Half Yearly Report

RNS Number : 7384X

Hansa Trust PLC

10 December 2010

 



HANSA TRUST PLC

HALF-YEARLY REPORT For the six months to 30 September 2010

 

Hansa Trust PLC

50 Curzon Street, London W1J 7UW

Tel: [phone] Fax: [phone]

Website: www.hansatrust.com

Email: [e-mail]

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 2010		31 March 2010	% change
Shareholders' Funds	£244.3m		£215.0m	13.6
Net Asset Value (NAV) per share
Opening NAV	895.9p		635.0p	-
Dividends	-		(39.4p)	-
Revenue and capital return	121.9p		300.3p	-
Closing NAV	1,017.8p		895.9p	13.6
Performance Benchmark	2.7%		6.2%	-
Ordinary Share Price	837.5p		760.0p	10.2
'A' Ordinary Share Price	820.0p		750.0p	9.3
FTSE All-Share Index	2,868		2,910	(1.4)
Discount
Ordinary shares	17.7%		15.2%	-
'A' Ordinary shares	19.4%		16.3%	-
Total Return (Dividends Reinvested)
Ordinary Shares	10.2%		57.4%	-
'A' non-voting Ordinary shares	9.3%		61.8%	-
FTSE All-Share Index Total Return Index	0.6%		52.8%	-

COMPANY REGISTRATION AND NUMBER

The Company is registered in England and its number is 126107.

Total Return Performance Graphs

NET ASSET VALUE

	6 months	1 year	3 years	5 years	10 years
Net Asset Value - dividends reinvested	13.6%	20.1%	5.0%	61.4%	154.0%
Benchmark	2.7%	5.7%	18.9%	32.2%	67.4%

SHARE PRICE

	6 months	1 year	3 years	5 years	10 years
Ordinary Share - dividends reinvested	10.2%	14.6%	(10.9%)	40.1%	98.1%
'A' Ordinary Share - dividends reinvested	9.3%	13.3%	(12.9%)	39.2%	138.5%
FTSE All-Share	0.6%	13.1%	(1.8%)	27.2%	37.4%

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

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.

However the real story of the period was that of currencies. The Euro crisis dominated the first three months; the unfolding US Dollar crisis is now the new concern.  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 regulatory 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 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

Interim Management Report

The Directors present their Report and Condensed Financial Statements for the six months to 30 September 2010.

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 2011

The key risks and uncertainties relating to the six months ending 30 September 2010 and for the six months to 31 March 2011 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 £689,050 (31 March 2010: £1,264,413). Amounts outstanding at 30 September 2010 were £122,721 (31 March 2010: £119,162).

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 18 November 2010 and was signed on its behalf by:

Alex Hammond-Chambers
Chairman
18 November 2010

Investment Manager's Report

The Investment Manager presents its report for the six months ended 30 September 2010.

BACKGROUND

The half year ended on a high note with September being an uncommonly strong month for global stock markets. All major markets posted strong gains on thin trading volumes, with Asian markets leading the charge. The world is polarized from an economic perspective, with strong growth and inflation in emerging markets and sluggish growth verging on deflation in the developed western world, causing renewed strains in global financial markets and, possibly, igniting policy tensions and protectionist measures between key economies, most obviously the US and China. The accelerated transfer of capital from developed to emerging markets continues as risk capital seeks higher yields and returns from growing populous markets. This is pushing up currency values and asset prices in developing countries, as the low interest rate environment is expected to continue in developed economies for longer than initially thought. The Brazilian finance minister warned that "we are in the midst of an international currency war" as countries attempt to boost their flagging economies by weakening currencies. Japan intervened in foreign exchange markets for the first time in six years in mid September to drive down the yen. Economic indicators in the US and China have been better than expected and newsflow in the corporate sector has remained broadly positive as corporate profits have staged a dramatic recovery. The Federal Reserve announced that it "will provide additional accommodation (quantitative easing) if needed" to maintain the recovery, acknowledging that inflation was below desired levels and that the US economy was growing only marginally, implying that the risks of deflation are rising. Here in the UK the Monetary Policy Committee may soon relaunch its programme of quantitative easing, while the Bank of Japan's unexpected policy loosening has refocused attention on the prospect of central banks continuing to supply liquidity support for financial markets, thereby reducing expectations of a double dip recession.

Emerging markets are set to continue to grow significantly faster than advanced economies as a result of growing exports to other fast growing emerging markets as well as an increasing reliance on domestic consumption. Emerging markets exports represented 36% of world exports in 2009 compared with 25% in 2000. Meanwhile the share of the United States, Japan and Germany, traditionally the largest exporters, declined from 28% to 22% of world exports between 2000 and 2009. A striking feature of emerging markets imports is that they are increasingly coming from emerging markets. The share of emerging markets in total emerging markets imports increased from 28% in 2000, to 41% of total imports in 2009, pointing to a form of inter-emerging markets integration and a structural trend where developed western economies will continue to lose market share.

The momentum behind the Brazilian growth theme is strong, an encouraging backdrop to the Trust's strategic investment in Ocean Wilsons Holdings, which rose 24.3% over the half year and represented 43.1% of assets at period end. Reforms made by President Cardoso enabled Brazil to conquer inflation, while Lula maintained market-based reforms over his two terms of office. These reforms enabled the country to benefit from opening up the economy to more non-state competition along with improvements in both infrastructure and technology, the latter being a key part of the government's crackdown on corruption. In the past nine years the Brazilian economy has created 14m new jobs and lifted 29m people out of poverty and in to the middle class, whose domestic consumption is helping to drive the economy. Going forward a lot of work still needs to be done to improve the private sector business environment and cut back the size of the state (and the bloated state pensions system), including cutting red tape and clamping down on corruption, as well as raising Brazil's low investment rate. The latter has resulted in a supply constrained economy which has left it vulnerable to periodic bouts of inflation. Both Dilma Rousseff and Jose Serra have identified Brazil's infrastructure deficit as being a key brake on growth, and Rousseff in particular favours a programme of state-directed investment, funded in large part by borrowing from overseas. Domestic savings are presently too low to finance an investment boom. More on Ocean Wilsons Holdings sizeable investment programme shortly.

OVERALL PERFORMANCE

During the period under review, the Ordinary and 'A' Ordinary share prices rose by 10.2% and 9.3% respectively against the FTSE All-Share Index fall of 1.4%, as both classes of shares traded at a wider discount to their net asset value. The time weighted return of the portfolio was 13.8%, compared with a rise of 2.7% in the company's benchmark and a rise of 0.6% in the FTSE All-Share Index - Total Return. The largest positive contributors to the overall 121.9p per share gain of the net asset value were Ocean Wilsons Holdings Ltd +85.7p and Andor Technology Plc +12.4p.

SECTOR WEIGHTING AND PERFORMANCE

	Sector Weighting	Sector Weighting	Six months' Performance
Sector	at 30 September 2010	at 30 September 2009	to 30 September 2010
	%	%	%
Strategic	43.1	35.5	24.3
Smaller Cap/AIM	16.0	19.6	10.5
Natural Resources	14.6	14.2	(6.2)
Property	5.3	7.4	1.1
Large Cap	11.2	8.5	7.8
Utilities	4.1	4.3	9.9
Mid Cap	4.6	3.6	13.6
Insurance	3.1	2.9	37.0
Investment Trusts	2.5	2.1	17.1
Cash & Cash Funds	(4.5)	1.9	(0.6)
Hedge	-	-	(96.9)

PORTFOLIO ACTIVITY AND M&A (5.7% Portfolio)

The thematic emphasis of the portfolio continues to be on companies with overseas earnings, with a focus on business to business facing companies rather than business to consumer. We mainly added to existing holdings of companies with oveaseas earnings, namely SSL International, BG Group, Cairn Energy, Cape and Experian. We took a new holding in Weir Group. We made three additions to UK centric companies with strong business franchises, namely Goals Soccer Centres, Galliford Try and EAGA. We will shortly receive £7.0m cash as a result of the recommended cash offer for SSL International (+43.2%) by Reckitt Benckiser at 1,171pence per share, while BRIT Insurance (+37.0%) has recommended an £850m offer after buyout firm CVC Capital Partners agreed to link up with original bidder Apollo Management, and we hope this could eventually realise up to £8.2m in cash proceeds. The Company had borrowings of £11.0m at the end of September, representing 4.5% of net assets.

THEMATIC REVIEW:

EMERGING MARKETS AND OVERSEAS EARNERS (74.5% Portfolio)

Ocean Wilsons Holdings Ltd (+24.3%) has two principal subsidiaries: Wilson Sons Ltd (a 58.25% interest), listed on the Sao Paulo and Luxembourg stock exchanges, one of the largest providers of maritime services in Brazil, and Ocean Wilsons Investments Ltd (100% owned), a portfolio of diversified international investments with an emerging market emphasis.

In January 2010 Wilson Sons Ltd announced that the Company's request for priority status was approved by the Marine Merchant Fund (FMM) board to access US $227m for the building of two new shipyard facilities, one located in the city of Rio Grande and the other in the city of Guaruja, which combined will more than double its shipbuilding capacity, and for the construction of a 11,000 TDW multipurpose ship. FMM is a government fund created to stimulate Brazil's vessel fleet renewal programme, a trigger for the revitalisation of the shipyard industry in Brazil. The incentive includes subsidised cost of debt (on average 3% in US dollar terms) and long-term maturity (20 years with a four-year grace period). Only companies building vessels in Brazil can access the FMM fund, which gives Wilson Sons Ltd competitive advantages over its global peers and newcomers since the procurement of environmental licenses may take longer than expected. As a way to protect the national industry, only vessels manufactured locally can operate in Brazil while there is also a local content requirement, in which at least 60-70% of components used in the shipyard must be supplied by local suppliers, which is another way to revitalise the shipbuilding industry in Brazil. Wilson Sons Ltd manages its own shipyards for tugboats and offshore supply vessels, affording it full control of cost and delivery schedule, without dependence on third parties for fleet maintenance or fleet expansion.

At the beginning of September Wilson Sons Ltd announced that it had signed the amendment to the Tecon Salvador lease contract with CODEBA (Bahia's port regulator), in order to extend the area within its container terminal, which will enable the company to receive larger ships, increasing its handling capacity. The company estimates it will spend R$100m to add 167 metres to the existing 210 metre berth area, and to increase the port depth from 12 metres to 15 metres. This could raise Wilson Sons Ltd capacity at Tecon Salvador by 80% from 250,000 to 450,000 containers a year. Wilson Sons Ltd operates its offshore business through a 50/50 joint venture with their Chilean partner Ultratug, which will own and operate offshore vessels to support oil and gas exploration and production activities in Brazil. At the end of September Wilson Sons Ltd announced the signing of a US $670m financing agreement between a subsidiary of the Wilson Sons Ultratug Offshore joint venture and BNDES as agent for FMM for an 18-year maturity, including a 3-year repayment grace period and average cost of 4% (US$). This financing is to support the construction of 13 new offshore support vessels (OSV'S) to be constructed in the Wilson Sons Ltd shipyards. The 13 vessels are expected to be delivered between early 2011 and 2015, increasing the joint venture fleet to 24 vessels. The joint venture strategy is to build an appropriate mix of vessels to attend the demand from national and international oil companies operating in Brazil. According to the Petrobras (the state oil company which raised US $67bn on the Sao Paulo stock exchange in September, completing the largest share issue in history) strategic plan, they alone require 250 new chartered OSV's by 2020 to fulfill their exploration and production of pre-salt and post-salt reserves. Out of this potential, 13 vessels have already been placed for bids and Wilson Sons Ltd won two, for a 15% share. The Brazilian shipyard industry has been operating pretty well at full capacity because of the demand from the oil industry. As already outlined, Wilson Sons Ltd investment is expected to more than double its shipbuilding capacity leaving it in a strong position to win new orders, and if it were to maintain its 15% share in new bids, it suggests the potential to deliver another 35 vessels. Wilson Sons Ltd ended Q2 2010 with an operating fleet of 10 offshore support vessels and Petrobras is scheduled to take delivery of 2 vessels up to 2012. By way of example, the 10th and latest addition to the fleet was constructed in the Wilson Sons Ltd shipyard in Guaruja. The vessel will operate on the spot market before entering service under an eight year contract with Petrobras, starting in February 2011. Meanwhile Wilson Sons towage business is going from strength to strength. With 54% market share and the largest fleet in Brazil with 67 tugboats, Wilson Sons provides towage services in all of Brazil's principal ports. Margins have been rising due to high demand for higher rate special operations which now account for 15% of towage revenues, a figure which could rise to 20% over the next five years.

Over the first half of the financial period to 30 June 2010 the invested portfolio (ex-cash and liquidity funds) fell 1.6%, compared with a decline of 9.8% in the MSCI (Developed) World Index and a fall of 6.2% in the MSCI Emerging Markets Index. The portfolio benefited from its underweight exposure to Continental Europe and performance was assisted by manager selection in most regions, most notably in the Far East and other Emerging Markets.

The portfolio's 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 US Dollar, Euros or Sterling, at a time when confidence in paper money is waning. BHP Billiton (-9.1%), the largest mining company in the world, has extended the deadline for its offer for Canada's PotashCorp by a month to comply with regulatory requests for extra information, while there have been rumours that Sinochem and the Chinese sovereign wealth fund are exploring a counter-bid to BHP Billiton's US $130/shr offer. BHP could lead the potash market away from negotiated pricing in much the same way that it helped end the benchmark iron ore pricing system last year. PotashCorp leads Canpotex, a three-member cartel marketing organisation that accounts for some 40% of the global potash trade. Cairn Energy (+8.7%) encountered oil and gas shows offshore Greenland, which "confirms an active, working petroleum system in the basin and is extremely encouraging at this very early stage of our exploration campaign". Cairn agreed to sell most of its 62% stake in Cairn India to Vedanta last month. BP (-31.4%) has finally killed the leaking Macondo well and BP's Deepwater Horizon investigation could reduce the likelihood of BP being found grossly negligent. New management changes have been made at the top of the company, and Bob Dudley will place a greatly increased emphasis on risk management and safety. Further momentum on the disposals programme and the likely restart of dividends with Q1 2011 results should help sentiment. Royal Dutch Shell (+5.5%) has set out its aspiration to achieve global production of 3.7mpd by 2014 accompanied by a major turnaround in the company's free cash flow. BG Group (-0.6%) targets long-term volume growth of 6-8%pa to 2020, while the company could be a major beneficiary of a significant tightening in the Liquid Natural Gas market in the period 2012-2015. Repsol's recent announcement of the sale of a stake in its Brazilian assets to Sinopec has refocused attention on BG. Eni S.p.A. (-5.2%) looks set for a fairly flat year for E&P volumes in 2010, while its longer term growth looks better and it continues to offer an above average dividend yield. Melrose Resources (+8.8%) has engaged advisers to divest its US assets to deploy the proceeds in paying down debt, with any balance put to its capex programme.

The big British banks posted strong profits as bad debts fell steeply in the first half of the year. HSBC's        (-1.7%) figures were boosted by an improved performance in the US and a decline in loan impairment charges, and the bank came a step closer to securing a sizeable foothold in South Africa after announcing it was in exclusive talks to acquire 70% of Nedbank, South Africa's fourth largest bank. GlaxoSmithKline's (+1.9%) Q2 results were heavily impacted by a significant £1.57bn restructuring/legal charge in relation to Avandia, but sales growth of 4% in sterling terms was better than expected, and the dividend was increased by 7%. The post-Avandia focus turns to the sustainability of the Advair/Relovair franchise and the potential for pipeline surprises in 2011. The new head of the consumer healthcare division, who is ex-China L'Oreal, has reportedly "set the business on fire" since May, whilst much of the restructuring benefits of recent years have been reinvested in emerging markets. Wolseley's (+0.4) full year results showed that H2 margins rose from 3.0% to 4.1%, and net debt was much lower than forecast. Most of its businesses still have strong market positions and we expect margins to be restored to 6% as management continues to focus on gross margins, cost reduction and improved service and stock availability. Experian (+8.4), the global credit information and marketing services group, produced final figures that exceeded expectations, a key feature being the delivery of cash, which has encouraged the company to improve its distribution to shareholders  via dividend increases and the introduction of a US $300m share buyback. Experian has acquired US peer Mighty Net for US $207.5m, which will consolidate its market leading position in the US. Andor Technology (+101.7%), the leading developer and manufacturer of high performance digital cameras for academic, industrial and government applications globally, reported that "trading in the second half of the year has continued to be strong" and that "the performance for the full year will exceed market expectations". Weir Group (+24.7%), the global manufacturer and supplier of engineering products and services is emerging as one of the most dynamic companies in the UK engineering sector, with entrenched positions in mining, nuclear and shale gas equipment combined with management skills in strategy, cost control, acquisitions and implementation. The growing aftermarket accounts for 60% of revenue, and the aim is to double profits by 2014 and hopefully sooner. CAPE (+51.2%), the international provider of essential non-mechanical support services to the energy and mineral resources sectors (76% of revenues), announced interims ahead of expectations, a return to the dividend list, a stated intention to return to the main market in Q2 2011, and a target to double earnings per share over the next 5 years. NCC Group (+19.2%), the international independent provider of Escrow and Assurance, has over the last six years produced Compound Annual Growth Rate (CAGR) in earnings of 21.9% and CAGR in dividends of 16%. Herald Investment Trust's (+17.1%) manager continues to run a diversified portfolio, preferring to take multiple small bets rather than a concentrated portfolio, with the focus of the portfolio continuing to be on defensive holdings of companies with recurring revenue streams and on companies where disruptive technologies are creating growth opportunities in new products and markets. Qinetiq (-19.6%) issued a trading statement saying tight working capital control has resulted in good cash generation, while macro markets remain uncertain, and there will be substantial UK headcount reductions. CAMCO (+30.8%) announced encouraging interims and a potential US $46m partnership with the Malaysian government.

REAL ASSETS (5.1% Portfolio)

The possibility of further quantitative easing and consequent decline in government bond yields has moved the yield gap firmly in favour of property. The outlook for prime commercial property is stable, but much less so for secondary assets where occupier risk is increasing and refinancing remains difficult and expensive. There are two commercial property markets in the UK, central London and the rest of the country. Great Portland Estates (+10.2%) is a fully exposed  London offices and retail Real Estate Investment Trust (REIT), with a high West End (80%) weighting, the balance in the City and Southwark. Just under a third of its space is London retail, and the portfolio contains a long pipeline of value-adding capex schemes capable of driving the West End outperformance. Hansteen (-4.9%) is a European industrial REIT set up by the founders of Ashtenne after that business was sold. The management have invested alongside shareholders from the IPO and in successive capital raisings. The portfolio is split 63% Germany, 20% Netherlands, 10% UK, and the balance Belgium and France. The business is now near fully invested with a focus on generating a high income surplus from its assets while continuing to acquire assets capable of delivering significant capital growth once the markets recover. In aggregate, approximately 92% of Total Commitments to unquoted DV3 (+2.5%) have have now been drawndown, leaving £27.1m undrawn and available. Of the £303.7m called since the inception of the fund, £264m (87%) has been returned to shareholders to date. DV3 most recently announced that they have completed the sale of 240 Regent Street for £221m, reflecting a net initial yield of 4.75%. Shareholders can now expect to see most, if not all, of their invested capital returned to them shortly with a reasonable profit on their investment to follow over the next few years since the majority of its assets are prime both in terms of location and quality of cash flow. In aggregate, 30% of Total Commitments to unquoted DV4 (+15.0%) have now been drawndown, leaving 70% or approximately £751.37m undrawn. Most of the investments are of prime quality, with Alpha Plus schools being the fund's largest investment to date. The value of the portfolio has performed relatively well compared to the underlying market and a number of promising new acquisitions have been made at seemingly attractive prices, although the relatively low proportion of the fund's capital deployed to date has meant that performance has been diluted.

OUTSOURCING AND SERVICES (6.9% Portfolio)

Hargreaves Services (+3.6%) is the UK's leading energy support services provider to the energy industry, providing a "one stop shop" for the distribution of coal and carbon-related materials through its integrated supply chain and ownership of strategic assets. The most recent full year results showed a particularly strong performance from the Energy and Commodities division, where there are attractive European expansion opportunities. Goals Soccer Centres (-13.0%), the premier operator of five-a-side soccer centres in the UK has seen new sites performing well and like for like sales up 3% in the second half suggesting the potential for strong growth in 2011. EAGA (-21.8%) is a "green" support services and business process outsourcing company, and it is the UK's largest residential energy efficiency provider. The company's final results showed a 10% increase in the dividend and a strengthening cash position, and the company is well placed to be a leading supplier into the Green Deal in 2013. Superglass (-13.8%) is the only pure-play UK insulation maker, and the trading update for the year ended August was noted as being in line with expectations, which should ensure that the company continues to operate comfortably within its banking facilities. Morson Group (+4.5%) is the UK's leading provider of technical contracting personnel to the aerospace and defence, nuclear and power, rail and other technical industries announced a solid interim trading performance across all sectors, and overseas recruitment operations have commenced in Brazil and Germany. Straight (+10.0%) manufactures recycling containers. The company produces containers for household, commercial, dry, green and hazardous waste, and also home composters. The company announced good interim figures and continues to maintain a healthy order book, and with the benefit of acquisitions the board is confident that performance in the second half will exceed expectations. All Leisure Group (-31.8%) differentiates itself by being destination-led and by offering smaller, more intimate ships, while its cruise customers are mature (55yrs+), the largest and fastest growing demographic within the leisure industry.

NON-DISCRETIONARY (4.6% Portfolio)

Scottish & Southern Energy (+6.0%) is on track to raise its dividend by at least 2% above inflation this year. The company is half way through its five-year investment drive, which will come to an end in March 2013. Centrica (+13.4%) agreed to purchase 97 natural gas wells and 42,000 acres of land in western Canada, in a deal that will help move its North American operation from supplying energy to being an integrated production and supply business. The company has also bought an additional 9.44% of the Statfjord field in Norway. Premier Foods (-48.7%) has confirmed that it has received an approach for its meat-free brand Quorn. The UK's largest food producer, whose brands include Hovis bread, Branston Pickle and Bisto gravy has promised to reduce its £1.4bn debt pile by £100m each year. Immupharma (-3.9%) is one of the best capitalised UK biotechnology companies with a £20m cash balance which should fund operations for some further 3.5 years. Its partner Cephalon has announced that it has started a phase 11b trial in the US for Lupus drug candidate Lupuzor, and there was further good news in the pipeline that first in man dosing has begun for oncology drug candidate IPP-204106.

OTHER (3.2% Portfolio)

Strong mortgage lending figures helped swing Lloyds Banking Group (+18.1%) well back in to the black. While the financial logic of the acquisition of HBOS was terrible, the industrial logic of gaining a commanding share in the UK retail banking business is still compelling, and the government will want to sell its 41% stake at a decent profit sometime in the future. Galliford Try (+1.7%) delivered decent 2010 figures and is on course to deliver the group's strategy of growing profits by delivering a transformational housebuilding expansion plan via the acquisition of new land while maintaining a profitable market position in construction.

OUTLOOK

With bond yields continuing to fall and the global economic recovery losing momentum, investors will increasingly look towards stocks with sustainable and growing dividend yields. Companies are generating huge amounts of free cash flow and record earnings despite revenues often being lower than those prior to the financial crisis, bringing share buy-backs on to the agenda. Some companies are exploiting the most attractive relative cost of debt-to-equity in 30 years by issuing corporate bonds in order to buy back shares, thereby using the currency of cheap credit to help unlock equity valuations via "de-equitisation". If stock markets were to become less volatile we could see higher levels of confidence in company boardrooms and a pick up in merger and acquisition activity against the background of fewer organic growth prospects from structurally slow growing developed economies. Low interest rates and the opening up of the high yield corporate bond market could encourage business combinations which can afford the opportunity to increase market share, improve pricing power, reduce costs and increase efficiencies.

Sovereign debt and banking problems are a typical aftershock of any international financial crisis, just as anaemic growth with sustained high unemployment is par for the course in the early stages of post-financial recoveries. Debt busts are deflationary and recoveries that follow financial recessions tend to be much weaker than those that follow non-financial recessions, as the process of deleveraging drags on. Although a growth relapse is likely in the West, a double-dip recession will probably be avoided, as recoveries usually gather momentum with the passing of time. The recovery requires patience.

Hansa Capital Partners LLP

Investment Manager

30 September 2010

Portfolio Information

at 30 September 2010

	Fair Value		Percentage of
Investments	£000		Net Assets
Ocean Wilsons Holdings Ltd	105,219		43.1
BG Group Plc	8,948		3.7
BRIT Insurance Holdings NV	7,597		3.1
SSL International Plc	6,948		2.8
Hargreaves Services Plc	6,805		2.8
BHP Billiton Plc	6,784		2.8
Weir Group Plc	6,261		2.6
Herald Investment Trust Plc	6,052		2.5
Cape Industries Plc	6,042		2.5
Andor Technology Plc	5,885		2.4
Top 10 Investments	166,541		68.3
HSBC Holdings Plc	5,711		2.3
Cairn Energy Plc	5,670		2.3
Centrica Plc	5,560		2.3
NCC Group Plc	5,544		2.3
Glaxosmithkline Plc	5,018		2.1
Great Portland Estates Plc	4,716		1.9
Experian Group Ltd	4,504		1.8
Scottish & Southern Energy Plc	4,472		1.8
Hansteen Holdings Plc	4,395		1.8
BP Plc	4,278		1.8
Top 20 Investments	216,409		88.7
Eni S.p.A.	4,112		1.7
Lloyds Banking Group Plc	3,459		1.4
EAGA Plc	3,189		1.3
Melrose Resources Plc	3,107		1.3
Goals Soccer Centres Plc	3,003		1.2
Royal Dutch Shell Plc	2,668		1.1
Galliford Try Plc	2,475		1.0
DV4 Ltd	2,356		1.0
Wolseley Plc	2,303		0.9
Morson Group Plc	1,680		0.7
Top 30 Investments	244,761		100.3
Other Investments (24)	9,894		4.0
Total Investments	254,655		104.3
Net current liabilities	(10,383)		(4.3)
Net Assets	244,272		100.0
Listed	208,745		82.0
AIM and OFEX	42,025		16.5
Unquoted	3,885		1.5
	254,655		100.0

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 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 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 2010.

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 2010.

(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 s.1158-1159 Corporation Taxes Act 2010 ("CTA 2010").

(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 s.1158-1159 CTA 2010 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
	2010	2009	2010
	£000	£000	£000
Income from listed investments
Dividends	1,315	2,108	3,446
Overseas dividends	569	2,329	4,869
	1,884	4,437	8,315
Other operating income
Stock Dividend	-	31	-
Interest receivable AAA rated money market funds	-	23	24
Interest receivable	5	-	31
	5	54	55
Total income	1,889	4,491	8,370
Total income comprises:
Dividends	1,884	4,437	8,315
Interest	5	23	55
Stock Dividend	-	31	-
	1,889	4,491	8,370

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 2010	909	3.8	28,349	118.1	29,258	121.9
Six months ended 30 September 2009	3,558	14.8	56,707	236.3	60,265	251.1
Year ended 31 March 2010	6,580	27.4	65,488	272.9	72,068	300.3

4. FINANCIAL INFORMATION

The financial information contained in this half-yearly report is not the Company's statutory accounts as defined in section 434-436 of the Companies Act 2006. The financial information for the six months ended 30 September 2010 and 30 September 2009 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 2010.

The statutory accounts for the financial year 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 matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain statements under section 498 (2), (3) and (4) of the Companies Act 2006.

The half-yearly financial information was approved by the Board of Directors on 18 November 2010.

5. NET ASSET VALUE PER SHARE

The Net Asset Value per share is based on the net assets attributable to equity shareholders of £244,272,000 (six months ended 30 September 2009: £209,191,000; year ended 31 March 2010: £215,014,000) 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 2010 was £327,438 (31 March 2010: £327,438).

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 2010 was £7,037,256 (31 March 2010: £7,379,111).

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       25 November

Half-yearly Report sent to shareholders 9 December

Interim Dividend payment                          17 December

Interim Management Statements             January and July

 

END

 

 

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