Interim Management Statement

RNS Number : 4714W

Hansa Trust PLC

31 January 2012

 



HANSA TRUST PLC

INTERIM MANAGEMENT STATEMENT (UNAUDITED)

This interim management statement covers the period from 1 April 2011 to 31 December 2011. It has been produced for the sole purpose of providing information to the Company's shareholders in accordance with the requirements of the UK Listing Authority's Disclosure and Transparency Rules.

The Directors are not aware of any significant events or transactions, which have occurred between 31 December 2011 and the date of publication of this statement, which have had a material impact on the financial position of the Company.

CORPORATE RESULTS

			Nine Months to 31 December 2011		Year Ended 31 March 2011
STATISTICS
Shareholders' Funds			£245.8m		£264.1m
Share Price
Ordinary share			790.0p		951.0p
'A' Ordinary share			790.0p		930.0p
Discount #
Ordinary shares			22.9%		13.6%
'A' Ordinary shares			22.9%		15.5%
Net Asset Value  per share
Opening Net Asset Value			1,100.5p		895.9p
Dividends			(3.5p)		(3.5p)
Revenue and capital return			(72.9p)		208.1p
Closing Net Asset Value			1,024.1p		1,100.5p
PERFORMANCE
Net Asset Value Return			(6.9%)		22.8%
Performance Benchmark			3.4%		5.3%
Ordinary Share			(16.9%)		25.1%
'A' Ordinary Share			(15.1%)		24.0%
FTSE All-Share Index			(6.8%)		5.4%
Total Return (Dividends Reinvested)
Ordinary Shares			(16.6%)		25.6%
'A' non-voting Ordinary shares			(14.7%)		24.4%
FTSE All-Share Index Total Return Index			(4.1%)		9.4%

KEY PERFORMANCE STATISTICS

PORTFOLIO PERFORMANCE STATISTICS

		Nine months to 31-12-11		Year to 31-03-11
		%		%
Portfolio Time Weighted Return		(6.0)		24.3
Benchmark		3.4		5.3
FTSE All Share - Total Return		(4.1%)		9.4

Weighting	Sector	Time Weighted Returns
-	Insurance	-		47.2
14.5	Natural Resources	(16.7)		9.6
40.0	Strategic	(5.7)		25.7
3.8	Mid Cap	(7.5)		23.3
20.5	Smaller Cap / AIM	(4.4)		35.3
2.0	Utilities	(6.9)		11.1
-	Hedge	-		(96.9)
7.1	Property	(1.2)		14.7
13.2	Large Cap	4.2		15.4
2.8	Investment Trusts	(12.3)		40.4
(3.7)	Loans	(1.8)		(1.4)
100.0	Total	(6.0)		24.3

Top Ten Contributors - pence per share
		Nine months to 31-12-11				Year to 31-03-11
NCC Group Plc		14.8		Ocean Wilson Holdings Ltd		90.6
Andor Technology Ltd		13.8		Cape Plc		18.4
Hargreaves Services Plc		6.8		Kofax Plc		15.0
Weir Group Plc		6.4		BG Group Plc		14.7
GlaxoSmithKline PLC		5.5		Andor Technology Ltd		14.0
Experian Group		4.8		Hargeaves Services Plc		12.1
Galliford Try Plc		3.5		BRIT Insurance Holdings NV		11.7
DV3 Limited		1.9		Weir Group Plc		10.9
Royal Dutch Shell		1.6		NCC Group Plc		10.7
DV4 Limited		1.3		SSL International Plc		9.1
Other Investments		(126.0)		Other investments		(7.2)
Before expenses and dividends		(65.6)		Before expenses and dividends		200.0

PORTFOLIO ANALYSIS                                                                                         31 December 2011

Ocean Wilsons Holdings Ltd		371.3		26.45		98,204		40.0
BG Group Plc		46,715.40		0.02		11,590		4.7
Hargreaves Services Plc		291.2		3.9		11,344		4.6
NCC Group Plc		285.6		3.82		10,897		4.4
Andor Technology Ltd		181.1		5.57		10,096		4.1
Weir Group Plc (The)		4,294.50		0.22		9,530		3.9
Experian Plc		8,787.60		0.1		8,496		3.5
Herald Investment Trust Plc		362.6		1.89		6,860		2.8
BHP Billiton Plc		39,527.40		0.02		6,765		2.8
Hansteen Holdings Plc		487.1		1.3		6,333		2.6
Cape Plc		386.6		1.57		6,082		2.5
GlaxoSmithKline Plc		74,245.20		0.01		5,884		2.4
DV4 Limited A2 Ordinary Shares		0		0		5,319		2.2
Centrica Plc		14,960.10		0.03		4,971		2.0
BP Plc		87,251.20		0.01		4,598		1.9
Great Portland Estates Plc		1,009.90		0.44		4,463		1.8
HSBC Holdings Plc		87,740.80		0.01		4,348		1.8
United Business Media		1,165.30		0.37		4,285		1.7
DV4 Commitment expiring 8 March 2013		0		0		4,274		1.7
Kofax Plc		207		2.04		4,212		1.7
Eni S.p.A.		53,462.80		0.01		4,004		1.6
Cairn Energy Plc		3,734.40		0.1		3,582		1.5
Royal Dutch Shell PLC B shares		65,297.50		0.01		3,525		1.4
Galliford Try Plc		388.8		0.9		3,482		1.4
Wolseley Plc		6,070.50		0.05		3,067		1.2
Goals Soccer Centres Plc		44.7		4.32		1,932		0.8
DV3 Limited Preference Shares NPV		0		0		1,418		0.6
Qinetiq Group Plc		875.8		0.15		1,326		0.5
Melrose Resources Plc		135.3		0.91		1,226		0.5
Lloyds Banking Group		17,755.50		0.01		1,206		0.5
Immupharma Plc		64.4		1.53		988		0.4
Altitude Group Plc		12.4		6.54		811		0.3
Morson Group Plc		17.7		3.86		683		0.3
Consolidated Investment Funds Ltd		0.6		100		633		0.3
All Leisure		14.8		3.59		532		0.2
DV3 Commitment expiring 31 March 2014		0		0		327		0.1
22 Other Investments						2,701		1.1
Net Liabilities						(14,215)		(5.8)
Total Net Asset Value						245,779		100.0
Banking Facility £30m - utilisation at 31 December 2011 £9.2m

NEWS UPDATES FROM TOP HOLDINGS 

(The twenty three holdings listed below representing 97.6% of Net Asset Value ("NA.V"). Details are provided in   respect to each company's Market Capitalisation, the proportion of NAV that the holding represents and the company's performance during the nine months to 31 December 2011)

Ocean Wilsons Holdings Limited - (Market Cap. £371.3m: 40.0% of NAV: Performance -23.0%) 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$125m. Briclog is located in the city of Rio de Janeiro and has been providing port services to the oil and gas industry since 2004. On the operational front, the legal action that temporarily halted the construction of the extension of the Guaraja shipyard has been satisfactorily resolved and the company has recently been granted an environmental licence to proceed with the construction of a much larger shipyard at Rio Grande, which will focus on building offshore support vessels to service oil and gas platforms. The expansion of the Company's naval construction capacity will facilitate the strategy of building vessels to meet the demand driven by the growth in the offshore oil and gas industry in Brazil. On the economic front, the recent strengthening of the US$ against the Real will ease some of the cost pressures on Wilson Sons which has revenues in US$ and costs in R$, while the strengthening of the US$ against Sterling increases the translational value of the underlying assets.

Hargreaves Services - (Market Cap. £291.2m:  4.6% of NAV: Performance +6.8%) the UK's leading energy support services provider announced final figures in line with expectations and stated "The Board remain very excited by the Group's positioning and opportunities to grow the business. All production from Monkton and Maltby is contracted until at least 2012, with the average contract price comfortably below the current market prices for coke and coal. We remain particularly excited by the prospects for the Group in Europe and at Tower Colliery. We will continue efforts to invest to grow our operations in Europe and further afield".

BG Group - (Market Cap. £46,715m:  4.7% of NAV: Performance -5.0%) now expects only "modest" production growth for FY11, but emphasises that its plans for production ramp-up in 2012-13, as well as its 2020 goals are unaffected. BG has an excellent opportunity set including its vast Brazilian reserves and Asian LNG developments. The main highlight of recent months is the upgrade to its offshore Brazilian reserves. At the end of June BG doubled its estimates for the Brazilian Santos Basin reserves and resources which are now estimated to amount to some 6 billion  barrels of oil equivalent net to BG. We will shortly get updates on Brazil, Australia (LNG) and on the US (shale gas).

Andor Technology - (Market Cap. £181.1m:  4.1% of NAV: Performance +13.8%) a global leader in the development and manufacture of high performance scientific digital cameras for academic, industrial and government applications, announced an excellent set of interim figures, stating that "trading through the second half has continued to be strong, with each of our markets delivering excellent growth over the same period last year".  The company talks about a "clear market driven strategy, continuous investment and searching for innovation in every aspect of our business".

NCC Group - (Market Cap. £285.6m:  4.4% of NAV: Performance +14.8%) the international, independent provider of Escrow and Assurance announced a strong set of final figures with a cash conversion ratio of 133%. Two acquisitions have transformed the group's scale and international reach over the last eighteen months, and both divisions enjoy market leading positions and continue to see predictable long term expansion with strongly recurring revenues throughout. "The outlook for NCC Group remains very good and the Board remains confident in its ability to deliver further sustainable growth".

Cape - (Market Cap. £386.6m:  2.5% of NAV: Performance -11.7%)  the international provider of essential non-mechanical downstream support services to the energy and mineral resources sectors, has confirmed that trading is in line with expectations and H2 is likely to see the next step change in activity, both in the Middle and Far East, while 91% of consensus revenues for 2011 are already secured. The group's tax residence is moving to Singapore and Jersey, and the share listing has moved from AIM to the main market. "Cape has a unique combination of capabilities and competence and an outstanding safety record. We are therefore ideally positioned to benefit from the upturn in demand for the construction support services which is driven by the forecast increase in capital spending in our sector and the global demand for energy. All indications continue to suggest we are entering a sustained period of demand growth for Cape's services".

Weir Group - (Market Cap. £4,294m:  3.9% of NAV: Performance +6.4%) 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 record margins. The Weir SPM pressure pumping equipment operation is market leader in one of the fastest growing upstream oil and gas sectors, with growth in the installed base and increased operating intensities driving further aftermarket opportunities and an accelerated original equipment replacement cycle. "The group is well on track to achieve its ambition to double 2009 profits by 2014".

Experian - (Market Cap.  £8,788m:  3.5% of NAV: Performance +4.8%) 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 Brazil, and verticals, with a culture of innovation to develop new products and move into new customer segments. In 2007 less than 20% of revenue was from outside the UK & US, and this is targeted to grow to 30-40% by 2014. The vertical diversification has seen non-financial sector revenue rise from just below 50% in 2007 to more than 60% currently. Acquisitive growth funded by free cash flow continues to play a role, with the deals tending to be bolt-ons that speed organic growth or allow the group to expand the reach of its core competencies of data or analytics.

Herald Investment Trust - (Market Cap. £362.6m:  2.8% of NAV: Performance -3.7%) its objective is to achieve capital appreciation by investing throughout the world in smaller quoted companies in the areas of communications and multi-media. The business activities of investee companies will include information technology, broadcasting, printing and publishing and the supply of equipment and services to these companies. Herald's Net Asset Value total return increased 6.6% in H1 2011, following on from a 41.2% rise in 2010. At 30 June 2011 the UK represented 67% of the equity portfolio, with 24% in the US, 2% in Europe and 7% in Asia/Emerging markets. The NAV has grown 11.2% pa since launch in 1994.

BHP Billiton - (Market Cap. £39,527m:  2.7% of NAV: Performance -7.7%) the largest mining company in the world, remains generally bullish about demand for commodities on the back of emerging market demand, while on the supply side mining projects are now at risk of delay due to economic uncertainty and potential delays to funding. BHP has tier one, high volume, low production cost, long-life and expandable assets.

Hansteen Holdings - (Market Cap.  £487.1m:  2.6% of NAV: Performance -1.5%) is a European industrial REIT with a 60% German portfolio weighting, set up by the founders of Ashtenne after that business was sold. The management have invested alongside shareholders at the IPO and in successive capital raisings. The company has disposable acquisition firepower of around £450m, and management continues to work hard to improve occupancy and drive improved rents within the portfolio. With property yields remaining largely flat, Hansteen is driving earnings to maximise the dividend pay out to its shareholders. "The Board intends to continue to operate a prudently progressive dividend policy for the foreseeable future reflecting the growing profitability of the business", in the true spirit of a REIT.

GlaxoSmithKline - (Market Cap. £74,245m: 2.4 % of NAV: Performance +5.5%)  delivered solid Q2 results, with cost-cutting benefits ahead of expectations and a strong performance from emerging markets. Buyback guidance remains at the upper end of £1-2bn, along with some £500m of divestments. The chief executive has stated "we expect underlying sales growth to translate into sustainable reported growth as we exit the year and move in to 2012".

Kofax - (Market Cap. £207.0m:  1.7% of NAV: Performance -18.6%)  a leading global provider of capture driven business process automation solutions, announced full year figures in line with the lower guidance set at the July trading statement, with H2 materially weaker than H1, the main weakness being in software license sales. With a growing pipeline the outlook statement reads "in the current fiscal year we conservatively expect between eight and ten per cent total revenue growth in US dollars on a constant currency basis". Year-end cash balances totalled U$98.3m (U$55.5m) and the company confirmed that it intends to IPO in the US and maintain a dual listing.

Centrica  - (Market Cap. £14,960m:  2.0% of NAV: Performance -1.5%) the UK's largest energy supplier, said pre-tax profits dropped by 19% in the first half of the year after higher wholesale prices and warmer weather took its toll on its residential energy business, but the interim dividend was increased by 12%. British Gas is being run as a single business with a greater emphasis on cost savings and is on course to exceed its £100m cost reduction target, while the rest of the business is benefitting from vertical integration and a focus on energy related services.

DV4 - (£1bn committed. Unquoted, 2.2% of NAV: Performance +1.3%) is 57% drawn, and Hansa Trust has a £10m commitment  to the Fund. The focus of acquisitions for the DV4 portfolio for the past year and going forward has largely been towards London and the South East, in the two principal markets where momentum exists; namely prime offices and residential. This is set against the back drop of a number of key objectives. First, a drive towards more income. Second, recognising that bank finance is in short supply, a search for leveraged investment opportunities such as land purchases. Third, the search for potential partners on projects from which the fund can benefit from enhanced promotes and fees. The acquisition of Minerva has increased the Fund's exposure to some first class assets in the London office and residential sectors. Alpha Plus was acquired in December 2007 and is the premier private education platform in the UK but with a London focus.

Great Portland Estates - (Market Cap.  £1,010m:  1.8% of NAV: Performance -3.4%) is a fully exposed London offices and retail Real Estate Investment Trust ("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, or simply put "London calling, regions falling". The near term development pipeline could potentially provide an additional 1.8m sq. ft. from 11 schemes which could be delivered by 2014. The depreciation of the pound together with a lack of new office space in the West End has fuelled demand from international investors.

HSBC Holdings - (Market Cap.£87,741m:  1.8% of NAV: Performance -4.8%) its strategic review outlined a target ROE of 12-15% over the cycle and emphasised the need to reduce costs and boost returns by focusing on profitable countries and businesses to be in. In Hong Kong and the UK, HSBC will continue to build on its large retail presence, but in many parts of the world, where it is sub-scale, it will exit. At least 39 out of 87 countries are ear-marked for possible exit. HSBC has a loan to deposit ratio of 79%, meaning that it is a net lender into the wholesale markets. Around 47% of revenues are derived from emerging markets, particularly Asia, the Middle East and Latin America. Total Eurozone exposure, including that to banks and corporates is U$32bn, or 25% of shareholders' funds.

United Business Media - (Market Cap. £1,165m:  1.7% of NAV: Performance -3.4%) focuses on two principal activities: worldwide information distribution, targeting and monitoring; and the development and monetisation of B to B communities and markets. The group had a good first half and all core areas of the business advanced with particularly strong performances from events and online marketing services, and the dividend was increased by 5% reflecting strong cash generation. The group's exposure to faster growing emerging markets is increasing, including China, India and Brazil, and the events activities were flagged as likely to outperform guidance.

BP - (Market Cap. £87,251m:  1.9% of NAV: Performance +0.8%) continues to put the Macondo well disaster in the Gulf of Mexico behind it, and is well on track to meet its target of achieving up to U$30bn of divestments by the end of 2011, giving the company more than sufficient cash to pay for the US escrow account. BP is poised to become a major player in the Indian gas business after a U$20bn deal with Reliance Industries covering exploration and development, although management's resolve to remain in the Russian TNK-BP joint venture is being severely tested. BP expects the momentum of its recovery to build into 2012 and 2013, with nine new projects coming on stream in the period, mostly in high margin areas. It remains on track to double its exploration spend and to increase the number of wells drilled in areas such as Brazil, Trinidad and Australia. It is proceeding with four developments in the North Sea with investment expected to total some £10bn over the next 5 years, to maintain production from the North Sea at 200-250Kbopd through to 2030.

Cairn Energy - (Market Cap. £3,734 m: 1.5 % of NAV: Performance -11.1%)  has received ONGC's consent to Vedanta's proposed acquisition of a controlling stake in Cairn India from Cairn Energy. Formal completion and a shareholder return could happen sometime in Q4-2011. The Delta-1 well offshore Greenland has been plugged and abandoned, leaving two wells out of a four well program still to be drilled this season. The company remains committed to seeking partners upon completion of the 2011 drilling program, as several of the largest global oil companies including ExxonMobil and Royal Dutch Shell have secured acreage offshore Greenland in recent years.

ENI - (Market Cap. £64,005m:  1.6% of NAV: Performance +4.8%) has confirmed that Libyan gas/condensate volumes should return soon, Management expects to see exports via Greenstream before year end, with full output early in 2012. ENI has reiterated its volume growth target of 3% p.a. for 2010-14 and has laid out its expectation of 2% pa growth thereafter to 2020, providing more confidence about cash generation and the strong implication that the dividend should be covered by free cash flow down to at least U$70/bb oil.

Galliford Try (Market Cap. £388.8m: 1.4% NAV: Performance +3.5% ) its housing strategy of unit and margin growth based on land acquired in the south of England at the bottom of the market, at a time when other house builders were retrenching, is paying off, materially pushing earnings ahead, even with competitive conditions in the group's construction operations. 72% of the land bank is new higher margin land and 2012 will see some 64% of units being built on this land. The company has opened numerous new sites and currently sells off 81 active sites, which will rise to 90 on average in the current financial year, ending the year at 100 sites. If the company chooses not to expand beyond 3,600 housing units and consolidates and replaces lots used with replacement plots, it will be in a strong position to increase its cash distributions to shareholders in the future.

Royal Dutch Shell (Market Cap. £65,298m: 1.4% NAV: Performance +1.6% ) is at a different point in the capital cycle than many peers, where a multi-year period of high capital investment is set to translate into superior cash flow growth over the next few years. In the Upstream operations, a highlight of 2011 is the start-up of some major projects, including Qatargas 4, the Pearl GTL plant in Qatar and the start-up of additional oil sands projects. In total these three projects are expected to contribute peak production of some four hundred thousand barrels of oil equivalent per day. In addition the group has taken final investment decisions on nine new projects including the go-ahead for the world's first Floating Liquefied Natural Gas on the Pre-ude project offshore Australia.

 

END

 

 

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