Half Yearly Report

RNS Number : 6292X

Hansa Trust PLC

20 November 2014

 



HANSA TRUST PLC

Announcement of Half-Yearly Results

for the six months ended 30 September 2014

Hansa Trust PLC announces its Half-Yearly Results for the six months ended 30 September 2014.

Financial Highlights	Six months ended 30 September 2014 (Unaudited)	Year ended 31 March 2014 (Audited)
Net Asset Value - Total Return	1.0%	12.3%
Performance Benchmark	1.6%	3.3%
Capital return per share	(4.4)p	114.1p
Revenue return per share	16.4p	17.0p
Net asset value per share	1,198.5p	1,197.5p
Dividend per share	8.0p	16.0p
Total income (£000's)	5,405	6,739
Revenue before taxation (£000's)	3,938	4,076

The following are attached:

·    Chairman's Report to the Shareholders

·    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:

Stephen Thomas                       Hansa Capital Partners LLP                  020 7647 5750

CHAIRMAN'S REPORT TO THE SHAREHOLDERS

Introduction:

As Shareholders will be aware, we have adopted a new approach to our investment strategy - focusing our overseas exposure in investment specific funds rather than in the businesses of large multinational companies. 

We embarked upon these changes earlier in the year, so this statement is by way of being a progress report.  We have made significant progress towards achieving our initial goal of a balance of the portfolio in each of four investment silos (as we refer to them).  They are Strategic, Core Regional Fund, Eclectic and Diversifying Fund and UK Equity Investments; the Portfolio Manager's Review in the full accounts goes into the detail of where we have got to - but in short we are almost there.

In last year's annual report, I stated that in future my statements would focus on the performance in relation to Hansa Trust's stated objective - namely long-term capital growth.  So I will just state the statistics for these first six months of our current year (net asset value essentially unchanged; share prices +10% (Ordinary) and 6% ("A" Ordinary) but without comment (the Portfolio Manager's September Factsheet, posted on the Company's website, goes into the detail) and, rather, address the detail of the long-term performance (using five years as the base for long-term).  Fulfilment of that objective is, after all, what your Board of Directors is accountable to you for.

I will also comment on the Board's recent trip to Brazil, on the recently declared dividend as part of our new dividend policy, on one or two of the issues raised at the recent AGM and finally but briefly on our long-term prospects.

Long-term Performance (5 years):

Net Asset Value:                         +37.5% to 1,198.6p

Ord Share Price:                          +27.8% to    965.3p

"A" Ord Share Price:                   +24.3% to    929.5p

Benchmark:                                  +21.2%

FTSE All-share Index:               +34.1%

Five years ago (30th September 2009) stock markets around the world had begun their recoveries from the devastation caused by the financial crisis that erupted with the bankruptcy of Lehman Brothers.  Most stock markets reached their nadir in March of that year.  Aided and abetted by large amounts of quantitative easing, equity and bond markets continued to rise - led by the United States (S&P 500 Index +86½%), whose economy thus far seems to have recovered best from the financial fiasco.

Our own net asset value has risen by 37½% over the last five years and, if dividends paid are added in, a total return of 48% has been earned.  By comparison, our benchmark produced a total return of 21¼%. Without getting too excited about these numbers, I think it is fair to say that the objective has been met and that they are reasonable results.

Over the same time the share prices of the two classes of shares - the Ordinary Shares and the "A" Ordinary Shares - rose respectively by 27.8% and 24.3% - rather less than the net asset value and resulting in a rise in the discounts to 19.5% and 22.4% respectively.  I should note that the discounts have fallen since the beginning of this financial year - having been 26.6% and 26.8% respectively.

The stock markets most affecting our net asset value over the period were those of the UK (+34%) and, in theory at least, of Brazil (-37½% expressed in £s).  In the event the rise in our own net asset value was aided by a rise in the share price of Ocean Wilsons (+39%), which completely bucked the decline that the Brazilian Index and the Real suffered.  Brazil's stock market, a former favourite of emerging market investors, peaked at the end of 2011 - as commodity prices started to decline and as its economic growth started to slow.

The contribution to the rise in net asset value between the holding in Ocean Wilsons ("OWH") and the rest of the portfolio is shown in the following table:

HT NAV	Rest of Portfolio NAV	OWH per HT share	Total NAV
Sep-09	561.8p	309.8p	871.6p
Sep-14	768.0p	430.6p	1,198.6p
	+206.2p	+120.8p	+327.0p
	+36.7%	+39.0%	+37.5%

Fixed interest securities, direct beneficiaries of the Government's quantitative easing programme, also fared well over the period as illustrated by the 21¼% return of our benchmark (calculated as the three year average rolling rate of return of a five year UK Government Bond +2%).

Visit to Brazil:

With over £100 million invested in Ocean Wilsons accounting for over 35% of the £288 million net asset value (circa £80 million is indirectly invested into its Brazilian subsidiary, Wilson Sons), it behoves the Directors to have a good knowledge and understanding of Ocean Wilsons and of Wilson Sons.  Although William Salomon is a director of both companies, all of the Directors of Hansa Trust take responsibility for the holding independently of other Ocean Wilson shareholders and - in order to do this - they must have that knowledge and understanding.

As part of fulfilling that responsibility, your Directors visit the facilities of Wilson Sons in Brazil every two to three years and meeting with its management at least once a year.  We also receive regular updates on Ocean Wilsons Investments during the course of the year.

In September just past, we spent just over a week visiting Wilson Sons' container port facilities in Rio Grande and Salvador, its shipyards in Guarujá (just outside São Paulo), its oil service facilities in Niterói (just outside Rio) and the company's headquarters in Rio itself.  We also attended a presentation on the political and economic prospects for Brazil.  I should report that we came away from Brazil up to date with our views and understanding of Wilson Sons' operations and greatly encouraged about the company's long-term prospects.

Dividend

First Interim of 8p per share to be paid on 28th November 2014

Along with the new direction given to the portfolio strategy, we announced a new dividend policy which was stated as - "So in future and barring unforeseen circumstances, we expect to announce the year's dividends to be paid as two equal interim dividends - one in November and the other in May.  From time to time there may be one-off circumstances, which give rise to an exceptional level of income, in which case we would declare a final dividend to be approved by shareholders at that year's AGM".

We have announced that, barring unforeseen circumstances, it is our intention to declare and pay two interim dividends in respect of the current year - each of 8p per share, making a total of 16p for the year as a whole. And on 22nd October 2014, we formerly declared the first interim dividend of 8p, which is to be paid on 28th November 2014. 

The Annual General Meeting (21st July 2014)

Although I usually report to shareholders on some of the issues raised at the annual general meeting in the following annual report, it is such a long time span that we thought it better to report in the following half year statement.  We always have a good turnout of shareholders, which is most encouraging and we get a lot of good questions asked and issues raised.  This past AGM was no exception.

While I won't attempt to go over every matter raised, I will attempt to highlight those that seem to us the ones of greatest interest generally.

The Portfolio Manager's Fees: The issue of the management fee was raised in the light of the considerable investment in different funds - there being concern that Hansa Trust was, in effect, suffering double portfolio management charges.  We responded that (i) that all equities suffer management costs, so that the decision to invest depends on the Portfolio Manager's assessment and judgement of an equity's future "after-management-costs" returns; (ii) the level of fees is reviewed once a year at the time that the portfolio management contract is reviewed and (iii) that they will be reviewed again next year at which time this issue will be raised.  Shareholders were also reminded that no management charge is levied on the value of the Ocean Wilsons holding.

Ocean Wilsons: We are asked a lot of questions about Ocean Wilsons because of the size of the investment and because Hansa Trust is its largest shareholder (26½%).  We are always very careful in our response to emphasise that the Board is not privy to inside information, knowing just that which is in the public domain.  We do not seek to tell the board of Ocean Wilsons what to do any more than we do the board of any other of our portfolio companies - in particular in relation to its dividend policy and its investment portfolio (both issues were raised at the AGM).

The Discount and Share Buy Backs:  Given the large discount that has prevailed during the last three or so years, the issue of what the Board is doing about reducing the discount and, in particular, why it isn't buying back shares was raised.  I referred shareholders to the passages that appeared in the past two annual reports where we have spelt out a number of reasons why we have not adopted a buy back policy.

Longer-Term Prospects:

The development of our investment strategy into investment in investment specific funds as a way of getting better focused exposure to the international economy and to international markets has we hope - and we certainly believe - enhanced the longer-term prospects for capital growth for Hansa Trust.  Hansa Capital Partners, who are our portfolio managers, has a good deal of knowledge and experience of the world of investment funds and - most importantly - of the people who run them.  Some of these funds are available to the general investing public but many are not, allowing Hansa Trust's Shareholders the chance to invest (indirectly) in funds they otherwise couldn't.  Investment in these funds, in our equity holdings in our smaller UK companies and in Ocean Wilsons is a nice mix of investment opportunities and with a nice balance of risk.  We believe it will do well.

The external outlook remains a bit of an enigma - with some excellent pluses (a healthy corporate world and very low global interest rates for the foreseeable future to name a couple) but with some negatives (the very uncertain long-term consequences of "quantitative easing" the expansion of central bank supplied money -  on a massive scale and the continuing roller coaster growth of government debt all over the world to name another couple of issues).  In our own country we have settled the potentially very serious issue of the breakup of the United Kingdom (for the moment at least) but face an important general election next year.  Brazil has just had its general election, returning Dilma Rousseff and her PT Party to power.  Whatever new policies emerge, we  think that the development of Brazil's offshore oilfields (a huge benefit for Wilson Sons) will remain a national priority.

As I always emphasise our prospects are largely but not wholly in our own hands.  We, your Directors, have confidence in the longer-term prospects for our portfolio companies and funds and that should result in good returns for Shareholders.

Alex Hammond-Chambers

Chairman

CONSOLIDATED GROUP INCOME STATEMENT

for the six months ended 30 September 2014

	(Unaudited)			(Unaudited)			(Audited)
	Six months ended			Six months ended			Year ended
	30 September 2014			30 September 2013			31 March 2014
	Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
	£000	£000	£000	£000	£000	£000	£000	£000	£000
(Losses)/gains on investments held at fair value	-	(1,020)	(1,020)	-	(2,460)	(2,460)	-	27,406	27,406
Exchange losses on currency balances	-	(32)	(32)	-	(1)	(1)	-	(23)	(23)
Investment income	5,405	-	5,405	4,923	-	4,923	6,739	-	6,739
	5,405	(1,052)	4,353	4,923	(2,461)	2,462	6,739	27,383	34,122
Investment management fees	(935)	-	(935)	(824)	-	(824)	(1,727)	-	(1,727)
Other expenses	(527)	-	(527)	(394)	-	(394)	(905)	-	(905)
	(1,462)	-	(1,462)	(1,218)	-	(1,218)	(2,632)	-	(2,632)
Profit before finance costs and taxation	3,943	(1,052)	2,891	3,705	(2,461)	1,244	4,107	27,383	31,490
Finance costs	(5)	-	(5)	(19)	-	(19)	(31)	-	(31)
Profit before taxation	3,938	(1,052)	2,886	3,686	(2,461)	1,225	4,076	27,383	31,459
Taxation	-	-	-	(4)	-	(4)	(4)	-	(4)
Profit for the period	3,938	(1,052)	2,886	3,682	(2,461)	1,221	4,072	27,383	31,455
Return per Ordinary and 'A'
non-voting Ordinary share	16.4p	(4.4)p	12.0p	15.3p	(10.2)p	5.1p	17.0p	114.1p	131.1p

The Company does not have any income or expense that is not included in the Profit/(loss) for the period. Accordingly the "Profit/(loss) 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.

The total column of this statement represents the Group's Income Statement, prepared in accordance with IFRS. The supplementary revenue and capital return columns are both prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in the above statement derive from continuing operations.

Condensed Statement of Changes in Equity
for the six months ended 30 September 2014 (Unaudited)
Share capital Capital redemption reserve Retained earnings Total £000 £000 £000 £000 Net assets at 1 April 2014 1,200 300 285,913 287,413 Gains for the period - - 2,886 2,886 Dividends - - (2,640) (2,640) Net assets at 30 September 2014 1,200 300 286,159 287,659 Condensed Statement of Changes in Equity
for the six months ended 30 September 2013 (Unaudited)
Share capital Capital redemption reserve Retained earnings Total £000 £000 £000 £000 Net assets at 1 April 2013 1,200 300 258,408 259,908 Gains for the period - - 1,221 1,221 Dividends - - (2,760) (2,760) Net assets at 30 September 2013 1,200 300 256,869 258,369 Condensed Statement of Changes in Equity
for the year ended 31 March 2014 (Audited) Share capital Capital redemption reserve Retained earnings Total £000 £000 £000 £000 Net assets at 1 April 2013 1,200 300 258,408 259,908 Gains for the period - - 31,455 31,455 Dividends - - (3,950) (3,950) Net assets at 31 March 2014 1,200 300 285,913 287,413

CONSOLIDATED GROUP BALANCE SHEET

as at 30 September 2014
	(Unaudited)		(Unaudited)		(Audited)
	30 September		30 September		31 March
	2014		2013		2014
	£000		£000		£000
Non-current assets
Investments held at fair value through profit or loss	280,969		259,873		283,089
	280,969		259,873		283,089
Current assets
Trade and other receivables	9,302		426		3,673
Cash and cash equivalents	750		1,701		13,250
	10,052		2,127		16,923
Current liabilities
Trade and other payables	(3,362)		(3,631)		(12,599)
Net current assets/(liabilities)	6,690		(1,504)		4,324
Net assets	287,659		258,369		287,413
Capital and reserves
Called up share capital	1,200		1,200		1,200
Capital redemption reserve	300		300		300
Retained earnings	286,159		256,869		285,913
Total equity shareholders' funds	287,659		258,369		287,413
Net asset value per Ordinary and 'A' non-voting Ordinary share	1,198.5p		1,076.5p		1,197.5p

CONSOLIDATED GROUP CASHFLOW STATEMENT

for the six months ended 30 September 2014
		(Unaudited)		(Unaudited)
		Six months		Six months		(Audited)
		ended		ended		Year ended
		30 September		30 September		31 March
		2014		2013		2014
		£000		£000		£000
Cash flows from operating activities
Gain before finance costs and taxation		2,891		1,244		31,490
Adjustments for:
Realised (gains)/losses on investments		(5,480)		2,772		(131)
Unrealised losses/(gains) on investments		6,500		(312)		(27,275)
Effect of foreign exchange rate changes		32		1		23
(Increase)/decrease in trade and other receivables		(2,393)		13		(3,234)
(Decrease)/increase in trade and
other payables		(19)		(29)		21
Taxes paid		-		(4)		(4)
Purchase of non - current investments		(67,566)		(1,073)		(8,273)
Sale of non - current investments		53,112		1,143		27,311
Net cash (outflow)/inflow from operating activities		(12,923)		3,755		19,928
Cash flows from financing activities
Interest paid on bank loans		(5)		(19)		(31)
Dividends paid		(2,640)		(2,760)		(3,950)
Drawdown/(repayment) of loans		3,100		600		(2,800)
Net cash inflow/(outflow) from financing activities		455		(2,179)		(6,781)
(Decrease)/increase in cash and cash equivalents		(12,468)		1,576		13,147
Cash and cash equivalents at 1 April		13,250		126		126
Effect of foreign exchange rate changes		(32)		(1)		(23)
Cash and cash equivalents at end of period		750		1,701		13,250

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 2014, the full Half-Yearly accounts have not yet been approved or distributed to shareholders.

2. The full Half-Yearly accounts for the six months ended 30 September 2014 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 2014.

3. Statutory accounts for the 12 months ended 31 March 2014 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

20 November 2014

 

END

 

 

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