Interim Results

RNS Number : 6201I

Hansa Trust PLC

20 November 2008

 

HANSA TRUST PLC

Announcement of Half-Yearly Results

for the six months ended 30 September 2008

Hansa Trust PLC announces its Half-Yearly Results for the six months ended 30 September 2008.

Financial Highlights	Six months ended 30 September 2008 (unaudited)		Year ended 31 March 2008 (audited)
Net Asset Value - Total Return		(10.8%)	(10.5%)
Performance Benchmark		3.4%	6.8%
Capital return per equity share		(114.6p)	(116.2p)
Revenue return per equity share		16.0p	13.8p
Net asset value per equity share		816.4p	924.5p
Dividend per equity share		3.5p	13.0p
Total income (£000's)		5,115	5,541
Revenue before taxation (£000's)		3,914	3,448

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

Ex-dividend date: 3 December 2008

Record date: 5 December 2008

Payment date: 19 December 2008

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

THE FINANCIAL CRISIS

The financial crisis that is unfolding before our very eyes took a very serious turn for the worse in the middle of September and has gone on getting worse as it finally dawned on everyone that the financial and economic situation was fraught with a lot of danger.  John Alexander, our portfolio manager, has written a very good anthology of events and I am not going to add to it. I would, however, encourage shareholders to read it; it is quite long but the story is indeed a long one and it gives the reader a good understanding of the nature of this financial crisis. The only comment I would add is that it is truly extraordinary how many people in authority - who should have known better - were in denial of the possibility of such a crisis occurring given that the tea leaves were there for all to see. Very few remain in denial any longer!

THE HALF YEAR RESULTS

NAV	Ord sh: 816.4p	'A' Ord sh: 816.4p
Share Price	Ord sh: 755.0p	'A' Ord sh: 747.5p
Discount	Ord sh: 7.5%	'A' Ord sh: 8.4%

The torrid time experienced by investors was reflected in our own returns; the net asset value of both classes of shares declined by 11.7% to 816.4p. Our own benchmark, which shareholders will remember is based on the fixed interest returns of gilt edge securities, returned 3.4%; because it is our job to make money for shareholders, it's return is the one we aim to beat but of course over the long-term. We keep an eye on the returns of the stock market as a whole, following in particular the FTSE All-share Index which happened to fall by 15.1%. The figures in the information table on page 2 show the total returns which reflect the effect of income received on the various returns.

The share prices of the two classes of shares fared a little better with the ordinary shares declining by 7.9% to 755p (where the discount was 7.5%) and the 'A' ordinary shares falling by 8.3% (discount: 8.4%). In these volatile stock markets the discounts of most investment trust companies have been jumping up and down as can be seen from the quite large discount that opened up during Ocotber (see below). 

Because so much has happened since, I think I should bring shareholders up to date with the net asset value as of the date of writing this statement. As at the time of writing the net asset value had fallen a further 21.9% to 637.3p per ordinary and 'A' ordinary share; the price of the ordinary shares had declined 29.1% to 535.0p (discount: 16.1%) while that of the 'A' ordinary shares had declined by 30.4% to 520.0p (discount: 18.4%). The stock market declined a further 19.6%.  These figures reflect the truly horrendous nature of stock markets since the end of September.

I would like to add a comment about share prices and thence net asset values at times like these. In very severe bear markets, particularly at the tail end of them, share prices tumble a long way without a lot of selling volume. The falls tend to be indiscriminate whatever the financial soundness and prospects for the individual companies concerned. Indeed the share prices of good companies can be particularly severely affected because those funds that need to sell to meet redemptions or other commitments find that their good shares are the only ones that can be sold. One of the main causes of the latest declines is the liquidation of many hedge funds which have to meet debt repayment obligations and redemptions.

PROSPECTS

John has written about the outlook and all the issues that affect the course of the economy and thence the stock market over the next year or two. He has made the point that the economic consequences of the financial crisis are very difficult to assess at this point in time, will be severe and will take some time to work themselves through. The stock market and its performance will move from having to cope with a financial crisis to reacting - in all probability - to a recession, quite possibly a global recession. That economic environment will determine the level of corporate profits and importantly dividends; the stock market, in turn, will have to adjust to a new level of price earnings ratios and dividend yields.

There are a number of scenarios that could evolve from today's financial crisis ranging from one extreme, a deflationary depression to another extreme an inflationary recession. The market place - individuals and companies - will sort out its own problems in time but the unknown ingredient in all of this is the actions of the government; it has the ability to make things somewhat better or considerably worse. In this respect it is difficult to have a lot of confidence given the quite extraordinary incompetence of this government generally - and of Gordon Brown's chancellorship in particular - ever since they took office in 1997. He has portrayed himself as a conservative Chancellor when, in fact, he spent money like a drunken sailor; given that the credit crisis has been caused by excessive spending by both the government and by consumers, both financed with debt, it is difficult to believe that his policy of spending our way out of the crisis will work. It frankly lacks any intellectual or practical credibility, and as George Osborne correctly observed, is likely to lead to yet further declines in the international value of

CHAIRMAN'S STATEMENT

(continued)

pound sterling. The solution has to centre on raising the level of savings in the Country and recapitalising the banks with sound management and sensible, workable regulation.  

He seems to have decided to micro manage the economy issuing dictats about who will do what when - even to the point of dictating that Lloyds TSB and HBOS should merge; putting two crippled banks together does not make one strong bank. It all brings back the nightmarish spectre of a command economy run by incompetents. His governance could well be the difference between a slow but orderly return to normality and something rather worse. That is an important unknown.

Setting that aside, the extent of the bear market to date is undoubtedly beginning to create good investment opportunities when viewed on a long-term basis. It is important to point out that share prices could well fall further - even from these low levels. But crisis is always a conjunction of danger and opportunity and opportunities there undoubtedly will be - maybe already are. As I always point out - ultimately our prospects depend on ourselves. If we can identify the right companies that are well managed, that have sound finances and are profitable enough to pay good dividends - and I am sure we will - then I can see good returns being made - but I must re-emphasise 'on a long term basis'.

Alex Hammond-Chambers

Chairman

20 November 2008.

CONDENSED GROUP INCOME STATEMENT

for the six months ended 30 September 2008

	(Unaudited) Six months ended 30 September 2008			(Unaudited ) Six months ended 30 September 2007			(Audited) Year ended 31 March 2008
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£000	£000	£000	£000	£000	£000	£000	£000	£000
Loss on investments Gain on derivative	- -	(28,475) 977	(28,475) 977	- -	(846) -	(846) -	- -	(28,112) 221	(28,112) 221
Exchange gains/(loss) on currency balances	-	1	1	-	-	-	-	(1)	(1)
Investment income (see note 2)	5,115	-	5,115	3,427	-	3,427	5,541	-	5,541
	5,115	(27,497)	(22,382)	3,427	(846)	2,581	5,541	(27,892)	(22,351)
Investment management fees	(730)	-	(730)	(1,045)	-	(1,045)	(1,838)	-	(1,838)
Write back of prior years' VAT	-	-	-	-	-	-	674	-	674
Other operating expenses	(358)	-	(358)	(361)	-	(361)	(729)	-	(729)
	(1,088)	-	(1,088)	(1,406)	-	(1,406)	(1,893)	-	(1,893)
Profit/(Loss) before finance costs and taxation	4,027	(27,497)	(23,470)	2,021	(846)	1,175	3,648	(27,892)	(24,244)
Finance costs	(113)	-	(113)	(1)	-	(1)	(200)	-	(200)
Profit/(Loss) before taxation	3,914	(27,497)	(23,583)	2,020	(846)	1,174	3,448	(27,892)	(24,444)
Taxation	(84)	-	(84)	(38)	-	(38)	(144)	-	(144)
Profit/(Loss) for the period	3,830	(27,497)	(23,667)	1,982	(846)	1,136	3,304	(27,892)	(24,588)
Return per Ordinary and 'A' non-voting Ordinary share (see note 3)	16.0p	(114.6p)	(98.6p)	8.3p	(3.5p)	4.8p	13.8p	(116.2p)	(102.4p)

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 2008

(Unaudited)

	Share  Capital		Capital  redemption  reserve		Retained 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 six months ended 30 September 2007

(Unaudited)

	Share  Capital		Capital redemption  reserve		Retained Earnings		Total
	£ 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 year ended 31 March 2008

(Audited)

	Share  Capital		Capital redemption  reserve		Retained Earnings		Total
	£ 000		£ 000		£ 000		£ 000
Net assets at 1 April 2007	1,200		300		247,966		249,466
Loss for the year	-		-		(24,588)		(24,588)
Dividends paid	-		-		(3,000)		(3,000)
Balance at 31 March 2008	1,200		300		220,378		221,878

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 GROUP BALANCE SHEET

as at 30 September 2008

	(Unaudited) 30 September 2008		(Unaudited )  30 September 2007		(Audited ) 31 March 2008
	£000		£000		£000
Non - current investments
Investments held at fair value through profit and loss	180,169		251,946		235,366
Current Assets
Trade and other receivables	2,323		574		2,398
Cash and cash equivalents	13,736		25		251
	16,059		599		2,649
Current Liabilities
Trade and other payables falling due within one year	(297)		(4,103)		(16,137)
Net current assets/(liabilities)	15,762		(3,504)		(13,488)
Net assets	195,931		248,442		221,878
Equity
Called up share capital	1,200		1,200		1,200
Capital redemption reserve	300		300		300
Retained earnings	194,431		246,942		220,378
Total equity shareholders' funds	195,931		248,442		221,878
Net asset value per Ordinary and 'A' non-voting Ordinary share (see note 5)	816.4p		1,035.2p		924.5p

The Statement 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 GROUP CASH FLOW STATEMENT

For the six months ended 30 September 2008

	(Unaudited)		(Unaudited)		(Audited)
	Six months ended 30 September		Six months ended  30 September		Year ended 31 March
	2008		2007		2008
	£000		£000		£000
(Loss)/Profit before finance costs and taxation	(23,470)		1,175		(24,244)
Adjustments for:
Realised gain on investments	(13,181)		(5,158)		(6,646)
Unrealised loss on investments	41,656		6,004		34,758
Effect of foreign exchange rate changes	(1)		-		1
Decrease/(increase) in trade and other receivables	75		82		(1,661)
(Decrease)/increase in trade and other payables	(40)		2,349		42
Taxes paid	(84)		(38)		(144)
Purchase of non-current investments	(3,960)		(24,479)		(42,801)
Sale of non-current investments	30,682		15,409		22,256
Net cash inflow/(outflow) from operating activities	31,677		(4,656)		(18,439)
Cash flows from financing activities
Interest paid on bank loans	(113)		-		(200)
Dividends paid	(2,280)		(2,160)		(3,000)
(Repayment)/drawdown of loans	(15,800)		750		15,800
Net cash (outflow)/inflow from financing activities	(18,193)		(1,410)		12,600
Increase/(Decrease) in cash and cash equivalents	13,484		(6,066)		(5,839)
Cash and cash equivalent at 1 April	251		6,091		6,091
Effect of foreign exchange rate changes	1		-		(1)
Cash and cash equivalents at end of period	13,736		25		251

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 2008, which have not yet been approved or distributed to shareholders.

 

2.        The full Half-Yearly accounts for the six months ended 30 September 2008 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 2008.

 

3.        Statutory accounts for the 12 months ended 31 March 2008 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

20 November 2008

 

END

 

 

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