Year-End Report
For the Year Ended
31March 2022
HANSA, investing to create
long-term growth
2022
HANSA INVESTMENT
COMPANY LIMITED
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, 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 Bermuda under company number 54752.
I am pleased to present the third Year-End Report for Hansa Investment Company Limited to shareholders.
During our financial year, the world has continued to experience heightened economic and political turbulence.
Wehave seen good progress on curbing the Covid-19 pandemic. Vaccination programmes have allowed many
countries to return to a more recognisable economic path, although China continues with it’s zero-Covid policy which
is having a noticeable effect on employment and industrial output.
The recent Russian invasion is having a terrible effect on the suffering people of Ukraine and continues to cast a long
shadow over Europe which has not been seen since the end of the Cold War. As a result, the outlook for energy and
food prices remains bleak until alternative sources can be brought on stream, which will take time.
Unsurprisingly, it has been a very challenging time for the investment management community. Our portfolio has
performed reasonably well with a particularly good contribution from Ocean Wilsons Holdings Ltd, which is gaining
more investor attention after a rather fallow period of price performance.
Portfolio details are set out in in the Portfolio Manager section written by Alec Letchfield of Hansa Capital Partners LLP.
I also draw your attention to my Chairman’s Report to the Shareholders on page 2 as well as the expanded ESG
disclosures on page 12. With regard to the latter, your Board has worked closely with the Portfolio Manager to
finesse their Responsible Investing Policy. Your Board wholeheartedly endorses the Manager's plans and we disclose
significant detail about their initiatives in that section.
Finally, I remind you that details of our upcoming AGM are at the back of this Annual Report. Please do take the time
to read, consider and vote if eligible to do so. We also plan on holding a shareholder update in September. Plans are
at an early stage, but we would like to reach as many interested parties as possible and so it is likely we will retain the
virtual presentation as adopted in previous years.
Yours sincerely
WELCOME
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
2 Strategic Report
2 Chairman’s Report to the Shareholders
4 The Board of Directors
6 The Board
8 Long-Term Performance
9 Organisation and Objectives
24 Portfolio Manager’s Report
36 Portfolio Statement
38 Shareholder Profile and Engagement
41 Corporate Governance Reports
41 Report of the Directors
42 Corporate Governance Report
47 Audit Committee Report
49 Directors’ Remuneration Report
52 Independent Auditor's Report to
the Members of Hansa Investment
Company Limited
57 Financial Statements
57 Income Statement
58 Balance Sheet
59 Statement of Changes in Equity
59 Cash Flow Statement
61 Notes to the Financial Statements
74 Notice of the Annual General Meeting
77 Investor Information
79 Company Information
80 Glossary of Terms
Long-Term
Highlights 2022
Graphs represent the combined results
of the Company with Hansa Trust. To
that end, prior to August 2019 where
historic information relating to Hansa
Trust is quoted on a ‘per share’ basis,
it has been converted to be consistent
with the number of HICL shares
in issue. There is no benchmark to
disclose.
Rolling Five Year NAV Returns to end March (per annum)
2013 – 2022
0
2
4
6
8
10
12
14
16
18
2022202120202019201820172016201520142013
4.9%
15.4%
5.9%
4.3%
4.7%
8.9%
5.7%
6.0%
0.6%
1.5%
It is the goal of the Company to make money for shareholders on a long-term basis (five years).
The Board monitors the five year NAV returns as the primary achievement of the Company’s goal.
Dividend payments for year to end March (pence per share)
2013 – 2022
2022-2023
2021-20222020-20212019-20202018-20192017-20182016-20172015-20162014-20152013-2014
Pence per HICL Share
1st Interim Paid
4th Interim Paid3rd Interim Paid
2nd Interim Paid
PredictedPayableFinal Dividend
0
0.4
0.8
1.2
1.6
2.0
2.4
2.8
3.2
3.6
1.0
1.6
1.6 1.6
1.6
1.6
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
3.2
0.8
2.2
1.6
1.61.6 1.6 1.6
The Dividend Policy can be found on page 21 of these Financial Statements and on the Company’s website.
Itcan be summarised as the declaration at the beginning of the year of four equal dividends, paid in November,
February, April and May.
Five Year NAV and Share Price Total Return
2017 – 2022
NAV
Ordinary Share Price
‘A’ Ordinary Share Price
Mar-17Mar-18Mar-19Mar-20Mar-2
1M
ar-22
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Hansa Investment Company Limited For the Year Ended 31 March 2022 1
STRATEGIC REPORT
Chairman’s Report to the
Shareholders
INTRODUCTION
I am pleased to report that our Portfolio Manager and other
service providers to Hansa Investment Company (“HICL”, “the
Company”) remain resilient and have not been operationally
affected by any Covid-19 problems or the conflict in Ukraine.
SHAREHOLDER RETURNS
For the year ended 31 March 2022, the Net Asset Value
(“NAV”) has increased by 12.5p per share, from 306.6p
per share to 319.1p per share. Regrettably, during the past
12 months there has been an increase in the discount from
35.4% to 37.8% for the Ordinary shares and from 35.3% to
39.5% for the ‘A’ Ordinary shares. More detail on these and the
longer-term performance can be found on page 8, as well as
our Portfolio Manager’s detailed review of markets and portfolio
performance in his report on page 24.
Our Portfolio Manager, Alec Letchfield and his team at Hansa
Capital Partners LLP (“Hansa Capital Partners”, “HCP”) has
continued to produce satisfactory risk adjusted returns to
shareholders. The portfolio he manages (the Company's
investment portfolio excluding Ocean Wilsons Holdings Ltd
(“OWHL”, “Ocean Wilsons”) has seen a gross time-weighted
total return of 1.1% in the past year, whilst our investment
in OWHL has seen a gross time-weighted return of 24.7%.
The latter was driven in part, by Wilson Sons Limited share
price increase in Sterling terms by 77.9%, whilst increasing in
Brazilian Real terms by 41.0%, the difference being the rally in
the price of the Brazilian Real against Sterling. Collectively, the
entire HICL portfolio has seen a gross time-weighted return of
6.2% for the twelve months ended 31 March 2022.
PROSPECTS
Writing about prospects and the future direction of markets
is always challenging at the best of times. However, I cannot
remember a time when there were so many moving parts in
the financial world, particularly interest rates, inflation and
monetary tightening, and a war of which the outcome and its
timing is impossible to predict at the time of writing. As such
we are faced with a highly uncertain geopolitical backdrop and
a lack of cohesive leadership which is creating the potential for
policy missteps and an environment that many younger market
practitioners will not have experienced during their lifetime.
In my Interim Report I mentioned the emergence of noticeable
inflationary trends, international tensions and energy shortages
which sadly have only increased since then. Of course, much of
this increase has been the result of Russia’s invasion of Ukraine.
Many forecasters have different views of when and at what
level inflation will peak in this cycle. My sense is that it will
probably stay elevated for longer than presently anticipated,
because of the labour shortages and production bottlenecks
(such as those driven by China's Zero-Covid policy and the
resulting lockdowns) and the ongoing disruptions in Ukraine.
The anticipated rises in interest rates and monetary tightening
as Quantitative Easing becomes Quantitative Tightening will
ultimately achieve the objective of reducing inflation, assuming
the Federal Reserve Board and other major Central Banks do
not cut short their campaign because of recessionary fears. One
has to remember the years of the inflationary build up created
by interest rate suppression, Quantitative Easing and lax lending
to get a feel for the size of the bubble that is now deflating.
The actions of the Central Banks will probably cause recessions,
which means equity markets probably still have some way to
fall before the bottoming out process can begin. This will, of
course, create great opportunities for the patient investor to buy
quality stocks at attractive prices.
On a more positive note, it has been encouraging to note the
improvement in the Ocean Wilsons share price and the excellent
contribution from Wilson Sons Limited (“Wilson Sons”),
partially created by the long-awaited increase in the value of the
Brazilian Real.
STRATEGY
Alec Letchfield and his team, supported by the Board, have
taken a slightly more defensive position in the past year which
has helped our overall performance. They have managed
our portfolio effectively through these challenging times for
investors, which includes negligible economic exposure to
Russian assets, but there has been some inevitable collateral
damage to our portfolio from the market’s reaction to the
war in Ukraine. Ourportfolio held no exposure to sanctioned
equities, either directly or through the fund investments
we hold. For the sake of clarity we continue to pass on any
cryptocurrency opportunities.
JONATHAN DAVIE
Chairman
Strategic Report
Chairman’s Report to the Shareholders
Strategic Report TABS
2 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
DIVIDEND POLICY
The Board continues to support our strategy of maintaining the
dividend at 3.2p until it is fully covered by net revenue income
and then increase it in line with any increase in the net revenue
income of the Company.
DISCOUNT MANAGEMENT
It is a great frustration to the Board and our shareholders that the
discount has not tightened over the past year, much of this can
probably be put down to a general widening of investment trust
spreads, due to market volatility and declining retail participation
in the markets. The Board continues to take the view that share
buybacks can only offer a short-term solution. It would increase
risk concentration as the proportion of the portfolio invested in
Ocean Wilsons would automatically increase, which the Board
wishes to avoid in line with the Company’s long-term strategy.
LIQUIDITY & INVESTOR BASE
The Board continue to work with our broker Winterflood and
Edison to promulgate the Hansa story and are now working
with Warhorse Partners, a brand and marketing specialist to the
Investment Trust industry, to explore alternate and fresh forms
of investor outreach and messaging.
INVESTMENT IN OCEAN WILSONS HOLDINGS LTD
As mentioned earlier in this Report, it is encouraging to note
the improvement in the value of Wilson Sons Ltd and the uplift
in the share price of Ocean Wilsons Holdings, after a period of
underperformance created mainly by the declining Brazilian Real.
Our strategy on the various options relating to OWHL mentioned
in my Report last year remain unchanged. Wecontinue to
consider longer-term options in respect of our holdings in OWHL.
SHARE CLASSES
The current position remains unchanged, with the majority of
Ordinary shareholders not wishing to change the present structure.
ENVIRONMENTAL, SOCIAL AND CORPORATE
GOVERNANCE (“ESG”) MATTERS
The Board has worked with the Portfolio Manager as the latter
has developed its Responsible Investment Policy. In particular,
the Portfolio Manager has been investigating the merits of
becoming a signatory of the United Nations Principles for
Responsible Investing (“UNPRI”) protocol.
The UNPRI encourages investors to use responsible investment
to enhance returns and better manage risks, but does not
operate for its own profit; it engages with global policymakers,
but is not associated with any government; and is supported by,
but not part of, the United Nations.
It consists of six principles that all signatories must agree with:-
1. Incorporate ESG issues into investment analysis and decision-
making processes.
2. Be active owners and incorporate ESG issues into our
ownership policies and practices.
3. Seek appropriate disclosure on ESG issues by the entities in
which we invest.
4. Promote acceptance and implementation of the Principles
within the investment industry.
5. Work together to enhance our effectiveness in implementing
the Principles.
6. Each report on our activities and progress towards
implementing the Principles.
The Board notes all the work that its Portfolio Manager has
undertaken in considering the merits of this important initiative
and is pleased to report that HCP plans to become a signatory
in the very near future.
The Board continues to offset the carbon created by flights to
Bermuda for meetings. The amount offset in the past year has
been 198 tonnes.
COMPANY AUDITOR
As of the Company’s most recent AGM in August 2021,
PricewaterhouseCoopers Ltd of Bermuda (“PwC”) were
appointed to audit the Company.
On behalf of the Board, I should like to extend our best wishes
to you, our shareholders and your loved ones.
Jonathan Davie, Chairman
17 June 2022
I would draw shareholders’ attention to the Glossary of Terms which can be found
at the end of this Year-End Report. I hope it is helpful in understanding a business,
ever more complicated by regulation and jargon.
Hansa Investment Company Limited For the Year Ended 31 March 2022 3
STRATEGIC REPORT
The Board
of Directors
JONATHANDAVIE
(Chairman)
Jonathan became Chairman of Hansa
Investment Company in June 2019.
He was a director of Hansa Trust from
January 2013 until its liquidation in
November 2021. He is also chairman
of First Avenue Partners, an alternatives
advisory boutique.
Jonathan qualified as a Chartered
Accountant and then joined George
M. Hill and Co. and became an
authorised dealer on the London Stock
Exchange. The firm was acquired by
Wedd Durlacher Mordaunt and Co.
where Jonathan became a partner in
1975. He was the senior dealing partner
of the firm on its acquisition by Barclays
Bank to form BZW in 1986.
Jonathan developed BZW’s Fixed
Income business prior to becoming
chief executive of the Global Equities
Business in 1991. In 1996 he became
deputy chairman of BZW and then vice
chairman of Credit Suisse First Boston
in 1998 on their acquisition of most of
BZW’s businesses. He focused on the
development of Credit Suisse’s Middle
Eastern business. He retired from Credit
Suisse in February 2007.
RICHARD LIGHTOWLER
(Audit Committee Chairman)
Richard became a Director of the
Company in June 2019. Richard has
25 years’ experience in public accounting
being partner of KPMG in Bermuda for
19 years. He was head of the KPMG
Insurance Group in Bermuda for 15 years,
a member of the firm’s Global Insurance
Leadership Team and Global Lead Partner
for a number of large international
insurance groups listed on the New York
and London Stock Exchanges.
Richard has significant regulatory
experience, advising the Bermuda
Monetary Authority and working with
clients regulated by the PRA, FRC and
FCA, as well as other international
regulators. He also has extensive
experience in risk and corporate
governance and significant transaction
experience including redomiciliations.
Richard is based in Bermuda. Richard
also holds directorships with Geneva
Re, Aspen Insurance Holdings and
Oakley Capital.
Meetings
attended
Total
Meetings
Board 5 5
Audit Committee 2 2
Meetings
attended
Total
Meetings
Board 5 5
Audit Committee 2 2
The Directors who
served the Company
during the year to
31 March 2022 are:
4 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
SIMONA HEIDEMPERGHER
Simona became a Director of the
Company in June 2019. Simona has
extensive experience as an executive
and non-executive director in a range of
companies, including listed companies,
investment funds and research
organisations, across multiple jurisdictions.
For the past 19 years, she has been
a director of Merifin Capital, an established
European privately owned investment
company. Priorto this she had roles as VP
Investments at CDB Web tech, a listed
investment vehicle, and as research
associate at Heidrick & Struggles, a leading
executive-level search and leadership
consultancy firm and as project coordinator
at Ambrosetti Group, an Italian consulting
company. Currently, Simona is the lead
independent non-executive director of
Aquafil SpA where she is chairman of the
audit and risk committee. Alongside this,
Simona is chair of the board of directors
of the Stramongate Group, a Luxembourg
public company, director of The European
Smaller Companies Trust, a Janus
Henderson Asset Management Investment
Trust listed on the London Stock Exchange
and director of Industrie Saleri Italo
S.p.A. an Italian private company in the
automotive supplier sector.
WILLIAM SALOMON
William became a Director of the
Company in June 2019. He was
a Director of Hansa Trust from 1999 until
its liquidation in November 2021. He has
a significant, long standing, investment in
the Company.
William’s experience in investments and
finance is important to the Board in
developing and monitoring investments
in special investment themes and in the
Company’s strategic investment through
Ocean Wilsons Holdings Limited in
Wilson Sons.
William is the senior partner of Hansa
Capital Partners LLP, the Portfolio
Manager and Additional Administrative
Services Provider, deputy chairman
of Ocean Wilsons Holdings Limited
and a director of its listed subsidiary
WilsonSons Limited. He is also
a shareholder representative on the
investment advisory committee for
DV4Ltd (“DV4”) and chairman of
ScotGems PLC investment trust. William
was formerly the vice chairman of Close
Asset Management Limited and chairman
of the merchant bank Rea Brothers PLC.
NADYA WELLS
Nadya became a Director of the
Company in June 2019. Nadya has
27 years’ experience in emerging and
frontier markets as a long-term investor
and corporate governance specialist.
Shespent 13 years as portfolio manager
with the Capital Group investing in Global
Emerging Markets and prior to that five
years with INVESCO Asset Management
Limited, investing in public and private
equity managing a closed ended fund.
She started her career in management
consultancy with Ernst & Young.
She holds a non-executive directorship
at Baring Emerging EMEA Opportunities
plc where she is senior independent
director. Nadya is also an independent
non-executive director on the boards of
various Luxembourg SICAVs managed
by Aberdeen Standard Investments
Luxembourg, where she chairs the
product committee. She also works
in academia conducting research and
consulting in the public and private sector
on financing in Global Health. She holds
an MBA from INSEAD, France.
Meetings
attended
Total
Meetings
Board 5 5
Audit Committee 2 2
Meetings
attended
Total
Meetings
Board 5 5
Audit Committee 2 2
Meetings
attended
Total
Meetings
Board 5 5
Audit Committee 2 2
Note:
The meetings listed above are the main events held during the year at which all Directors attend. Additionally, there have been numerous meetings and Board calls
to consider and approve operational requirements for the Company, such as quarterly dividends. These meetings are arranged as and when required and require the
meeting to be quorate but not necessarily attended by all Directors. These have not been listed above.
The Board normally holds an annual Strategy session in February. This was delayed to April 2022 due to the outbreak of the Omicron variant of Covid-19 so the Board
could meet face-to-face.
Hansa Investment Company Limited For the Year Ended 31 March 2022 5
STRATEGIC REPORT
The Board
The Board
Board members are selected based on their individual and
complementary skills and experience and their ability to commit
sufficient time to drive the Company’s success. All Directors will
retire at each AGM and offer themselves for consideration for
re-election. The Board recommends the re-appointment of each
of the Directors, based on their continuing contribution to the
Company and its shareholders.
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 in accordance with the
investment objective. These responsibilities are discharged in
many ways and are explained below.
INVESTMENT OBJECTIVE POLICY
The Company objective is to grow the net assets of the
Company over the medium to long-term by investing in
a diversified and multi-strategy portfolio.
The Company seeks to achieve its investment objective by
investing in third-party funds, global equities and other
international financial securities. The Company may invest in
quoted and unquoted securities. The Company’s portfolio will
typically comprise at least 30 investments.
The Company holds a strategic position in the share capital of
OWHL, which represents the Company’s largest holding. The
Company will not make further investments into OWHL.
The Company has no set maximum or minimum exposures to
any asset class, geography or sector and will seek to achieve
an appropriate spread of risk by investing in a diversified global
portfolio of securities and other assets.
INVESTMENT STRATEGY
The Portfolio Manager, engaged by and acting on behalf of the
Company, seeks to build a multi-strategy portfolio by selecting
investments across four key investment categories, in addition
to the strategic investment in OWHL:
• Core – investments, typically through third-party funds,
that the Company can expect to hold throughout the
economic cycle.
• Thematic – investments, typically through third-party funds,
that reflect key investment themes the Portfolio Manager
believes will generate excess returns.
• Diversifying Assets – investments, typically through
third-party funds and directly, that create asset diversification
within the portfolio.
• Global Equities – a diversified portfolio of global equities
identified by the Portfolio Manager as having long-term
growth potential.
The Company has no set maximum or minimum exposures to
any asset class, geography or sector, the Board does, however,
set guidelines which the Portfolio Manager adheres to. These
can be adjusted by the Board. While the proportion of the
portfolio represented by each of these categories will vary
over time, the Board establishes parameters for the Portfolio
Manager, based on its view of the global investment markets.
The Board set the following guidelines for each category as
a percentage of the portfolio (including the strategic investment
in OWHL):
• Core: 0-50%
• Thematic: 0-25%
• Diversifying Assets: 0-40%
• Global Equities: 0-40%
6 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
The Portfolio Manager has a strong focus on identifying
investments with excellent fundamentals and a similar
investment philosophy to HCP. In particular, taking a long-term
approach to investing, good alignment and not seeking to
replicate a benchmark. These investments range from those
sectors benefiting from structurally higher growth, such as
technology, to assets which the Company believes stand on
unwarranted discounts to their intrinsic value.
INVESTMENT MONITORING AND
KEY PERFORMANCE INDICATORS (“KPIS”)
The Company believes this investment strategy may produce
returns not replicated by movements in any market index.
Furthermore, the Board considers that the use of a single
benchmark will not always offer shareholders the relevance
and the clarity needed with regard to the performance of
the Company.
The Board’s primary goal is for the Company to generate
long-term returns for shareholders and so will compare the
Company’s performance against that of a safe return from
an appropriate Government bond – for this the Board has
elected to follow the FTSE Gilts All Stocks TR Index (Bloomberg:
FTFIBGT). The Board’s second goal is for the Company to
achieve returns that are higher than inflation and use the
UK’s CPI (Bloomberg: UKRPCHVJ) as the KPI for comparison.
Finally, the Board compares the Company’s returns with those
of an appropriate index – for which the Board has elected to
follow the performance in GBP of the MSCI All Country World
Index excluding Frontier Markets (Bloomberg: NDUEACWF).
Seepage17 for the further discussion on the KPIs.
POLICY ON BOARD COMPOSITION
Appointments to the Board are made on merit and against
objective criteria, in accordance with the AIC Corporate
Governance Code. The Board considers it is of paramount
importance to shareholders that, after consideration of the skills
and experience needed by the Board, candidates are chosen on
the basis of their contribution to the Company’s needs and that
there should be no discrimination in the choice of Directors for
any reason.
Hansa Investment Company Limited For the Year Ended 31 March 2022 7
STRATEGIC REPORT
Long-Term Performance
Long-Term Performance
TEN YEAR COMPANY PERFORMANCE STATISTICS
Year ended 31March
Shareholders’
Funds
Net Asset Value
per share –
Ordinary and
‘A’Ordinary
Annual
Dividends Ordinary ‘A’ Ordinary Ordinary ‘A’ Ordinary
2022 £382.9m 319.1p 3.2p 198.5p 193.0p 37.8% 39.5%
2021 £367.9m 306.6p 3.2p 198.0p 198.5p 35.4% 35.3%
2020 £276.3m 230.2p 3.2p 130.9p 135.5p 43.1% 41.2%
2019 £337.3m 281.1p 3.2p 195.5p 195.0p 30.5% 30.6%
2018 £323.1m 269.3p 3.2p 198.5p 195.5p 26.3% 27.4%
2017 £307.5m 256.3p 3.2p 173.3p 169.6p 32.4% 33.8%
2016 £255.6m 213.0p 3.2p 146.0p 145.1p 31.5% 31.9%
2015 £273.3m 227.8p 3.2p 172.0p 165.5p 24.5% 27.3%
2014 £287.4m 239.5p 3.2p 175.9p 175.5p 26.6% 26.7%
2013 £259.9m 216.6p 3.0p 166.8p 163.0p 23.0% 24.7%
2012 £268.2m 223.5p 2.8p 181.0p 178.3p 19.0% 20.2%
The table includes information relating to HICL and historic information relating to Hansa Trust. The years ended 2020-2022 notes
HICL information. The historic year ends 2011-2019 all relate to Hansa Trust. So that data is consistent and comparable, the historic
data in columns “Net Asset Value per Share”, “Annual Dividends” and “Share Price (Mid)” have been restated to reflect that, as
part of the redomicile of the business of Hansa Trust to HICL in August 2019, HICL issued five times as many shares in each share
class of HICL as there were in Hansa Trust.
The Company’s KPIs can be found on page17.
To 31March 2022 1 year 3 years 5 years 10 years
Total Return (%)
Ordinary shares 1.7 7.2 25.0 32.1
‘A’ non-voting Ordinary shares (1.3) 4.5 24.3 30.7
NAV 5.1 17.7 32.2 63.0
Share Price (Mid)
Discount/(Premium)
8 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Organisation and Objectives
Organisation and Objectives
This section explains how the Board has organised the
Company and seeks to deliver its objectives.
BOARD COMMITTEES
The Directors consider that, in order to fulfil their
responsibilities as the Directors of the Company, they should
all be members of every sub-committee where possible.
Audit Committee
The Audit Committee, which meets at least twice a year,
consists of all independent Directors of the Board. Richard
Lightowler is the Chairman of the Audit Committee.
The AIC Code of Corporate Governance (“the AIC Code”)
indicates that all independent Directors can be members
of the Audit Committee. The Board is of the opinion that,
particularly as the Company has relatively few Directors,
shareholders benefit from the views of all Directors. Therefore,
Jonathan Davie, as Chairman of the Company, is also
a member of this Committee. The Board further acknowledges
that the AIC Code states all Committee members should be
independent. Therefore, William Salomon is not a member of
the Committee. The Committee reports its recommendations
to the Board for final approval.
Nomination Committee
The independent members of the Board fulfil the function
of the Nomination Committee. The Committee is chaired by
Nadya Wells. Appointments are made after consideration of
the skills and experience needed by the Board and against
objective criteria in accordance with the AIC Code. The Board
considers it is of paramount importance to shareholders
that, after consideration of the skills and experience needed
by the Board, candidates are chosen on the basis of their
contribution to the Company's needs and that there should
be no discrimination in the choice of Directors for any reason.
The Board has determined that all Directors will retire and
offer themselves for re-election each year at the AGM and
this policy includes any Directors appointed during the year.
The Committee reports its recommendations to the Board for
final approval.
Management Engagement Committee
The independent members of the Board fulfil the function of
the Management Engagement Committee. The Committee
is chaired by Jonathan Davie. The level of management
fees, level of service provided and the performance of
the Portfolio Manager are reviewed on a regular basis to
ensure these remain competitive and in the best interests of
shareholders. The Board, after the annual recommendation
of this Committee, considers the engagement of the Portfolio
Manager to be in the best interests of the shareholders.
TheCommittee reports its recommendations to the Board for
final approval.
Remuneration Committee
The independent members of the Board fulfil the function
of the Remuneration Committee. The Committee is chaired
by Simona Heidempergher. The level of Directors’ fees is
monitored against external benchmarks taking specific note
of each Director's duties and also relative to other comparable
companies. The Committee reports its recommendations to
the Board for final approval.
REQUIREMENTS OF S172 UK COMPANIES ACT
As required by the AIC Code, the Board describes below how
it has met the requirements of s172 of the UK Companies Act
as applicable to the Company. This includes an explanation
of how the Board has sought to promote the Company for
the benefit of its members, how it has taken into account the
likely long-term consequences of decisions and how it fosters
relationships with stakeholders. The Company is an investment
company with an appointed Portfolio Manager. As a result,
it has no direct employees or customers in the traditional
sense. The Board has identified the Company’s shareholders,
its Portfolio Manager (as well as the Additional Administrative
Services Provider, “AASP”), its other key service providers as its
key stakeholders.
Hansa Investment Company Limited For the Year Ended 31 March 2022 9
STRATEGIC REPORT
SHAREHOLDER INTERACTION & PROMOTING THE COMPANY
Stakeholder Interaction
Shareholders The shareholder base is a mixture of private investors, wealth managers and asset managers
across both classes of the Company’s shares. The Board monitors changes in the shareholder
base at its quarterly Board meetings. The Company communicates through the publication
of Year-End and Half-Year Financial Statements, through detailed quarterly and monthly
factsheets, as well as through the Company’s website. The Company also holds shareholder
presentations incorporating presentations by the Board and key service providers to keep
shareholders informed.
The Board seeks to understand the opinions of a wide variety of shareholders. The
Company maintains a dedicated email address for shareholders to contact the Board
([email protected]) and shareholder correspondence and feedback is a regular item
ofdiscussion at Board meetings.
The Company continues to meet shareholders and other interested parties facilitated by its
brokers, Winterflood, and Edison as well as through direct contact.
Investors are also kept informed through paid-for editorial pieces by Edison Research and
discussion with media organisations. During the last two years, to enable shareholders to
meet with the Board and Portfolio Manager during the Covid-19 pandemic, the Board used
online shareholder presentations. Whilst the Board believes there is still a place for face-to-face
shareholder updates, the strong attendance at the online events encourages the Board that
these online events will remain a feature of the Company’s shareholder outreach.
Portfolio Manager & AASP The Board’s main working relationship is with the staff of HCP as the Portfolio Manager and the
AASP. HCP is responsible for the Company’s portfolio management (including asset allocation,
stock and sector selection in accordance with guidelines established by the Board). It is also
responsible for administrative and operational functions including day-to-day oversight of the
other key service providers (Administrators, Custodians, Registrar and Company Secretarial).
Successful management of shareholders’ assets by the Portfolio Manager is crucial to enable the
Company to deliver its investment strategy and meet its objective.
Other key service providers The Company has other key service providers. All service providers are listed at the back of this
Annual Report. Key providers are the Company’s Administrator (Maitland Administration Services
Limited), Custodian (Lombard Odier) and Registrar (Link Market Services (Guernsey) Limited).
Whilst the Board looks to the Portfolio Manager and the AASP to keep a day-to-day oversight of
these providers, they are contracted directly to the Company. As such, the Board retains ultimate
responsibility for their roles. The AASP reports regularly on operational matters. The Board
seeks to visit each provider at least annually for a face-to-face meeting to discuss service levels,
operations and future developments.
Organisation and Objectives
Continued
10 Hansa Investment Company Limited For the Year Ended 31 March 2022
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Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Main areas of engagement
Key Area Issue Engagement & Outcomes
Investment Strategy &
ESG matters
The Board has control over the Company’s
investment in OWHL but, otherwise,
all investments are managed by HCP as
Portfolio Manager.
The Investment Strategy incorporates
appropriate ESG considerations.
The Board has engaged with the Portfolio
Manager and encouraged them to develop
a responsible investment policy. The Board
understands HCP has made significant progress
and is expecting to become a signatory to the
UNPRI within the coming financial year. The
Board wholeheartedly supports this policy.
Discount Management The Board is mindful of and regularly
discusses the hare price compared to NAV
and related discount. The Board is of the view
that providing transparency and clarity to
investors, as well as promoting demand for
the Company’s shares, should create a positive
impact on the discount for the medium to
longer-term. To this end, the Board continues
its discussions with Warhorse Partners,
a brand and marketing specialist focused on
the asset management industry, to review the
Company’s branding and communications
strategy with shareholders and potential
shareholders alike. The aim of the project is to
enhance and broaden the understanding of
the Company, with the ultimate objective of
widening the shareholder base and deepening
the market for shares.
It is a great frustration to the Board that the
discount has not tightened over the past
year. It is also noted that there has been
general widening of investment trust spreads
due to market volatility and declining retail
participation in the markets.
Dividend Policy & Share
Buybacks
The Board continues to support maintaining
the dividend at 3.2p until it is fully covered by
net income. At that time it plans to increase it
in line with any increase in the net income of
the Company.
The Board believes that share buybacks can
only offer a short-term solution. To buy back
shares would increase risk concentration,
as the proportion of the portfolio invested
in Ocean Wilsons would increase which the
Board wishes to avoid.
The Board continues to provide transparency of
dividend and buy back policies to shareholders
in documents and presentations.
Hansa Investment Company Limited For the Year Ended 31 March 2022 11
STRATEGIC REPORT
Key Area Issue Engagement & Outcomes
Maintaining levels of
service from Service
Providers
The Company does not have direct
employees. Rather, its operations are
conducted by several key service providers.
The Company enters into service-level
agreements with each provider. The Board
oversees these services to ensure that best
practice is followed and that the Company is
receiving a comprehensive service and value
for money.
The independent members of the Board
annually review the performance of the
Portfolio Manager. Additionally, the day-to-day
performance of other key service providers
(Administrator, Custodian and Registrar) are
monitored by the AASP on behalf of the
Board. In addition, there is an annual review
of service providers' annual Controls Audit
Reports. Members of the Board also visit
each key service provider annually to review
performance and understand any changes in
their businesses.
LONG-TERM IMPACT OF DECISIONS – ESG MATTERS
With ever-growing global concerns and developments
surrounding matters such has climate change, social
inequalities and ethical corporate strategy and governance,
the Board believes there is a communal duty for meaningful
and effective action to be taken and are committed to doing
so. It is the Board's belief that responsible investing and
a well-run sustainable business model aids in generating
superior long-term returns.
The Board is responsible for the Company's ESG policy. In
2020, the Board adopted the Portfolio Manager’s (“PM”)
Responsible Investment Policy, which is applied to all Company
investments in funds and companies, in both public and
private markets. In line with the evolving nature of ESG’s
integration within financial services, the PM continues to
review and develop their policy of responsible investing within
their investment process. This involves ensuring environmental,
social and governance factors are more seamlessly integrated
throughout the investment management process, including
within the due diligence, decision-making and investment
monitoring processes. With such purposeful integration of
ESG considerations within the investment process, it can aid
in fostering an economically efficient and sustainable global
financial system and enhance investment performance.
As long-term investors, HCP has a natural desire to be
a responsible investor and a good corporate citizen. HCP’s
approach begins by communicating its expectations to fund
and company investments that they should take ESG issues
seriously, clearly report on them, be responsible owners and
to continuously show positive indicators of aspiring to do the
rightthing.
HCP does not operate an exclusionary policy, as it is not
believed that excluding whole sectors or countries is
a sustainable, or reasonable approach to its investment
activities. Each fund manager or company is assessed as
an individual, taking into account the sector and country
within which they operate and their direction of travel in ESG
enhancements. For example, a manager trying to encourage
companies in a polluting sector to improve their environmental
performance would not be automatically excluded from
investment simply for operating ina heavily polluted sector.
HCP seeks to ensure that all investee managers and companies
are thinking longer term and that they are also thinking
about their longer-term impacts across the spectrum of
their business. This certainly includes the negatives – such
as understanding how companies are lowering their carbon
emissions, ensuring they are not using forced or child labour
in their supply chains, taking care not to deplete natural
resources, or be involved in deforestation. But it also includes
the positive impacts, for example, knowing if a company
is taking advantage of the opportunities it may have from
climate change by developing greener energies, recycling
Organisation and Objectives
Continued
12 Hansa Investment Company Limited For the Year Ended 31 March 2022
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General Meeting Investor Information
used clothing, or designing biodegradable fabrics. HCP’s
involvement with the managers and companies is on-going
and pushes them to manage the risks and take advantage
of the opportunities in a tailored and considered manner.
A manner that reaps longer-term benefits for the Company, as
well as the environment and the greater society.
Fund Investments
HCP seeks to invest in funds who are responsible owners
of their investee companies, have specific consideration
as to how their investee companies manage their ESG
responsibilities and seek to engage with those company
boards, if they are failing in their duties. Where a manager is
not living up to these standards, HCP will first seek to engage
the management team and encourage improvement. If the
managers engagement is weak, or if the communicated
concerns are not sufficiently addressed and their positive
commitment to do so is not apparent, HCP’s ultimate action
would be to reduce current investment, exit, or not invest
in the first place. Whilst HCP does not seek to exclude fund
managers that invest in sectors such as energy or countries
such as China, it would also expect such managers to properly
articulate how they operate in such areas and manage the
potential ESG considerations. HCP’s investment philosophy
favours those fund managers who are typically long-term in
their approach and seeks to invest in high quality companies
that are well managed and often higher returning. As a result,
many of the fund managers will either not invest in, or have
a high hurdle before they will invest in, those businesses that
are focused on energy, resources or certain materials. Hence,
although we do not set limits, there is a natural bias away
from those companies and sectors that score less well on
ESGmetrics.
Company Investments
When considering direct equity investments HCP seeks to
ensure that company management teams are responsible
custodians of their businesses, report clearly on ESG metrics
and seek to improve on those areas in which they are lagging.
Again, as with fund selection, HCP does not seek to exclude
specific sectors and countries, but instead for those companies
that make significant use of energy, resources and materials,
orlack in other social or governance related matters, HCP
would seek clarity and understanding on how they manage
these issues and their responsibilities.
In the natural positive progression of HCP’s commitment to
further integrating ESG and climate relevant considerations
within its investment process, HCP are in the process of
reviewing and making a commitment to become signatories
of the United Nations supported Principles for Responsible
Investment (“UNPRI”). The Board expects HCP will become
UNPRI signatories prior to the next Annual Report.
Taskforce on Climate-Related Financial Disclosures
In line with LR 15.4.29R, as a closed-ended investment
company, HICL is exempt from the annual reporting
requirement to publish statements in line with the Taskforce
on Clime-Related Disclosures’ (“TCFD”) framework
of recommendations and recommended disclosures.
However, considering the Board and the PM’s approach to
responsible investing and the Company's core investment
objective to generate superior, but sustainable, medium to
long-term growth in shareholder value, we have elected
to provide relevant information on our approach to the
TCFD recommendations.
Governance
The Board supports the implementation of good corporate
governance practises and oversees a long-term and
sustainable approach to business strategy of the Company.
This in part is done by adopting a Responsible Investment
Policy, which aims to seamlessly integrate sustainability,
climate-related risks and opportunities into the Company’s
investment process and constantly evolves alongside
regulation and good stewardship. This is in line with HCP’s
approach to its ESG assessment of fund manager and
company investments, which involves enquiring whether
they are aligned with global sustainability and climate change
focused initiatives, such as being signatories of the UNPRI.
The Board continues to have oversight of the Company's
investment in Ocean Wilsons and, as a result, the performance
of that company's investment in Wilson Sons. In 2021, the
Board noted that Wilson Sons become members of the
Carbon Disclosure Project (“CDP”), which aims to build a truly
sustainable economy, by measuring and understanding their
environmental impact. Furthermore, Wilson Sons continues to
Hansa Investment Company Limited For the Year Ended 31 March 2022 13
STRATEGIC REPORT
state their commitment to the climate agenda and to building
solutions that adapt to the new scenarios established by the
challenges imposed by climate change in the world.
Risk Management
Climate-related risks within the Company's investments are
identified, assessed and managed by HCP as the Portfolio
Manager, with such to be reported to the Board for our
oversight. As part of the portfolio risk management and
monitoring process, HCP’s approach combines long-term
and purpose-driven engagement with underlying fund
managers and companies, active voting and setting a clear
escalation framework. This approach aims to identify and
address climate-related issues and minimise systemic risks that
may impact the assets within the portfolio. Engagement can
take several forms, including regular and ad hoc face-to-face
(or video) meetings with management, formal written
correspondence, or the Portfolio Manager participating in
relevant shareholder votes for current investments. Within
the last year, further enhancements to the Company’s voting
process have been made, albeit all voting decisions are made
and directed by the HCP only. Taking such an active approach
to investing may involve voting against the management of an
underlying investment if its impact can help manage climate
related risks and drive positive change.
Strategy
The Company’s strategic objective is to grow its net assets over
the medium to long-term, by investing in a diversified and
multi-strategy portfolio and, in line within this objective, the
Board are responsible for pursuing the growth of shareholder
value. Responsible investment and the integration of ESG risks
and opportunities consideration within the investment process is
believed to be aligned with the Company’s values and heritage.
In line with our future commitment to become signatories of
the UNPRI, a key objective we intend to pursue is to encourage
our investments to embed ESG risks and opportunities into their
own strategies, direction and goals. An example of a climate-
related opportunity could include the increased alignment of
fund managers and companies sustainable investing practises,
providing a more diverse pool of responsible investment
opportunities for the Company. An example of climate-related
risk could include regulatory, market and reputational risks.
Metrics & Targets
In relation to the Portfolio Manager's investment process,
a more holistic approach is taken by assessing an investment by
their intent and direction of travel, rather than purely by specific
targeted metrics. The ESG assessment of a fund manager or
company will involve HCP developing a view by utilising their
published ESG reporting, the information received through the
due diligence and engagement processes and other external
research. The Company has no material information to report
inrelation to metrics and targets.
Ocean Wilsons Holdings Ltd
As noted elsewhere within this Report, the Board retains specific
responsibility for the holding in Ocean Wilsons HoldingsLtd
and, with it, the monitoring of its ESG credentials. OWHL is
made up of two investments – Ocean Wilsons Investments
Ltd, an investment portfolio and a significant holding in
Wilson Sons Ltd, a Brazilian maritime business. From an ESG
standpoint, our Portfolio Manager is also the investment
advisor to the Ocean Wilsons Investments’ portfolio. The
Board understand that our Portfolio Manager is engaging
with Ocean Wilsons Investments’ board on their Responsible
Investing Policy. Asa Board we receive periodic updates from
Wilson Sons, an operating business with several thousand
employees, regarding their business including issues relevant
to ESG considerations. In 2021, Wilsons Sons listed on the
Novo Mercado ("New Market") B3 listed segment and
became members of the Carbon Disclosure Project which,
inpartnership with companies and governments, aims to build
a truly sustainable economy, by measuring and understanding
the environmental impact. Wilson Sons continues to be
proud of their focused approach to Health & Safety and staff
wellbeing. As in many heavy industries, there is a focus on
safety, improving working practices to minimise staff injuries.
They continue to see a decade-long trend of reduction in
Lost-time Injuries – which is a reflection of an increasingly safe
working environment. Since2011, there has been a 87%
decrease in Lost-time Injuries. Additionally, Greenhouse Gas
emissions remain a focus for Wilson Sons. It continues to adopt
state-of-the-art technologies to continue to drive reductions in
emissions such as replacing diesel equipment with electrically
powered alternatives at their container ports. Wilson Sons has
also taken decisive steps to protect the safety and wellbeing
of its employees during the Covid-19 pandemic. Their head-
Organisation and Objectives
Continued
14 Hansa Investment Company Limited For the Year Ended 31 March 2022
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Notice of the Annual
General Meeting Investor Information
office staff are operating on a hybrid model of office and home
working and, for those who can’t, working practises minimise
the amount of mixing to reduce the risk of cross infection.
Additionally, the company has maintained Its commitment to
proactively publish its Greenhouse Gas Emissions Inventory
(GHG) in the public emissions registry. This platform is
managed by the Brazilian GHG Protocol Programme. In 2021,
Wilson Sons were awarded the gold seal by the programme.
Further information can be seen in their published 2021
Sustainability Report.
Carbon Offset
Each year, there are a number of flights for individual Directors
to attend Board meetings in Bermuda. Therefore, as a matter
of policy, the Board has elected to offset the carbon impact of
its travel on behalf of the business though a relationship with
Greenfleet Australia (www.greenfleet.com.au).
Streamlined Energy & Carbon Reporting (“SECR”) and
Greenhouse Gas Emissions (“GGE”)
The Company has no direct greenhouse gas emissions to
report from the day to day operations of its business. However,
as noted above, the attendance of Directors at Board meetings
in Bermuda means travel related carbon emissions. The Board
has assessed the emissions associated with these trips to be
“Scope 3 Indirect Emissions” for the purposes of the SECR.
The Board has further estimated the emissions associated with
the flights to be in the region of 198 tonnes of CO2 (inclusive
of the radiative effect of high altitude aircraft emissions and
contrails) in any ‘normal’ year. The Board has assessed that the
Company does not have other Indirect Emissions to report, as
all other emissions will be associated with the operations of
service providers and be reported by them if appropriate.
Social, Community, Human Rights, Employee
Responsibilities Policy
The Company does not have any employees. The Company
has no direct social, community or human rights impact.
Its principal responsibility to shareholders is to ensure the
investment portfolio is properly invested and managed.
SERVICE PROVIDERS
Service Provider Policy
The Board consists entirely of non-executive Directors; it
delegates the day-to-day implementation of its policies to third
party service providers. The Board has contractually delegated
to external organisations the management of the investment
portfolio, the custodial services which include safeguarding
of the assets and the day to day accounting and company
secretarial requirements. Each of these contracts is only entered
into after proper consideration of the quality and cost of
services, which are regularly reviewed and monitored either by
the Board or its Committees. The Board recognises it is these
key service providers and, importantly, their staff who are critical
to the success and smooth running of your Company.
The Board, in seeking to engage organisations which can
provide the relevant levels of experience and expertise at an
acceptable cost, carries out the following activities:
• Monitors third party suppliers, performance, costs
and commitment to a successfully implemented
controls environment
The Board, at its regular meetings, reviews reports prepared
by both the Portfolio Manager and the Administrator,
which enable it to monitor the performance and costs of
the third-party suppliers to the Company. The Additional
Administrative Services Provider (“AASP”) has an ongoing
dialogue with each supplier to monitor their processes and
systems and feedback any concerns that might be arising.
Inaddition, a Director will seek to meet with key suppliers
once a year (or more frequently as is necessary).
• Monitors Portfolio Manager performance
The Board reviews reports prepared by the Portfolio Manager
at its regular meetings, which enables it to monitor the
investment performance, risks and returns. The Portfolio
Manager attends each Board meeting to provide an update
on Investment Performance and enable the Directors to
actively question the risks and investment performance
within the portfolio.
• Determines investment strategy, guidelines and restrictions
The Board determines the investment strategy in conjunction
with the Portfolio Manager. The strategy is monitored
regularly and refinements are made to it as required, with
formal review at the Board’s annual strategy meeting.
Hansa Investment Company Limited For the Year Ended 31 March 2022 15
STRATEGIC REPORT
The Board issues formal investment guidelines and
restrictions, compliance with these is reported by the
Portfolio Manager’s compliance officer on a regular basis
and is also monitored independently by the Administrator.
• Determines gearing levels and capital preservation through
the use of hedging instruments
The Board, taking account of advice from the Portfolio
Manager, determines the maximum level of borrowings the
Company will undertake at the time of borrowing. Details
of the borrowing limits can be found on page 18. The
Company will not invest in derivatives for speculative gain,
but may use derivatives for efficient portfolio management
and hedging purposes.
The key service provider relationship to the Company is Hansa
Capital Partners as the Portfolio Manager and Additional
Administrative Services Provider to the Company.
THE PROVIDERS
Portfolio Manager & Additional Administrative
ServicesProvider
Hansa Capital Partners LLP is the Portfolio Manager for the
Company. It is responsible for all assets in the portfolio, other
than the Company’s investment in OWHL. The Board is in
regular contact with the investment management team at HCP
which is led by Alec Letchfield. Additionally, Alec Letchfield
is invited to quarterly meetings of the Board to formally
present portfolio updates and discuss market trends. The
Portfolio Manager’s detailed review of the year can be found
onpage 24.
HCP charges an investment management fee at an annual rate
of 1% of the net assets of the Company (after any borrowings)
but, after deducting the value of the investment in OWHL, on
which no fee is payable. The Portfolio Manager has charged
£3,010,000 for the year ended 31 March 2022 (year ended
31 March 2021: £2,621,000). Hanseatic Asset Management
LBG, a company connected to Hansa Capital Partners LLP
and which is also the AIFM, separately charges an investment
management fee to the investment subsidiary of OWHL.
The terms of the Portfolio Management Agreement permit
either party to terminate the agreement by giving to the other
not less than 12 months’ notice, or such shorter period as
is mutually acceptable. There is no agreement between the
Company and the Portfolio Manager concerning compensation
in respect to the termination of the agreement. In its annual
assessment of the Portfolio Manager, the Board concluded
that, because of the skills and experience of the management
team it is in the best interest of shareholders that the Portfolio
Manager remains in place under the present terms. Details
of the fees paid to the Portfolio Manager can be found in
Note 3 on page 64.
HCP also acts as the Additional Administrative Services Provider
(“AASP”) to the Company. This role ensures a number of the
day-to-day processes for the Company are carried out as well
as providing oversight of, and a liaison between, a number
of the Company’s service providers and the Company itself.
HCP is paid £115,000 per annum for this service (year ended
31 March 2021: £115,000). HCP is not the Company Secretary
– see below.
Auditor
The Company’s Auditor is PricewaterhouseCoopers Ltd,
a Bermudan registered firm. The Board have developed
a strong working relationship with the Auditor and have
been happy with the rigour and challenge offered. The
reappointment of PwC as Auditor to the Company will be
proposed at the forthcoming AGM.
Auditor independence rules restrict the amount and type of
non-audit related work that can be performed by a company’s
auditor. Any non-audit related work must be pre-approved by
the Board. Currently, PwC provides only audit services to the
Company (details in Note 4 on page 64).
Company Secretary
The Company has engaged Conyers Corporate Services
(Bermuda) Ltd (“Conyers”) as its Company Secretary.
Duringthe year to 31 March 2022, the Company Secretaryhas
charged £32,713 (year ended 31 March2021:£5,919).
Alternative Investment Fund Manager
As a Bermudan resident, the Company is defined as a non EU
Alternative Investment Fund (“AIF”) under the EU’s Alternative
Investment Fund Manager’s Directive (“AIFMD”). As such,
the Company and the AIFM are only subject to the AIFMD
Organisation and Objectives
Continued
16 Hansa Investment Company Limited For the Year Ended 31 March 2022
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Notice of the Annual
General Meeting Investor Information
rules in a limited way – specifically in relation to marketing
the Company’s shares in the EU. The Company appointed
Hanseatic Asset Management LBG, with effect from 29 August
2019, to act as its AIFM, with responsibilities for the Portfolio
Management and Risk Management. The AIFM has sub-
contracted to Hansa Capital Partners LLP the provision of
Portfolio Management services. The AIFM does not charge
a direct fee for its services, although it does recharge any third-
party fees incurred.
Administrator
The Company has engaged Maitland Administration Services
Limited as its Administrator. The Administrator has charged
£155,289 for the year ended 31 March 2022 (year ended
31 March 2021: £143,517). On 18 May 2022, it was
announced that the fund services and third-party management
company businesses of Maitland International Holdings plc,
which includes our Administrator, was to be acquired by
ApexGroup Ltd. TheBoard understands that the transaction
issubject to a number of regulatory approvals.
Custodian
The Company has engaged Banque Lombard Odier & Cie SA
(“Lombard Odier”) as the Company’s Custodian. During the
year to 31 March 2022, Lombard Odier charged £184,868 for
the custodial service (year ended 31 March 2021: £163,308).
KEY PERFORMANCE INDICATORS AND OTHER MEASURES
The Board, regularly and at least quarterly, reviews the returns
and the performance of the Company, including an analysis
using the KPIs listed below.
The Board considers that the use of a single benchmark does
not always offer shareholders the relevance and the clarity
needed with regard to the performance of their Company
against its investment objective. The overall assessment of the
performance of the Company is given by the Chairman in his
Report on page 2.
In discussions between the Board and the Portfolio Manager,
returns are compared with a number of measures, including
the return of a government bond, using the 10 year UK Gilt
Return (FTSE All Stocks Gilts Total Return Index); to the rate
of inflation (real returns are important to shareholders) and
with those of appropriate indices for different elements of
the portfolio.
Additionally, whilst not specifically KPIs, the cost of managing
the Company is monitored against the NAV (the ratio between
costs and NAV is also known as the ‘ongoing charges
percentage per annum ratio’); and the discount/premium the
shares sell at in relation to the NAV are likewise monitored.
The Board of Directors monitors the returns made in
absolute (firstly) and relative (secondly) terms against the
KPIs established. The comparisons are made over 1, 3, 5 and
10 year time horizons.
i) Shareholders – Total Returns
To 31March 2022 1 year 3 years 5 years 10 years
Share Price Total Return
Ordinary shares 1.7% 7.2% 25.0% 32.1%
‘A’ non-voting Ordinary
shares
(1.3%) 4.5% 24.3% 30.7%
ii) Company – Total Returns
The Company's Total Returns are used to determine the
effectiveness of the Investment Strategy and of the Portfolio
Management. The KPIs overleaf should also be noted.
To 31March 2022 1 year 3 years 5 years 10 years
NAV 5.1% 17.7% 32.2% 63.0%
iii) Discount/Premium
A comparison is made between the (discount)/premium of the
Company’s two classes of shares and of the AIC average.
To 31March 2022
1 year
average
3 years
average
5 years
average
10 years
average
Ordinary shares (%) (33.6) (34.3) (31.4) (29.0)
‘A’ non-voting Ordinary
shares (%)
(34.0) (34.1) (32.3) (30.2)
AIC (%) (3.4)
Note: AIC only produces an AIC average for one year.
Whilst there are Investment Trusts that exhibit one or more
similarities to the Company, the Board does not consider the
Company to have any direct peers.
iv) Expense ratios
To 31March 2022 1 year 3 years 5 years 10 years
Ongoing annual charges (%) 1.1 1.1 1.1 1.1
Hansa Investment Company Limited For the Year Ended 31 March 2022 17
STRATEGIC REPORT
Organisation and Objectives
Continued
To comply with the Packaged Retail and Insurance-based
Investment Products Regulation (“PRIIP”), the Company has
issued a PRIIP’s Key Information Document (“KID”) for each
of its two share classes. In the PRIIPs, KID regulations are very
prescriptive as to how costs are calculated and presented.
Inparticular, in addition to the costs of the Company itself
noted above, the PRIIP calculation also incorporates the costs
of the directly held fund investment vehicles themselves, but
not those for directly held equities. Based upon the financial
results for the year to 31 March 2022, the PRIIP KID cost ratio
is 1.98% per annum.
v) Key Performance Indicators
The following are the KPIs the Board uses to assess the returns
of elements of the portfolio and of the Company as a whole.
To 31March 2022 1 year 3 years 5 years 10 years
NAV Total Return 5.1% 17.7% 32.2% 63.0%
FTSE UK Gilts All Stocks
TRIndex
(5.1%) (1.4%) 2.7% 32.1%
UK CPI Inflation 7.0% 9.4% 14.2% 22.7%
MSCI ACWI NR (GBP) 12.7% 46.4% 64.6% 215.5%
LIMITS
Investment Guidelines
The Portfolio Manager, on behalf of the Company, seeks to
build a multi-strategy portfolio by seeking investments across
four key investment categories under its mandate:
• Core – investments, typically through third-party funds, that
the Company can expect to hold throughout the cycle;
• Thematic – investments, typically through third-party funds,
that reflect key investment themes which the Portfolio
Manager believes will generate excess returns;
• Diversifying Assets – investments, typically through
third-party funds and directly, that create asset
diversification within the portfolio; and
• Global Equities – a diversified portfolio of global equities
identified by the Portfolio Manager as having long-term
growth potential.
Whilst the Company has no set maximum or minimum
exposures to any asset class, geography or sector, the Board
nonetheless sets guidelines which the Portfolio Manager
adheres to. These can be adjusted by the Board. While the
proportion of the portfolio represented by each of these
categories will vary over time, the Board may set parameters
for the Portfolio Manager based on its view of the global
investment markets. At the current time, the Board has set the
following guidelines for each category as a percentage of the
portfolio value (including the strategic investment in OWHL):
• Core: 0-50%
• Thematic: 0-25%
• Diversifying Assets: 0-40%
• Global Equities: 0-40%
Borrowing Limits
The Board considers whether returns may be enhanced if the
Company borrows money at appropriate times for the purpose
of investment. The Company has an unsecured lending facility
through its Custodian, Lombard Odier. The Board has agreed
to a nominal maximum loan of £30m, subject to there being
sufficient value and diversity within the portfolio to meet the
lender’s borrowing requirements. The Portfolio Manager is able
to utilise this facility as required up to the upper limit available.
PRINCIPAL RISKS
The Company has risk management processes in place which
enables the Board to identify, assess and manage the principal
risks faced by the Company. Consistent with the AIC Code and
UK Corporate Governance Code, these risks are considered to
have the potential to threaten the Company’s business model,
future performance/returns, solvency, liquidity, reputation,
or regulatory status. An integral part of this process is the
maintenance and ongoing evaluation of the Company’s Risk
Assessment & Controls (“RAC”) Matrix, which identifies
both the risks and associated controls operating within the
Company and relevant third-party service providers. To ensure
emerging risks are assessed on an ongoing basis, the Board
reviews the RAC Matrix at each Board meeting, considering
HICL’s current and future anticipated risk environment. The
Board receives updates at each meeting from the PM and
the AASP, to discuss any operational issues that may have
arisen. Additionally, as part of the risk management processes,
theCompany also requests the Custodian, Administrator and
Registrar to annually provide a relevant assurance report of
their internal controls (e.g.AAF01/06, AAF 01/20, ISAE 3402),
from which the exceptions they’ve identified are reported to
the Company’sBoard.
18 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
When considering the Company’s principal risks and
uncertainties, the Board assesses this in line with the
Company’s stated objective of generating superior, but
sustainable, long-term growth in shareholder value. The main
risk being that over the long-term (determined as greater than
five years), shareholders do not make a return from investing
in the Company. The Company's closed-ended fund structure
is also considered to be in alignment with its stated objective,
especially within extremely volatile market conditions. This is
due to the portfolio not having to be managed and maintained
to manage potential significant redemptions or short-term
liquidity needs as open-ended funds would. The closed-ended
structure can take advantage of less liquid market opportunities
as part of Its portfolio holdings.
The principal risks and uncertainties identified and associated controls in place to manage these risks are described below:
PRINCIPAL RISKS – EXTERNAL CONTROLS TO MITIGATE RISKS
Market Risk – Long-Term Company
Share Performance
Types of market risk considered include
interest rate, currency, equity, credit,
concentration, liquidity and macro
geo-political risks.
The Board:
• has appointed an appropriate PM whose performance for the Company is
reviewed and challenged on a quarterly basis;
• has set investment guidelines and restrictions, which are reported against by the
PM on a monthly basis;
• operates an asset allocation model, which is regularly reviewed and discussed
with the PM; and
• monitors and discusses portfolio construct and performance quarterly.
Company Shares – Performance,
Price, Liquidity and Discount
Monitoring
Low market trading volumes of
Company shares and the discount to
the NAV becoming inherent in the share
price.
The Board:
• regularly reviews the share price, discount level and portfolio performance;
• maintains periodic oversight on shareholder-base;
• actively seeks feedback both directly from shareholders and indirectly through the
Company’s Broker (Winterflood) or specific outreach programmes (Edison); and
• has the ability to buy-back non-voting shares of the Company.
Hansa Investment Company Limited For the Year Ended 31 March 2022 19
STRATEGIC REPORT
Organisation and Objectives
Continued
PRINCIPAL RISKS – EXTERNAL CONTROLS TO MITIGATE RISKS
Tax, Accounting, Legal &
Regulatory risks
Adverse outcomes resulting from
legislative changes to tax, legal and
regulatory requirements. Adverse
outcomes from not meeting ESG
expectations.
The Board:
• obtains regular updates and advice from relevant professional advisers;
• maintains oversight and receives regular reporting on the legislative and
regulatory changes, which impact HICL, as monitored by the PM;
• maintains the Company’s membership with the Association of Investment
Companies;
• has adopted the PM's responsible investing policy;
• has set explicit expectations on the integration of ESG considerations within
the investment process and continues to look to emerging guidance to further
develop the Company’s level of ESG disclosures; and
• receives documented confirmation of the PM’s adherence to relevant regulatory
requirements and emerging sanction risks.
Reputational risk
Negative behaviours, publications
or market sentiment impacting the
reputation of the Company.
The Company:
• requires the annual selection of Board members, all of whom must have
a commitment to governance;
• communicates with investors and the public in a clear and transparent
manner; and
• has set pre-approval procedures for accuracy and reliability of such information.
PRINCIPAL RISKS – INTERNAL CONTROLS TO MITIGATE RISKS
Operational risk
Risks associated with process, system
and control failures in all operational
areas, associated with the Company’s
reliance on third-party service providers,
due to having no employees.
Operational areas considered includes
Liquidity, Safeguarding of Assets and
Reliability of Financial Reporting.
• Investment guidelines require investments to be in generally liquid assets with an
asset allocation to avoid concentrations.
• An overdraft facility provides a contingency for any short-term liquidity
shortfall. A pre-approval payment process is in place as part of an overall cash
management process.
• Due diligence is undertaken prior to appointing all service providers. Periodic
performance reviews of these providers are made and, where relevant, the
Company annually requests independent service provider assurance reports on
the operating effectiveness of their internal controls.
• An independent Custodian is appointed to safeguard the Company’s assets.
ThisCustodian is bound by regulatory and legal contractual obligations and
liabilities. Regular reconciliations are undertaken to ensure accuracy of records.
• Pre-approval processes are in place prior to the publication of any financial
information.
20 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
PRINCIPAL RISKS – INTERNAL CONTROLS TO MITIGATE RISKS
Gearing/Balance Sheet risk
Risk of over-gearing the balance
sheet and creating nancial stress on
theCompany.
• A maximum limit on the overdraft facility is in place.
• Any increase in overdraft or credit facility requires Board pre- approval.
Compliance & Regulatory risks
A lack of compliance with legislative
requirements leading to regulatory
breaches and the Company no longer
maintaining its premium listing.
The Board:
• seeks advice from relevant professional advisers.
DIVIDEND POLICY AND DIVIDEND PAYMENTS
Dividend Policy
The Board’s dividend policy is to pay four similar interim
dividends each year. The Board will declare the rate of the four
dividends at the beginning of the financial year in question.
The Board anticipates dividends to be paid in August, during
the financial year, followed by November and February, with
the fourth being paid in the May following the end of the
financial year. The Board continues to support our strategy of
maintaining the dividend at 3.2p until it is fully covered by net
revenue income and then increase it in line with any increase in
the net revenue income of the Company. If circumstances are
such that the level of cash income generated by the portfolio is
insufficient to meet the dividend commitment, the shortfall may
be made up from the Company’s reserves. Under certain one-off
circumstances an extra and final dividend may be proposed at
the Company’s Annual General Meeting.
Dividend Payments
The dividends paid are as follows:
2021-2022
£000
Ordinary and ‘A’ non-voting Ordinary shares
First interim paid 0.8p (August 2021) per share 960
Second interim paid 0.8p (November 2021) per share 960
Third interim paid 0.8p (February 2022) per share 960
Fourth interim paid 0.8p (May 2022) per share 960
Total dividends 3,840
The Board is not proposing a final dividend per Ordinary and
‘A’ non-voting Ordinary share class.
Hansa Investment Company Limited For the Year Ended 31 March 2022 21
STRATEGIC REPORT
Organisation and Objectives
Continued
Dividend History
Being only three years old, the Company does not have
a sufficiently long dividend history itself. However, combining
its dividends paid during the year with dividends paid out
to shareholders of Hansa Trust in prior periods (years ended
31 March 2019 and before) over the previous ten years is
as follows:
DIVIDEND PAYMENTS FOR YEAR TO END MARCH
(PENCE PER SHARE)
Pence per HICL Share
1st Interim Paid
4th Interim Paid3rd Interim Paid
2nd Interim Paid
PredictedPayableFinal Dividend
0
0.4
0.8
1.2
1.6
2.0
2.4
2.8
3.2
3.6
1.0
1.6
1.6 1.6
1.6
1.6
0.8
0.8
0.8
0.8
0.8
0.8
0.8
3.2
0.8
2.2
1.6
1.6
0.8
0.8
0.8
0.8
1.6 1.6 1.6
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
Note: The dividend history represents the combined results of the Company
with Hansa Trust including, where relevant, the dividend rate converted into the
number of shares in issue by HICL. It also reects the expected level of dividend
for the year ending 31 March 2023 as advised by the Company.
Discount Policy
The objective of HICL is to encourage the demand for the shares,
by ensuring it has an investment policy that is attractive to investors
and which is likely to produce above average returns over the long-
term. Further, we aim to promote the Company and its prospects,
through clear and transparent reporting, so as to encourage the
demand for its shares. The Board continues its discussions with
Warhorse Partners, a brand and marketing specialist focused on
the asset management industry, to review the Company’s branding
and communications strategy with shareholders and potential
shareholders alike. The aim of the project continues to be to
enhance and broaden the understanding of the Company, with the
ultimate objective of widening the shareholder base and deepening
the market for shares.
The Board does not believe it can manage the discount in the
short-term through a share buyback policy. Furthermore, the
Board does not believe buying in its own shares is in the best
long-term interest of shareholders because:
• it reduces the number of shares outstanding and therefore
the liquidity of the shares in the market place; less liquidity
may cause a rise in the discount;
• it means a liquid portfolio needs to be maintained,
compromising the ability to have a portfolio of special
situations; the maintenance of the long-term investment
policy and its portfolio takes precedence over the short-term
discount policy;
• the holding in OWHL would represent an even greater
percentage of the portfolio and buying back shares would
raise the relative exposure to Brazil, which the Board does not
wish to do; and
• buying back shares treats the symptoms of the problem of
lack of demand, not the cause.
Insurance
The Company through its Bye-Laws has indemnified its
Directors and Officers to the fullest extent permissible by law.
During the year the Company also purchased and maintained
liability insurance for its Directors and Officers.
Going Concern
The Company’s business activities, together with the factors
likely to affect its future development, performance and
position, including its financial position, are set out in the
Chairman’s Report to the Shareholders, the Portfolio Manager’s
Report and other elements of the Strategic Report.
After due consideration of the Balance Sheet, estimated
liabilities for the 12 months following the signing of this
Report and having made appropriate enquiries, the Directors
have concluded the Company has adequate resources
to continue in operational existence for the foreseeable
future. Assets of the Company consist of securities, the
majority of which are traded on recognised stock exchanges,
oropen-ended funds run by established managers. For this
reason, theycontinue to adopt the going concern basis in
preparing the Financial Statements.
22 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Longer-Term Viability Statement
In addition to the Statement of Going Concern, the Directors
are also required to make a statement concerning the
longer-term viability of the Company. As stated previously in
the wider Strategic Report, the Directors consider 12 months
to be a relatively short time frame when considering
performance and look to the longer-term for both the
performance and risks associated with the Company.
The Directors consider a period of five years to be a more
representative period which aligns to the Portfolio Manager’s
longer-term horizon. This period is sufficiently long to
manage short-term market volatility and allow longer-term
performance to work through. The Board continually monitors
the Investment Strategy and Investment Guidelines issued
to the Portfolio Manager and directs the Portfolio Manager
to target long-term capital preservation. Further, whilst the
Board has sanctioned the use of gearing, the facility available
to the Portfolio Manager is relatively small compared to the
NAV of the Company. Finally, a number of the more significant
costs in each financial year are contracted to be calculated,
on the basis of the underlying NAV of the Company. As such,
in a period of negative portfolio performance, the cost base
should also fall.
Barring unforeseen circumstances and taking account of the
Company’s current position including the lingering global
effects of the Covid-19 pandemic, the principal risks, the
longer-term strategy for the portfolio including a diversified
and liquid asset base and the lack of gearing, the Directors
confirm they have a reasonable expectation that the Company
will continue to operate and meet its liabilities as they fall due
for the next five years.
Hansa Investment Company Limited For the Year Ended 31 March 2022 23
STRATEGIC REPORT
MARKETS IN 2022 – THREADING THROUGH THE EYE OF THE NEEDLE
Market backdrop
As the adage goes “There are decades where nothing happens;
and there are weeks where decades happen” and the first
quarter of 2022 felt very much like this both from a stock
market and a geo-political perspective.
The year started in a similar vein to how 2021 ended. Inflation
continued to spike higher, buoyed by a blend of rising
commodity prices, labour markets regaining some of their
pricing power and structural supply side issues. Unlike last year
however, central banks began to acknowledge that this was not
necessarily a temporary, post-Covid, phenomena, but instead
that there were more worrying structural elements to the
price hikes. Hence the quarter saw central banks increasingly
shift from viewing their role as one of preventing a COVID-
induced economic depression to one of preventing the current
high inflation from becoming ingrained in the system and
consequently much harder to eliminate over the longer-term.
Chart 1: Inflation moving higher
Mar-09
Aug-09
Jan-10
Jun-10
Nov-10
Apr-11
Sep-11
Feb-12
Jul-12
Dec-12
May-13
Oct-13
Mar-14
Aug-14
Jan-15
Jun-15
Nov-15
Apr-16
Sep-16
Feb-17
Jul-17
Dec-17
May-18
Oct-18
Mar-19
Aug-19
Jan-20
Jun-20
Nov-20
Apr-21
Sep-21
Feb-22
YoY %
-4
-2
0
2
4
6
8
10
US Core CPI
US CPI
Country GDP Company MV Index MV
Source: Bloomberg
Our view, which broadly matched the consensus, was that there
were good reasons to believe the extremes in inflation would
start to ease somewhat as the year progressed. Partly this was
a function of economic growth slowing from the post-Covid
economic rebound, combined with supply chains normalising
as companies adapted as they exited the lockdowns, but also
we expected some of the major inflationary forces, such as
oil prices, to start annualising out with 2022 unlikely to see
the same degree of prices rises as 2021. Where we differed
from the market however was that, whilst we saw inflation
edging back this year, we were of the view that some of the
inflationary forces were more structural and ultimately would
likely require more aggressive actions by central banks in terms
of their longer-term rate setting if they were to hit their inflation
targets. Potentially this would be the catalyst for the next
recession and accompanying bear market, albeit we saw this as
a problem to be managed down the road.
Hence whilst the prospect of higher rates was not initially
taken well by markets, the blend of declining inflation as the
year progressed, together with economic growth being lower
but still above trend potentially created a backdrop that we
Portfolio Manager’s Report
Portfolio Manager’s Report
24 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
viewed as broadly favourable for equities. To be clear though
we were very much of the view that markets were unlikely to
repeat the double digit returns of the previous two years and
increasingly we saw longer-term market returns as being much
more modest, with the high returns of recent years probably
‘borrowed’ from future stock market returns. We also felt the
chances of a policy mistake were much higher for the year
ahead resulting in more volatility in markets with the potential
for market losses if there was a policy misstep.
Chart 2: Historic LT returns versus our future forecasts
Private
equity
CommoditiesHedge
Funds
Global
Equities
Emerging
Market Equities
US
Equities
EM Bonds
(LC)
US IG
Corporates
US
Treasuries
CashInflation
Materials
Banks
Div Fin
Semis
Cons Dur
Transport
Auto
Energy
Cosn Svs
Insurance
Real Estate
S/w & Svs
Tech H/w & Equip
Retailing
Media
Comm Svs & Supp
FD & Drg Retail
HC Equip & Svs
Utilities
Telecom
HH & PP
FD, Bev & Tob
Pharma
European sectors 20-year correlation with inflation expectations
0%
2%
4%
6%
8%
10%
12%
14%
Annualised return (USD)
Historic Nominal return
Expected Nominal return
Country GDP Company MV Index MV
3.9%
2.4%
4.5%
8.1%
8.5%
6.4%
10.9%
6.6%
9.5%
8.6%
9.1%
6.9%
9.7%
3.8%
2.4%
6.5%
8.5%
12.6%
0.6%
0.5%
1.3%
2.4%
Source: Internal; Bloomberg
Then, in late February, we saw the invasion of Ukraine by
Russia. Whilst there had been speculation that Russia was
preparing for an invasion for some time, the view of most
informed commentators was that this was the normal
posturingby Putin demonstrating to the world that Russia
was not to be underestimated and to improve its bargaining
position. Rationally, there seemed little upside to such a move
with many Russians having family in Ukraine (and therefore
a bloody war being deeply unpopular with many Russians),
theinevitable sanctions that would result from such actions
andultimately the prospect of Ukraine joining NATO seemed
unlikely, with most countries recognising this would be a step
too far for Russia.
Clearly this view was misplaced. Whilst impossible to read the
mind of Putin, it seems likely that he is seeking to recreate
some form of iron curtain between Russia and the West and
sees Ukraine as intrinsically part of Russia and a buffer between
Russia and NATO countries, at a time when Russia is becoming
increasingly aligned with China and the East. Perhapswhat
he didn’t fully appreciate, however, was the strength of the
reaction by the West and the subsequent sanctions. In an
attempt to isolate Russia from the rest of the world, and to
push the country further into economic hardship, the West
introduced measures, such as excluding Russia from the
international payments system (“SWIFT”), ceasing trading with
Russian companies, seizing the assets of oligarchs linked to
Putin and stopping important elements of the supply chain,
suchas semi-conductors being sold to Russia. Effectively there is
an ‘Iran-ification’ of Russia taking place, that in all likelihood will
last for many years or at least until there is regime change.
Hansa Investment Company Limited For the Year Ended 31 March 2022 25
STRATEGIC REPORT
Unfortunately Putin’s actions have placed further stress on
a system already under immense pressure. Whilst largely
irrelevant from an economic perspective, Russia is the second
largest producer of commodities globally in terms of energy,
metals and soft commodities. With commodities a key
component of inflation the last thing needed is further pressure
on prices through rising costs of energy, key metals such as
palladium and nickel and important food stuffs such as corn
and wheat and fertilisers. Furthermore, not only does inflation
come under pressure but there are important implications for
economic growth especially in Europe. Consumers face yet
more pressure as utility and fuel bills rise to a point where it is
likely to place real pressure on their ability to spend on goods
and services. Similarly, many industries face potentially much
higher energy costs, squeezing margins and even the risk of
energy outages if Putin decides to double down and limit the
supply of oil and gas into Europe.
Chart 3: The importance of Russia in commodity markets
Russian Federation 26.3%
Russian Federation 31.6%
Norway 9.5%
USA 9.5%
Libya 8.4%
Others 9.5%
EU27 Imports of Crude Oil, 2021 EU27 Imports of Gas, 2021
Algeria 3.2%
Algeria 17.3%
Azerbaijan 5.3%
Saudi Arabia 5.3%
Iraq 7.4%
Nigeria 7.4%
Kazakhstan 8.4%
Others 8.2%
Nigeria 4.1%
UK 5.1%
Qatar 7.1%
Norway 12.2%
USA 14.3%
Source: Food and Agricultural Organization of the United Nations
As a result the first quarter has been something of a roller
coaster for global stock markets. January saw markets sell-
off sharply, as investors came to terms with higher inflation
and a realisation that rates would need to move much higher
if inflation was to return to target levels. Intra-market the
moves were even more extreme, reflecting the fact that higher
discount rates imply lower valuations for longer duration
companies, resulting in a significant rotation out of growth
areas such as technology into the more cyclical areas of the
markets, particularly commodities. These moves were amplified
towards the end of February when Russia invaded Ukraine.
Markets took a further lurch downwards as they came to terms
with the ramification of these events and many commodity
prices spiked up in a disorderly fashion.
Interestingly, markets rallied as we neared the end of March.
Whilst perhaps hard to rationalise given the very uncertain
world in which we currently live, it likely reflects a belief that
some form of peace agreement will be reached between Russia
and Ukraine and with it recession in Europe is avoided, and
perhaps that the worst of the risks on the energy front will not
come to fruition. Our view is that saying anything on these
points is fraught with uncertainty.
In summary, world equity markets fell by 5.4% in Q1, albeit
with wide variations across countries and sectors. The US,
being a relatively closed economy and largely self-sufficient
for energy, fell by 4.9% whereas Europe, being more directly
impacted by events in Ukraine and highly dependent on Russian
oil and gas, fell by 7.9%. Amongst the other world markets,
Japan fell by 6.8%, India by 1.8% and the UK, given its large
commodity component, rose by 1.7%. Interestingly, China fell
by 14.2% reflecting the challenges of continuing with its zero
Covid policy and possibly a backlash against those countries
with lower governance standards in the light of Russia’s actions.
At the sector level unsurprisingly energy has been strong, rising
Portfolio Manager’s Report
Continued
26 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
by 21.2% over the quarter, whereas technology, being a long
duration sector, fell by 10.3% as the fear of rising interest rates
weighed on it.
Perhaps the most notable performance for the quarter however
occurred in the bond markets. Having been in a multi-year
bull market, as persistently low inflation drove interest rates
ever lower, many bond prices have been falling sharply by
bond market standards. With inflation rates spiking higher
and central banks beginning to react by both withdrawing
liquidity and increasing interest rates, bonds have unsurprisingly
underperformed. The important global Treasury market has
fallen by some 5.5% in the year-to-date, US investment
grade by 8.3% and the UK government bond market by just
under 10%.
Finally, commodity prices have again jumped higher with
the Russia/Ukraine situation placing further pressure on an
already tight market. Gold and copper rose by 5.9% and 6.7%
respectively, but the standout performer was energy, with
European brent crude rising by 37.6% to $106.60/barrel, a level
not seen since 2014.
Chart 4: Performance of countries, sectors and asset classes (GBP)
Dark bars represent Q1 2022 returns
Light bars represent returns from January 2021 to March 2022
% Return (GBP)
Global Markets (DM/EM/FM)
Developed Markets
Emerging Markets
Frontier Markets
North America
Japan
UK
Europe
Brazil
India
China
Global High Yield
Global Treasury
Global Aggregate Corporate Bond
EMBI Global
EM Global Diversied
Gold
Bloomberg Commodity Index
Copper
WTI Cushing
USD/EUR
USD/GBP
USD/BRL
Source: Bloomberg
CurrenciesCommoditiesFixed IncomeEquities
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
Market Outlook
Positioning portfolios in the current environment is fraught with
difficulty and unfortunately the range of potential outcomes is
very wide and, to a degree, binary in nature. Betting on ‘black’
and being wrong could have disastrous implications in terms
of performance!
Whilst there are many different permutations for how markets
pan out, the two core scenarios that we see for the year ahead
are as follows:
Scenario 1…..the bear case
As discussed above, whereas markets had previously expected
there to be a significant transitory element to the current high
inflation, it is very possible that there are much deeper, more
structural factors behind the current price rises. Commodities,
for example, may continue to remain high for some time to
come. Having been through many years of underinvestment as
investors shied away from the sector having been burnt in the
prior cycle, commodities have effectively been starved of capital
for the past few years. Exacerbating this problem has been the
Hansa Investment Company Limited For the Year Ended 31 March 2022 27
STRATEGIC REPORT
impact of ESG. The desire to move to a more environmentally
friendly world (quite rightly, in our opinion) has meant many
investors and banks have limited their investment into the
sector. Unfortunately, whilst this move is a laudable one, the
timeframe has perhaps been overly ambitious. Whilst ultimately
a zero-carbon world is undoubtedly achievable, in the short to
medium-term a combination of both fossil fuels and renewables
is required if we are to meet our energy needs. As has been
illustrated all too painfully by recent events, outsourcing your
energy production to regions such as Russia and claiming your
carbon footprint has improved, is not always a desirable thing
to do. Energy security as well as how it is sourced are equally
important for meeting a country’s energy requirements.
Compounding the issue has been labour costs. For many
years now corporates have dominated at the expense of the
labour market. Due to the strength of their negotiating power,
companies have been able to minimise labour costs in pursuit
of higher margins and in the process the share of corporate
profitability has increased sharply as a percentage of global GDP,
whereas that of labour has fallen precipitously.
Chart 5: Corporates have benefited at the expense of labour markets in recent years
Dec-70
Jun-73
Dec-75
Jun-78
Dec-80
Jun-83
Dec-85
Jun-88
Dec-90
Jun-93
Dec-95
Jun-98
Dec-00
Jun-03
Dec-05
Jun-08
Dec-10
Jun-13
Dec-15
Jun-18
Dec-20
Wages % of US Gross Domestic Income
Corporate Profits % of US GDP (RHS)
35
40
45
50
55
60
2
4
6
8
10
12
Wages % of US Gross Domestic Income
Corporate Profits % of US GDP
Country GDP Company MV Index MV
Source: Bloomberg
Covid however appears to have shifted the balance of power.
A combination of people viewing their quality of life as more
important than simple remuneration has meant many industries,
such as hospitality, have seen a sharp reduction in labour supply
and a corresponding uptick in wage inflation. With the pandemic
also encouraging companies to focus more on supply chain
security and shift less of their supply chains to cheaper labour
markets such as China, the greater use of domestic labour in
developed markets has only served to exacerbate this problem.
Unfortunately, this backdrop of rising inflation has come at a time
when economic growth is likely to slow. Partly this is a natural
phenomenon as economies slow following a year of supernormal
growth as we exited the pandemic, but also it reflects our current
late cycle position when growth would naturally be expected to
fall. The risk now is that the situation in Ukraine may be the straw
that breaks the camel’s back, forcing economies into recession as
confidence levels fall, especially in Europe and with rising energy
costs placing pressure on corporate profitability.
Portfolio Manager’s Report
Continued
28 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Chart 6: Rising inflation and falling growth – stagflation?
2023202220212020201920182017
Materials
Banks
Div Fin
Semis
Cons Dur
Transport
Auto
Energy
Cosn Svs
Insurance
Real Estate
S/w & Svs
Tech H/w & Equip
Retailing
Media
Comm Svs & Supp
FD & Drg Retail
HC Equip & Svs
Utilities
Telecom
HH & PP
FD, Bev & Tob
Pharma
European sectors 20-year correlation with inflation expectations
Annualised return (USD)
Country GDP Company MV Index MV
IMF Forecast
Risk of growth declining
faster than expected while
inflation remains elevated?
2.4%
4.5%
8.1%
8.5%
6.4%
10.9%
6.6%
9.5%
8.6%
9.1%
6.9%
9.7%
3.8%
2.4%
6.5%
8.5%
12.6%
0.6%
0.5%
1.3%
2.4%
-4%
-2%
0%
2%
4%
6%
8%
10%
US GDP Growth
US CPI Inflation
Source: Bloomberg; IMF
As a result Central Banks are facing what may be an
unwinnable battle as they attempt to head off significantly
higher inflation at a time when global economies are slowing.
On the one hand they may accept inflation needs to stay high
if they are to avoid pushing economies into recession. Equally
they may be of the view that bringing inflation back to target
is a necessary evil if we are to avoid baking inflation into the
system and making the problem much harder to resolve in
the longer term. Threading economies through the eye of the
needle may well be possible, but it does look as though the
hole is becoming an increasingly small one!
Scenario 2……the alternative scenario
There is, however, an alternative to this doomsday scenario for
stock markets.
On the inflationary front, many commentators believe that
whilst there are undoubtedly structural elements to the current
inflationary picture, the core underlying drivers are the result of
the pandemic. As economies reopened there was a mismatch
between demand and the ability for supply chains to meet this
demand, especially with the ongoing zero Covid policy in China.
Naturally over time you would expect these imbalances to
resolve themselves. Also, in hindsight, it appears many elements
of the government and Central Bank Covid stimulus packages
were not needed and in practice added fuel to an already hot
fire. With many of these packages now running off and with
interest rates now rising, this should remove an important driver
of inflation.
Equally comparisons between now and the 1970s seem to be
particularly wide of the mark, as economies then were very
different from those existing currently. Whereas in the seventies
trade unions held economies to ransom and commodities were
a much larger proportion of the global economy, now markets
are highly interconnected and technology focused. Many would
also highlight that for the majority of recent years it has been
deflation that has been the main problem impacting economies,
not inflation, and question whether economies are really that
different now from those pre-Covid.
Hansa Investment Company Limited For the Year Ended 31 March 2022 29
STRATEGIC REPORT
Chart 7: Energy intensity of the global economy has
declined since the late 1970s
Energy consumption per GDP, World
0
2
4
6
8
10
12
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
Quadrillion Btu per trilion dollars GDP
Source: US Energy Information Administration
Similarly, it is very possible that the full extent of the growth
pressures is being overplayed. No-one is in any doubt growth
rates will be lower this year than they were last, but what is up
for debate is whether global economies are necessarily heading
for recession (and a corresponding bear market). Whilstnot
wishing to underplay the scale of the human tragedy that is
unfolding in Ukraine, neither Ukraine nor Russia is relevant
in terms of the size of their economies. Confidence levels in
Europe will obviously be affected in the near-term and higher
energy prices will dampen corporate sentiment, but it is
very possible that the resilience of the European economy is
being underestimated and a recession is ultimately avoided.
Furthermore, Europe has been a stagnant economy for many
years and the US, which remains the pre-eminent driver of global
stock markets, looks to be in relatively good shape, with decent
growth forecasts for the coming year and is largely energy self-
sufficient (albeit it is also struggling to combat the challenges of
higher inflation and rates setting).
Chart 8: Growth forecasts (IMF)
Emerging EconomiesAdvanced EconomiesJapanEuro AreaUS
Materials
Banks
Div Fin
Semis
Cons Dur
Transport
Auto
Energy
Cosn Svs
Insurance
Real Estate
S/w & Svs
Tech H/w & Equip
Retailing
Media
Comm Svs & Supp
FD & Drg Retail
HC Equip & Svs
Utilities
Telecom
HH & PP
FD, Bev & Tob
Pharma
European sectors 20-year correlation with inflation expectations
Annualised return (USD)
2022
2023
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
Source: IMF
Stock markets are likely to perform acceptably in such
a backdrop, especially given the lack of alternatives and, whilst
no one is arguing we are entering a goldilocks period for global
stock markets, the backdrop is not nearly so bad as the gloom
mongers would have you believe.
Portfolio Manager’s Report
Continued
30 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Portfolio positioning
The million-dollar question of course is how do you position
portfolios given these potentially very different, very
distinct outcomes?
Scenario 1 is bad for stock markets on many levels. Recessions
and bear markets in equities go hand in hand and the
combination of high inflation and rising rates will almost
certainly be the death knell of the multi-year bull market in
bonds. Hence not only do risk assets come under pressure, but
also defensive assets, a scenario where the 60:40 balanced
portfolio between equities and bonds will not bail out investors
and may in fact perform very poorly.
At the sector level Scenario 1 also has major implications.
Whereas previously a low inflation, low interest rate
environment favoured high growth companies and made value
and commodity investing less attractive, Scenario1 would
tend to be bad for growth companies and long-term assets in
general, due to higher discount rates and favour commodities
and real assets which can offer protection in a more
inflationary world.
In contrast Scenario 2 would likely provide a very different
backdrop for global markets. If recession is avoided and with
many sectors increasingly discounting a severe growth shock,
equities may offer the best possible home for investors,
especially in view of the lack of alternatives. Bonds may see
some form of a relief rally in view of the extent of the sell-off
experienced over recent months and, if the terminal interest rate
is lower due to less inflationary pressure, investors may seek to
revisit growth sectors such as technology in view of the lower
discount rates.
So, the big question is where do we stand and how are we
positioning portfolios in the current environment?
Well, without sounding trite, very carefully. Given the very
different outcomes for how the environment may pan-out there
is a real danger of taking an extreme position in one direction
or the other and being proved to be very wrong. Typically when
this happens and you are on the back foot, you tend be whip-
sawed and compound the original mistakes.
Hence at this point we have largely maintained our equity
positions. Undoubtedly this is the closest we have been to
revisiting this pro-equity position within the current cycle and
if events do start to veer in the wrong direction and scenario1
looks more likely than that of scenario 2, we will look to act
quickly and de-risk portfolios. Clearly equities are vulnerable
to a recession and a corresponding bear market, but they do
have the advantage that great companies typically possess
pricing power and can help offset the worst effects of inflation.
Ultimately most companies are normally owners of real assets
which should provide an element of protection in a higher
inflation world.
At the sector level we would advocate more balance within
portfolios. Whilst still of the view that commodities are in
a longer-term structural decline, there can be sub-cycles where
these assets produce periods of significant outperformance,
as was demonstrated by the tobacco sector in the noughties.
Similarly, our conviction that we are very much in the midst of
a structural change as the world is digitised and AI becomes
a feature of almost all that we do remains unchanged. Thekey
question in the short-term is how one values this growth with
discount rates in flux, but we take comfort from the fact that
ultimately these companies will be able to grow into their
valuations, whereas getting it wrong in those sectors which are
in structural decline is much more damaging to one’s wealth.
Geographically we would also advocate a more balanced
stance. Whereas previously we had begun to think that more
cyclical economies, such as Europe and the emerging markets,
would do better than the US in an environment where growth
was acceptable and higher inflation made long duration
sectors such as technology less attractive, the events in Ukraine
have yet again swung the pendulum back in favour of the
US. The combination of being in robust economic health,
relatively unaffected economically by the war in Europe and
largely energy self-sufficient, has made the US a safe haven.
Undoubtedly its valuation is higher than the rest of the world,
but many would argue this is justified given the structurally
higher returns in the US. We have said it many times before and
we will say it again now, you bet against the US stock market at
your peril!
Hansa Investment Company Limited For the Year Ended 31 March 2022 31
STRATEGIC REPORT
In contrast, whilst bonds may well be oversold in the short-
term and their relative valuation to equities has improved
significantly, we continue to see few attractions for longer-term
investors. Typically, when multi-year bull markets break they fall
for longer than you anticipate (just as bull markets typically go
on for longer) and one should not forget just how powerful
the downward pressures have been on rates for many years,
combined with the impact of Central Banks buying a large
proportion of their national debt. Typically, where we are present
in bonds we prefer those managers who either have the ability
to short, are highly active or who play in the more complex
areas of the market.
Summary
Current market conditions are extraordinarily complex, with very
different potential outcomes which unfortunately may lead to
wide variances in asset class performance. Positioning portfolios
in such a backdrop is challenging to say the least.
At Hansa we are fortunate to possess a number of structural
advantages that work in our favour. Typically, we manage highly
diversified portfolios both by asset class but also by geography.
Our managers are highly experienced and have almost invariably
managed portfolios through multiple cycles and different
market conditions. Whilst there will be periods where they
‘get it wrong’ we rest assured in the longevity and strength of
their investment processes and, ultimately, by their focus on
good quality companies which become stronger during periods
of turmoil.
Perhaps most important however is our genuine long-term
investment horizon. It is this that enables us to focus on
identifying great quality investments rather than seeking to time
markets. As noted many times in the past trying to time markets
is incredibly difficult. Even if you are successful (read lucky!) in
calling a market sell-off you then need to time when it is right
to re-enter markets. So often we have seen investors get the
first part of this right only to miss the next cycle completely
by staying cautious for too long. Through the application of
this long-term philosophy this should enable us to continue to
deliver robust, repeatable investment performance.
Chart 9: Long-term market chart highlighting how periods of sell-off diminish in importance over time
1927
1930
1933
1936
1939
1942
1945
1948
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
1
10
100
1000
10000
S&P 500 Index (Log scale)
Wall Street Crash
1929
Recession
1937-38
Kennedy slide
1962
Black Monday
1987
Dot-com Bubble
2000s
GFC
2007-08
COVID
2020
Source: Bloomberg
Portfolio Review and Activity
During what has been a volatile period for markets, your
Company produced a return of 5.1% for the full financial year.
Ocean Wilsons Holdings has been a strong contributor over that
time, with a return of 24.7%. The key performance indicators
for the past 12 months were varied, with the MSCI ACWI NR
Index (GBP) being up 12.7% and the UK CPI being up 7.0%
as inflation has come through strongly, while the FTSE UK Gilts
All Stocks TR Index declined 5.1%. The UK equity market, as
measured by the FTSE All Share TR Index, rose 13.0%. The
Company’s NAV per share has increased from 306.6p at the
end of March 2021 to 319.1p at the end of March 2022, with
3.2p per share having been paid out in dividends during the
financial year.
Portfolio Manager’s Report
Continued
32 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Core and Thematic Funds
For the financial year the Core Regional silo has gained 1.5%,
while the Thematic silo is down 2.2%.
The North American holdings were among the strongest
contributors to performance over the last year. Despite declining
in the final quarter of the year, Findlay Park American, Select
Equity and Vulcan Value Equity are all up quite strongly over
the year with returns of 12.7%, 8.8% and 2.6%, respectively.
These funds tend to have a lower exposure to the more cyclical
parts of the market, such as energy and financials, which have
been stronger in recent months. Findlay Park’s exposure to
stocks such as TopBuild, Ferguson and Home Depot detracted
later in the year on concerns that rising rates will slow down
the housing market in the US, although the manager remains
positive about the long-term outlook for residential housing
activity. Pershing Square Holdings avoided the market falls
of the last quarter, making a gain of 0.2% and it is up an
impressive 17.9% over the year. These gains have partly been
the result of interest rate swaptions that the manager realised
in January, generating $1.45bn on $188m invested by the fund.
Some of these proceeds were then invested into Netflix, which
the manager had been looking at for some time, as a dip in its
share price driven by worries about subscriber growth created
an entry opportunity. Given concerns about rising interest rates
the manager decided to take out new interest rate swaptions
during the quarter that had strike prices somewhat out of the
money and with a longer-term expiration. These have already
tripled in value, although they have not yet been realised.
The portfolio’s Japanese holdings fell over the last quarter of the
year, with Goodhart Partners: Hanjo and Indus Japan now
being down 12.2% and 4.2%, respectively, over the last year.
Detractors within the Indus fund included positions in Fujitsu
(ITservices) and JSR (rubber for car tyres), while the fund’s largest
position in the media conglomerate Kadokawa contributed as
the stock performed well after the company announced it would
be adding its anime content to a major platform.
Within the emerging and frontier market holdings there were
strong gains by NTAsian Discovery, which continued its
period of good performance and has returned 28.0% over
the year. The fund is currently heavily concentrated in Vietnam
and Indonesia where the manager sees the best opportunities
within the south-east Asia region. FPT, a Vietnamese technology
company, reported impressive performance with revenue
growing 27% and profit 30%. This was mainly driven by its
technology and software segments and the margin was lifted
by the increased contribution from digital transformation
services. An Indonesian hospital provider, Medikaloka Hermina,
was another strong contributor with its performance mainly
driven by market talk of a potential strategic investor. The
company has continued to grow revenue and profit due
to Covid-19 patients coupled with improved operational
efficiencies. BlackRock Frontiers Investment Trust is up 9.2%
over the year while KLS Corinium Emerging Markets Equity
is down 3.5% since it was added to the portfolio in December
2021. The manager exited the fund’s Russian positions during
January, as speculation grew regarding Russia’s invasion of
Ukraine, which ultimately proved to be the correct decision and
limited the losses incurred by the fund.
Within the portfolio’s Thematic bucket there were divergent
performances this year, as some sectors benefited from the
backdrop of higher inflation and interest rates, while others
suffered. The beneficiaries included the energy and mining
exposures we added in the last few months of the year, with
the iShares MSCI World Energy Sector ETF and iShares
Global Metals and Mining Producers ETF both returning
14% since their purchase dates. The exposure to the financials’
sector through SPDR MSCI World Financials ETF also gained,
being up 2.6% over the final quarter and 17.2% over the
year. Healthcare and technology sector exposures, however,
detracted over the year. GAM Star Disruptive Growth had
a more challenging final quarter as it declined by 12.9% and
is down 3.4% over the year. The three healthcare positions,
Worldwide Healthcare Trust, BB Biotech and RA Capital
International Healthcare Fund all declined during the final
quarter. The first two of these are down 11.3% and 12.3%,
respectively, for the year, while RA Capital has fallen by 27.6%.
Diversifying Funds
The diversifying holdings are intended to dampen volatility and
show lower correlation to the equity market. It is pleasing to
see they have performed this function well in a period when
both equities and bonds have delivered negative returns. The
Diversifying silo produced a return of 0.7% over the final
quarter, taking its return over the financial year to 6.5%.
Hansa Investment Company Limited For the Year Ended 31 March 2022 33
STRATEGIC REPORT
Some of the strongest returns in the Diversifying silo came from
the two trend-following CTA funds, which did especially well in
the final quarter, with Schroder GAIA BlueTrend and GAM
Systematic Core Macro rising 18.0% and 7.5%, respectively,
over the year. Performance has come from a range of sources
for these funds, but positions in commodities have been
notable contributors for both. BioPharma Credit has also been
particularly strong, registering a 10.8% gain for the final quarter
to bring it to be up 18.8% over the year. Performance was
particularly strong in February when the company announced
it was providing Collegium Pharmaceutical with a new senior
secured term loan for $650m to fund its proposed acquisition of
BioDelivery Sciences International.
Both macro funds continue to produce steady returns,
with MKP Opportunity being up 4.6% over the year and
HudsonBay being up 4.5%. Global Event Partners and
Keynes Systematic Absolute Return Fund are up just over
3% for theyear.
There were some losses in the diversifying holdings within the
fixed income space during the last quarter of the year, although
these still broadly outperformed wider fixed income indices. The
Apollo Total Return Fund declined 1.0%, leaving it up 2.1%
over the year, while the Lazard Convertible Global Fund fell
5.2% and is down 6.3% since its purchase date in July 2021.
The passive position in US Treasuries has detracted this year, as
the Vanguard US Government Bond Index Fund is down
4.1% over 12 months.
Global Equities
The portfolio returned 1.3% over the past year, with the biggest
contributors being CVS Health, Alphabet and Arch Capital.
The biggest detractors were Grupo Catalana Occidente,
TripAdvisor and Nexon.
The war in Ukraine caused the oil price to move sharply
higher, but it had been gradually moving upwards prior to that
over concerns about a lack of new supply in a rebounding
global economy. In recent years oil companies have been
under pressure from ESG and activist investors to reduce their
capital spending, this combined with an oil price that had
been fluctuating around $50 a barrel for the five years up to
the pandemic meant capital expenditures (capex) had been
declining. As an example, the Brazilian champion Petrobras cuts
its capex every year from a record $45bn in 2013, falling to
$6.3bn in 2021. Similarly, BP has seen its capex fall from $25bn
in 2013 to $10.8bn last year.
It appears that the pressure from investors and low oil prices has
led to severe underinvestment in upstream production, but this
cycle may well have ended as higher prices and concerns over
energy security foster new investment and both Petrobras and
BP’s spending is set to increase in 2022.
Our holding in Subsea 7 should be a beneficiary of this trend
and has won contracts from both BP and Petrobras in the
past six months. Subsea 7 is an engineering and construction
company focused on offshore energy, essentially providing the
plumbing to rigs and windfarms. They operate on long lead
times meaning the business has a certain visibility on its revenue
stream, but this also means the cycles are long and do not turn
quickly. Their order backlog value peaked in 2013 and declined
until 2018, but it has been gradually increasing since then and
they recently noted they expect another strong order intake
in 2022. They are also cycling through some lower margin
business which was tendered when times were tougher, so we
also expect to see margin improvement next year. Theyare in a
strong position as several competitors did notsurvive the bear
market in oil spending and many of those that did have perilous
balance sheets, unlike Subsea 7 which hasvery little debt.
One of the key reasons they have survived and thrived over
the past few years is because of the excellent stewardship
of the chairman and 23% owner Kristian Siem. An aligned
management is particularly important in long cycle businesses
as there is no incentive to chase unprofitable contracts to
boost revenues and backlogs to meet short-term management
targets. This fundamental principal-agent problem has led to the
downfall of a number of Subsea 7’s peers over the years.
The unknowable question is whether this is just a short-term
pickup in oil company capex or the beginning of a new cycle.
We view risk as a permanent impairment of capital and the
risk of that with Subsea 7 is low, even if oil company spending
resumes its decline. Not only does Subsea 7 possess a strong
balance sheet and has 18% of its backlog exposed to a fast-
growing renewables business, but it also trades at a valuation
that implies a resumption of spending declines. It is priced at
0.7x the value of its tangible net assets and 11x 2023 free cash
Portfolio Manager’s Report
Continued
34 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
flow despite an enviable track record of compounding tangible
book value per share at 9% for 15 years. If oil capex does
improve, we think the upside is significant but if it does not our
downside should be protected.
During the year we initiated a position in Glencore and sold
our positions in Alphabet, Berkshire Hathaway, C&C, Hilton
Food, Iridium, Marel, Nexon, Samsung and TripAdvisor.
Ocean Wilsons Holdings
Operating activity through 2021 has been solid and the
company has reported strong growth in both revenues and
profits, despite the business being impacted by the limited
availability of empty containers and worldwide logistics
bottlenecks. The business achieved record cargo handling
figures at its Salvador container terminal through the course
of the year, where the new berth infrastructure has supported
increased efficiency. Other achievements during 2021 included
the listing of the Wilson Sons’ subsidiary on the Novo Mercado
segment of the stock market, which required the company to
adopt corporate governance practices over and above those
required by Brazilian law. A six-for-one stock split has been
approved by shareholders for Wilson Sons, which took place
on 16 May. The investment portfolio continues to show strong
performance, with the most recent December 2021 valuation
being 13.4% larger than the December 2020 valuation.
The Ocean Wilsons Holdings share price gained 7.5% in the
quarter on a total return basis and it is up 24.7% over the
last 12 months. The share price represents a discount to the
look-through NAV of 47.8%, based on the market value of the
Wilson Sons shares together with the latest valuation of the
investment portfolio.
The investment portfolio shares many characteristics with the
portfolio held directly within Hansa Investment Company, with
a preference for funds with clearly defined strategies run by
long-term, conviction managers. It has a significant private
equity programme invested in Limited Partnerships, and recently
many of these funds have been making significant distributions
and delivering strong returns. While paying out $2.5m for
dividend payments in each of May and August 2021, the
portfolio increased in value to $351.8m at the end of December
2021, up from $332.7m at the end of April 2021 and $310.3m
at the end of December 2020.
The fourth quarter (calendar year) results for Wilson Sons
(released in March) were significantly ahead of the prior year,
with earnings of $34.0m, 6.8% higher than the same quarter in
2020. Performance for the full year was strong with earnings of
$159.4m, 16.3% ahead of 2020. Container terminals were able
to deliver growing revenues despite the challenges affecting
global trade, thanks to robust first half results in 2021 and
an improved revenue mix. Volumes increased at the Salvador
terminal, mainly driven by higher trans-shipment and imports of
empty containers, while renewable energy stood out during the
year in terms of imports.
The towage division reported good results as operating volumes
were driven by strong commodity exports and LNG imports.
The division’s EBITDA margin increased due to better average
revenue per manoeuvre and more special operations, which
were up over 50% for the year. While there remains some
uncertainty around global trade during 2022, the company
expects trade flow to support strong towage results while
maritime services to the oil and gas industry are expected
to recover.
Alec Letchfield
May 2022
Hansa Investment Company Limited For the Year Ended 31 March 2022 35
STRATEGIC REPORT
Investments
Fair value
£000
Percentage of
Net Assets
Core Regional Funds
Findlay Park American Fund 28,712 7.5
Vulcan Value Equity Fund 24,076 6.3
Select Equity Offshore Ltd 20,282 5.3
BlackRock Strategic Hedge Fund 13,923 3.6
Schroder ISF Asian Total Return 11,819 3.1
Goodhart Partners: Hanjo Fund 10,278 2.7
Pershing Square Holdings Ltd 9,908 2.6
Adelphi European Select Equity Fund 8,114 2.1
Indus Japan Long-Only Fund 7,020 1.8
Egerton Long-Short Fund Ltd 6,521 1.7
Prince Street Institutional Offshore Ltd 5,838 1.5
iShares Core MSCI Europe UCITS ETF 5,608 1.5
iShares Core EM IMI UCITS ETF 4,309 1.1
NTAsian Discovery Fund 4,003 1.1
BlackRock Frontiers Investment Trust PLC 3,445 0.9
KLS Corinium Emerging Markets Equity Fund 2,703 0.7
Total Core Regional Funds 166,559 43.5
Strategic
Wilson Sons (through the holding in Ocean Wilsons Holdings) * 56,771 14.8
Ocean Wilsons Investments Limited (through the holding in
OceanWilsons Holdings) *
36,757 9.6
Total Strategic 93,528 24.4
Global Equities
Interactive Brokers Group Inc 3,607 0.9
Exor NV 3,230 0.8
CK Hutchison 2,980 0.8
Subsea 7 2,613 0.7
Orion Engineered Carbons SA 2,545 0.7
Arch Capital Group Ltd 2,437 0.6
CVS Health Corp 2,383 0.6
Grupo Catalana Occidente SA 2,232 0.6
Coats Group PLC 1,858 0.5
Glencore PLC 1,800 0.5
Dollar General 1,699 0.4
Viaset Inc 1,612 0.4
CTT-Correios de Portugal 952 0.2
Total Global Equities 29,948 7.7
Portfolio Statement
As at 31 March 2022
Portfolio Statement
36 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Investments
Fair value
£000
Percentage of
Net Assets
Diversifying
Global Event Partners Ltd 10,571 2.8
DV4 Ltd ** 8,917 2.3
Hudson Bay International Fund Ltd 4,944 1.3
MKP Opportunity Offshore Ltd 3,192 0.8
Keynes Systematic Absolute Return Fund 2,521 0.7
Apollo Total Return Fund 2,436 0.6
Selwood AM – Liquid Credit Strategy 2,302 0.6
Lazard Convertible Global 1,995 0.5
BH Absolute Return Government Bond 1,749 0.5
Vanguard US Govt Bond Index Fund 1,595 0.4
GAM Systematic Core Macro (Cayman) Fund 1,444 0.4
BioPharma Credit PLC 1,423 0.4
Schroder GAIA BlueTrend 1,361 0.4
Total Diversifying 44,450 11.7
Thematic Assets
GAM Star Fund PLC – Disruptive Growth 22,377 5.8
SPDR MSCI World Financials UCITS ETF 8,338 2.2
Impax Environment Markets Fund 4,868 1.3
BB Biotech AG 3,388 0.9
RA Capital International Healthcare Fund 2,325 0.6
Worldwide Healthcare Trust PLC 2,076 0.5
iShares MSCI Global Markets & Mining Prods ETF 1,068 0.3
iShares MSCI World Energy Sector UCITS ETF 1,061 0.3
Total Thematic 45,501 11.9
Total Investments 379,986 99.2
Net Current Liabilities (368) (0.1)
Non-Current Assets 3,244 0.9
Net Assets 382,862 100.0
Note:
* Hansa Investment Company Ltd owns 9,352,770 shares in Ocean Wilsons Holdings Limited. In order to better reflect Hansa Investment Company’s exposure to different
market silos, the two subsidiaries of OWHL, Wilson Sons and Ocean Wilsons (Investments) Ltd (“OWIL”), are shown separately above. The fair value of Hansa Investment
Company’s holding in OWHL 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 31 December 2021 OWHL Financial Statements, to the market value of OWHL’s holding in Wilson Sons, that being the bid share price of Wilson Sons multiplied by
the number of shares held by OWHL at 31 March 2022.
** DV4 Ltd is an unlisted Private Equity holding. As such, its value is estimated as a Level 3 Asset in Note 20. All other valuations are either derived from information
supplied by listed sources or from pricing information supplied by third party fund managers.
Hansa Investment Company Limited For the Year Ended 31 March 2022 37
STRATEGIC REPORT
Capital Structure
The Company has 40,000,000 Ordinary shares of 1p (1/3 of
the total capital) and 80,000,000 ‘A’ non-voting Ordinary
shares of 1p (2/3 of the total capital) 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.
Shareholder Profile
The Company’s shares owned at 31 March 2022 are as follows:
Ordinary
shares
‘A’ non-voting
Ordinary shares
Institutional &
Wealth Managers
16,237,782 40.60% 72,347,254 90.43%
Directors 11,220,745 28.05% 3,738,723 4.67%
Private Individuals 12,492,197 31.23% 3,677,670 4.60%
Other 49,276 0.12% 236,353 0.30%
40,000,000 80,000,000
Substantial Shareholders
As at 31 March 2022, the Directors were aware of the interests
(opposite) in the Ordinary shares of the Company, which
exceeded 3% of the voting issued share capital of that class.
The following information is disclosed in accordance
with the DTR 7.2.6 of the FCA Disclosure Guidance and
Transparency Rules.
The Company’s capital structure and voting rights are
summarised above and in Note 14 on page 67.
• The giving of powers to issue or buy back the Company’s shares
requires an appropriate resolution to be passed by shareholders.
Proposals for the renewal of the Board’s powers to buy back
shares are set out in the Notice of the Annual General Meeting
on pages 74 to 76.
• There are: no restrictions concerning the transfer of securities
in the Company; no special rights with regard to control
attached to securities; no agreements between holders of
securities regarding their transfer known to the Company;
no agreements which the Company is party to that affect its
control following a takeover bid; and no agreements between
the Company and its Directors concerning compensation for
loss of office. Notwithstanding the foregoing, the Company
may require any holder of shares to transfer some or all of its
shares (or otherwise refuse to register any transfer of shares) to
avoid the Company, if the Company were a company which
was resident for tax purposes in the UK, being regarded as
a “close company” as defined in s.414 of the UK Income and
Corporation Taxes Act 1988, to another person whose holding
of such shares, in the sole and conclusive determination of the
Board, would not cause the Company to be a close company.
Additionally, the Company’s Bye-Laws provide for the voting
rights of Ordinary shares to be automatically reallocated
to other shareholders to prevent the Company becoming
a close company. The reallocation mechanism operates where
a transfer of shares or other change in the interests of holders
of shares occurs and would cause the Company to become
a close company. In these circumstances, the voting rights
attaching to the affected shares are reallocated by enhancing
the voting rights of the smallest registered shareholders on
a temporary basis pending the operation of the compulsory
transfer provisions referred to above.
No. of voting
shares
% of voting
shares
Nomolas Ltd 10,347,125 25.9%
Victualia Limited Partnership 10,347,125 25.9%
These holdings are correct as of 31 March 2022 and have not
changed as at the signing date of these Financial Statements.
William Salomon is interested in 10,347,125 of the shares held
by Victualia Limited Partnership, representing 25.9% of the
voting share capital. In addition, William Salomon has further
interests in the Company’s shares; the total interest is detailed in
the Directors’ Interests section below.
As at 17 June 2022, the date of signing of the Year-End
Financial Statements, there have been no disclosures to the
Company of changes of interests under DTR 5.
Shareholder Prole and
Engagement
Shareholder Prole and Engagement
38 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
BOARD AND MANAGEMENT SHAREHOLDINGS
Directors and Directors’ Interests
The present members of the Board are shown on pages 4 and 5.
The Board’s policy is that all Directors retire annually. All
Directors being eligible, at the forthcoming Annual General
Meeting, will retire and seek re-election in accordance with
the Board’s policy. The contracts of employment between
the Company and each of the Directors do not allow for any
compensation payment in the event of loss of office.
The interests of Directors and their connected parties in the Company at 31 March 2022 are shown below:
Ordinary shares
of 1p each
‘A’ non-voting
Ordinary shares
of 1p each
Nature of
interest
2022 % 2022 %
W Salomon 11,169,345 27.92% 3,508,723 4.39%
Beneficial
J Davie 45,000 0.11% 230,000 0.29%
Beneficial
S Heidempergher 6,400 0.02% – –
Beneficial
Total 11,220,745 28.05% 3,738,723 4.68%
As at 17 June 2022, the date of signing the Year-End
Financial Statements, there were no changes to report to the
Directors’ holdings.
William Salomon is the senior partner of Hansa Capital Partners
LLP. Fees payable to Hansa Capital Partners LLP amounted
to £3,010,000 (including Portfolio Management and AASP
functions). The fees outstanding at the year end amounted to
£255,719. During the year, no rights to subscribe for the shares
of the Company were granted to, or exercised by Directors,
their spouses or infant children.
PORTFOLIO MANAGER’S INTERESTS
As at 17 June 2022, the date of signing of this Year-End Report,
the management and staff of the Portfolio Manager’s group,
excluding the holding of William Salomon, shown above, were
interested in approximately 10.3m shares in the Company – a
mixture of Ordinary and ‘A’ non-voting Ordinary shares.
NOTICE PERIOD FOR GENERAL MEETINGS
The Company’s Bye-Laws permit the Company’s general
meetings (other than AGMs) may be held on 14 days’ notice.
ANNUAL GENERAL MEETING
The Company’s Notice of Annual General Meeting is included in
this Report on page74.
Authority to repurchase ‘A’ non-voting Ordinary shares
A resolution will be proposed at the forthcoming AGM, seeking
shareholder approval for the renewal of the authority for the
Company to repurchase its own ‘A’ non-voting Ordinary shares.
The Board believes the ability of the Company to repurchase
its own ‘A’ non-voting Ordinary shares in the market could
potentially benefit all equity shareholders of the Company in
the long-term. The repurchase of ‘A’ non-voting Ordinary shares
at a discount to the underlying NAV would enhance the NAV
per share of the remaining equity shares.
Hansa Investment Company Limited For the Year Ended 31 March 2022 39
STRATEGIC REPORT
The Company’s Bye-Laws are drafted in such a way that the
Company may from time to time purchase and cancel its own
shares. However, the Company requires that shareholders’
approval to repurchase shares be sought. At the AGM the
Company will therefore seek the authority to purchase up
to 11,992,000 ‘A’ non-voting Ordinary shares (representing
14.99% of the Company’s issued ‘A’ non-voting Ordinary share
capital, the maximum permitted under the FCA Listing Rules),
at a price not less than 1p per share (the nominal value of
each share) and not more than 5% above the average of the
middle-market quotations for the five business days preceding
the day of purchase or, where a series of transactions have
taken place the higher of the last independent trade and
current highest independent bid on the trading venue where
the purchase(s) will be carried out. The authority being sought,
the full text of which can be found in the Notice of Meeting,
will last until the date of the next AGM.
The Company is seeking authority to use its realised capital
reserve to allow repurchase of shares in the market. The
decision as to whether the Company repurchases any shares
will be at the absolute discretion of the Board. Any shares
purchased will be cancelled.
The Directors consider that all the resolutions to be proposed
at the forthcoming AGM as set out in the Notice of AGM on
page 74, are in the best interests of shareholders as a whole
and unanimously recommend all shareholders to vote in favour.
Guidance on how to vote at the AGM can be found in the
notes to the Notice of AGM on pages 75 and 76.
If the Board considers a significant proportion of votes have
been cast against a resolution at the AGM, the Company will
explain, when announcing the results of voting, what action it
intends to take to understand the reasons behind the results of
the vote.
APPROVAL OF THE DIRECTORS
The Directors consider the Year-End Report and Financial
Statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s position and
performance, business model and strategy.
For and on behalf of the Board
Jonathan Davie
Chairman
17 June 2022
Shareholder Prole and Engagement
Continued
40 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
CORPORATE GOVERNANCE REPORTS
The Directors have chosen to report on some of those items
within the body of the Strategic Report, while others remain
within the Report of the Directors.
ITEMS INCLUDED WITHIN THE STRATEGIC REPORT
The following items are listed within the Strategic Report:
• Statement of the existence of qualifying indemnity provisions
for Directors – see page 22.
• Dividend policy and payments made during the year,
summarised in the Organisation & Objectives section
– seepage 21.
• Names of Directors, at any time in the year – seepages4
to5 for the Directors’ details and attendance at
Company meetings.
• Greenhouse Gas Emissions – see page 15
• Policy on Board Composition – see page 7 within
“The Board”.
• Stakeholder Engagement – While the Company has no
employees, suppliers or customers, the Directors give
regular consideration to the need to foster the Company’s
business relationships with its stakeholders, in particular
with shareholders and service providers. The effect of this
consideration upon the principal decisions taken by the
Company during the financial year is set out in further detail
in the Strategic Report on pages 9 to 15.
ITEMS REPORTED WITHIN THE DIRECTORS’ REPORT
Disclosure to the Auditor of Relevant Audit Information
The Directors confirm that, so far as they are aware, having
made such enquiries and having taken such steps as they
consider they reasonably ought, they have provided the Auditor
with all the information necessary for it to be able to prepare its
Report. In doing so each Director has made themself aware of
any information relevant to the audit and established that the
Company’s Auditor is aware of that information. The Directors
are not aware of any information relevant to the audit of which
the Company’s Auditor is unaware.
Capital Structure
The Company’s Capital Structure is described in the “Investor
Information Section” on page 77.
Corporate Governance Report
The Corporate Governance Report, including the Financial
Risk Management Review of the Company, is included in this
document starting on page 42.
Future Developments and Post Balance Sheet Events
As disclosed on page17, it was announced on 18May 2022
that the Company's Administrator, Maitland Administrator
Services Limited, is to be acquired by Apex Group Ltd subject
to a number of regulatory approvals. Other than this, the
Company does not have any imminent events or post-balance
sheet items to report.
APPROVAL OF THE DIRECTORS
The Directors consider the Year-End Report and Financial
Statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s position and
performance, business model and strategy. Further details
demonstrating the Company’s performance, business model
and strategy have been included within the Strategic Report
onpages 2 to 40.
For and on behalf of the Board
Jonathan Davie
Chairman
17 June 2022
Report of the Directors
Corporate Governance Reports
Report of the Directors
Hansa Investment Company Limited For the Year Ended 31 March 2022 41
CORPORATE GOVERNANCE REPORTS
CORPORATE GOVERNANCE CODE
Internal Controls
The UK Corporate Governance Code (“UK Code”) (issued
July 2018 Code for accounting periods beginning on or after
1 January 2019), which can be found on the website of
the Financial Reporting Council (“FRC”) (www.frc.org.uk),
requires the directors of UK listed companies to review
the effectiveness of the company’s risk management and
system of internal controls on an annual basis. The Directors
recognise the importance of sound corporate governance,
robust risk management processes and effective systems of
internal controls. They review the effectiveness of these on at
least an annual basis. The Directors, through the procedures
outlined below, keep the system of risk management and
internal controls under review. The Board has identified risk
management controls in the key areas of business objectives,
accounting, compliance, operations and secretarial as areas to
be included in the extended review.
The Board recognises its ultimate responsibility for the
Company’s system of risk management and internal controls
and for monitoring their effectiveness. In order to perform this
responsibility the Board receives regular reports on all aspects
of risk management and internal control from the Company’s
service providers (including financial, operational and
compliance controls, risk management and relationships with
other service providers); the Board will instigate necessary action
in response to any significant failings or weaknesses identified
by these reports. However, it must be noted this system is
designed to manage rather than eliminate the risk of failure to
achieve business objectives and can only provide reasonable and
not absolute assurance against material misstatement or loss.
Financial Reporting
The Board has a responsibility to present a fair, balanced and
understandable assessment of annual, half-year and other price
sensitive public reports and reports to regulators, as well as
to provide information required to be presented by statutory
requirements. To ensure this responsibility is fulfilled, all such
reports are reviewed and approved by the Board prior to
their issue.
The Board confirms there have been no specific events since
31 March 2022, of which the Board is aware, which would
have a material impact on the Company.
COMPLIANCE WITH THE PROVISIONS OF THE UK
CORPORATE GOVERNANCE CODE
The Board of Hansa Investment Company has considered
the Principles and Provisions of the AIC Code. The AIC Code
addresses the Principles and Provisions set out in the UK Code,
as well as setting out additional Provisions on issues that are of
specific relevance to the Company.
The Board considers that reporting against the Principles
and Provisions of the AIC Code, which has been endorsed
by the FRC in the UK, provides more relevant information
to shareholders.
The Company has complied with the Principles and Provisions of
the AIC Code.
The AIC Code is available on the AIC website (www.theaic.
co.uk). It includes an explanation of how the AIC Code adapts
the Principles and Provisions set out in the UK Code to make
them relevant for investment companies.
ASSOCIATION OF INVESTMENT COMPANIES CODE
The AIC Code has 17 principles. The principles are listed below
together with the Board’s response as to how it seeks to meet
the principle’s recommendation:
Board Leadership and Purpose
A. A successful company is led by an effective board, whose
role is to promote the long-term sustainable success of the
company, generating value for shareholders and contributing
to wider society.
The Board is formed of five Directors with a complementary
mix of skills and experience to lead the Company.
TwoDirectors served on the board of the Company’s
predecessor, Hansa Trust, whilst three Directors were
newly appointed to HICL. All have significant and relevant
experience. All Directors are focused on generating
long-term value for shareholders and there is significant
share ownership in the Company’s shares amongst
the Directors.
Corporate Governance Report
Corporate Governance Report
42 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
B. The board should establish the company’s purpose, values
and strategy, and satisfy itself that these and its culture are
aligned. All directors must act with integrity, lead by example
and promote the desired culture.
The Board believes that the Company’s purpose, values and
strategy are clear: to create long-term growth of shareholder
value. The Board sets the standard for openness and
professionalism that the Company’s key service providers
follow. In particular, there is regular interaction between the
Board and the Company’s Portfolio Manager and also the
AASP for day to day liaison with other service providers.
C. The board should ensure that the necessary resources are in
place for the company to meet its objectives and measure
performance against them. The board should also establish
a framework of prudent and effective controls, which enable
risk to be assessed and managed.
The Board receives regular and detailed reports from the
Portfolio Manager regarding investment performance as
well as market trends and views on risks. The Board has
set a number of KPIs (see page 17) against which the
performance of elements of the portfolio can be considered.
The Board receives regular risk and compliance reporting
including from key service providers.
D. In order for the company to meet its responsibilities to
shareholders and stakeholders, the board should ensure
effective engagement with, and encourage participation
from, these parties.
The Board considers its stakeholders to be its shareholders
and its key service providers. It actively engages with
shareholders via an annual general meeting, shareholder
presentations, quarterly factsheets, website communication
and with feedback also received through outreach
programmes such as Edison, as well as direct one-to-one
correspondence. The Board engages with other key service
providers through the operations of its AASP on a day to day
basis, as well as via an annual meeting with each or more
frequently if an issue arises.
E. Principle E is omitted by the AIC Code.
Division of Responsibilities
F. The chair leads the board and is responsible for its overall
effectiveness in directing the company. They should
demonstrate objective judgement throughout their tenure
and promote a culture of openness and debate. In addition,
the chair facilitates constructive board relations and the
effective contribution of all non-executive directors, and
ensures that directors receive accurate, timely and clear
information.
The Chairman is Jonathan Davie. The Chairman promotes
and encourages active participation from all Directors at
Board meetings. Further, whilst adhering to membership
guidelines, sub-committees also seek to include as many
Directors as possible to ensure a broad range of views. All
Directors receive regular monthly and quarterly information
prepared by the Portfolio Manager and Administrator,
as well as portfolio performance presentations from the
Portfolio Manager.
G. The board should consist of an appropriate combination
of directors (and, in particular, independent non-executive
directors) such that no one individual or small group of
individuals dominates the board’s decision making.
The Board consists of five Directors. All have a financial
background but each also brings individual specialisms
and experience that are complimentary. Their biographies
are noted on pages 4 and 5. Four Directors are deemed
independent. The fifth, William Salomon, is the Senior
Partner of the Company’s Portfolio Manager and, therefore,
is deemed non-independent. All Directors are non-
executive. All Directors are actively involved in decisions
and committees unless conflicts exist which preclude this.
Therefore, Mr Salomon does not participate in the evaluation
of the performance of the Portfolio Manager due to his role
as senior partner of that firm. Nor does he participate in
decisions regarding the Company’s largest asset (by value)
OWHL, due to him being a director of that company. Finally,
Mr Salomon is not a member of the Audit Committee due
to his non-independent status, although he does attend
meetings of that Committee.
Hansa Investment Company Limited For the Year Ended 31 March 2022 43
CORPORATE GOVERNANCE REPORTS
H. Non-executive directors should have sufficient time to meet
their board responsibilities. They should provide constructive
challenge, strategic guidance, offer specialist advice and hold
third party service providers to account.
The Directors consider they have sufficient time to meet
their responsibilities. Directors consult with the Company
before accepting other appointments to confirm capacity to
do so and that no conflict exists. A formal timetable exists
for the Board meetings and sub-committees. In considering
appointments and potential conflicts of interests the Board
considers the available time each Director has to commit
to the Company. The Portfolio Manager and AASP report
to scheduled Board meetings, giving the Directors the
opportunity to challenge performance, raise issues and
offer guidance.
I. The board, supported by the company secretary, should ensure
that it has the policies, processes, information, time and
resources it needs in order to function effectively and efficiently.
The Company Secretary and AASP support the Board
in identifying and monitoring all governance matters.
Additionally, Directors are able to consult external
professional advisors to assist them in the performance of
their duties as and when required. Board reporting and
materials are refined on an ongoing basis.
Composition, succession and evaluation
J. Appointments to the board should be subject to a formal,
rigorous and transparent procedure, and an effective
succession plan should be maintained. Both appointments
and succession plans should be based on merit and objective
criteria and, within this context, should promote diversity
of gender, social and ethnic backgrounds, cognitive and
personal strengths.
The Board has appointed a Nominations Committee chaired
by Nadya Wells. The Committee seeks to meet annually to
give full and ongoing consideration to succession planning
after consideration of the skills and experience needed by
the Board. Ahead of any appointment, the Committee is
tasked with evaluating the skills required of a candidate to
ensure the Board retains the range of skills required. The
Company believes a diverse Board brings many benefits and,
as such, there is no restriction placed on Board membership.
K. The board and its committees should have a combination of
skills, experience and knowledge. Consideration should be
given to the length of service of the board as a whole and
membership regularly refreshed.
The Directors have a broad range of backgrounds including
investment management, finance and banking as well
as operational experience. Biographies of all Directors
are shown on pages 4 and 5. As noted in J above, the
Nominations Committee is tasked with maintaining a broad
range of skills and experiences at times of succession.
L. Annual evaluation of the board should consider its
composition, diversity and how effectively members work
together to achieve objectives. Individual evaluation should
demonstrate whether each director continues to contribute
effectively.
The Nominations Committee is responsible for the ongoing
consideration of Board composition and to identify any skills
gap – now or in the future. The Nomination Committee
considers Board effectiveness annually.
Audit, risk and internal control
M. The board should establish formal and transparent
policies and procedures to ensure the independence and
effectiveness of external audit functions and satisfy itself on
the integrity of financial and narrative statements.
The Board has specifically delegated the appointment and
monitoring of the Company’s external Auditor to its Audit
Committee. The Company’s Auditor was formally appointed
in November 2019. The tender process was led by the
Chairman of the Audit Committee. To ensure independence,
the Company’s Auditor does not provide other services to
the Company. The Company rigorously follows policy and
procedure to ensure effectiveness of the external audit and
integrity of financial reporting.
N. The board should present a fair, balanced and understandable
assessment of the company’s position and prospects.
The Board considers and approves all relevant shareholder
communications. The Year-End Report is reviewed by
the Board to ensure it presents a fair and balanced view
including commentary on going concern and long-term
viability. The Audit Committee considers the fairness of the
Financial Statements before recommending them to the
Board for approval.
Corporate Governance Report
Continued
44 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
O. The board should establish procedures to manage risk,
oversee the internal control framework, and determine the
nature and extent of the principal risks the company is willing
to take in order to achieve its long-term strategic objectives.
Principal risks are identified by the Board and risk appetite
established against these risks. Day to day risk management
is undertaken by the Portfolio Manager and AASP within
the parameters established by the Board. The Board meets
with the Portfolio Manager at each scheduled Board
meeting where there is opportunity to discuss particular
aspects of the portfolio and associated risks. Operational
risk and compliance reporting are also regularly discussed by
the Board.
Remuneration
P. Remuneration policies and practices should be designed to
support strategy and promote long-term sustainable success.
The remuneration of Directors is overseen by the
Remuneration Committee, chaired by Simona
Heidempergher. The Directors each receive a fixed annual
fee and do not receive any additional element based on
performance of the Company. Additionally, Directors offer
themselves annually for re-election at the Company’s AGM.
Q. A formal and transparent procedure for developing policy on
remuneration should be established. No director should be
involved in deciding their own remuneration outcome.
The Directors’ Remuneration Report (pages 49 to 51) notes
that each Director is paid a fixed fee representative of their
roles and additional responsibilities on the Board. This fee
level is reviewed by the Remuneration Committee making
use of external evidence before being recommended to the
wider Board.
R. Directors should exercise independent judgement and
discretion when authorising remuneration outcomes, taking
account of company and individual performance, and wider
circumstances.
The Directors’ Remuneration Report (pages 49 to 51) notes
that each Director is paid a fixed fee representative of their
roles and additional responsibilities on the Board. There
are no additional performance-related elements to any
Director’s remuneration.
COMPLIANCE WITH THE FINANCIAL CONDUCT
AUTHORITY UKLA LISTING RULES
The Directors are responsible for ensuring that:
• Adequate accounting records are kept, that are sufficient to
show and explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial position of
the Company and enable them to ensure that the Financial
Statements are consistent with the relevant requirements
under the UK Companies Act 2006.
• The assets of the Company are safeguarded; and for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.
• The Report of the Directors and other information included
in the Year-End Report is prepared in accordance with
Company Law in the UK. The Directors are also responsible
for ensuring the Year-End Report includes information
required by the Listing Rules of the FCA.
• The Company has effective internal control systems,
designed to ensure that adequate accounting records are
maintained; and that financial information on which the
business decisions are made, which is issued for publication,
is reliable. Such a system of internal control can provide only
reasonable, but not absolute, assurance against material
misstatement or loss.
• The Company Financial Statements for each financial year
are prepared in accordance with International Financial
Reporting Standards (“IFRS”) adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European
Union. The Directors must not approve the Financial
Statements unless they are satisfied they give a true and fair
view of the state of affairs and profit or loss of the Company
for that period.
Hansa Investment Company Limited For the Year Ended 31 March 2022 45
CORPORATE GOVERNANCE REPORTS
In preparing these Financial Statements, the Directors are
required to:
• select suitable accounting policies and apply
them consistently;
• make judgements and estimates that are reasonable
and prudent;
• state whether they have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union; and
• prepare the Financial Statements on the going concern
basis, unless it is inappropriate to presume the Company will
continue in business.
Under the FCA UKLA Listing Rules and the UK Code, the Board
is responsible for:
• Disclosing how it has applied the principles and complied
with the provisions of the AIC Code and, thereby, the UK
Code, or where not, to explain the reasons for divergence.
• Reviewing the effectiveness of the Company’s systems of risk
management and internal controls.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website: www.HansaICL.com. Visitors to the website
need to be aware that legislation governing the preparation
and dissemination of the Financial Statements may differ from
legislation in their own jurisdictions.
RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:
• The Financial Statements are prepared in accordance with
applicable international accounting standards and present
fairly, in all material respects, the financial position of Hansa
Investment Company.
• The Strategic Report, including the Chairman’s Report to the
Shareholders and the Report of the Directors includes a fair
review of the development and performance of the business
and the position of the Company, together with a description
of the principal risks and uncertainties it faces.
The Directors consider the Year-End Report and Financial
Statements, taken as a whole, are fair, balanced and
understandable. Further detail demonstrating the Company’s
performance, business model and strategy has been included
within the Strategic Report on pages 2 to 40.
For and on behalf of the Board
Jonathan Davie
17 June 2022
Corporate Governance Report
Continued
46 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
The Audit Committee comprises solely independent Directors,
as required by the AIC Code and endorsed by the FRC. It is
chaired by Richard Lightowler. Given the size of the Board and
the range of experience they bring, all non-committee Directors
are invited to attend the Audit Committee meetings. However,
only the independent member Directors are able to vote.
Recommendations of the Audit Committee are brought before
the whole Board for discussion and ratification.
The terms of reference of the Committee are determined by the
Committee and approved by the Board and include, but are not
restricted to, the following:
• To consider and make a recommendation to the Board as
to the appointment of the external Auditor, tendering of
the external audit, approval of the annual audit fee and
any questions relating to the resignation or dismissal of
the Auditor.
• To determine with the external Auditor the nature and scope
of the audit.
• To review and monitor the independence of the external
Auditor including pre-approval, of any, non-audit services to
the Company.
• To consider the performance of the Auditor.
• To review the Half-Year and Year-End Financial Reports
before submission to the Board, focusing particularly on:
• any changes in accounting policies and practices;
• major judgemental areas;
• significant adjustments resulting from the audit;
• the going concern assumption;
• compliance with Accounting Standards and
Governance Codes;
• compliance with FCA Listing Rules and legal
requirements; and
• valuation of unquoted investments.
• To discuss issues and matters arising from the annual audit
with the Auditor.
• To review the Auditor’s audit findings and responses to it,
including holding an executive session with the Auditor.
• To review and monitor the effectiveness of the Company’s
Internal Control and Risk framework prior to endorsement
by the Board.
• To review service providers’ AAF 01/06 or ISAE 3402 reports.
As confirmed at the Company’s AGM in August 2021,
PricewaterhouseCoopers Ltd remains as the Company’s
Independent Auditor.
In discharging its duties and, in particular, matters relating to
the approval of the Year-End Report, Half-Year Report and
the review of the Company’s internal controls, the Committee
considers reports and presentations made by the Company’s
Auditor, Administrator, Company Secretary, Additional
Administrative Services Provider (including those of its
Compliance Officer) and Legal Advisers.
In its review of the Financial Statements, the Committee pays
particular attention to the ownership of assets, the valuations
of the portfolio, recognition of income and areas of significant
judgement. In this regard we receive regular reporting from
the Portfolio Manager including reports on the effectiveness
of internal controls in these areas. In addition, the Committee
discusses the Auditor’s scope of work in these areas.
With regard to the ownership of assets, the Company’s
Custodian and Administrator have confirmed the ownership
of all assets to the Audit Committee’s satisfaction. With regard
to the valuations, the Audit Committee notes that 70% of
the Investment portfolio by value is held in assets that are
either traded or listed on an exchange or are cash. Further, of
the remaining 30% unquoted fund investments, the majority
primarily hold traded securities. Valuations for these funds
are supplied by third party managers. The Audit Committee
recognises that the 44% of the total portfolio are Level 1 and
54% are Level 2 securities. The Committee is satisfied with
the valuation process. With regard to revenue recognition, the
Audit Committee reviewed the external Auditor’s approach
to the audit prior to the commencement of the audit. The
results of the audit in this area were discussed with the external
Auditor and there were no significant issues arising in relation
to the recognition of revenue.
Audit Committee Report
Audit Committee Report
Hansa Investment Company Limited For the Year Ended 31 March 2022 47
CORPORATE GOVERNANCE REPORTS
The Audit Committee considers the potential need for an
internal audit function on an annual basis, recognising the FRC
guidance on proportionality. The Audit Committee considers
internal compliance testing at the Administrator and Portfolio
Manager to be sufficiently independent and robust to negate
the need for a standalone internal audit function.
The Committee is authorised by the Board to investigate any
activity within its terms of reference, to seek any information it
requires from any officer or service provider to the Company, to
obtain outside legal or other independent professional advice
and to secure the attendance of third parties with relevant
experience and expertise if it considers this necessary.
The Chairman of the Audit Committee formally reports to the
Board following each Audit Committee meeting and on other
occasions as requested by the Board.
A separate evaluation of Committee members is not conducted.
Rather, their suitability and effectiveness is considered as part of
the annual Board evaluation process which is described within
the Corporate Governance Report on page 42.
The Audit Committee, having considered its responsibilities and
its reporting to the Board, confirms it is not aware of any matter
which it should bring to the attention of either the Board or the
Auditor and considers the Year-End Report, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position and
performance, business model and strategy.
The Audit Committee considers the external Auditor’s
independence, objectivity, scope of work and overall quality
as well as cost effectiveness through a process of feedback
from the Company advisors, including the Company Secretary,
the AASP, the Portfolio Manager and discussion with the
Auditors. The Committee also meets with the Auditor in
executive session at least annually. The current audit partner
is Scott Watson-Brown who has led the audit since the
Company's inception in June 2019 and the appointment of
PricewaterhouseCoopers Ltd as its auditor.
The level of non-audit services provided to the Company by
the Auditor is monitored, as is the Auditor’s objectivity in
providing such services, to ensure that the independence of
the audit team from the Company is not compromised. No
non-audit services are provided by PricewaterhouseCoopers
Ltd to the Company. Further information on fees paid to the
Auditor is contained in “Other Expenses” within Note 4 of the
Financial Statements.
For and on behalf of the Audit Committee.
Richard Lightowler
Audit Committee Chairman
17 June 2022
Audit Committee Report
Continued
48 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Directors’ Remuneration Report
The Board produces a separate report on the Directors’
Remuneration and, by approving it, confirms its accuracy.
There are elements of the Directors’ Remuneration Report that
are subject to audit as disclosures in accordance with “IAS24
– Related Party Disclosures” which have been presented here.
These are labelled as “audited”, with the Auditor’s report
included on page 52.
Ordinary resolutions for the approval of this Report will be put
to shareholders at the forthcoming AGM.
ANNUAL STATEMENT
The Company has five non-executive Directors. The Board has
appointed a Remuneration Committee. The Chairman of this
Committee is Simona Heidempergher who has signed this
Statement on behalf of the Board.
This is the third year of the Company’s operation. Each Director
was appointed during June 2019 following the creation of the
Company. Each Director presents themselves for annual re-
election at the Company’s AGM.
POLICY ON DIRECTORS’ REMUNERATION
The Board’s policy is that the remuneration of non-executive
Directors should include a basic pay level and should reflect the
experience of the Board as a whole, be appropriate for the work
carried out and the responsibilities, financial and reputational
risks undertaken, including additional remuneration for any
roles in addition to the responsibilities of the non-executive
director role – for example, the chairman. The remuneration
does not include a performance related element and Directors
do not receive bonuses, share options, pensions or long-term
incentive schemes. The total remuneration of the Board will be
kept within the limits set out in the Company’s Bye-Laws, as
amended from time to time.
In assessing current and future levels of director compensation,
the Remuneration Committee seeks external comparative
information when assessing the remuneration of existing
Directors. This includes the fees paid by other similar companies
(both industry and jurisdiction) as well as seeking input from
recruitment specialists familiar with the external market.
The fees for the non-executive Directors are within the limits
(maximum total fee of $350,000) as set out in the Company’s
Bye-Laws. The maximum is set as a USD amount. The equivalent
is £266,383 if translated at the applicable rate on 31 March
2022. The Board has reviewed the current maximum annual fee
for director remuneration and will seek shareholder approval to
increase this to $400,000 per annum (£304,437 if translated
at the applicable rate on 31 March 2022) at the upcoming
AGM. The increase is to allow sufficient headroom over the
fees payable to existing directors to appoint another director if
required or as part of board succession planning.
DIRECTORS’ SERVICE CONTRACTS
It is the Board’s policy that every Director has a service contract.
None of the service contracts is for a fixed term. The terms of
appointment provide that a Director shall retire and be subject
to re-election at the first AGM after appointment. The Board
has decided each Director will retire annually at the AGM
and seek re-election as appropriate. The terms also provide
that either party may give three months’ notice. In certain
circumstances a Director may be removed without notice and
compensation will not be due on leaving office. There are no
agreements between the Company and its Directors concerning
compensation for loss of office.
FUTURE POLICY TABLE
All of the Directors are non-executive, whose only remuneration
is a fee. The implementation of the above current policy could
give rise to the following increase in fees:
Current
total fee
£000
Potential future
total fee
£000
Non-executive Director fees 194* 266**
Note:
* This fee represents the current Directors’ fees translated from USD
to Sterling for the year ended 31 March 2022. For information, annual
current Director fees are noted in the table below.
** This amount is the current upper limit of remuneration of $350,000,
converted at the exchange rate to GBP on 31 March 2022. The Board
will seek permission at the upcoming AGM via a resolution put to
shareholder vote to increase this upper limit to $400,000 per annum.
POLICY FOR NOTICE PERIODS
The current Directors’ service contracts stipulate three months’
written notice to be given by either the Director or the Company
to terminate the services of a Director. The Board consider this
is sufficient notice to ensure an orderly hand over between
the parties.
Hansa Investment Company Limited For the Year Ended 31 March 2022 49
CORPORATE GOVERNANCE REPORTS
SHAREHOLDERS’ VIEWS ON REMUNERATION POLICY
The formal views of unconnected shareholders have not been
sought in the preparation of this policy.
EMPLOYEES
The Company does not have any employees, only
non-executive Directors.
ANNUAL REPORT ON REMUNERATION
Directors’ Emoluments (Audited)
The Company does not have any employees, only non-executive
Directors who receive only a basic fee, plus repayment of
expenses incurred in the course of performing their duties.
Therefore, the use of the detailed remuneration table,
as prescribed in the legislation, is not appropriate here.
A condensed table showing the information relevant to the
Directors’ remuneration is shown in its place.
The Directors who received fees during the year received the
following emoluments in the form of fees. For clarity, these
amounts are quoted in the currency as per their service contract.
The Director’s remuneration is set in USD, as is common for
many Bermudan companies. Therefore, additionally, their
current annual fee is also quoted in Sterling. This conversion has
been made at the relevant exchange rate on 31 March 2022:
Annual
Fee
$000
2022
Fee
£000
2022
Total
£000
2021
Fee
£000
2021
Total
£000
Jonathan Davie (Chairman) 70 53 53 51 51
Richard Lightowler 60 46 46 43 43
Simona Heidempergher 50 38 38 36 36
William Salomon 25 19 19 18 18
Nadya Wells 50 38 38 36 36
255 194 194 184 184
The annual fee paid to each Director, in USD, remains unchanged
from the date of their appointments in June 2019. Changes in
the above table between the prior period and the current year are
due to movement in exchange rates (USD to Sterling).
The Company also pays the expenses of the Directors to attend
the Board meetings, fees incurred during the year was £48,170
(2021: nil – due to Covid-19 travel restrictions).
STATEMENT OF SHAREHOLDER VOTING
Votes in respect of the resolution to approve the Directors’
Remuneration Report at the Company’s AGM in August 2021
were cast as follows:
No. of
shares voted
% of
votes cast
Votes cast in favour 21,370,153
100.00
Votes cast against 0 0.00
Total votes cast 21,370,153
100.00
Votes withheld 0
DIRECTORS’ INTERESTS (AUDITED)
Directors must seek permission from the Chairman before
trading in shares, taking note of any Closed Periods. Other than
that, there are no specific rules on Directors’ shareholdings.
The interests of Directors and their connected parties in the
Company at 31 March 2022 are shown below:
Ordinary shares
of 1p each
‘A’ non-voting
Ordinary
shares of 1p each
Nature
of
interest
2022 2021 2022 2021
Jonathan Davie
45,000 45,000 230,000 230,000 Beneficial
William Salomon
11,169,345 11,169,345 3,508,723 3,463,223 Beneficial
Simona
Heidempergher
6,400 6,400 – – Beneficial
As at 17 June 2022, the date of signing of these Year-End
Financial Statements, there were no changes to report to the
Directors’ holdings.
William Salomon is the senior partner of Hansa Capital Partners
LLP. Fees payable to Hansa Capital Partners LLP as Portfolio
Manager amounted to £3,010,000. The fees outstanding at
the year-end amounted to £255,719. During the year, no rights
to subscribe to the shares of the Company were granted to,
orexercised by Directors, their spouses or infant children.
Directors’ Remuneration Report
Continued
50 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
YOUR COMPANY’S PERFORMANCE
The graph below shows the ten-year cumulative total return
to shareholders:
TEN YEAR NET ASSET VALUE AND
SHARE PRICE TOTAL RETURN
NAV Cum Income TR
Ord Share TR
‘A’ Ord Share TR
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Mar-19
Mar-20
Mar-21
Mar-22
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
80%
70%
DIRECTORS’ ATTENDANCE
The Directors meet as a Board on a quarterly basis and at other
times as necessary and the table below sets out the number of
operational meetings and the attendance at them by each Director.
Board
Audit
Committee
Number of meetings held 5 2
Number of meetings attended:
Jonathan Davie (Chairman) 5 2
Richard Lightowler 5 2
Simona Heidempergher 5 2
William Salomon 5 2
Nadya Wells 5 2
Notes:
1) The meetings listed above are the main events held during the year
at which all Directors attend. Additionally, there have been numerous
meetings and board calls to consider and approve operational
requirements for the Company, such as quarterly dividends. These
meetings are arranged as and when required and require the meeting to
be quorate but not necessarily attended by all Directors. These have not
been listed above.
2) The Board has amalgamated its annual Strategy meeting into
its Board meeting schedule. As such, it will no longer be listed as
a separatemeeting.
On behalf of the Board, I confirm that the above Report on
Directors’ Remuneration summarises, as applicable, for the year
ended 31 March 2022:
(a) the major decisions on Directors’ remuneration;
(b) any substantial changes relating to Directors’ remuneration
made during the year; and
(c) the context in which those changes occurred and decisions
have been taken.
For and on behalf of the Board
Simona Heidempergher
Chairman of the Remuneration Committee
17 June 2022
Hansa Investment Company Limited For the Year Ended 31 March 2022 51
Independent Auditor’s Report to the
Board of Directors and Shareholders of
HansaInvestment Company Limited
Our opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of Hansa Investment
Company Ltd. (the Company) as at 31 March 2022, and its financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in
the European Union.
What we have audited
The Company’s financial statements, included on pages 57 and 73, comprise:
• the balance sheet as at 31 March 2022;
• the income statement for the year then ended;
• the statement of changes in equity for the year then ended;
• the cash flow statement for the year then ended; and
• the notes to the financial statements, which include significant accounting policies and other explanatory information.
Certain required disclosures have been presented elsewhere in the Year-End Report, rather than in the notes to the financial
statements. These are cross-referenced from the financial statements and are identified as audited.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the audit of the nancial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the International Code of Ethics for Professional Accountants (including
International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and the
ethical requirements of the Chartered Professional Accountants of Bermuda Rules of Professional Conduct (CPA Bermuda Rules) that
are relevant to our audit of the financial statements in Bermuda. We have fulfilled our other ethical responsibilities in accordance
with the IESBA Code and the ethical requirements of the CPA Bermuda Rules.
Materiality
Our audit approach
Overview
• Overall materiality: £3,828,000, based on 1% of net assets.
Audit scope
• In addition to determining materiality, we also assessed, amongst other factors, the following
in designing our audit:
– the risk of material misstatement in the financial statements
– significant accounting estimates
– the risk of management override of internal controls
Key audit matters
• Valuation and existence of investments; and
• Accuracy, occurrence and completeness of investment income
52 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Audit scope
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we considered where management made subjective judgements; for example, in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in
all of our audits, we also addressed the risk of management override of internal controls, including, among other matters,
consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial
statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the
industry in which the Company operates.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance
whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error.
Theyareconsidered material if, individually or in aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality
for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped
us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements, both individually and in aggregate, on the financial statements as a whole.
Overall materiality £3,828,000
How we determined it 1% of net assets.
Rationale for the materiality benchmark applied We applied this benchmark as a generally accepted audit practice
for investment company audits.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
£191,000, as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Hansa Investment Company Limited For the Year Ended 31 March 2022 53
Independent Auditor’s Report to the
Board of Directors and Shareholders of
HansaInvestment Company Limited, continued
Independent Auditor’s Report to the
Board of Directors and Shareholders of
HansaInvestment Company Limited, continued
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Valuation and existence of
investments
Refer to notes 1(d) and 9 to the
financial statements for disclosures
of related accounting policies and
balances.
The investment portfolio at the period
end comprised listed equity investments
valued at £290 million (76%) and
unlisted fund investments valued at
£90 million (24%). We focused on the
existence of both listed and unlisted
investments, as listed investments
comprise the majority of the investments
balance and unlisted investments are,
individually and in aggregate, material
to the financial statements. We focused
on the valuation of listed investments
because listed investments represent the
principal element of the net asset value
as disclosed on the Balance Sheet in the
financial statements. We also focused on
the valuation of the unlisted investments
as the valuation of these investments is
material to the Company.
Listed investments: We tested the existence of the listed investment portfolio by
agreeing the holdings for investments to an independent custodian confirmation.
We tested the valuation of the listed investments by agreeing the prices used
inthe valuation to independent third-party sources.
Unlisted investments: We understood and evaluated the controls around the
pricing of unlisted investments including the final approval of the valuation by the
Manager and the Board.
• We obtained direct confirmation of the existence of investments held
andthe price from each fund administrator. We used these two key inputs
to recalculate the valuation applied by management. This recalculation
wasperformed for 100% of the unlisted investments.
• We obtained an understanding of the underlying methodology applied to each
unlisted investment through review of their most recently available audited
financial statements to evaluate whether it was based on fair value.
• We assessed the impact of uncertain market wide events, such as Russia's war
on Ukraine, on the valuation of the investments. For unlisted investments,
we have done this by obtaining confirmations of any impact directly from
fund managers.
Based on the procedures detailed above, no misstatements were identified which
required reporting to those charged with governance.
Accuracy, occurrence
and completeness of
investmentincome
Refer to notes 1(f) and 2 to the
financial statements for disclosures
of related accounting policies
andbalances.
Investment income consists of dividend
income of £5.9 million. As part of our
procedures, we focused on the accuracy,
occurrence and completeness of investment
income recognition as incomplete or
inaccurate income could have a material
impact on the Company’s net asset value
and dividend cover. We also focused on the
accounting policy for income recognition
along with its allocation and presentation
in the Income Statement as set out in
the requirements of The Association of
Investment Companies Statement of
Recommended Practice (the “AIC SORP”)
as incorrect application could indicate
a misstatement inincomerecognition.
We assessed the accounting policy for investment income recognition for
compliance with accounting standards and the AIC SORP and performed testing
to evaluate whether income had been accounted for in accordance with this
stated accounting policy. We found that the accounting policies implemented
were in accordance with accounting standards and the AIC SORP, and that
income has been accounted for in accordance with the stated accounting policy.
We tested the accuracy of dividend receipts by agreeing the dividend rates from
investments to independent market data.
To test for completeness, we tested, for a sample of investment holdings in the
portfolio, that all dividends declared in the market by investment holdings had
been recorded. We tested occurrence by confirming that all dividends recorded in
the period had been declared in the market by investment holdings, and we traced
a sample of dividends received to bank statements.
We also tested the allocation and presentation of investment income between
the revenue and capital return columns of the Income Statement in line with the
requirements set out in the AIC SORP by determining reasons behind dividend
distributions.
Based on the procedures detailed above we did not identify any misstatements
which required reporting to those charged with governance.
54 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Other information
Management is responsible for the other information. The other information comprises the Year-End Report (but does not
include the financial statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in
this regard.
UK Corporate Governance Code
We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified, under the
Listing Rules of the FCA, for review by the auditors.
Responsibilities of management and those charged with governance for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with International
Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and for
such internal control as management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout
the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate,
tomodify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Company to cease to continue as a going concern.
Hansa Investment Company Limited For the Year Ended 31 March 2022 55
Independent Auditor’s Report to the
Board of Directors and Shareholders of
HansaInvestment Company Limited, continued
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Scott Watson-Brown.
PricewaterhouseCoopers Ltd
Chartered Professional Accountants
Hamilton, Bermuda
17 June 2022
56 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
FINANCIAL STATEMENTS
Income Statement
For the year ended 31 March 2022
Hansa Investment Company Limited For the Year Ended 31 March 2022 57
Year ended
31 March 2022
Year ended
31 March 2021
Notes
Revenue
£000
Capital
£000
Total
£000
Revenue
£000
Capital
£000
Total
£000
Gains on investments held at fair value
through profit or loss
9 – 17,065 17,065 – 93,032 93,032
Foreign Exchange gains/(losses) – 80 80 – (181) (181)
Investment income 2 5,904 – 5,904 6,350 – 6,350
5,904 17,145 23,049 6,350 92,851 99,201
Portfolio management fees 3 (3,010) – (3,010) (2,621) – (2,621)
Other expenses 4 (1,227) – (1,227) (1,149) – (1,149)
(4,237) – (4,237) (3,770) – (3,770)
Income for the year 1,667 17,145 18,812 2,580 92,851 95,431
Return per Ordinary and ‘A’ non-voting
Ordinary share
7 1.4p 14.3p 15.7p 2.2p 77.4p 79.6p
The Company does not have any income or expense not included in the above Statement. Accordingly, the “Income for the Year”
is also the “Total Comprehensive Income for the Year”, as defined in IAS 1 (revised) and no separate Statement of Comprehensive
Income has been presented.
The total column of this statement represents the Company’s Income Statement, prepared in accordance with International
Financial Reporting Standards (“IFRS”) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
Thesupplementary revenue and capital return columns are both prepared under guidance published by the AIC.
All revenue and capital items in the above Statement derive from continuing operations.
The accompanying notes on pages 61 to 73 are an integral part of this Statement.
FINANCIAL STATEMENTS
Balance Sheet
As at 31 March 2022
58 Hansa Investment Company Limited For the Year Ended 31 March 2022
The accompanying notes on pages 61 to 73 are an integral part of this Statement.
Notes
2022
£000
2021
£000
Non-current assets
Investments in subsidiary at fair value through profit or loss 8 – 3,179
Investments held at fair value through profit or loss 9 379,986 365,268
379,986 368,447
Current assets
Trade and other receivables 11 201 177
Cash and cash equivalents 12 3,043 2,833
3,244 3,010
Current liabilities
Trade and other payables 13 (368) (3,567)
Net current assets/(liabilities) 2,876 (557)
Net assets 382,862 367,890
Capital and reserves
Called up share capital 14 1,200 1,200
Contributed surplus 15 324,759 326,019
Retained earnings 16 56,903 40,671
Total equity shareholders’ funds 382,862 367,890
Net asset value per Ordinary and ‘A’ non-voting Ordinary share 17 319.1p 306.6p
The Financial Statements of Hansa Investment Company Limited, registered in Bermuda under company number 54752, set out on
pages 57 to 60 were approved by the Board of Directors on 17 June 2022 and were signed on its behalf by
Jonathan Davie
Chairman
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Statement of Changes in Equity
For the year ended 31 March 2022
Hansa Investment Company Limited For the Year Ended 31 March 2022 59
Notes
Share
capital
2022
£000
Contributed
surplus
reserve
2022
£000
Retained
earnings
2022
£000
Total
2022
£000
Net assets at 1 April 2021 1,200 326,019 40,671 367,890
Profit for the year – – 18,812 18,812
Dividends 6 – (1,260) (2,580) (3,840)
Net assets at 31 March 2022 1,200 324,759 56,903 382,862
Statement of Changes in Equity
For the year ended 31 March 2021
Notes
Share capital
2021
£000
Contributed
surplus
reserve
2021
£000
(Accumu-
lated losses)/
retained
earnings
2021
£000
Total
2021
£000
Net assets at 1 April 2020 1,200 327,939 (52,840) 276,299
Profit for the year – – 95,431 95,431
Dividends 6 – (1,920) (1,920) (3,840)
Net assets at 31 March 2021 1,200 326,019 40,671 367,890
The accompanying notes on pages 61 to 73 are an integral part of this Statement.
FINANCIAL STATEMENTS
Cash Flow Statement
For the year ended 31 March 2022
Notes
Year ended
31 March 2022
£000
Year ended
31 March 2021
£000
Cash flows from operating activities
Income for the year* 18,812 95,431
Adjustments for:
Realised (gains)/losses on investments 9 (5,440) 2,011
Unrealised gains on investments 9 (11,625) (95,043)
Foreign exchange (80) 181
(Increase)/decrease in trade and other receivables 11 (24) 2,326
Decrease in trade and other payables 13 (20) (146)
Purchase of non-current investments (30,840) (27,416)
Sale of non-current investments 33,187 28,444
Net cash inflow from operating activities 3,970 5,788
Cash flows from financing activities
Dividends paid 6 (3,840) (3,840)
Net cash outflow from financing activities (3,840) (3,840)
Increase in cash and cash equivalents 130 1,948
Cash and cash equivalents at beginning of financial year 2,833 1,066
Effect of foreign exchange rate changes 80 (181)
Cash and cash equivalents at end of year 12 3,043 2,833
*Includes dividends received of £5,918,000 (2021: £6,172,000) and interest received of £nil (2021: nil).
The accompanying notes on pages 61 to 73 are an integral part of this Statement.
60 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Hansa Investment Company Limited For the Year Ended 31 March 2022 61
1 ACCOUNTING POLICIES
Hansa Investment Company Limited is a company limited by shares, registered and domiciled in Bermuda with its registered office
shown on page 78. The principal activity of the company is set out in the strategic report on pages 2 to 40.
(a) Basis of preparation
The Financial Statements of the Company have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. IFRS means standards and
interpretations issued (or adopted) by the International Accounting Standards Board (IASB) (they comprise: International Financial
Reporting Standards, International Accounting Standards (IAS) and Interpretations developed by the IFRS Interpretations Committee
or the former Standing Interpretations Committee (SIC)) or IFRS that have been adopted in the relevant jurisdiction.
These Financial Statements are presented in Sterling because that is the currency of the primary economic environment in which the
Company operates.
The Financial Statements have been prepared on an historical cost and going concern basis in line with the assertion of the Board on
page 22. The Financial Statements have also been prepared in accordance with the AIC Statement of Recommended Practice (“SORP”)
for investment trusts, issued by the AIC in October 2019, to the extent that the SORP does not conflict with IFRS. The principal
accounting policies adopted are set out below.
(b) Basis of non-consolidation
IFRS 10 stipulates that subsidiaries and associates of Investment Entities are not consolidated but, rather stated at fair value unless
the conditions for certain exemptions from this treatment are met. Hansa Investment Company Ltd meets all three characteristics
of an Investment Entity as described by IFRS 10. Last financial year the Company had one, 100% owned, subsidiary Hansa Trust
Limited. The Company became the 100% owner of Hansa Trust’s shares as part of the Scheme of Arrangement on 29 August 2019.
Hansa Trust Limited was dissolved during the year to 31 March 2022.
(c) Presentation of Income Statement
In order to better reflect the activities of an investment company and in accordance with guidance issued by the AIC, supplementary
information which analyses the Income Statement between items of a revenue and capital nature, has been presented alongside the
Income Statement.
(d) Non-current investments
As the Company’s business is investing in financial assets, with a view to profiting from their total return in the form of income
received and increases in fair value, investments are classified at fair value through profit or loss on initial recognition in accordance
with IFRS 9. The Company manages and evaluates the performance of these investments on a fair value basis, in accordance with its
investment strategy and information about the investments is provided on this basis to the Board of Directors.
Investments are recognised and derecognised on the trade date. For listed investments fair value is deemed to be bid market prices, or
closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock Exchange’s electronic trading service,
covering most of the market including all FTSE 100 constituents and most liquid FTSE 250 constituents, along with some other securities.
Fund investments are stated at fair value through profit or loss as determined by using the most recent available valuation. In some
cases, this will be by reference to the most recent valuation statement supplied by the fund’s manager. In other cases, values may be
available through the fund being listed on an exchange or via pricing sources such as Bloomberg.
Private equity investments are stated at fair value through profit or loss as determined by using various valuation techniques, in
accordance with the International Private Equity and Venture Capital Valuation Guidelines. In the absence of a valuation at the
balance sheet date, additional procedures to determine the reasonableness of the fair value estimate for inclusion in the financial
statements may be used. These could include direct enquiries of the manager of the investment to understand, amongst others,
valuation process and techniques used, external experts used in the valuation process and updated details of underlying portfolio.
In addition, the Company can obtain external independent valuation data and compare this to historic valuation movements of the
asset. Further, recent arms-length market transactions between knowledgeable and willing parties where available might also be
considered. The investment in the Company’s subsidiary undertaking is stated at fair value for the prior year.
Unrealised gains and losses, arising from changes in fair value, are included in net profit or loss for the period as a capital item in the
Income Statement and are ultimately recognised in the Capital Reserves.
Notes to the Financial Statements
FINANCIAL STATEMENTS
62 Hansa Investment Company Limited For the Year Ended 31 March 2022
1 ACCOUNTING POLICIES (CONTINUED)
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank, short-term deposits and cash funds with an original maturity of three months
orless and are subject to an insignificant risk of changes in capital value.
(f) Investment Income and return of capital
Dividends receivable on equity shares are recognised on the ex-dividend date. Where no ex-dividend date is quoted, dividends
are recognised when the Company’s right to receive payment is established. Dividends and Real Estate Investment Trusts’ (“REIT”)
income are all stated net of withholding tax. In many cases, Bermudan companies cannot recover foreign incurred taxes withheld on
dividends and capital transactions. As a result, any such taxes incurred will be charged as an expense and included here. When an
investee company returns capital to the Company, the amount received is treated as a reduction in the book cost of that investment
and is classified as sale proceeds.
(g) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement
except as follows:
(i) expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the
Income Statement.
(h) Taxation
Under current Bermuda law, the Company is not required to pay taxes in Bermuda on either income or capital gains. The Company
has received an undertaking from the Bermuda government exempting it from all local income, withholding and capital gains taxes
being imposed and will be exempted from such taxes until 31 March 2035.
(i) Foreign Currencies
Transactions denominated in foreign currencies are recorded in the local currency, at the actual exchange rates as at the date of the
transaction. Assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rate of exchange
prevailing at the balance sheet date. Any gain or losses arising from a change in exchange rates, subsequent to the date of the
transaction, is included as an exchange gain or losses in the capital or revenue column of the Income Statement, depending on
whether the gain or losses is of a capital or revenue nature respectively.
(j) Retained Earnings
Contributed Surplus
The following are credited or charged to this reserve via the capital column of the Income Statement:
• gains and losses on the disposal of investments;
• exchange differences of a capital nature;
• expenses charged to the capital column of the Income Statement in accordance with the above accounting policies; and
• increases and decreases in the valuation of investments held at the balance sheet date.
Revenue Reserves
The following are credited or charged to this reserve via the revenue column of the Income Statement:
• net revenue recognised in the revenue column of the Income Statement.
Notes to the Financial Statements
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Hansa Investment Company Limited For the Year Ended 31 March 2022 63
1 ACCOUNTING POLICIES (CONTINUED)
(k) Significant Judgements and Estimates
The key significant estimate to report, concerns the Company’s valuation of its holding in DV4 Ltd. DV4 is 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 31 March 2022. The most recent valuation statement was received on 4 March 2022 stating
the value of the Company’s holding as at 31 December 2021. In the absence of a valuation for 31March2022 from DV4, the
Company performed additional procedures to determine the reasonableness of the fair value estimate for inclusion in the Financial
Statements. Direct enquiries of the manager of DV4 were made in July 2020 to understand, amongst others, valuation process
and techniques used, external experts used in the valuation process and updated details of underlying property portfolio. It has
been confirmed with DV4's manager that the valuation procedures discussed in July 2020 are still the same used now. In addition,
the Company has compared the historic valuation movements of DV4 to the FTSE350 Real Estate Index. Based on the information
obtained and additional analysis performed the Company is satisfied that DV4 is carried in these Financial Statements at an
amount that represents its best estimate of fair value at 31 March 2022. It is believed the value of DV4 asat 31 March 2022 will
not be materially different, but this valuation is based on historic valuations by DV4, does not have a readily available third party
comparator and, as such, is an estimate. There are no significant judgements.
(l) Adoption of new and revised standards
At the date of authorisation of these Financial Statements the following standards and amendments to standards, which have not
been applied in these Financial Statements, were in issue, but not yet effective:
• Amendments to IAS1 ‘Classification of liabilities as current or non-current’ (effective for accounting periods beginning on or after
1 January 2023).
• IFRS 17, ‘Insurance contracts’ (effective for accounting periods beginning on or after 1 January 2023).
• Amendments to IAS 8 ‘Definition of Accounting Estimates’ (effective for accounting periods on or after 1 January 2023).
• Amendments to IAS 1 and IFRS Practice Statement 2 ‘Disclosure of Accounting Policies’ (effective for accounting periods on or
after 1 January 2023).
• Amendments to IAS 12 ‘Deferred Tax related to Assets and Liabilities arising from a Single Transaction’ (effective for accounting
periods on or after 1 January 2023).
The Company does not believe there will be a material impact on the Financial Statements or the amounts reported from the
adoption of these standards.
In the current financial period the Company has applied to the following amendments to standards:
• IFRS 9, IAS 39, IFRS 7, IFRS 16 and IFRS 4: Interest Rate Benchmark Reform – phase 2 (amended) (effective for accounting periods
beginning on or after 1 January 2021).
There is no material impact on the Financial Statements or the amounts reported from the adoption of these amendments to
the standards.
(m) Intercompany loan
At the year ended 31 March 2022 there is no longer an intercompany loan as Hansa Trust Limited was dissolved on 9 November
2021. In the year to 31 March 2021 the intercompany loan was recognised at cost, being the fair value of the consideration
receivable. The amounts falling due for repayment within one year were included under current liabilities in the Balance Sheet for
the year ended 31 March 2021.
(n) Operating Segments
The Company considers it has one operating segment for the purposes of IFRS8.
Notes to the Financial Statements
FINANCIAL STATEMENTS
64 Hansa Investment Company Limited For the Year Ended 31 March 2022
2 INVESTMENT INCOME
Revenue
Year ended
31 March 2022
£000
Revenue
Year ended
31 March 2021
£000
Income from quoted investments
Dividends 5,904 6,350
Total income 5,904 6,350
3 PORTFOLIO MANAGEMENT FEE
Revenue
Year ended
31 March 2022
£000
Revenue
Year ended
31 March 2021
£000
Portfolio management fee 3,010 2,621
Total management fee 3,010 2,621
4 OTHER EXPENSES
Revenue
Year ended
31 March 2022
£000
Revenue
Year ended
31 March 2021
£000
Administration fees 155 143
Directors’ remuneration 188 195
Auditor’s remuneration for:
– audit of the Company’s Annual accounts 76 80
Printing fees 30 36
Director’s liability insurance 69 74
Marketing 127 79
Registrar's fees 82 83
Banking charges 15 1
Secretarial services 167 121
Travel expenses 80 (4)
Legal fees – redomicile project – 17
Broker fees 26 21
Stock Exchange listing fees 46 52
Safe custody fees 185 165
Management fee rebate from GAM (138) –
Other 119 86
Total Other Expenses 1,227 1,149
5 FINANCE COSTS
Revenue
Year ended
31 March 2022
£000
Revenue
Year ended
31March 2021
£000
Interest payable – –
Total Finance Costs – –
This note refers to an ongoing finance facility with Lombard Odier which has not been utilised in the current or prior year.
Notes to the Financial Statements
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Hansa Investment Company Limited For the Year Ended 31 March 2022 65
6 DIVIDENDS PAID
Year ended
31 March 2022
£000
Year ended
31March 2021
£000
Amounts recognised as distributed to shareholders in the year are as follows:
Fourth interim dividend for 2021 (paid 28 May 2021): 0.8p (2020:0.8p) 960 960
First interim dividend for 2022 (paid 31 August 2021): 0.8p (2021:0.8p) 960 960
Second interim dividend for 2022 (paid 26 November 2021): 0.8p (2021:0.8p) 960 960
Third interim dividend for 2022 (paid 28 February 2022): 0.8p (2021: 0.8p) 960 960
Total Dividends Paid 3,840 3,840
Set out below are the total dividends paid and proposed in respect of the current financial year. Where there has been no revenue
available for distribution by way of dividend for the year, dividends have been paid from contributed surplus which is permitted by
Bermudan company law.
Year ended
31 March 2022
£000
Year ended
31March 2021
£000
First interim dividend for 2022 (paid 31 August 2021): 0.8p (2021: 0.8p) 960 960
Second interim dividend for 2022 (paid 26 November 2021): 0.8p (2021: 0.8p) 960 960
Third interim dividend for 2022 (paid 28 February 2022): 0.8p (2021: 0.8p) 960 960
Fourth interim dividend for 2022 (payable 27 May 2022): 0.8p (2021:0.8p) 960 960
Total Dividends Paid & Proposed 3,840 3,840
The Board has announced four interim dividends, each of 0.8p per Ordinary and ‘A’ non-voting Ordinary share, relating to the year
ended 31 March 2022. No final dividend is proposed for the year ended 31 March 2022.
7 RETURN ON ORDINARY SHARES (EQUITY)
Revenue
Year ended
31 March
2022
Capital
Year ended
31 March
2022
Total
Year ended
31 March
2022
Revenue
Year ended
to 31March
2021
Capital
Year ended
to 31March
2021
Total
Year ended
to 31March
2021
Returns per share 1.4p 14.3p 15.7p 2.2p 77.4p 79.6p
Returns
Revenue return per share is based on the revenue attributable to equity shareholders of £1,667,000 (2021: £2,580,000).
Capital return per share is based on the capital profit attributable to equity shareholders of £17,145,000 (2021: £92,851,000).
Total return per share is based on the combination of revenue and capital returns attributable to equity shareholders, amounting to
net profit of £18,812,000 (2021: £95,431,000).
Both revenue and capital return are based on 40,000,000 Ordinary shares and 80,000,000 ‘A’ non-voting Ordinary shares, in issue
throughout the year.
Notes to the Financial Statements
FINANCIAL STATEMENTS
66 Hansa Investment Company Limited For the Year Ended 31 March 2022
8 INVESTMENTS IN SUBSIDIARY AT FAIR VALUE THROUGH PROFIT OR LOSS
During the year Hansa Trust Ltd was dissolved. Therefore, the remaining intercompany balance, along with the share capital and
other reserves of Hansa Trust Ltd were reduced and then cancelled. As a result, there is no investment in subsidiary as at 31 March
2022. As at 31 March 2021, the Company owned 100% of the ordinary share capital and voting rights of Hansa Trust PLC formerly
an investment trust, registered and operating in England. The fair value at 31 March 2021 was £3,179,000. As at 31 March 2021,
Hansa Trust PLC was no longer trading and was not beneficially entitled to any investments except for an intercompany loan.
The intercompany loan was originally created as part of the Scheme of Domiciliation in August 2019 to reflect the transfer of
the beneficial title of the portfolio from Hansa Trust PLC to the Company. As at 31 March 2021 there remained a relatively small
intercompany balance between the two entities which fully settled with Hansa Investment Company Limited on the dissolution of
Hansa Trust Limited on 9 November 2021 giving a nil balance as at 31 March 2022. As part of the process of dissolution, Hansa
Trust PLC had re-registered as Hansa Trust Limited.
9 INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
Listed
£000
Unquoted
£000
2022
Total
£000
2021
Total
£000
Cost as at 1 April 246,951 74,883 321,834 324,873
Investment holding gains/(losses) at 1 April 30,333 13,101 43,434 (51,609)
Valuation as at 1 April 277,284 87,984 365,268 273,264
Movements in the year:
Purchases at cost 30,530 310 30,840 27,416
Sales – proceeds (32,223) (964) (33,187) (28,444)
Movement in investment holding gains 14,680 2,385 17,065 93,032
Valuation as at 31 March 290,271 89,715 379,986 365,268
Cost as at 31 March 250,660 74,267 324,927 321,834
Investment holding gains as at 31 March 39,611 15,448 55,059 43,434
Valuation as at 31 March 290,271 89,715 379,986 365,268
2022
£000
2021
£000
Gains/(losses) on sales 5,440 (2,011)
Movement in investment holding gains 11,625 95,043
Gains on investments held at fair value through profit or loss 17,065 93,032
Transaction costs
During the year expenses were incurred in acquiring and disposing of investments classified as fair value through profit or loss.
Thesehave been expensed through capital and are included within gains on investments in the Income Statement. The total costs
were as follows:
2022
£000
2021
£000
Purchases 14 22
Sales 23 23
37 45
Notes to the Financial Statements
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Hansa Investment Company Limited For the Year Ended 31 March 2022 67
10 SIGNIFICANT HOLDING
The Company’s holdings of 10% or more of any class of shares in investment companies and 20% or more of any class of shares in
non-investment companies as at 31 March 2022 are detailed below:
Exc. Minority Interest
Country of
incorporation
or registration
Class of
capital
% of
class
held
Latest
available
accounts
Total
capital and
reserves
Profit
after
tax for
the year
Ocean Wilsons Holdings Limited Bermuda Ordinary 26.5 31.12.21 $593,657,000 $63,687,000
Ocean Wilsons Holdings Limited is included as part of the investment portfolio in accordance with IAS 28 – Investment in Associates.
11 TRADE AND OTHER RECEIVABLES
The Company applies the IFRS 9 simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance for all trade receivables and contract assets.
2022
£000
2021
£000
Prepayments and accrued income 201 177
201 177
12 CASH AND CASH EQUIVALENTS
2022
£000
2021
£000
Cash at bank 3,043 2,833
3,043 2,833
13 TRADE AND OTHER PAYABLES
2022
£000
2021
£000
Intercompany Loan – 3,179
Other creditors and accruals 368 388
368 3,567
Note: Hansa Trust Limited was dissolved on 9 November 2021. As a result, the remaining Intercompany loan balance was cancelled at this time as well as the equity
investment in the subsidiary of the same value. See Note 20 for information on the equity Investment. See Note 8 for a more detailed explanation of the dissolution process.
14 CALLED UP SHARE CAPITAL
2022
£000
2021
£000
40,000,000 Ordinary shares of 1p 400 400
80,000,000 ‘A’ non-voting Ordinary shares of 1p 800 800
1,200 1,200
The ‘A’ non-voting Ordinary shares do not entitle the holders to receive notices or to vote, either in person or by proxy, at any
general meeting of the Company, but in all other respects rank pari passu with the Ordinary shares of the Company.
Notes to the Financial Statements
FINANCIAL STATEMENTS
68 Hansa Investment Company Limited For the Year Ended 31 March 2022
15 CONTRIBUTED SURPLUS
2022
£000
2021
£000
Opening balance at 1 April 326,019 327,939
Dividend paid (1,260) (1,920)
Closing balance at 31 March 324,759 326,019
16 RETAINED EARNINGS
Reserves Reserves
Revenue
2022
£000
Capital –
Other
2022
£000
Capital –
Investment
holding
profits
2022
£000
Total
retained
earnings
2022
£000
Revenue
2021
£000
Capital –
Other
2021
£000
Capital –
Investment
holding
profits
2021
£000
Total
(accumulated
losses)/
retained
earnings
2021
£000
Opening balance at 1 April (1,111) (1,652) 43,434 40,671 (1,771) 540 (51,609) (52,840)
Profit/(loss) for the year 1,667 5,520 11,625 18,812 2,580 (2,192) 95,043 95,431
Dividend paid (2,580) – – (2,580) (1,920) – – (1,920)
Closing balance at 31 March (2,024) 3,868 55,059 56,903 (1,111) (1,652) 43,434 40,671
17 NET ASSET VALUE
2022 2021
NAV per Ordinary and ‘A’ non-voting Ordinary share 319.1p 306.6p
The NAV per Ordinary and ‘A’ non-voting Ordinary share is based on the net assets attributable to equity shareholders of
£382,862,000 (2021: £367,890,000) and on 40,000,000 Ordinary shares (2021: 40,000,000) and 80,000,000 ‘A’ non-voting
Ordinary shares (2021: 80,000,000) in issue at 31 March 2022.
18 COMMITMENTS AND CONTINGENCIES
The Company has no outstanding commitments as at 31 March 2022.
19 FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
The Company’s financial instruments comprise securities, cash balances, debtors and creditors. These assets are classified in the
following measurement categories:
• those to be measured subsequently at fair value through profit or loss; and
• those to be measured at amortised cost.
The financial assets held at amortised cost include trade and other receivables, cash and cash equivalents.
Risk Objectives and Policies
The objective of the Company is to achieve growth of shareholder value commensurate with the risks taken, bearing in mind that
the protection of long-term shareholder value is paramount. The policy of the Board is to provide a framework within which the
Portfolio Manager can operate and deliver the objectives of the Company. In pursuing its investment objective, the Company is
exposed to a variety of risks that could result in either a reduction in the Company’s net assets and/or a reduction of the profits
available for dividends.
These risks include those identified by the accounting standard IFRS 7, being market risk (comprising currency risk, interest rate risk
and other price risk), liquidity risk and credit risk. The Directors’ approach to the management of these is set out below. The Board,
in conjunction with the Portfolio Manager and Company Secretary, oversees the Company’s risk management.
Notes to the Financial Statements
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Hansa Investment Company Limited For the Year Ended 31 March 2022 69
19 FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (CONTINUED)
Risks Associated with Financial Instruments
Foreign currency risk
Foreign currency risks arise in two distinct areas which affect the valuation of the investment portfolio. 1) the direct exposure where
an investment is denominated and paid for in a currency other than Sterling; and 2) the indirect exposure where an investment has
substantial non-Sterling underlying investment and/or cash flows. The Company does not normally hedge against foreign currency
movements affecting the value of the investment portfolio, but takes account of this risk when making investment decisions. Some
of the fund investments into which the Company invests will, in part or in whole, hedge some of their underlying currency risk,
but this will be known at the time of investment and will form part of the investment decision. In those cases, the hedging will not
remove the exposure to the underlying country or market sector. The Portfolio Manager monitors the effect of foreign currency
fluctuations through the pricing of the investments by the various markets.
Direct
foreign
currency
risk
2022
£000
No direct
foreign
currency
risk
2022
£000
Total
2022
£000
Direct
foreign
currency
risk
2021
£000
No direct
foreign
currency
risk
2021
£000
Total
2021
£000
Investments 115,858 264,128 379,986 127,772 237,496 365,268
Other receivables including prepayments 29 172 201 126 51 177
Cash at bank 24 3,019 3,043 – 2,833 2,833
Current liabilities – (368) (368) – (388) (388)
115,911 266,951 382,862 127,898 239,992 367,890
Note: Direct foreign currency risk includes direct exposure to USD and Euro currencies.
Foreign currency sensitivity
The following table illustrates the sensitivity of the profit/loss for the year and the shareholders’ funds in regard to the Company’s
financial assets and financial liabilities. It assumes a 10% depreciation of Sterling against foreign currencies at 31 March 2022 and
31 March 2021. These percentages have been determined based on the average market volatility in exchange rates in the previous
12 months. The sensitivity analysis is based on the Company’s monetary foreign currency financial instruments held at each balance
sheet date.
US$
2022
£000
Euro
2022
£000
Other
2022
£000
US$
2021
£000
Euro
2021
£000
Other
2021
£000
If Sterling had weakened by 10% against the currencies shown, this would have had the following effect on the Company:
Income statement – profit/(loss) 785 (331) (191) 3,029 509 851
Equity shareholder funds 8,536 1,453 1,600 8,291 2,201 2,297
9,321 1,122 1,409 11,320 2,710 3,148
Note: Other includes exposure to foreign currencies excluding US dollar and Euro.
A 10% strengthening of Sterling against the above currencies would result in an equal and opposite effect on the above amounts.
Notes to the Financial Statements
FINANCIAL STATEMENTS
70 Hansa Investment Company Limited For the Year Ended 31 March 2022
19 FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (CONTINUED)
Interest rate risk
Interest rate movements may affect the level of income receivable on cash deposits and the interest payable on the Company’s
variable rate borrowings.
The Company has banking facilities amounting to £30m (2021: £30m) which are available for the Portfolio Manager to use in
purchasing investments; the costs of which are based on the prevailing LIBOR rate, plus an agreed margin. The Company does not
normally hedge against interest rate movements affecting the value of the investment portfolio, but takes account of this risk when
an investment is made utilising the facility. The level of banking facilities used is monitored by both the Board and the Portfolio
Manager on a regular basis. The impact on the returns and net assets of the Company for every 1% change in interest rates, based
on the amount drawn down at the Year-End under the facility, would be £nil (2021: £nil). The level of banking facilities utilised at
31 March 2022 was £nil (2021: £nil).
Interest rate changes usually impact equity prices. The level and direction of change in equity prices is subject to prevailing local and
world economic conditions as well as market sentiment, all of which are very difficult to predict with any certainty. The Company
has floating rate financial assets, consisting of bank balances and cash funds that have received average rates of interest during the
year of 0.0% on bank balances.
Cash flow
interest
rate risk
2022
£000
No
interest
rate risk
2022
£000
Total
2022
£000
Cash flow
interest
rate risk
2021
£000
No
interest
rate risk
2021
£000
Total
2021
£000
Investments – 379,986 379,986 – 365,268 365,268
Other receivables including prepayments – 201 201 – 177 177
Cash at bank 3,043 – 3,043 2,833 – 2,833
Current liabilities – (368) (368) – (388) (388)
3,043 379,819 382,862 2,833 365,057 367,890
Other price risk
By the nature of its activities, the Company’s investments are exposed to market price fluctuations. NAV is calculated and reported
daily to the London Stock Exchange. The Portfolio Manager and the Board monitor the portfolio valuation on a regular basis and
consideration is given to hedging the portfolio against large market movements.
The Company’s investment in Ocean Wilsons is large both in absolute terms, £93.5m as valued at 31 March 2022 (2021:
£78.6m) and as a proportion of the NAV, 24.4% (2021: 21.4%). Shareholders should be aware that if anything of a severe and
untoward nature were to happen to this company, it could result in a significant impact on the NAV and share price. However,
it should also be noted that the exposure of Hansa Investment Company Limited to the currency, country and market based risk
exposure of OceanWilsons is, to an extent, mitigated by the diverse nature of the two investments within Ocean Wilsons. Wilson
Sons, corresponding to 60.7% of Ocean Wilsons’ NAV, has a direct exposure to the Brazilian economy, whereas OceanWilsons
Investments has a diverse Investment portfolio and corresponds to the other 39.3%. It is an investment the Board pays close
attention to and it should be pointed out that the risks associated with it are very different from those of the other companies
represented in the portfolio. The Board itself regularly undertakes a thorough review of its business and prospects and has
determined that its future holds a lot of promise. As a consequence the Board believes the risk involved in the investment
is worthwhile.
The performance of the portfolio as a whole is not designed to correlate with that of any market index. Should the portfolio of the
Company, as detailed on pages 36 and 37, rise or fall in value by 10% from the year end valuation, the effect on the Company’s
profit and equity would be an equal rise or fall of £38.0m (2021: £36.8m).
Notes to the Financial Statements
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Hansa Investment Company Limited For the Year Ended 31 March 2022 71
19 FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (CONTINUED)
Credit Risk
The Company only transacts with regulated institutions on normal market terms, which are trade date plus one to three days in
the case of equities. Fund investment settlement periods will vary from fund to fund and are defined by the individual managers.
Thelevels of amounts outstanding from brokers and fund managers are regularly reviewed by the Portfolio Manager. The duration
of credit risk associated with the investment transactions is the period between the date the transaction took place, the trade date,
the date the stock and cash were transferred and the settlement date. The level of risk during the period is the difference between
the value of the original transaction and its replacement with a new transaction. The amounts due to/(from) brokers at 31 March
2022 are shown in Note 11 and Note 13 on page 67.
The Company’s maximum exposure to credit risk on cash is £3.0m (2021: £2.8m) and on cash funds is £nil (2021: £nil). Surplus cash
is on deposit with the Depositary/Custodian.
Liquidity Risk
The liquidity risk to the Company is that it is unable to meet its obligations as they fall due, as a result of a lack of available cash and
an inability to dispose of investments in a timely manner. A substantial proportion of the Company’s portfolio is held in liquid quoted
investments; however, there is a large, Strategic, holding in Ocean Wilsons of 24.4% (2021: 21.4%), unquoted equity investments
of 2.3% (2021: 2.2%) and investments into open-ended investment funds with varying liquidity terms of 61.7% (2021: 59.9%).
The Portfolio Manager takes into consideration the liquidity of each investment when purchasing and selling, in order to maximise
the returns to shareholders, by placing suitable transaction levels into the market. Special consideration is given to investments
representing more than 5% of the investee company. A detailed list of the investments, split by silo, held at 31 March 2022 is
shown on pages 36 and 37. This can be used broadly to ascertain the levels of liquidity within the portfolio, although liquidity will
vary with each investment – particularly the funds.
Capital Management
The Company considers its capital to be its issued share capital and reserves and whilst the Company has access to loan facilities it
is not considered or used as core capital, but primarily to meet the cash timing requirements of opportunistic investment strategies
and thereby enhance shareholder returns. The Board regularly monitors its share discount policy and the level of discounts and
whilst it has the option to repurchase shares, it considers the best means of attaining a good rating for the shares is to concentrate
on good shareholder returns.
However, the Board believes the ability of the Company to repurchase its own ‘A’ non-voting Ordinary shares in the market may
potentially enable it to benefit all equity shareholders of the Company. The repurchase of ‘A’ non-voting Ordinary shares, at a discount
to the underlying NAV, would enhance the NAV per share of the remaining equity shares and might also enable the Company to
address more effectively any imbalance between supply and demand for the Company’s ‘A’ non-voting Ordinary shares.
20 FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
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
(i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability not based on observable market data (unobservable inputs).
Notes to the Financial Statements
FINANCIAL STATEMENTS
72 Hansa Investment Company Limited For the Year Ended 31 March 2022
20 FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (CONTINUED)
The financial assets and liabilities, measured at fair value, in the Statement of Financial Position, grouped into the fair value hierarchy
and valued in accordance with the accounting policies in Note 1, are detailed below:
31March 2022
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
Financial assets at fair value through profit or loss
Quoted equities 136,771 – – 136,771
Unquoted equities – – 8,917 8,917
Fund investments 27,328 206,970 – 234,298
Net fair value 164,099 206,970 8,917 379,986
31March 2021
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
Financial assets at fair value through profit or loss
Quoted equities 136,680 – – 136,680
Unquoted equities – – 8,055 8,055
Fund investments 14,188 206,345 – 220,533
Investment In subsidiary – – 3,179 3,179
Net fair value 150,868 206,345 11,234 368,447
The Company’s policy is to recognise transfers into and out of the different fair value hierarchy levels at the date the event or change
in circumstances that caused the transfer occurred.
A reconciliation of fair value measurements in Level 3 is set out in the following table:
2022
Equity
investments
£000
2021
Equity
investments
£000
Opening Balance 11,234 12,455
Dissolution of Hansa Trust (3,179) –
Capital Distribution (648) –
Total gains or losses included in gains on investments in the Income Statement:
– on assets held at year end 1,510 (1,221)
Closing Balance 8,917 11,234
Note: Hansa Trust Limited was dissolved on 9 November 2021. As a result, the remaining equity investment was cancelled at this time as well as the Intercompany
loan balance with the subsidiary of the same value. See Note 13 for information on the Intercompany loan balance. See Note 8 for a more detailed explanation of the
dissolution process.
Notes to the Financial Statements
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Hansa Investment Company Limited For the Year Ended 31 March 2022 73
20 FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (CONTINUED)
As at 31 March 2022, the investment in DV4 has been classified as Level 3. This is because 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 31 March 2022. The most recent valuation statement was received on 4 March 2022 and relates to
the DV4 portfolio at 31 December 2021. Additionally, the underlying assets of DV4 are all Real Estate in nature and, as such, there
is not a readily comparable market of identical assets for valuation purposes. In the absence of a valuation for 31 March 2022 from
DV4, the Company performed additional procedures to determine the reasonableness of the fair value estimate for inclusion in the
Financial Statements. Direct enquiries of the manager of DV4 were made in July 2020 to understand, amongst others, valuation
process and techniques used, external experts used in the valuation process and updated details of underlying property portfolio.
In addition, the Company has obtained external independent valuation data and compared the historic valuation movements of
DV4 to that data. It has been confirmed with DV4's manager that the valuation procedures discussed in July 2020 are still the same
used now. In addition, the Company has compared the historic valuation movements of DV4 to the FTSE350 Real Estate Index.
Based on the information obtained and additional analysis performed the Company is satisfied that DV4 is carried in these Financial
Statements at an amount that represents its best estimate of fair value at 31 March 2022. It is believed the value of DV4 as at
31 March 2022 will not be materially different, but this valuation is based on historic valuations by DV4, does not have a readily
available third party comparator and, as such, is an estimate. If the value of the investment was to increase or decrease by 10%,
while all other variables remained constant, the return and net assets attributable to shareholders for the year ended 31 March 2022
would have increased or decreased by £892,000 (2021: £806,000). The Board considers 10% to be a potential movement between
valuation periods borne out by historic valuation trends. However, this does not preclude the valuation moving a greater amount
than 10% in the future. The subsidiary has been valued taking into account the latest assets and liabilities remaining In Hansa Trust.
21 RELATED PARTIES & TRANSACTIONS WITH THE PORTFOLIO MANAGER
William Salomon is a Director of the Company and Senior Partner of the Company’s Portfolio Manager. Details of the relationship
between the Company and Hansa Capital Partners LLP, including amounts paid during the year and owing at 31 March 2022,
aredisclosed in the Strategic Report – Shareholder Profile and Engagement on pages 38 to 40 and in Note 3 on page 64. Details
of the relationship between the Company and the Directors, including amounts paid during the period to 31 March 2022,
aredisclosed in the Strategic Report – The Board on page 6 and also in the Directors’ Remuneration Report on pages 49 to 51.
22 CONTROLLING PARTIES
At 31 March 2022 Victualia Limited Partnership and Nomolas Ltd each held 25.9% of the issued Ordinary shares.
Additionalinformation is disclosed in the Strategic Report – Substantial Shareholders on page 38.
23 POST BALANCE SHEET EVENTS
There are no significant events that have occurred after the end of the reporting year to the date of this report which
require disclosure.
Notes to the Financial Statements
74 Hansa Investment Company Limited For the Year Ended 31 March 2022
Notice of the Annual General Meeting
NOTICE OF THE ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting
of the Members of the Company will be held at Clarendon
House, 2 Church Street, Hamilton, HM 11, Bermuda on
Thursday 11 August at 10:00 a.m. (Bermuda time) for the
following purposes:
Agenda
• To appoint a chairperson of the meeting.
• To confirm notice.
Resolutions
1 To receive and consider the audited Financial Statements
and the Reports of the Directors and Auditor for the year
ended 31 March 2022.
2 To re-elect Jonathan Davie (a biography and Board
endorsement can be found on page 4) as a Director of
the Company.
3 To re-elect Richard Lightowler (a biography and Board
endorsement can be found on page 4) as a Director of
the Company.
4 To re-elect Nadya Wells (a biography and Board
endorsement can be found on page 5) as a Director of
the Company.
5 To re-elect William Salomon (a biography and Board
endorsement can be found on page 5) as a Director of
the Company.
6 To re-elect Simona Heidempergher (a biography and Board
endorsement can be found on page 5) as a Director of
the Company.
7 To approve the Directors’ Remuneration Report.
8 To approve the Directors’ Remuneration Policy and
authorise the Board to determine the remuneration of
the Directors. Further, as per the Policy as presented on
page49, to increase the current upper annual limit of
Directors’ remuneration to $400,000. Thus, also approve
the amendment to the Company’s bye-law 44.1(a) to
replace the text “not exceed US$350,000 per annum”
with “not exceed US$400,000 per annum”.
9 To approve the Company’s Dividend Policy as can be found
on page 21 of the Annual Report.
10 To appoint PricewaterhouseCoopers Ltd as Auditor of the
Company and to authorise the Directors to determine the
remuneration of the Auditor.
11 Approval to repurchase up to 14.99% of the
‘A’ non-voting Ordinary shares of 1p each in the issued
shares capital of the Company (the “Shares”).
THAT the Company be and hereby is unconditionally
authorised to make market purchases up to an aggregate
of 11,992,000 shares at a price (exclusive of expenses)
which is:
a) not less than 1p per share; and
b) not more than the higher of: i) 5% above the average
of the middle-market quotations (as derived from
and calculated by reference to the Daily Official List
of the London Stock Exchange) for ‘A’ non-voting
Ordinary shares of 1p each in the five business days
immediately preceding the day on which the share is
purchased; and ii) the higher of the last independent
trade and the then current highest independent bid.
AND
THAT the approval conferred by this resolution shall expire
on the date of the next AGM (except in relation to the
purchase of shares, the contract for which was concluded
before such date and which might be executed wholly or
partly after such date) unless the authority is renewed or
revoked at any other general meeting prior to such time.
Dated: 17 June 2022
Shane Reynolds
For and on behalf of
Conyers Corporate Services (Bermuda) Limited
Secretary
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Hansa Investment Company Limited For the Year Ended 31 March 2022 75
Notes for Shareholders
1 Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001 (as amended), only those members
registered in the register of members of the Company
48hours before the Annual General Meeting (i.e. by close
of business UK time on 9 August 2022) (or if the Meeting
is adjourned, in the register of members of the Company
48hours before the date and time of the adjourned
meeting) (the “Meeting”) shall be entitled to attend or
vote at the Meeting in respect of the number of shares
registered in their respective names at that time. Changes
to entries on the register of members after that time will
be disregarded in determining the rights of any person to
attend or vote at the Meeting.
2 Registered members of the Company may vote at the
Meeting (whether by show of hands or poll) in person
or by proxy or corporate representative. A member may
appoint one or more persons as his proxy to attend and
vote at the Meeting on his behalf. A proxy need not be
a member. Where more than one proxy is appointed the
instrument of proxy must specify the number of shares
each proxy is entitled to vote.
3 The appointment of a proxy will not affect the right of
a member to attend and vote in person at the Meeting or
adjourned meeting. A member that is a corporation may
appoint a representative to attend and vote on its behalf at
the Meeting by delivering evidence of such appointment
to the Company’s registrar no later than 48 hours before
the time fixed for the Meeting (i.e. by 2:00pm UK time on
9 August 2022) or any adjourned meeting.
4 In order to be valid, the proxy appointment (together
with any power of attorney or other authority (if any)
under which it is signed, or a notarised certified copy of
that authority) must be returned by one of the following
methods, in each case so as to arrive no later than 2:00pm
UK time on 9 August 2022 or, in the case of an adjourned
meeting, not less than 48 hours before the time appointed
for holding such adjourned meeting (ignoring for these
purposes non-working days) or (in the case of a poll taken
otherwise than at or on the same day as the Meeting or
adjourned meeting) for the taking of the poll at which it is
to be used:
a) via www.signalshares.com by logging on and
selecting the ‘Proxy Voting’ link. If you have not
previously registered for electronic communications,
you will first be asked to register as a new user, for
which you will require your investor code (“IVC”),
(which can be found on your share certificate), family
name and postcode (if resident in the UK); or
b) in hard copy form by post, by courier or by hand to
the Company’s Registrars, Link Group, PXS 1, Central
Square, 29 Wellington Street, Leeds, LS1 4DL.
If you need help with voting online or need to request
a proxy form, please contact our Registrars, Link
Group, on 0371 664 0300. Calls are charged at the
standard geographic rate and will vary by provider.
Calls outside the UK will be charged at the applicable
international rate. They are open between 09:00 – 17:30,
Monday to Friday excluding public holidays in England
and Wales. Alternatively, you can email Link at
shareholder[email protected].
Notes for Depositary Interest Holders
1 You will not receive a form of direction for the Annual
General Meeting in the post. Depositary Interests may
be voted through the CREST Proxy Voting Service
in accordance with the procedures set out in the
CREST manual.
In order for a proxy appointment or instruction made
using the CREST service to be valid, the appropriate
CREST message (a “CREST Proxy Instruction”) must be
properly authenticated in accordance with Euroclear UK
& Ireland Limited’s specifications and must contain the
information required for such instruction, as described
in the CREST Manual (available via www.euroclear.com/
CREST). The message, regardless of whether it constitutes
the appointment of a proxy or is an amendment to the
instruction given to a previously appointed proxy must,
in order to be valid, be transmitted so as to be received
by the issuer’s agent ID RA10 by 2:00pm UK time on
8 August 2022. For this purpose, the time of receipt
will be taken to be the time (as determined by the time
stamp applied to the message by the CREST Application
Host) from which the issuer’s agent is able to retrieve the
message by enquiry to CREST, in the manner prescribed by
76 Hansa Investment Company Limited For the Year Ended 31 March 2022
Notice of the Annual General Meeting
Continued
CREST. After this time any change of instructions to proxies
appointed through CREST should be communicated to
the appointee through other means. CREST members
and, where applicable, their CREST sponsors, or voting
service providers should note that Euroclear UK & Ireland
Limited does not make available special procedures in
CREST for any particular message. Normal system timings
and limitations will, therefore, apply in relation to the
input of CREST Proxy Instructions. It is the responsibility
of the CREST member concerned to take (or, if the CREST
member is a CREST personal member, or sponsored
member, or has appointed a voting service provider, to
procure that his CREST sponsor or voting service provider(s)
take(s)) such action as shall be necessary to ensure
that a message is transmitted by means of the CREST
system by any particular time. In this connection, CREST
members and, where applicable, their CREST sponsors
or voting system providers are referred, in particular,
to those sections of the CREST Manual concerning
practical limitations of the CREST system and timings. The
Company may treat as invalid a CREST Proxy Instruction
in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
2 In the case of Depositary Interest Holders, a form of
direction may be requested and completed in order
to instruct Link Market Services Trustees Limited, the
Depositary, to vote on the holder’s behalf at the Meeting
by proxy or, if the Meeting is adjourned, at the adjourned
meeting. Requests for a hard copy should be sent Link
Group, PXS 1, Central Square, 29 Wellington Street, Leeds,
LS1 4DL (telephone number: 03716640300).
3 To be effective, a valid form of direction (and any power of
attorney or other authority under which it is signed) must
be received electronically or delivered to Link Group, PXS1,
Central Square, 29 Wellington Street, Leeds, LS1 4DL by no
later by 2:00pm UK time on 8 August 2022) or 72hours
before any adjourned Meeting.
4 The Depositary will appoint the Chairman of the meeting
as its proxy to cast your votes. The Chairman may also vote
or abstain from voting as he or she thinks fit on any other
business (including amendments to resolutions) which may
properly come before the meeting.
5 The ‘Vote Withheld’ option is provided to enable you to
abstain from voting on the resolutions. However, it should
be noted that a ‘Vote Withheld’ is not a vote in law and
will not be counted in the calculation of the proportion of
the votes ‘For’ and ‘Against’ a resolution.
6 Depositary Interest holders wishing to attend the meeting
should contact the Depositary at Link Group, PXS1,
Central Square, 29 Wellington Street, Leeds, LS1 4DL or by
email by using [email protected] by no
later than by 2:00pm UK time on 8 August 2022.
All Holders
1 The quorum for the Annual General Meeting shall be two
or more shareholders present in person or by proxy. If
within two hours from the time appointed for the meeting
a quorum is not present, the meeting shall be adjourned
to the next business day at the same time and place or to
such other time and place as the Directors may determine,
and if a quorum is not present at any such adjourned
meeting, the meeting shall be dissolved.
2 As of 17 June 2022 the Company’s total number of shares
in issue is 40,000,000 Ordinary shares of 1p each and
80,000,000 ‘A’ non-voting Ordinary shares of 1p 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.
3 A copy of this notice and other information can be found
at https://www.hansaicl.com/shareholder-information/
financial-and-investment-reporting/year-2022#2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Investor Information
Investor Information
INVESTOR INFORMATION
The Company currently manages its affairs so as to be
a qualifying investment company for ISA 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 ISA products. In addition, the
Company currently conducts its affairs so shares issued by
Hansa Investment Company Limited can be recommended by
independent financial advisers to ordinary retail investors, in
accordance with the Financial Conduct Authority’s (“FCA”)
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
excluded securities defined in the FCA Handbook Glossary.
Finally, Hansa Investment Company is registered as a Reporting
Financial Institution with the US IRS for FATCA purposes.
INVESTOR DISCLOSURE
AIFMD
Hansa Investment Company’s AIFMD Investor Disclosure
document can be found on its website. The document is
a regulatory requirement and summarises key features of the
Company for investors. It can be viewed at: www.hansaicl.com/
shareholder-information/regulatory-information.aspx
Packaged Retail and Insurance-based Investment Products
(“PRIIPs”)
The Company’s AIFM, Hanseatic Asset Management LBG,
isresponsible for applying the product governance rules defined
under the MiFID II legislation on behalf of Hansa Investment
Company Limited. Therefore, the AIFM is deemed to be the
‘Manufacturer’ of Hansa Investment Company’s two share
classes. Under MiFID II, the Manufacturer must make available
Key Information Documents (“KIDs”) for investors to review
ifthey so wish ahead of any purchase of the Company’s shares.
Links to these documents can also be found on the Company’s
website for good measure: www.hansaicl.com/shareholder-
information/regulatory-information.aspx
CAPITAL STRUCTURE
The Company has 40,000,000 Ordinary shares of 1p each
and 80,000,000 ‘A’ non-voting Ordinary shares of 1p 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.
Hansa Investment Company Limited For the Year Ended 31 March 2022 77
INVESTOR INFORMATION
Investor Information
Continued
CONTACT DETAILS
Email: [email protected]
Website: www.hansaicl.com
Company Secretary (and Company’s Registered Office)
Conyers Corporate Services (Bermuda) Limited
Clarendon House, 2 Church Street
PO Box HM666, Hamilton HM CX
Bermuda
Phone: +1 441 279 5373
Website: www.conyers.com
Please contact the Portfolio Manager, as below, if you have any
queries concerning the Company’s investments or performance.
Portfolio Manager
Hansa Capital Partners LLP
50 Curzon Street
London W1J 7UW
Telephone: +44 (0) 207 647 5750
Email: [email protected]
Website: www.hansagrp.com
The Company’s website includes the following:
– Monthly Fact Sheets
– Stock Exchange Announcements
– Details of the Board Statements
– Annual and Interim Reports
– Share Price Data Reports
Please contact the Registrars, as below, if you have a query
about a certificated holding in the Company’s shares.
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
If you do not have internet access you can call the Shareholder
Support Centre on 0371 664 0300. Calls are charged at the
standard geographic rate and will vary by provider. Calls outside
the UK will be charged at the applicable international rate.
They are open between 09:00 – 17:30, Monday to Friday
excluding public holidays in England and Wales.
Email: shareholderenquiries@linkgroup.co.uk
www.linkgroup.eu
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 BMG428941162
‘A’ non-voting Ordinary shares BMG428941089
SEDOL
Ordinary shares BKLFC18
‘A’ non-voting Ordinary shares BKLFC07
Reuters
Ordinary shares HAN.L
‘A’ non-voting Ordinary shares HANA.L
Bloomberg
Ordinary shares HAN LN
‘A’ non-voting Ordinary shares HANA LN
TIDM
Ordinary shares HAN
‘A’ non-voting Ordinary shares HANA
Legal Entity Identifier: 213800RS2PWJXSZQDF66
USEFUL INTERNET ADDRESSES
Association of Investment Companies www.theaic.co.uk
London Stock Exchange www.londonstockexchange.com
TrustNet www.trustnet.com
Interactive Investor www.iii.co.uk
Morningstar www.morningstar.com
Edison www.edisongroup.com
FINANCIAL CALENDAR
Company year end 31March
Annual Report sent to shareholders 30 June
Annual General Meeting 9 August
Announcement of Half Year results November
Interim Report sent to shareholders December
Interim dividend payments August, November,
February & May
78 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Company Information
Company Information
Registered in Bermuda company number: 54752
BOARD OF DIRECTORS
Jonathan Davie (Chairman)
Simona Heidempergher
Richard Lightowler
William Salomon
Nadya Wells
SECRETARY AND REGISTERED OFFICE
Conyers Corporate Services (Bermuda) Limited
Clarendon House
2 Church Street
PO Box HM666
Hamilton HM CX
Bermuda
PORTFOLIO MANAGER AND ADDITIONAL
ADMINISTRATIVE SERVICES PROVIDER
Hansa Capital Partners LLP
50 Curzon Street
London W1J 7UW
INDEPENDENT AUDITOR
PricewaterhouseCoopers Ltd
Washington House
4th Floor, 16 Church Street
Hamilton HM11
Bermuda
SOLICITORS – BERMUDA
Conyers Dill & Pearman Limited
Clarendon House
2 Church Street
Hamilton HM11
Bermuda
SOLICITORS – UK
Dentons
1 Fleet Place
London EC4M 7WS
REGISTRAR
Link Market Services (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St. Sampson
Guernsey
GY2 4LH
CUSTODIAN
Banque Lombard Odier & Cie SA
11 Rue de la Corraterie
1204 Geneva
Switzerland
STOCKBROKER
Winterflood Investment Trusts
The Atrium Building
Cannon Bridge
25 Dowgate Hill
London EC4R 2GA
ADMINISTRATOR
Maitland Administration Services Limited
Hamilton Centre
Rodney Way
Chelmsford
Essex
CM1 3BY
ALTERNATIVE INVESTMENT FUND MANAGER
Hanseatic Asset Management LBG
Tudor House
Le Bordage
St Peter Port
Guernsey
GY1 1WD
Hansa Investment Company Limited For the Year Ended 31 March 2022 79
INVESTOR INFORMATION
Association of Investment Companies (“AIC”)
The Association of Investment Companies is the UK trade
association for closed-ended investment companies. It represented
Hansa Trust prior to the redomiciliation of the business. Despite
the Company not being UK domiciled, the Company is UK listed
and operates in most ways in a similar manner to a UK Investment
Trust. Therefore, the Company follows the AIC Code of Corporate
Governance and the Board considers that the AIC’s guidance on
issues facing the industry remains very relevant to the operations
of the Company.
Alternative Investment Fund Managers Directive
(“AIFMD”)
The AIFMD is a regulatory framework for alternative investment
fund managers (“AIFMs”), including managers of hedge funds,
private equity firms and investment trusts. Its scope is broad and,
with a few exceptions, covers the management, administration
and marketing of alternative investment funds (“AIFs”). Its focus is
on regulating the AIFM rather than the AIF.
Annual Dividend/Dividend
The amount paid by the Company to shareholders in dividends
(cash or otherwise) relating to a specific financial year of the
Company. The Company’s dividend policy is to announce its
expected level of dividend payment at the start of each financial
year. Barring unforeseen circumstances, the Company then
expects to make four interim dividend payments each year – at the
end of August, November and February during that financial year
and at the end of May following the end of the financial year.
Bid Price
The price at which you can sell shares determined by supply
and demand.
Capital Structure
The stocks and shares that make up a company’s capital i.e.
the amount of ordinary and preference shares, debentures and
unsecured loan stock etc. which are in issue.
Closed-ended
A company with a fixed number of shares in issue.
Depositary/Custodian
A financial institution acting as a holder of securities
for safekeeping.
Discount
When the share price is lower than the NAV, it is referred to as
trading at a discount. The discount is expressed as a percentage
ofthe NAV.
Expense Ratio
An expense ratio is determined through an annual calculation,
where the operating expenses are divided by the average NAV.
Note there is also a description of an additional PRIIPs KIDs.
Five Year Rolling NAV Return (per annum)
The rate at which, compounded for five years, will equal the
five year NAV total return to end March, assuming dividends are
always reinvested at pay date.
Five Year NAV and Share Price Total Return
Rebased from 0% at the start of the five year period, this is
the rate at which the Company’s NAV and share prices would
have returned at any period from that starting point, assuming
dividends are always reinvested at pay date. The Company will
continue to quote results from its predecessor, Hansa Trust Limited,
as part of that reporting so shareholders can see the longer-term
performance of the portfolio.
Gearing
Gearing refers to the level of borrowing related to equity capital.
Hedging
Strategy used to reduce risk of loss from movements in interest
rates, equity markets, share prices or currency rates.
Issued Share Capital
Issued share capital is the total number of shares subscribed to by
the shareholders.
Key Information Document (“KID”)
This is a document of a form stipulated under the PRIIPs
Regulations. It provides basic, pre-contractual, information about
the Company and its share classes in a simple and accessible
manner. It is not marketing material.
Glossary of Terms
Glossary of Terms
80 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Key Performance Indicators (“KPIs”)
A set of quantifiable measures that a company uses to gauge
its performance over time. These metrics are used to determine
a company’s progress in achieving its strategic and operational
goals and also to compare a company’s finances and performance
against other businesses within its industry. In the case of historic
information, the KPIs will be compared against data of both the
Company and, prior to the Company’s formation, from Hansa
Trust Limited.
Market Capitalisation
The market value of a company’s shares in issue. This figure is
found by taking the stock price and multiplying it by the total
number of shares outstanding.
Mid Price
The average of the Bid and Offer Prices of a particular
traded share.
Net Asset Value/NAV
The value of the total assets minus liabilities of the company.
Net Asset Value Total Return
See Total Return.
Offer Price
The price at which you can buy shares determined by supply
and demand.
Ordinary Shares
Shares representing equity ownership in a company allowing
investors to receive dividends. Ordinary shareholders have the
pro-rata right to a company’s residual profits. In other words, they
are entitled to receive dividends if any are available after payments
to financial lenders and dividends on any preferred shares are paid.
They are also entitled to their share of the residual economic value
of the company should the business unwind.
Hansa Investment Company Limited has two classes of Ordinary
share. The Ordinary (40m shares) and the ‘A’ non-voting Ordinary
shares (80m shares). Both have the same financial interest in the
underlying assets of the Company and receive the same dividend,
but differ only in that only the former shares have voting rights,
whereas the latter do not. They trade separately on the London
Stock Exchange, nominally giving rise to different share prices at
any given time.
Premium
When the share price is higher than the NAV it is referred to as
trading at a premium. The premium is expressed as a percentage
of the NAV.
Packaged Retail and Insurance-based Investment Product
(“PRIIP”)
Packaged retail investment and insurance-based products
(“PRIIPs”) make up a broad category of financial assets that are
regularly provided to consumers in the European Union. Theterm
PRIIPs, created by the European Commission to regulate the
underlying market, is defined as any product manufactured by
the financial services industry, to provide investment opportunities
to retail investors, where the amount repayable is subject to
fluctuation because of exposure to reference values, or the
performance of underlying assets not directly purchased by the
retail investor.
Shareholders’ Funds/Equity Shareholders’ Funds
This value equates to the NAV of the Company. See NAV.
Spread
The difference between the Bid and Ask price.
Tradable Instrument Display Mnemonics (“TIDM”)
A short, unique code used to identify UK-listed shares. The TIDM
code is unique to each class of share and to each company.
Itallows the user to ensure they are referring to the right share.
Previously known as EPIC.
Total Return
When measuring performance, the actual rate of return of an
investment or a pool of investments over a given evaluation
period. Total return includes interest, capital gains, dividends and
distributions realised over a given period of time.
Hansa Investment Company Limited For the Year Ended 31 March 2022 81
INVESTOR INFORMATION
Glossary of Terms
Continued
Total Return – Shareholder
The Total Return to a shareholder is a measure of the performance
of the Company’s share price over time. It combines share price
appreciation/depreciation and dividends paid to show the total
return to the shareholder expressed as an annualised percentage.
In the case of historic information, the Total Return will include
data against data of both the Company and, prior to the
Company’s formation, from Hansa Trust Limited.
VIX Index
The VIX, or the CBOE Volatility Index, is a widely used measure
of the implied volatility of the stock market, based on S&P 500
index options. It is calculated and published by the Chicago Board
Options Exchange.
82 Hansa Investment Company Limited For the Year Ended 31 March 2022
Strategic Report
Corporate Governance
Reports Financial Statements
Notice of the Annual
General Meeting Investor Information
Notes
Hansa Investment Company Limited For the Year Ended 31 March 2022 83
Notes
84 Hansa Investment Company Limited For the Year Ended 31 March 2022
Hansa Investment Company Limited
Clarendon House
2 Church Street
PO Box HM666
Hamilton HM CX
Bermuda
T: +44 (0) 207 647 5750
Visit us at
www.hansaicl.com
HANSA INVESTMENT
COMPANY LIMITED