Half Yearly Report

RNS Number : 7292R

Hansa Trust PLC

21 November 2012

 



HANSA TRUST PLC

Announcement of Half-Yearly Results

for the six months ended 30 September 2012

Hansa Trust PLC announces its Half-Yearly Results for the six months ended 30 September 2012.

Financial Highlights	Six months ended  30 September 2012 (Unaudited)	Year ended 31 March 2012 (Audited)
Net Asset Value - Total Return	(9.1)%	1.8%
Performance Benchmark	1.9%	4.4%
Capital return per equity share	(115.6)p	5.8p
Revenue return per equity share	13.8p	14.7p
Net asset value per equity share	1,005.2p	1,117.5p
Dividend per equity share	3.5p	14.0p
Total income (£000's)	4,428	6,049
Revenue before taxation (£000's)	3,308	3,529

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

Ex-dividend date: 28 November 2012

Record date: 30 November 2012

Payment date: 13 December 2012

The following are attached:

·              Chairman's Statement

·              Condensed Group Income Statement

·              Condensed Statement of Changes in Equity

·              Condensed Group Balance Sheet

·              Condensed Group Cash Flow Statement

·              Notes

For further information please contact:

Peter Gardner                        Hansa Capital Partners LLP                                020 7647 5750

Chairman's Statement

THE NET ASSET VALUE (AT 30 SEPTEMBER 2012)   

NAV: 1,005.2p per share (- 112.3p; - 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 shows that, for the six months to 30^th 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. However we benefited from lower expenses, finance costs and taxation leaving our net profit only slightly lower (see page 18).  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 on 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 from 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: somehow 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

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		Capital redemption reserve		Retained Earnings		Total
	£000		£000		£000		£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		Capital redemption reserve		Retained Earnings		Total
			£000		£000		£000		£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		Capital redemption reserve		Retained Earnings		Total
	£000		£000		£000		£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		(Unaudited) 30 September 2011 £000		(Audited) 31 March 2012 £000
	£000		£000		£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		139
	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		(Unaudited) Six months ended 30 September 2011		(Audited) Year ended 31 March 2012
	£000		£000		£000
Cash flows from operating activities
(Loss)/profit before finance costs and taxation	(24,415)		(3,913)		5,084
Adjustments for:
Realised gains 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:

1.     This Announcement is not the Company's Half-Yearly accounts. It is an abridged version of the Company's full Half-Yearly accounts for the six months ended 30 September 2012, which have not yet been approved or distributed to shareholders.

2.     The full Half-Yearly accounts for the six months ended 30 September 2012 have been prepared in accordance with International Financial Reporting Standards ("IFRS") and using the same accounting policies as those in the last published annual accounts, being those to 31 March 2012.

3.     Statutory accounts for the 12 months 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 matter to which the auditors drew attention without qualifying the report, and did not contain statements under Section 498 of the Companies Act 2006.

Hansa Capital Partners LLP - Company Secretary

21 November 2012

 

END

 

 

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