Half Yearly Report

RNS Number : 4304I

Hansa Trust PLC

09 December 2015

Hansa, investing to create

long‑term growth

Half Year Report

Six Months Ended

30 September 2015

Welcome

I'm pleased to present our Half Year Report to the shareholders.

You will note the pace of change of the portfolio has slowed somewhat from recent periods, now the new investments are largely in place. Alec Letchfield outlines his thoughts on the market and key investments in his Portfolio Manager's Report.

The Company held a well-attended AGM in July following which Jonathan Davie assumed the role of Chairman of the Audit Committee. As in previous years, I have noted a couple of the points discussed at the AGM for those of you who could not attend.

Finally, by the time you receive this Report, you will no doubt have noted that the first interim dividend of 8.0p per share for the year to 31 March 2016 was paid on 27 November 2015.

I trust you will find our thoughts on the current market and our prospects (both short and longer-term) interesting.

Yours sincerely

Alex Hammond-Chambers

THIS DOCUMENT IS IMPORTANT and if you are a holder of Ordinary shares it requires your immediate attention. If you are in doubt as to the action you should take or the contents of this document, you should seek advice from an independent financial advisor, authorised if in the UK under the Financial Services and Markets Act 2000, or other appropriately authorised financial advisor if outside of the UK. If you have sold or transferred your Ordinary shares in the Company, you should send this document and any accompanying Form of Proxy, immediately to the purchaser or transferee; or to the stockbroker, bank or other agent through whom the sale or transfer was effected for onward transmission as soon as practicable.

COMPANY REGISTRATION AND NUMBER: The Company is registered in England & Wales under company number 126107.

Chairman's Report to the Shareholders

Alex Hammond‑Chambers

Chairman

The details of our first half year returns are covered by Alec Letchfield's Portfolio Manager's Report, allowing me to report on the long-term (five year) returns, which are the Company's stated goals. So the basic statistics covering the last five years are:

5 Year Performance to 30 SepT 2015

	Sept 2010	Sept 2015
Net Asset Value	1,017.80p	1,083.50p	+6.5%
Net Asset Value (total return)	(Total Divs Paid: 64.5p)		+12.8%
Benchmark			+18.8%

These returns lag behind our benchmark but they are made up of two distinct returns within the portfolio - from our holding in Ocean Wilsons Holdings Ltd ("OWH") and from the rest of the Hansa Trust portfolio:

Net Asset Value ("NAV") per HT Share

	Rest of Portfolio	OWH	Total NAV
Sept-10	579.4p	438.4p	1,017.8p
Sept-15	787.3p	296.2p	1,083.5p
Movement	+207.9p	-142.2p	+65.7p
Movement	+35.9%	-32.4%	+6.5%

The table above shows that the 'Rest of Portfolio' (pre and post the strategy changes) has fared really rather well.

Shareholders will be very aware of the much publicised political and economic circumstances in Brazil, which have had a marked effect on OWH's share price (-32.4% over the five years). The share price of its Brazilian subsidiary, Wilson Sons, actually rose 10% over the period in Brazilian Real, but the collapse of the value of the Brazilian currency turned that increase into a decline of 51% when expressed in Sterling. That the share price of Wilson Sons should have risen in value against the huge headwind of the declining stock market is testament to the progress the company has made over the last five years, in developing its marine services business and the high regard in which the company and its management is held.

Share Prices

	Sept 2010	Sept 2015
Ocean Wilsons (£)	1,125.0p	760.0p	-32.4%
Wilson Sons (BRL)	BRL 26.5	BRL 29.2	+10.1%
Wilson Sons (£)	993.0p	487.2p	-50.9%
Brazil's BOVESPA (BRL)	69,429.8	45,059.3	-35.1%
Brazil's BOVESPA (£)	26,007.9	7,517.5	-71.1%
Brazilian Real/£	BRL 2.670	BRL 5.994	-55.5%

The decline in the value of our holding in Ocean Wilsons has tended to mask the progress made in the rest of the portfolio. Shareholders will be aware of the development of our investment strategy which we undertook in the early part of 2014, which has now been running for about a year and a half. Alec's report goes into some detail on it, commenting on the four different investment silos we have adopted as part of that strategy.

Long-term Share Price Returns

Of course the returns which matter most are those shareholders experience through their shareholdings - in turn through the share prices. The table below provides the data concerning the two classes of shares and their share prices over the period.

5 Year Performance to 30th SepT 2015

	Sept 2010	Sept 2015
Ordinary Share Price	837.50p	813.80p	-2.8%
Ordinary Share Price (total return)	(Total Divs Paid: 64.5p)		+4.9%
Discount: Ordinary Share	-17.7%	-24.9%
"A" Ordinary Share Price	820.00p	782.50p	-4.6%
"A" Ordinary Share Price (total return)	(Total Divs Paid: 64.5p)		+3.3%
Discount: "A" Ordinary Share	-19.4%	-27.8%

These share price return figures are heavily influenced by the fact that the discount has widened because, we believe, of the Brazilian factor with which our shares are associated. I comment on the situation in Brazil below, but I reiterate the point made in the last Annual Report that "it will take time for Brazil to turn itself around and re‑engage the attention of international investors, it (a lower discount) will not be realised overnight". We do believe that, with improvements in the Brazilian story, which will in time come, the discounts on our shares will narrow.

Interestingly our five year record coincides with this period of Brazilian difficulties to which I refer overleaf.

Brazil

The difficulties that the politics and economics of Brazil are encountering are quite well broadcast, if only because of their severity. The present difficulties, it can be argued, started towards the end of 2011 and the beginning of 2012 when the price of commodities around the world started to fall and the value of the US Dollar started to rise. Brazil's BOVESPA peaked at circa BRL73,000 towards the end of 2010 (BRL45,000 at the end of September 2015); the Real was circa BRL1.70 per US Dollar (BRL3.96 at the end of September 2015) and many of the important commodities peaked in the first half of 2011 - iron ore, for instance, Brazil's biggest commodity export, peaked in February 2011 at circa $190 per ton (circa $55 per ton at the end of September 2015). Gradually, over the period, the external economics of Brazil deteriorated (notwithstanding the significant decline in the value of the Real, the benefits of which take time to take effect). Brazil now needs a strong government to get the country's finances back in order and on the path to a sustainable recovery.

Meanwhile Wilson Sons has continued to prosper and is well set to enjoy the benefits of the large investment programme it undertook during recent years.

DIVIDEND

Shareholders will now be familiar with our new dividend policy which is to declare at the beginning of the Company's fiscal year and subsequently pay two interim dividends - in the case of this fiscal year each of 8p per share, making a total of 16p for the year as a whole. On 20 October 2015, we formerly declared the first interim dividend of 8p, payable on 27 November 2015.

The Annual General Meeting (16 July 2015)

Shareholders will be familiar with the practice that we have adopted of highlighting one or two of the important questions raised at each year's Annual General Meeting - with our responses to them. There were two I would like to highlight in this statement:

• Following Alec Letchfield's presentation on the portfolio and its prospects, he was asked about the criteria he used in selecting funds for investment and whether the liquidity of the subsequent holding was a material consideration. Over and above the objective of making investments in funds that our shareholders could not easily make for themselves (and in some cases not at all), he responded that he looked for an alignment of interest between the manager of the fund in question and the fund itself (usually being an investment by the manager in the fund), good stock picking processes and disciplines and an appropriate structure of the fund in relation to its investment objective. He stated he did not have any overriding rules about the liquidity of investments in funds, but rather treated each investment on a case by case basis. One of the advantages of managing a closed ended fund - such as that of an investment trust - is that the liquidity of the portfolio's holdings is not an important priority.

• The second question addressed to the Board, concerned the validity of continuing to hold the large investment in Wilson Sons, through Ocean Wilsons, given the difficulties occurring in Brazil. It was noted that Wilson Sons was a well-managed company with excellent prospects (the primary criteria for making any equity investment) which was the reason the investment in that business had made us a lot of money in the past. It was also pointed out that the Board wished to keep a strategic investment in Ocean Wilsons so Hansa Trust would be consulted should there ever be the prospect of the sale of the company. Further, it was also noted there had been times in the past when there were difficulties in Brazil and when it would have been tempting to sell the Ocean Wilsons holding but that, by not selling in difficult times, Hansa Trust had benefitted from huge gains in the share price in better times. The Board felt Wilson Sons was well positioned to take advantage of the government's requirement for local (Brazilian) involvement in marine services.

Longer-Term Prospects

It seems the world economy (in which we have - selectively chosen - some exposure) is in the doldrums. Nobody seems to know - with any great degree of assurance - quite which way it is drifting - into a period of stag-deflation (to coin a rather ugly phrase!), recession, or even rather higher inflation. With the first two comes a continuation of quantitative easing, ultra-low interest rates and, quite possibly, continuing buoyant securities markets - as investors chase the income that interest rates no longer afford. Stock markets are driven by money and confidence and, as long as the money is there and there is confidence that the patient (the post 2008/9 global economy) is making an albeit slow recovery towards better times, markets will continue to perform well - as they have done since the nadir of the early months of 2009.

The pluses are that (rather perversely) the slow global economic growth would appear to prolong ultra-low interest rates, corporate balance sheets are strong, profits are buoyant (albeit with one or two problem areas - mining and oil for instance) and margins are high. As long as this continues, the prospects for dividends and dividend growth (a very important prop for equity markets) remain good and the demand for equities likewise.

But there are clouds on the horizon - global debt continues to grow and grow, some emerging market economies and their international indebtedness are causes for concern, politics is throwing up some strange bedfellows (particularly because of the division caused by - perceived or otherwise - growing financial inequality), mass immigration problems, growing concern about cybercrime and the uncertainty of the politics of Russia and the economics of China. Then there are the black swans which appear out of left field, which are bemusing and worrying (Volkswagen's diesel engine emissions scandal being the latest such event). Anyone of them can have an effect on confidence - one of the two drivers to markets levels I mentioned above.

And thirdly there is - what appears to be unlikely at the moment but which can appear quite suddenly and as unexpectedly - the possibility of rather more than mild inflation. It can literally erupt. It would mean much higher interest rates quite quickly and almost certainly lead to a material reverse in the value of financial markets. Fortunately, at this time, it seems to be a lesser possibility.

Investing in such uncertain circumstances is not easy. But in the end though, successful long-term equity investment is all about backing good companies/funds run by able and honest people. Our success in our investment in Wilson Sons is just such an example of backing good management over a long time. The rest of the portfolio stands up to the same scrutiny which makes your Board optimistic of long-term success, without being certain of short‑term fluctuations.

Alex Hammond‑Chambers
Chairman
27 November 2015

Half Year Management Report

The Directors present their Report and Condensed Financial Statements for the six months to 30 September 2015.

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.

Alex Hammond-Chambers (Chairman of the Board), Jonathan Davie (Chairman of Audit Committee), Raymond Oxford, William Salomon and Geoffrey Wood.

BUSINESS REVIEW FOR THE SIX MONTHS TO 30 SEPTEMBER 2015

The business review, which includes an indication of important events which have occurred within the six months to 30 September 2015, are covered in the Chairman's Report to the Shareholders and the Portfolio Manager's Report.

KEY RISKS FOR THE FINANCIAL YEAR TO 31 MARCH 2016

The key risks and uncertainties relating to the six months ended 30 September 2015 and for the year to 31 March 2016 are covered in the Chairman's Report to the Shareholders, the Portfolio Manager's Report and also within the notes to the Financial Statements.

GOING CONCERN BASIS OF ACCOUNTING FOR THE FINANCIAL YEAR TO 31 MARCH 2016

The Directors consider it appropriate to adopt the going concern basis of accounting in preparing these Half-Year Financial Statements. The Directors do not know of any material uncertainties to the Company's ability to continue to adopt this approach over a period of at least 12 months from the date of approval of these Financial Statements.

RELATED PARTY TRANSACTIONS

During the period, Hansa Capital Partners LLP charged portfolio management fees and company secretarial fees to the Company, amounting to £1,031,000, excluding VAT (year to 31 March 2015: £1,968,000). Amounts outstanding at 30 September 2015 were £164,000 (31 March 2015: £173,500).

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'. 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-Year 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 FCA's Disclosure and Transparency Rules.

The above Interim Management Report including the Responsibility Statement was approved by the Board on 27 November 2015 and was signed on its behalf by:

Alex Hammond-Chambers
Chairman
27 November 2015

Portfolio Manager's Report -

Seeing the wood for the trees

One of the most challenging and vital aspects of fund management is separating the truly important events from the background noise. As a fund manager, so often one becomes caught up in the day-to-day machinations of the market, scrutinising company profit announcements, waiting with bated breath for the next piece of macro data and so on. In reality this is almost always counter-productive, leading to excessive dealing, incurring high transaction charges and hindering one's ability to spot the really important factors. We try not to do this at Hansa. Rather, it is most often best to ignore the short-term noise, turn off the Bloomberg terminal if necessary and resist the urge to trade the markets.

What is necessary, however, is to identify major inflection points, where it is right to re‑assess one's positioning and adjust portfolios accordingly. Typically, this would be the recognition of a coming bear market, or a supercycle beginning or indeed ending. Correctly identifying these is challenging but worthwhile, since the resulting asset allocation calls are the main drivers of investment performance and are far more influential than the outcomes of individual stocks or funds.

With this approach in mind, we consider the events of the summer. Stock markets have been through a torrid time. In equity markets, the MSCI World fell 5.0% during the quarter and 10.0% over the six month period. Within this, the US, Europe and UK fell by 3.3%, 5.2% and 6.6% respectively, over three months and by 8.6%, 10.2% and 9.2% over six months. Other asset classes have not escaped the weakness over the quarter, with oil down 21.2%, copper by 7.2% and local currency emerging market debt by 7.1%.

Naturally we ask ourselves whether this is just a summer lull, exacerbated by a lack of liquidity and sovereign wealth fund selling, or if the market is signalling that something more important is afoot and a change in strategy is required?

On the face of it there appears to be good reason for concern with two of the most important market drivers, China and US interest rates, experiencing important changes.

China, which has been one of the main drivers of global growth over the past decade, is wobbling. In truth, the Chinese economy has been experiencing a lower growth rate for some while now, coming down from over 10% to 7%, according to official numbers. There is a sense, however, that having expanded too quickly and invested too heavily, growth could go into freefall. The Chinese government has recognised this and is attempting to manage a transition from an export driven economy to a service and consumer led one. However, such shifts rarely happen seamlessly and its efforts may be both too little and too late. Recent decisions to weaken the exchange rate and artificially prop-up the stock market only serve to fuel the belief that the situation is out of control.

The other concern is that of a change in direction in US interest rates. A feature of markets in recent years has been the persistent use of liquidity in the face of economic and stock market weakness. Undoubtedly this policy has boosted global stock markets, as money works its way through the system in pursuit of higher returns and income, albeit its impact on growth and lending seems to be diminishing. Naturally, with the US nearing a turning point in its rate cycle, and with US rates forming the basis for the global risk free rate, there is a fear that stock markets will decline in the face of such a change.

Exacerbating this situation is the current market backdrop. Much like a chemical reaction, where conditions need to be optimal to see a really explosive effect, stock markets are at their most vulnerable at particular points in the cycle. Typically at the start of the cycle when valuations are low and fear is high, markets can tolerate numerous shocks and disappointments. However, as the cycle matures and valuations rise, the ability for markets to shake off disappointments diminishes. In the current situation, with the maturing cycle showing high, albeit not excessive, valuations and with markets not having experienced a meaningful pull-back for some while now, share prices are particularly susceptible to negative news flow.

Whether these conditions herald the next bear market is likely to depend on the economic outlook, since true bear markets typically go hand-in-hand with recessions. Currently, a recession in the developed world, which continues to dominate global stock markets, does not appear likely. Growth is undoubtedly lacklustre but nonetheless positive. The US and UK lead the way with their cycles being more advanced and growth more robust, but even Europe is seeing positive signs of a recovery in growth from depressed levels.

The outlook for emerging markets is less clear. With Chinese growth falling and many commodity-exporting emerging nations under pressure in the face of weakening commodity prices, prospects for their economies and stock markets remain challenging. To a large degree this is captured in current valuations, which are now significantly below most developed markets. Unfortunately these situations have a habit of persisting for longer than one expects, and typically prior excesses lead to prices over-shooting on the downside.

The concern has been that this slow-down in emerging markets causes a recession in developed markets. Back in 1998, when many emerging markets experienced a sharp decline in their growth, developed markets escaped relatively unscathed. With emerging markets now much larger, however, and with global trade now far more interconnected, the danger of weakness in emerging markets rippling through to developed markets is greater. Our sense at this point is that whilst any emerging market weakness will weigh on developed market growth, it will not push them into recession. Partly this reflects the fact that most developed markets are commodity importers and are the beneficiaries of weak commodity prices. Also, since many emerging markets are net exporters, they are not key sources of demand for developed markets and hence their impact is more muted.

Taking into account all these factors, we conclude that the markets have probably experienced a summer lull, albeit a particularly severe one. We acknowledge that the uncertainty in the global economy, combined with the slowdown in China and the anticipated rate rising cycle in the US, are likely to contribute to ongoing bouts of volatility. However, we are not making significant changes to our strategy, although we are looking to add less correlated investments in order to help protect against market draw‑downs.

Portfolio Review and Activity

During this challenging period for markets, your Company's NAV has returned -4.1% on a total return basis over the six month period to the end of September, with the NAV falling from 1,138.6p per share to 1,091.4p per share (again, on a total return basis including the dividend of 8.0p per share paid in the period). Excluding the Brazil-focused Ocean Wilsons Holdings the Company's NAV has returned -3.6%. This compares to a return of 1.7% for the benchmark, which is absolute in nature, and -11.0% for the MSCI All Country World Index. Underlying contributors to this performance are discussed in the silo review below.

Activity levels have been modest over the period, reflecting the fact that most of the changes post the strategic review have now been made. In the second quarter we sold JO Hambro Japan and purchased the Lyxor Nikkei 400 ETF, a passive fund that tracks the new Japanese index focusing on those companies with good shareholder returns and corporate governance. We also purchased Indus Japan Long Only, an active Japanese fund with a focus on larger capitalisation stocks and added to our position in Goodhart Hanjo Japan following a positive update with the manager.

We also purchased the Global Event Partners Fund managed by BlackRock, reflecting our desire to start adding less correlated investments, which will provide us with some protection from falling markets as the stock market cycle matures.

Core/Regional funds

As would be expected, the Core/Regional silo saw a wide range of returns over the past six months. Pleasingly our two hedge funds produced robust returns with BlackRock European Hedge rising by 12.9% and CF Odey UK Absolute Return by 6.1%. The manager of the BlackRock European Hedge fund, Alister Hibbert, has managed risk well, reducing his overall exposure to markets and has also made money by being short a number of names in the commodity sector. We feel we have the great advantage of having access to some of the world's best fund managers, which provides us insight into their thoughts on markets. Our discussions with Alister Hibbert reinforce our macro view, as he argues China is unlikely to derail the domestic recovery in Europe, whilst acknowledging that we remain in a low growth world.

Your Company's exposures to Asian and emerging markets have unsurprisingly been under pressure, with Schroder ISF Asian Total Return, Prince Street Institutional and NTAsian Discovery down by 12.5%, 14.8% and 23.4% respectively over the past half year. The combined exposure to the latter two is relatively modest at just 2% of portfolio assets, whilst the weighting in Schroder Asian, which actively manages its risk levels, is higher at 2.3%.

Eclectic and Diversifying funds

The Eclectic and Diversifying silo also saw a spread of returns over the past six months. DV4, our property investment, returned an excellent 9.3% whereas our technology fund, GAM Star Technology and JLP Credit Opportunity fell by 14.6% and 15.3%, respectively. JLP is a fund which invests in stressed credit that typically comes under pressure at the very end of a cycle, as recession nears and defaults start to rise. This is not what we envisage in the near‑term and we suspect the recent underperformance partly reflects the low liquidity in the sector owing to regulatory restrictions on banks. As coupons are paid and bonds are redeemed we would expect significant value to be realised.

UK Equities

Our largest holding, NCC Group (Mkt Cap £630m), was purchased at IPO in 2004 and is fundamentally a services business, with the world's largest team of highly skilled testers or "ethical hackers" who find vulnerabilities in companies' cyber defences, offering an almost unique way to play the cybersecurity theme in the UK. The firm's Domain Services proposition is an internally funded start-up which is still evolving towards a higher proportion of consultancy type revenues, as it aims to create a safe corner of the internet. The original Escrow division remains the cornerstone of the group and is highly cash generative, storing software source code for critical applications, to ensure business continuity should a software vendor fail. The dividend has been increased at a compound rate of 25% pa since the company floated in 2004.

While on the subject of cybersecurity, Experian (Mkt Cap £10.6bn), now the only FTSE 100 holding left in the portfolio, recently announced that its North American business experienced an unauthorised acquisition of information from a server that contained data, on behalf of one of its clients (T-Mobile, USA, Inc), on approximately 15 million consumers in the US. While regrettable, similar instances are unfortunately commonplace in such businesses and importantly the breach did not involve payment card numbers or banking information.

Hansteen Holdings (Mkt Cap £885m) invests primarily in industrial properties in the UK and Europe, focusing on properties with the potential for high yields and opportunities for value improvement. The portfolio is diversified in terms of country and tenant type and is weighted 50% in Germany, 28% in the UK and 22% in Northern Europe. It is managed on a very hands-on basis via a platform of 16 regional offices. Since inception, Hansteen has delivered strong NAV returns alongside an attractive and growing dividend. Owing to the increasingly strong occupier and investment demand within the market, this is expected to continue.

UBM (Mkt Cap £2.3bn), a leading global marketing services and communications company, whose primary focus is events, has confirmed it is in discussions with a number of parties about a potential sale of its PR Newswire business, which would turn UBM into a fully-focused events business which could drive a re-rating of its shares.

Ocean Wilsons Holdings

The second quarter results for Wilson Sons, which were released in August, showed a strong rise in EBITDA of 37.8% from the previous year. This was despite the continuing weak macroeconomic picture in Brazil. During the year, the Wilson Sons' share price, in Brazilian Real terms, has increased 4.2% from BRL28.3 to BRL29.5, at a time when the BOVESPA has weakened by 11.9%. The resilience of the company's logistics and maritime operations is encouraging and demonstrates the benefits of the company's diversity.

Revenues in Container Terminals continue to be pressured, down 18.1% from the previous year, but there are signs that agricultural exports through the terminals are picking up, helped by the weak Real. Meanwhile, Towage revenues improved 3.9%, owing to increases in harbour manoeuvres and special operations during the quarter. Growth in harbour manoeuvres was mainly driven by new port operations in the state of Pará, while the expanding special operations helped contribute to an increased EBITDA margin of 44.6% in the segment.

The portfolio of Ocean Wilsons Investments, the subsidiary of OWH, was valued at $248.5m at the end of June 2015, which was down slightly from $251.7m at the end of December 2014. The decline was primarily due to $7.0m of dividends paid in the period, principally to fund the 2014 final dividend payment to shareholders of OWH. The time-weighted, gross‑of-fees, performance over this six month period was 2.2%.

In the third quarter, the share price of OWH fell by 14.8% (in Pound Sterling terms), meaning it is down 11.0% over the first six months of our company's financial year, and down 7.0% with dividends reinvested. The share price represents a discount to the look-through NAV of 26.1%, based on the market value of the Wilson Sons' shares together with the latest valuation of the investment portfolio.

Company share performance and discount

During the six months to September 2015, the Ordinary and 'A' non-voting Ordinary share prices fell by 46.2p and 45.0p respectively - both approximately 5.4% of their values at 31 March 2015. Whilst this is partly a reflection of the wider market malaise during this time (the MSCI All Countries World Index fell 11.9% during this period), it is mainly the impact of the falling value of OWH on the portfolio which, as noted above, has suffered due to the weakening Brazilian Real and fallen by 10.2% in Sterling terms or c.33p per Hansa share.

During this period, the discount of both share classes has remained fairly constant (Ordinary: 24.9%; 'A' non-voting Ordinary: 27.8%). We believe that a key reason for the ongoing discount is the continuing market uncertainly over the Brazilian economy.

Summary

The current market setback represents one of the most significant tests since we began the long road to recovery post the Great Financial Crisis, matched only by the Euro crisis of 2011. As discussed above, we do not believe this heralds the next recession and bear market in the developed economies, but it is a situation we will monitor closely. However, we do expect to see ongoing volatility as the slowdown in China and other emerging markets plays out.

We remain encouraged by the progress of your portfolio, which whilst not delivering positive returns over the past few months, has significantly outperformed global equity markets. The vast majority of the strategic changes have now been made such that we have a blend of both direct UK equities and complementary world-class funds. Undoubtedly our investment in Wilson Sons, via the holding in Ocean Wilsons Holdings, is weighing on sentiment but we remain of the view this is an excellent company that will emerge from the crisis in Brazil as a stronger and even more successful entity. Furthermore, at just 15% of the Hansa Trust assets, and with the Trust standing on a 26% discount to NAV, you could argue you are getting this great company for free!

Alec Letchfield
Hansa Capital Partners LLP
October 2015

Portfolio Statement

as at 30 September 2015

Investments	Fair value £000	Percentage of Net Assets
UK Equity
NCC Group PLC	14,385	5.5
Hansteen Holdings PLC	8,608	3.3
Galliford Try PLC	8,297	3.2
UBM PLC	7,859	3.0
Experian PLC	5,444	2.1
Great Portland Estates PLC	5,127	2.0
Cape PLC	4,112	1.6
Brooks Macdonald Group PLC	3,418	1.3
Goals Soccer Centres PLC	3,359	1.3
Hargreaves Services PLC	2,368	0.9
Hilton Food Group PLC	1,661	0.6
Cairn Energy PLC	743	0.3
Petroceltic International PLC	453	0.2
Immupharma PLC	400	0.2
Altitude Group PLC	330	0.1
Seven other investments	448	0.2
Total UK Equity	67,012	25.8
Strategic
Wilson Sons (through our holding in Ocean Wilsons Holdings) *	39,222	15.1
Total Strategic	39,222	15.1
Core Regional Funds
Findlay Park American Fund	11,700	4.5
Adelphi European Select Equity Fund Class F	8,656	3.3
Select Equity Offshore Ltd Class D	7,636	2.9
Goodhart Partners Longitude Fund: Hanjo Fund	7,429	2.9
Vulcan Value Equity Fund	7,308	2.8
Indus Japan Long Only Fund	6,281	2.4
CF Odey UK Absolute Return Fund Class I	5,976	2.3
Schroder ISF Asian Total Return Fund Class D	5,863	2.3
BlackRock European Hedge Fund Class I	4,900	1.9
Pershing Square Holdings	4,687	1.8
Vanguard FTSE Developed Europe ex UK Equity Index	3,659	1.4
Lyxor UCITS ETF JPX - Nikkei 400	3,581	1.4
Prince Street Institutional Offshore Ltd	3,314	1.3
NTAsian Discovery Fund Classes A & B	2,013	0.8
Total Core Regional Funds	83,003	32.0
Eclectic & Diversifying Assets
Ocean Wilsons Investments (through our holding in Ocean Wilsons Holdings) *	31,859	12.3
DV4 Ltd	11,837	4.5
GAM Star Technology Fund	8,888	3.4
Global Event Partners Ltd Class F	7,937	3.0
JLP Credit Opportunity Cayman Fund	4,026	1.5
Total Eclectic & Diversifying Assets	64,547	24.7
Total Investments	286,829	97.6
Net current assets/(liabilities)	6,251	2.4
Net Assets	260,035	100.0

*Hansa Trust owns 9,352,770 shares in Ocean Wilsons Holdings Limited ("OWH"). In order to reflect better Hansa Trust's exposure to different market silos, the two subsidiaries of OWH, Wilson Sons and Ocean Wilsons (Investments) Ltd ("OWIL") are shown separately above. The fair value of Hansa Trust's holding in OWH has been apportioned across the two subsidiaries in the ratio of the latest reported NAV of OWIL, that being the NAV of OWIL shown per the 30 June 2015 OWH accounts, to the market value of OWH's holding in Wilson Sons, that being the bid share price of Wilson Sons multiplied by the number of shares held by OWH at 30 September 2015.

Financial Statements

Condensed Group Income Statement

For the six months ended 30 September 2015

	(Unaudited) Six months ended 30 September 2015			(Unaudited) Six months ended 30 September 2014			(Unaudited) Year ended 31 March 2015
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Revenue £000	Revenue £000	Capital £000	Total £000
Losses on investments held at fair value	-	(14,963)	(14,963)	-	(1,020)	(1,020)	-	(12,707)	(12,707)
Exchange losses on currency balances	-	(13)	(13)	-	(32)	(32)	-	(12)	(12)
Investment income	5,143	-	5,143	5,405	-	5,405	6,302	-	6,302
	5,143	(14,976)	(9,833)	5,405	(1,052)	4,353	6,302	(12,719)	(6,417)
Investment management fees	(981)	-	(981)	(935)	-	(935)	(1,868)	-	(1,868)
Other expenses	(523)	-	(523)	(527)	-	(527)	(1,274)	-	(1,274)
	(1,504)	-	(1,504)	(1,462)	-	(1,462)	(3,142)	-	(3,142)
Profit/(Losses) before finance costs and taxation	3,639	(14,976)	(11,337)	3,943	(1,052)	2,891	3,160	(12,719)	(9,559)
Finance costs	-	-	-	(5)	-	(5)	(7)	-	(7)
Profit before taxation	3,639	(14,976)	(11,337)	3,938	(1,052)	2,886	3,153	(12,719)	(9,566)
Taxation	-	-	-	-	-	-	-	-	-
Profit for the period	3,639	(14,976)	(11,337)	3,938	(1,052)	2,886	3,153	(12,719)	(9,566)
Return per Ordinary and 'A' non-voting Ordinary share	15.2p	(62.4)p	(47.2)p	16.4p	(4.4)p	12.0p	13.1p	(53.0)p	(39.9)p

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 2015

(Unaudited)

	Share capital £000	Capital redemption reserve £000	Retained earnings £000	Total £000
Net assets at 1 April 2015	1,200	300	271,792	273,292
Losses for the period	-	-	(11,337)	(11,337)
Dividends	-	-	(1,920)	(1,920)
Net assets at 30 September 2015	1,200	300	258,535	260,035

Condensed Statement of Changes in Equity

For the six months ended 30 September 2014

(Unaudited)

	Share capital £000	Capital redemption reserve £000	Retained earnings £000	Total £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 year ended 31 March 2015

(Audited)

	Share capital £000	Capital redemption reserve £000	Retained earnings £000	Total £000
Net assets at 1 April 2014	1,200	300	285,913	287,413
Losses for the period	-	-	(9,566)	(9,566)
Dividends	-	-	(4,555)	(4,555)
Net assets at 31 March 2015	1,200	300	271,792	273,292

Condensed Group Balance Sheet

as at 30 September 2015

	(Unaudited) 30 September 2015 £000	(Unaudited) 30 September 2014 £000	(Audited) 31 March 2015 £000
Non-current assets
Investments held at fair value through profit or loss	253,784	280,969	255,264
	253,784	280,969	255,264
Current assets
Trade and other receivables	377	9,302	9,358
Cash and cash equivalents	6,174	750	9,039
	6,551	10,052	18,397

Current liabilities
Trade and other payables	(300)	(3,362)	(369)
Net current assets	6,251	6,690	18,028

Net assets	260,035	287,659	273,292

Capital and reserves
Called up share capital	1,200	1,200	1,200
Capital redemption reserve	300	300	300
Retained earnings	258,535	286,159	271,792
Total equity shareholders' funds	260,035	287,659	273,292

Net asset value per Ordinary and 'A' non-voting Ordinary share	1,083.4p	1,198.5p	1,138.6p

Condensed Cash Flow Statement

For the six months ended 30 September 2015

	(Unaudited) Six months ended 30 September 2015 £000	(Unaudited) Six months ended 30 September 2014 £000	(Audited) Year ended 31 March 2015 £000
Cash flows from operating activities
(Loss)/Gain before finance costs and taxation	(11,337)	2,891	(9,559)
Adjustments for:
Realised gains on investments	(2,427)	(5,480)	(10,803)
Unrealised losses on investments	17,390	6,500	23,510
Effect of foreign exchange rate changes	13	32	12
(Increase)/decrease in trade and other receivables	(191)	(2,393)	3,487
(Decrease)/increase in trade and
other payables	(69)	(19)	88
Taxes paid	-	-	-
Purchase of non - current investments	(27,725)	(67,566)	(82,976)
Sale of non - current investments	23,414	53,112	76,604
Net cash (outflow)/inflow from operating activities	(932)	(12,923)	363
Cash flows from financing activities
Interest paid on bank loans	-	(5)	(7)
Dividends paid	(1,920)	(2,640)	(4,555)
Drawdown of loans	-	3,100	-
Net cash outflow/(inflow) from financing activities	(1,920)	455	(4,562)
Decrease in cash and cash equivalents	(2,852)	(12,468)	(4,199)
Cash and cash equivalents at beginning of period	9,039	13,250	13,250
Effect of foreign exchange rate changes	(13)	(32)	(12)
Cash and cash equivalents at end of period	6,174	750	9,039

Notes to the Condensed Financial Statements

1. ACCOUNTING POLICIES

The Financial Statements of the Group have been prepared under the historical cost convention, except for the measurement at fair value of investment, and 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 are consistent with the basis of the accounting policies set out in the Group and Company's Annual Report and Accounts at 31 March 2015.

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

2 INCOME

	(Unaudited) Six months ended 30 September 2015 £000	(Unaudited) Six months ended 30 September 2014 £000	(Audited) Year ended 31 March 2015 £000
Income from quoted investments
UK dividends	1,083	1,553	2,428
Overseas and other dividends	3,924	3,811	3,737
Property income distributions	133	41	137
	5,140	5,405	6,302
Other income
Interest receivable on AAA rated money market funds	3	-	-

Total income	5,143	5,405	6,302

3 DIVIDENDS PAID

	(Unaudited) Six months ended 30 September 2015 £000	(Unaudited) Six months ended 30 September 2014 £000	(Audited) Year ended 31 March 2015 £000
Final dividend for 2015: 0.0p (2014: 11.0p)	-	2,640	2,640
Second interim dividend for 2015 (paid May 2015): 8.0p (2014: 0.0p)	1,920	-	-
First interim dividend for 2015 (paid November 2014): 8.0p	-	-	1,920
Unclaimed dividends refunded	-	-	(5)
			4,555

Note: The first interim dividend for 2016, payable in November 2015 will be 8.0p per share (2015, paid November 2014: 8.0p).

4 RETURN PER SHARES

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 2015 (Unaudited)	3,639	15.2	(14,976)	(62.4)	(11,337)	(47.2)
Six months ended 30 September 2014 (Unaudited)	3,938	16.4	(1,052)	(4.4)	2,886	12.0
Year ended 31 March 2015 (Audited)	3,153	13.1	(12,719)	(53.0)	(9,566)	(39.9)

5 FINANCIAL INFORMATION

The financial information contained in this Half Year 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 2015, and 30 September 2014 are not for a full financial year, have not been audited or reviewed by the Auditors and have been prepared in accordance with accounting policies consistent with those set out in the Annual Report and Accounts for the year ended 31 March 2015.

The statutory accounts for the financial year ended 31 March 2015 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 Year financial information was approved by the Board of Directors on 27 November 2015.

6 NET ASSET VALUE PER SHARE

The Net Asset Value per share is based on the net assets attributable to equity shareholders of £260,035,000 (30 September 2014: £287,659,000; 31 March 2015: £273,292,000) and on 24,000,000 shares, being the number of shares in issue at the period ends.

7 COMMITMENTS AND CONTINGENCIES

The Company has a commitment to DV4 Ltd, an unquoted property investment company. As of 7 March 2015, the investment period for DV4 ended. Under the commitment agreement, this allows DV4 to call the remaining outstanding amount of the original commitment but only for existing projects for a period of two years, or for the payment of expenses and liabilities of DV4. As at 30 September 2015, the Company's undrawn commitment was £702,372 and the interest free loan referred to in past reports had been fully repaid (30 September 2014: undrawn commitment £1,296,227; loan £1,162,880). The holding in DV4 is held at a current valuation of £11,837,000 (2014: £9,120,000).

8 PRINCIPAL RISKS AND UNCERTAINTIES

The principal financial and related risks faced by the Company fall into the following broad categories - External and Internal. External risks to shareholders and their returns are those that can severely influence the investment environment within which the Company operates: including government policies, economic recession, declining corporate profitability, rising inflation and interest rates and excessive stock market speculation. Internal and operational risks to shareholders and their returns are: portfolio (stock and sector selection and concentration), balance sheet (gearing), and/or administrative mismanagement. In respect of the risks associated with administration, the loss of Approved Investment Trust status under s.1158 CTA 2010 would have the greatest impact.

A review of the half year and the outlook for the Company can be found in the Chairman's Report to the Shareholders and in the Portfolio Manager's Review.

Information on each of these areas is given in the Strategic Report within the Annual Report and Accounts for the year ended 31 March 2015. In the view of the Board these principal risks and uncertainties are applicable to the remaining six months of the financial year as they were to the six months under review.

9 FAIR VALUE HIERARCHY

Fair Value Hierarchy

IFRS 13 'Fair Value Measurement' requires an entity to classify fair value measurements, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (ie as prices) or indirectly (ie derived from prices); and

Level 3: inputs for the asset or liability not based on observable market data (unobservable inputs).

The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy, are detailed below:

30 September 2015	Level 1 £000	Level 2 £000	Level 3 £000	Total £000
Financial assets at fair value through profit or loss
Quoted equities	142,780	-	-	142,780
Unquoted equities	-	-	11,837	11,837
Fund investments	-	99,167	-	99,167
Net fair value	142,780	99,167	11,837	253,784

31 March 2015	Level 1 £000	Level 2 £000	Level 3 £000	Total £000
Financial assets at fair value through profit or loss
Quoted equities	149,101	-	-	149,101
Unquoted equities	-	-	11,331	11,331
Fund investments	-	94,832	-	94,832
Net fair value	149,101	94,832	11,331	255,264

There have been no transfers during the year between levels.

The Group's policy is to recognise transfers into and out of the different fair value hierarchy levels at the date of the event or change in circumstances that caused the transfer to occur.

A reconciliation of fair value measurements in Level 3 is set out in the following table:

	September 2015 Equity investments £000	March 2015 Equity investments £000
Opening Balance	11,331	7,976
Purchases (Capital Drawdown)	-	2,459
Sales (Capital Distribution)	(550)	(568)
Total gains or losses included in gains on investments in the income statement:
- on assets sold	550	446
- on assets held at year end	506	1,018
Closing Balance	11,837	11,331

As at 30 September 2015, the investment in DV4 Ltd has been classified as Level 3. The investment has been valued using the most recent estimated NAV as advised to the Company by DV4, adjusted for any further drawdowns, distributions or redemptions between the valuation date and 30 September 2015. The most recent valuation statement was received on 21 August 2015, with an estimated NAV based on the unaudited capital statement of DV4 as at 30 June 2015. It is believed that the value of DV4 as at 30 September 2015 will not be materially different. If the value of the investment was to increase or decrease by 10%, while all other variables had remained constant, the return and net assets attributable to shareholders for the period ended 30 September 2015 would have increased/decreased by £1,183,700.

Investor Information

The Company currently manages its affairs so as to be a qualifying investment trust for NISA (New Individual Savings Account) purposes, for both the Ordinary and 'A' non-voting Ordinary shares. It is the present intention that the Company will conduct its affairs so as to continue to qualify for NISA products. In addition, the Company currently conducts its affairs so shares issued by Hansa Trust plc can be recommended by independent financial advisers to ordinary retail investors, in accordance with the Financial Conduct Authority's (FCA's) rules in relation to non‑mainstream investment products and intends to continue to do so for the foreseeable future. The shares are excluded from the FCA's restrictions which apply to non‑mainstream investment products, because they are shares in an investment trust.

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

Hansa Trust PLC

50 Curzon Street, London W1J 7UW

Telephone: +44 (0) 207 647 5750

Fax: +44 (0) 207 647 5770

Email: hansatrustenquiry@hansacap.com

Website: www.hansatrust.com

The Company's website includes the following:

- Monthly Fact Sheets

- Stock Exchange Announcements

- Interim Management Statements

- Details of the Board Statements

- Annual and Half Year Reports

- Share Price Data Reports

Please contact the Portfolio 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: +44 (0) 207 647 5750

Email: hansatrustenquiry@hansacap.com

Website: www.hansagrp.com

Please contact the Registrars, as below, if you have a query about a certificated holding in the Company's shares.

Capita Asset Services

The Registry

34 Beckenham Road

Beckenham

Kent BR3 4TU

Telephone: 0871 664 0300

(Calls cost 10p per minute plus network charges)

Email: shareholderenquiries@capita.co.uk
www.capitaregistrars.com

SHARE PRICE LISTINGS

The price of your shares can be found on our website and in the Financial Times under the heading 'Investment Companies'.

In addition, share price information can be found under the following:

ISIN Code

Ordinary shares GB0007879728

'A' non‑voting Ordinary shares GB0007879835

SEDOL

Ordinary shares 787972

'A' non‑voting Ordinary shares 787983

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

Association of Investment Companies www.theaic.co.uk

London Stock Exchange www.londonstockexchange.com

TrustNet www.trustnet.com

Interactive www.iii.co.uk

Morningstar www.morningstar.com

Edison www.edisongroup.com

FINANCIAL CALENDAR

Company year end 31 March

Annual Report sent to shareholders June

Annual General Meeting July

Announcement of Half Year results December

Half Year Report sent to shareholders December

Interim dividend payments November & May

Companies

Hansa Investment Company Limited (DI) (HAN)

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