Half Yearly Report

RNS Number : 8906S

Hansa Trust PLC

06 December 2012

 



HANSA TRUST PLC

HALF-YEARLY REPORT For the six months to 30 September 2012

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 2% 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 2012	31 March 2012	% change
Shareholders' Funds	£241.2m	£268.2m	(10.0)
Net Asset Value (NAV) per share
Opening NAV	1,117.5p	1,100.5p	-
Dividends	(10.5)p	(3.5)p	-
Revenue and capital return	(101.8)p	20.5p	-
Closing NAV	1,005.2p	1,117.5p	(10.0)
Performance Benchmark	1.9%	4.4%	-
Ordinary Share Price	734.0p	920.0p	(20.2)
'A' non-voting Ordinary Share Price	715.0p	873.0p	(18.1)
FTSE All‑Share Index	2,998	3,003	(0.2)
Discount
Ordinary shares	27.0%	17.7%	-
'A' non-voting Ordinary shares	28.9%	21.9%	-
Total Return (Dividends Reinvested)
Ordinary Shares	(19.1)%	(2.8)%	-
'A' non‑voting Ordinary shares	(16.9)%	(5.7)%	-
FTSE All‑Share Index Total Return Index	2.3%	1.9%	-

COMPANY REGISTRATION AND NUMBER

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

TOTAL RETURN PERFORMANCE GRAPGHS

NET ASSET VALUE

	6 months	1 year	3 years	5 years	10 years
Net Asset Value - dividends reinvested	(9.1)%	(6.0)%	20.6%	5.4%	308.5%
Benchmark	1.9%	4.1%	14.6%	27.8%	61.2%

SHARE PRICE

	6 months	1 year	3 years	5 years	10 years
Ordinary Share - dividends reinvested	(19.1)%	(15.3)%	2.6%	(20.2)%	259.9%
'A' Ordinary Share - dividends reinvested	(16.9)%	(17.7)%	1.0%	(22.3)%	255.9%
FTSE All-Share	2.3%	18.0%	28.2%	11.4%	146.1%

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

CHAIRMANS'S STATEMENT

THE ASSET VALUE (AT 30 SEPTEMBER 2012)

NAV: 1,005.2p per share (-123.3p; -10.0%)

I would like to start this statement by saying that, although we have unquestionably had a difficult six months, we remain optimistic about the prospects for the companies in which our portfolio is invested. The nature of stock markets in these times is that they are volatile. That volatility is, of course, a function of the volatility of the underlying stocks and shares that make up stock markets and is a reflection of the constantly changing view of the short term prospects for individual share prices - not necessarily of the long-term prospects for the individual companies themselves. In our case we suffered from one or two individual share price declines, which have had a marked effect on our net asset value; it declined 10% during the half year from 1,117.5p to 1,005.2p per share.

Stock market sentiment, of course, affects the general level of all stocks and shares. In that respect there was the now rather usual ebb and flow of bad news and no news as the financial crises lurch from storm to calm and back again. In this period Brazil suffered particularly with a marked decline in both the value of its currency (-11% against Sterling) and its stock market (-8%) leaving the BOVESPA Index 19% lower in Sterling terms than at the end of March. That obviously had a significant effect on the share price of Ocean Wilsons, which declined by 16% and, given the importance of our holding in the company, was the single biggest reason for the decline in our own net asset value (accounting for about 80p per Hansa Trust share) although we did receive a dividend from Ocean Wilson of £1.7m during the period. And yet the long-term prospects for Brazil have not deteriorated over the six months - even if the short-term perception of them has. The long-term prospects for Ocean Wilsons remain as exciting as they were six months ago, albeit the company's trading is being buffeted by some short-term trends (see John Alexander's Investment Manager's Review and also Ocean Wilsons' website: www.oceanwilsons.bm ). The Sao Paolo share price of Ocean Wilsons' Brazilian subsidiary, Wilson Sons (at R$ 29.85) was essentially unchanged during the period, which may reflect rather greater confidence amongst Brazilian investors in its future.

Of the stock markets of the largest seven economies in the world, those of the USA (+1% in sterling terms) and of the UK (largely unchanged) were the best performing; by contrast Brazil (-19% in sterling terms) and China (-8.5% in sterling terms) were the worst. Against a background of an unchanged UK stock market, the rest of the portfolio declined a little under 5%, (see below), largely influenced by declines in four of our holdings - those in Hargreaves Services Cape, Andor Technology and BG Group (again, see John's commentary). Along with our other portfolio companies, we remain optimistic about the prospects for these three companies.

Per Hansa share:	31-Mar-12	30-Sep-12	Δ%
Ocean Wilsons holding:	457.9p	378.0p	-17.4%
Rest of Portfolio (incl. net income and current liabilities):	659.6p	627.2p	-4.9%
Net Asset Value per share:	1,117.5p	1,005.2p	-10.0%

THE SHARE PRICES

Ordinary shares: 734.0p (-186.0p; - 20.2%)
"A" Ordinary shares:715.0p (-158.0p; - 18.1%)

I am afraid that both the two share prices - of the ordinary and the "A" ordinary shares - suffered rather more than the net asset value. On top of the 10.0% decline emanating from the fall in the net asset value, the two share prices suffered a further 10.2% and 8.1% decline respectively as the discounts widened to 27.0% and 28.9%.

There were two main influences on the fall in the share prices - being sentiment over Brazil itself and hence over our holding in Ocean Wilsons and the technical event that Hansa Trusts "A" shares were omitted from the FTSE All-Share Index, creating selling orders from index linked portfolios that became forced sellers.

We have made it clear that, except in exceptional circumstances, we do not buy back shares just to reduce the discount in the short-term. We did regard these forced sales as an exceptional opportunity and did indeed make a bid for those "A" shares; however, the opportunity was not lost on other investors and the block of shares traded away from us. While the uncertain sentiment hangs over Brazil and thence over our large holding in Ocean Wilsons (it too sells at a discount to its underlying net asset value), investors would appear to be reluctant to buy either class of the Company's shares. It is the Board's view that, once sentiment towards Brazil improves and indeed once some of the huge investments that Wilson Sons is making begin to bear fruit, there will be a significant improvement in the sentiment for the Company's shares.

While I do not wish to sound complacent about the level of the discount, I should point out that the main driver of returns over the long-term is the net asset value return. We believe that - always providing our optimism about the prospects for our portfolio works out - we will continue to produce good net asset value returns over the longer term and that, in turn, shareholders will enjoy good share price returns, emanating from both good performance and lower discounts.

THE INTERIM DIVIDEND

Our Income Statement (on page 19) shows that, for the six months to 30th September 2012, revenues from investments and other sources were £4.43m and the net revenue profit was £3.30m. Our UK dividend income rose but our overseas income declined from the same period a year ago, leaving our gross income £0.26m lower (for details see note 2 on page 23). However we benefited from lower expenses, finance costs and taxation leaving our net profit only slightly lower (see page 19). On the back of these revenue results, the Board of Directors has declared an interim dividend of 3.5p per share (the same as that of a year ago) to be paid to shareholders on 13 December 2012 to shareholders on the Register of Members at 30 November 2012.

BOARD OF DIRECTORS

Following the Annual General Meeting held on 31st July, Jamie Borwick, stepped down as a Director of Hansa Trust. We paid tribute to him for his great service to the Company over many years and I would like to thank him once again for his contribution over his tenure as both a Chairman and Director:  Jamie, thank you.

PROSPECTS

 I have already stated that we, the Board, remain optimistic about the prospects for the companies in whose shares our portfolio is invested. We have made the point - many times - that the prospects for Hansa Trust depend largely (but not wholly) on ourselves, on our ability to invest in well managed companies, with competitive businesses and sound finances. I always stress the importance of good management because the quality of both wise corporate governance and good management assumes an extra degree of importance in difficult times. Bad governance and bad management gets companies into trouble as the fate of our large banks has so amply demonstrated in the past few years. The quality of governance and management ranks at the top of our Manager's check list when choosing stocks to invest in.

However our companies cannot - unfortunately - operate in a political or economic vacuum so that the overall investment environment affects us and our prospects - just as it does all investors. In this respect it is difficult to have the same degree of optimism as we have for our investee companies. At best we have to say that we - along with all other investors - simply don't know what lies in store for us.

What we do know is that we are now living in a very different era to that which has prevailed over the last 50 or so years. After the Second World War our economy was depressed but the financial condition of most individuals, banks and commercial companies was in a relatively healthy state. Since then we have enjoyed - aided by good demographics, by excellent technological development and productivity growth, by the development of an extended welfare state and by extensive borrowing - an unprecedented and extended era of prosperity which has now been carried too far; it has come to an end. We find ourselves at the end of that protracted boom and in a decidedly unhealthy financial condition. Those positive driving forces are - by and large - no longer at work and yet we have to get out of our financial mess: but how it is not entirely clear. It is not going to be easy, there will be good and bad patches and it is going to take a long time. What we can say is that it won't make investing easy and that we will need to continue to invest in good companies in order to earn that good return that I have referred to above. In such circumstances investment in good companies should prove to be very rewarding.

Alex Hammond-Chambers

Chairman

21 November 2012

INTERIM MANAGEMENT REPORT

The Directors present their Report and Condensed Financial Statements for the six months to 30 September 2012.

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)     Professor Wood     
Mr Salomon

BUSINESS REVIEW FOR THE SIX MONTHS TO 30 SEPTEMBER 2012

The business review, which includes an indication of important events which have occurred within the six months to 30 September 2012, are covered in the Chairman's Statement and the Investment Manager's Report.

KEY RISKS FOR THE FINANCIAL YEAR TO 31 MARCH 2012

The key risks and uncertainties relating to the six months ended 30 September 2012 and for the six months to 31 March 2013 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 £787,235, excluding VAT (31 March 2012: £1,664,666). Amounts outstanding at 30 September 2012 were £132,195 (31 March 2012: £142,544).

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 on a going concern basis.

•    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 21 November 2012 and was signed on its behalf by:

Alex Hammond-Chambers

Chairman

21 November 2012

The Investment Manager presents its report for the six months ended 30 September 2012.

BACKGROUND

At the end of last year The European Central Bank crucially relieved an incipient credit crunch by providing a massive liquidity injection through its long-term refinancing operations, buying some time, but not dealing with the issues of solvency and competitiveness as the gap between creditor and debtor countries continued to widen, and the world continued to stagger on under a mountain of debt and deleveraging. In September Central Banks around the world fired their collective bazookas, minting asset purchase programmes, led by the European Central Bank and the Federal Reserve and accompanied by stimulus programmes in Japan, China and Brazil to combat the forces of deleverage and deflation and promote growth and employment. Effectively sovereign nations taking on the debt generated by banks in recent decades to enable lenders to resume activity and keep growth alive. Mr Draghi, president of the ECB outlined details of a bond purchase programme, named Outright Monetary Transactions (OMT). The scheme will be unlimited in its extent, with no yield target, and involves the purchase of existing government bonds of troubled Eurozone countries with a one to three year life, thereby seeking lower borrowing costs in countries like Italy and Spain as well as remove concerns about these countries' refunding prospects. However before the ECB acts countries must actively choose to seek its help, and agree to stick to their fiscal and economic reform plans. Next up the Federal Reserve with an extension of the forward guidance for near zero US base rates and the introduction of an open-ended Mortgage Backed Securities (MBS) purchase programme of US$40bn per month to help bring down high mortgage rates, a barrier to recovery, to run concurrently with its existing "Operation Twist" activities of US$45bn per month in long-dated treasuries, which themselves have been extended to the end of 2012. Unlike previous programmes, QE3 does not have a defined limit and will continue until the labour market improves. In other words, the Fed has for the first time tied policy to developments in the economy and will not change policy until it succeeds.

GENERAL BACKGROUND THOUGHTS
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 over the extended duration of post financial recoveries. Expect the job markets in the developed West to remain difficult.

Debt busts are deflationary and economic recoveries that follow financial recessions tend to be much weaker, slower and more erratic/uneven than those that follow non-financial recessions, as the necessary process of deleveraging drags on. Expect any recovery to be very long-haul and jagged in nature.

The developed economies have suffered the mother of all debt busts and they are buried in debt. Governments are way over-borrowed, and banks are trying to re-build their balance sheets in a more harshly regulated world and are lending less. Meanwhile consumers in the developed world are still in an unprecedented process of retrenchment after a spending binge that resulted in record levels of household debt and very low savings. Ready availability of credit and ever rising property prices are a thing of the past. An extended period of household retrenchment lies ahead in the West as consumers reduce their debt levels and save for the future, at a time when incomes are lagging rising inflation, and household bills and levels of taxation are rising.

The global economy moves forward as a two speed jagged/stalling recovery. Sluggish growth or 'possibly worse' and very low interest rates in the developed world coupled with corrosion in the Eurozone. The lack of employment and income growth and continued tight credit conditions are stalling the business cycle, leading to austerity in the West. In comparison, faster growth in developing markets coupled with higher inflation.

The corporate sector is currently in good shape, with repaired and strengthened balance sheets, good top line growth in developing markets, depressed wage inflation in developed markets.

Asset prices fluctuate much more than fundamentals, as investor sentiment oscillates wildly between greed and fear, optimism and pessimism, with little sense of moderation. Short term volatility is a given on the equity journey.

Corporate sector is likely to be a net buyer of equities, both through cash financed M&A activity, as well as share buybacks.

Asset prices fluctuate much more than fundamentals, as investor sentiment oscillates wildly between greed and fear, optimism and pessimism, with little sense of moderation. Short term volatility is a given on the equity journey.

INVESTMENT THEMES

London quoted companies with a strong position in their home markets, and who have the world as their market place.

•    Companies with leading market positions, offering top line growth and pricing power. The strong get stronger.

•    Companies which enjoy high margins and generate good levels of free cash flow.

•    Companies that re-invest in the products and services that they offer their customers.

•    Companies with good revenue predictability and visibility.

We generally prefer companies which sell to other companies ("B to B"), rather than companies which sell to the consumer ("B to C").

We are wary of companies which are largely dependent on the developed world consumer or public sector spending, or companies that are easily threatened by higher input prices.

INVESTMENT STYLE

It is especially difficult to get market timing right and almost impossible to consistently benefit from short-term macro judgement calls. We prefer to spend most of our time focussing on the underlying companies in the portfolio, whilst keeping portfolio turnover to a minimum. Patient, long only, and giving things time.

OVERALL PERFORMANCE

During the six months under review, the Ordinary and "A" Ordinary share prices declined by 20.2% and 18.1% respectively against a decline in the FTSE All-Share Index of 0.2% as both classes of shares traded at wider discount to their net asset value. The time weighted return of the portfolio was -8.8%, compared with a rise of 1.9% in the Company's benchmark and a rise of 2.3% in the FTSE All-Share Index - Total Return.

The six month period under review has been difficult. Brazil's economic future does not look nearly as bright as its recent past. Since 2010, when the country registered GDP growth of 7.5%, its economy has slowed dramatically.

Last year the country's GDP growth reached only 2.7%, and while GDP growth forecasts for 2012 began the year at 3.5%, Brazil's central bank now expects growth to reach only 1.9%, while Credit Suisse projects only 1.5% growth for the year. Against this background the central bank has cut the selic interest rate to a record low 7.25%, from a peak of 12.5% in August 2011. The most obvious cause of Brazil's poor economic outlook is the collapse of the commodities boom, with the country's exports to China decreasing by more than half during the first six months of 2012. Growing Brazilian protectionism is also making Brazilian products increasingly less competitive, and these protectionist policies need to be reversed by implementing long-delayed labour, tax and education reforms in order to reduce the cost of doing business in Brazil and address some of the country's supply-side weaknesses while increasing the country's international competitiveness. A decade of economic growth has seen the emergence of a new lower-middle class that increasingly expects better standards of education, security and infrastructure. The labour market remains tight, with unemployment nearing only 5%, and inflation expectations are only loosely anchored. While concerns in Brazil focus on the slowing demand for the country's exports, others worry that domestic labour costs are now outstripping productivity gains and feel that a more substantial rebalancing of the economy is in order. Investor appetite has waned which has taken its toll on the short term price performance of Ocean Wilsons Holdings Limited.

In addition we suffered a number of setbacks in some of our other top ten holdings, including Hargreaves Services, Cape, Kofax and Andor which are covered under the individual company commentaries. Finally, and on a technical note, the Hansa "A" Ordinary non-voting shares exited the FTSE ALL Share index in July, which saw some index selling of the "A" Ordinary non-voting shares in thin markets, causing a huge pricing disparity with the Hansa Ordinary voting shares which have the same economic interest and will remain in the index.

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SECTOR WEIGHTING AND PERFORMANCE

Sector	Sector Weighting at  30 September 2012 %	Sector Weighting at  30 September 2011 %	Six months' Performance to 30 September 2012 %
Strategic	37.6	45.5	(16.0)
Smaller Cap/AIM	17.5	20.0	(19.9)
Natural Resources	13.0	12.4	(4.8)
Property	7.9	6.6	12.7
Large Cap	13.8	10.7	6.3
Utilities	2.3	2.0	7.2
Mid Cap	5.5	3.4	17.9
Investment Trusts	3.0	2.5	(1.7)
Strategic	37.6	45.5	(16.0)
Net current liabilities (inc. loans)           (0.6)		(3.1)	(0.9)

NEWS UPDATES FROM TOP HOLDINGS

(the twenty four holdings listed below represent 95.6% of Net Asset Value, and individually represent 1% or more of NAV. Details are provided in respect to each company's Market Capitalisation, the proportion of NAV that the holding represents, and the company's share price performance over the six months to 30 September 2012).

Ocean Wilsons Holdings Ltd - (Market Cap. £343.0m: 37.6% of NAV: Performance -16.0%) is a Bermuda based investment company and through its subsidiary operates as a maritime services company in Brazil. The company is listed on both the Bermuda Stock Exchange and the London Stock Exchange and has two principal subsidiaries. Wilson Sons Limited (58.25% owned), is an autonomous Bermuda company listed on the Sao Paulo Stock Exchange and Luxembourg Stock Exchange. Wilson Sons is one of the largest providers of maritime services in Brazil, with activities including harbour and ocean towage, container terminal operations, offshore support services, logistics, small vessel construction and ship agency. Ocean Wilsons (Investments) Limited (wholly owned) is a Bermuda investment company, holding a portfolio of international investments managed by Hanseatic Asset Management LBG, a Guernsey registered and regulated investment manager.

Over the next six years Wilson Sons Limited expects to invest over US$1.8bn, not including acquisitions, US$0.84bn in Offshore Support Services, the balance in Towage and Shipyards, as both will also benefit from offshore E&P activities. Brasco (wholly owned) has signed a contract for the acquisition of Briclog for R$125m. Briclog is located in the city of Rio de Janeiro and has been providing port services to the oil and gas industry since 2004. On the operational front, the legal action that temporarily halted the construction of the extension of the Guaraja shipyard has been satisfactorily resolved. The expansion of the Company's naval construction capacity will facilitate the strategy of building vessels to meet the demand driven by the growth in the offshore oil and gas industry in Brazil. On the economic front, any strengthening of the US$ against the R$ will ease some of the cost pressures on Wilson Sons which has revenues in US$ and costs in R$, while any strengthening of the US$ against Sterling increases the translational value of the underlying assets.

Ocean Wilsons Holdings Ltd first half income was negatively affected by a combination of the depreciation of the Real against the US dollar, constrained cabotage and transhipment volumes, the end of the Petrobas public port operation in Rio de Janeiro, increased depreciation (which is dollar denominated) and increased employee expenses from headcount for pre-operational hiring and share based payment expenses. The outcome in terms of profit for the full year may fall significantly short of earlier market forecasts, but the company maintains a positive view on future market prospects as it continues to focus on delivering its long term US$1.8bn investment plan.

Wilson Sons Limited announced a contract for the acquisition of a new offshore support vessel, so the Company's joint venture fleets will now comprise 5 offshore vessels under construction and 17 in operation with 14 owned and 3 AHTS ship management contracts. Wilson Sons estimates that by the end of 2015 its offshore supply vessel fleet will have grown to around 24 vessels and then 34 vessels by 2017, placing it in the top four Brazilian OSV operators. Meanwhile the company is aiming to complete the civil works of the Guaruja II shipyard during the last quarter of 2012, more than doubling the shipbuilding capacity of Wilson Sons and allowing for increased third party vessel construction and maintenance services. Wilson Sons is now waiting for a final licence to start building a new US$155m shipyard in Rio Grande next to its Tecon Rio Grande container terminal. This would allow the company to concentrate most of its shipbuilding activity down south in the Rio Grande yard while focussing more on ship repair and servicing the offshore industry in Guaruja, because of its proximity to the Santos and Campos basins.

NCC Group - (Market Cap. £320.1m: 4.8% of NAV: Performance+4.3%) the international, independent provider of Escrow and Assurance announced a strong set of final figures, with overall group operating margins of 27%, 131% cash conversion and a 24% increase in the dividend. In May NCC announced that it "has reverted to its former Group-wide IT solution with immediate effect due to operational problems with its new system which was being installed. This had no impact on trading but resulted in a one-off, mostly non-cash charge, of £6.9m in the financial year to 31st May 2012". More recently it has acquired two US-based companies, Matasano Security and Intrepidus, establishing NCC Group as a major force on the East of the United States, with the largest testing team in the key New York area. The group has enjoyed significant success in the US since it acquired California-based iSec Partners in October 2010.The rise and severity of cyber-attacks is concerning and could lead to some form of cyber-security legislation requiring companies to reveal material security breaches which in turn would drive higher spending in cyber-security consulting and solutions. Close to 20m items of personal information have been illegally traded online in first half of 2012, more than in the whole of 2011 and four times the number in 2010 according to Experian.

BG Group - (Market Cap. £42,468.4m: 4.4% of NAV: Performance -12.6%) continues to offer some of the best growth prospects amongst the big-cap oils even though BG's E&P volumes have been broadly flat for the last three years. Although growth could reach 6% this year it is still below the company's original projections, but should accelerate from 2013, with volumes rising 14%p.a. for 2013-15. LNG markets could see a doubling in demand by 2025, and with 40% of its value and nearly 30% of its production LNG related, BG is the outstanding play on the positive trends with trading upside should the current wave of projects face delay. The company took another step towards achieving its US$5bn asset disposal programme, to focus on exploration activities, by announcing an agreed sale of its Comgas business in Brazil to Cosan for US$1.7bn.

Experian - (Market Cap. £10,392.6m: 3.8% of NAV: Performance +7.1%) the global credit information and marketing services group remains a long-term growth story, as it continues on a journey of expansion into new geographic markets, notably the group's high growth Brazilian subsidiary Serasa, and verticals, with a culture of innovation to develop new products and move in to new customer segments. Acquisitive growth funded by free cash flow continues to play an important role, with the deals tending to be bolt-on which accelerate organic growth or allow the group to expand the reach of its core competencies of data or analytics. The full year core financial targets remain, namely mid to high single-digit organic revenue growth, improving margins and cash flow conversion of over 100%. For investors the story is about growth in cash flow and the potential for cash to be returned, once the 30% minority interest in Serasa is bought in.

Weir Group - (Market Cap. £3,757m: 3.2% of NAV: Performance 2.0%) is a global engineering solutions provider to the mining, oil & gas and power markets. This focus, together with a growing emerging market presence, continued commitment to operational excellence, strong aftermarket revenues and value enhancing acquisitions has resulted in strong operating margins. Interestingly General Electric has announced the creation of GE mining, based in Australia, demonstrating GE's attraction to the mining industry despite some immediate concerns about the original equipment outlook. With many of the mining majors delaying new projects the Weir debate is focussed on the deliverability of the June 2012 target to double the EBIT number by 2016. About 50% of group revenues come from spares and service, one of the highest aftermarket exposures in the sector. The mainstay products are slurry pumps for mining and pressure pumps for hydraulic fracturing of shale gas and shale oil, both with high wear rates and in the case of mining the beneficiary of higher mine production levels as ore grades decline.

Herald Investment Trust - (Market Cap. £405.3m: 3.0% of NAV: Performance -1.7%) was launched in 1994 to invest in smaller quoted Technology, Media & Telecom stocks. Two thirds of assets are invested in the UK market and the portfolio is very diversified with some 240 holdings, so individual stock risk is relatively low, while there is very little net gearing at the present time. Little interest is being shown by institutional investors in this area of the market as reflected in very little IPO activity, leading to low valuations, thereby leaving the door open to takeover activity, particularly by US companies.

Hargreaves Services - (Market Cap. £182.8m: 2.8% of NAV: Performance -44.0%) is the UK's leading supplier of solid fuels and bulk material logistics. The company announced record profits for the year ended 31 May 2012, which were overshadowed by on-going geological gas ingress problems in the Maltby deep coal mine. The real possibility of mothballing the mine demonstrates the determination of the Board to ensure that Maltby does not have a destructive impact on the wider group. In fact mothballing could have a positive short term impact, while the removal of inherent deep mining risk could highlight the quality of earnings of the rest of the group, "which is trading strongly", which in turn could lead to a re-rating of the group. Maltby is not a core asset in terms of growth strategy, and the group is well placed to continue taking its services-led offering into new geographies, leveraging its experience in mining services, steel and power generation.

Andor Technology - (Market Cap. £118.2m: 2.7% of NAV: Performance -24.5%) is a global leader in the development and manufacture of high performance scientific digital cameras for academic, industrial and government applications. The company is continuing to see strong growth in Asia Pacific, offset by weaker sales in Europe and the US. Trading this year has been affected by an earlier absence of orders from two of the company's US customers, one of which has now returned to more normal ordering patterns, but still leaving a gap in 2012 order flow. 2013 is expected to see a slower sales growth rate than is normal because of some pressure on government research. Innovation and new product delivery is key to Andor's continued growth and the new mid-range Zyla camera has been well received, with good traction with OEM's, and should see growth ramping up in the coming year. The company has been building up sizeable cash reserves over the last few years and the Board now considers it appropriate to commence the payment of dividends and intends to adopt a progressive dividend policy which reflects the long-term earnings and cash flow potential of the company.

BHP Billiton - (Market Cap. £40,657.4m: 2.7% of NAV: Performance +2.8%) is the largest mining company in the world with tier 1, high volume, low production cost, long-life and expandable upstream assets, diversified by commodity, geography and market. The company expects industrialisation and urbanisation of China and other emerging economies to continue to support strong demand for many commodities in the long term, but takes the view that the commodity Supercycle is decelerating in the short term, rather than coming to an end. BHP Billiton is more of a resources company than a miner, with the Petroleum division contributing 23% of EBIT, which it is prepared to see rising to 40% of EBIT if that is how opportunities and projects develop and, in due course exposure to phosphates, in one sense a proxy for food production. Oil is more defensive than metals, and phosphates are likely to be so too. Now that Chinese investment growth is slowing, BHP is scaling back its previously announced capex plans, or as CEO Marius Kloppers recently stated "adjusting our rate of forward capital deployment in order to live within our means". For FT13, 20 major projects are currently in execution with a budget of US$22.8bn, and the company has stated that no major project approvals are expected in the next 12 months. BHP has provided an update for Olympic Dam ( a mine with a life of at least 100 years ), delaying the project to investigate an alternative, less capital-intensive design. "We are absolutely determined to bend the cost trend". This new prudence is going down well with investors who see the move as protecting cash for dividends or share buy backs and for new investment opportunities in the current downturn.

DV4 - (£1bn committed, Unquoted, 2.6% of NAV) has now drawn down 64.7% of monies committed, and Hansa Trust has a £10m commitment to this fund. In addition there is significantly more capital committed to existing assets in DV4, which will increase that committed percentage materially. The focus of acquisitions for the DV4 portfolio in the recent past and going forwards has been towards London and the South East, in the two principal markets where momentum exists, namely prime offices and residential. DV4 has now acquired 22 investments and the majority of its capital has been drawn or is committed. The Olympic Village (50:50 joint venture with Qatari Diar) is likely to require substantial equity at completion and Minerva (50:50 joint venture with AREA Property Partners) will require further equity as well. The assembled portfolio very much reflects the original thinking behind the fund, namely it is opportunistic in nature, has considerable potential for value enhancement through asset management initiatives and has a theme of underlying quality.

United Business Media - (Market Cap. £1,176.3m: 2.6% of NAV: Performance +16.1%) focuses on two principal activities: worldwide information distribution, targeting and monitoring, and the development and monetisation of B to B communities and markets, with 6000 staff in more than 30 countries. UBM's business mix has been moving towards more attractive divisions and geographies, namely Events and US/emerging markets including China, through a combination of organic growth and acquisitions. Events, the valuable part of UBM and a secular growth story, now make up nearly two thirds of EBITA currently, and most recently grew revenues by 15% underlying, with margins of up to 32.5%, and a weighting towards large scale, market-leading shows in the US and emerging markets. At the time of the H1 results this year UBM announced a strategic review/non-core disposal of the Data Services division within UBM. This should be the catalyst for a re-rating of the shares, because the Events business would then represent more than three quarters of EBITA post-sale, while also allowing the re-focussed company to choose from returning cash, reducing debt and/or making more earnings accretive Events acquisitions. UBM's Events business comes out very well against its peers both on an organic revenue growth basis and also on margins, and events/exhibitions are often the only occasion when industry players can get together.

Great Portland Estates - (Market Cap. £1,409.9m: 2.6% of NAV: Performance +27.0%) is a fully exposed London offices and retail REIT, with an 80% weighting in the West End and the balance in the City and Southwark. There are two commercial property markets in the UK, Central London and the rest of the country, and we expect Great Portland's West End portfolio to continue to outperform the wider market as robust tenant demand (led by the TMT sector) for its product coupled with restricted supply drives further rental growth. The company's pre-letting successes have de-risked its committed development pipeline as well as allowing it to switch on further schemes. There are 16 uncommitted schemes totalling 2.6msqft, including two "jewels", namely the two major land holdings and Crossrail beneficiaries at Hanover Square and Rathbone Place, both London W1. Meanwhile the amount of safe haven capital flowing into the central London property market shows no signs of diminishing.

Hansteen Holdings - (Market Cap. £500.2m: 2.5% of NAV: Performance 11.8%) is a European industrial Real Estate Investment Trust ("REIT") with a heavy portfolio weighting in Germany and a strategy of buying high yielding industrial properties at less than replacement cost with opportunities to add value and manage them intensively via locally based management teams for income and capital growth. The key is purchase price, financing structure and management approach. "The likelihood is that the next five or six years will be a period for acquiring and intensively managing. Whilst there will be selective sales there are unlikely to be large-scale realisations. Most likely, the bulk of the returns to our shareholders will be from growing income and dividends. Later in the cycle capital returns will become more significant".

GlaxoSmithKline - (Market Cap. £70,592.6m: 2.4% of NAV: Performance +5.3%) has benefitted from its "defensive" attractions of cash generation and a decent yield. A compelling long-term buy amidst a backdrop of zero interest rates and negative real yields. Meanwhile the proportion of world GDP spent on healthcare is expected to rise as technology advances in pharmaceuticals and medical equipment and devices continue to improve health and life expectancy. This might suggest that GlaxoSmithkline is like a supercharged inflation-linked bond offering the win/win of superior growth and a higher starting yield. While it is the first large-cap pharma to exit the patent cliff and has minimal hard patent risk until 2015/16, it does face risk with its No 1 selling drug, Advair, which accounts for about 30% of EBIT. The company is struggling to return to sales and margin growth mode promised by CEO Andrew Witty, increasing the pressure on the company to execute on its pipeline, where regulatory and execution hurdles are high. The Group remains highly cash generative and there appears to be a good pipeline of new products, with the potential to launch 8 major new drugs and vaccines in the next two years.

Centrica - (Market Cap. £17,034.6m: 2.3% of NAV: Performance +7.2%) is the UK's largest energy supplier with 41% of the gas market, 25% of the electricity market and 7% of the UK power generation market. Some 70% of Centrica's operating profit arises from two divisions, Centrica Energy, the upstream business, and Centrica Residential the downstream business, with a continuing trend towards vertical integration between the two. Centrica's strategy of increased vertical integration and improving operational efficiency has enabled it to continue to grow despite the challenging economic environment and volatile commodity prices. Strong cash generation and a good balance sheet underpin significant spend on organic capex and acquisitions, while British Gas Services is targeting double-digit profit growth through operational efficiencies.

Galliford Try - (Market Cap. £595.5m: 2.2% of NAV: Performance +19.3%) set out a strategy in September 2009 to transform its house building business by carrying out a rights issue to raise £125.6m, and setting the ambitious objective of doubling the size of the house building division by the end of the third year and targeting a significant increase in profits and return on capital. The plan was to create a business that could deliver around 3000 units a year with a deliberate focus on the south of England where the market is more robust. These objectives have been exceeded, and in addition, the group has maintained a high quality and profitable construction order book. The current strategy is to enhance the quality of earnings and improve cash flow, enabling the group to pursue a progressive and sustainable dividend distribution policy. A strong balance sheet and a disciplined growth strategy with a clear focus on improving margins by improving building practices and benefitting from a positive undertow in the work out of legacy land. The group is well positioned to deliver further profitable growth in 2013 and beyond.

Kofax - (Market Cap. £261.9m: 2.2% of NAV: Performance -3.8%) strategy has evolved into a single corporate vision statement, namely, to be the leading provider of capture-enabled business process management (BPM) solutions. These solutions provide a rapid return on investment to thousands of customers in banking, insurance, government, business process outsourcing and other markets. Kofax delivers these solutions directly through its own sales organisations and a global network of more than 800 authorised partners throughout the Americas, EMEA and Asia Pacific. The US$48.1m acquisition of Singularity has made for a more compelling joined-up software proposition, enabling Kofax to upsell to a more mature capture customer base. Kofax realized "lower than expected software license revenues during the third quarter in its core capture software business as the result of an unusual number of delayed orders at quarter end", but at the time the management did not lower their guidance for the full year. Kofax produced an impressive set of final figures with Q4 software license sales +20.3%, as moves to backfill the product portfolio saw success in re-igniting sales, while also strengthening management in the sales organisation.

HSBC Holdings - (Market Cap. £104,993.3m: 2.1% of NAV: Performance +6.0%) has significant exposure to emerging markets, particularly Asia (some 75% of the bank's total profits), and is entirely retail funded, with a loan to deposit ratio of 75%, making it a net lender into wholesale markets. HSBC has reiterated that it is confident it will achieve cost savings at the top end of its US$2.5 - 3.5bn target range by the end of 2013, demonstrating that costs are under control, and at the same time Stuart Gulliver thinks the bank can hit its target ROE range of 12-15%. More than 14000 staff have been let go since the end of last year, and plans have been announced to cut loose 19 business areas that are sub-scale/non-core.

BP's - (Market Cap. £83,170.7m: 1.8% of NAV: Performance -3.4%) share price was about 630p before the Deepwater Horizon tragedy in the Gulf of Mexico some two years ago. About US$15bn of divestments are expected by the end of 2013 on top of the US$23bn made by the end of 2011 to pay for the costs of the disaster. BP is also looking to focus on its four large hubs in the Gulf of Mexico while selling its non-strategic interests in the region. AAR, BP's partner in TNK-BP is examining an all-cash offer for BP's 50% stake in the JV, but Rosneft still looks the most likely buyer, and it appears that such a move has Russian State support. Although BP would lose the TNK-BP dividend stream and a sale price could appear to be on the low side, this would be offset by a material reduction in BP's risk exposure and the opportunity of an alternative long-term alliance with Rosneft.

Cape - (Market Cap. £290.2m: 1.7% of NAV: Performance -39.8%) is an international provider of essential, non-mechanical support services to the energy and mineral resources sectors. Cape is fundamentally well placed to benefit from the rise in global energy demand over the next few years, but poor execution threw a spanner in the works. In March Cape announced that work releases on an Algerian contract had been slower than expected, with revenues in 2011 less than one-third of planned levels, and CEO Martin May left the company, being replaced on an acting basis by Brendan Connolly.

A further project review was held in mid-April during which no material concerns were highlighted by the project team, and a trading statement on 1st May confirmed "that overall trading has been in line with the Board's expectations. The bombshell came on 25th May when Cape announced its intention to recognise a one-off charge of £14m in respect of current and estimated future losses on the contract, followed by the announcement on 30th May of the appointment of Joe Oatley, former CEO of Hamworthy, as CEO, who had run Strachan & Henshaw, a contracting business within Weir. In August Cape announced its third profit warning, saying Full Year results for 2012 and 2013 will be materially lower than expected, this time caused by a slowdown of onshore work in Australia. At the end of August management showed their confidence in the outlook for the business by maintaining the interim dividend. Cape has strategic market positions in three geographies, offering growth in Asian LNG, resilience in UK maintenance and attractive margins in the Middle East.

ENI - (Market Cap. €49,278.1m: 1.7% of NAV: Performance +3.5%) is selling 30% of its 52.5% holding in Italian gas distributor Snam to Italian State holding company CDP as the first step in a complete disposal. This will see a large reduction in ENI's balance sheet gearing and a sharp increase in E&P exposure to 58% of pro forma 2011 capital employed vs 48%. As a result of its improved gearing ENI will authorise the restart of a share buyback programme, with the Italian government maintaining its holding in ENI at 30%. ENI has recently reiterated its production volume growth targets of a little more than 3%pa from 2011-15 and about 3%pa from 2015-22, although the company did emphasise current difficulties on project delivery.

Wolseley - (Market Cap. £7,564.3m: 1.6% of NAV: Performance +11.7%) is the world's largest specialist trade distributor of plumbing and heating products to professional contractors and a leading supplier of building materials in North America, the UK and Continental Europe. Although these markets remain very competitive, Wolseley continues with its policy of self-help. The group is being very tightly run, with an underlying trading margin of 5.2% and scope for further improvement, while the group is highly cash generative. The latest full year figures saw net debt fall from £568m to £45m, partly the result of a number of disposals, although the group also made nine bolt-on acquisitions during the year. The surprise was a £350m special dividend. The USA accounts for 48% of on-going group revenue and with a margin of 6.3% it accounts for an even higher share of group profit. Ferguson, the US subsidiary, has outperformed its market strongly as its distribution centre model is unique in the industry and has given it economies of scale (being twice the size of its next biggest competitor) and the ability to offer a range of 50000 stock-keeping units compared to around 6000 at single branch competitors. Ferguson may be about to benefit from the recent strengthening in new US housing starts. There is no sector of America's economy that is more cyclical than housing and some commentators think that the latest upturn could turn in to a boom by 2015, driven by a combination of improving house prices, rising rates of household formation and population growth, a lower inventory of homes for sale, and last but by no means least improving access to mortgage credit.

Royal Dutch Shell's - (Market Cap. £57,822.2m: 1.3% of NAV: Performance 2.4%) figures have continued to be volatile over recent quarters, with a significant miss in the second quarter due to temporary factors. The longer term outlook is good on the back of the strength of its prospective free cash flow turnaround. Shell is still capable of generating its implicit target of US$51pa average cash flow over 2012-15 at US$100/b Brent, driven by over 60 new projects, underpinning an expected increase in investment and payout.

Goals Soccer Centres - (Market Cap. £55.9m: 1.0% of NAV: Performance +8.5%) is the leading player in the fast-growing 5-a-side soccer market, operating 43 centres in the UK, one in Los Angeles, and has established a pipeline in excess of 40 sites. The latest interim figures were overshadowed by the recent failed 144p per share bid from Ontario Teachers' Pension Scheme, blocked by just over 25% of shareholders on the grounds that it undervalued the business. The barriers to entry are high in this market, and the cost of the centres is mostly in the build, and once the capital is sunk the on-going running costs are relatively marginal. Debt reduction and improving returns at sites opened since 2008 is the main story going forwards. Meanwhile a new innovative modular build concept has been successfully developed at Chester on time and on budget, reducing capital expenditure to £1.5m per centre from £2.3m, reducing the build time to 14 weeks from 22 weeks, significantly improving return on capital.

OUTLOOK

 The Eurozone crisis is two interlinked crises, namely a sovereign debt crisis and a banking crisis and a big question is which country will be the first to sign up to a strengthened austerity programme under international monitoring before the ECB acts, although Spain is viewed as a leading candidate. Draghi's plan will buy more time as it tries to eliminate the risk of a Eurozone break up forced by the markets, as buying bonds will help keep borrowing costs down. However the ensuing and increasingly severe fiscal self-flagellation and political discord, along with the competitiveness, growth and jobs crises could win out. Witness the violent riots in Greece, anti-austerity protests in Madrid and threats of independence from Catalonia, with populist demands forcing governments to continue favouring equality over efficiency. The financial crisis has had huge political as well as economic effects, as politicians try to find new ways of redistributing wealth to deal with the pressing issue of inequality, suggesting that the size and scope of western states is only likely to increase. Only the restoration of competitiveness, growth and jobs will provide the capacity to address the overwhelming debt overhang. Prospects for growth must improve. Ensuring the survival of the Eurozone is a political decision. In other words a political union, a banking union and much greater fiscal integration and the requirement for the nations of Europe to significantly surrender their sovereignty. We are witnessing the inevitable move of the debt mountain from banks to sovereign nations, as the European banks need to have their balance sheets restored/recapitalised as underlying money supply is already contracting as bank lending shrinks and Europe faces deflation, in stark comparison with the US where QE3 should boost money supply growth into the 8% range and the banks are well back in the lending business again.

It is not easy to safely deleverage a highly-indebted economy like America when growth is so sluggish, as it requires a well-executed policy mix by central bankers in which growth is not dampened excessively by austerity measures, inflation is held within a manageable range between 1% and 3% to avert a currency collapse, and interest rates are held below the rate of GDP growth. Interesting to hear the Brazilian Finance Minister stating that the recent announcement of further QE in the US had stimulated a currency war. Interest rates would not stay below nominal growth rates for long without manipulation, so central banks need to create additional demand for bonds to keep yields low. The virtually zero interest rate policy and bond purchases by central banks keep yields low, supporting debt servicing, while increased regulation forces banks and insurers to hold supposedly risk-free government bonds for liquidity and solvency reasons. If real yields are kept below the rate of GDP growth, debt levels will decrease over time. The technical term for this is financial repression, the suppression of interest rates so that creditors subsidise debtors, and savers subsidise mortgage holders. The global economy could slowly de-lever in this manner over a period of decades. In the very near term the looming fiscal cliff in the US is becoming the elephant in the room as investors wonder how policy makers in Washington will manage to break free of the current political gridlock, to avoid the large fiscal tightening which is scheduled to take effect in 2013. If a solution is found global growth could gradually improve over the year ahead, in response to concerted policy support and a slowly healing US economy. At the end of the day what is generally lacking is a revival in business confidence or "animal spirits" to really get economic activity going again, and this too will to a large degree rely on the greatest healer of all, namely time.

Hansa Capital Partners LLP

Investment Manager
30 September 2012

PORTFOLIO INFORMATION

                        at 30 September 2012

Investments	Fair Value £000	Percentage of Net Assets
Ocean Wilsons Holdings Ltd	90,722	37.6
NCC Group Plc	11,594	4.8
BG Group Plc	10,525	4.4
Experian Plc	9,261	3.8
Weir Group Plc	7,779	3.2
Herald Investment Trust Plc	7,142	3.0
Hargreaves Services Plc	6,705	2.8
Andor Technology Plc	6,582	2.7
BHP Billiton Plc	6,449	2.7
DV4 Ltd #	6,311	2.6
Top 10 Investments	163,070	67.6
United Business Media Plc	6,295	2.6
Great Portland Estates Plc	6,231	2.6
Hansteen Holdings Plc	5,979	2.5
GlaxoSmithKline Plc	5,710	2.4
Centrica Plc	5,634	2.3
Galliford Try Plc	5,333	2.2
Kofax Plc	5,301	2.2
HSBC Holdings Plc	5,076	2.1
BP Plc	4,365	1.8
Cape Plc	4,196	1.7
Top 20 Investments	217,190	90.0
Eni S.P.A.	4,068	1.7
Wolseley Plc	3,804	1.6
Royal Dutch Shell Plc	3,158	1.3
Goals Soccer Centres Plc	2,415	1.0
Qinetiq Group Plc	1,894	0.8
Lloyds Banking Group Plc	1,812	0.8
Brooks Macdonald Group Plc	1,541	0.6
Cairn Energy Plc	1,463	0.6
Melrose Resources Plc	1,337	0.6
Immupharma Plc	834	0.3
Top 30 Investments	239,516	99.3
Other Investments (17)	3,286	1.3
Total Investments	242,802	100.6
Net current liabilities	(1,553)	(0.6)
Net Assets	241,249	100.0
Listed	215,457	88.7
AIM and OFEX	20,573	8.5
Unquoted #	6,772	2.8
	242,802	100.0

CONDENSED GROUP INCOME STATEMENT

for the six months ended 30 September 2012

	(Unaudited) Six months ended 30 September 2012			(Unaudited) Six months ended 30 September 2011			(Audited) Year ended 31 March 2012
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£000	£000	£000	£000	£000	£000	£000	£000	£000
(Losses)/gains on investments	-	(27,736)	(27,736)	-	(7,398)	(7,398)	-	1,404	1,404
Exchange losses on currency balances	-	(6)	(6)	-	(2)	(2)	-	(3)	(3)
Income (see note 2)	4,428	-	4,428	4,688	12	4,700	6,049	-	6,049
	4,428	(27,742)	(23,314)	4,688	(7,388)	(2,700)	6,049	1,401	7,450
Investment management fees	(737)	-	(737)	(798)	-	(798)	(1,565)	-	(1,565)
Other expenses	(364)	-	(364)	(415)	-	(415)	(801)	-	(801)
	(1,101)	-	(1,101)	(1,213)	-	(1,213)	(2,366)	-	(2,366)
Profit/(loss) before finance costs and taxation	3,327	(27,742)	(24,415)	3,475	(7,388)	(3,913)	3,683	1,401	5,084
Finance costs	(19)	-	(19)	(57)	-	(57)	(154)	-	(154)
Profit/(loss) before taxation	3,308	(27,742)	(24,434)	3,418	(7,388)	(3,970)	3,529	1,401	4,930
Taxation	(4)	-	(4)	(38)	-	(38)	(4)	-	(4)
Profit/(loss) for the period	3,304	(27,742)	(24,438)	3,380	(7,388)	(4,008)	3,525	1,401	4,926
Return per Ordinary and 'A' non-voting Ordinary share (see note 3)	13.8p	(115.6)p	(101.8)p	14.1p	(30.8p)	(16.7p)	14.7p	5.8p	20.5p

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

All of the profit and total comprehensive income for the period 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 2012

                                                    (Unaudited)

	Share Capital £000	Capital redemption reserve £000	Retained Earnings £000	Total £000
Net assets at 1 April 2012	1,200	300	266,707	268,207
Loss for the period	-	-	(24,438)	(24,438)
Dividends paid	-	-	(2,520)	(2,520)
Balance at 30 September 2012	1,200	300	239,749	241,249

Condensed Statement of Changes in Equity for the six months ended 30 September 2011 (Unaudited)
	Share Capital £000	Capital redemption reserve £000	Retained Earnings £000	Total £000
Net assets at 1 April 2011	1,200	300	262,613	264,113
Loss for the period	-	-	(4,008)	(4,008)
Dividends paid	-	-	-	-
Balance at 30 September 2011	1,200	300	258,605	260,105

Condensed Statement of Changes in Equity for the year ended 31 March 2012 (Audited)
	Share Capital £000	Capital redemption reserve £000	Retained Earnings £000	Total £000
Net assets at 1 April 2011	1,200	300	262,613	264,113
Profit for the year	-	-	4,926	4,926
Dividends	-	-	(832)	(832)
Balance at 31 March 2012	1,200	300	266,707	268,207

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 2012
	(Unaudited) 30 September 2012 £000	(Unaudited) 30 September 2011 £000	(Audited) 31 March 2012 £000
Non-current investments
Investments held at fair value through profit and loss	242,802	268,081	270,944
Current Assets
Trade and other receivables	719	402	294
Cash and cash equivalents	594	404	137
	1,313	806	431
Current Liabilities
Trade and other payables falling due within one year	(2,866)	(8,782)	(3,186)
Net current assets	(1,553)	(7,976)	(2,737)
Net assets	241,249	260,105	268,207
Equity
Called up share capital	1,200	1,200	1,200
Capital redemption reserve	300	300	300
Retained earnings	239,749	258,605	266,707
Total equity shareholders' funds	241,249	260,105	268,207
Net asset value per Ordinary and 'A' non-voting Ordinary share (see note 5)	1,005.2p	1,083.8p	1,117.5p

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 2012
	(Unaudited) Six months ended 30 September 2012 £000	(Unaudited) Six months ended 30 September 2011 £000	(Audited) Year ended 31 March 2012 £000
Cash flows from operating activities
(Loss)/profit before finance costs and taxation	(24,415)	(3,913)	5,084
Adjustments for:
Realised losses on investments	2,121	-	4,388
Unrealised losses/(gains) on investments	25,615	7,398	(5,792)
Effect of foreign exchange rate changes	6	2	3
Increase in trade and other receivables	(425)	(121)	(13)
Decrease in trade and other payables	(22)	(150)	(195)
Taxes paid	(4)	(38)	(4)
Purchase of non-current investments	(469)	(9,134)	(11,582)
Sale of non-current investments	875	24	8,412
Net cash inflow/(outflow) from operating activities	3,282	(5,932)	301
Cash flows from financing activities
Interest paid on bank loans	(19)	(57)	(154)
Dividends paid	(2,520)	-	(832)
Repayment of loans	(280)	(1,900)	(7,470)
Net cash outflow from financing activities	(2,819)	(1,957)	(8,456)
Increase/(decrease) in cash and cash equivalents	463	(7,889)	(8,155)
Cash and cash equivalent at 1 April	137	8,295	8,295
Effect of foreign exchange rate changes	(6)	(2)	(3)
Cash and cash equivalents at end of period	594	404	137

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') as adopted by the European Union.

The Half-Year  Financial Statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and on the basis of the accounting policies set out in the Group and Company's Annual Report and Accounts at 31 March 2012.

These Financial Statements are presented in Sterling which is the currency of the primary economic environment in which the Group operates.

2.  INVESTMENT INCOME

	(Unaudited) Six months ended 30 September 2012 £000		(Unaudited) Six months ended 30 September 2011 £000		(Audited) Year ended 31 March 2012 £000
Income from quoted investments
Dividends		2,082		1,751		2,892
Overseas dividends		2,346		2,936		3,156
		4,428		4,687		6,048
Other operating income
Interest receivable on AAA rated money market funds		-		-		1
Other interest receivable		_		1		_
Total Income		4,428		4,688		6,049

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
Period	£000	Pence per share	£000	Pence per share	£000	Pence per share
Six months ended 30 September 2012	3,304	13.8	(27,742)	(115.6)	(24,438)	(101.8)
Six months ended 30 September 2011	3,380	14.1	(7,388)	(30.8)	(4,008)	(16.7)
Year ended 31 March 2012	3,525	14.7	1,401	5.8	4,926	20.5

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 2012 and 30 September 2011 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 2012.

The statutory accounts for the financial year ended 31 March 2012 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 21 November 2012.

5.  NET ASSET VALUE PER SHARE

The Net Asset Value per share is based on the net assets attributable to equity shareholders of £241,249,000 (six months ended 30 September 2011: £260,105,000; year ended 31 March 2012: £268,207,000) 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. DV3 Ltd is in solvent liquidation and whilst it is not expected that the liquidator will call upon the outstanding commitment of £807,438 it is expected to remain in place until the completion of the orderly winding up of the company.

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 2012 was £3,852,480 (six months ended 30 September 2011: £6,194,325; year ended 31 March 2012: £3,993,337).

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 each 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

34 Beckenham Road

Beckenham

Kent

BR3 4TU

Tel: [phone]

(Calls cost 10p per minute plus network charges)

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 21 November

Half‑yearly Report sent to shareholders            5 December

Interim Dividend payment                 13 December

Interim Management Statements   January and July

NOTES

Hansa Trust PLC

50 Curzon Street, London W1J 7UW

Tel: [phone] Fax: [phone]

Website: www.hansatrust.com

Email: [e-mail]

 

END

 

 

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