Interim Results
Hansa Trust PLC
23 November 2007
HANSA TRUST PLC
Announcement of Half Yearly Results
for the six months ended 30 September 2007
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.
FINANCIAL HIGHLIGHTS
Six months Year ended
ended
30 September 31 March 2007
2007
(unaudited) (audited)
Net Asset Value - Total Return 0.51% 28.4%
Benchmark 3.4% 6.7%
Capital return per equity share (3.5p) 218.2p
Revenue return per equity share 8.3p 12.8p
Net asset value per equity share 1035.2p 1039.4p
Interim Dividend 3.5p 3.5p
Total income (£000's) 3,427 5,215
Revenue before taxation (£000's) 2,020 3,116
An interim dividend of 3.5p per share (amounting to £840,000) is to be paid.
Ex-dividend date: 5 December 2007
Record date: 7 December 2007
Payment date: 21 December 2007
The following are attached:
• Chairman's Statement
• Condensed Group Income Statement
• Condensed Statement of Changes in Equity
• Condensed Consolidated Balance Sheet
• Condensed Consolidated Cash Flow Statement
• Notes
For further information please contact:
Peter Gardner Hansa Capital Partners LLP 020 7647 5750
CHAIRMAN'S STATEMENT
HALF YEAR RESULTS: NAV 1,035.2p p share (-0.4%)
We suffered a very small decline in the net asset value in the first six months
of the current year; it fell from 1,039.4p per share to 1,035.2p - a decline of
0.4%. It came about as a consequence of a small decline in the value of the
portfolio and the payment of the final dividend (which, under the new accounting
standards, relates to last year's income!), offset by the net income earned in
this period. The table below summarises the returns per ordinary and A ordinary
shares:
Starting net asset value: 1,039.4p
Final dividend -9.0p
Net income earned 8.3p
Decline in the value of the portfolio -3.5p
Closing net asset value: 1,035.2p
As shareholders you are aware that our goal is to make money - not every year,
let alone every half year - but over the longer-term which we determine as five
years. We have set ourselves an appropriate absolute return benchmark to go with
our absolute return objective and that returned 3.4%. We recognise that in
difficult stock markets such a benchmark will be difficult to beat. And of
course we aim to beat the stock market - we compare our return with the FTSE
All-share Index - and that rose by 1.0% to 3,317.
It has been a bit of a roller coaster six months. It started well enough with
the stock market continuing the upward trend which had started after the shake
out that occurred in May and June 2006. It looked as though it would achieve its
old high established at the end of 1999 when the index reached nearly 7,000.
However, the news concerning banking problems just got worse and worse.
Eventually we had the first run on a bank in 140 years - Northern Rock - and the
momentum in the price of stocks and shares came to an end. The index recovered
somewhat by the end of September leaving it marginally higher than at 31st March
2007.
Our own portfolio bears very little resemblance to any index - rightly so, for
we are paid to be different and to do better thereby. John Alexander's
investment manager's report, which follows this statement, goes into
considerable detail on the returns of the different themes that make up the
portfolio and of the underlying holdings. Our top three contributors to our net
asset value returns were Resolution plc which added 11.7p per Hansa share, Ocean
Wilsons 5.9p and BHP Billiton 3.7p. However at the other end of our attribution
list were the negative returns of -6.8p per Hansa share for our holding in Engel
East Europe, -5.3p for Wolseley and -3.9p for Melrose Resources.
INTERIM DIVIDEND: 3.5p per share (unchanged)
The Board has declared an interim dividend of 3.5p per Ordinary and A Ordinary
shares - the same as last year - to be paid to shareholders on 21st December
2007.
VALUE ADDED TAX:
Shareholders will be aware that our manager, Hansa Capital Partners LLP, has
been charging management fees on which the VAT last year amounted to c.
£200,000. Following a recent decision by the European Court of Justice that Her
Majesty's Revenue and Customs should not be levying VAT on the management fees
paid by investment trust companies, HMRC has confirmed that it will not do so in
the future. Although there are still one or two issues to sort out, we have
already stopped paying VAT on our management fee and we expect to reclaim some
of the payments made in the past. These potential repayments have not been
reflected in the half year statement.
OUTLOOK:
The short term outlook for equities is not as rosy as it has been in recent
times. The provision in the United States of mortgages to a large number of
households who could not afford them has created a considerable problem in the
banking industry - the problem being popularly referred to as the 'sub-prime'
crisis. It may also be that there are other loans that banks have been making in
the past few years that are of doubtful value, including some of those made to
hedge and private equity funds. Any time that there is a banking crisis is
usually a bad time for stock markets and it is not unreasonable to suppose that
they may decline in the short term.
CHAIRMAN'S STATEMENT - (CONTINUED)
However, the long term outlook for equities still remains excellent, as
companies benefit from the development of emerging economies (China, India, etc)
and from the powerful electronics revolution and its effect on productivity.
Brazil of course is one of those countries with an emerging economy and we have
a very considerable exposure to it through our holding in Ocean Wilsons (c. 30%
of our portfolio). Shareholders should be aware that, because it is a large
holding, the portfolio's value is at risk to any mishap in either Brazil or the
company; however it should also be remembered that the investment represents a
great opportunity for further gains in the net asset value. We retain our
confidence in its excellent future prospects.
The level of borrowing at 30th September stood at £750,000 drawn down from our
facility of £20 million; the very small level of gearing reflects our concern
about the near term uncertainties in the markets. This left us with borrowing
capacity of some £19 million to buy shares in the event of a serious stock
market decline. However since the period end, we have received bids for three of
the holdings in our portfolio and - as a consequence - our net cash position
today stands at circa £32 million to back up the £20million borrowing facility.
We are well positioned to take advantage of any distressed selling that may well
occur in these turbulent markets. In addition we are reviewing derivative
stragegies designed to provide some protection to the portfolio in the event of
a further serious stock market decline. I hope to report to you more on this
matter in the Annual Report.
Central banks face the very difficult task of setting interest rates at an
appropriate level which balances the needs of the banking industry and the
economies they operate in and the risk of global inflation. It will not be easy.
However slow downs, even recessions, are times when past excesses and
misdemeanours are cleared up, setting up a platform for the next phase of
economic growth and a new bull market. We may have to wait a little bit for it
but the long term fundamentals argue strongly in favour of it.
Alex Hammond-Chambers
Chairman
22 November 2007
CONDENSED GROUP INCOME STATEMENT
for the six months ended 30 September 2007
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
30 September 30 September 31 March 2007
2007 2006
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
------ ------ ------ ------ ------ ------ ------ ------ ------
(Loss)/
Gains - (846) (846) - (3,013) (3,013) - 52,403 52,403
on
investments
Loss on
derivative - - - - - - - (20) (20)
Exchange
Gains/
(Loss)
on currency - - - - 5 5 - (10) (10)
balances
Investment
income (see
note 2) 3,427 - 3,427 3,152 - 3,152 5,215 - 5,215
------- ------ ------ ------- ------ ------ ------- ------ ------
3,427 (846) 2,581 3,152 (3,008) 144 5,215 52,373 57,588
------- ------ ------ ------- ------ ------ ------- ------ ------
Investment
management
fees (1,045) - (1,045) (645) - (645) (1,312) - (1,312)
Other
operating
expenses (361) - (361) (262) - (262) (561) - (561)
------- ------ ------ ------- ------ ------ ------- ------ ------
(1,406) - (1,406) (907) - (907) (1,873) - (1,873)
------- ------ ------ ------- ------ ------ ------- ------ ------
Profit/
(Loss)
before
finance 2,021 (846) 1,175 2,245 (3,008) (763) 3,342 52,373 55,715
costs and
taxation
Finance (1) - (1) (225) - (225) (226) - (226)
costs
------- ------ ------ ------- ------ ------ ------- ------ ------
Profit/
(Loss)
before 2,020 (846) 1,174 2,020 (3,008) (988) 3,116 52,373 55,489
taxation ------- ------ ------ ------- ------ ------ ------- ------ ------
Taxation (38) - (38) (33) - (33) (58) - (58)
------- ------ ------ ------- ------ ------ ------- ------ ------
Profit/
(Loss) 1,982 (846) 1,136 1,987 (3,008) (1,021) 3,058 52,373 55,431
for the ------- ------ ------ ------- ------ ------ ------- ------ ------
period
Return per
Ordinary
and
'A'
non-voting
Ordinary 8.3p (3.5p) 4.8p 8.3p (12.5p) (4.2p) 12.8p 218.2p 231.0p
share ------- ------ ------ ------- ------ ------ ------- ------ ------
(see note 3)
The total column of this statement represents the Group's Income Statement,
prepared in accordance with IFRS. The supplementary revenue return and capital
return columns are both prepared under guidance published by the Association of
Investment Companies.
All revenue and capital items in the above statement derive from continuing
operations.
The Statement above is regarded as being in a condensed form due to the fact
that no explanatory notes are available as would be the case in the Annual
Report.
CONDENSED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2007
(Unaudited)
Share Capital Retained Total
Capital redemption Earnings
reserve
£ 000 £ 000 £ 000 £ 000
---------- -------- -------- -------
Net assets at 1 April 2007 1,200 300 247,966 249,466
Profit for the period - - 1,136 1,136
Dividends paid - - (2,160) (2,160)
---------- -------- -------- -------
Balance at 30 September 2007 1,200 300 246,942 248,442
---------- -------- -------- -------
CONDENSED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2006
(Unaudited)
Share Capital Retained Total
Capital redemption Earnings
reserve
£ 000 £ 000 £ 000 £ 000
--------- --------- ------- -------
Net assets at 1 April 2006 1,200 300 194,875 196,375
Profit for the period - - (1,021) (1,021)
Dividends paid - - (1,500) (1,500)
--------- --------- ------- -------
Balance at 30 September 2006 1,200 300 192,354 193,854
--------- --------- ------- -------
CONDENSED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2007
(Audited)
Share Capital Retained Total
Capital redemption earnings
reserve
£ 000 £ 000 £ 000 £ 000
-------- ---------- ------- --------
Net assets at 1 April 2006 1,200 300 194,875 196,375
Profit for the year - - 55,431 55,431
Dividends paid - - (2,340) (2,340)
-------- ---------- ------- --------
Balance at 31 March 2007 1,200 300 247,966 249,466
-------- ---------- ------- --------
The Statements above are regarded as being in a condensed form due to the fact
that no explanatory notes are available as would be the case in the Annual
Report.
CONDENSED CONSOLIDATED BALANCE SHEET
as at 30 September 2007
(Unaudited) (Unaudited ) (Audited)
30 September 30 September 31 March
2007 2006 2007
£000 £000 £000
---------- ---------- ---------
Non -current investments
Investments held at fair value
through profit and loss 251,946 170,534 243,641
---------- ---------- ---------
Current Assets
Other receivables 574 1,598 737
Investments 10 - 4,667
Cash and cash equivalents 15 21,959 1,424
---------- ---------- ---------
599 23,557 6,828
Current Liabilities
Other payables falling due within one
year (4,103) (237) (1,003)
---------- ---------- ---------
Net current assets/(liabilities) (3,504) 23,320 5,825
---------- ---------- ---------
Net assets 248,442 193,854 249,466
---------- ---------- ---------
Equity
Called up share capital 1,200 1,200 1,200
Capital redemption reserve 300 300 300
Retained earnings 246,942 192,354 247,966
---------- ---------- ---------
Total equity shareholders' funds 248,442 193,854 249,466
---------- ---------- ---------
Net asset value per Ordinary and 1,035.2p 807.7p 1,039.4p
'A' non-voting Ordinary share (see note
5)
The Statement above is regarded as being in a condensed form due to the fact
that no explanatory notes are available as would be the case in the Annual
Report.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 September 2007
--------------------------- ----------- ----------- ----------
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended ended
30 September 30 September 31 March
2007 2006 2007
£000 £000 £000
----------- ----------- ----------
Profit/(Loss) before
finance costs and taxation 1,175 (763) 55,715
Adjustments for:
Realised gains on
investments (5,158) (22,171) (32,063)
Unrealised gains/(loss) on
investments 6,004 25,185 (20,340)
Effect of foreign exchange
rate changes - (5) 10
Increase/(decrease) in
prepayments and accrued
income 82 (186) (391)
Decrease/(increase) in
other creditors and
accruals 2,349 (58) -
Taxes paid (38) (9) (58)
Purchase of non-current
investments (24,479) (17,286) (65,752)
Sale of non-current
investments 15,409 45,331 77,905
----------- ----------- ----------
Net cash inflow/(outflow)
from operating activities (4,656) 30,038 15,026
----------- ----------- ----------
Cash flows from financing activities
Interest paid on bank loans - (225) (226)
Dividends paid (2,160) (1,500) (2,340)
Drawdown/(repayment) of
loans 750 (6,600) (6,600)
----------- ----------- ----------
Net cash (outflow) from
financing activities (1,410) (8,325) (9,166)
----------- ----------- ----------
(Decrease)/Increase in cash
and cash equivalents (6,066) 21,713 5,860
Cash and cash equivalent at
1 April 6,091 241 241
Effect of foreign exchange
rate changes - 5 (10)
----------- ----------- ----------
Cash and cash equivalents
at end of period 25 21,959 6,091
----------- ----------- ----------
The Statement above is regarded as being in a condensed form due to the fact
that no explanatory notes are available 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 2007, which have not yet been approved or distributed to
shareholders.
2. The full half yearly accounts for the six months ended 30 September
2007 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 2007.
3. Statutory accounts for the 12 months ended 31 March 2007 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 237 (2) and (3) of the Companies Act 1985.
Hansa Capital Partners LLP - Company Secretary
23 November 2007
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