Annual Report
31 March
## 202 3
Hansa Investment Company Limited Annual Report 31 March 2023
We are globally diversied, multi-asset class investors who seek
to identify compelling investment opportunities in both long
funds, hedge funds, direct global equities and private assets. We
operate without being constrained by benchmarks, but instead
seek to conservatively grow capital over time through investing
in a blend of best-in-class public and private equities balanced
by more defensive all-weather investments.
Long-term, not short-term
In an investment world that is increasingly short-term in nature
and momentum driven, we seek to invest for the longer-term,
playing to our multi-generational roots.
Access to the world’s elite, best-in-class managers
Our long-term outlook, combined with our desire to form
lasting multi-year relationships, makes us an attractive
partner to many of the world’s elite funds, many of which are
unavailable to large institutions and retail investors.
Dare to be dierent
Rather than seeking to replicate indices we look to identify those
areas of the market that oer attractive upside, with careful
consideration of risks that may incur a permanent impairment
of capital, even if this means being unconventional. Importantly,
we are nimble and act quickly when needed priding ourselves on
being exible and independently-minded, as illustrated by our
investment in Ocean Wilsons Holdings Limited.
Operating outside the bureaucracies of a large institution
By virtue of being a smaller, dedicated fund management group
with signicant internal investment, we share an alignment of
interest and, importantly, are not driven by asset gathering for
the sake of prot maximisation.
To see more: www.hansaicl.com
Hansa Investment Company Limited
Registered in Bermuda company number: 54752
2
OVERVIEW
## Contents
Overview
IFC e power of investing dierently
2 Financial summary
3 Chairman’s report
6 Long-term performance
Portfolio Manager’s Review
8 Portfolio Manager’s report
25 e Portfolio
Strategic Review
28 Investment objective, strategy and performance
31 Shareholder prole
33 Stakeholder engagement
37 Principal risks
Governance
40 e Board of Directors
42 Organisation and objectives
47 Report of the Directors
49 Corporate Governance Report
53 Audit Committee Report
54 Directors’ Remuneration Report
58 Nominations Committee Report
Financial Statements
60 Independent auditor’s report
64 Income Statement
65 Balance Sheet
66 Statement of Changes in Equity
67 Cash Flow Statement
68 Notes to the Financial Statements
Additional Information
80 Notice of the Annual General Meeting
85 Investor information
87 Glossary of Terms
1
Hansa Investment Company Limited Annual Report 31 March 2023
## Financial summary
As at 31 March 2023

|  | ORDINARY SHARES | ‘A’ NONVOTING ORDINARY SHARES |
| --- | --- | --- |
| NAV per share | Share price | Share price |
|  | 174.0p | 170.5p |

## 305.8p
Discount Discount
Total assets
## 43.1% 44.2%
Gross yield Gross yield
## £367.0m
## 1.8% 1.9%
Annual dividend payments Five year total return cumulative performance
3.2 40
2.4 20
1.6 0 %
pence per share
0.8 -20
0 -40
2019-202018-19 2020-21 2021-22 2022-23 Mar 19Mar 18 Mar 20 Mar 21 Mar 22 Mar 23
1st interim paid 2nd interim paid 3rd interim paid NAV Cum Income Ordinary share price ‘A’ Ordinary share price
4th interim paid Payable Predicted
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.
Geographic exposure Sector exposure

| North America 43.1% | Financials 15.7% |
| --- | --- |
| Diversified 12.5% | Information Technology 14.7% |
| Asia Pacific ex Japan 12.4% | Diversified 12.5% |
| Developed Europe ex UK 10.9% | Consumer Discretionary 12.1% |
| UK 7.1 % | Industrials 8.9% |
| Japan 5.7% | Health Care 7.6 % |
| Cash/Liquidity Funds 3.7% | Materials 5.7% |
| Middle East & Africa 2.0% | Energy 5.1% |
| Latin America 1.7% | Communications Services 4.9% |
| Emerging Europe 0.9% | Real Estate 4.6% |

Cash/Liquidity Funds 3.7%
Consumer Staples 3.6%
Utilities 0.9%
2
OVERVIEW

# Chairman's report

# Dear Shareholder

![img-0.jpeg](img-0.jpeg)

**Jonathan Davie**

## Introduction

I am pleased to present the refreshed format of our Annual Report, which is intended to give additional information and clarity.

## Shareholder returns

Our Portfolio Manager, Alec Letchfield and his team at Hansa Capital Partners LLP ("HCP", "Hansa Capital Partners", "PM") have performed robustly on a relative basis in a very difficult market. The portfolio he manages – the Company's investment portfolio, excluding the holding in Ocean Wilsons Holdings Limited ("OWHL", "Ocean Wilsons") – achieved a gross time-weighted negative return of -1.1% in the past year (2021/22: gross time-weighted positive return of 1.1%). Our investment in OWHL generated a gross time-weighted negative return of -5.17% (2021/22: gross time-weighted positive return of 24.7%). Collectively, the entire Hansa Investment Company Limited ("HICL", "the Company") portfolio generated a gross time-weighted negative return of -2.0% for the 12 months ended 31 March 2023 (2021/22: gross time-weighted positive return 6.2%).

For the year ended 31 March 2023, the Net Asset Value ("NAV") Total Return has declined by 3.1%, reducing from 319.1p per share to 305.8p per share, whilst also returning 3.2p per share in dividends. Regrettably, consistent with much of the Investment Trust sector, during the past 12 months there has been an increase in the discount from 37.8% to 43.1% for the Ordinary shares and from 39.5% to 44.2% for the 'A' Ordinary shares. More detail on our results and the longer-term performance can be found on page 6, as well as in our Portfolio Manager's detailed review of markets and portfolio performance in his Report on page 8.

## Prospects

I noted in my annual Chairman's Statement last year that I could not remember a more challenging time to be forecasting events with so many moving parts.

I am not sure any of the clouds of uncertainty have disappeared, other than more clarity on the future sourcing of energy for Europe and positive signs on the future decline of inflationary pressures. A decline in job openings and easing of wage increases are beginning to become apparent in the US.

The levels of confusion can probably be best illustrated by several major investment bank's strategists' disagreeing as to whether either a recession is coming due to higher interest rates and additional quantitative tightening to defeat inflationary forces or, conversely, whether there will be a major decline in rates due to a banking crisis and a collapse in inflation creating a great new bull market!

At the time of writing, investor sentiment to both fixed income securities and equities seems to be holding up better than I had expected. However, to my mind, many obstacles still stand in the way of a substantial improvement in valuations.

These obstacles include the smaller US regional and local state banks which are overexposed to commercial lending and battling with their larger banking competitors and the Fed for deposits. I see the overabundance of office property in many parts of the world, partially created by the post Covid "work from home" activity, as a serious vulnerability for some banks struggling to improve net interest margins, an improvement which historically would be a given in a rising interest environment. They have not been helped by the obliteration of Contingent Convertible bonds from the Credit Suisse debacle, which will increase their cost of funding either through future bond issues or equity raises.

The overall net effects on the banking system should be de minimis – whilst creating a tightening of lending standards. I have been surprised that the signs of an oncoming recession have not become clearer, particularly with the shrinkage of the money supply. It is apparent that the generosity of government handouts as a result of the Covid

Our Portfolio Manager, Alec Letchfield and his team at Hansa Capital Partners LLP, have performed robustly on a relative basis in a very difficult market.

3
Hansa Investment Company Limited Annual Report 31 March 2023
pandemic were, in the round, so large that many potential and benets of diversication
recipients are still beneting from this largesse generated by the investment portfolio.
and spending it quite slowly. is has deferred any
e primary objective of the Company is to
recession and will probably slow the deceleration of
generate a good economic return over the medium
ination, with obvious consequences for the timing
to long-term and create a compelling investment
and speed of any future decline in interest rates.
proposition for private investors, enabling them
to gain access to investments not otherwise
Strategy
readily available. is, in due course, should
Alec Letcheld and his team, supported by the
increase demand for the Company’s shares. Each
Board, have continued to take an increasingly
Investment Trust must consider its own particular
defensive position during the year which has
circumstances and objectives in assessing what
helped our overall performance. We do not hold
is in the best interests at any particular point in
any direct crypto type assets or real estate assets,
time for the Company and its shareholders. Your
other than our long-held investment in DV4. e
Board continues to focus on the construction of
Board, in consultation with Alec Letcheld, has
a portfolio to create long-term value and it is in
The Board, in decided to commence investing into a portfolio
the light of this that it has decided to build an
of illiquid alternative assets, primarily in Private
consultation with our allocation to Private Equity.
Equity. We believe that, over time, this will
Portfolio Manager,
dierentiate HICL’s investment portfolio and We aim to promote the Company and its
has decided to give shareholders exposure to an asset class and prospects through clear and transparent reporting
underlying investments they could not easily gain to encourage demand for shares, particularly
commence investing
exposure to directly. amongst private shareholders, thereby widening
into a portfolio of
the shareholder base. With this in mind, we are
illiquid alternative e long-term nature of Private Equity also ts
revamping our website. We have refreshed this
well with our own long-term investment horizons.
assets, primarily Annual Report and our regular communication with
Our Portfolio Manager has signicant experience
shareholders. We continue to work with Edison to
in Private Equity.
investing in Alternative Assets and we are positive
produce appropriate marketing research reports
about this new development. By its nature, the
and assist the Portfolio Manager in meeting with
Private Equity portfolio will take a number of years
appropriate professionals. We will hold a hybrid
to mature. e plan is to build this illiquid segment
meeting with shareholders in person and by video
over a period of time, to a level of around 10% of
conference in London on 27 September this year.
HICL’s portfolio. Further details are set out in the
e Board has also considered whether the stubborn
Portfolio Manager’s Report.
level of discount reects a lack of understanding
of the quality and liquidity of the portfolio and,
The Discount
therefore, the integrity of the NAV. It may be helpful
Your Board is aware that the Company’s discount to consider:
to NAV for both share classes is in excess of 40%.
e Board has listened to shareholder feedback and • 47.6% of the value of the portfolio at year end
was derived from securities which are tradeable
discusses this topic at Board meetings to consider
on an Exchange and as such, their value is based
what appropriate steps it could take up to help
upon their respective market listed share prices.
reduce the discount over the medium and long term.
is includes the holding in Ocean Wilsons
e Board has considered a share buy-back policy (traded on the London Stock Exchange) which
but does not consider this would have a signicant accounts for 22.8% of the portfolio.
eect on the discount, at which the shares trade. • 46.2% of the value of the portfolio at year end was
In the opinion of the Board: derived from third party fund vehicles, whose
value is based on prices received directly from
• it reduces the number of shares outstanding
the funds themselves, the price at which HICL’s
and therefore the liquidity of the shares in the
units could be sold for at that point in time.
marketplace; reduced liquidity may, in fact, cause
• 3.7% was held in cash at the year end.
a rise in the discount;
• Only 2.5% was held in illiquid vehicles (DV4, an
• it means a liquid investment portfolio needs to
evergreen holding).
be maintained, compromising the ability to have
a portfolio of special situations; the maintenance Of the above, 91.3% of the total NAV has a pricing
of the long-term investment policy and its frequency of at least monthly, with 73.6% being daily
portfolio takes precedence over the short-term or multiple times a day. Further, even if the Strategic
discount policy; and holding in OWHL were considered illiquid, 68.5%
• the holding in OWHL would represent an even of the total portfolio can be exited within a month,
greater percentage of the portfolio and buying with 50.8% being daily. For these reasons, the Board
back shares would raise the relative exposure considers that the values of the diverse investment
to Brazil, which the Board does not wish to portfolio are robust and do not reect ‘stale’ values in
do, giving preference to the return generation a period of market volatility.
4
OVERVIEW

## Dividends

Your Board has decided to continue with its existing dividend policy, which is to pay four similar interim dividends at the rate of 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. Currently the income generated by the portfolio is insufficient to meet this dividend commitment and the shortfall is made up from the Company's reserves. In principle, your Board does not believe it to be in the Company's best interests to use capital as a source from which to pay dividends.

## Liquidity and investor base

The Board continues to work with our broker and Alec Letchfield to promulgate the HICL's story and investment opportunity. We are also continuing to enhance transparent and timely communication.

## Investment in Ocean Wilsons Holdings Limited

The Board continues to focus on the investment in Ocean Wilsons. Ocean Wilsons itself has two assets. An investment portfolio, held through its subsidiary Ocean Wilsons (Investments) Limited and a circa 56% holding in their main asset Wilson Sons Holdings Brasil SA ("Wilson Sons"), an established and respected Brazilian shipping and maritime business. Encouragingly, Wilson Sons performed well in 2022 in Brazilian Real terms with a 6.2% increase in revenue and a 9.3% uplift in EBITDA. All this despite the continuing challenges of global supply chain bottlenecks in the early part of the year. During the year to 31 December 2022, the investment portfolio returned -13.8%, which was better than the MSCI ACWI & Frontier Markets Index which, in US$ terms was -18.4% for the same period.

The Board notes that, on 12 June 2023, OWHL announced it was undertaking a strategic review involving its investment in Wilson Sons and that it will consider all potential strategic options. The Board will follow the process with interest but notes from OWHL's announcement that it is currently at an early stage with no certainty as to its outcome.

## Share classes

The current position of Ordinary and 'A' Ordinary share classes remains unchanged as the majority of Ordinary shareholders have informed the Board they do not wish to alter the present structure at this time.

## Environmental, Social and Corporate Governance ("ESG") matters

As I mentioned in my Report in the Half-Year accounts, our Portfolio Manager is now a signatory to the UNPRI initiative.

The Board continues to offset the carbon created by flights to Bermuda for meetings. The amount offset in the past year is 237 tonnes (2022 - 198 tonnes). Further, during the year, the Board sought an environmental cause that has relevance to Bermuda, our country of domicile. Amongst many worthy organisations, we discovered the Blue Marine Foundation, an environmental charity dedicated to restoring the ocean to health by addressing overfishing, one of the world's biggest environmental problems. See more on page 44.

## Annual General Meeting ("AGM") and Amendment to Bye-Laws

At the back of these Financial Statements, you will find a notice regarding our upcoming AGM to be held on 27 July 2023 in Bermuda. Within the notice you will find several resolutions that are presented annually. Additionally, you will note a one-off change the Company is proposing to its Bye-Laws requiring shareholders to supply, if requested, information relating to their tax residency. Globally tax authorities and government agencies require financial institutions, including investment companies, to collect and report certain tax information in relation to their shareholders. In principle, this should only affect a very small number of our shareholders who are personally on our share register – approximately 142 shareholders holding less than 1% of our share capital. Failure by those shareholders to supply the required information, will cause the Company to submit incomplete returns, with the consequent risk of penalties or censure by the authorities. The proposed Bye-Law changes enable the Company to take the necessary measures in relation to those few shareholders who refuse to provide the information required, so as to enable the Company to satisfy its reporting requirements.

Please see page 36 for more detail on the proposed changes and the more detailed reasoning behind the proposals.

## Company Auditor

As at the Company's most recent AGM in August 2022, 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.

**Jonathan Davie**
Chairman
26 June 2023

The Board seeks to enhance and broaden the understanding of the Company in the market, with the ultimate objective of widening the shareholder base increasing demand and deepening the market for shares.

5
Hansa Investment Company Limited Annual Report 31 March 2023
## Long-term performance
Ten year company performance statistics
Net Asset Value

|  |  |  | per share – |  | Share price (mid) Discount/ (Premium) |
| --- | --- | --- | --- | --- | --- |
|  | Shareholders’ |  | Ordinary and | Annual |  |
| Year ended 31 March |  | Funds | ‘A’ Ordinary | dividends Ordinary ‘A’ Ordinary Ordinary ‘A’ Ordinary |  |

2023 £367.0m 305.8p 3.2p 174.0p 170.5p 43.1% 44.2%
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 2 2 7.8 p 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%
e table includes information relating to HICL and historic information relating to Hansa Trust. e years ended 2020-2023 notes
HICL information. e historic year ends 2013-2019 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 reect that, as part of
the redomicile of the business of Hansa Trust to HICL in August 2019, HICL issued ve times as many shares in each share class of
HICL as there were in Hansa Trust.
e Company’s KPIs can be found further on in the Report.
To 31 March 2023 1 year 3 years 5 years 10 years
Total Return (%)
Ordinary shares (10.8%) 39.9% (4.3%) 25.5%
‘A’ non-voting Ordinary shares (10.1%) 32.4% (4.7%) 26.1%
NAV (3.1%) 37. 2 % 20.4% 60.7%
6
PORTFOLIO MANAGER’S REVIEW
## Portfolio
## Manager’s
## Review
7
Hansa Investment Company Limited Annual Report 31 March 2023
## Portfolio Manager’s report
## e domino eect
Alec Letcheld
Portfolio Manager
Year in review 70’s. Central bankers, having almost universally
been in the camp that ination was transitory,
Initially, the nancial year to end March 2023
looked to be a rather middling year. Not great, were forced to do an about-turn and acknowledge
with growth expected to slow and ination above that ination was increasingly structural in nature
average albeit peaking in the middle of the year, and necessitated both faster and larger rate rises.
but equally not disastrous. Something like a -/+10% From an environment where rates were eectively
year was our rough and ready view as we entered anchored to zero and 25bp moves were deemed
the year. signicant, we rapidly moved to a backdrop where
central bankers were racing to outdo one another in
is view however was quickly overtaken by events.
an eort to look tough on ination.
Russia’s decision to invade Ukraine in February
2022 had set-o a domino eect unleashing a e next domino to fall was that of geopolitical
series of increasingly negative events and serving stability. e war in Ukraine saw a line being drawn
to push markets into a downward spiral. Initially, between the West and the BRIC countries. e
energy and commodity prices spiked with Ukraine West backed the sovereignty of Ukraine providing
and Russia being key producers of many global weaponry and nancial support while the BRIC
commodities. is added fuel to the already hot countries aligned with Russia in the belief that
inationary re meaning that ination, rather the sphere of inuence of countries such as
than falling from around the middle of the year as Russia and China extended beyond their national
many expected, spiked to levels last seen in the borders. Whereas previously countries such as
Chart 1: Dominoes falling
Global growth
Unemployment
Geopolitical stability
Interest rates
Russia’s invasion of Ukraine
8
PORTFOLIO MANAGER'S REVIEW

the US and China adopted a 'frenemies' approach to one another, they are now far more open with their hostility and, in particular, the desire of the US to stymie China's march to global economic dominance.

China also surprised on the downside. 2022 had been expected to be the year where it exited its zero-covid policy, providing a much-needed boost to global growth at a time when the developed economies were slowing. However, unlike the West, which balanced the impacts of COVID in terms of deaths and reopening economies, China continued to adopt a far tougher approach in the belief that deaths should be minimised even at the expense of their economy. At the end of the year it finally relented albeit not until there was civil unrest with the population rebelling against the severity of the lockdowns.

The domino that is yet to properly fall however is that of global growth. With many arguing that growth would start to fall sharply in the face of these challenges and given the extent of rate rises, growth has remained relatively resilient. In particular, employment has been remarkably stable much to the disappointment of central banks given its impact on wage inflation.

March 2023 saw a further surprise for investors as a mini banking crisis took hold in the US, beginning with a little-known bank called Silicon Valley Bank (SVB). SVB was in fact an essential part of the venture capital industry in the US, providing services ranging from a home for deposits to loans and credit facilities. Unfortunately the bank's business model unwound quickly when interest rates moved upwards, impacting its portfolio of bonds despite its policy of treating them as hold-to-maturity rather than marked-to-market. When depositors began withdrawing their cash, forcing the bonds to be realised at their current value, the model unwound quickly.

While the US Federal Deposit Insurance Corporation, whose role is to maintain stability and public confidence in the financial system, stepped in to backstop all depositors and found a buyer for the profitable parts of the bank, markets were already identifying other banks with similarly risky business models. This led to Signature Bank also being placed under the control of the FDIC, while the share price of First Republic Bank collapsed and was subsequently acquired by J.P. Morgan.

However, the woes of the US regional banks, whilst a worrying development, paled into insignificance compared to the trouble that Credit Suisse was in, given its much greater importance to the financial system. The Swiss government was therefore forced to intervene to ensure its quick sale to rival bank UBS. Although there were many questions asked about the mechanics of this transaction, the swift

action of regulatory authorities on both sides of the Atlantic seemed, at least for now, to contain this crisis.

While the financial sector has been one of the worst performing parts of the equity market in the first quarter of 2023, markets were generally up for the quarter despite their falls in March. Fixed income markets have seen very volatile moves lately as yields moved up in February amid concerns of faster rate rises, only to fall swiftly in March as the trouble in the banking sector meant these were overtaken by worries about a wider slowdown in economic growth. However, these lower bond yields served to boost longer duration mega cap technology names that have been viewed somewhat as bond-proxies in recent years.

Relating this back to markets, we can see that the first quarter of the financial year, which was at the epicentre of the bad news flow, saw the worst falls, with global equities down some 14% at their trough. The second quarter began with a recovery that made back this loss before falling again in late summer. In the third and fourth quarters markets edged themselves higher albeit with setbacks along the way as investors started to anticipate a peak in inflation and were even looking to a point when interest rates could start to fall again. Overall, in sterling terms, global stock markets fell by 1.5% over the past twelve months which perhaps belies the severity of events as we passed through the year.

At the country level the most interesting factor to note was the underperformance of the US market, as the UK, Europe and Japan markets outperformed for the first time in many years. Over the year the US was down 3.3%, a little worse than the MSCI World Index, while the UK was up 5.5%. Europe was even stronger up 7.9% and Japan was just positive with a gain of 0.8%. Europe's relative strength is somewhat surprising given that it sits on the doorstep of the Russian-Ukrainian conflict and is most exposed to any energy shortages due to Russian oil and gas sanctions, although the mild winter experienced in Europe helped in this regard. The China market was a rollercoaster, being down 24% by end October but made this all back to end the year up 1.4%. Brazil was a poor performer being down 13.5% while India declined 6.5%.

At the core of this year's events however has been the bond market. Following years of zero interest rates and falling inflation, the bolt of inflation and the resultant rise in interest rates meant that bonds failed in their duty to offer defensive returns when equity markets were falling. Global Treasuries fell by 3.4%, which would have been more were it not for sterling weakness, while UK government bonds were down by as much as 16.3%. As a consequence the classic 60:40 portfolio of global equities and UK gilts, the mainstay of the private investor, was down by 7.4% over the year, which is likely to come

At the country level the most interesting factor to note was the underperformance of the US market, as the UK, Europe and Japan markets outperformed for the first time in many years.

9
Hansa Investment Company Limited Annual Report 31 March 2023
Chart 2: Performance of countries, sectors, and asset classes
10%
5%
0%
% Return (GBP) -5%
-10%
-15%
-20%
-25%
UK
Japan Brazil India China Gold
Europe Copper
USD/EUR USD/GBP USD/BRL
EMBI Global WTI Cushing
North America
Frontier Markets Global Treasury
Emerging Markets Global High Yield
Developed Markets
EM Global Diversified
Global Markets (DM/EM/FM) Bloomberg Commodity Index
lobal Aggregate Corporate Bond
Dark bars represent 3 month returns to 31 March 2023. Light bars represent 12 month returns to 31 March 2023.
Source: Bloomberg.
as a shock to many when their annual portfolio systematic funds struggled in the rst quarter of
valuations start to come through. 2023 having performed well prior to then.
Amongst the alternative asset classes, there were
The outlook for 2023
heavy declines in energy prices as WTI oil, which
e current rally in markets is worth exploring, not
had reached a high for the year in June at nearly $124
least to determine if we are now past the peak in
per barrel, ended the year below $80, while natural
bad news and whether 2023 oers better prospects
gas was another big faller. Metals such as iron and
for investors.
copper showed declines, while gold increased from
$1,475/oz to nearly $1,900/oz. e broad commodity Two factors seem to be exciting markets. First, the
index declined 6.9% over the year. Hedge funds were belief that we have seen the peak of ination with
on the whole somewhat better than equities, with the current double-digit levels expected to fall as
the broad HFRI index up 4.2%, albeit macro and we move into the rst half of 2023. We have some
Chart 3: Energy prices and supply chains have eased sharply
12000 140
120
10000
100
8000
80
6000
60 $/barrel
$/container
4000
40
Source: Bloomberg.
2000
20
0 0
2017 2018 2019 2020 2021 2022 10
WCI Composite Container Freight Benchmark Rate (LHS) WTI (RHS)
G
PORTFOLIO MANAGER’S REVIEW North America
remains home to
many of the world’s
leading technology,
biotechnology
and private equity
companies.
11
Hansa Investment Company Limited Annual Report 31 March 2023
sympathy with this view. A number of the more population views it as yet another example of the
cyclical factors which have been driving ination leadership’s mismanagement of the crisis.
higher are indeed rolling over sharply with oil
Combined with lower valuations in many markets
prices down from a peak of $124/barrel to $80/
(but certainly not all) it is perhaps unsurprising
barrel now and container shipping prices down
that markets, being forward looking discounting
80% to $2,120 now. With the mild autumn helping
mechanisms, are trying to look through some of
Europe rebuild its energy reserves, and hopefully
the more negative news ow to a point where the
mitigating its dependence on Russian oil, combined
outlook is more positive.
with the base eect as current high prices fall out
the back end, this bodes well for the year ahead and
So where do we stand? Well, we advocate some
with it a potential peaking of interest rates (and
caution. We are yet to see a weakening of the
indeed central banks may even start to cut rates
economy or corporate earnings despite the events
later in 2023).
discussed above. Whilst the picture is a mixed one,
many important economic indicators are still well
e second factor exciting markets has been
into expansionary territory. GDP growth for the
China relaxing its zero-COVID policy. Following
world is expected to come in at 2.7% in 2023, the
a period of widespread civil unrest throughout
US some 0.8% and Europe 0.3%. Whilst it is indeed
China and with the Chinese economy weakening,
possible that economies such as Europe are already
showing growth of just 3% in the rst nine months
in recession, with important metrics such as the ISM
of 2022 versus a 5.5% target for the year as a
Services PMI measure coming in at 56.5 many areas
whole, President Xi is relenting on a number of
are still very much in expansionary territory. Perhaps
his measures (presumably recognising that civil
most worryingly, employment gures remain very
unrest and the danger that the population are
strong in a number of key markets, hardly the stu of
pushed back into poverty are two key factors that
recession. It’s a similar picture in corporate earnings
dictatorships fear the most). e challenge now is
which again, whilst showing pockets of weakness,
the speed with which China returns to some kind of
feels as though the worst is still to come.
normality. In particular, China has to contend with
a relatively high number of older people who are yet
e second area where we would exercise some
Wage inflation, with
to be fully vaccinated, a vaccine that is less eective
caution is that of ination. Whilst it is encouraging
unemployment than those being used in the West, and a healthcare
that some of the more cyclical factors appear to
system that is unlikely to be able to cope with mass
at historically low be rolling over, and indeed we believe that the
outbreaks, especially in its more rural regions. At
narrative for the coming months will be about
levels, will likely
this stage markets seem to be anticipating that the
ination falling from currently extended levels, we
be stickier and exit path will follow that of the West which, whilst
worry that some of the more structural factors will
a stop-start process, ultimately led to a return
harder to remove, be more persistent and challenging to eliminate.
to normality. e fear in China’s case however is
In particular, wage ination, with unemployment
especially with trade
that the outbreaks may be much more severe,
at historically low levels, will likely be stickier and
unions flexing their especially as they have failed to build up any herd
harder to remove, especially with trade unions
muscles again. immunity as was the case in the West. Perversely
exing their muscles again.
such an outcome may lead to further unrest as the
Chart 4: Valuations are starting to look more reasonable
40
35
30
25
20
15
10
Line represents ten year range Cheap current ten year average Expensive current ten year average
5
Source: Bloomberg.
0
US UK Italy
World Japan Spain China India Brazil Korea
France Russia Mexico Turkey
Germany Sweden
AC World
Netherlands Switzerland South Africa
Europe ex UK Asia ex Japan
12
Emerging Markets
PORTFOLIO MANAGER’S REVIEW
Chart 5: Consensus expects the mildest recession in recent history
Source: DB
is combination of stronger than expected fear that the real challenges that markets face Although inflation is
growth together with stickier ination is likely to are yet to come and will be more structural in
likely to fall from the
make it harder for central banks to cut rates. In nature. Although ination is likely to fall from
current extremes,
all probability rates will stay higher for longer and the current extremes, the real question is where
under a worst-case scenario they may even have does it settle in the medium to longer-term and the real question is
to push up to higher than anticipated levels to what level of interest rate does this imply? We where does it settle
eliminate ination from the system, even if this are not particularly worried by the more cyclical
in the medium to
comes at the cost of a deeper, more protracted short-term factors inuencing ination which
longer-term and
recession. Such an outcome is likely to lead to will undoubtedly drop out sooner or later, but we
markets retreating sharply and even going much do worry that there is a regime shift taking place what level of interest
lower than the previous trough depending on the due to more deep-rooted inationary factors.
rate does this imply?
severity of the downturn. Even without this bad Globalisation, as noted in the past, now looks
outcome, historically it is very unusual for markets to be rmly in reverse as governments worry
to bottom and start the recovery process without about security of supply more than its cost. As
being deeper into recession and the fuller impact highlighted by recent news that TSMC is investing
on corporate earnings being felt. $40bn in building a new fabrication unit in the
US, rather than in Taiwan or China, no longer are
It seems likely then that markets face a period
governments obsessed with achieving the cheapest
of both push and pull as the bulls and bears wax
prices for consumers but instead avoiding hostile
and wane depending on news ow. It is certainly
nations holding their supply chains to ransom.
possible that the current rally has legs as we start
Compounded by the higher labour costs in China,
the year with news ow dominated by ination
it feels very much like we are in the sunset of
coming o its highs and global growth bolstered
globalisation.
by the Chinese unlocking process. However, if, as
seems likely, there is a growing realisation that
Similarly, the lack of investment into many
ination is stickier than many believe to be the case
commodities as capital markets got ahead of
then this strength is likely to be short-lived. Indeed
themselves in their desire to be seen to be green
it may well be a case of bad news being good news
has meant that the supply of many essential
(at least for stock markets) as weaker growth shows
commodities will struggle to meet demand in the
that central bank policy measures are working,
years ahead. With commodities key components
and they can indeed take their foot o the brake.
% GDP lost from peak to trough in post WWII recessions of ination, again this makes ination look stickier
In contrast stronger growth, and with it stickier
than has been the case in the past.
ination, is likely to lead to central banks being …
Oct-49 more hawkish, forcing up rates even higher, and May-54 Apr-58 Feb-61 Nov-70 Mar-75 Jul-80 Nov-82 Finally, we now appear to be in a period of Mar-91 Nov-01 Jun-09 Apr-20 H2 2023
0%
ultimately driving economies into a much deeper structurally much tighter labour markets. It is
recession. Hence, at this stage, we feel little need to unclear at this point the degree to which this
-2%
lean into the current market strength. is a post-COVID anomaly that will ultimately
normalise as COVID recedes into history, or if
-4%
A new paradigm? it is more persistent in nature. Certainly it feels
Whilst the coming months are likely to be more structural with COVID encouraging many
-6%
dominated by the events discussed above, we older people to bring forward their retirement,
-8%
-10%
13
-12%
Hansa Investment Company Limited Annual Report 31 March 2023
changing labour migration patterns and increasing model with developing economies expected to
competition for cheap labour in areas such as trend towards this model and ultimately were of
internet logistics which all serve to force up wage little relevance from a market context in view of
levels. For many years now commentators have their small size.
been calling for a reversal in the trend towards
Now however, this period of geopolitical stability
corporate prots growing at the expense of the
appears to be changing. e developing markets are
labour force and it is possible that this day has
growing in economic power such that by 2050 the
now arrived. Sticky wage ination is much more
top ve global economies are predicted to include
worrying to central banks as it tends to be harder to
China, India and Indonesia with the US being
eliminate once it becomes ingrained in the system.
displaced by China as the most important economic
The days of zero, Hence the days of zero, or even negative ination, nation. is growing strength is encouraging many
seem long gone and with it the prospect of returning of the developing countries to ex their muscles
or even negative
to a low interest rate environment. Instead it is likely and, perhaps most worryingly, increasingly countries
inflation, seem long
that ination settles at higher levels – the key will be are aligning between the two sides with the East no
gone and with it the how much higher – and as a result we will enter a
longer prepared to be dictated to by the US.
prospect of returning higher interest rate environment where quantitative
tightening replaces quantitative easing. is is Hence having historically been able to largely ignore
to a low interest
incredibly important for stock markets. Recent years geopolitics, at least from an investment context,
rate environment. it is now becoming harder and harder to ignore.
have been dominated by an abundance of liquidity.
is drove exceptional returns from bond markets Instead we must factor into our thought process
as yields trended to zero, but also buoyed risk asset how the geopolitical landscape evolves and the risks
classes such as equities. rough a combination of that this may present. As highlighted in 2022 by
excess cash in the nancial system needing to nd a Russia’s invasion of Ukraine, the behaviour of many
home and with central banks able to throw liquidity developing markets can be at best unpredictable
at markets during periods of distress without the and, at worst, extremely disruptive to world stock
fear of creating ination, we have experienced a markets.
golden period in stock markets over the last couple
of decades. Instead, if higher ination and interest Positioning
rates are more persistent it seems likely that stock So how do we position portfolios for the coming
markets will be somewhat lower and cycles shorter year and the period ahead? Well, without sounding
especially given that the ‘Fed Put’ will no longer be trite, with some diculty!
an option in many cases.
As detailed previously, whilst we see good reason
e second structural change that we would for equities to continue to move higher in the
highlight is in the geopolitical backdrop. In recent near-term we are not overly inclined to chase this
years, geopolitics was of little real concern for rally as we see challenges developing in the form
investors. e US hegemony prevailed, with the US of recession, stickier ination and rates staying
adopting the ultimate market friendly economic higher for longer. Instead, the main debate we
Chart 6: Quantitative easing has been a major driver of assets. What does this imply for
quantitative tightening?
Global Central Bank Balance Sheets
30
25
20
Tr $
15
10
Source: Bloomberg
5
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
14
Bank of Japan Fed European Central Bank BoE
Developing markets PORTFOLIO MANAGER’S REVIEW
are growing in
economic power such
that, by 2050, the top
five global economies
are predicted to
include China, India
and Indonesia.
15
Hansa Investment Company Limited Annual Report 31 March 2023
Chart 7: US bear markets & recoveries since World War II
Average decline (%)
Average/
Current
Decline Structural Cyclical Event-Driven
0
Source: Goldman Sachs
-10
-20
have internally is whether we should be using this more appropriate. Higher rates typically favour
strength to sell into and if we should take a more companies who generate more of their earnings in
-30
negative tilt. Largely this will be dependent on the near term and, if recession is around the corner,
-40 whether or not existing rate cuts are successful then quality companies with more predictable
in their goal of dampening ination and the more earning streams will likely command a premium.
-50 cyclical inationary elements working their way at’s not to say we are anti-growth technology
out of the system. It certainly seems that the companies! ey may well be part of the solution if
-60 market has got ahead of itself and as highlighted companies seek to increase their productivity in the
by chart 7, if history is anything to go by, the falls face of wage price pressure, but the more egregious
experienced to date would be consistent with a valuations of recent times are unlikely to return any
soft-landing rather than the 35% or so decline for a time soon. However these technology companies
Average decline (%)
typical cyclical bear market. are likely to be under more pressure to become
Average/ protable rather than continually burning cash in
Average length (months) Current
is changing backdrop has also led to a number
Decline Structural Cyclical Event-Driven the pursuit of market share growth.
0 of important intra-market changes. No longer is
30
it a question of being purely focused on longer Perhaps the area of most interest is the bond
-10 duration growth names. Instead, with interest rates market. For a number of years now we have largely
25
unlikely to trend back to zero in the near-term, ignored the sector, viewing yields as too low and
-20

| 20 | holding a blend of value, quality and growth seems | the risk from higher ination and rates as too |
| --- | --- | --- |
| -30 15 |  |  |
| -40 10 |  |  |

Chart 8: Fixed income assets yielding over 4%, 1999 to 2022

| -50 5 |  |  |
| --- | --- | --- |
| -60 0 |  |  |
|  | Average/ | Structural Cyclical Event-Driven |

Current
Length

| 100% Average time to recover (months) Average length (months) Average decline (%) |  |
| --- | --- |
| 90% | Average/ |
| 60 30 |  |

Current
80% Decline Structural Cyclical Event-Driven
0
50 25
70%
-10 20 60%
40
50%
-20 15
30
40%
-30 10 30%
20
Source: BlackRock
20%
-40 10 5
10%
-50 0 0 0%
Average/ Average Structural Cyclical Event-Driven Structural Cyclical Event-Driven
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Current 16
-60 Length
US Treasury US Municipal Global Credit Global High Yield US Agencies Emerging Markets US MBS US CMBS Euro Periphery Euro Core

| Average time to recover (months) Average length (months) |  |  |
| --- | --- | --- |
| 60 30 |  |  |
| 50 25 |  |  |
| 40 20 |  |  |
| 30 15 |  |  |
| 20 10 |  |  |
| 10 5 |  |  |
| 0 0 |  |  |
|  | Average/ Average Structural Cyclical Event-Driven | Structural Cyclical Event-Driven |

Current
Length
Average time to recover (months)
60
50
40
30
20
10
0
Average Structural Cyclical Event-Driven
PORTFOLIO MANAGER’S REVIEW
Chart 9: The US dollar looks expensive on a purchasing power parity basis. Nearing a top?
Source: Bloomberg
high. Instead we have favoured equities which aggressively than other countries and the valuation
represented a more attractive risk return. Given of the dollar looking expensive, it is bringing us
the jump in yields that we have seen over the past closer to the point where dollar strength is replaced
year however, and with ination now at cyclically by dollar weakness. With interest rates likely to
high levels, parts of the bond market are starting turn earlier in the US compared to many other
to become more interesting again. Yields are now countries, and as the safety premium awarded to
higher than equities in many parts of the bond the dollar erodes, we would see investors moving
market meaning we are increasingly shifting from out of the dollar and favouring other, non-dollar
TINA (ere Is No Alternative to equities) to TARA assets. In particular we would highlight emerging
(ere Are Reasonable Alternatives). at’s not to markets which typically do much better in a weaker
say however that we would be diving in with both dollar environment, especially in light of their more
feet, and in particular we worry that the high yield
attractive current valuations.
market still fails to reect the dangers from rising
default rates if recession starts to take hold, but
Conclusion The challenge
nonetheless we are beginning to evaluate positions
e challenge facing markets and policy makers in
facing markets and
in areas such as shorter duration high quality
the coming months will be untangling the drivers of
investment grade credit. policy makers in the
ination and growth in terms of which factors are
coming months will
Similarly the outlook for some sectors of the hedge cyclical and which are more structural in nature.
fund space is again looking structurally much more Initially it looks like the more cyclical factors will be untangling the
attractive. An environment characterised by greater hold sway which will likely support stock markets
drivers of inflation
volatility, the need to be more tactical, and higher as ination falls and investors try to look through
and growth in terms
interest rates is exactly the kind of backdrop that the cycle to a point where interest rates start to
macro and multi-strategy hedge funds thrive in. turn and a new cycle begins. Whilst acknowledging of which factors
Equally, CTA funds, which trade price momentum this potential strength, we are inclined to sit tight, are cyclical and
rather than being fundamentally driven, again viewing markets as having got ahead of themselves
which are more
typically do much better in today’s fast markets. and ignoring the looming economic and corporate
structural in nature.
After a period of more lacklustre returns, where sector weakness and the pressure on valuations
many have struggled to justify their fees, this has that this will bring.
reinforced the case for having macro and more
e more dicult question is whether we should
systematic funds within a diversied multi-asset
class portfolios especially with bonds failing in be actively selling into this strength and taking
The deviation from purchasing power parity value, USD vs selected currencies
this role. We have signicant exposure to both a more cautious position within portfolios. To
60% a large degree this depends on whether any 100%
these areas.
50% economic downturn proves worse than commonly
Another area of potential change is that of the US
anticipated, i.e. a hard landing as opposed to a soft
40%
dollar. Whilst by no means arguing that the role
landing or, even more worryingly, that economies
30% 50%
of the US dollar as the global reserve currency
and ination remain more resilient than central
20% is under threat - with no real alternative to the
bankers are comfortable with and they are forced
liquidity and the stability of the scal and monetary
10% into driving economies much lower to bring
backdrop provided by the US - the combination
0% ination back to acceptable levels. 0%
of US interest rates being raised earlier and more
-10%
-20%
-30% -50%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
17
EUR (LHS) JPY (RHS)
Hansa Investment Company Limited Annual Report 31 March 2023
In Japan, the Indus
Japan Long Only
made gains over the
year, being up 2.2%,
with positions such as
Renesas Electronics
and Food & Life
Companies being top
contributors.
18
PORTFOLIO MANAGER'S REVIEW

Overlaying this is a growing sense that we may be nearing some broader paradigm shift. We do not say this lightly as paradigm shifts are rare and whilst being wonderful headline makers, are generally not great for fund managers' careers. Nonetheless, it feels that having lived through decades of diminishing inflation and interest rates and copious liquidity, we are entering one where liquidity is harder to come by and central banks can no longer ride to the rescue at points of market distress. Such a backdrop likely implies a period of lower returns, less protracted and shorter cycles and, as detailed above, greater balance in portfolios between different asset classes and a combination of value, growth and quality, something we feel well placed to offer our investors given our broad, multi-asset approach.

### Portfolio review and activity

During what was a volatile year for global markets, your Company produced a commendable return of -3.1% on an NAV total return basis for the financial year. High inflation, and the interest rate increases that they implied, were significant concerns for investors throughout the year, although as time went on there were increasing fears of an economic slowdown, and finally a mini banking crisis that began in California and led to the downfall of Credit Suisse, precipitating a flight to safety. Of the three key performance indicators, two are negative over twelve months, with the MSCI ACWI NR Index (GBP) being down 1.5% and the FTSE UK Gilts

All Stocks TR Index being down a steep 16.3%. Hence performance compared very favourably with the classic 60:40 equity/bond balanced portfolio which was down 7.5%. With inflation having been high over this period, the UK CPI has gained 9.2%. Although the position in Ocean Wilsons Holdings detracted with a loss of 5.2% for the year, we believe its investment portfolio offers very useful diversification benefits, and we note signs of improving sentiment towards Brazil which should be supportive of its Wilson Sons position, which will also be helped by increasing global trade as China continues its reopening post covid.

The Company's net asset value per share was 305.8 pence at the end of March 2023, down from 319.1 pence at the end of March 2022, while 3.2 pence per share has been paid out in dividends during the year.

### Core and Thematic Funds

For the financial year the Core Regional silo declined 4.0% while the Thematic silo was down 8.7%.

Europe as a region has been stronger lately, and this has aided some of the portfolio's holdings.

**Schroders Global Recovery**, first purchased in October 2022, has significant exposure to Europe, as well as the UK and Japan, while being underweight the US. The fund gained 7.0% in the final quarter of the financial year, leaving it up 13.7% since purchase. Companies which

The introduction of a private equity allocation to the portfolio has seen a commitment to TA Associates. Its technology investments include Cast & Crew, a leading international provider of software and tech-driven services to the entertainment production industry.

![img-1.jpeg](img-1.jpeg)

19
Hansa Investment Company Limited Annual Report 31 March 2023
have performed well for it include Continental In Japan, the Indus Japan Long Only made gains
AG, the tyre company, and UniCredit, the Italian over the year, being up 2.2%, with positions such as
bank, which had a very strong quarter despite the Renesas Electronics and Food & Life Companies
turmoil in the wider nancial sector. Elsewhere, the being top contributors. Goodhart Partners: Hanjo
portfolio’s passive holding in iShares Core MSCI Fund, which has a smaller cap focus, was down
Europe returned 9.4% for the year. 0.3% for the year.
After a long period of leading performance in Emerging and frontier markets generally lagged
the portfolio, the North American holdings have developed markets over the year, but there were
been a little weaker versus other regions this some relatively stronger performers in this part
year. Select Equity declined 9.4% and Pershing of the portfolio. NTAsian Discovery gained
Square Holdings was down 4.3%. Pleasingly, the 1.7% for the year. Its top holding is BFI Finance,
portfolio’s largest holding outside Ocean Wilsons a consumer nancing company in Indonesia,
Holdings, Findlay Park American’s decline of that has contributed positively over the last year.
just 0.4% is ahead of the North American index. e manager likes its connection to the growing
Findlay Park has been actively pivoting the fund GDP per capita in the country and it is beneting
further away from mega cap companies towards from digitalising its operations. Vietnam remains
more midcap companies (the majority of holdings a signicant exposure for the fund, although this
added in the last two years have been in the detracted over the course of the year. BlackRock
$3-50bn range, including West Pharmaceuticals Frontiers Investment Trust has delivered positive
and United Rentals) where they are nding better returns, with a rise of 4.4% over the last quarter
opportunities and more attractive valuations. taking it to a return of 7.2% for the year, aided by
Beutel Goodman US Value was purchased in some of its holdings in the Middle East which were
November 2022 to provide exposure to large cap buoyed by elevated oil prices, although these have
value stocks. e fund is managed by a dedicated come o more recently.
value investment team that has stuck admirably to
e thematic holdings have experienced mixed
their investment philosophy during a long period
performance over the last year. Energy exposure
when markets have generally been dominated by
BlackRock Frontiers through iShares MSCI World Energy Sector
growth companies. It registered a small decline of
Investment Trust has
ETF has been a strong contributor, gaining 12.7%,
returned 7.2% for the year. 0.6% during the nal quarter of the nancial year,
Fertiglobe, the world’s although it fell back 5.3% in the last quarter. GAM
as value stocks lagged, and its return since it was
largest seaborne exporter Star Disruptive Growth has fallen 20.3% over the
purchased in the portfolio has been -3.4%.
of urea and ammonia
year, as the technology sector declined after many
combined, has been one of
its outstanding performers.
Photo courtesy of Fertiglobe
20
PORTFOLIO MANAGER'S REVIEW

years of leading market gains, although it bounced 7.7% in the final quarter. Healthcare returns were mixed, with **RA Capital International Healthcare** being the best performing over the year with a rise of 13.6%, while **Worldwide Healthcare Trust** declined 3.7% and **BB Biotech** fell 14.7%. In May 2022 the position in **SPDR MSCI World Financials ETF** was switched into the **Polar Capital Global Insurance Fund**, which has since outperformed and fared much better than the broad financials sector in the fallout from Silicon Valley Bank's failure. The Polar Insurance Fund is up 11.0% since purchase.

We recently agreed with the Board to introduce an allocation to private equity within the portfolio. This will provide access to investments that are not contained in the public markets, while benefiting from private equity's long-term nature that fits well with the Company's investment horizon. We have significant experience of investing with some of the world's best private equity firms, ranging from large blue-chip names to lesser-known specialist managers. A fully developed private equity programme will take many years to construct, but some early commitments have already been made. These include commitments to invest in funds managed by **Khosla** and **GGV**, two leading Silicon Valley venture capital groups that are very difficult to access. While recent events surrounding Silicon Valley Bank, combined with falling technology valuations have been difficult for the venture

capital space, it is hoped that this could work well for funds beginning to invest money into the space now. A further commitment has been made to **TA Associates XV**, the next flagship fund from the leading US growth private equity firm, which has an excellent track record of investing across technology, healthcare and services sectors.

### Diversifying Funds

The diversifying holdings have continued to provide an attractive alternative source of returns whilst dampening volatility and displaying low correlations to the equity market. They delivered a gain of 0.8% in the last twelve months, which is a very positive result in an environment of falling equity markets, and far ahead of the steep losses in the bond markets, where the UK gilt index fell 16.3%.

The two macro funds have again delivered steady returns this financial year, with **Hudson Bay International** rising 3.7% and **MKP Opportunity** up 4.5%. Some of the strongest performance over the year has come from within the fixed income part of the portfolio, although generally within more niche strategies as sovereign bonds have declined. **BioPharma Credit** has been particularly strong, delivering a 13.6% return for the year. A significant portion of this total return is derived from income, with the company continuing to meet its 7% annual dividend target. **Selwood Liquid Credit Strategy**

Life sciences specialist BioPharma Credit delivered a 13.6% return for the year.

![img-2.jpeg](img-2.jpeg)

21
Hansa Investment Company Limited Annual Report 31 March 2023
beneted from a good nal quarter, gaining 7.9%, to treasuries, which stood at 24 days at the end
bring it to a return of 7.2% for the nancial year. of March, a stark contrast to the asset-liability
mismatch at other nancial institutions. While
Keynes Dynamic Beta Strategy pulled back in the
the sell-side analysts have been frustrated with the
last quarter, with a decline of 2.1% as its directional
conservative approach to the balance sheet in the
models detracted in both equities and bonds, but
past, over the long term it pays o to be invested
delivered a return of 7.1% for the year. Schroder
alongside an owner-operator where the chairman
BlueTrend suered similarly in the last quarter
and sta hold over 75% of the shares. eir long-
with a decline of 12.8% that leaves it down 2.4% for
term focus is summed up by the chairman in
the year, but the other CTA fund, GAM Systematic
response to an analyst asking them about their
Core Macro, was less aected and remains up 4.1%
balance sheet in January, well before the banking
for the year, partly thanks to its diversied, non-
crisis made headlines. “It is a risk we cannot take
trend models.
because if you’re right, we’ll actually make extra
money. But if we’re wrong, we can lose a fortune
Global Equities
because as rates go up, we have to raise the rate
Over the past year, e global equity silo returned 18.0% over the past that we pay to our clients. And we don’t want to be
year, with the biggest contributors being Orion a situation where we are lent out on the long end
our value investing
Engineered Carbons, Interactive Brokers and and we’re borrowing on the short term from our
approach within our
Arch Capital. e biggest detractors were CTT, customers. So, we can get creamed that way, and we
Global Equities silo CVS and ViaSat. will not do that.”
has allowed us to

|  | Over the past year, our value investing approach | e relative strength of IBKR has been |
| --- | --- | --- |
| avoid the general | has allowed us to avoid the general declines in the | acknowledged, evidenced by a 31% drop in its |
|  | equity markets. However, in the preceding year, | peer, Schwab, over the same period. Moving |

declines in the
our risk-averse style struggled to keep up, which forward, customers may re-evaluate the nancial
equity markets.
is not surprising. Our real challenge is to achieve strength of their broker, resulting in a potential
satisfactory results during tough times, although it uptick in the pace of client wins, especially from
is impractical to accurately determine or anticipate Registered Investment Advisers. In addition, further
when these times might occur. e cost of doing client growth is anticipated to come from large
that can be to not keep pace with bull markets and international institutions that white label the IBKR
if that means not buying over-valued stocks just to platform. IBKR has already secured two signicant
maintain relative performance to a benchmark, that customers who are expected to begin transferring
is a price we are willing to pay. their clients later in the year.
Our process is focused on bottom-up stock picking, We believe it is quite possible that IBKR earns over
rather than regional or sector selection, and we are $6 a share by 2025, which would be a 14% EPS
pleased to report that this approach has been the CAGR from 2022. is conservative estimate is less
primary driver of our returns. When we wrote to than the 19% earnings CAGR they have achieved
you three years ago, we were optimistic about the since our initial purchase in 2017 and represents a
long-term prospects of our global equity portfolio forward multiple of just 13x P/E.
due to its 50% discount to its intrinsic value.
During the year we initiated a new position in
Although the discount has narrowed to 35% since
Bergman & Beving, added to our positions in
then, we still believe that the portfolio oers a
Coats, CTT, Grupo Catalana Occidente and
substantial margin of safety.
ViaSat and reduced our positions in CK Hutchison,
Continuing our earlier discussion on banking, it’s CVS, Dollar General, EXOR, Interactive Brokers
worth noting that our direct equity portfolio has a and Subsea 7.
40% weighting in the nancial sector based on the
Global Industry Classication Standard (GICS). Ocean Wilsons Holdings
However, we do not have any exposure to banks. As the largest integrated provider of port and
Instead, we have invested in brokers, insurers, and maritime logistics in Brazil, we believe the Ocean
an industrial holding company. Our largest position, Wilsons’ subsidiary, Wilson Sons, is well-placed
Interactive Brokers (IBKR), suered a 7% decline to perform in the coming years. e business has
from March 8th to the end of the quarter, as the a strong competitive position, being the leading
market sold o all nancial stocks indiscriminately. provider of towage services in Brazil with the
However, the banking situation has left IBKR in largest and most modern eet, as well as operating
a much stronger position, as it has showcased its major container terminals in the north and south
nancial strength to potential customers. Unlike of the country: Rio Grande and Salvador. In recent
its peers, IBKR oers the best interest rates on times the company has seen several challenges,
customer deposits, currently at 4.33% on USD including political upheaval in Brazil and the
balances compared to Charles Schwab’s 0.45%, so disruption stemming from covid that signicantly
is unlikely to see customers move their deposits. impacted global trade and hurt the energy sector
Additionally, it invests its cash in short-duration that is an important part of the company’s demand.
22
PORTFOLIO MANAGER'S REVIEW

However, there are now signs that these factors are improving, which should be positive for the company going forward.

Recent results have begun to evidence this improvement, with earnings for 2022 being 6.2% higher than in 2021. There were still shortages of empty containers during the year stemming from global logistics bottlenecks, which particularly affected the terminal at Rio Grande, but this has started to improve in 2023, with volumes up 5.2% year-on-year for the first two months. Demand for offshore energy-linked services is improving, with vessel turnarounds in the offshore support bases increasing over 30% compared to 2021 and operating days rising by over 20%. Two new support base contracts were signed in the last quarter of 2022, while three platform supply vessels began operating under new four-year contracts with Petrobras.

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 managers with skin in the game. The most recent portfolio report for the year 2022 shows

encouraging relative performance, albeit with losses given the challenging market conditions. There was a decline over the calendar year of 13.8%, which was significantly ahead of the global equity and bond indices. Performance was helped by thematic exposures to energy and commodities, as well as the private market investments which have demonstrated resilience. Private equity holdings now make up 39.1% of the investment portfolio, and many of the funds returned significant capital during the year. Some of the largest private equity positions include venture capital funds of funds managed by Stepstone, US buyout funds managed by KKR and a financials-focused fund managed by Reverence Capital. The December 2022 portfolio valuation of $293.8m was down from $328.2m at the end of March 2022. During 2022 dividends of $5m, in two equal tranches, were paid out from the portfolio in May and July.

**Alec Letchfield**
*Chief Investment Officer*
April 2023

Orion Engineered Carbons was amongst the biggest contributors in global equities. Its carbon black chemical products are used in a multitude of industrial applications, from conductive coatings to prevent lightning damage in aircraft to engineered plastics in automotive interiors.

![img-3.jpeg](img-3.jpeg)

23
Hansa Investment Company Limited Annual Report 31 March 2023 Wilson Sons achieved
a 5% reduction in their
total emissions in 2022,
achieved through the
adoption of state-of-
the-art technologies
bringing greater
energy eiciencies.
24 24
PORTFOLIO MANAGER'S REVIEW

# The portfolio

As at 31 March 2023

|  Investments | Fair value £000 | % of net assets  |
| --- | --- | --- |
|  **Core regional funds**  |   |   |
|  Findlay Park American Fund | 24,514 | 6.7  |
|  iShares Core S&P 500 UCITS ETF | 21,360 | 5.8  |
|  Select Equity Offshore Ltd | 18,385 | 5.0  |
|  BlackRock Strategic Equity Hedge Fund | 13,917 | 3.8  |
|  Schroder ISF Asian Total Return | 10,598 | 2.9  |
|  Pershing Square Holdings Ltd | 9,333 | 2.5  |
|  iShares Core MSCI Europe UCITS ETF | 8,331 | 2.3  |
|  BA Beutel Goodman US Value Fund | 7,966 | 2.2  |
|  Schroder ISF Global Recovery | 7,942 | 2.2  |
|  Indus Japan Long-Only Fund | 7,178 | 1.9  |
|  Egerton Long-Short Fund Ltd | 6,653 | 1.8  |
|  Goodhart Partners: Hanjo Fund | 6,422 | 1.8  |
|  KLS Corinium Emerging Markets Equity Fund | 4,846 | 1.3  |
|  iShares Core EM IMI UCITS ETF | 4,117 | 1.1  |
|  NTAsian Discovery Fund | 4,071 | 1.1  |
|  BlackRock Frontiers Investment Trust PLC | 3,539 | 1.0  |
|   | **159,172** | **43.4**  |

## Strategic

|  Ocean Wilsons Holdings Limited^{1} | 83,707 | 22.8  |
| --- | --- | --- |
|  *Wilson Sons* | 51,564 | 14.0  |
|  *Ocean Wilsons (Investments) Limited* | 32,143 | 8.8  |
|   | **83,707** | **22.8**  |

## Diversifying

|  Global Event Partners Ltd | 10,328 | 2.8  |
| --- | --- | --- |
|  DV4 Ltd^{2} | 9,132 | 2.5  |
|  Hudson Bay International Fund Ltd | 5,126 | 1.4  |
|  MKP Opportunity Offshore Ltd | 3,336 | 0.9  |
|  GAM Systematic Core Macro (Cayman) Fund | 3,122 | 0.8  |
|  Schroder GAIA BlueTrend | 2,884 | 0.8  |
|  Keynes Dynamic Beta Strategy (Offshore) Fund Limited | 2,660 | 0.7  |
|  Selwood AM - Liquid Credit Strategy | 2,468 | 0.7  |
|  Apollo Total Return Fund | 2,415 | 0.7  |
|  Prana Absolute Return Fund | 1,939 | 0.5  |
|  Brevan Howard Absolute Return Government Bond Fund | 1,731 | 0.5  |
|  Vanguard US Government Bond Index Fund | 1,502 | 0.4  |
|  BioPharma Credit PLC | 1,415 | 0.4  |
|  Lazard Convertible Global | 715 | 0.2  |
|   | **48,773** | **13.3**  |

25
Hansa Investment Company Limited Annual Report 31 March 2023

|  Investments | Fair value £000 | % of net assets  |
| --- | --- | --- |
|  **Global equities**  |   |   |
|  Interactive Brokers Group Inc | 4,478 | 1.2  |
|  Orion Engineered Carbons SA | 4,434 | 1.2  |
|  Arch Capital Group Ltd | 3,640 | 1.0  |
|  Subsea 7 | 3,120 | 0.8  |
|  Grupo Catalana Occidente SA | 3,063 | 0.8  |
|  Exor NV | 2,770 | 0.8  |
|  Coats Group PLC | 2,524 | 0.7  |
|  CK Hutchison | 2,432 | 0.7  |
|  Glencore PLC | 1,672 | 0.5  |
|  Dollar General | 1,473 | 0.4  |
|  Viaset Inc | 1,466 | 0.4  |
|  Bergman & Beving | 1,407 | 0.4  |
|  CTT Correios de Portugal | 1,080 | 0.3  |
|  CVS Health Corp | 481 | 0.1  |
|   | **34,040** | **9.3**  |
|  **Thematic assets**  |   |   |
|  Polar Capital Insurance Fund | 6,883 | 1.9  |
|  GAM Star Fund PLC - Disruptive Growth | 5,548 | 1.5  |
|  Impax Environmental Markets Fund | 3,570 | 1.0  |
|  Worldwide Healthcare Trust PLC | 3,031 | 0.8  |
|  RA Capital International Healthcare Fund | 2,643 | 0.7  |
|  iShares MSCI World Energy Sector UCITS ETF | 2,184 | 0.6  |
|  BB Biotech AG | 1,877 | 0.5  |
|  iShares MSCI Global Markets & Mining Producers ETF | 1,834 | 0.5  |
|   | **27,570** | **7.5**  |
|  **Total investments** | **353,262** | **96.3**  |
|  Net current assets | 13,703 | 3.7  |
|  **Net assets** | **366,965** | **100.0**  |

$^{1}$ Hansa Investment Company Limited owns 9,352,770 shares in Ocean Wilsons Holdings Limited ("OWHL"). OWHL operates through two assets: Wilson Sons S.A. and Ocean Wilsons Investments Ltd ("OWIL"). These are shown separately above. The fair value of the Company's holding in OWHL has been apportioned across the two assets in the ratio of the latest reported NAV of OWIL, that being the NAV of OWIL shown per 31 December 2022 OWHL quarterly update, 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 2023.

$^{2}$ DV4 Ltd is an unlisted Private Equity holding. As such, its value is estimated as a Level 3 Asset in note 19. All other valuations are either derived from information supplied by listed sources, or from pricing information supplied by third party fund managers.

26
STRATEGIC REVIEW
## Strategic
## Review
27
Hansa Investment Company Limited Annual Report 31 March 2023
## Investment objective, strategy and performance
Investment objective policy
e Company objective is to grow the net assets of the Company over the medium to long-term by investing in a diversied and multi-
strategy portfolio.
e Company seeks to achieve its investment objective by investing in third-party funds, global equities and other international
nancial securities. e Company may invest in quoted and unquoted securities.
e Company currently holds a strategic position in the share capital of OWHL. e Company will not make further investments into
OWHL.
e 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 diversied global portfolio of securities and other assets.
Investment strategy
e 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.
• ematic – investments, typically through third-party funds, that reect key investment themes the Portfolio Manager believes will
generate excess returns.
• Diversifying Assets – investments, typically through third-party funds and directly, that create asset diversication within the
portfolio.
• Global Equities – a diversied portfolio of global equities identied by the Portfolio Manager as having long-term growth potential.
Although the Company has no set maximum or minimum exposures to any asset class, geography or sector, the Board establishes
set guidelines which the Portfolio Manager adheres to. ese 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 environment. e Board has set the following guidelines for each category as a percentage of the portfolio
(including the strategic investment in OWHL):
• Core: 0-50%
• ematic: 0-25%
• Diversifying Assets: 0-40%
• Global Equities: 0-40%
e Portfolio Manager has a strong focus on identifying investments with excellent fundamentals, taking a long-term approach to
investing, good alignment and not seeking to replicate a benchmark. ese investments range from those sectors beneting from
structurally higher growth, such as technology, to assets which the Company believes stand on unwarranted discounts to their intrinsic
value.
During the year, following discussions between the Portfolio Manager and the Board considering ways to develop the portfolio further
in the medium to long-term, HCP has been approved to introduce an allocation to Private Equity and Venture Capital within the
Portfolio. is will be a multi-year programme to develop access to investments that are not available in public markets. e Portfolio
Manager has signicant experience investing in Private Equity and Venture Capital. e Board believes this new exposure will be seen
as very attractive by existing and potential future shareholders. e long-term nature of private equity is aligned with the long-term
investment horizon of the Company.
Borrowing limits
e Board considers whether returns may be enhanced if the Company introduces leverage at appropriate times. e Company has an
unsecured lending facility through its Custodian, Banque Lombard Odier & Cie SA (“Lombard Odier”), in the amount of £30m, subject
to there being sucient value and diversity within the portfolio to meet the lender’s borrowing requirements. e Portfolio Manager is
able to utilise this facility as required up to the upper limit available. No amounts have been drawn from this facility during the year.
Investment monitoring and key performance indicators (“KPIs”)
e investment strategy is designed for capital appreciation over the long-term achieved through diversied multi-asset class
allocation. Returns are not replicated by movements in any single market index. Furthermore, the Board considers that the use of a
single benchmark will not always oer shareholders the relevance and the clarity needed to measure the performance of the Company.
28
STRATEGIC REVIEW

The Board's primary goal is for the Company to generate long-term returns for shareholders and so we 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 equity index – for which the Board has elected to follow the performance in GBP of the MSCI All Country World Index excluding Frontier Markets (Bloomberg: NDUACWF). 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.

The Board regularly, and at least quarterly, reviews the returns and the performance of the Company with the Portfolio Manager, including an analysis using the KPIs.

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 and company – total returns

|  To 31 March 2023 | 1 year | 3 years | 5 years | 10 years  |
| --- | --- | --- | --- | --- |
|  **Share price total return**  |   |   |   |   |
|  Ordinary shares | (10.8%) | 39.9% | (4.3%) | 25.5%  |
|  'A' non voting Ordinary shares | (10.1%) | 32.4% | (4.7%) | 26.1%  |
|  Portfolio NAV | (3.1%) | 37.2% | 20.4% | 60.7%  |

#### ii) Discount/premium

A comparison is made between the (discount)/premium of the Company's two classes of shares and of the AIC average.

|  To 31 March 2023 | 1 year average | 3 years average | 5 years average | 10 years average  |
| --- | --- | --- | --- | --- |
|  **Share price total return**  |   |   |   |   |
|  Ordinary shares | (40.0%) | (36.7%) | (33.7%) | (30.4%)  |
|  'A' non voting Ordinary shares | (41.0%) | (36.8%) | (34.5%) | (31.5%)  |
|  AIC (%) | (10.7%) |  |  |   |

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.

#### iii) 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 31 March 2023 | 1 year | 3 years | 5 years | 10 years  |
| --- | --- | --- | --- | --- |
|  NAV Total Return | (3.1%) | 37.2% | 20.4% | 60.7%  |
|  NAV Total Return (Ex OWHL) | (2.7%) | 29.8% | 24.9% | 73.2%  |
|  FTSE UK Gilts All Stocks TR Index | (16.3%) | (24.9%) | (14.4%) | 5.1%  |
|  UK CPI Inflation | 10.1% | 18.7% | 22.8% | 31.4%  |
|  MSCI ACWI NR (GBP) | (1.5%) | 54.1% | 58.7% | 167.1%  |

29
Hansa Investment Company Limited Annual Report 31 March 2023
iv) Expense ratios
To 31 March 2023 1 year 3 years 5 years 10 years
Ongoing annual charges (%) 1.2 1.1 1.1 1.1
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 PRIIP, KID regulations are very prescriptive as to how costs
are calculated and presented. In particular, 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
nancial results for the year to 31 March 2023, the PRIIP KID cost ratio is 1.81% per annum.
30
STRATEGIC REVIEW

## Shareholder profile

### 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. See also Note 13 in the Notes to the Financial Statements.

### Shareholder profile

The Company's shares owned at 31 March 2023 are as follows:

|   | Ordinary shares |   | 'A' non-voting ordinary shares  |   |
| --- | --- | --- | --- | --- |
|  Institutional and wealth managers | 16,021,382 | 40.05% | 72,715,872 | 90.90%  |
|  Directors | 11,220,745 | 28.05% | 3,817,123 | 4.77%  |
|  Private individuals | 12,591,202 | 31.48% | 3,467,005 | 4.33%  |
|  Other | 166,671 | 0.42% | 0 | 0.00%  |
|   | **40,000,000** |  | **80,000,000** |   |

### Substantial shareholders

As at 31 March 2023, the Directors were aware of the following interests in the Ordinary shares of the Company, which exceeded 3% of the voting issued share capital of that class.

|   | No. of voting shares | % of voting shares  |
| --- | --- | --- |
|  Nomolas Ltd | 10,347,125 | 25.9%  |
|  Victualia Limited Partnership | 10,347,125 | 25.9%  |
|  Sky Hill Limited | 1,690,000 | 4.23%  |

These holdings are correct as of 31 March 2023 and have not changed as at the signing date of these Financial Statements.

Hansa Investment Company traces its origins back to 1912 when the Alto Paraná Development Company was launched to develop forestry in Brazil. Having become an investment trust company in the late-1940s, the Company became closely associated with the Salomon Family, initially through Sir Walter Salomon, whose family trusts became substantial shareholders. The late-1950s also saw the acquisition of a significant shareholding of Ocean Wilsons Holdings Limited through the issuance of the 'A' non-voting Ordinary shares by the Company's predecessor, Hansa Trust. Over the following decades, the Salomon family helped to build the publicly-owned and independently run investment company we know today, with its focus on delivering reliable long-term asset growth for shareholders.

The wider Salomon family remain significant investors in the Company. William Salomon, Sir Walter's son, a director of HICL and Senior Partner of the Company's Portfolio Manager, 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. Other members of the wider Salomon family, who are also descendants of Sir Walter, are interested in a further 12m shares in the Company.

### Restrictions associated within the share classes

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.

There are: no restrictions concerning the transfer of securities in the Company; no agreements between holders of securities regarding their transfer known to the Company; and no agreements between the Company and its Directors concerning compensation for loss of office. Notwithstanding the foregoing, the Company can require any holder of the Ordinary voting 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

31
Hansa Investment Company Limited Annual Report 31 March 2023

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. At the forthcoming AGM, the Company is proposing a one-off change to its Bye-Laws requiring shareholders to supply, if requested, information relating to their tax residency. Globally tax authorities and government agencies require financial institutions, including investment companies, to collect and report certain tax information in relation to their shareholders. In principle, this should only affect a very small number of our shareholders who are personally on our share register – approximately 142 shareholders holding less than 1% of our share capital. Failure by those shareholders to supply the required information, will cause the Company to submit incomplete returns, with the consequent risk of penalties or censure by the authorities. The proposed Bye-Law changes enable the Company to take the necessary measures in relation to those few shareholders who refuse to provide the information required so as to enable the Company to satisfy its reporting requirements.

As at 26 June 2023, the date of signing of the Annual Financial Statements, there have been no disclosures to the Company of changes of interests under DTR 5.

## Board and management shareholdings

### Directors' Interests

The interests of Directors and their connected parties in the Company at 31 March 2023 are shown below:

|   | Ordinary shares of 1p each |   | 'A' non-voting ordinary shares of 1p each |   | Nature of interest  |
| --- | --- | --- | --- | --- | --- |
|  W Salomon | 11,169,345 | 27.92% | 3,587,123 | 4.48% | Beneficial  |
|  J Davie | 45,000 | 0.11% | 230,000 | 0.29% | Beneficial  |
|  S Heidemperger | 6,400 | 0.02% | – | – | Beneficial  |
|  Total | 11,220,745 | 28.05% | 3,817,123 | 4.77% |   |

As at 26 June 2023, the date of signing the Annual 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 £2,824,000 (including Portfolio Management and Additional Administrative Services Provider ("AASP") functions). The fees outstanding at the year end amounted to £240,793. 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 26 June 2023, the date of signing of this Annual Report, the management and staff of the wider Portfolio Manager's group (Hanseatic Asset Management LBG, an Investment Manager and AIFM located and regulated in Guernsey), excluding the holding of William Salomon, shown above, were interested in circa 10.3m shares in the Company – a mixture of Ordinary and 'A' non-voting Ordinary shares.

32
STRATEGIC REVIEW
## Stakeholder engagement
Requirements of Section 172 UK Companies Act
As required by the AIC Code, the Board describes below how it has met the requirements of Section 172 of the UK Companies Act,
as applicable to the Company. is includes an explanation of how the Board has sought to promote the Company for the benet
of its members, how it has taken into account the likely long-term consequences of decisions and how it fosters relationships with
stakeholders. e Company is an investment company with an appointed Portfolio Manager. As a result, it has no direct employees
or customers. e Board has identied 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.
STAKEHOLDER INTERACTION
Shareholders e shareholder base is a mixture of private investors, wealth managers and asset managers across both
classes of the Company’s shares. e Board monitors changes in the shareholder base at its Board meetings.
e Company communicates through the publication of Annual and Half-Year Financial Statements, through
detailed quarterly and monthly factsheets, as well as through the Company’s website. e Company also
holds periodic shareholder presentations incorporating presentations by the Board and key service providers
to keep shareholders informed.
e Board seeks to understand the opinions of a wide variety of shareholders. e Company maintains
a dedicated email address for shareholders to contact the Board (HICLenquiry@hansacap.com) and
shareholder correspondence and feedback is a regular item of discussion at Board meetings.
e Company continues to meet shareholders and other interested parties facilitated by its broker, as well
as through direct contact. e Portfolio Manager also runs an outreach programme in conjunction with an
investor relations specialist.
Investors are also kept informed through paid-for editorial pieces and discussion with media organisations.
As a result of the Covid pandemic, the Board used online shareholder presentations to enable shareholders
to meet with the Board and Portfolio Manager. 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. e next shareholder event is planned
for 27 September 2023 as a hybrid online and physical meeting.
Portfolio Manager e Board’s main working relationship is with the sta of HCP as the Portfolio Manager and the AASP.
and 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.
e AASP also assists with the preparation of the Annual and Half-Year Financial Statements as well as
Factsheets and website updates. e Board works closely with the AASP to approve disclosures made via
these publications.
Other key service Key service providers are the Company’s Administrator (Maitland Administration Services Limited),
providers 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. e AASP reports
regularly on operational matters. e Board seeks to visit each provider at least annually for a face-to-face
meeting to discuss service levels, operations and future developments.
e Company is in the process of changing its Registrar. From late-September 2023, Computershare will
replace Link as the Company’s Registrar. New contact details will be made available on the Company’s
website at that time. e new Registrar will hold all the historic information currently retained by Link.
33
Hansa Investment Company Limited Annual Report 31 March 2023
Main areas of engagement
KEY AREA TOPIC ENGAGEMENT AND OUTCOMES
Investment e Investment Strategy incorporates e Board has engaged with the Portfolio Manager and
strategy and ESG appropriate ESG considerations. For clarity, encouraged them to develop a responsible investment
matters the Company does not purport to be a “Green” policy. e Board notes that the Hanseatic Group, of
fund. However, through its ESG disclosures and which the Portfolio Manager is a member, has become
reporting the actions of its Portfolio Manager, a signatory to the UNPRI during the nancial year. e
it seeks to give clarity to the processes around Board wholeheartedly supports this policy. See page 43
assessing the Environmental, Social and/or for further information.
Governance aspects to its investment decisions
and ongoing monitoring.
Discount It is a great frustration to the Board that the e Board is mindful of, and regularly considers, the
management and discount has not tightened over the past share price compared to the NAV and related discount.
share buybacks year. It is also noted that there has been e Board is of the view that providing transparency
general widening of investment trust spreads and clarity to investors, as well as promoting demand
due to market volatility and declining retail for the Company’s shares, should create a positive
participation in the markets. impact on the discount for the medium to longer-term.
To this end, the Board has redeveloped the Company’s
website, its Annual and Half-Year Financial Statements
and its factsheets and quarterly reviews. e Board
continues to develop the Company’s branding and
communications strategy with shareholders and
potential shareholders alike. e aim 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.
e primary objective of the company is to generate
a good economic return over the medium to long-
term and create a compelling investment proposition
for private investors enabling them to gain access to
investments that are not readily available. is in due
course should increase demand for the company’s shares.
Each investment trust must consider its own particular
circumstances and objectives in assessing what is in
the best interests at any particular point in time for the
company and its shareholders. Your Board continues to
focus on the construction of a portfolio to create long-
term value and it is in the light of this that it decided
to build an allocation to Private Equity. e Board has
considered a share buy-back policy but does not consider
that this would have a signicant eect on the discount,
at which the shares trade. In the opinion of the board:
• it reduces the number of shares outstanding and
therefore the liquidity of the shares in the marketplace;
reduced liquidity may, in fact, cause a rise in the
discount;
• it means a liquid investment 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; and
• 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, giving preference
to the return generation potential and benets of
diversication generated by the investment portfolio.
34
STRATEGIC REVIEW
Capital structure e Company has two separate share classes, e current position of Ordinary and ‘A’ Ordinary share
both of which are traded on the LSE. e classes remains unchanged as the majority of Ordinary
Ordinary shareholders are entitled to one vote shareholders have informed the Board that they do not
per Ordinary share held. e ‘A’ non-voting wish to alter the present structure at the present time.
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. Consideration has
been given to whether the two share classes
could be merged in some way.
Dividends e Board continues to support maintaining e portfolio held by the Company is currently
the dividend at 3.2p until it is fully covered by constructed for long-term capital appreciation rather
net income. At that time it plans to increase it in than income generation. As a result, the income
line with any increase in the net income of the generated by the portfolio is insucient to meet this
Company. dividend commitment and the shortfall is made up from
the Company’s reserves. In principle, your Board does
not believe it to be in the Company’s best interests to use
capital as a source from which to pay dividends.
Maintaining levels e Company does not have direct employees. e independent members of the Board annually review
of service from Rather, its operations are conducted by several the performance of the Portfolio Manager. Additionally,
service providers key service providers. e Company enters into the day-to-day performance of other key service
service-level agreements with each provider. e providers (Administrator, Custodian and Registrar)
Board oversees these services to ensure that best are monitored by the AASP on behalf of the Board. In
practice is followed and that the Company is addition, there is an annual review of service providers'
receiving a comprehensive service and value for annual Controls Audit Reports. Members of the Board
money. also visit each key service provider annually to review
performance and understand any changes in their
businesses.
Notice period for general meetings
e Company’s Bye-Laws permit that the Company’s general meetings (other than AGMs) may be held on 14 days’ notice.
Annual general meeting
e Company’s Notice of Annual General Meeting is included in this Report.
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. e Board believes the ability of the Company to repurchase its own ‘A’ non-voting
Ordinary shares in the market could potentially benet all equity shareholders of the Company in the long-term.
e 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 ve 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. e 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.
e Company is seeking authority to use its realised capital reserve to allow repurchase of shares in the market. e decision as to
whether the Company repurchases any shares will be at the absolute discretion of the Board. Any shares purchased will be cancelled.
e Directors consider that all the resolutions to be proposed at the forthcoming AGM, as set out in the Notice of AGM, 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.
If the Board considers a signicant 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.
35
Hansa Investment Company Limited Annual Report 31 March 2023
Bye-Laws b) Untraceable Shareholders
e Company seeks shareholder approval to adopt new Bye-Laws e Company is also taking this opportunity to consider its
(the “New Bye-Laws”) in order to update the Company’s current dealings with Untraceable Shareholders. In line with what
Bye-Laws (the “Existing Bye-Laws”). e resolution will be other companies are doing, the Company is seeking to reduce
proposed as a special resolution. the current period to determine a shareholder untraceable
to six years. is proposal is to help the Company manage
Requirement for certain shareholders to supply the shareholder register in connection with its reporting
information for tax authorities, governments and obligations under FATCA, the Common Reporting Standard,
regulatory reporting purposes or any similar law or regulation and also more generally
e proposed amendments are being introduced in the New Bye- to remove longstanding untraced shareholders and where
Laws primarily to: appropriate, require a compulsory transfer of shares, all having
• enable the Company to meet its reporting obligations under followed due process to trace shareholders. ese Proposals
the Foreign Account Tax Compliance Act (‘FATCA’), the should enable the Company to provide an accurate account
Common Reporting Standard or any similar law or regulation, of the shareholder information of the Company, by removing
by introducing an obligation for shareholders to provide the untraced shareholders including shareholders who may have
required FATCA or Common Reporting Standard information passed away and shareholders who have consistently failed to
within a reasonable timeframe, or to provide for the mandatory respond to the Company’s requests for information.
sale of shares if the required information is not provided;
A summary of the principal amendments being introduced in the
• provide the Company with more exibility in dealing with
New Bye-Laws which the Board considers will be of most interest
untraced shareholders; and
to shareholders is set out in the AGM Notice on page 80.
• increase the maximum annual remuneration of the Directors
to US$600,000 per annum. us, it is proposed to amend
Bye-Law 44.1(a) to replace the text “not exceed US$400,000
per annum” with “not exceed US$600,000 per annum”. Further
details are given in the Directors’ Remuneration Report on
page 54.
In more detail, the key proposed changes are as follows:
a) Obligation to provide information to the Company
e FATCA rules which require certain non-US nancial
institutions to report information about shareholders and
other “account holders” are underpinned by a special US
withholding tax, which applies to both the income and gross
proceeds of sale derived from US investments. To avoid the
withholding tax, a nancial institution must comply with
its FATCA due diligence and reporting obligations, whether
imposed under a direct agreement between the nancial
institution and the IRS, or under the domestic law of the
jurisdiction in which the nancial institution is established. In
addition, the nancial institution may be subject to nancial
penalties under its domestic law if it fails to comply with the
relevant due diligence and reporting obligations. In order to
meet its reporting obligations under FATCA, the Common
Reporting Standard, or any similar law or regulation, the
Company must collect and provide certain information on
its shareholders. Where the Company’s shareholders fail to
provide the required information (“Non-Responders”), the
Company’s reporting is decient, and the Company may
be subject to negative intervention from the authorities in
Bermuda, including nding itself subject to nancial penalties.
ere are a number of shareholders whose whereabouts are
not known or do not respond to requests for information.
In order to resolve this, the Company requires a mechanism
to obtain the required information or remove the Non-
Responders from the Company’s register of members. A
new Bye-Law has therefore been introduced to enable the
Company to provide for the mandatory sale of shares of
any shareholder that fails to provide the required FATCA or
Common Reporting Standard information within a reasonable
timeframe following a formal request from and due process
being followed by the Company.
36
STRATEGIC REVIEW
## Principal risks
e 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
identies 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. e Board also receives updates at each meeting from the Portfolio Manager and the AASP
on operational risk matters. Additionally, as part of the risk management processes, the Company also annually reviews the Custodian,
Administrator and Registrar assurance reports of their internal controls (e.g. AAF 01/06, AAF 01/20, ISAE 3402). e impact of any
exceptions are considered by the Board.
Consideration of the Company’s principal risks and uncertainties, is made in the context of the Company’s stated objective of
generating superior, but sustainable, long-term growth in shareholder value. e main risk being that over the long-term (determined
as greater than ve years), shareholders do not make a return from investing in the Company. e Company’s closed-ended fund
structure is also considered to be in alignment with its stated objective, especially within extremely volatile market conditions. is
is due to the portfolio not having to be managed and maintained to manage potential signicant redemptions or short-term liquidity
needs as open-ended funds would. Additionally, the closed-ended structure can take advantage of less liquid market opportunities as
part of Its portfolio holdings.
e principal risks and uncertainties identied and associated controls in place to manage these risks are described below:
PRINCIPAL RISKS  EXTERNAL CONTROLS TO MITIGATE RISKS
Market risk – long-term e Board:
company share performance • has appointed an appropriate PM whose performance for the Company is reviewed and
Market risk includes interest rate, challenged on a quarterly basis;
currency, equity, credit, ination, • has set investment guidelines and restrictions, which are reported against by the PM on a
concentration, liquidity and macro monthly basis;
geopolitical risks. • operates an asset allocation model, which is regularly reviewed and discussed with the PM; and
• monitors and discusses portfolio construct and performance quarterly.
Performance risk, share e Board:
price, liquidity and discount • regularly reviews the share price, discount level and portfolio performance;
monitoring • maintains periodic oversight on shareholder-base;
Low market trading volumes of • actively seeks feedback both directly from shareholders and indirectly through the Company’s
Company shares and the discount Broker or specic outreach programmes involving the Portfolio Manager;
to the NAV becoming inherent in • has the ability to buy-back non-voting shares of the Company; and
the share price. • initiates strategies to reduce discount over the medium term.
Tax, accounting, legal and e Board:
regulatory risks • obtains regular updates and advice from relevant professional advisers;
• maintains oversight and receives regular reporting on the legislative and regulatory changes,
Adverse outcomes resulting from
which impact HICL, as monitored by the PM;
legislative changes to tax, legal
• maintains the Company’s membership with the Association of Investment Companies;
and regulatory requirements.
• has adopted the PM’s responsible investing policy;
Adverse outcomes from not
• has set explicit expectations on the integration of ESG considerations within the investment
meeting ESG expectations.
process;
• continues to develop ESG disclosures in compliance with reporting regulations; and
• receives documented conrmation of the PM’s adherence to relevant regulatory requirements
and emerging sanction risks.
Reputational risk e Company:
Negative behaviours, publications • requires the annual selection of Board members, all of whom must have a commitment to
or market sentiment impacting the governance;
reputation of the Company. • has direct oversight of PM;
• 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.
37
Hansa Investment Company Limited Annual Report 31 March 2023
PRINCIPAL RISKS  INTERNAL CONTROLS TO MITIGATE RISKS
Operational risk • Pre-approval processes are in place prior to the publication of any nancial information.
Risks associated with process, system • Identication and certication of key controls by AASP compliance team.
and control failures including those • Due diligence is undertaken prior to appointing all service providers. Regular performance
associated with the Company’s third- reviews of third-party providers are made and, where relevant, the Company annually
party service providers. requests independent service provider assurance reports on the operating eectiveness of
their internal controls.
Operational areas considered includes • An overdraft facility provides a contingency for any short-term liquidity shortfall. A pre-
Liquidity, Safeguarding of Assets and approval payment process is in place as part of an overall cash management process.
Reliability of Financial Reporting. • An independent Custodian is appointed to safeguard the Company’s assets. is
Custodian is bound by regulatory and legal contractual obligations and liabilities. Regular
reconciliations are undertaken to ensure accuracy of records.
Gearing/balance sheet risk • A maximum limit on the overdraft facility is in place.
Risk of over-gearing the balance sheet • Any increase in overdraft or credit facility requires Board pre-approval.
and creating nancial stress on the
Company.
Insurance
e Company through its Bye-Laws has indemnied its Directors and Ocers to the fullest extent permissible by law. During the year
the Company also purchased and maintained liability insurance for its Directors and Ocers.
Going concern
e Company’s business activities, together with the factors likely to aect its future development, performance and position, including
its nancial position, are set out in the Chairman’s Statement and the Portfolio Manager’s Report within this Annual 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 is a going concern and has adequate resources to continue
in operational existence for at least 12 months. Assets of the Company consist of securities, the majority of which are traded on
recognised stock exchanges, or open-ended funds run by established managers. e Financial Statements are prepared on a going
concern basis.
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. e 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. e Directors consider a period of ve years to be
a more representative period, which aligns with the Portfolio Manager’s longer-term horizon. is period is suciently long to manage
short-term market volatility and allow longer-term performance to work through. e 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 signicant costs in each nancial 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, the principal risks, the longer-term strategy
for the portfolio, including a diversied and liquid asset base and the lack of gearing, the Directors conrm they have a reasonable
expectation that the Company will continue to operate and meet its liabilities as they fall due for the next ve years.
38
GOVERNANCE
## Governance
39
Hansa Investment Company Limited Annual Report 31 March 2023
## The Board of Directors
The Directors who served the Company during the year to 31 March 2023 are:
Jonathan Davie Simona Heidempergher Richard Lightowler
Chairman Remuneration Committee Chair Audit Committee Chairman

| Jonathan became Chairman of Hansa | Simona became a Director of the | Richard became a Director of the |
| --- | --- | --- |
| Investment Company in June 2019. He was | Company in June 2019. Simona has | Company in June 2019. Richard has 26 |
| a director of Hansa Trust from January | extensive experience as an executive | years’ experience in public accounting |
| 2013 until its liquidation in November | and non-executive director in a | being partner of KPMG in Bermuda |
| 2021. He is also a partner of First Avenue | range of companies, including listed | for 19 years. He was head of the KPMG |
| Partners, an alternatives advisory | companies, investment funds and | Insurance Group in Bermuda for 15 years, |
| boutique. | research organisations, across multiple | a member of the rm’s Global Insurance |
|  | jurisdictions. | Leadership Team and Global Lead Partner |

Jonathan qualied as a Chartered
for a number of large international
Accountant and then joined George M. For the past 20 years, she has been
insurance groups listed on the New York
Hill and Co. and became an authorised a director of Merin Capital, an
and London Stock Exchanges.

| dealer on the London Stock Exchange. | established European privately owned |  |
| --- | --- | --- |
| e rm was acquired by Wedd Durlacher | investment company. Prior to this she | Richard has signicant regulatory |
| Mordaunt and Co. where Jonathan | had roles as VP Investments at CDB | experience, previously advising the |
| became a partner in 1975. He was the | Web tech, a listed investment vehicle, | Bermuda Monetary Authority and |
| senior dealing partner of the rm on its | and as research associate at Heidrick | working with clients regulated by the |
| acquisition by Barclays Bank to form BZW | & Struggles, a leading executive-level | PRA, FRC and FCA, as well as other |
| in 1986. | search and leadership consultancy rm | international regulators. He also has |
|  | and as project coordinator at Ambrosetti | extensive experience in risk and corporate |

Jonathan developed BZW’s Fixed Income
Group, an Italian consulting company. governance and signicant transaction
business prior to becoming chief executive
Currently, Simona is the chair of the board experience. Richard is based in Bermuda.
of the Global Equities Business in 1991. In
of directors of the Stramongate Group, a Richard also holds non-executive
1996 he became deputy chairman of BZW
Luxembourg public company, director of directorships with Aspen Insurance
and then vice chairman of Credit Suisse
e European Smaller Companies Trust, Holdings, Geneva Re and Oakley Capital
First Boston (“CSFB”) in 1998 on their
a Janus Henderson Asset Management Investments.
acquisition of most of BZW’s businesses.
Investment Trust listed on the London
He focused on the development of CSFB’s
Stock Exchange and director of Industrie
Middle Eastern business. He retired from
Saleri Italo S.p.A. an Italian private
CSFB in February 2007.
company in the automotive supplier
sector.
40
GOVERNANCE
Board members are selected
based on their individual and
complementary skills and experience
and their ability to commit suicient
time to drive the Company’s
success. All Directors will retire at
each AGM and oer themselves
for consideration for re-election.
The Board recommends the
re-appointment of each of the
William Salomon Nadya Wells
Directors, based on their continuing
Nominations Committee Chair and
Senior Independent Director contribution to the Company
and its shareholders. The service
William became a Director of the Nadya became a Director of the Company
contracts between the Company

| Company in June 2019. He was a Director | in June 2019. Nadya has 28 years’ |  |
| --- | --- | --- |
| of Hansa Trust from 1999 until its | experience in emerging and frontier | and each of the Directors do not |
| liquidation in November 2021. He has a | markets as a long-term investor and | allow for any compensation payment |
| signicant, long standing, investment in | corporate governance specialist. She |  |

in the event of loss of oice.
the Company. spent 13 years as portfolio manager with
the Capital Group investing in Global
William’s experience in investments and
Emerging Markets and prior to those ve
nance is important to the Board in
years with INVESCO Asset Management
developing and monitoring investments
Limited, investing in public and private
in special investment themes and in the
equity managing a closed ended fund.
Company’s strategic investment through
She started her career in management
Ocean Wilsons Holdings Limited in
consultancy with Ernst & Young.
Wilson Sons.
She holds a non-executive directorship
William is the senior partner of Hansa
at Baring Emerging EMEA Opportunities
Capital Partners LLP, the Portfolio
plc where she is senior independent
Manager and Additional Administrative
director. Nadya is an independent non-
Services Provider, deputy chairman of
executive director on the boards of various
Ocean Wilsons Holdings Limited and a
Luxembourg SICAVs managed by large
director of its Brazilian listed subsidiary
global asset managers. She also works
Wilson Sons Holdings Brasil S.A.. He is
in academia conducting research and
also a shareholder representative on the
consulting in the public and private sector
investment advisory committee for DV4
on nancing in Global Health. She holds
Ltd (“DV4”). William was formerly the vice
an MBA from INSEAD, France.
chairman of Close Asset Management
Limited and chairman of the merchant
bank Rea Brothers PLC.
41
Hansa Investment Company Limited Annual Report 31 March 2023
## Organisation and objectives
is section explains how the Board has organised the Company Management Engagement Committee
and seeks to deliver its objectives. e Committee is chaired by Jonathan Davie. All independent
members of the Board are members of the Management
Board committees and roles Engagement Committee. e Committee has two primary roles.
e Directors consider that, in order to full their responsibilities Firstly, to review the functional and operational performance of
as the Directors of the Company, they should all be members of the Portfolio Manager with the Company’s investment policy.
every sub-committee where possible. Where a Director cannot Secondly, to review annually the performance of any other key
be a member of a committee, they should attend the meetings service providers to the Company.
unless a conict exists and it would be inappropriate for them to
e level of management fees, level of service provided and the
be present.
performance of the Portfolio Manager are reviewed on a regular
basis to ensure these remain competitive and in the best interests
Audit Committee
of shareholders. e Board, after the annual recommendation
Richard Lightowler is the Chairman of the Audit Committee.
of this Committee, considers whether the engagement of the
e Audit Committee consists of all independent Directors of
Portfolio Manager is in the best interests of the shareholders.
the Board. e Audit Committee exists to assist the Board in
e Committee members also carry out periodic visits to the key
the nancial and narrative reporting of information relating
service providers as well as seeking feedback on the performance
to the Company, the review of the Internal Controls and Risk
of other service providers from the Portfolio Manager in its
Management systems, the oversight of the Company’s annual
capacity as Additional Administrative Service Provider.
audit and in the liaison with, and assessment of, the Company’s
external Auditor PricewaterhouseCoopers Ltd. e Committee e Committee reports its recommendations to the Board for
meets at least twice a year – timed to review the Annual and Half- nal approval.
Year Financial Statements prior to their approval and release.
Remuneration Committee
e AIC Code of Corporate Governance (“the AIC Code”)
e Committee is chaired by Simona Heidempergher. All
indicates that all independent Directors can be members of the
independent members of the Board are members of the
Audit Committee including, if agreed by the Board, the Chairman
Remuneration Committee. William Salomon attends the
of the Board. e Board is of the opinion that, particularly as the
Committee but is not a member. e Committee is responsible
Company has relatively few Directors, shareholders benet from
for the broad policy for the remuneration of the Company’s
the views of all Directors. erefore, Jonathan Davie, as Chairman
Chairman and non-executive Directors pursuant to the
of the Company, is also a member of this Committee. e Board
Company’s Bye-Laws. e Committee takes into account all
further acknowledges that the AIC Code states all Committee
factors which it deems necessary. When setting the remuneration
members should be independent. erefore, William Salomon
policy for Directors, the Committee reviews remuneration
is not a member of the Committee although attends as a non-
trends across the wider industry, including the use of external
member. e Committee reports its recommendations to the
independent surveys, and considers the ongoing appropriateness
Board for nal approval.
and relevance of the remuneration policy. e level of directors’
See page 53 for the Audit Committee Report fees should be set at a level which attracts and retains high
calibre candidates. Fees are monitored against external
Nomination Committee benchmarks taking specic note of each Director’s duties, time
e Committee is chaired by Nadya Wells. All independent commitments to properly full all obligations and duties and
members of the Board are members of the Nomination also relative to other comparable companies in comparable
Committee. William Salomon attends the Committee but is not currencies. No Director sets their own individual remuneration.
a member.
e Committee reports its recommendations to the Board for
e Committee reviews the structure, size and composition nal approval.
(including the skills, knowledge and experience) of the Board
See page 54 for the Directors’ Remuneration Report.
and makes recommendations to the Board with regard to any
changes, as necessary. It also considers succession planning of
Senior Independent Director (“SID”)
directors, taking into account tenure and performance of board
During the Company’s nancial year, Nadya Wells was appointed
members as well as challenges and opportunities facing the
to act as the Company’s Senior Independent Director. e SID
Company, and what skills and expertise are, therefore, needed
acts as a sounding board for the Chairman as well as to serve
on the Board in the future. If a skills-gap or pending vacancy
as an intermediary between the Chairman and the views of the
is identied, the Committee is responsible for identifying and
other Directors, shareholders, other key stakeholders and the
nominating candidates to ll Board vacancies as and when they
Company’s Portfolio Manager when necessary.
arise.
See page 58 for the Nomination Committee Report.
42
GOVERNANCE
Long-term impact of decisions – ESG matters duties. Where a manager is not living up to these standards, HCP
will rst seek to engage the management team and encourage
In the natural positive progression of HCP’s commitment to
improvement. If the managers engagement is weak, or if the
further integrating ESG and climate relevant considerations
communicated concerns are not suciently addressed and their
within its investment process, the Hanseatic Group, of which
positive commitment to do so is not apparent, HCP’s ultimate
HCP is a member, has become a signatory of the United Nations
action would be to reduce current investment, exit, or not invest
supported Principles for Responsible Investment (“UNPRI”).
in the rst place. Whilst HCP does not seek to exclude fund
With ever-growing global concerns and developments managers that invest in sectors such as energy or countries
surrounding matters such has climate change, social inequalities such as China, it would, however, expect such managers to
and ethical corporate strategy and governance, the Board properly articulate how they operate in such areas and manage
believes there is a communal duty for meaningful and eective the potential ESG considerations. HCP’s investment philosophy
action to be taken and are committed to doing so. It is the Board’s favours those fund managers who are typically long-term in
belief that responsible investing and a well-run sustainable their approach and seeks to invest in high-quality, well-managed
business model aids in generating superior long-term returns. companies that are often higher-returning. As a result, although
we do not set limits, there is a natural bias away from these
e Board is responsible for the Company’s ESG policy. In
companies and sectors that score less well on ESG metrics.
2020, the Board adopted the Portfolio Manager’s Responsible
Investment Policy, which is applied to all Company investments
Company investments
in funds and companies, in both public and private markets.
When considering direct equity investments HCP seeks to ensure
In line with the evolving nature of ESG’s integration within
that company management teams are responsible custodians
nancial services, the PM continues to review and develop their
of their businesses, report clearly on ESG metrics and seek to
policy of responsible investing within their investment process.
improve on those areas in which they are lagging.
is involves ensuring environmental, social and governance
factors are integrated throughout the investment management
Taskforce on Climate-Related Financial Disclosures
process, including within the due diligence, decision-making and
As a closed-ended investment company, HICL is exempt from
investment monitoring processes.
the annual reporting requirement to publish statements in line
As long-term investors, HCP has a natural desire to be a with the Taskforce on Climate-Related Disclosures’ (“TCFD”)
responsible investor and a good corporate citizen. HCP’s approach framework of recommendations and recommended disclosures.
begins by communicating its expectations to fund and company However, considering the Board and the PM’s approach to
investments that they should take ESG issues seriously, clearly responsible investing and the Company’s core investment
report on them, be responsible owners and to continuously show objective to generate superior, but sustainable, medium to
positive indicators of aspiring to do the right thing. long-term growth in shareholder value, we have elected to
provide relevant information on our approach to the TCFD
HCP does not operate an exclusionary policy, as excluding whole
recommendations.
sectors or countries is not a sustainable, or reasonable approach
to its investment activities. Each fund manager or company is
Governance
assessed as an individual, taking into account the sector and
Strong corporate governance practices are intrinsic to how the
country within which they operate and their direction of travel in
Board operates. e Board oversees a long-term and sustainable
ESG enhancements.
approach to business strategy of the Company. is in part is
HCP seeks to ensure that all investee managers and companies done by adopting a Responsible Investment Policy, which aims to
are thinking longer term and that they are also thinking about integrate sustainability, climate-related risks and opportunities,
their longer-term impacts across the spectrum of their business. social responsibility and strong governance into the Company’s
is certainly includes the negatives – such as understanding investment process. is is consistent with HCP’s approach to its
how companies are lowering their carbon emissions, ensuring ESG assessment of fund managers and company investments.
they are not using forced or child labour in their supply chains,
taking care not to deplete natural resources, or be involved Risk Management
in deforestation. But it also includes the positive impacts, for Climate-related risks within the Company’s investments are
example, knowing if a company is taking advantage of the identied, assessed and managed by HCP as the Portfolio
opportunities it may have from climate change by developing Manager. As part of the portfolio risk management and
greener energies, recycling used clothing, or designing monitoring process, HCP’s combines long-term and purpose-
biodegradable fabrics. HCP’s involvement with the managers and driven engagement with underlying fund managers and
companies is ongoing and pushes them to manage the risks and companies, active voting and setting a clear escalation
take advantage of the opportunities in a tailored and considered framework. is approach aims to identify and address
manner. A manner that reaps longer-term benets for the climate-related issues and minimise systemic risks that may
Company, as well as the environment and the greater society. impact the assets within the portfolio. Engagement can take
several forms, including regular and ad hoc meetings with
Fund investments management, formal written correspondence, or the Portfolio
HCP seeks to invest in funds who are responsible owners of their Manager participating in relevant shareholder votes for current
investee companies, have specic consideration as to how their investments.
investee companies manage their ESG responsibilities and seek
to engage with those company boards, if they are failing in their
43
Hansa Investment Company Limited Annual Report 31 March 2023

## 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. In line with this objective, the Board are responsible for pursuing the growth of shareholder value. Responsible investment and the integration of ESG risks and opportunities within the investment process is aligned with the Company's values and heritage. HCP becoming a signatory to UNPRI is part of our overall strategy.

## Metrics and 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 in relation to metrics and targets.

## Ocean Wilsons Holdings Limited

OWHL has two investments – Ocean Wilsons Investments Ltd, an investment portfolio and a holding in Wilson Sons Holdings Brasil S.A., a Brazilian maritime business. From an ESG standpoint, our Portfolio Manager is also the investment advisor to the Ocean Wilsons Investments' portfolio. The Board understands that our Portfolio Manager is engaging with Ocean Wilsons Investments' board on their Responsible Investing Policy. As a Board we receive periodic updates from Wilson Sons, an operating business with several thousand employees, regarding their business including issues relevant to ESG considerations. Wilsons Sons is listed on the Novo Mercado ("New Market") B3 listed segment and is a member of the Carbon Disclosure Project which, in partnership with companies and governments, aims to build a truly sustainable economy, by measuring and understanding the environmental impact. In 2022, Wilson Sons achieved a grade B performance in the climate change questionnaire for the maritime transportation segment. This was an improvement from the grade C performance achieved in 2021, making Wilson Sons in line with 44% of companies in the maritime sector that publicly disclose their data to CDP. Wilson Sons continues to be proud of their focused approach to health & safety, staff wellbeing and the preservation of the environment and communities they operate in. This continued focus was awarded through the "Great Place to Work" certification, which is a standard of excellence for work environments, and have been ranked in the top quintile of the S&P Global 2022 Corporate Sustainability Assessment. As in many heavy industries, there is a focus on safety and improving working practices to minimise staff injuries. To this end, Wilson Sons has a non-negotiable commitment to ensuring the health and safety conditions of all employees, customers and third parties at their facilities. Their commitment to maintaining an increasingly safe working environment is reflected by their continuous trend of reduction in lost-time injuries, which in 2022 was reduced to a frequency rate of 0.45 incidents per one million hours worked. This rate exceeds the world-class benchmark. Additionally, the reduction of Greenhouse Gas emissions remain a focus for Wilson Sons, who achieved a 5% reduction in their total emissions in 2022, achieved through the adoption of state-of-the-art technologies

such as replacing diesel equipment with electrically powered alternatives at their container ports. Additionally, the company has maintained its commitment to proactively publish its Greenhouse Gas Emissions Inventory ("GHG") in the public emissions registry, a platform managed by the Brazilian GHG Protocol Programme. In 2022, Wilson Sons maintained their gold seal by the programme. Further information can be seen in their 2022 Sustainability Report, published on their website.

## Carbon offset and charitable support

Each year, there are a number of flights for individual Directors to attend Board meetings in Bermuda. Therefore, 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). This year, circa 237 tonnes of carbon dioxide has been offset. Greenfleet Australia runs a tree planting offset programme.

Additionally, during the year the Board looked for an environmental cause to sponsor that has direct relevance to Bermuda, our country of domicile. Given its island status, Bermudians are more aware than most of the marine environment. Marine life is under threat from climate change, acidification of the sea, pollution and invasive species. But these threats are compounded by overfishing, which strips the ocean of life, and so reduces its capacity to produce oxygen, absorb carbon dioxide and regulate the climate. It's estimated that almost 94% of commercial fish stocks are fully or overexploited and 90% of large, predatory fish are gone. Overfishing therefore represents a major threat for the food security of millions and could have devastating consequences for Earth's climate if these ecosystems fail. Amongst many worthy organisations, we discovered the Blue Marine Foundation, an environmental charity dedicated to restoring the ocean to health by addressing overfishing and supporting marine conservation projects. The ocean is the world's largest carbon sink: by combating overfishing and the associated impact on the wider marine environment, Blue Marine aims to help life in the ocean perform its vital function of stabilising the Earth's climate. By partnering with Blue Marine, the Company supports their work around the world ultimately benefiting us all and, in particular, maritime communities like Bermuda. The Company has committed to a charitable gift of £10,000 per annum towards Blue Marine's work.

## Streamlined Energy and 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 which are "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 237 tonnes of CO2 in any 'normal' year.

## 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.

44
GOVERNANCE
Service providers The providers
Service Provider Policy Portfolio Manager & Additional Administrative Services
e Company has no employees and operates through third Provider
party service providers. e Board has contractually delegated Hansa Capital Partners LLP is the Portfolio Manager for the
to external organisations the management of the investment Company. It is responsible for all assets in the portfolio, other
portfolio, the custodial services which include safeguarding of the than the Company’s investment in OWHL. e Board is in regular
assets and the day-to-day accounting and company secretarial contact with the investment management team at HCP which
requirements. Each of these contracts is only entered into after is led by Alec Letcheld. Additionally, Alec Letcheld is invited
proper consideration of the quality and cost of services, which are to quarterly meetings of the Board to formally present portfolio
regularly reviewed and monitored. updates and discuss market trends. e Portfolio Manager’s
detailed review of the year can be found on page 8.
e key service provider relationship to the Company is Hansa
Capital Partners as the Portfolio Manager and Additional HCP charges a portfolio management fee at an annual rate of
Administrative Services Provider (“AASP”) to the Company. 1% of the net assets of the Company (after any borrowings),
after deducting the value of the investment in OWHL, on which
e Board carries out the following activities as part of its
no fee is payable. e Portfolio Manager has charged £2,824,000
oversight of third party service providers:
for the year ended 31 March 2023 (year ended 31 March 2022:
£3,010,000). Hanseatic Asset Management LBG, a company
Monitors performance, costs and commitment to a
connected to Hansa Capital Partners and which is also the
successfully implemented controls environment
AIFM, separately charges an investment management fee to the
e Board, at its regular meetings, reviews reports prepared investment subsidiary of OWHL.
by both the Portfolio Manager and the Administrator, which
enable it to monitor the performance and costs of the third- e terms of the Portfolio Management Agreement permit either
party suppliers to the Company. e Additional Administrative party to terminate the agreement by giving to the other not less
Services Provider has an ongoing dialogue with each provider to than 12 months’ notice, or such shorter period as is mutually
monitor their processes and systems and, in addition, members acceptable. ere is no agreement between the Company and
of the Board meet with key providers at least annually to discuss the Portfolio Manager concerning compensation in respect to
performance. the termination of the agreement. In its annual assessment of the
Portfolio Manager, the Board concluded that, because of the skills
Monitors Portfolio Manager performance and experience of the management team it is in the best interest
of shareholders that the Portfolio Manager remains in place
e Board reviews reports prepared by the Portfolio Manager at
under the present terms. Details of the fees paid to the Portfolio
its regular meetings, which enables it to monitor the investment
Manager can be found in Note 3 to the Financial Statements.
performance, risks and returns. e Portfolio Manager attends
each Board meeting where there is an active dialogue on
HCP also acts as the AASP to the Company. is role ensures a
performance, process, risks and opportunities and governance
number of the day-to-day processes for the Company are carried
matters.
out, as well as providing oversight of, and a liaison between, a
number of the Company’s service providers and the Company
e Board identies key controls and regularly monitors them
itself. HCP is paid £115,000 per annum for this service (year
through compliance reports on control eectiveness.
ended 31 March 2022: £115,000).
Determines investment strategy, guidelines and restrictions
Auditor
e Board determines the investment strategy in conjunction
e Company’s Auditor is PricewaterhouseCoopers Ltd, a
with the Portfolio Manager. e strategy is monitored regularly
Bermudan registered rm. e Board is satised with the quality
with adjustments made as required.
of work performed by PwC. e reappointment of PwC as Auditor
e Board issues formal investment guidelines and restrictions; to the Company will be proposed at the forthcoming AGM.
compliance with these is reported by the Portfolio Manager’s
Auditor independence rules restrict the amount and type of non-
compliance ocer quarterly and is also monitored independently
audit related work that can be performed by a company’s Auditor.
by the Administrator.
Any non-audit related work must be pre-approved by the Board.
PwC did not provide any non-audit services in the year.
Determines gearing levels and capital preservation through
the use of hedging instruments
Company Secretary
e Board, taking account of advice from the Portfolio Manager,
e Company has engaged Conyers Corporate Services
determines the maximum level of borrowings the Company
(Bermuda) Ltd (“Conyers”) as its Company Secretary. During the
will undertake. e Company will not invest in derivatives for
year to 31 March 2023, Conyers has charged £38,275 (year ended
speculative gain, but may use derivatives for ecient portfolio
31 March 2022: £32,713).
management and hedging purposes.
45
Hansa Investment Company Limited Annual Report 31 March 2023

### **Alternative Investment Fund Manager**

As a Bermudan resident, the Company is defined as a UK Alternative Investment Fund ("AIF") under the UK Alternative Investment Fund Manager's Directive ("UK AIFMD"). As such, the Company and the AIFM are subject to a more limited set of UK AIFMD requirements, which are largely in relation to marketing the Company's shares into the UK. 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 functions. The AIFM has delegated the provision of Portfolio Management services to Hansa Capital Partners LLP but remains responsible for the Risk Management function. 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 £149,722 for the year ended 31 March 2023 (year ended 31 March 2022: £155,289). On 9 January 2023 Apex Group Ltd announced the completion of its acquisition of the fund services and third-party management company businesses of Maitland International Holdings plc, which includes our Administrator.

### **Custodian**

The Company has engaged Banque Lombard Odier & Cie SA as the Company's Custodian. During the year to 31 March 2023, Lombard Odier charged £180,335 for the custodial service (year ended 31 March 2022: £184,868).

### **Registrar**

The Company's Registrar is Link Market Services (Guernsey) Limited ("Link"). The Registrar has charged £91,728 for the year ended 31 March 2023 (year ended 31 March 2022: £89,001). During the year, following a review of services received by the Company's Management Engagement Committee, it has been decided to change registrar. From 25 September 2023, the Company's new Registrar will be Computershare Investor Services (Bermuda) Limited ("Computershare"). The Directors thank Link for their work with the Company and its predecessor, Hansa Trust, and look forward to working with Computershare.

46
GOVERNANCE
## Report of the Directors
e Directors have chosen to report on some items within the body of the Strategic or Governance Reports, while others remain within
the Report of the Directors.
Items included within Strategic or Governance reports
e following items are listed within the Strategic or Governance Reports:
• Statement of the existence of qualifying indemnity provisions for Directors.
• Dividend policy and payments made during the year.
• Names of Directors, at any time in the year and the Directors’ details and attendance at Company meetings.
• Streamlined Energy & Carbon Reporting and Greenhouse Gas Emissions.
• 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.
e eect of this consideration upon the principal decisions taken by the Company during the nancial year is set out in further
detail in the Strategic Report.
Items reported within the Directors’ Report
Disclosure to the Auditor of Relevant Audit Information
e Directors conrm 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. e Directors are not aware of any information relevant to the audit of which the Company’s Auditor is unaware.
Board composition and diversity
e Board recognises and is supportive of the new FCA Listing Rules (LR 9.8.6R(9)) which aim to improve transparency on the diversity
of company boards and executive management teams and was implemented for accounting periods starting on or after 1 April 2022.
Accordingly, boards are required to annually report on whether the specic three FCA targets have been met, and if they have not been
met, the reasons why. ese three targets are:
(i) at least 40% of the individuals on its board of directors are women;
(ii) at least one of the following senior positions (Chair CEO, Senior Independent Director, CFO) on its board of directors is held by a
woman; and
(iii) at least one individual on its board of directors is from a minority ethnic background;
e tables below set out the gender and ethnic diversity composition of the Board as at 31 March 2023. e Board is pleased to
report that it is compliant with each of the three FCA targets. Two of the ve Directors are women (40%), one of whom holds the
senior position of SID, and one of the ve Directors is from a minority ethnic background. ere have been no changes made to the
composition of the Board, or the roles the Directors have been appointed, between the year end and approval of this Annual Report.
As per LR 9.8.6R(10), numerical data is disclosed in the tables below, which shows the Company’s compliance with these three FCA
targets.
Number of
senior
Number of Percentage positions
Board of the on the
1
Gender Diversity members Board Board
Men 3 60% 2
Women 2 40% 1
Other - - -
Not specified/prefer not to say - - -
47
Hansa Investment Company Limited Annual Report 31 March 2023
Number of
senior
Number of Percentage positions
Board of the on the
1
Ethnic Diversity members Board Board
White British or other White (including minority-white groups) 4 80% 2
Mixed/Multiple Ethnic Groups 1 20% 1
Asian/Asian British - - -
Black/African/Caribbean/Black British - - -
Other ethnic group, including Arab - - -
Not specified/ prefer not to say - - -
1
Note, the format and information supplied in the above tables are as prescribed by the FCA’s Listing Rules. HICL is an externally
managed closed-ended investment company and as such does not have any employees or appoint executive board positions.
Accordingly, the senior board positions which the Company denes as applicable are Chairman, Audit Committee Chairman and SID.
is data was provided by the individual Directors, at the request of the Committee, asking them to indicate how the Company should
categorise their ethnic background for the purposes of the FCA requirements of Board diversity.
Capital Structure
e Company’s Capital Structure is described in the “Shareholder Prole and Engagement” section.
Corporate Governance Report
e Corporate Governance Report, including the Financial Risk Management Review of the Company, is included in this Report.
Future Developments and Post Balance Sheet Events
On 12 June 2023, OWHL announced it was undertaking a strategic review involving its investment in Wilson Sons and the Board notes
from the announcement that it is currently at an early stage with no certainties as to the outcome.
Approval of the Directors
e Directors consider the Annual 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.
For and on behalf of the Board
Jonathan Davie
Chairman
26 June 2023
48
GOVERNANCE
## Corporate Governance Report
Corporate governance code Association of Investment Companies Code
Internal Controls e AIC Code has 17 principles. e Company sets out below
e UK Corporate Governance Code (“UK Code”), requires the how it has complied with the Principles and Provisions:
directors of UK listed companies to review the eectiveness of
the company’s risk management and system of internal controls Board Leadership and Purpose
on an annual basis. e Board is committed to sound corporate A. A successful company is led by an eective board, whose
governance, robust risk management processes and eective role is to promote the long-term sustainable success
systems of internal controls. e Board reviews and considers of the company, generating value for shareholders and
the eectiveness of internal controls regularly and review contributing to wider society.
exception reporting at least quarterly. e Directors, through the e Board is formed of ve Directors with a complementary
procedures outlined below, keep the system of risk management mix of skills and experience to lead the Company. Two
and internal controls under review. Directors served on the board of the Company’s predecessor,
Hansa Trust, whilst three Directors were appointed at
e Board recognises its ultimate responsibility for the
the formation of HICL. All have signicant and relevant
Company’s system of risk management and internal controls
experience. All Directors are focused on generating long-term
and for monitoring their eectiveness. In order to perform
value for shareholders and there is signicant share
this responsibility the Board receives regular reports on all
ownership in the Company’s shares amongst the Directors.
aspects of risk management and internal control from the
e Board engages at least quarterly with its Portfolio
Company’s service providers (including nancial, operational and
Manager challenging performance, process, risk, cost and
compliance controls, risk management and relationships with
strategy.
other service providers); the Board will instigate necessary action
in response to any signicant failings or weaknesses identied by
B. The board should establish the company’s purpose,
these reports.
values and strategy, and satisfy itself that these and its
culture are aligned. All directors must act with integrity,
Financial Reporting
lead by example and promote the desired culture.
e Board has a responsibility to present a fair, balanced and
e Board believes that the Company’s purpose, values and
understandable assessment of annual, half-year and other price
strategy are clear: to create long-term growth of shareholder
sensitive public reports and reports to regulators, as well as
value. e Board fosters a culture that is open to new ideas
to provide information required to be presented by statutory
and is able to inuence its service providers through eective
requirements. To ensure this responsibility is fullled, all such
challenge and regular robust review of performance. e
reports are reviewed and approved by the Board prior to their
Board sets the standard for openness and professionalism
issue.
that the Company’s key service providers follow. In particular,
there is regular interaction between the Board and the
e Board conrms there have been no specic events since 31
Company’s Portfolio Manager and also the AASP for day to
March 2023, of which the Board is aware, which would have a
day liaison with other service providers.
material impact on the Company.
C. The board should ensure that the necessary resources
Compliance with the provisions of the UK
are in place for the company to meet its objectives and
Corporate Governance Code
measure performance against them. The board should
e Board of Hansa Investment Company has considered also establish a framework of prudent and eective
the Principles and Provisions of the AIC Code. e AIC Code controls, which enable risk to be assessed and managed.
addresses the Principles and Provisions set out in the UK Code,
e Board, through the work of its Committees and regular
as well as setting out additional Provisions on issues that are of
Board meetings ensures regular measurement against the
specic relevance to the Company.
Company’s objectives. e adequacy and eectiveness of
internal controls is considered at each Board meeting.
e Board considers that reporting against the Principles and
Provisions of the AIC Code, which has been endorsed by the FRC
D. In order for the company to meet its responsibilities to
in the UK, provides more relevant information to shareholders.
shareholders and stakeholders, the board should ensure
eective engagement with, and encourage participation
e Company has complied with the Principles and Provisions of
from, these parties.
the AIC Code.
e Board considers its stakeholders to be its shareholders
e AIC Code is available on the AIC website (www.theaic.
and its key service providers. e Board is committed to
co.uk). It includes an explanation of how the AIC Code adapts the
transparent reporting in all its communications. It actively
Principles and Provisions set out in the UK Code to make them
engages with shareholders via an annual general meeting,
relevant for investment companies.
periodic shareholder presentations, the next of which will
be held on 27 September 2023, quarterly factsheets, website
49
Hansa Investment Company Limited Annual Report 31 March 2023
communication and with feedback also received through H. Non-executive directors should have suicient time to
outreach programmes by the Company’s broker and Portfolio meet their board responsibilities. They should provide
Manager, as well as direct one-to-one correspondence. e constructive challenge, strategic guidance, oer
Board engages with other key service providers through the specialist advice and hold third party service providers to
operations of its AASP on a day to day basis, as well as via at account.
least one annual meeting with each to ensure accountability
e Directors conrm they have sucient time to meet their
and value-added performance. e Board has also
responsibilities. Directors consult with the Company before
established the role of Senior Independent Director. e SID
accepting other appointments, to conrm capacity to do
acts as a sounding board for the Chairman as well as to serve
so and that no conict exists. In considering appointments
as an intermediary between the Chairman and the views of
and potential conicts of interests the Board considers
the other Directors, shareholders, other key stakeholders and
the available time each Director has to commit to the
the Company’s Portfolio Manager when necessary.
Company. A formal calendar exists for the Board meetings
and sub-committees. Ad-hoc meetings may be arranged
Principle E is omitted by the AIC Code.
without advance materials for time-sensitive matters. e
Portfolio Manager and AASP report to scheduled Board
Division of Responsibilities
meetings, giving the Directors the opportunity to challenge
F. The chair leads the board and is responsible for its
performance, raise issues and oer guidance.
overall eectiveness in directing the company. They
should demonstrate objective judgement throughout their I. The board, supported by the company secretary, should
tenure and promote a culture of openness and debate. In ensure that it has the policies, processes, information,
addition, the chair facilitates constructive board relations time and resources it needs in order to function
and the eective contribution of all non-executive eectively and eiciently.
directors, and ensures that directors receive accurate, e Company Secretary and AASP support the Board
timely and clear information. in identifying and monitoring all governance matters.
e Chairman is Jonathan Davie. e Chairman promotes Additionally, Directors are able to consult external
and encourages active participation from all Directors at professional advisors to assist them in the performance
Board meetings. Further, whilst adhering to membership of their duties as and when required. Board reporting and
guidelines, sub-committees also seek to include as many materials are rened on an ongoing basis.
Directors as possible to ensure a broad range of views. All
Directors receive regular monthly and quarterly information Composition, succession and evaluation
prepared by the Portfolio Manager and Administrator, as well J. Appointments to the board should be subject to a
as portfolio performance presentations from the Portfolio formal, rigorous and transparent procedure, and an
Manager. eective succession plan should be maintained. Both
appointments and succession plans should be based
G. The board should consist of an appropriate combination
on merit and objective criteria and, within this context,
of directors (and, in particular, independent non-
should promote diversity of gender, social and ethnic
executive directors) such that no one individual or small
backgrounds, cognitive and personal strengths.
group of individuals dominates the board’s decision
e Board has appointed a Nominations Committee chaired
making.
by Nadya Wells. e Nominations Committee conducts
e Board consists of ve Directors. All have a nancial
a formal due diligence process on all appointments and
background but each also brings individual specialisms and
considers annually the continued suitability and performance
experience that are complimentary. eir biographies are
of directors. e Company believes a diverse Board brings
noted earlier on in the Report. Four Directors are deemed
many benets and, as such, there is no restriction placed on
independent. e fth, William Salomon, is the Senior
Board membership. Inclusivity, diversity, variety of experience
Partner of the Company’s Portfolio Manager and, therefore, is
and personal strengths are all incorporated in the decision
deemed non-independent. All Directors are actively involved
making for director selection and succession planning.
in decisions and committees unless conicts exist which
preclude this. Accordingly, Mr Salomon does not participate K. The board and its committees should have a combination
in the evaluation of the performance of the Portfolio
of skills, experience and knowledge. Consideration
Manager due to his role as senior partner of that rm. Nor
should be given to the length of service of the board as a
does he participate in decisions regarding the Company’s
whole and membership regularly refreshed.
largest asset (by value) OWHL, due to him being a director
e Directors have a broad range of backgrounds including
of that company. Finally, Mr Salomon is not a member of
investment management, nance and banking as well
the Audit, Nominations or Remuneration Committees due
as operational experience. Biographies of all Directors
to his non-independent status, although he does attend
are shown earlier on in the Report. Each director retires
meetings of those Committees. e culture of open and
and is subject to re-election at the AGM. e decision to
honest communication and forthright discussion means no
propose directors for Nomination at the AGM is made by
individual or small group dominate decision making.
the Nomination Committee. e Nominations Committee
is tasked with maintaining a broad range of skills and
experiences at times of succession.
50
GOVERNANCE
L. Annual evaluation of the board should consider its Remuneration
composition, diversity and how eectively members P. Remuneration policies and practices should be designed
work together to achieve objectives. Individual evaluation to support strategy and promote long-term sustainable
should demonstrate whether each director continues to success.
contribute eectively.
e remuneration of Directors is overseen by the
e Nominations Committee is responsible for the ongoing Remuneration Committee, chaired by Simona
consideration of Board composition and to identify any Heidempergher. e Directors each receive a xed annual
skills gap, now or in the future. e Nomination Committee fee and do not receive any additional element based on
considers Board eectiveness annually. performance of the Company. Additionally, Directors oer
themselves annually for re-election at the Company’s AGM.
Audit, risk and internal control
Q. A formal and transparent procedure for developing policy
M. The board should establish formal and transparent
on remuneration should be established. No director
policies and procedures to ensure the independence and
should be involved in deciding their own remuneration
eectiveness of external audit functions and satisfy itself
outcome.
on the integrity of financial and narrative statements.
e Directors’ Remuneration Report notes that each Director
e Board has specically delegated the appointment and
is paid a xed fee representative of their roles and additional
monitoring of the Company’s external Auditor to its Audit
responsibilities on the Board. is fee level is reviewed
Committee. e Company’s Auditor was formally appointed in
by the Remuneration Committee annually considering
November 2019. e tender process was led by the Chairman
performance, time commitments and market conditions.
of the Audit Committee. e Audit Committee considers the
Recommendations are made to the Board for approval.
independence and eectiveness of the external Auditor at
Further detail is provided in the Remuneration Committee
least annually. e Company’s Auditor does not provide other
Report.
services to the Company. e Company rigorously follows
policy and procedure to ensure eectiveness of the external
R. Directors should exercise independent judgement and
audit and integrity of nancial reporting. Refer also to the
discretion when authorising remuneration outcomes,
Audit Committee Report.
taking account of company and individual performance,
and wider circumstances.
N. The board should present a fair, balanced and
Performance, individual contribution and market conditions
understandable assessment of the company’s position
are all considered when setting directors’ fees.
and prospects.
e Board considers and approves all relevant shareholder
Compliance with The Financial Conduct Authority
communications. e Annual and Half-Year Reports are
Listing Rules
reviewed by the Board to ensure they present a fair and
balanced view including commentary on going concern e Directors are responsible for ensuring that:
and long-term viability. e Audit Committee considers the • Adequate accounting records are kept, that are sucient to
fairness of the Financial Statements before recommending show and explain the Company’s transactions and disclose
them to the Board for approval. with reasonable accuracy at any time the nancial position
of the Company and enable them to ensure that the Financial
e Annual and Half-Year Reports provide fair, balanced and Statements are consistent with the relevant requirements
understandable commentary on the Company’s performance under the UK Companies Act 2006.
and prospects. • e assets of the Company are safeguarded; and for taking
reasonable steps for the prevention and detection of fraud and
O. The board should establish procedures to manage risk,
other irregularities.
oversee the internal control framework, and determine
• e Report of the Directors and other information included in
the nature and extent of the principal risks the company
the Annual Report is prepared in accordance with Company
is willing to take in order to achieve its long-term strategic
Law in the UK. e Directors are also responsible for ensuring
objectives.
the Annual Report includes information required by the Listing
Principal risks are identied by the Board and risk appetite
Rules of the FCA.
established against these risks. Day to day risk management
• e Company has eective internal control systems, designed
is undertaken by the Portfolio Manager and AASP within
to ensure that adequate accounting records are maintained;
the parameters established by the Board. e Board meets
and that nancial information on which the business decisions
with the Portfolio Manager at each scheduled Board meeting
are made, which is issued for publication, is reliable. Such a
where there is opportunity to discuss particular aspects
system of internal control can provide only reasonable, but not
of the portfolio and associated risks. Operational risk and
absolute, assurance against material misstatement or loss.
compliance reporting are also regularly discussed by the
• e Company Financial Statements for each nancial year are
Board. Emerging risks are monitored and incorporated into
prepared in accordance with International Financial Reporting
the risk appetite framework as they arise.
Standards (“IFRS”). IFRS means standards and interpretations
issued (or adopted) by the International Accounting Standards
Board (“IASB”). e Directors must not approve the Financial
Statements unless they are satised they give a true and fair
view of the state of aairs and prot or loss of the Company for
that period.
51
Hansa Investment Company Limited Annual Report 31 March 2023
In preparing these Financial Statements, the Directors are Responsibility statement
required to:
e Directors conrm that:
• select suitable accounting policies and apply them
• e Financial Statements are prepared in accordance with
consistently;
applicable international accounting standards and present
• make judgements and estimates that are reasonable and
fairly, in all material respects, the nancial position of Hansa
prudent;
Investment Company.
• state whether they have been prepared in accordance with
• e Strategic Report, including the Chairman’s Statement
International Financial Reporting Standards; and
and the Report of the Directors includes a fair review of the
• prepare the Financial Statements on the going concern
development and performance of the business and the position
basis, unless it is inappropriate to presume the Company will
of the Company, together with a description of the principal
continue in business.
risks and uncertainties it faces.
Under the FCA Listing Rules and the UK Code, the Board is
e Directors consider the Annual Report and Financial
responsible for:
Statements, taken as a whole, are fair, balanced and
understandable. Further commentary demonstrating the
• disclosing how it has applied the principles and complied with
Company’s performance, business model and strategy has been
the provisions of the AIC Code and, thereby, the UK Code, or
included within the Annual Report.
where not, to explain the reasons for divergence.
• reviewing the eectiveness of the Company’s systems of risk
For and on behalf of the Board
management and internal controls.
e Directors are responsible for the maintenance and integrity
of the corporate and nancial information included on the
Company’s website: www.HansaICL.com. Visitors to the website
need to be aware that legislation governing the preparation Jonathan Davie
and dissemination of the Financial Statements may dier from 26 June 2023
legislation in their own jurisdictions.
52
GOVERNANCE
## Audit Committee Report
e Audit Committee comprises solely independent Directors, e Audit Committee also considers the potential need for an
as required by the AIC Code and endorsed by the FRC. It is internal audit function on an annual basis, recognising the FRC
chaired by Richard Lightowler. Given the size of the Board and guidance on proportionality. e Audit Committee considers
the range of experience they bring, all non-committee Directors internal compliance testing at the Administrator and Portfolio
are invited to attend the Audit Committee meetings. However, Manager to be suciently independent and robust to negate the
only the independent member Directors are able to vote. need for a standalone internal audit function.
Recommendations of the Audit Committee are brought before
No material control weaknesses or incidents of potential fraud
the whole Board for discussion and ratication.
were identied. e Company’s service providers implement
e Audit Committee ensures fair, balanced and understandable clear whistleblowing, anti-bribery and corruption policies. e
reporting of Company results. Company received direct reporting from service providers on
internal controls and audit reports on their internal controls.
e principal roles of the Audit Committee are to ensure that:
e Committee is authorised by the Board to investigate any
• the integrity of nancial reporting within the Annual and
activity within its terms of reference, to seek any information it
Half-Year Reports taken as a whole are fair, balanced and
requires from any ocer or service provider to the Company, to
understandable and provide information necessary for
obtain outside legal or other independent professional advice and
shareholders to assess the Company’s performance, business
to secure the attendance of third parties with relevant experience
model and strategy;
and expertise if it considers this necessary.
• the independence, objectivity and eectiveness of the external
Auditor is maintained and monitored. e Committee also e Chairman of the Audit Committee formally reports to the
reviews the external Auditor performance in terms of quality Board following each Audit Committee meeting and on other
and value; occasions as requested by the Board.
• the nancial reporting internal controls system of the
e Audit Committee conrmed to the Board that the Annual
Company are adequate and eective.
Report, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to
Financial Reporting and Internal Controls
assess the Company’s position and performance, business model
In discharging its duties and, in particular, matters relating to the
and strategy.
approval of the Annual Report, Half-Year Report and the review
of the Company’s internal controls, the Committee considers
Audit: Independence and quality
reports and presentations made by the Company’s Auditor,
e Audit Committee considers the external Auditor’s
Administrator, Company Secretary, Additional Administrative
independence, objectivity, scope of work engagement team
Services Provider (including those of its Compliance Ocer) and
experience, compliance with relevant ethical and professional
Legal Advisers.
standards and overall quality of service through a process of
In its review of the Financial Statements, the Committee pays feedback from the Company advisors, including the AASP, the
particular attention to the ownership of assets, the valuations of Portfolio Manager and direct discussion with the Auditor. e
the portfolio and recognition of income. In this regard we receive Committee also meets with the Auditor in an executive session at
regular reporting from the Portfolio Manager and AASP, including least annually. e current audit partner is Scott Watson-Brown
reports on the eectiveness of internal controls in these areas. who has led the audit since the Company’s inception in June
In addition, the Committee discusses with, and receives reports 2019 and the appointment of PricewaterhouseCoopers Ltd as its
from, the Auditor on the nature and scope of work performed on Auditor.
valuation and ownership of assets and on income recognition.
Auditors’ remuneration and terms of engagement are approved
e Company’s Custodian conrms title of all assets in its by the Audit Committee. Any non-audit services must be pre-
custody. In its consideration of valuations, the Committee notes approved by the Audit Committee to ensure objectivity and
that 75% of the Investment portfolio by value is held in assets independence of the audit is not compromised. No non-audit
that are either traded or listed on an exchange or are cash. services are provided by PricewaterhouseCoopers Ltd to the
Further, of the remaining 25% unquoted fund investments, Company. Further information on fees paid to the Auditor is
the majority primarily hold traded securities. Valuations for contained in “Other Expenses” within Note 4 of the Financial
these funds are supplied by third party managers. e Audit Statements.
Committee recognises that 57% of the total portfolio assets are
Level 1 and 40% are Level 2 securities. Given the signicant level For and on behalf of the Audit Committee.
of externally valued assets, the Committee is satised with the
valuation process. ere is very limited management judgement
in determining valuations. Revenue recognition does not involve
signicant judgement or the use of estimates.
Richard Lightowler
Audit Committee Chairman
26 June 2023
53
Hansa Investment Company Limited Annual Report 31 March 2023

# Directors' Remuneration Report

## Annual statement

The Company has five non-executive Directors. The Board has appointed a Remuneration Committee. The Chairman of this Committee is Simona Heidemperger. All independent members of the Board are members of the Remuneration Committee. William Salomon attends the Committee but is not a member.

Each Director was initially 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 be a fixed-fee only. This fee should reflect the experience of each director, time commitment required to fulfil the role, market conditions, financial and reputational risks undertaken and additional responsibilities. The remuneration does not include a performance related element and Directors do not receive bonuses, share options, pensions or long-term incentive schemes. The aggregate 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, such as the use of independent external surveys. This includes the fees paid by other similar companies (both industry and jurisdiction), seeking input from recruitment specialists familiar with the external market, assessing the time commitment for each of the Directors in their appointed roles and considering the responsibilities their roles bring. The increasing demands being placed on all NEDs by shareholders, regulators and markets are also factored.

The fees for the non-executive Directors are within the limits (maximum total fee of $400,000) as set out in the Company's Bye-Laws. The maximum is set as a USD amount. The equivalent is £325,203 if translated at the applicable rate on 31 March 2023. The Board has reviewed the current maximum annual fee for director remuneration and will seek shareholder approval to increase this to $600,000 per annum (£487,804 if translated at the applicable rate on 31 March 2023) at the upcoming AGM. The increase is for two reasons:

- During the year, the Remuneration Committee has assessed, and increased, Director remuneration for the first time since the Company's formation in June 2019. Considering the criteria noted above, the Committee increased director remuneration to the annual equivalent of $375,000 (£304,870 if translated at the applicable rate on 31 March 2023) effective 1 October 2022. This is broken out by Director in the remuneration table below.
- Subsequent to the change in the current level of remuneration, the increased limit is sought to allow sufficient headroom over the current fees payable to existing directors to appoint another director if required, including as part of board succession planning, as well as allow capacity to permit future remuneration reviews in the coming years.

## 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.

## 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.

## 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.

54
GOVERNANCE
e 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. e Director’s remuneration is set in USD, as is common for most Bermudan
companies. e following table notes the Directors current annual fee as at 31 March 2023. It also notes their fee, in USD, for the
current and prior nancial years. For each nancial year, the equivalent Sterling fee is shown converted at the relevant year-end
exchange rate respectively:

| 2023 | 2023 | 2022 | 2022 |
| --- | --- | --- | --- |
| fee | fee | fee | fee |
| $000 | £000 | $000 | £000 |

Jonathan Davie (Chairman) 85 72 70 53
Simona Heidempergher 65 55 50 38
Richard Lightowler 75 63 60 46
3
William Salomon 25 21 25 19
Nadya Wells 65 55 50 38
315 266 255 194
e annual fee paid to each Director, in USD, was reviewed, as noted above, and increased from their previous amount eective 1
October 2022. Prior to that date, their fees remained unchanged from the date of their appointments in June 2019. e above table
compares the current year to prior year fees in USD versus Sterling. Approximately 1/3 of the increase in the Sterling equivalent is due
to the movement in the USD/Sterling exchange rate between the two periods.
e Company also pays the expenses of the Directors to attend the Board meetings. Directors’ travel costs incurred during the year
were £141,000 (2022: £48,000).
Statement of shareholder voting
Votes in respect of the resolution to approve the Directors’ Remuneration Report at the Company’s AGM in August 2022 were cast as
follows:
No. of % of
shares votes
voted cast
Votes cast in favour 22,335,068 99.55
Votes cast against 100,000 0.45
Total votes cast 22,435,068 100.00
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 specic rules on Directors’ shareholdings.
e interests of Directors and their connected parties in the Company at 31 March 2023 are shown below:
Ordinary shares ‘A’ non-voting ordinary shares
of 1p each of 1p each
Nature of
interest2023 2022 2023 2022
Jonathan Davie 45,000 45,000 230,000 230,000 Beneficial
William Salomon 11,1 69,3 45 11,169,34 5 3,587,123 3,508,723 Beneficial
Simona Heidempergher 6,400 6,400 – – Beneficial
As at 26 June 2023, the date of signing of these Annual Financial Statements, there were no changes to report to the Directors’ holdings.
55
Hansa Investment Company Limited Annual Report 31 March 2023
William Salomon is the senior partner of Hansa Capital Partners LLP. Fees payable to Hansa Capital Partners LLP amounted to
£2,824,000 (including Portfolio Management and AASP functions). e fees outstanding at the year end amounted to £240,793. 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.
Your company’s performance
e graph below shows the ten-year cumulative total return to shareholders:
80%
70%
60%
50%
40%
%
30%
20%
10%
0%
-10%
-20%
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
NAV Cum Income Ordinary Share Price A Ordinary Share Price
Directors’ attendance
e 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.
Management
Strategy Audit Remuneration Nomination Engagement
1
Board Day Committee Committee Committee Committee
Number of Meetings 13 1 2 2 2 2
Jonathan Davie 8 1 2 2 1 2
Simona Heidempergher 12 1 2 2 2 2
Richard Lightowler 10 - 2 2 - 2
2
William Salomon 8 1 2 2 2 2
Nadya Wells 8 1 2 2 2 2
1
“Board” includes full meetings of the Board, of which there were ve held during the year, as well as periodic ‘other’ meetings and
Board calls to consider and approve operational requirements for the Company, such as quarterly dividends. ese ‘other’ meetings
are arranged as and when required and require the meeting to be quorate but not necessarily attended by all Directors.
2
William Salomon is deemed to not be independent. erefore, he attends as an observer of the Audit and Remuneration Committees
but is not a committee member. Further, he attends the Management Engagement Committee when the majority of Service Providers
are discussed but exempts himself when the performance of the Portfolio Manager is discussed due to his position as its Senior
Partner.
56
GOVERNANCE
On behalf of the Board, I conrm that the above Report on Directors’ Remuneration summarises, as applicable, for the year ended 31
March 2023:
(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.
An Ordinary resolution for the approval of this Report will be put to shareholders at the forthcoming AGM.
For and on behalf of the Board
Simona Heidempergher
Chairman of the Remuneration Committee
26 June 2023
57
Hansa Investment Company Limited Annual Report 31 March 2023
## Nominations Committee Report
e Committee is chaired by Nadya Wells. All independent members of the Board are members of the Nomination Committee. William
Salomon attends the Committee but is not a member.
Role
e Committee reviews the structure, size and composition (including the skills, knowledge and experience) of the Board and makes
recommendations to the Board with regard to any changes, as necessary. It also considers succession planning of directors, taking into
account tenure and performance of board members as well as challenges and opportunities facing the Company, and what skills and
expertise are, therefore, needed on the Board in the future. If a skills-gap or pending vacancy is identied, the Committee is responsible
for identifying and nominating candidates to ll Board vacancies as and when they arise.
Appointments are made after consideration of the skills and experience needed by the Board and against objective criteria in
accordance with the AIC Code. e 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. e Nominations Committee pays due regard to the
nal rules published by the Financial Conduct Authority in April 2022 in respect of diversity and inclusion on company boards and
executive management. e Company believes a diverse Board brings many benets and, as such, there is no restriction placed on
Board membership. Selection and appointment will continue to be based on merit and against a skills matrix to ensure the overall
composition of the Board has an appropriate balance of knowledge and experience, whilst remaining cognisant of the relevant
geographic and diversity considerations. e Board has determined that all Directors will retire and oer themselves for re-election
each year at the AGM and this policy includes any Directors appointed during the year. e Committee reports its recommendations to
the Board for nal approval.
Activities during the year
e Nomination Committee has met twice during the year. e Committee has developed a Skills Matrix to summarise the knowledge,
skills, experience and overall competence of each Director. is included anonymised feedback from the other Board members as well
as feedback from each individual Director themselves. e Skills Matrix considers a wide range of relevant factors when assessing
individual and collective competence including knowledge, skills, experience, diversity, geographic considerations, other time and
business commitments, as well as their overall performance and contribution during the period in relation to their specic role.
Following its review, and in line with the small size, structure and nature of the Company, the Committee concluded that each Director
continued to contribute as required, and the Board continued to operate eectively.
e current Directors were all originally appointed in June 2019. ere have been no resignations during the year and all Board
members have indicated their desire to stand for re-election at the forthcoming AGM. Following the annual review of Board Skills, the
Nomination Committee is supportive of re-appointing the Directors to the Board within the 2023 AGM.
While the Nomination Committee did not recommend the appointment of new Directors within the Company’s nancial year, during
the year, the Committee decided to appoint a Senior Independent Director (“SID”). e role of the SID is to act as a sounding board for
the Chairman, as well as to serve as an intermediary between the Chairman and the views of the other Directors, Shareholders, other
key stakeholders and the Company’s Portfolio Manager if necessary. Nadya Wells oered to take on this additional responsibility and
was appointed to act as the Company’s Senior Independent Director (“SID”).
Succession planning
No new appointments to the Board are proposed at this time. As part of the Skills Matrix utilised to evaluate Board composition, the
Board notes the number of years each Director has served and their expected date of retirement. While the Board does not consider
the length of tenure to have a direct negative correlation to the Directors’ performance and contribution, the Nomination Committee
remains cognisant of the AIC recommendations and therefore still considers this element as part of its overall succession planning.
For and on behalf of the Board
Nadya Wells
Chairman of the Nomination Committee
26 June 2023
58
FINANCIAL STATEMENTS
## Financial
## Statements
59
Hansa Investment Company Limited Annual Report 31 March 2023
## Independent auditor’s report
To the Board of Directors and Shareholders of Hansa Investment Company Limited
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Our opinion
In our opinion, the nancial statements present fairly, in all material respects, the nancial position of Hansa Investment Company
Limited (the Company) as at 31 March 2023, and its nancial performance and its cash ows for the year then ended in accordance
with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB).
What we have audited
e Company’s nancial statements comprise:
• the balance sheet as at 31 March 2023;
• the income statement for the year then ended;
• the statement of changes in equity for the year then ended;
• the cash ow statement for the year then ended; and
• the notes to the nancial statements, which include signicant accounting policies and other explanatory information.
Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the nancial statements.
ese are cross-referenced from the nancial statements and are identied 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 sucient 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 nancial statements in Bermuda. We have fullled our other ethical responsibilities in accordance with
the IESBA Code and the ethical requirements of the CPA Bermuda Rules.
Our audit approach
Overview
Overall materiality: £3,669,000 based on approximately 1% of net assets.
Materiality
In addition to determining materiality, amongst other factors, the following were assessed in
designing our audit:
Audit • the risk of material misstatement in the nancial statements
scope • signicant accounting estimates
• the risk of management override of internal controls
• Valuation and existence of investments
• Accuracy, occurrence and completeness of investment income
Key audit
matters
60
FINANCIAL STATEMENTS
Audit scope
As part of designing our audit, the risks of material misstatement in the nancial statements, were assessed and materiality was
determined. In particular, consideration was given to where management made subjective judgements; for example, in respect of
signicant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in
all of our audits, the risk of management override of internal controls was addressed, including, among other matters, consideration of
whether there was evidence of bias that represented a risk of material misstatement due to fraud.
e scope of our audit was tailored in order to perform sucient work to enable us to provide an opinion on the nancial 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
e scope of our audit was inuenced by our application of materiality. An audit is designed to obtain reasonable assurance whether
the nancial statements are free from material misstatement. Misstatements may arise due to fraud or error. ey are considered
material if, individually or in aggregate, they could reasonably be expected to inuence the economic decisions of users taken on the
basis of the nancial statements.
Based on our professional judgement, certain quantitative thresholds for materiality were determined, including the overall materiality
for the nancial statements as a whole as set out in the table below. ese, together with qualitative considerations, helped to
determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the eect of misstatements,
both individually and in aggregate, on the nancial statements as a whole.
Overall materiality £3,669,000
How we determined it Approximately 1% of net assets
is benchmark was applied as a generally accepted audit practice for
Rationale for the materiality benchmark applied
investment company audits.
We agreed with the Audit Committee that we would report to them misstatements identied during our audit above £183,000, as well
as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most signicance in our audit of the nancial
statements of the current period. ese matters were addressed in the context of our audit of the nancial 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 Listed equity investments: We tested the existence of the listed
Refer to notes 1(c) and 8 to the financial statements investment portfolio by agreeing the holdings for investments to an
for disclosures of related accounting policies and independent custodian conrmation.
balances.
We tested the valuation of the listed investments by agreeing the prices
e investment portfolio at the year end was comprised used in the valuation to independent third-party sources.
of listed equity investments valued at £264 million (75%) Unquoted investments: We understood and evaluated the controls
and unquoted investments valued at £90 million (25%). around the pricing of unquoted investments including the nal approval
of the valuation by the Manager and the Board.
We focused on the existence of both listed and unquoted
investments, as listed investments comprise the majority • We obtained direct conrmation of the existence of investments
of the investments balance and unquoted investments held and the price from each fund administrator. We used these two
are, individually and in aggregate, material to the nancial key inputs to recalculate the valuation applied by management. is
statements. recalculation was performed for 100% of the unquoted investments.
• We obtained an understanding of the underlying methodology applied
We focused on the valuation of listed equity investments
to each unquoted investment through review of their most recently
because listed investments represent the principal
available audited nancial statements to evaluate whether it was
element of the net asset value as disclosed on the Balance
based on fair value.
Sheet in the nancial statements. We also focused on the
valuation of the unquoted investments as the valuation of Based on the procedures detailed above, no misstatements were
these investments is material to the Company. identied which required reporting to those charged with governance.
61
Hansa Investment Company Limited Annual Report 31 March 2023
KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Accuracy, occurrence and completeness of We assessed the accounting policy for investment income recognition
investment income for compliance with accounting standards and the AIC SORP and
Refer to notes 1(e) and 2 to the financial statements performed testing to evaluate whether income had been accounted for
for disclosures of related accounting policies and in accordance with this stated accounting policy. We found that the
accounting policies implemented were in accordance with accounting
balances.
standards and the AIC SORP, and that income has been accounted for in
Investment income consists of dividend income of £6.9 accordance with the stated accounting policy.
million. As part of our procedures, we focused on the
We tested the accuracy of dividend receipts by agreeing the dividend
accuracy, occurrence and completeness of investment
rates from investments to independent market data.
income recognition as incomplete or inaccurate income
could have a material impact on the Company’s net
To test for completeness, we tested, for a sample of investment holdings
asset value and dividend cover. We also focused on the
in the portfolio, that all dividends declared in the market by investment
accounting policy for income recognition along with its
holdings had been recorded. We tested occurrence by conrming that
allocation and presentation in the Income Statement
all dividends recorded in the period had been declared in the market by
as set out in the requirements of e Association of
investment holdings, and we traced a sample of dividends received to
Investment Companies Statement of Recommended
bank statements.
Practice (the “AIC SORP”) as incorrect application could
indicate a misstatement in income recognition. 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
Other information
Management is responsible for the other information. e other information comprises the Annual Report (but does not include the
nancial statements and our auditor’s report thereon).
Our opinion on the nancial 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 nancial statements, our responsibility is to read the other information identied above and, in
doing so, consider whether the other information is materially inconsistent with the nancial 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 specied, 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 nancial statements in accordance with International
Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB) and for such internal control
as management determines is necessary to enable the preparation of nancial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the nancial 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.
ose charged with governance are responsible for overseeing the Company’s nancial reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the nancial 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 inuence the economic decisions of users taken on the basis of these nancial statements.
62
FINANCIAL STATEMENTS
As part of an audit in accordance with ISAs, we exercise We communicate with those charged with governance regarding,
professional judgment and maintain professional scepticism among other matters, the planned scope and timing of the
throughout the audit. We also: audit and signicant audit ndings, including any signicant
• Identify and assess the risks of material misstatement of the deciencies in internal control that we identify during our audit.
nancial statements, whether due to fraud or error, design and
We also provide those charged with governance with a statement
perform audit procedures responsive to those risks, and obtain
that we have complied with relevant ethical requirements
audit evidence that is sucient and appropriate to provide
regarding independence, and to communicate with them all
a basis for our opinion. e risk of not detecting a material
relationships and other matters that may reasonably be thought
misstatement resulting from fraud is higher than for one
to bear on our independence, and where applicable, actions
resulting from error, as fraud may involve collusion, forgery,
taken to eliminate threats or safeguards applied.
intentional omissions, misrepresentations, or the override of
internal control.
From the matters communicated with those charged with
• Obtain an understanding of internal control relevant to the
governance, we determine those matters that were of most
audit in order to design audit procedures that are appropriate
signicance in the audit of the nancial statements of the current
in the circumstances, but not for the purpose of expressing an
period and are therefore the key audit matters. We describe these
opinion on the eectiveness of the Company’s internal control.
matters in our auditor’s report unless law or regulation precludes
• Evaluate the appropriateness of accounting policies used
public disclosure about the matter or when, in extremely rare
and the reasonableness of accounting estimates and related
circumstances, we determine that a matter should not be
disclosures made by management.
communicated in our report because the adverse consequences
• Conclude on the appropriateness of management’s use of the
of doing so would reasonably be expected to outweigh the public
going concern basis of accounting and, based on the audit
interest benets of such communication.
evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast signicant doubt
e engagement partner on the audit resulting in this
on the Company’s ability to continue as a going concern. If we
independent auditor’s report is Scott Watson-Brown.
conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures
in the nancial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s
PricewaterhouseCoopers Ltd.
report. However, future events or conditions may cause the
Chartered Professional Accountants
Company to cease to continue as a going concern.
Hamilton, Bermuda
• Evaluate the overall presentation, structure and content of the
26 June 2023
nancial statements, including the disclosures, and whether
the nancial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
63
Hansa Investment Company Limited Annual Report 31 March 2023
## Income Statement
For the year ended 31 March 2023

|  |  |  |  | Year ended |  |  |  |  | Year ended |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  | 31 March |  |  |  |  | 31 March |  |
|  |  |  |  |  | 2023 |  |  |  |  | 2022 |
|  | Revenue |  | Capital |  | Total | Revenue |  | Capital |  | Total |
| Note |  | £000 | £000 |  | £000 |  | £000 | £000 |  | £000 |

(Losses)/gains on investments held at fair value through profit or loss 8 - (14,924) (14,924) - 17,065 17,065
Foreign exchange gains - 327 327 - 80 80
Investment income 2 6,892 - 6,892 5,904 - 5,904
6,892 (14,597) ( 7,7 0 5) 5,904 17,145 23,049
Portfolio management fees 3 (2,824) - (2,824) (3,010) - (3,010)
Other expenses 4 (1,527) - (1,527) (1,227) - (1,227)
(4,351) - (4,351) (4,237) - (4,237)
Income/(losses) before finance costs 2,541 (14,597) (12,056) 1,667 17,145 18,812
Finance costs 5 (1) - (1) - - -
Income/(losses) for the period 2,540 (14,597) (12,057) 1,667 17,145 18,812
Return per Ordinary and ‘A’ non-voting Ordinary share 7 2 .1p (12.2)p (10.1)p 1.4p 14.3p 15.7p
The Company does not have any income or expense not included in the above Statement. Accordingly the “Income/(losses) for
the Year” is also the “Total Comprehensive Income/(losses) 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 Income Statement, prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board (“IASB”).
All revenue and capital items in the above Statement derive from continuing operations.
The accompanying notes on pages 68 to 78 are an integral part of this Statement.
64
FINANCIAL STATEMENTS
## Balance Sheet
As at 31 March 2023

|  | 31 March |  | 31 March |  |
| --- | --- | --- | --- | --- |
|  |  | 2023 |  | 2022 |
| Note |  | £000 |  | £000 |

Non-current assets
Investments held at fair value through profit or loss 8 353,262 379,986
353,262 379,986
Current assets
Trade and other receivables 10 128 201
Cash and cash equivalents 11 13,987 3,043
14,115 3,244
Current liabilities
Trade and other payables 12 (412) (368)
Net current assets 13,703 2,876
Net assets 366,965 382,862
Capital and reserves
Called up share capital 13 1,200 1,200
Contributed surplus 14 323,799 324,759
Retained earnings 15 41,966 56,903
Total equity shareholders’ funds 366,965 382,862
Net asset value per Ordinary and ‘A’ non-voting Ordinary share 16 305.8p 319.1p
The Financial Statements of Hansa Investment Company Limited, registered in Bermuda under company number 54752, set out on
pages 64 to 67 were approved by the Board of Directors on 26 June 2023 and were signed on its behalf by
Jonathan Davie
Chairman
The accompanying notes on pages 68 to 78 are an integral part of this Statement.
65
Hansa Investment Company Limited Annual Report 31 March 2023
## Statement of Changes in Equity
Contributed

|  | Share | surplus | Retained |  |  |
| --- | --- | --- | --- | --- | --- |
|  | capital | reserve | earnings |  | Total |
| For the year ended 31 March 2023 Note | £000 | £000 |  | £000 | £000 |

Net assets at 1 April 2022 1,200 324,759 56,903 382,862
Losses for the period - - (12,057) (12,057)
Dividends 6 - (960) (2,880) (3,840)
Net assets at 31 March 2023 1,200 323,799 41,966 366,965
Contributed

|  | Share | surplus | Retained |  |  |
| --- | --- | --- | --- | --- | --- |
|  | capital | reserve | earnings |  | Total |
| For the year ended 31 March 2022 Note | £000 | £000 |  | £000 | £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
The accompanying notes on pages 68 to 78 are an integral part of this Statement.
66
FINANCIAL STATEMENTS
## Cash Flow Statement
For the year ended 31 March 2023

|  | Year ended |  | Year ended |  |
| --- | --- | --- | --- | --- |
|  | 31 March |  | 31 March |  |
|  |  | 2023 |  | 2022 |
| Note |  | £000 |  | £000 |

Cash flows from operating activities before finance costs for the year
(Loss)/income* (12,056) 18,812
Adjustments for:
Realised gains on investments 8 (5,571) (5,440)
Unrealised losses/(gains) on investments 8 20,495 (11,625)
Foreign exchange (327) (80)
Decrease/(increase) in trade and other receivables 10 73 (24)
Increase/(decrease) in trade and other payables 12 44 (20)
Purchase of non-current investments (78,568) (30,840)
Sale of non-current investments 90,368 33,187
Net cash inflow from operating activities 14,458 3,970
Cash flows from financing activities
Interest paid (1) -
Dividends paid 6 (3,840) (3,840)
Net cash outflow from financing activities (3,841) (3,840)
Increase in cash and cash equivalents 10,617 130
Cash and cash equivalents at start of period 3,043 2,833
Eect of foreign exchange rate changes 327 80
Cash and cash equivalents at end of year 11 13,987 3,043
*Includes dividends received of £6,810,000 (2022: £5,918,000) and interest received of nil (2022: nil)
The accompanying notes on pages 68 to 78 are an integral part of this Statement.
67
Hansa Investment Company Limited Annual Report 31 March 2023
## Notes to the Financial Statements
1 Accounting policies
Hansa Investment Company Limited is a company limited by shares, registered and domiciled in Bermuda with its registered oice
shown on page 85. The principal activity of the Company is as an investment vehicle.
(a) Basis of preparation
The Financial Statements of the Company have been prepared in accordance with International Financial Reporting Standards.
IFRS means standards and interpretations issued (or adopted) by the International Accounting Standards Board (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”)).
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 38. 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 July 2022, to the extent that the SORP does not conflict with IFRS. The principal
accounting policies adopted are set out below.
(b) 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.
(c) 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 de-recognised 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 which is
considered to be fair value at the Balance Sheet date. 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, the 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.
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.
(d) 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 or
less and are subject to an insignificant risk of changes in capital value.
(e) 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.
68
FINANCIAL STATEMENTS

**(f) Expenses**

All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement except expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the Income Statement.

**(g) 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.

**(h) 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 loss arising from a change in exchange rates, subsequent to the date of the transaction, is included as an exchange gain or loss in the capital or revenue column of the Income Statement, depending on whether the gain or loss is of a capital or revenue nature respectively.

**(i) 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.

Under Bermudan Company Law, Retained earnings and Contributed Surplus Reserve are both distributable.

**(j) 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 2023. The most recent valuation statement was received on 21 March 2023 stating the value of the Company's holding as at 31 December 2022. In the absence of a valuation for 31 March 2023 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 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 the prior year 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 2023. It is believed the value of DV4 as at 31 March 2023 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.

**(k) 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 that 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:

- Minor amendments to IAS 16, 37 and 41 and IFRS 4, 7, 9, and 16 (effective for annual periods beginning on or after 1st January 2022). There is no material impact on the Financial Statements or the amounts reported from the adoption of these amendments to the standards.

**(l) Operating Segments**

The Company considers it has one operating segment for the purposes of IFRS8.

69
Hansa Investment Company Limited Annual Report 31 March 2023
2 Investment income

| Revenue |  |  | Revenue |  |
| --- | --- | --- | --- | --- |
| Year ended |  | Year ended |  |  |
| 31 March |  |  | 31 March |  |
| Revenue |  |  | Revenue |  |
|  | 2023 |  |  | 2022 |
|  | £000 |  |  | £000 |

Income from quoted investments
Dividends 6,892 5,904
Total income 6,892 5,904
3 Portfolio management fee

| Revenue |  |  | Revenue |  |
| --- | --- | --- | --- | --- |
| Year ended |  | Year ended |  |  |
| 31 March |  |  | 31 March |  |
|  | 2023 |  |  | 2022 |
|  | £000 |  |  | £000 |

Portfolio management fee 2,824 3,010
Total management fee 2,824 3,010
4 Other expenses

| Revenue |  |  | Revenue |  |
| --- | --- | --- | --- | --- |
| Year ended |  | Year ended |  |  |
| 31 March |  |  | 31 March |  |
|  | 2023 |  |  | 2022 |
|  | £000 |  |  | £000 |

Administration fees 150 155
Directors' remuneration 262 188
Auditor's remuneration for:
- audit of the Company's Annual Accounts 68 76
Printing fees 36 30
Directors' liability insurance 67 69
Marketing 140 127
Registrar's fees 93 82
Banking charges 38 15
Secretarial services 153 167
Travel expenses 217 80
Broker fees 25 26
Stock Exchange listing fees 50 46
Safe custody fees 180 185
Management fee rebate from GAM (28) (138)
Other 76 119
Total other expenses 1,527 1,227
70
FINANCIAL STATEMENTS
5 Finance costs

| Revenue |  |  | Revenue |  |
| --- | --- | --- | --- | --- |
| Year ended |  | Year ended |  |  |
| 31 March |  |  | 31 March |  |
|  | 2023 |  |  | 2022 |
|  | £000 |  |  | £000 |

Interest payable 1 -
Total finance costs 1 -
6 Dividends paid

| Year ended |  | Year ended |  |
| --- | --- | --- | --- |
| 31 March |  | 31 March |  |
|  | 2023 |  | 2022 |
|  | £000 |  | £000 |

Amounts recognised as distributed to shareholders in the year are as follows:
Fourth interim dividend for 2022 (paid 27 May 2022): 0.8p (2021: 0.8p) 960 960
First interim dividend for 2023 (paid 26 August 2022): 0.8p (2022: 0.8p) 960 960
Second Interim dividend for 2023 (paid 25 November 2022): 0.8p (2022: 0.8p) 960 960
Third Interim dividend for 2023 (paid 24 February 2023): 0.8p (2022:0.8p) 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 capital reserves, specifically contributed
surplus which is permitted by Bermudan company law.

| Year ended |  | Year ended |  |
| --- | --- | --- | --- |
| 31 March |  | 31 March |  |
|  | 2023 |  | 2022 |
|  | £000 |  | £000 |

First interim dividend for 2023 (paid 26 August 2022): 0.8p (2022: 0.8p) 960 960
Second Interim dividend for 2023 (paid 25 November 2022): 0.8p (2022: 0.8p) 960 960
Third Interim dividend for 2023 (paid 24 February 2023): 0.8p (2022:0.8p) 960 960
Fourth interim dividend for 2023 (payable 26 May 2023):0.8p 2022 (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 2023. No final dividend is proposed for the year ended 31 March 2023. .
7 Return on ordinary shares (equity)

| Revenue |  |  | Capital |  | Total | Revenue |  |  | Capital |  | Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| year ended |  | year ended |  | year ended |  | year ended |  | year ended |  | year ended |  |
| 31 March |  |  | 31 March | 31 March |  | 31 March |  |  | 31 March | 31 March |  |
|  | 2023 |  | 2023 |  | 2023 |  | 2022 |  | 2022 |  | 2022 |

Returns per share 2 .1p (12.2)p (10.1)p 1.4p 14.3p 15.7p
Returns
Revenue return per share is based on the revenue attributable to equity shareholders of £2,540,000 (2022: £1,667,000).
Capital return per share is based on the capital loss attributable to equity shareholders of £14,597,000 (2022: profit of £17,145,000).
Total return per share is based on a combination of revenue and capital returns attributable to equity shareholders, amounting to net
loss of £12,057,000 (2022: profit of 18,812,000).
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.
71
Hansa Investment Company Limited Annual Report 31 March 2023
8 Investments held at fair value through profit or loss

|  |  |  | 2023 | 2022 |
| --- | --- | --- | --- | --- |
| Listed | Unquoted |  | Total | Total |
| £000 |  | £000 | £000 | £000 |

Cost at 1 April 250,660 74,267 324,927 321,834
Investment holding gains at 1 April 39,611 15,448 55,059 43,434
Valuation as at 1 April 290,271 89,715 379,986 365,268
Movements in the year:
Purchases at cost 72 ,138 6,430 78,568 30,840
Sales – proceeds (84,501) (5,867) (90,368) (33,187 )
Movement in investment holding (losses)/gains (13,948) (976) (14,924) 17,065
Valuation as at 31 March 263,960 89,302 353,262 379,986
Cost as at 31 March 242,560 76,138 318,698 324,927
Investment holding gains 21,400 13,1 64 34,564 55,059
Valuation as at 31 March 263,960 89,302 353,262 379,986
2023 2022
£000 £000
Gains on sales 5,571 5,440
Movement in investment holding (losses)/gains (20,495) 11,625
(Losses)/gains on investments held at fair value through profit or loss (14,924) 1 7,065
Transaction costs
During the year expenses were incurred in acquiring and disposing of investments classified as fair value through profit or loss.
These have been expensed through capital and are included within gains on investments in the Income Statement. The total costs
were as follows:
2023 2022
£000 £000
Purchases 38 14
Sales 18 23
56 37
9 Significant holdings
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 2023 are detailed below:
Exc. Minority Interest
Country of
incorporation % Latest Total Profit after
or Class of of class available capital and tax for the
registration Capital held accounts reserves period
Ocean Wilsons Holdings Limited Bermuda Ordinary 26.5 31.12.2022 $554,608,000 ($18,675,000)
Ocean Wilsons Holdings Limited is included as part of the investment portfolio in accordance with IAS 28 - Investment in
Associates.
72
FINANCIAL STATEMENTS

## 10 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.

|   | 2023 £000 | 2022 £000  |
| --- | --- | --- |
|  Prepayments and accrued income | 128 | 201  |
|   | **128** | **201**  |

## 11 Cash and cash equivalents

|   | 2023 £000 | 2022 £000  |
| --- | --- | --- |
|  Cash at bank | 13,987 | 3,043  |
|   | **13,987** | **3,043**  |

## 12 Trade and other payables

|   | 2023 £000 | 2022 £000  |
| --- | --- | --- |
|  Other creditors and accruals | 412 | 368  |
|   | **412** | **368**  |

## 13 Called up share capital

|   | 2023 £000 | 2022 £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.

## 14 Contributed surplus

|   | 2023 £000 | 2022 £000  |
| --- | --- | --- |
|  Opening balance at 1 April | 324,759 | 326,019  |
|  Dividend paid | (960) | (1,260)  |
|  **Closing balance at 31 March** | **323,799** | **324,759**  |

73
Hansa Investment Company Limited Annual Report 31 March 2023
15 Retained earnings

|  |  |  |  |  |  | Reserves |  |  |  |  |  |  |  | Reserves |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  | Capital - |  |  |  |  |  |  |  | Capital - |  |  |  |
|  |  |  |  | investment |  |  | Total |  |  |  |  | investment |  |  | Total |
|  |  | Capital - |  | holding |  | retained |  |  |  | Capital - |  | holding |  | retained |  |
| Revenue |  |  | other |  | profit | earnings |  | Revenue |  |  | other |  | profit | earnings |  |
|  | 2023 |  | 2023 |  | 2023 |  | 2023 |  | 2022 |  | 2022 |  | 2022 |  | 2022 |
|  | £000 |  | £000 |  | £000 |  | £000 |  | £000 |  | £000 |  | £000 |  | £000 |

Opening balance at 1 April (2,024) 3,868 55,059 56,903 (1,111) (1,652) 43,434 40,671
Profit/(loss) for the year 2,540 5,898 (20,495) (12,057) 1,667 5,520 11,625 18,812
Dividend paid (2,880) - - (2,880) (2,580) - - (2,580)
Closing balance at 31 March (2,364) 9,766 34,564 41,966 (2,024) 3,868 55,059 56,903
16 Net asset value
2023 2022
£000 £000
NAV per Ordinary and ‘A’ non-voting Ordinary share 305.8p 319.1p
The NAV per Ordinary and ‘A’ non-voting Ordinary share is based on the net assets attributable to equity shareholders of
£366,965,000 (2022: £382,862,000) and on 40,000,000 Ordinary shares (2022: 40,000,000) and 80,000,000 ‘A’ non-voting Ordinary
shares (2022: 80,000,000) in issue at 31 March 2023.
17 Commitments and contingencies
The Company has made two commitments during the year to Private Equity vehicles totalling $2.4m as at the year end (2022: £nil).
As at the year end, no amount has been drawn against either of those commitments.
18 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.
Foreign currency risk
Foreign currency risks arise in two distinct areas which aect 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 aecting 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 eect of foreign currency fluctuations
through the pricing of the investments by the various markets.
74
FINANCIAL STATEMENTS

|  | Direct |  | No direct |  |  |  | Direct |  | No direct |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | foreign |  |  | foreign |  |  | foreign |  | foreign |  |  |
| currency risk |  | currency risk |  |  | Total | currency risk |  | currency risk |  |  | Total |
|  | 2023 |  |  | 2023 | 2023 |  | 2022 |  |  | 2022 | 2022 |
|  | £000 |  |  | £000 | £000 |  | £000 |  |  | £000 | £000 |

Investments 115,139 238,123 353,262 115,858 264,1 28 379,986
Other receivables including prepayments 72 56 128 29 172 201
Cash at bank - 13,987 13,987 24 3,019 3,043
Current liabilities - (412) (412) - (368) (368)
115,211 251,754 366,965 115,911 266,951 382,862
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 2023 and 31
March 2022. 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.

| If sterling had weakened by 10% against | US$ | Euro | Other | US$ | Euro | Other |
| --- | --- | --- | --- | --- | --- | --- |
| the currencies shown, this would have had | 2023 | 2023 | 2023 | 2022 | 2022 | 2022 |
| the following eect on the Company: | £000 | £000 | £000 | £000 | £000 | £000 |

Income statement - profit/(loss) 918 (328) (204) 785 (331) (191)
Equity shareholders funds 9,228 692 1,601 8,536 1,453 1,600
10,14 6 364 1,397 9,321 1,12 2 1,409
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 eect on the above amounts.
Interest rate risk
Interest rate movements may aect 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 (2022: £30m) which are available for the Portfolio Manager to use in
purchasing investments; the costs of which are based on the prevailing interest rate, plus an agreed margin. The Company does
not normally hedge against interest rate movements aecting 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 (2022: £nil). The level of banking facilities utilised at 31
March 2023 was £1,000 (2022: £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 diicult 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% on bank balances.

| Cash flow |  |  | No |  | Cash flow |  |  | No |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| interest |  | interest |  |  | interest |  | interest |  |  |
| rate risk |  | rate risk |  | Total | rate risk |  | rate risk |  | Total |
|  | 2023 |  | 2023 | 2023 |  | 2022 |  | 2022 | 2022 |
|  | £000 |  | £000 | £000 |  | £000 |  | £000 | £000 |

Investments - 353,262 353,262 - 379,986 379,986
Other receivables including prepayments - 128 128 - 201 201
Cash at bank 13,987 - 13,987 3,043 - 3,043
Current liabilities - (412) (412) - (368) (368)
13,987 352,978 366,965 3,043 379,819 382,862
75
Hansa Investment Company Limited Annual Report 31 March 2023

### 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, £83.7m as valued at 31 March 2023 (2022: £93.5m) and as a proportion of the NAV, 22.8% (2022: 24.4%). 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 to the currency, country and market-based risk exposure of Ocean Wilsons is, to an extent, mitigated by the diverse nature of the two investments within Ocean Wilsons. Wilson Sons, corresponding to 61.6% of Ocean Wilsons' NAV, has a direct exposure to the Brazilian economy, whereas Ocean Wilsons Investments has a diverse Investment portfolio and corresponds to the other 38.4%. 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 25 and 26, 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 £35.3m (2022: £38.0m).

### 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. The levels 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 2023 are shown in Note 10 and Note 12 on page 73.

The Company's maximum exposure to credit risk on cash is £14.0m (2022: £3.0m) and on cash funds is £nil (2022: £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 22.8% (2022: 24.4%), unquoted equity investments of 2.6% (2022: 2.3%) and investments into open-ended investment funds with varying liquidity terms of 58.6% (2022: 61.7%).

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 2023 is shown on pages 25 and 26. 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.

## 19 Fair value hierarchy and financial liabilities

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 asset 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).

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:

76
FINANCIAL STATEMENTS
Level 1 Level 2 Level 3 Total
31 March 2023 £000 £000 £000 £000
Financial assets at fair value through profit or loss
Quoted equities 136,942 - - 136,942
Unquoted equities - - 9,132 9,132
Fund investments 3 7,8 26 169,362 - 2 07,1 88
Fair Value 174,768 169,362 9,132 353,262
Level 1 Level 2 Level 3 Total
31 March 2022 £000 £000 £000 £000
Financial assets at fair value through profit or loss
Quoted equities 136,771 - - 136,771
Unquoted equities - - 8,917 8,917
Fund investments 2 7, 32 8 206,970 - 234,298
Fair Value 164,099 206,970 8,917 379,986
The Company’s policy is to recognise transfers into and out of the dierent fair value hierarchy levels at the date of the event
orchange in circumstances that caused the transfer to occur.
A reconciliation of fair value measurements in Level 3 is set out in the following table:

|  | 31 March |  |  | 31 March |  |
| --- | --- | --- | --- | --- | --- |
|  |  | 2023 |  |  | 2022 |
|  |  | equity |  |  | equity |
| investments |  |  | investments |  |  |
|  |  | £000 |  |  | £000 |

Opening Balance 8,917 11,234
Dissolution of Hansa Trust - (3,17 9)
Sales (Capital Distribution) - (648)
Total gains or losses included in gains on investments in the Income Statement:
on assets held at year end 215 1,510
Closing Balance 9,132 8,917
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. More information can be found in the prior year
accounts.
As at 31 March 2023, 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 2023. The most recent valuation statement was received on 21 March 2023 and relates to
the DV4 portfolio at 31 December 2022. 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 2023 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 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 the prior year 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 2023. It is believed the value of DV4 as at 31 March 2023
will not be materially dierent, but this valuation is based on historic valuations by DV4, does not have a readily available third party
77
Hansa Investment Company Limited Annual Report 31 March 2023

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 2023 would have increased or decreased by £913,000 (2022: £892,000). 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. In the prior year, the subsidiary was valued taking into account the latest assets and liabilities remaining in Hansa Trust.

## 20 Related parties and 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 2023, are disclosed in the Governance Section – Service Providers on pages 45 to 46 and in Note 3 on page 70. Details of the relationship between the Company and the Directors, including amounts paid during the period to 31 March 2023, are disclosed in the Governance Section – The Board on page 40 and also in the Directors’ Remuneration Report on pages 54 to 57.

## 21 Controlling parties

At 31 March 2023 Victualia Limited Partnership and Nomolas Ltd each held 25.9% of the issued Ordinary shares. Additional information is disclosed in the Strategic Review – Substantial Shareholders on page 31.

## 22 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.

78
ADDITIONAL INFORMATION
## Additional
## Information
79
Hansa Investment Company Limited Annual Report 31 March 2023

# 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 27 July 2023 at 9:00 a.m. (Bermuda time) for the following purposes:

## Agenda

1. To appoint a chairperson of the meeting.
2. To confirm notice.

## Resolutions

3. To receive and consider the audited Financial Statements and the Reports of the Directors and Auditor for the year ended 31 March 2023.
4. To re-elect Jonathan Davie (a biography and Board endorsement can be found earlier on in the report) as a Director of the Company.
5. To re-elect Richard Lightowler (a biography and Board endorsement can be found earlier on in the report) as a Director of the Company.
6. To re-elect Nadya Wells (a biography and Board endorsement can be found earlier on in the report) as a Director of the Company.
7. To re-elect William Salomon (a biography and Board endorsement can be found earlier on in the report) as a Director of the Company.
8. To re-elect Simona Heidemperger (a biography and Board endorsement can be found earlier on in the report) as a Director of the Company.
9. To approve the Directors' Remuneration Report.
10. To approve the Directors' Remuneration Policy and authorise the Board to determine the remuneration of the Directors.
11. To approve the Company's Dividend Policy as can be found earlier on in the Annual Report.
12. To appoint PricewaterhouseCoopers Ltd as Auditor of the Company and to authorise the Directors to determine the remuneration of the Auditor.
13. 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:

- not less than 1p per share; and
- 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.

## 14. Special Resolution

Approval to adopt new Bye-Laws (the 'New Bye-Laws') in order to update the Company's current Bye-Laws (the 'Existing Bye-Laws').

## Summary of proposed amendments to the bye-laws

Set out below is a summary of the principal amendments which will be made to the Company's Existing Bye-Laws through the adoption of the New Bye-Laws proposed at the AGM if approved by shareholders.

This summary is intended only to highlight the principal amendments which are likely to be of interest to shareholders. It is not intended to be comprehensive and cannot be relied upon to identify amendments or issues which may be of interest to all shareholders. This summary is not a substitute for reviewing the full terms of the New Bye-Laws which will be available for inspection at the Company's registered office, [also being the venue of the AGM] and also at the registered office of Hansa Capital Partners LLP being 50 Curzon Street, London, England, W1J 7UW, in each case from the date of the AGM Notice until the close of the AGM. The new Bye-Laws will also be available for inspection at the venue of the AGM from 15 minutes before and during the AGM and on the Company website https://www.hansai.com/shareholder-information/regulatory-information.aspx

## 1.1 - Interpretation

A definition of "Common Reporting Standard" has been included. This is used in Bye-Law 83 (Obligation to provide information to the Company).

A definition of "FATCA" has been included. This is used in Bye-Law 83 (Obligation to provide information to the Company).

A definition of "Hansa Trust" has been included. This is used in Bye-Law 15.4 (Untraced Shareholders).

A definition of "US Tax Code" has been included. This is used in Bye-Law 83.1.3 (Obligation to provide information to the Company).

## 15.1 (a) - Untraced Shareholders

Bye-law 15 sets out the current provisions in relation to Untraceable Shareholders and adopts the historic provisions of the articles of association of Hansa Trust plc which were incorporated into the Company's Bye-laws. Under Bye-law 15, the Company is entitled to sell shares held by any shareholders that remain untraceable for a period of 12 years. Shareholders are held to be untraceable if they have failed to claim any dividends within the 12-year period. In line with what other companies are doing, we are seeking to reduce the current 12-year period to six years to help the Company tidy up the shareholder register in connection with its reporting obligations under FATCA, the Common Reporting Standard or any relevant law or regulation and also

80
ADDITIONAL INFORMATION

more generally to remove longstanding untraced shareholders, having followed due process.

The language has been updated to include a reference to distributions in respect of the shares that have become payable.

Language has been included to note that the Company will be entitled to sell shares held by Untraceable shareholders if the shareholder has been uncontactable for a period of two calendar years within the six-year period (being the last two calendar years of the six year period).

#### **15.1 (b) - Untraced Shareholders**

The language that referred to the Company's method of circulating an advertisement in national newspapers in order to notify Untraced Shareholders that their shares are to be sold has been amended to reflect the Company's more direct approach to notification including sending a notice to a shareholder's last known address and showing that reasonable efforts have been made to trace a shareholder, such as engaging a professional asset reunification company.

These changes reflect current practice of third party registrar service providers.

Language has been included to note that where the Company has no record of the address of a shareholder, the Company is not required to send a notice but must demonstrate that reasonable efforts have been used to trace the shareholder including, if necessary, appointing a professional asset reunification company.

#### **15.1 (c) - Untraced Shareholders**

The language has been updated to reflect the changes to Bye-Law 15.1(a) relating to the six-year period for Untraced Shareholders and the notice requirements relating to Untraced Shareholders noted in Bye-Law 15.1(b).

#### **15.2 - Untraced Shareholders**

The language has been updated to reflect the six-year period for Untraced Period noted in Bye-Law 15.1(a).

#### **15.3 - Untraced Shareholders**

Language has been included to note that the net proceeds of sale of shares of untraced shareholder shall be forfeited and will belong to the Company. Language relating to the obligation of the Company to account to the Untraced Shareholders for an amount equal to such proceeds has been removed to correspond with the addition noted above.

These changes are to enable the Company to comply with its reporting obligations under FATCA, the Common Reporting Standard or any relevant law or regulation.

#### **15.4 - Untraced Shareholders**

Given the long term nature of some of the untraced shareholders in comparison to the relatively recent re-domiciliation of the investment company to Bermuda in 2019, this Bye-Law has been included to provide the Board with discretion to include, in the calculation of the six-year period for Untraced Shareholders, the time the Untraced Shareholder held shares in Hansa Trust, being the long standing predecessor to the Company.

#### **19.3 - Method of Payment**

This Bye-Law has been updated to clarify that the period for which dividends of unclaimed shares are to be forfeited from the date when payment became due is six-years rather than 12-years to correspond with Bye-Law 15.1(a).

#### **44.1 - Directors Fees**

This Bye-Law has been updated to increase the current upper annual limit of Directors' remuneration from $400,000 to $600,000 as explained in the Directors' Remuneration Report.

#### **81.2 - Definition applicable to Bye-Laws 82, 83 and 84**

This Bye-Law has been updated to include definitions of "Information" in terms of Bye-Law 83.1, "Relevant Laws" in terms of Bye-Law 83.1.1.

#### **83.1 - Obligations to provide information to the Company**

A new Bye-Law 83.1 has been included to provide that the Company may serve a written notice on any holder to request that any information, representations, certificates, waivers, documents or forms relating to the holder is provided to the Company. This has been included to provide the Company with the ability to satisfy the requirements under FATCA, the Common Reporting Standard or any relevant laws or regulations of any jurisdiction or territory to which the Company is subject.

The inclusion of this Bye-Law will provide the Company with the ability to require shareholders to co-operate in respect of the exchange of information to comply with the Company's international tax reporting obligations.

#### **83.2 - Obligations to provide information to the Company**

A new Bye-Law 83.2 has been included to provide that the Company is entitled to hold and process the information noted above, and to disclose any information as required to the relevant government division or department and to any person or entity in order to comply with the relevant laws or regulations and for the purposes of carrying out the business of the Company.

#### **83.3 - Obligations to provide information to the Company**

A new Bye-Law 83.3 has been included to provide that where any holder of the Company fails to provide the requested information within the period set out in Bye-Law 83.1, being 30 days, then the Company will issue a further notice with a specified period of 21 days, failing which if the Company receives no response, they shall be entitled to sell or transfer the holder's shares.

#### **83.4 - Obligations to provide information to the Company**

A new Bye-Law 83.4 has been included to provide that, if the requirements in Bye-Laws 83.3.1 or 83.3.2 noted above are not satisfied, then the holder will have been deemed to have agreed to the sale and transfer of their shares.

#### **83.5 - Obligations to provide information to the Company**

A new Bye-Law 83.5 has been included to provide that the holder shall execute any documents, opinions, instruments, and certificates as requested by the Company in order for the Company to exercise their rights and entitlements under Bye-Law 83.

81
Hansa Investment Company Limited Annual Report 31 March 2023
83.6 – Obligations to provide information to the Company
A new Bye-Law 83.6 has been included to provide that the
inclusion of new Bye-Law 83 in the Company Articles will not
restrict the Company from withholding or deducting any taxes or
other sums required to be withheld or deducted by the Company
in accordance with FATCA, the Common Reporting Standard or
any relevant law or regulation.
83.7 – Obligations to provide information to the Company
e inclusion of a new Bye-Law 83.7 provides that where any
monies received by the Company become subject to any tax
deductions, the Company is not required to compensate or make
good the holders, and the holders will receive no credit or refund
in relation to the deduction.
83.8 – Obligations to provide information to the Company
In order for the Company to comply with reporting obligations
under FATCA, the Common Reporting Standard or any relevant
law or regulation, a new Bye-Law 83.8 provides that if the holder
undergoes any material change which eects their status, the
holder must immediately notify the Company so that the relevant
records can be updated.
For and on behalf of Conyers Corporate Services (Bermuda)
Limited
Vida Kam
Secretary
26 June 2023
82
ADDITIONAL INFORMATION
Notes for Shareholders Notes for Depositary Interest Holders
1 Pursuant to Regulation 41 of the Uncerticated Securities 1 You will not receive a form of direction for the Annual General
Regulations 2001 (as amended), only those members Meeting in the post. Depositary Interests may be voted
registered in the register of members of the Company 48 through the CREST Proxy Voting Service in accordance with
hours before the Annual General Meeting (i.e. by close the procedures set out in the CREST manual.
of business UK time on 25 July 2023) (or if the Meeting is
In order for a proxy appointment or instruction made
adjourned, in the register of members of the Company 48
using the CREST service to be valid, the appropriate
hours before the date and time of the adjourned meeting)
CREST message (a “CREST Proxy Instruction”) must be
(the “Meeting”) shall be entitled to attend or vote at the
properly authenticated in accordance with Euroclear UK
Meeting in respect of the number of shares registered in
& Ireland Limited’s specications and must contain the
their respective names at that time. Changes to entries on
information required for such instruction, as described
the register of members after that time will be disregarded in
in the CREST Manual (available via www.euroclear.com/
determining the rights of any person to attend or vote at the
CREST). e message, regardless of whether it constitutes
Meeting.
the appointment of a proxy or is an amendment to the
2 Registered members of the Company may vote at the Meeting instruction given to a previously appointed proxy must, in
(whether by show of hands or poll) in person or by proxy order to be valid, be transmitted so as to be received by the
or corporate representative. A member may appoint one or issuer’s agent ID RA10 by 1:00pm UK time on 24 July 2023. For
more persons as his proxy to attend and vote at the Meeting this purpose, the time of receipt will be taken to be the time
on his behalf. A proxy need not be a member. Where more (as determined by the time stamp applied to the message by
than one proxy is appointed the instrument of proxy must the CREST Application Host) from which the issuer’s agent
specify the number of shares each proxy is entitled to vote. is able to retrieve the message by enquiry to CREST, in the
manner prescribed by CREST. After this time any change of
3 e appointment of a proxy will not aect the right of a
instructions to proxies appointed through CREST should be
member to attend and vote in person at the Meeting or
communicated to the appointee through other means. CREST
adjourned meeting. A member that is a corporation may
members and, where applicable, their CREST sponsors, or
appoint a representative to attend and vote on its behalf at
voting service providers should note that Euroclear UK &
the Meeting by delivering evidence of such appointment to
Ireland Limited does not make available special procedures
the Company’s registrar no later than 48 hours before the
in CREST for any particular message. Normal system timings
time xed for the Meeting (i.e. by 1:00pm UK time on 25 July
and limitations will, therefore, apply in relation to the input
2023) or any adjourned meeting.
of CREST Proxy Instructions. It is the responsibility of the
CREST member concerned to take (or, if the CREST member
4 In order to be valid, the proxy appointment (together with
is a CREST personal member, or sponsored member, or
any power of attorney or other authority (if any) under which
has appointed a voting service provider, to procure that his
it is signed, or a notarised certied copy of that authority)
CREST sponsor or voting service provider(s) take(s)) such
must be returned by one of the following methods, in each
action as shall be necessary to ensure that a message is
case so as to arrive no later than 1:00pm UK time on 25 July
transmitted by means of the CREST system by any particular
2023 or, in the case of an adjourned meeting, not less than 48
time. In this connection, CREST members and, where
hours before the time appointed for holding such adjourned
applicable, their CREST sponsors or voting system providers
meeting (ignoring for these purposes non-working days) or
are referred, in particular, to those sections of the CREST
(in the case of a poll taken otherwise than at or on the same
Manual concerning practical limitations of the CREST system
day as the Meeting or adjourned meeting) for the taking of
and timings. e Company may treat as invalid a CREST
the poll at which it is to be used: via www.signalshares.com
Proxy Instruction in the circumstances set out in Regulation
by logging on and selecting the ‘Proxy Voting’ link. If you have
35(5)(a) of the Uncerticated Securities Regulations 2001.
not previously registered for electronic communications, you
will rst be asked to register as a new user, for which you will
2 In the case of Depositary Interest Holders, a form of direction
require your investor code (“IVC”), (which can be found on
may be requested and completed in order to instruct Link
your share certicate), family name and postcode (if resident
Market Services Trustees Limited, the Depositary, to vote on
in the UK); or
the holder’s behalf at the Meeting by proxy or, if the Meeting
is adjourned, at the adjourned meeting. Requests for a hard
in hard copy form by post, by courier or by hand to the
copy should be sent Link Group, PXS 1, Central Square, 29
Company’s Registrars, Link Group, PXS 1, Central Square, 29
Wellington Street, Leeds, LS1 4DL (telephone number: 0371
Wellington Street, Leeds, LS1 4DL.
664 0300).
If you need help with voting online or need to request a proxy
3 To be eective, a valid form of direction (and any power of
form, please contact our Registrars, Link Group, on 0371 664
attorney or other authority under which it is signed) must
0300. Calls are charged at the standard geographic rate and
be received electronically or delivered to Link Group, PXS 1,
will vary by provider. Calls outside the UK will be charged
Central Square, 29 Wellington Street, Leeds, LS1 4DL by no
at the applicable international rate. ey are open between
later by 1:00pm UK time on 24 July 2023 or 72 hours before
09:00 – 17:30, Monday to Friday excluding public holidays
any adjourned Meeting.
in England and Wales. Alternatively, you can email Link at
shareholderenquiries@linkgroup.co.uk.
4 e Depositary will appoint the Chairman of the meeting
as its proxy to cast your votes. e Chairman may also vote
83
Hansa Investment Company Limited Annual Report 31 March 2023
or abstain from voting as he or she thinks t on any other All holders
business (including amendments to resolutions) which may
1 e quorum for the Annual General Meeting shall be two or
properly come before the meeting.
more shareholders present in person or by proxy. If within
two hours from the time appointed for the meeting a quorum
5 e ‘Vote Withheld’ option is provided to enable you to
is not present, the meeting shall be adjourned to the next
abstain from voting on the resolutions. However, it should be
business day at the same time and place or to such other time
noted that a ‘Vote Withheld’ is not a vote in law and will not
and place as the Directors may determine, and if a quorum is
be counted in the calculation of the proportion of the votes
not present at any such adjourned meeting, the meeting shall
‘For’ and ‘Against’ a resolution.
be dissolved.
6 Depositary Interest holders wishing to attend the meeting
should contact the Depositary at Link Group, PXS 1, Central 2 As of 26 June 2023 the Company’s total number of shares in
Square, 29 Wellington Street, Leeds, LS1 4DL or by email by issue is 40,000,000 Ordinary shares of 1p each and 80,000,000
using nominee.enquiries@linkgroup.co.uk by no later than by ‘A’ non-voting Ordinary shares of 1p each in issue. e
1:00pm UK time on 24 July 2023. Ordinary shareholders are entitled to one vote per Ordinary
share held. e ‘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/
nancial-and-investment-reporting/year-2023.aspx#2023
84
ADDITIONAL INFORMATION
## Investor information
Company information Investor disclosure
e Company currently manages its aairs so as to be a qualifying AIFMD
investment company for ISA purposes, for both the Ordinary and Hansa Investment Company Limited’s AIFMD Investor Disclosure
‘A’ non-voting Ordinary shares. It is the present intention that document can be found on its website. e document is a
the Company will conduct its aairs so as to continue to qualify regulatory requirement and summarises key features of the
for ISA products. In addition, the Company currently conducts Company for investors.
its aairs so shares issued by Hansa Investment Company
Limited can be recommended by independent nancial advisers Packaged Retail and Insurance-based Investment
to ordinary retail investors, in accordance with the Financial Products (“PRIIPs”)
Conduct Authority’s (“FCA”) rules in relation to non-mainstream e Company’s AIFM, Hanseatic Asset Management LBG, is
investment products and intends to continue to do so for the responsible for applying the product governance rules dened
foreseeable future. e shares are excluded from the FCA’s under the MiFID II legislation on behalf of Hansa Investment
restrictions which apply to non-mainstream investment products, Company Limited. erefore, the AIFM is deemed to be the
because they are excluded securities as dened in the FCA ‘Manufacturer’ of Hansa Investment Company’s two share classes.
Handbook Glossary. Finally, Hansa Investment Company Limited Under MiFID II, the Manufacturer must make available Key
is registered as a Reporting Financial Institution with the US IRS Information Documents (“KIDs”) for investors to review if they so
for FATCA purposes. wish ahead of any purchase of the Company’s shares.
Capital structure Links to these documents can be found on the Company’s
website: www.hansaicl.com.
e Company has 40,000,000 Ordinary shares of 1p each and
80,000,000 ‘A’ non-voting Ordinary shares of 1p each in issue. e
Service providers
Ordinary shareholders are entitled to one vote per Ordinary share
held. e ‘A’ non-voting Ordinary shares do not entitle the holders Independent Auditor
to vote or receive notice of meetings, but in all other respects they PricewaterhouseCoopers Ltd
have the same rights as the Company’s Ordinary shares.
Solicitors – Bermuda
Conyers Dill & Pearman Limited
Secretary and registered oice
Solicitors – UK
Conyers Corporate Services (Bermuda) Limited
Dentons UK and Middle East LLP
Clarendon House
2 Church Street PO Box HM666 Custodian
Hamilton HM CX Bermuda Banque Lombard Odier & Cie SA
Stockbroker
Winterood Investment Trusts
Administrator
Maitland Administration Services Limited
Alternative Investment Fund Manager
Hanseatic Asset Management LBG
85
Hansa Investment Company Limited Annual Report 31 March 2023
Financial calendar
Company year end Further information about Hansa Investment
31 March Company Limited, including monthly fact
sheets, stock exchange announcements and
Annual Report sent to shareholders
shareholder presentations, can be found on the
June
Company’s website: www.hansaicl.com
Annual General Meeting
July/August
Announcement of half-year results
November
Please contact the Portfolio Manager, as
Half-year Report sent to shareholders
below, if you have any queries concerning the
December
Company’s investments or performance.
Interim dividend payments
August, November, February and May Portfolio Manager and additional administrative
services provider

| Share price listings | Hansa Capital Partners LLP |
| --- | --- |
| e price of your shares can be found on our website. In addition, | 50 Curzon Street |
| share price information for Ordinary shares / ‘A’ non-voting | London |
| Ordinary shares can be found via the following codes: | W1J 7UW |

Telephone: +44 (0) 207 647 5750
ISIN
Email: hiclenquiry@hansacap.com
BMG428941162 / BMG428941089
Website: www.hansagrp.com
SEDOL
BKLFC18 / BKLFC07
Reuters
HAN.L / HANA.L
Please contact the Registrars, as below, if you
Bloomberg
have a query about a certicated holding in the
HAN LN / HANA LN
Company’s shares.
TIDM
HAN / HANA Registrar
Link Market Services (Guernsey) Limited
Legal Entity Identifier
Mont Crevelt House
213800RS2PWJXS2QDF66
Bulwer Avenue
St. Sampson
Guernsey
GY2 4LH
Email: enquiries@linkgroup.co.uk
Website: www.linkassetservices.com
If you do not have internet access you can call the
Shareholder Support Centre on +44 (0) 371 664 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.
e Registrars are open between 09:00 – 17:30, Monday to
Friday excluding public holidays in England and Wales.
Register for updates
To receive the latest news
and views on the Company,
please register at
www.hansaicl.com
86
ADDITIONAL INFORMATION
## Glossary of terms
Association of Investment Companies (“AIC”) Expense Ratio
e Association of Investment Companies is the UK trade An expense ratio is determined through an annual calculation,
association for closed-ended investment companies (www. where the operating expenses are divided by the average NAV.
theaic.co.uk). Despite the Company not being UK domiciled, the Note there is also a description of an additional PRIIPs KID
Company is UK listed and operates in most ways in a similar Ongoing Charges Ratio explained in the 31 March 2022
manner to a UK Investment Trust. erefore, the Company Annual Report.
follows the AIC Code of Corporate Governance and the Board
considers that the AIC’s guidance on issues facing the industry Five Year Rolling NAV Return (per annum)
remains very relevant to the operations of the Company. e rate at which, compounded for ve years, will equal the ve
year NAV total return to end March, assuming dividends are
Alternative Investment Fund Managers Directive always reinvested at pay date.
(“AIFMD”)
e AIFMD is a regulatory framework for alternative investment Five Year NAV and Share Price Total Return
fund managers (“AIFMs”), including managers of hedge funds, Rebased from 0% at the start of the ve year period, this is
private equity rms and investment trusts. Its scope is broad and, the rate at which the Company’s NAV and share prices would
with a few exceptions, covers the management, administration have returned at any period from that starting point, assuming
and marketing of alternative investment funds (“AIFs”). Its focus is dividends are always reinvested at pay date. e Company will
on regulating the AIFM rather than the AIFs. continue to quote results from its predecessor, Hansa Trust Ltd,
as part of that reporting so shareholders can see the longer-term
Annual Dividend / Dividend performance of the portfolio.
e amount paid by the Company to shareholders in dividends
(cash or otherwise) relating to a specic nancial year of the Gearing
Company. e Company’s dividend policy is to announce its Gearing refers to the level of borrowing related to equity capital.
expected level of dividend payment at the start of each nancial
year. Barring unforeseen circumstances, the Company then Hedging
expects to make four interim dividend payments each year – at
Strategy used to reduce risk of loss from movements in interest
the end of August, November and February during that nancial
rates, equity markets, share prices or currency rates.
year and at the end of May following the end of the nancial year.
Issued Share Capital
Bid Price
Issued share capital is the total number of shares subscribed to by
e price at which you can sell shares determined by supply
the shareholders.
and demand.
Key Information Document (“KID”)
Capital Structure
is is a document of a form stipulated under the PRIIPs
e stocks and shares that make up a company’s capital i.e.
Regulations. It provides basic, pre-contractual, information about
the amount of ordinary and preference shares, debentures and
the Company and its share classes in a simple and accessible
unsecured loan stock etc. which are in issue.
manner. It is not marketing material. e UK regulatory
authorities have introduced legislation from 1 January 2023 to
Closed-ended
amend some of the disclosures in the KID for UK shareholders.
A company with a xed number of shares in issue. e Company’s AIFM will be producing both UK KIDs and
European KIDs going forward.
Depositary/Custodian
A nancial institution acting as a holder of securities for Key Performance Indicators (“KPIs”)
safekeeping. A set of quantiable measures a company uses to gauge its
performance over time. ese metrics are used to determine a
Discount company’s progress in achieving its strategic and operational
When the share price is lower than the NAV, it is referred to as goals and also to compare a company’s nances and performance
trading at a discount. e discount is expressed as a percentage of against other businesses within its industry. In the case of historic
t h e N AV. information, the KPIs will be compared against data of both the
Company and, prior to the Company’s formation, from Hansa
Trust Ltd.
87
Hansa Investment Company Limited Annual Report 31 March 2023
Market Capitalisation Packaged Retail and Insurance-based Investment
e market value of a company’s shares in issue. is gure is Product (“PRIIP”)
found by taking the stock price and multiplying it by the total Packaged retail investment and insurance-based products
number of shares outstanding. (“PRIIPs”) make up a broad category of nancial assets that are
regularly provided to consumers in the European Union. e
Mid Price term PRIIPs, created by the European Commission to regulate the
e average of the Bid and Oer Prices of a particular underlying market, is dened as any product manufactured by the
traded share. nancial services industry, to provide investment opportunities
to retail investors, where the amount repayable is subject to
Net Asset Value (“NAV”) uctuation because of exposure to reference values, or the
performance of underlying assets not directly purchased by the
e value of the total assets minus liabilities of a company.
retail investor. See also Key Information Document (“KID”).
Net Asset Value Total Return
Shareholders’ Funds/Equity Shareholders’ Funds
See Total Return.
is value equates to the NAV of the Company. See NAV.
Oer Price
Spread
e price at which you can buy shares determined by supply
e dierence between the Bid and Ask price.
and demand.
Tradable Instrument Display Mnemonics (“TIDM”)
Ordinary Shares
A short, unique code used to identify UK-listed shares. e TIDM
Shares representing equity ownership in a company allowing
code is unique to each class of share and to each company. It
investors to receive dividends. Ordinary shareholders have the
allows the user to ensure they are referring to the right share.
pro-rata right to a company’s residual prots. In other words, they
Previously known as EPIC.
are entitled to receive dividends if any are available after payments
to nancial lenders and dividends on any preferred shares are
Total Return
paid. ey are also entitled to their share of the residual economic
value of the company should the business unwind. When measuring performance, the actual rate of return of an
investment or a pool of investments over a given evaluation
Hansa Investment Company Limited has two classes of Ordinary
period. Total return includes interest, capital gains, dividends and
shares – the Ordinary shares (40 million shares) and the ‘A’ non-
distributions realised over a given period of time.
voting Ordinary shares (80 million shares). Both have the same
nancial interest in the underlying assets of the Company and
Total Return – Shareholder
receive the same dividend per share, but dier only in that only
e Total Return to a shareholder is a measure of the performance
the former shares have voting rights, whereas the latter do not.
of the company’s share price over time. It combines share price
ey trade separately on the London Stock Exchange, nominally
appreciation/depreciation and dividends paid to show the total
giving rise to dierent share prices at any given time.
return to the shareholder expressed as an annualised percentage.
In the case of historic information, the Total Return will include
Premium
data against data of both the Company and, prior to the
When the share price is higher than the NAV it is referred to as
Company’s formation, from Hansa Trust Ltd.
trading at a premium. e premium is expressed as a percentage
of the NAV.
88
OVERVIEW
89
Hansa Investment Company Ltd
Clarendon House
2 Church Street
PO Box HM666
Hamilton HM CX Bermuda
+44 (0) 207 647 5750
hiclenquiry@hansacap.com
www.hansaicl.com