Half Yearly Report

RNS Number : 6637W

Hansa Trust PLC

23 November 2010

 



HANSA TRUST PLC

Announcement of Half-Yearly Results

for the six months ended 30 September 2010

Hansa Trust PLC announces its Half-Yearly Results for the six months ended 30 September 2010.

Financial Highlights	Six months ended 30 September 2010 (unaudited)	Year ended 31 March 2010 (audited)
Net Asset Value - Total Return	13.6%	48.0%
Performance Benchmark	2.7%	6.2%
Capital return per equity share	118.1p	272.9p
Revenue return per equity share	3.8p	27.4p
Net asset value per equity share	1,017.8p	895.9p
Dividend per equity share	3.5p	25.0p
Total income (£000's)	1,889	8,370
Revenue before taxation (£000's)	913	6,584

An interim dividend of 3.5p per share (amounting to £840,000) is to be paid.

Ex-dividend date: 1 December 2010

Record date: 3 December 2010

Payment date: 17 December 2010

The following are attached:

·              Chairman's Statement

·              Condensed Group Income Statement

·              Condensed Statement of Changes in Equity

·              Condensed Group Balance Sheet

·              Condensed Group Cash Flow Statement

·              Notes

For further information please contact:

Peter Gardner                Hansa Capital Partners LLP                    020 7647 5750

Chairman's Statement

CURRENCIES AND STOCK MARKETS

The first half of our year, the year which began on 1 April 2010, was really about currencies. It began with the Euro crisis erupting as the financial world became very concerned about the finances of Greece - most particularly - but also of Ireland, Italy, Portugal and Spain. The whole concept of the European single currency was being called into question; the banking crisis had moved on to a currency crisis. As so often happens the world's investors fled to the (supposedly) safe haven of the US Dollar which rose by circa 10% against the collapsing Euro and by lesser amounts against others. Stock markets were decidedly weak.

However, stock markets started to turn around during our second quarter and, although most failed to recover their first quarter losses, the recovery had started. By the end of September 2010 the indices of the markets of the largest economies had performed as follows:

Change in Stock Markets (£s, 31 March to 30 September 2010)
Australia	-3.6%		China	-15.8%		Japan	-8.6%
Brazil	0.2%		France	-8.9%		UK	-1.4%
Canada	-2.1%		Germany	-1.3%		USA	-5.7%

It would appear that Investors regard stocks and shares as a better store of value than paper currencies. Fuelled by generous monetary polices around the world, stock markets, by 18 November, the date of writing this statement, had recovered even further.

The Euro crisis dominated the first three months; the unfolding US Dollar crisis along with the return of the Euro crisis are the new concerns.  From the end of June to 18 November the US Dollar has steadily weakened as the table below shows:

Decline of US$ (v. local currency - 30 June to 18 November 2010)
Australia	-14.3%		China	-2.2%		Japan	-5.6%
Brazil	-4.5%		France	-10.0%		UK	-6.7%
Canada	-4.1%		Germany	-10.0%

It is not unreasonable that, when countries put their national balance sheets on line to save their banking systems, there will be a run on their currencies and so it has happened.  It is fair to say that none of the world's major currencies can be regarded as a proper store of value and that is well reflected in the rising price of gold.  By 18 November it had risen against all those major currencies, hitting a new high of over $1,400 per ounce - over 25% higher than it was on 31 March 2010. The world clearly distrusts fiat currencies.

THE NET ASSET VALUE (30 SEPT 2010)

NAV: 1,017.8p per share (+ 121.9p; + 13.6%)

I am very happy to be able to report that the net asset value per share rose from 895.9p to 1,017.8p.  As with markets generally, it was a tale of two halves, the net asset value declining by 6.5% during the first three months but more than recovering over the second three months during which it rose by 21.5%, leaving the net asset value 13.6% or 121.9p higher over the six months. That is better than our benchmark (+ 2.7%) but, as we mention all the time, we do not consider such short-term performance meaningful. Stock markets are far too volatile to put much store in any returns earned over half a year.  For the sake of comparison the UK's stock market, (as reflected by the FTSE All-Share Index) fell - as shown in the table above - by 1.4%.

However the return does underline the excellent recovery in the net asset value since the end of March 2009, the month when the stock markets generally bottomed out following the sub-prime mortgage collapses. At the end of March 2009 our net asset value stood at 635p, so that the subsequent recovery of circa 60% is most welcome.  Furthermore we paid dividends over the period of 39.5p per share for a total return of 68%; our benchmark returned 9%.  Again by way of contrast the UK stock market rose by circa 47%, with a total return of 54%.

Once again our holding in Ocean Wilsons was the main driver of the increase in the net asset value.  John Alexander writes about its developments and its share price performance over the period in his Investment Manager's Report - its shares rose by circa 25% over the six months and by circa 118% since the end of the bear market - so I will not dwell on it. The continued good performance of its shares has resulted in our holding accounting for 43% of shareholders' equity and for the first time ever the value of the holding has risen above £100 million (£105.2 at the end of September). We remain optimistic about its maritime business in Brazil but it is important to remind shareholders that Ocean Wilsons is more than just a Brazilian operating company. It has an investment subsidiary with assets in excess of $250 million (Ocean Wilsons market capitalisation is c.$750m), which has exposure through various investment vehicles to a number of economies: mainly emerging.

THE SHARE PRICES

Ordinary shares:                 837.5p (+ 77.5p; + 10.2%)

"A" Ordinary shares:            820.0p (+ 70.0p; +   9.3%)

Both classes of shares rose over the period as shown in the table above, reflecting the rise in the underlying net asset value.  It left the respective discounts at 17.7% and 19.4%.

THE INTERIM DIVIDEND

It should be mentioned that no final dividend was paid in the period as a second interim had been paid towards the end of March.  However the Board has declared an interim dividend in respect of the year to 31 March 2011 of 3.5p per share, the same level of dividend that was paid last year, to be paid on 17 December 2010 to shareholders on the Register of Members on 3 December 2010.

GOVERNANCE AND REGULATION

Your Board of Directors is currently involved in dealing with a number of governance and regulation issues, which have emanated from Brussels and London. The Alternative Investment Fund Managers Directive ("AIFM") from Brussels is the European Union's regulation directive aimed at bringing certain types of funds (including investment trust companies) into its a regulated environment. The Association of Investment Companies, of which Hansa Trust is a member, has done a good job in representing the interests of investment trust companies and has succeeded in reining in most of the unworkable provisions in the original proposals.  There are consequences and costs for Hansa but none that would appear to be unmanageable.

The never ending creep of corporate governance rules, regulations and best practices continues with further revisions, led by David Walker, to the Code of Corporate Governance. To add to the mountain of governance is a new Stewardship Code, which is one more piece of red tape for your board to deal with. While the spirit behind much of the provisions of all of these codes usually makes sense, it really is highly unlikely that the new provisions would have saved the country from the consequences of the massive corporate governance failures of our major banks. Good governance is not about red taped compliance but rather about sound judgement and decisions born of wisdom, experience and thorough knowledge of the business of a company.

However the single most important matter that your Board of Directors is dealing with is the proposal for the modernisation of the taxation rules of investment trust companies issued by HMRC. Whilst it contains many proposals which would greatly benefit London as an investment centre, certain others could have an impact on our Company. Your Board on your behalf has made submissions to HMRC and other parties in order to ensure these proposals are rejected and that the Company remains unaffected by the proposed changes in legislation. Our case together with a number of other similarly impacted investment trusts is being supported by The Association of Investment Companies who have also made submissions to HMRC.

PROSPECTS

As he always does, John Alexander provides an excellent summary of the developments within - and the prospects for - the portfolio and thence the Company and as I say each time I write a statement, our prospects depend ultimately on ourselves.

However the external investment environment remains an important consideration for us. The huge build up of debt by consumers, companies, banks and governments over the last thirty or so years finally erupted into the monstrous financial crisis of 2008/2009.  Governments moved reasonably quickly to deal with the immediate consequences of the crisis - banking insolvency and an implosion of liquidity - so that by the end of the first quarter of 2009 that particular fire had been doused.  However the action put national balance sheets on the line and so, not unsurprisingly, a currency crisis erupted; it is doubtful that that is over and it is in turn showing signs of evolving into a currency war - for the moment in lieu of a trade war. It must be hoped there will be sufficient common sense and wisdom amongst our political and financial leaders to solve these problems but even if there is it will take time. It is likely that the performance of stock markets will continue to be volatile with periods of calm, optimism and profitability and other periods of crisis and losses.

Volatility provides opportunity for the long-term investor as much as for the short-term trader. There are plenty of opportunities to make money in equities around the world, particularly in those equities exposed to the faster growing and more soundly financed countries and companies of the emerging market economies. It is up to us to take advantage of them; we have in the past and I would expect us to do so in the future.

Alex Hammond-Chambers
Chairman
18 November 2010

Condensed group income statement

for the six months ended 30 September 2010

	(Unaudited) Six months ended 30 September 2010			(Unaudited) Six months ended 30 September 2009			(Audited) Year ended 31 March 2010
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£000	£000	£000	£000	£000	£000	£000	£000	£000
Gains on investments	-	28,369	28,369	-	57,011	57,011	-	66,232	66,232
Loss on derivatives	-	(16)	(16)	-	(304)	(304)	-	(744)	(744)
Currency exchange losses	-	(4)	(4)	-	-	-	-	-	-
Investment income (see note 2)	1,889	-	1,889	4,491	-	4,491	8,370	-	8,370
	1,889	28,349	30,238	4,491	56,707	61,198	8,370	65,488	73,858
Investment management fees	(639)	-	(639)	(614)	-	(614)	(1,264)	-	(1,264)
Write back of prior years' VAT	51	-	51	-	-	-	97	-	97
Other expenses	(351)	-	(351)	(315)	-	(315)	(618)	-	(618)
	(939)	-	(939)	(929)	-	(929)	(1,785)	-	(1,785)
Profit before finance costs and taxation
	950	28,349	29,299	3,562	56,707	60,269	6,585	65,488	72,073
Finance costs	(37)	-	(37)	-	-	-	(1)	-	(1)
Profit before taxation	913	28,349	29,262	3,562	56,707	60,269	6,584	65,488	72,072
Taxation	(4)	-	(4)	(4)	-	(4)	(4)	-	(4)
Profit for the period	909	28,349	29,258	3,558	56,707	60,265	6,580	65,488	72,068
Return per Ordinary and 'A'
non-voting Ordinary share
(see note 3)	3.8p	118.1p	121.9p	14.8p	236.3p	251.1p	27.4p	272.9p	300.3p

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 2010 (Unaudited)

	Share Capital	Capital redemption reserve	Retained Earnings	Total
	£000	£000	£000	£000
Net assets at 1 April 2010	1,200	300	213,514	215,014
Profit for the period	-	-	29,258	29,258
Dividends paid	-	-	-	-
Balance at 30 September 2010	1,200	300	242,772	244,272

Condensed Statement of Changes in Equity

for the six months ended 30 September 2009 (Unaudited)

	Share Capital	Capital redemption reserve	Retained 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 year ended 31 March 2010 (Audited)

	Share Capital	Capital redemption reserve	Retained Earnings	Total
	£000	£000	£000	£000
Net assets at 1 April 2009	1,200	300	150,906	152,406
Profit for the year	-	-	72,068	72,068
Dividends paid	-	-	(9,460)	(9,460)
Balance at 31 March 2010	1,200	300	213,514	215,014

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 2010

	(Unaudited)	(Unaudited)	(Audited)
	30 September	30 September	31 March
	2010	2009	2010
	£000	£000	£000
Non-current investments
Investments held at fair value through profit and loss	254,655	204,706	216,309
Current Assets
Trade and other receivables	688	713	631
Cash and cash equivalents	176	4,128	1,824
	864	4,841	2,455
Current Liabilities
Trade and other payables falling due within one year	(11,247)	(356)	(3,750)
Net current (liabilities) /assets	(10,383)	4,485	(1,295)
Net assets	244,272	209,191	215,014
Equity
Called up share capital	1,200	1,200	1,200
Capital redemption reserve	300	300	300
Retained earnings	242,772	207,691	213,514
Total equity shareholders' funds	244,272	209,191	215,014
Net asset value per Ordinary and
'A' non-voting Ordinary share (see note 5)	1,017.8p	871.6p	895.9p

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 2010

	(Unaudited)	(Unaudited)	(Audited)
	Six months ended	Six months ended	Year ended
	30 September	30 September	31 March
	2010	2009	2010
	£000	£000	£000
Cash flows from operating activities
Profit before finance costs and taxation	29,299	60,269	72,073
Adjustments for:
Realised (gains)/losses on investments	(939)	179	1,704
Unrealised gains on investments	(27,430)	(57,190)	(67,936)
Effect of foreign exchange rate changes	4	-	-
(Increase)/decrease in trade and other receivables	(57)	437	519
(Decrease)/increase in trade and other payables	(3)	133	27
Taxes paid	(4)	(4)	(4)
Purchase of non-current investments	(12,050)	(8,668)	(16,075)
Sale of non-current investments	2,073	-	5,025
Net cash outflow from operating activities	(9,107)	(4,844)	(4,667)
Cash flows from financing activities
Interest paid on bank loans	(37)	-	(1)
Dividends paid	-	(3,480)	(9,460)
Drawdown of loans	7,500	-	3,500
Net cash inflow/(outflow) from financing activities	7,463	(3,480)	(5,961)
Decrease in cash and cash equivalents	(1,644)	(8,324)	(10,628)
Cash and cash equivalent at 1 April	1,824	12,452	12,452
Effect of foreign exchange rate changes	(4)	-	-
Cash and cash equivalents at end of period	176	4,128	1,824

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:

1.    This Announcement is not the Company's Half-Yearly accounts. It is an abridged version of the Company's full Half-Yearly 
accounts for the six months ended 30 September 2010, which have not yet been approved or distributed to shareholders.

2.     The full Half-Yearly accounts for the six months ended 30 September 2010 have been prepared in accordance with International 
Financial Reporting Standards ("IFRS") and using the same accounting policies as those in the last published annual accounts, being those to 31 March 2010.

3.     Statutory accounts for the 12 months ended 31 March 2010 have been delivered to the Registrar of Companies and received an 
audit report which was unqualified, did not include a reference to any matter to which the auditors drew attention without qualifying the report, and did not contain statements under Section 498 of the Companies Act 2006.

Hansa Capital Partners LLP - Company Secretary

18 November 2010

 

END

 

 

IR FEEFEDFSSESF