pressure and the threat of unemployment and rising taxation is ever real, resulting in a significant and sustained weakness in final demand, creating an age of thrift for consumers in Western Europe and the US.

The problem is that with rising levels of saving as well as unemployment, where does growth come from, particularly when it comes to the fourth strand of the de-leveraging process, namely government borrowing. The US and UK governments cannot stop banks, corporates and households from de-leveraging, but they are trying to ease the pain by borrowing more while everyone else is trying to borrow less. The problems facing the UK have been compounded by the fact that debt-driven financial and property sector bubbles were mistaken for "real" growth, allowing public spending to expand to levels which are now unaffordable, in effect a structural deficit. Next year government spending in Britain is expected to reach 54% of gross domestic product, while government revenues are expected to be just 40% of GDP. With the borrowing requirement heading for £200bn, massive cuts in public spending will dominate the macro economic scene, regardless of which political party is in power. Hundreds of thousands of public sector workers will lose their jobs over the next few years and there will be endless rounds of cutbacks in public expenditure, along with big downside risks of higher taxation, as government is shrunk.

Stock markets do not look overvalued, standing at the same absolute level as 10 years ago despite the growth in earnings. Many investors are still very cautious and remain 100% in cash and bonds, at a time of monetary and fiscal extremism, when central banks are printing record amounts of money and governments are spending ever more of it. There is still plenty of money on the sidelines to come in to markets if the bears capitulate. Central banks are still pumping liquidity in to the system, not withdrawing it and are keen to nurture a sustainable recovery, not snuff out a nascent one prematurely. The low-rate nirvana for stocks is likely to continue for longer than many expected, while the corporate sector has taken self-help to heart and benefited from some favourable tailwinds. High unemployment can co-exist with an economic recovery, because while joblessness cuts demand and reduces potential revenue for companies, it also affects costs, because the bargaining power of companies with workers is stronger, making profit margins more sustainable in a world of slowing wage growth. Actions by management teams to cut costs happened much more quickly than in previous cycles, as they focused on survival and prepared for the equivalent of an asteroid collision after the world stopped in its tracks in Q3/Q4 2008. The corporate sector has rapidly right-sized itself for a slower growth/stagnant world, reducing employment costs and working capital, thereby releasing funds to reduce debt, protecting both earnings and cash flow in spite of a sluggish top-line sales outcome. In addition corporate gross margins have improved as a result of the lagged impact of falling commodity prices on input costs, and weak sterling has seen great translation benefits for the overseas earners, all factors helping to magnify the earnings performance. 

This is a world where the strong are getting stronger, taking market share from their weaker competitors and are now having the confidence and the ability, given thawed credit markets, to re-enter the M&A arena in order to build market positions. The emerging markets are becoming of increasing strategic importance to many companies, although successful execution will provide many challenges, given the difficulties of translating economic growth into investment returns. There is excess capacity in most industries, the output gap, leading to intense price competition, which means inflationary pressures and expectations are likely to remain muted for some time yet, extending the period of an accommodative monetary policy. Debt busts are deflationary. It's a good time to be holding the shares of high quality companies with strong market positions, led by good management teams, sometimes with large equity interests, enabling us to become co-proprietors. Companies with reliable top line growth and visible revenue streams which are not too prone to the economic cycle. Companies with manageable levels of financial and operational gearing. Companies with good cash flows, and a commitment to a progressive dividend policy, and companies with top quality real assets. Stock markets have scope to continue climbing the wall of fear, although there will be setbacks on bouts of nervousness about the strength and pace of recovery, and about how and when governments will exit their stimulus packages. That money tightening will take the form of some combination of a higher level of Bank Rate and asset sales from the Asset Purchase Facility to the private sector, which should push gilt yields back up towards where they would have been in the absence of quantitative easing. One thing is for sure, the era of excessively cheap lending in the UK has gone, as we return to the real world where credit is no longer handed out on ridiculously lax conditions and at an unsustainably low cost.

Hansa Capital Partners LLP

Investment Manager

  Portfolio Information

                                                                                                                                                           at 30 September 2009

	Fair Value		Percentage of
Investments	£000		investments
Ocean Wilsons Holdings Ltd	74,355		36.3
Hargreaves Services Plc	7,650		3.7
BG Group Plc	7,609		3.7
HSBC Holdings Plc	6,340		3.1
Brit Insurance Holdings Plc	6,045		3.0
BHP Billiton Plc	5,722		2.8
BP Plc	5,530		2.7
Hansteen Holdings Plc	5,400		2.6
NCC Group Plc	5,250		2.6
Glaxosmithkline Plc	4,918		2.4
Top 10 Investments	128,819		62.9
Scottish and Southern Energy Plc	4,692		2.3
Eni S.p.a	4,664		2.3
Hammerson Plc	4,495		2.2
Herald Investment Trust Plc	4,361		2.1
Centrica Plc	4,324		2.1
EAGA Plc	4,105		2.0
Cape Industries Plc	3,735		1.8
Great Portland Estates Plc	3,659		1.8
Goals Soccer Centres Plc	3,513		1.7
Melrose Resources Plc	3,271		1.6
Top 20 Investments	169,638		82.8
SSL International Plc	3,040		1.5
Ark Therapeutics Group Plc	2,739		1.3
Royal Dutch Shell Plc	2,494		1.2
Experian Group Ltd	2,289		1.1
Wolseley Plc	2,170		1.1
Lloyds TSB Group Plc	2,068		1.0
Morson Group Plc	1,978		1.0
Andor Technology Plc	1,899		0.9
Delta Plc	1,795		0.9
Premier Foods Plc	1,785		0.9
Top 30 Investments	191,895		93.7
Other Investments (31)	12,811		6.3
Total Investments	204,706		100.0
Listed	161,524		78.9
AIM and OFEX	41,456		20.3
Unquoted	1,726		0.8
	204,706		100.0

  Condensed group income statement

                                                                                                                       for the six months ended 30 September 2009

	(Unaudited) Six months ended 30 September 2009			(Unaudited) Six months ended 30 September 2008			(Audited) Year ended 31 March 2009
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£000	£000	£000	£000	£000	£000	£000	£000	£000
Gain/(loss) on investments	-	57,011	57,011	-	(28,475)	( 28,475)	-	(72,631)	(72,631)
(Loss)/gain on derivative	-	(304)	(304)	-	977	977	-	1,891	1,891
Currency exchange gains	-	-	-	-	1	1	-	1	1
Investment income
(see note 2)	4,491	-	4,491	5,115	-	5,115	6,479	-	6,479
	4,491	56,707	61,198	5,115	(27,497)	(22,382)	6,479	(70,739)	(64,260)
Investment management
fees	(614)	-	(614)	(730)	-	(730)	(1,276)	-	(1,276)
Other expenses	(315)	-	(315)	(358)	-	(358)	(616)	-	(616)
	(929)	-	(929)	(1,088)	-	(1,088)	(1,892)	-	(1,892)
Profit/(loss) before finance
costs and taxation	3,562	56,707	60,269	4,027	(27,497)	(23,470)	4,587	(70,739)	(66,152)
Finance costs	-	-	-	(113)	-	(113)	(113)	-	(113)
Profit/(loss) before taxation	3,562	56,707	60,269	3,914	(27,497)	(23,583)	4,474	(70,739)	(66,265)
Taxation	(4)	-	(4)	(84)	-	(84)	(87)	-	(87)
Profit/(loss) for the period	3,558	56,707	60,265	3,830	(27,497)	(23,667)	4,387	(70,739)	(66,352)
Return per Ordinary and 'A'
non-voting Ordinary share
(see note 3)	14.8p	236.3p	251.1p	16.0p	(114.6p)	(98.6p)	18.3p	(294.8p)	(276.5p)

The Company does not have any income or expense that is not included in the profit for the period. Accordingly the "Profit for the period" is also the "Total comprehensive income for the period", as defined in IAS 1 (revised) and no separate Statement of Comprehensive Income has been presented.

All of the profit and total comprehensive income for the year is attributable to the Company's shareholders.

The total column of the statement is the Income Statement of the Company prepared in accordance with IFRS. The supplementary revenue and capital columns are presented for information purposes as recommended by the Statement of Recommended Practice issued by the Association of Investment Companies.

The Statement above is regarded as being in a condensed form due to the fact that fewer explanatory notes are included than would be the case in the Annual Report.

  Condensed Statement of Changes in Equity

                                                                                                                                 for the six months ended 30 September 2009

                                                                                                                                                                                       (Unaudited)

		Capital
		redemption	Retained
	Share Capital	reserve	Earnings	Total
	£000	£000	£000	£000
Net assets at 1 April 2009	1,200	300	150,906	152,406
Profit for the period	-	-	60,265	60,265
Dividends paid	-	-	(3,480)	(3,480)
Balance at 30 September 2009	1,200	300	207,691	209,191

Condensed Statement of Changes in Equity

                                                                                                                                 for the six months ended 30 September 2008

                                                                                                                                                                                       (Unaudited)

		Capital
		redemption	Retained
	Share Capital	reserve	Earnings	Total
	£000	£000	£000	£000
Net assets at 1 April 2008	1,200	300	220,378	221,878
Loss for the period	-	-	(23,667)	(23,667)
Dividends paid	-	-	(2,280)	(2,280)
Balance at 30 September 2008	1,200	300	194,431	195,931

Condensed Statement of Changes in Equity

                                                                                                                                                  for the year ended 31 March 2009

                                                                                                                                                                                           (Audited)

		Capital
		redemption	Retained
	Share Capital	reserve	Earnings	Total
	£000	£000	£000	£000
Net assets at 1 April 2008	1,200	300	220,378	221,878
Loss for the year	-	-	(66,352)	( 66,352)
Dividends paid	-	-	(3,120)	(3,120)
Balance at 31 March 2009	1,200	300	150,906	152,406

The Statements above are regarded as being in a condensed form due to the fact that fewer explanatory notes are included than would be the case in the Annual Report.

  Condensed Group Balance Sheet

                                                                                                                                                                                    as at 30 September 2009

	(Unaudited)	(Unaudited)	(Audited)
	30 September	30 September	31 March
	2009	2008	2009
	£000	£000	£000
Non-current investments
Investments held at fair value through profit and loss	204,706	180,169	139,027
Current Assets
Trade and other receivables	713	2,323	1,150
Cash and cash equivalents	4,128	13,736	12,452
	4,841	16,059	13,602
Current Liabilities
Trade and other payables falling due within one year	(356)	(297)	(223)
Net current assets	4,485	15,762	13,379
Net assets	209,191	195,931	152,406
Equity
Called up share capital	1,200	1,200	1,200
Capital redemption reserve	300	300	300
Retained earnings	207,691	194,431	150,906
Total equity shareholders' funds	209,191	195,931	152,406
Net asset value per Ordinary and
'A' non-voting Ordinary share (see note 5)	871.6p	816.4p	635.0p

The Statement above is regarded as being in a condensed form due to the fact that fewer explanatory notes are included than would be the case in the Annual Report.

  Condensed Group Cash Flow Statement

                                                                                                                                      for the six months ended 30 September 2009

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	30 September	30 September	31 March
	2009	2008	2009
	£000	£000	£000
Cash flows from operating activities
Profit/(loss) before finance costs and taxation	60,269	(23,470)	(66,152)
Adjustments for:
Realised gain/(loss) on investments	179	(13,181)	(13,181)
Unrealised (gain)/loss on investments	(57,190)	41,656	85,812
Effect of foreign exchange rate changes	-	(1)	(1)
Decrease in trade and other receivables	437	75	1,248
Increase/(decrease) in trade and other payables	133	(40)	(114)
Taxes paid	(4)	(84)	(87)
Purchase of non-current investments	(8,668)	(3,960)	(6,974)
Sale of non-current investments	-	30,682	30,682
Net cash (outflow)/inflow from operating activities	(4,844)	31,677	31,233
Cash flows from financing activities
Interest paid on bank loans	-	(113)	(113)
Dividends paid	(3,480)	(2,280)	(3,120)
Repayment of loans	-	(15,800)	(15,800)
Net cash outflow from financing activities	(3,480)	(18,193)	(19,033)
(Decrease)/increase in cash and cash equivalents	(8,324)	13,484	12,200
Cash and cash equivalent at 1 April	12,452	251	251
Effect of foreign exchange rate changes	-	1	1
Cash and cash equivalents at end of period	4,128	13,736	12,452

The Statement above is regarded as being in a condensed form due to the fact that no explanatory notes are included as would be the case in the Annual Report.

  Notes to the Condensed Financial Statements

1. ACCOUNTING POLICIES

The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ('IFRS'). These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group operates. 

(a)    Basis of preparation 

This half-yearly report is prepared in accordance with IAS 34 and on the basis of the accounting policies set out in the group and Company's Annual Report and Accounts at 31 March 2009.

The financial statements have been prepared on an historical cost basis, except for the revaluation of certain financial assets. The principal accounting policies adopted are set out below. Where presentational guidance set out in the Statement of Recommended Practice ('SORP') for investment trusts issued by the Association of Investment Companies (AIC) is consistent with the requirements of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP and with pronouncements on interim reporting issued by the Accounting Standards Board.

(b)    Basis of Consolidation 

The consolidated financial statements incorporate the financial statements of the Company and its subsidiary undertakings made up to 30 September 2009.

(c)    Presentation of income statement

In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the income statement between items of a revenue and capital nature has been presented alongside the Income Statement. In accordance with the Company's status as a UK investment company under section 833 of the Companies Act 2006, net capital returns may not be distributed by way of dividend. Additionally, the net revenue is the measure the Directors believe to be appropriate in assessing the Company's compliance with certain requirements set out in section 842 of the Income and Corporation Taxes Act 1988.

(d)    Non-current investments 

As the Company's business is investing in financial assets, with a view to profiting from their total return in the form of income received and increases in fair value, investments are designated as fair value through profit and loss on initial recognition in accordance with IAS 39. The Company manages and evaluates the performance of these investments on a fair value basis in accordance with its investment strategy and information about the investments is provided on this basis to the Board of Directors.

Investments are recognised and de-recognised on the trade date. For listed investments fair value is deemed to be bid market prices or closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock Exchange electronic trading service covering most of the market including all FTSE 100 constituents and most liquid FTSE 250 constituents along with some other securities. 

Unquoted investments are stated at fair value through profit or loss as determined by using various valuation techniques, in accordance with the International Private Equity and Venture Capital ("IPEVC") Valuation Guidelines. These include using recent arms length market transactions between knowledgeable and willing parties where available.

Gains and losses arising from changes in fair value are included in net profit or loss for the period as a capital item in the income statement and are ultimately recognised in the Capital Reserves.

(e)    Derivative Financial Instruments

Over the counter derivative options are measured at fair value as valued by the issuing broker at bid-market price. 

(f)    Cash and cash equivalents 

Cash and cash equivalents comprise cash at bank, short-term deposits and cash funds with an original maturity of three months or less and are subject to an insignificant risk of changes in capital value.

(g)    Investment Income 

Dividends receivable on equity shares are recognised on the ex-dividend date. Where no ex-dividend date is quoted, dividends are recognised when the Company's right to receive payment is established. UK dividends are stated net of related tax credits while overseas dividends and REIT income is stated gross.

Underwriting commission is recognised in the revenue column of the Income Statement, insofar as it relates to shares not required to be taken up. Where a proportion of the shares underwritten are required to be taken up the same proportion of the commission received is recognised in the capital column of the Income Statement, with the balance taken to the revenue column.

(h)    Expenses 

(All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement except as follows:

(i)    expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the Income Statement; and

(ii)    expenses are charged to the realised capital reserve, via the capital column of the Income Statement, where a connection with the maintenance or enhancement of the value of the investments can be demonstrated.

(i)    Taxation 

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the Income Statement because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet date.

In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against capital returns in the supplementary information in the Income Statement is the "marginal basis". Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the Income Statement, then no tax relief is transferred to the capital return column.

Deferred taxation is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Investment trusts which have approval under Section 842 ICTA 1988 are not liable for taxation on capital gains.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Income Statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

(j)    Foreign Currencies 

Transactions denominated in foreign currencies are recorded in the local currency, at the actual exchange rates as at the date of the transaction. Assets and liabilities denominated in foreign currencies at the year end are reported at the rate of exchange prevailing at the year end. Any gain or loss arising from a change in exchange rates, subsequent to the date of the transaction, is included as an exchange gain or loss in the capital or revenue column of the Income Statement, depending on whether the gain or loss is of a capital or revenue nature respectively.

(k)    Capital Reserve

Gains or losses on realisation of investments and changes in fair values of investments which are readily convertible to cash, without accepting adverse terms, are transferred to the capital reserve. 

2. INVESTMENT INCOME

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	30 September	30 September	31 March
	2009	2008	2009
	£000	£000	£000
Income from listed investments
Dividends	2,108	2,415	3,474
Overseas dividends	2,329	2,399	2,454
	4,437	4,814	5,928
Other operating income
Stock Dividend	31	-	-
Interest receivable AAA rated money market funds	23	300	487
Interest receivable	-	1	64
	54	301	551
Total income	4,491	5,115	6,479
Total income comprises:
Dividends	4,437	4,814	5,928
Interest	23	301	551
Stock Dividend	31	-	-
	4,491	5,115	6,479

3. RETURNS PER SHARE

The returns stated below are based on 24,000,000 shares, being the weighted average number of shares in issue during the period. 

		Revenue		Capital		Total
		Pence		Pence		Pence
Period	£000	per share	£000	per share	£000	per share
Six months ended 30 September 2009	3,558	14.8	56,707	236.3	60,265	251.1
Six months ended 30 September 2008	3,830	16.0	(27,497)	(114.6)	(23,667)	(98.6)
Year ended 31 March 2009	4,387	18.3	(70,739)	(294.8)	(66,352)	(276.5)

4. FINANCIAL INFORMATION

The financial information contained in this half-yearly report is not the Company's statutory accounts as defined in section 435(1) of the Companies Act 2006. The financial information for the six months ended 30 September 2009 and 30 September 2008 is not for a financial year, has not been audited or reviewed by the auditors and has been prepared in accordance with accounting policies consistent with those set out in the Annual Report and Accounts for the year ended 31 March 2009.

The statutory accounts for the financial year ended 31 March 2009 have been delivered to the Registrar of Companies and received an audit report which was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain statements under section 237(2) and (3) of the Companies Act 1985.

The half-yearly financial information was approved by the Board of Directors on 19 November 2009.

5. NET ASSET VALUE PER SHARE

The Net Asset Value per share is based on the net assets attributable to equity shareholders of £209,191,000 (six months ended 30 September 2008: £195,931,000; year ended 31 March 2009: £152,406,000) and on 24,000,000 shares, being the number of shares in issue at the period ends.

6. COMMITMENTS AND CONTINGENCIES

The Company has entered into a commitment agreement with DV3 Limited, an unquoted property investment company. The commitment was for £807,438 for a period of three years from 30 March 2008. The amount outstanding at 30 September 2009 was £327,438 (31 March 2009: £327,438).

During 2007/08 the Company entered into a further commitment agreement with DV4 Limited, also an unquoted property investment company. The commitment was for £10m for a period of five years from 7 March 2008 and the amount outstanding at 30 September 2009 was £8,268,873 (31 March 2009: £8,268,873).

The Company continues to pursue outstanding VAT recoverable following the HMRC's acceptance of the European Court of Justice Judgement, from its former investment managers and whilst the Board is confident it will recover further amounts, the level and timing of these amounts remains uncertain.

  Investor Information

The Company currently manages its affairs so as to be a qualifying investment trust for ISA purposes. As a result, under current UK legislation, the Ordinary and 'A' non-voting Ordinary shares qualify for investment in the stocks and shares component of a non-CAT Standard ISA up to the full annual subscription limit. It is the present intention that the Company will conduct its affairs so as to continue to qualify for ISA products.

CAPITAL STRUCTURE

The Company has 8,000,000 Ordinary shares of 5p and 16,000,000 'A' non-voting Ordinary shares of 5p each in issue. The Ordinary shareholders are entitled to one vote per Ordinary share held. The 'A' non‑voting Ordinary shares do not entitle the holders to vote or receive notice of meetings but in all other respects they have the same rights as the Company's Ordinary shares. 

CONTACT DETAILS

Please contact the Investment Manager, as below, if you have any queries concerning the Company's investments or performance.

Hansa Capital Partners LLP
50 Curzon Street

London W1J 7UW 

Telephone: [phone] 

www.hansagrp.com 

Please contact the Registrars, as below, if you have a query about a certificated holding in the Company's shares. 

Capita Registrars 

The Registry 

Northern House
Woodsome Park 
Fenay Bridge 
Huddersfield

West Yorkshire HD8 0LA

Telephone: [phone]

Email: [e-mail]

www.capitaregistrars.com 

WEB SITE ADDRESS AND CONTENTS

The Company's website, www.hansatrust.com contains information on the Company and includes the following:

Monthly Fact Sheets

Quarterly Interim Statements

Annual and Half-yearly Reports 

Stock Exchange Announcements

Details of the Board and Investment Manager

Share Price Data

SHARE PRICE LISTINGS 

The price of your shares can be found in the Financial Times under the heading Investment Companies.

In addition, share price information can be found under the following: 

ISIN No                                        Code
Ordinary Shares                           GB0007879728
'A' non-voting Ordinary shares        GB0007879835
Sedol No
Ordinary Shares                            0787972
'A' non-voting Ordinary shares        0787983
Reuters
Ordinary shares                            HAN.L
'A' non-voting Ordinary shares        HANA.L
Bloomberg
Ordinary shares                            HAN LN
'A' non-voting Ordinary shares        HANA LN

SEAQ

Ordinary shares HAN

'A' non-voting Ordinary shares HANA

USEFUL INTERNET ADDRESSES 

The Association of 
Investment Companies                                            www.theaic.co.uk

London Stock 

Exchange                                           www.londonstockexchange.com
TrustNet                                                                  www.trustnet.com
Interactive                                                                       www.iii.co.uk

FINANCIAL CALENDAR 

Company year end                                                           31 March
Preliminary full year results announced                               June
Annual Report sent to shareholders                                    July
Annual General Meeting held                                            August
Final Dividend payment                                                       August
Announcement of half-yearly results                       26 November
Half-yearly Report sent to shareholders                 10 December 
Interim Dividend payment                                            18 December 

  Total Return Performance Graphs

NET ASSET VALUE

	6 months	1 year	3 years	5 years	10 years
Net Asset Value	40.1%	9.5%	13.7%	99.9%	214.1%
Benchmark	3.2%	6.5%	19.9%	33.0%	69.6%

SHARE PRICE

	6 months	1 year	3 years	5 years	10 years
Ordinary Share	51.3%	2.9%	(7.6%)	102.3%	236.4%
'A' non-voting Ordinary Share	56.2%	3.1%	(2.4%)	101.6%	260.3%
FTSE All-Share	35.9%	11.3%	(2.3%)	41.1%	33.7%

The returns in the above charts have assumed that the dividends paid by the Company have been re-invested on the payment date, at the prevailing Net Asset Value and Share Price.

Past Performance is not a guide to future performance.    Source: Internal Management Information

 

END

 

 

IR FEAFIFSUSESE