Annual Report
31 March
202 3
2
Hansa Investment Company Limited Annual Report 31 March 2023
We are globally diversied, 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 dierent
Rather than seeking to replicate indices we look to identify those
areas of the market that oer 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 signicant internal investment, we share an alignment of
interest and, importantly, are not driven by asset gathering for
the sake of prot maximisation.
To see more: www.hansaicl.com
Hansa Investment Company Limited
Registered in Bermuda company number: 54752
1
OVERVIEW
Contents
Overview
IFC e power of investing dierently
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 prole
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
2
Hansa Investment Company Limited Annual Report 31 March 2023
Financial summary
As at 31 March 2023
‘A’ NONVOTING ORDINARY SHARES
Share price
170.5p
Discount
44.2%
Gross yield
1.9%
ORDINARY SHARES
Share price
174.0p
Discount
43.1%
Gross yield
1.8%
NAV per share
305.8p
Total assets
£367.0m
Annual dividend payments Five year total return cumulative performance
Mar 19Mar 18 Mar 20 Mar 21 Mar 22 Mar 23
pence per share
%
3.2 40
0 -40
0.8 -20
1.6 0
2.4 20
1st interim paid 2nd interim paid 3rd interim paid
4th interim paid Payable Predicted
2019-202018-19 2020-21 2021-22 2022-23
NAV Cum Income Ordinary share price ‘A’ Ordinary share price
Geographic exposure Sector exposure
Financials 15.7%
Information Technology 14.7%
Diversified 12.5%
Consumer Discretionary 12.1%
Industrials 8.9%
Health Care 7.6 %
Materials 5.7%
Energy 5.1%
Communications Services 4.9%
Real Estate 4.6%
Cash/Liquidity Funds 3.7%
Consumer Staples 3.6%
Utilities 0.9%
North America 43.1%
Diversified 12.5%
Asia Pacific ex Japan 12.4%
Developed Europe ex UK 10.9%
UK 7.1 %
Japan 5.7%
Cash/Liquidity Funds 3.7%
Middle East & Africa 2.0%
Latin America 1.7%
Emerging Europe 0.9%
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.
3
OVERVIEW
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 Letcheld and his
team at Hansa Capital Partners LLP (“HCP”, “Hansa
Capital Partners”, ”PM”) have performed robustly
on a relative basis in a very dicult market. e
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 inationary pressures. A
decline in job openings and easing of wage increases
are beginning to become apparent in the US.
e 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
inationary forces or, conversely, whether there
will be a major decline in rates due to a banking
crisis and a collapse in ination creating a great
new bull market!
At the time of writing, investor sentiment to both
xed 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.
ese 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 oce 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. ey 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.
e overall net eects 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
Chairman’s report
Jonathan Davie
Chairman
Dear Shareholder
Our Portfolio
Manager, Alec
Letchfield and his
team at Hansa
Capital Partners
LLP, have performed
robustly on a relative
basis in a very
diicult market.
4
Hansa Investment Company Limited Annual Report 31 March 2023
pandemic were, in the round, so large that many
recipients are still beneting from this largesse
and spending it quite slowly. is has deferred any
recession and will probably slow the deceleration of
ination, with obvious consequences for the timing
and speed of any future decline in interest rates.
Strategy
Alec Letcheld and his team, supported by the
Board, have continued to take an increasingly
defensive position during the year which has
helped our overall performance. We do not hold
any direct crypto type assets or real estate assets,
other than our long-held investment in DV4. e
Board, in consultation with Alec Letcheld, has
decided to commence investing into a portfolio
of illiquid alternative assets, primarily in Private
Equity. We believe that, over time, this will
dierentiate HICL’s investment portfolio and
give shareholders exposure to an asset class and
underlying investments they could not easily gain
exposure to directly.
e long-term nature of Private Equity also ts
well with our own long-term investment horizons.
Our Portfolio Manager has signicant experience
investing in Alternative Assets and we are positive
about this new development. By its nature, the
Private Equity portfolio will take a number of years
to mature. e plan is to build this illiquid segment
over a period of time, to a level of around 10% of
HICL’s portfolio. Further details are set out in the
Portfolio Manager’s Report.
The Discount
Your Board is aware that the Company’s discount
to NAV for both share classes is in excess of 40%.
e Board has listened to shareholder feedback and
discusses this topic at Board meetings to consider
what appropriate steps it could take up to help
reduce the discount over the medium and long term.
e Board has considered a share buy-back policy
but does not consider this would have a signicant
eect 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 benets of diversication
generated by the investment portfolio.
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 not otherwise
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 has decided to build an
allocation to Private Equity.
We aim to promote the Company and its
prospects through clear and transparent reporting
to encourage demand for shares, particularly
amongst private shareholders, thereby widening
the shareholder base. With this in mind, we are
revamping our website. We have refreshed this
Annual Report and our regular communication with
shareholders. We continue to work with Edison to
produce appropriate marketing research reports
and assist the Portfolio Manager in meeting with
appropriate professionals. We will hold a hybrid
meeting with shareholders in person and by video
conference in London on 27 September this year.
e Board has also considered whether the stubborn
level of discount reects a lack of understanding
of the quality and liquidity of the portfolio and,
therefore, the integrity of the NAV. It may be helpful
to consider:
• 47.6% of the value of the portfolio at year end
was derived from securities which are tradeable
on an Exchange and as such, their value is based
upon their respective market listed share prices.
is includes the holding in Ocean Wilsons
(traded on the London Stock Exchange) which
accounts for 22.8% of the portfolio.
• 46.2% of the value of the portfolio at year end was
derived from third party fund vehicles, whose
value is based on prices received directly from
the funds themselves, the price at which HICL’s
units could be sold for at that point in time.
• 3.7% was held in cash at the year end.
• Only 2.5% was held in illiquid vehicles (DV4, an
evergreen holding).
Of the above, 91.3% of the total NAV has a pricing
frequency of at least monthly, with 73.6% being daily
or multiple times a day. Further, even if the Strategic
holding in OWHL were considered illiquid, 68.5%
of the total portfolio can be exited within a month,
with 50.8% being daily. For these reasons, the Board
considers that the values of the diverse investment
portfolio are robust and do not reect ‘stale’ values in
a period of market volatility.
The Board, in
consultation with our
Portfolio Manager,
has decided to
commence investing
into a portfolio of
illiquid alternative
assets, primarily
in Private Equity.
5
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 insucient 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
e Board continues to work with our broker and
Alec Letcheld 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
e 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.
e 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.
e 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
e 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.
e Board continues to oset the carbon created
by ights to Bermuda for meetings. e amount
oset 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 overshing, 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 nd a notice regarding our upcoming AGM
to be held on 27 July 2023 in Bermuda. Within the
notice you will nd several resolutions that are
presented annually. Additionally, you will note
a one-o 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 nancial institutions, including
investment companies, to collect and report
certain tax information in relation to their
shareholders. In principle, this should only aect
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. e
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.
6
Hansa Investment Company Limited Annual Report 31 March 2023
Long-term performance
Ten year company performance statistics
Year ended 31 March
Shareholders’
Funds
Net Asset Value
per share –
Ordinary and
‘A’ Ordinary
Annual
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 reect 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%
Share price (mid) Discount/ (Premium)
PORTFOLIO MANAGER’S REVIEW
Portfolio
Manager’s
Review
7
8
Hansa Investment Company Limited Annual Report 31 March 2023
Chart 1: Dominoes falling
Russia’s invasion of Ukraine
Interest rates
Geopolitical stability
Unemployment
Global growth
Year in review
Initially, the nancial year to end March 2023
looked to be a rather middling year. Not great,
with growth expected to slow and ination above
average albeit peaking in the middle of the year,
but equally not disastrous. Something like a -/+10%
year was our rough and ready view as we entered
the year.
is view however was quickly overtaken by events.
Russia’s decision to invade Ukraine in February
2022 had set-o a domino eect unleashing a
series of increasingly negative events and serving
to push markets into a downward spiral. Initially,
energy and commodity prices spiked with Ukraine
and Russia being key producers of many global
commodities. is added fuel to the already hot
inationary re meaning that ination, rather
than falling from around the middle of the year as
many expected, spiked to levels last seen in the
70’s. Central bankers, having almost universally
been in the camp that ination was transitory,
were forced to do an about-turn and acknowledge
that ination was increasingly structural in nature
and necessitated both faster and larger rate rises.
From an environment where rates were eectively
anchored to zero and 25bp moves were deemed
signicant, we rapidly moved to a backdrop where
central bankers were racing to outdo one another in
an eort to look tough on ination.
e next domino to fall was that of geopolitical
stability. e war in Ukraine saw a line being drawn
between the West and the BRIC countries. e
West backed the sovereignty of Ukraine providing
weaponry and nancial support while the BRIC
countries aligned with Russia in the belief that
the sphere of inuence of countries such as
Russia and China extended beyond their national
borders. Whereas previously countries such as
e domino eect
Alec Letcheld
Portfolio Manager
Portfolio Manager’s report
9
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 nally
relented albeit not until there was civil unrest with
the population rebelling against the severity of the
lockdowns.
e 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 ination.
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 condence in the nancial system, stepped
in to backstop all depositors and found a buyer
for the protable parts of the bank, markets were
already identifying other banks with similarly risky
business models. is 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 insignicance
compared to the trouble that Credit Suisse was in,
given its much greater importance to the nancial
system. e 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 nancial sector has been one of the
worst performing parts of the equity market in
the rst 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
rst quarter of the nancial year, which was at
the epicentre of the bad news ow, saw the worst
falls, with global equities down some 14% at their
trough. e 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 ination 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 rst 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 conict
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.
e 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 ination, the bolt of ination and
the resultant rise in interest rates meant that bonds
failed in their duty to oer 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.
10
Hansa Investment Company Limited Annual Report 31 March 2023
as a shock to many when their annual portfolio
valuations start to come through.
Amongst the alternative asset classes, there were
heavy declines in energy prices as WTI oil, which
had reached a high for the year in June at nearly $124
per barrel, ended the year below $80, while natural
gas was another big faller. Metals such as iron and
copper showed declines, while gold increased from
$1,475/oz to nearly $1,900/oz. e broad commodity
index declined 6.9% over the year. Hedge funds were
on the whole somewhat better than equities, with
the broad HFRI index up 4.2%, albeit macro and
systematic funds struggled in the rst quarter of
2023 having performed well prior to then.
The outlook for 2023
e current rally in markets is worth exploring, not
least to determine if we are now past the peak in
bad news and whether 2023 oers better prospects
for investors.
Two factors seem to be exciting markets. First, the
belief that we have seen the peak of ination with
the current double-digit levels expected to fall as
we move into the rst half of 2023. We have some
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
Global Markets (DM/EM/FM)
Developed Markets
Emerging Markets
Frontier Markets
North America
UK
Japan
Europe
Brazil
India
China
Global Treasury
G
lobal Aggregate Corporate Bond
Global High Yield
EMBI Global
EM Global Diversified
Bloomberg Commodity Index
Gold
Copper
WTI Cushing
USD/EUR
USD/GBP
USD/BRL
% Return (GBP)
Chart 2: Performance of countries, sectors, and asset classes
Source: Bloomberg.
Dark bars represent 3 month returns to 31 March 2023. Light bars represent 12 month returns to 31 March 2023.
Source: Bloomberg.
0
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0
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2017 2018 2019 2020 2021 2022
$/barrel
$/container
WCI Composite Container Freight Benchmark Rate (LHS) WTI (RHS)
Chart 3: Energy prices and supply chains have eased sharply
PORTFOLIO MANAGER’S REVIEW
North America
remains home to
many of the world’s
leading technology,
biotechnology
and private equity
companies.
11
12
Hansa Investment Company Limited Annual Report 31 March 2023
sympathy with this view. A number of the more
cyclical factors which have been driving ination
higher are indeed rolling over sharply with oil
prices down from a peak of $124/barrel to $80/
barrel now and container shipping prices down
80% to $2,120 now. With the mild autumn helping
Europe rebuild its energy reserves, and hopefully
mitigating its dependence on Russian oil, combined
with the base eect as current high prices fall out
the back end, this bodes well for the year ahead and
with it a potential peaking of interest rates (and
indeed central banks may even start to cut rates
later in 2023).
e second factor exciting markets has been
China relaxing its zero-COVID policy. Following
a period of widespread civil unrest throughout
China and with the Chinese economy weakening,
showing growth of just 3% in the rst nine months
of 2022 versus a 5.5% target for the year as a
whole, President Xi is relenting on a number of
his measures (presumably recognising that civil
unrest and the danger that the population are
pushed back into poverty are two key factors that
dictatorships fear the most). e challenge now is
the speed with which China returns to some kind of
normality. In particular, China has to contend with
a relatively high number of older people who are yet
to be fully vaccinated, a vaccine that is less eective
than those being used in the West, and a healthcare
system that is unlikely to be able to cope with mass
outbreaks, especially in its more rural regions. At
this stage markets seem to be anticipating that the
exit path will follow that of the West which, whilst
a stop-start process, ultimately led to a return
to normality. e fear in China’s case however is
that the outbreaks may be much more severe,
especially as they have failed to build up any herd
immunity as was the case in the West. Perversely
such an outcome may lead to further unrest as the
population views it as yet another example of the
leadership’s mismanagement of the crisis.
Combined with lower valuations in many markets
(but certainly not all) it is perhaps unsurprising
that markets, being forward looking discounting
mechanisms, are trying to look through some of
the more negative news ow to a point where the
outlook is more positive.
So where do we stand? Well, we advocate some
caution. We are yet to see a weakening of the
economy or corporate earnings despite the events
discussed above. Whilst the picture is a mixed one,
many important economic indicators are still well
into expansionary territory. GDP growth for the
world is expected to come in at 2.7% in 2023, the
US some 0.8% and Europe 0.3%. Whilst it is indeed
possible that economies such as Europe are already
in recession, with important metrics such as the ISM
Services PMI measure coming in at 56.5 many areas
are still very much in expansionary territory. Perhaps
most worryingly, employment gures remain very
strong in a number of key markets, hardly the stu of
recession. It’s a similar picture in corporate earnings
which again, whilst showing pockets of weakness,
feels as though the worst is still to come.
e second area where we would exercise some
caution is that of ination. Whilst it is encouraging
that some of the more cyclical factors appear to
be rolling over, and indeed we believe that the
narrative for the coming months will be about
ination falling from currently extended levels, we
worry that some of the more structural factors will
be more persistent and challenging to eliminate.
In particular, wage ination, with unemployment
at historically low levels, will likely be stickier and
harder to remove, especially with trade unions
exing their muscles again.
Wage inflation, with
unemployment
at historically low
levels, will likely
be stickier and
harder to remove,
especially with trade
unions flexing their
muscles again.
Source: Bloomberg.
0
5
10
15
20
25
30
35
40
AC World
World
Emerging Markets
US
UK
Europe ex UK
Asia ex Japan
Japan
France
Germany
Italy
Netherlands
Spain
Sweden
Switzerland
China
India
Brazil
Russia
Mexico
South Africa
Turkey
Korea
Chart 4: Valuations are starting to look more reasonable
Line represents ten year range Cheap current ten year average Expensive current ten year average
13
PORTFOLIO MANAGER’S REVIEW
is combination of stronger than expected
growth together with stickier ination is likely to
make it harder for central banks to cut rates. In
all probability rates will stay higher for longer and
under a worst-case scenario they may even have
to push up to higher than anticipated levels to
eliminate ination from the system, even if this
comes at the cost of a deeper, more protracted
recession. Such an outcome is likely to lead to
markets retreating sharply and even going much
lower than the previous trough depending on the
severity of the downturn. Even without this bad
outcome, historically it is very unusual for markets
to bottom and start the recovery process without
being deeper into recession and the fuller impact
on corporate earnings being felt.
It seems likely then that markets face a period
of both push and pull as the bulls and bears wax
and wane depending on news ow. It is certainly
possible that the current rally has legs as we start
the year with news ow dominated by ination
coming o its highs and global growth bolstered
by the Chinese unlocking process. However, if, as
seems likely, there is a growing realisation that
ination is stickier than many believe to be the case
then this strength is likely to be short-lived. Indeed
it may well be a case of bad news being good news
(at least for stock markets) as weaker growth shows
that central bank policy measures are working,
and they can indeed take their foot o the brake.
In contrast stronger growth, and with it stickier
ination, is likely to lead to central banks being
more hawkish, forcing up rates even higher, and
ultimately driving economies into a much deeper
recession. Hence, at this stage, we feel little need to
lean into the current market strength.
A new paradigm?
Whilst the coming months are likely to be
dominated by the events discussed above, we
fear that the real challenges that markets face
are yet to come and will be more structural in
nature. Although ination is likely to fall from
the current extremes, the real question is where
does it settle in the medium to longer-term and
what level of interest rate does this imply? We
are not particularly worried by the more cyclical
short-term factors inuencing ination which
will undoubtedly drop out sooner or later, but we
do worry that there is a regime shift taking place
due to more deep-rooted inationary factors.
Globalisation, as noted in the past, now looks
to be rmly in reverse as governments worry
about security of supply more than its cost. As
highlighted by recent news that TSMC is investing
$40bn in building a new fabrication unit in the
US, rather than in Taiwan or China, no longer are
governments obsessed with achieving the cheapest
prices for consumers but instead avoiding hostile
nations holding their supply chains to ransom.
Compounded by the higher labour costs in China,
it feels very much like we are in the sunset of
globalisation.
Similarly, the lack of investment into many
commodities as capital markets got ahead of
themselves in their desire to be seen to be green
has meant that the supply of many essential
commodities will struggle to meet demand in the
years ahead. With commodities key components
of ination, again this makes ination look stickier
than has been the case in the past.
Finally, we now appear to be in a period of
structurally much tighter labour markets. It is
unclear at this point the degree to which this
is a post-COVID anomaly that will ultimately
normalise as COVID recedes into history, or if
it is more persistent in nature. Certainly it feels
more structural with COVID encouraging many
older people to bring forward their retirement,
Although inflation is
likely to fall from the
current extremes,
the real question is
where does it settle
in the medium to
longer-term and
what level of interest
rate does this imply?
Source: DB
-12%
-10%
-8%
-6%
-4%
-2%
0%
Oct-49
May-54
Apr-58
Feb-61
Nov-70
Mar-75
Jul-80
Nov-82
Mar-91
Nov-01
Jun-09
Apr-20
H2 2023
…
% GDP lost from peak to trough in post WWII recessions
Chart 5: Consensus expects the mildest recession in recent history
14
Hansa Investment Company Limited Annual Report 31 March 2023
changing labour migration patterns and increasing
competition for cheap labour in areas such as
internet logistics which all serve to force up wage
levels. For many years now commentators have
been calling for a reversal in the trend towards
corporate prots growing at the expense of the
labour force and it is possible that this day has
now arrived. Sticky wage ination is much more
worrying to central banks as it tends to be harder to
eliminate once it becomes ingrained in the system.
Hence the days of zero, or even negative ination,
seem long gone and with it the prospect of returning
to a low interest rate environment. Instead it is likely
that ination settles at higher levels – the key will be
how much higher – and as a result we will enter a
higher interest rate environment where quantitative
tightening replaces quantitative easing. is is
incredibly important for stock markets. Recent years
have been dominated by an abundance of liquidity.
is drove exceptional returns from bond markets
as yields trended to zero, but also buoyed risk asset
classes such as equities. rough a combination of
excess cash in the nancial system needing to nd a
home and with central banks able to throw liquidity
at markets during periods of distress without the
fear of creating ination, we have experienced a
golden period in stock markets over the last couple
of decades. Instead, if higher ination and interest
rates are more persistent it seems likely that stock
markets will be somewhat lower and cycles shorter
especially given that the ‘Fed Put’ will no longer be
an option in many cases.
e second structural change that we would
highlight is in the geopolitical backdrop. In recent
years, geopolitics was of little real concern for
investors. e US hegemony prevailed, with the US
adopting the ultimate market friendly economic
model with developing economies expected to
trend towards this model and ultimately were of
little relevance from a market context in view of
their small size.
Now however, this period of geopolitical stability
appears to be changing. e developing markets are
growing in economic power such that by 2050 the
top ve global economies are predicted to include
China, India and Indonesia with the US being
displaced by China as the most important economic
nation. is growing strength is encouraging many
of the developing countries to ex their muscles
and, perhaps most worryingly, increasingly countries
are aligning between the two sides with the East no
longer prepared to be dictated to by the US.
Hence having historically been able to largely ignore
geopolitics, at least from an investment context,
it is now becoming harder and harder to ignore.
Instead we must factor into our thought process
how the geopolitical landscape evolves and the risks
that this may present. As highlighted in 2022 by
Russia’s invasion of Ukraine, the behaviour of many
developing markets can be at best unpredictable
and, at worst, extremely disruptive to world stock
markets.
Positioning
So how do we position portfolios for the coming
year and the period ahead? Well, without sounding
trite, with some diculty!
As detailed previously, whilst we see good reason
for equities to continue to move higher in the
near-term we are not overly inclined to chase this
rally as we see challenges developing in the form
of recession, stickier ination and rates staying
higher for longer. Instead, the main debate we
The days of zero,
or even negative
inflation, seem long
gone and with it the
prospect of returning
to a low interest
rate environment.
Source: Bloomberg
0
5
10
15
20
25
30
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Tr $
Global Central Bank Balance Sheets
Bank of Japan Fed European Central Bank BoE
Chart 6: Quantitative easing has been a major driver of assets. What does this imply for
quantitative tightening?
PORTFOLIO MANAGER’S REVIEW
Developing markets
are growing in
economic power such
that, by 2050, the top
five global economies
are predicted to
include China, India
and Indonesia.
15
16
Hansa Investment Company Limited Annual Report 31 March 2023
have internally is whether we should be using this
strength to sell into and if we should take a more
negative tilt. Largely this will be dependent on
whether or not existing rate cuts are successful
in their goal of dampening ination and the more
cyclical inationary elements working their way
out of the system. It certainly seems that the
market has got ahead of itself and as highlighted
by chart 7, if history is anything to go by, the falls
experienced to date would be consistent with a
soft-landing rather than the 35% or so decline for a
typical cyclical bear market.
is changing backdrop has also led to a number
of important intra-market changes. No longer is
it a question of being purely focused on longer
duration growth names. Instead, with interest rates
unlikely to trend back to zero in the near-term,
holding a blend of value, quality and growth seems
more appropriate. Higher rates typically favour
companies who generate more of their earnings in
the near term and, if recession is around the corner,
then quality companies with more predictable
earning streams will likely command a premium.
at’s not to say we are anti-growth technology
companies! ey may well be part of the solution if
companies seek to increase their productivity in the
face of wage price pressure, but the more egregious
valuations of recent times are unlikely to return any
time soon. However these technology companies
are likely to be under more pressure to become
protable rather than continually burning cash in
the pursuit of market share growth.
Perhaps the area of most interest is the bond
market. For a number of years now we have largely
ignored the sector, viewing yields as too low and
the risk from higher ination and rates as too
Source: Goldman Sachs
-60
-50
-40
-30
-20
-10
0
Average/
Current
Decline Structural Cyclical Event-Driven
Average decline (%)
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30
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Length
Structural Cyclical Event-Driven
Average length (months)
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60
Average Structural Cyclical Event-Driven
Average time to recover (months)
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Average time to recover (months)
Chart 7: US bear markets & recoveries since World War II
Source: BlackRock
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
US Treasury US Municipal Global Credit Global High Yield US Agencies Emerging Markets US MBS US CMBS Euro Periphery Euro Core
Chart 8: Fixed income assets yielding over 4%, 1999 to 2022
PORTFOLIO MANAGER’S REVIEW
17
high. Instead we have favoured equities which
represented a more attractive risk return. Given
the jump in yields that we have seen over the past
year however, and with ination now at cyclically
high levels, parts of the bond market are starting
to become more interesting again. Yields are now
higher than equities in many parts of the bond
market meaning we are increasingly shifting from
TINA (ere Is No Alternative to equities) to TARA
(ere Are Reasonable Alternatives). at’s not to
say however that we would be diving in with both
feet, and in particular we worry that the high yield
market still fails to reect the dangers from rising
default rates if recession starts to take hold, but
nonetheless we are beginning to evaluate positions
in areas such as shorter duration high quality
investment grade credit.
Similarly the outlook for some sectors of the hedge
fund space is again looking structurally much more
attractive. An environment characterised by greater
volatility, the need to be more tactical, and higher
interest rates is exactly the kind of backdrop that
macro and multi-strategy hedge funds thrive in.
Equally, CTA funds, which trade price momentum
rather than being fundamentally driven, again
typically do much better in today’s fast markets.
After a period of more lacklustre returns, where
many have struggled to justify their fees, this has
reinforced the case for having macro and more
systematic funds within a diversied multi-asset
class portfolios especially with bonds failing in
this role. We have signicant exposure to both
these areas.
Another area of potential change is that of the US
dollar. Whilst by no means arguing that the role
of the US dollar as the global reserve currency
is under threat - with no real alternative to the
liquidity and the stability of the scal and monetary
backdrop provided by the US - the combination
of US interest rates being raised earlier and more
aggressively than other countries and the valuation
of the dollar looking expensive, it is bringing us
closer to the point where dollar strength is replaced
by dollar weakness. With interest rates likely to
turn earlier in the US compared to many other
countries, and as the safety premium awarded to
the dollar erodes, we would see investors moving
out of the dollar and favouring other, non-dollar
assets. In particular we would highlight emerging
markets which typically do much better in a weaker
dollar environment, especially in light of their more
attractive current valuations.
Conclusion
e challenge facing markets and policy makers in
the coming months will be untangling the drivers of
ination and growth in terms of which factors are
cyclical and which are more structural in nature.
Initially it looks like the more cyclical factors will
hold sway which will likely support stock markets
as ination falls and investors try to look through
the cycle to a point where interest rates start to
turn and a new cycle begins. Whilst acknowledging
this potential strength, we are inclined to sit tight,
viewing markets as having got ahead of themselves
and ignoring the looming economic and corporate
sector weakness and the pressure on valuations
that this will bring.
e more dicult question is whether we should
be actively selling into this strength and taking
a more cautious position within portfolios. To
a large degree this depends on whether any
economic downturn proves worse than commonly
anticipated, i.e. a hard landing as opposed to a soft
landing or, even more worryingly, that economies
and ination remain more resilient than central
bankers are comfortable with and they are forced
into driving economies much lower to bring
ination back to acceptable levels.
The challenge
facing markets and
policy makers in the
coming months will
be untangling the
drivers of inflation
and growth in terms
of which factors
are cyclical and
which are more
structural in nature.
Source: Bloomberg
-50%
0%
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100%
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-10%
0%
10%
20%
30%
40%
50%
60%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
The deviation from purchasing power parity value, USD vs selected currencies
EUR (LHS) JPY (RHS)
Chart 9: The US dollar looks expensive on a purchasing power parity basis. Nearing a top?
Hansa Investment Company Limited Annual Report 31 March 2023
18
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.
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 ination 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 dierent asset classes and a combination
of value, growth and quality, something we feel well
placed to oer 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 nancial
year. High ination, and the interest rate increases
that they implied, were signicant concerns for
investors throughout the year, although as time
went on there were increasing fears of an economic
slowdown, and nally a mini banking crisis that
began in California and led to the downfall of Credit
Suisse, precipitating a ight 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 ination 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 oers very useful
diversication benets, 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.
e 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 nancial year the Core Regional silo
declined 4.0% while the ematic 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, rst purchased
in October 2022, has signicant exposure to
Europe, as well as the UK and Japan, while being
underweight the US. e fund gained 7.0% in
the nal quarter of the nancial 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.
19
Hansa Investment Company Limited Annual Report 31 March 2023
have performed well for it include Continental
AG, the tyre company, and UniCredit, the Italian
bank, which had a very strong quarter despite the
turmoil in the wider nancial sector. Elsewhere, the
portfolio’s passive holding in iShares Core MSCI
Europe returned 9.4% for the year.
After a long period of leading performance in
the portfolio, the North American holdings have
been a little weaker versus other regions this
year. Select Equity declined 9.4% and Pershing
Square Holdings was down 4.3%. Pleasingly, the
portfolio’s largest holding outside Ocean Wilsons
Holdings, Findlay Park American’s decline of
just 0.4% is ahead of the North American index.
Findlay Park has been actively pivoting the fund
further away from mega cap companies towards
more midcap companies (the majority of holdings
added in the last two years have been in the
$3-50bn range, including West Pharmaceuticals
and United Rentals) where they are nding better
opportunities and more attractive valuations.
Beutel Goodman US Value was purchased in
November 2022 to provide exposure to large cap
value stocks. e fund is managed by a dedicated
value investment team that has stuck admirably to
their investment philosophy during a long period
when markets have generally been dominated by
growth companies. It registered a small decline of
0.6% during the nal quarter of the nancial year,
as value stocks lagged, and its return since it was
purchased in the portfolio has been -3.4%.
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. Goodhart Partners: Hanjo
Fund, which has a smaller cap focus, was down
0.3% for the year.
Emerging and frontier markets generally lagged
developed markets over the year, but there were
some relatively stronger performers in this part
of the portfolio. NTAsian Discovery gained
1.7% for the year. Its top holding is BFI Finance,
a consumer nancing company in Indonesia,
that has contributed positively over the last year.
e manager likes its connection to the growing
GDP per capita in the country and it is beneting
from digitalising its operations. Vietnam remains
a signicant exposure for the fund, although this
detracted over the course of the year. BlackRock
Frontiers Investment Trust has delivered positive
returns, with a rise of 4.4% over the last quarter
taking it to a return of 7.2% for the year, aided by
some of its holdings in the Middle East which were
buoyed by elevated oil prices, although these have
come o more recently.
e thematic holdings have experienced mixed
performance over the last year. Energy exposure
through iShares MSCI World Energy Sector
ETF has been a strong contributor, gaining 12.7%,
although it fell back 5.3% in the last quarter. GAM
Star Disruptive Growth has fallen 20.3% over the
year, as the technology sector declined after many
BlackRock Frontiers
Investment Trust has
returned 7.2% for the year.
Fertiglobe, the world’s
largest seaborne exporter
of urea and ammonia
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 nal 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 nancials
sector in the fallout from Silicon Valley Bank’s
failure. e 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.
is will provide access to investments that are not
contained in the public markets, while beneting
from private equity’s long-term nature that ts well
with the Company’s investment horizon. We have
signicant experience of investing with some of
the world’s best private equity rms, 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.
ese include commitments to invest in funds
managed by Khosla and GGV, two leading Silicon
Valley venture capital groups that are very dicult
to access. While recent events surrounding Silicon
Valley Bank, combined with falling technology
valuations have been dicult 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 agship fund from
the leading US growth private equity rm, which
has an excellent track record of investing across
technology, healthcare and services sectors.
Diversifying Funds
e diversifying holdings have continued to
provide an attractive alternative source of returns
whilst dampening volatility and displaying low
correlations to the equity market. ey 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%.
e two macro funds have again delivered steady
returns this nancial 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 xed 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 signicant
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.
21
22
Hansa Investment Company Limited Annual Report 31 March 2023
beneted from a good nal quarter, gaining 7.9%, to
bring it to a return of 7.2% for the nancial year.
Keynes Dynamic Beta Strategy pulled back in the
last quarter, with a decline of 2.1% as its directional
models detracted in both equities and bonds, but
delivered a return of 7.1% for the year. Schroder
BlueTrend suered similarly in the last quarter
with a decline of 12.8% that leaves it down 2.4% for
the year, but the other CTA fund, GAM Systematic
Core Macro, was less aected and remains up 4.1%
for the year, partly thanks to its diversied, non-
trend models.
Global Equities
e global equity silo returned 18.0% over the past
year, with the biggest contributors being Orion
Engineered Carbons, Interactive Brokers and
Arch Capital. e biggest detractors were CTT,
CVS and ViaSat.
Over the past year, our value investing approach
has allowed us to avoid the general declines in the
equity markets. However, in the preceding year,
our risk-averse style struggled to keep up, which
is not surprising. Our real challenge is to achieve
satisfactory results during tough times, although it
is impractical to accurately determine or anticipate
when these times might occur. e cost of doing
that can be to not keep pace with bull markets and
if that means not buying over-valued stocks just to
maintain relative performance to a benchmark, that
is a price we are willing to pay.
Our process is focused on bottom-up stock picking,
rather than regional or sector selection, and we are
pleased to report that this approach has been the
primary driver of our returns. When we wrote to
you three years ago, we were optimistic about the
long-term prospects of our global equity portfolio
due to its 50% discount to its intrinsic value.
Although the discount has narrowed to 35% since
then, we still believe that the portfolio oers a
substantial margin of safety.
Continuing our earlier discussion on banking, it’s
worth noting that our direct equity portfolio has a
40% weighting in the nancial sector based on the
Global Industry Classication Standard (GICS).
However, we do not have any exposure to banks.
Instead, we have invested in brokers, insurers, and
an industrial holding company. Our largest position,
Interactive Brokers (IBKR), suered a 7% decline
from March 8th to the end of the quarter, as the
market sold o all nancial stocks indiscriminately.
However, the banking situation has left IBKR in
a much stronger position, as it has showcased its
nancial strength to potential customers. Unlike
its peers, IBKR oers the best interest rates on
customer deposits, currently at 4.33% on USD
balances compared to Charles Schwab’s 0.45%, so
is unlikely to see customers move their deposits.
Additionally, it invests its cash in short-duration
treasuries, which stood at 24 days at the end
of March, a stark contrast to the asset-liability
mismatch at other nancial institutions. While
the sell-side analysts have been frustrated with the
conservative approach to the balance sheet in the
past, over the long term it pays o to be invested
alongside an owner-operator where the chairman
and sta hold over 75% of the shares. eir long-
term focus is summed up by the chairman in
response to an analyst asking them about their
balance sheet in January, well before the banking
crisis made headlines. “It is a risk we cannot take
because if you’re right, we’ll actually make extra
money. But if we’re wrong, we can lose a fortune
because as rates go up, we have to raise the rate
that we pay to our clients. And we don’t want to be
a situation where we are lent out on the long end
and we’re borrowing on the short term from our
customers. So, we can get creamed that way, and we
will not do that.”
e relative strength of IBKR has been
acknowledged, evidenced by a 31% drop in its
peer, Schwab, over the same period. Moving
forward, customers may re-evaluate the nancial
strength of their broker, resulting in a potential
uptick in the pace of client wins, especially from
Registered Investment Advisers. In addition, further
client growth is anticipated to come from large
international institutions that white label the IBKR
platform. IBKR has already secured two signicant
customers who are expected to begin transferring
their clients later in the year.
We believe it is quite possible that IBKR earns over
$6 a share by 2025, which would be a 14% EPS
CAGR from 2022. is conservative estimate is less
than the 19% earnings CAGR they have achieved
since our initial purchase in 2017 and represents a
forward multiple of just 13x P/E.
During the year we initiated a new position in
Bergman & Beving, added to our positions in
Coats, CTT, Grupo Catalana Occidente and
ViaSat and reduced our positions in CK Hutchison,
CVS, Dollar General, EXOR, Interactive Brokers
and Subsea 7.
Ocean Wilsons Holdings
As the largest integrated provider of port and
maritime logistics in Brazil, we believe the Ocean
Wilsons’ subsidiary, Wilson Sons, is well-placed
to perform in the coming years. e business has
a strong competitive position, being the leading
provider of towage services in Brazil with the
largest and most modern eet, as well as operating
major container terminals in the north and south
of the country: Rio Grande and Salvador. In recent
times the company has seen several challenges,
including political upheaval in Brazil and the
disruption stemming from covid that signicantly
impacted global trade and hurt the energy sector
that is an important part of the company’s demand.
Over the past year,
our value investing
approach within our
Global Equities silo
has allowed us to
avoid the general
declines in the
equity markets.
PORTFOLIO MANAGER’S REVIEW
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.
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. ere were still shortages of
empty containers during the year stemming from
global logistics bottlenecks, which particularly
aected the terminal at Rio Grande, but this has
started to improve in 2023, with volumes up 5.2%
year-on-year for the rst two months. Demand
for oshore energy-linked services is improving,
with vessel turnarounds in the oshore 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.
e investment portfolio shares many
characteristics with the portfolio held directly
within Hansa Investment Company, with a
preference for funds with clearly-dened strategies
run by managers with skin in the game. e most
recent portfolio report for the year 2022 shows
encouraging relative performance, albeit with
losses given the challenging market conditions.
ere was a decline over the calendar year of 13.8%,
which was signicantly 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 signicant 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 nancials-focused fund managed by
Reverence Capital. e 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 Letcheld
Chief Investment Ocer
April 2023
23
Hansa Investment Company Limited Annual Report 31 March 2023
24
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 eiciencies.
24
25
PORTFOLIO MANAGER’S REVIEW
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 Oshore 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 7,9 6 6 2.2
Schroder ISF Global Recovery 7,942 2.2
Indus Japan Long-Only Fund 7,1 7 8 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 Oshore Ltd 3,336 0.9
GAM Systematic Core Macro (Cayman) Fund 3,12 2 0.8
Schroder GAIA BlueTrend 2,884 0.8
Keynes Dynamic Beta Strategy (Oshore) 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
The portfolio
As at 31 March 2023
26
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
2 7,5 70 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.
STRATEGIC REVIEW
27
Strategic
Review
28
Hansa Investment Company Limited Annual Report 31 March 2023
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 diversied 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 diversied 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 reect key investment themes the Portfolio Manager believes will
generate excess returns.
• Diversifying Assets – investments, typically through third-party funds and directly, that create asset diversication within the
portfolio.
• Global Equities – a diversied portfolio of global equities identied 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 beneting 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 signicant 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 sucient 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 diversied 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 oer shareholders the relevance and the clarity needed to measure the performance of the Company.
Investment objective, strategy and performance
29
STRATEGIC REVIEW
e 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). e Board’s second goal is for the Company to achieve returns that are higher than
ination 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: NDUEACWF). 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 ination (real returns are important to shareholders) and with those of appropriate
indices for dierent elements of the portfolio.
e 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 specically 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.
e Board of Directors monitors the returns made in absolute ( rstly) and relative (secondly) terms against the KPIs established. e
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
e 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%) 3 7. 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% 1 67.1%
30
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.
31
STRATEGIC REVIEW
Capital structure
e 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. e 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. See also Note 13 in the Notes to the Financial Statements.
Shareholder profile
e 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, 46 7,0 05 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%
ese 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 Paranà 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. e late-1950s also saw the
acquisition of a signicant 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.
e wider Salomon family remain signicant 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
e 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.
ere 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 oce. 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 dened 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
Shareholder profile
32
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-o change to its Bye-Laws requiring shareholders to supply, if requested, information relating to their
tax residency. Globally tax authorities and government agencies require nancial institutions, including investment companies, to
collect and report certain tax information in relation to their shareholders. In principle, this should only aect 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. e 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
e 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 11,1 69,3 45 2 7.92% 3,587,123 4.48% Beneficial
J Davie 45,000 0.11% 230,000 0.29% Beneficial
S Heidempergher 6,400 0.02% – – Beneficial
Total
11,220,745 28.05% 3,817,123 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). 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.
Portfolio manager’s interests
As at 26 June 2023, the date of signing of this Annual Report, the management and sta 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.
33
STRATEGIC REVIEW
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 benet
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 identied 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
and AASP
e Board’s main working relationship is with the sta of HCP as the Portfolio Manager and the AASP.
HCP is responsible for the Company’s portfolio management (including asset allocation, stock and sector
selection in accordance with guidelines established by the Board). It is also responsible for administrative
and operational functions including day-to-day oversight of the other key service providers (Administrators,
Custodians, Registrar and Company Secretarial). Successful management of shareholders’ assets by the
Portfolio Manager is crucial to enable the Company to deliver its investment strategy and meet its objective.
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
providers
Key service providers are the Company’s Administrator (Maitland Administration Services Limited),
Custodian (Lombard Odier) and Registrar (Link Market Services (Guernsey) Limited). Whilst the Board looks
to the Portfolio Manager and the AASP to keep a day-to-day oversight of these providers, they are contracted
directly to the Company. As such, the Board retains ultimate responsibility for their roles. 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.
Stakeholder engagement
34
Hansa Investment Company Limited Annual Report 31 March 2023
Main areas of engagement
KEY AREA TOPIC ENGAGEMENT AND OUTCOMES
Investment
strategy and ESG
matters
e Investment Strategy incorporates
appropriate ESG considerations. For clarity,
the Company does not purport to be a “Green”
fund. However, through its ESG disclosures and
reporting the actions of its Portfolio Manager,
it seeks to give clarity to the processes around
assessing the Environmental, Social and/or
Governance aspects to its investment decisions
and ongoing monitoring.
e Board has engaged with the Portfolio Manager and
encouraged them to develop a responsible investment
policy. e Board notes that the Hanseatic Group, of
which the Portfolio Manager is a member, has become
a signatory to the UNPRI during the nancial year. e
Board wholeheartedly supports this policy. See page 43
for further information.
Discount
management and
share buybacks
It is a great frustration to the Board that the
discount has not tightened over the past
year. It is also noted that there has been
general widening of investment trust spreads
due to market volatility and declining retail
participation in the markets.
e Board is mindful of, and regularly considers, the
share price compared to the NAV and related discount.
e Board is of the view that providing transparency
and clarity to investors, as well as promoting demand
for the Company’s shares, should create a positive
impact on the discount for the medium to longer-term.
To this end, the Board 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 signicant eect 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 benets of
diversication generated by the investment portfolio.
35
STRATEGIC REVIEW
Capital structure
e Company has two separate share classes,
both of which are traded on the LSE. e
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. Consideration has
been given to whether the two share classes
could be merged in some way.
e current position of Ordinary and ‘A’ Ordinary share
classes remains unchanged as the majority of Ordinary
shareholders have informed the Board that they do not
wish to alter the present structure at the present time.
Dividends
e Board continues to support maintaining
the dividend at 3.2p until it is fully covered by
net income. At that time it plans to increase it in
line with any increase in the net income of the
Company.
e portfolio held by the Company is currently
constructed for long-term capital appreciation rather
than income generation. As a result, the income
generated by the portfolio is insucient 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.
Maintaining levels
of service from
service providers
e Company does not have direct employees.
Rather, its operations are conducted by several
key service providers. e Company enters into
service-level agreements with each provider. e
Board oversees these services to ensure that best
practice is followed and that the Company is
receiving a comprehensive service and value for
money.
e independent members of the Board annually review
the performance of the Portfolio Manager. Additionally,
the day-to-day performance of other key service
providers (Administrator, Custodian and Registrar)
are monitored by the AASP on behalf of the Board. In
addition, there is an annual review of service providers'
annual Controls Audit Reports. Members of the Board
also visit each key service provider annually to review
performance and understand any changes in their
businesses.
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 benet 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 signicant 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.
36
Hansa Investment Company Limited Annual Report 31 March 2023
Bye-Laws
e Company seeks shareholder approval to adopt new Bye-Laws
(the “New Bye-Laws”) in order to update the Company’s current
Bye-Laws (the “Existing Bye-Laws”). e resolution will be
proposed as a special resolution.
Requirement for certain shareholders to supply
information for tax authorities, governments and
regulatory reporting purposes
e proposed amendments are being introduced in the New Bye-
Laws primarily to:
• enable the Company to meet its reporting obligations under
the Foreign Account Tax Compliance Act (‘FATCA’), the
Common Reporting Standard or any similar law or regulation,
by introducing an obligation for shareholders to provide the
required FATCA or Common Reporting Standard information
within a reasonable timeframe, or to provide for the mandatory
sale of shares if the required information is not provided;
• provide the Company with more exibility in dealing with
untraced shareholders; and
• 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 decient, 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.
b) Untraceable Shareholders
e Company is also taking this opportunity to consider its
dealings with Untraceable Shareholders. In line with what
other companies are doing, the Company is seeking to reduce
the current period to determine a shareholder untraceable
to six years. is proposal is to help the Company manage
the shareholder register in connection with its reporting
obligations under FATCA, the Common Reporting Standard,
or any similar law or regulation and also more generally
to remove longstanding untraced shareholders and where
appropriate, require a compulsory transfer of shares, all having
followed due process to trace shareholders. ese Proposals
should enable the Company to provide an accurate account
of the shareholder information of the Company, by removing
untraced shareholders including shareholders who may have
passed away and shareholders who have consistently failed to
respond to the Company’s requests for information.
A summary of the principal amendments being introduced in the
New Bye-Laws which the Board considers will be of most interest
to shareholders is set out in the AGM Notice on page 80.
37
STRATEGIC REVIEW
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
identies 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 signicant 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 identied and associated controls in place to manage these risks are described below:
PRINCIPAL RISKS EXTERNAL CONTROLS TO MITIGATE RISKS
Market risk – long-term
company share performance
Market risk includes interest rate,
currency, equity, credit, ination,
concentration, liquidity and macro
geopolitical risks.
e Board:
• has appointed an appropriate PM whose performance for the Company is reviewed and
challenged on a quarterly basis;
• has set investment guidelines and restrictions, which are reported against by the PM on a
monthly basis;
• operates an asset allocation model, which is regularly reviewed and discussed with the PM; and
• monitors and discusses portfolio construct and performance quarterly.
Performance risk, share
price, liquidity and discount
monitoring
Low market trading volumes of
Company shares and the discount
to the NAV becoming inherent in
the share price.
e Board:
• regularly reviews the share price, discount level and portfolio performance;
• maintains periodic oversight on shareholder-base;
• actively seeks feedback both directly from shareholders and indirectly through the Company’s
Broker or specic outreach programmes involving the Portfolio Manager;
• has the ability to buy-back non-voting shares of the Company; and
• initiates strategies to reduce discount over the medium term.
Tax, accounting, legal and
regulatory risks
Adverse outcomes resulting from
legislative changes to tax, legal
and regulatory requirements.
Adverse outcomes from not
meeting ESG expectations.
e Board:
• obtains regular updates and advice from relevant professional advisers;
• maintains oversight and receives regular reporting on the legislative and regulatory changes,
which impact HICL, as monitored by the PM;
• maintains the Company’s membership with the Association of Investment Companies;
• has adopted the PM’s responsible investing policy;
• has set explicit expectations on the integration of ESG considerations within the investment
process;
• continues to develop ESG disclosures in compliance with reporting regulations; and
• receives documented conrmation of the PM’s adherence to relevant regulatory requirements
and emerging sanction risks.
Reputational risk
Negative behaviours, publications
or market sentiment impacting the
reputation of the Company.
e Company:
• requires the annual selection of Board members, all of whom must have a commitment to
governance;
• 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.
Principal risks
38
Hansa Investment Company Limited Annual Report 31 March 2023
PRINCIPAL RISKS INTERNAL CONTROLS TO MITIGATE RISKS
Operational risk
Risks associated with process, system
and control failures including those
associated with the Company’s third-
party service providers.
Operational areas considered includes
Liquidity, Safeguarding of Assets and
Reliability of Financial Reporting.
• Pre-approval processes are in place prior to the publication of any nancial information.
• Identication and certication of key controls by AASP compliance team.
• Due diligence is undertaken prior to appointing all service providers. Regular performance
reviews of third-party providers are made and, where relevant, the Company annually
requests independent service provider assurance reports on the operating eectiveness of
their internal controls.
• An overdraft facility provides a contingency for any short-term liquidity shortfall. A pre-
approval payment process is in place as part of an overall cash management process.
• 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
Risk of over-gearing the balance sheet
and creating nancial stress on the
Company.
• A maximum limit on the overdraft facility is in place.
• Any increase in overdraft or credit facility requires Board pre-approval.
Insurance
e Company through its Bye-Laws has indemnied its Directors and Ocers to the fullest extent permissible by law. During the year
the Company also purchased and maintained liability insurance for its Directors and Ocers.
Going concern
e Company’s business activities, together with the factors likely to aect 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 suciently 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 signicant 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 diversied and liquid asset base and the lack of gearing, the Directors conrm 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.
GOVERNANCE
Governance
39
40
Hansa Investment Company Limited Annual Report 31 March 2023
The Directors who served the Company during the year to 31 March 2023 are:
Richard became a Director of the
Company in June 2019. Richard has 26
years’ experience in public accounting
being partner of KPMG in Bermuda
for 19 years. He was head of the KPMG
Insurance Group in Bermuda for 15 years,
a member of the rm’s Global Insurance
Leadership Team and Global Lead Partner
for a number of large international
insurance groups listed on the New York
and London Stock Exchanges.
Richard has signicant regulatory
experience, previously advising the
Bermuda Monetary Authority and
working with clients regulated by the
PRA, FRC and FCA, as well as other
international regulators. He also has
extensive experience in risk and corporate
governance and signicant transaction
experience. Richard is based in Bermuda.
Richard also holds non-executive
directorships with Aspen Insurance
Holdings, Geneva Re and Oakley Capital
Investments.
Jonathan became Chairman of Hansa
Investment Company in June 2019. He was
a director of Hansa Trust from January
2013 until its liquidation in November
2021. He is also a partner of First Avenue
Partners, an alternatives advisory
boutique.
Jonathan qualied as a Chartered
Accountant and then joined George M.
Hill and Co. and became an authorised
dealer on the London Stock Exchange.
e rm was acquired by Wedd Durlacher
Mordaunt and Co. where Jonathan
became a partner in 1975. He was the
senior dealing partner of the rm on its
acquisition by Barclays Bank to form BZW
in 1986.
Jonathan developed BZW’s Fixed Income
business prior to becoming chief executive
of the Global Equities Business in 1991. In
1996 he became deputy chairman of BZW
and then vice chairman of Credit Suisse
First Boston (“CSFB”) in 1998 on their
acquisition of most of BZW’s businesses.
He focused on the development of CSFB’s
Middle Eastern business. He retired from
CSFB in February 2007.
Jonathan Davie
Chairman
Simona Heidempergher
Remuneration Committee Chair
Richard Lightowler
Audit Committee Chairman
Simona became a Director of the
Company in June 2019. Simona has
extensive experience as an executive
and non-executive director in a
range of companies, including listed
companies, investment funds and
research organisations, across multiple
jurisdictions.
For the past 20 years, she has been
a director of Merin Capital, an
established European privately owned
investment company. Prior to this she
had roles as VP Investments at CDB
Web tech, a listed investment vehicle,
and as research associate at Heidrick
& Struggles, a leading executive-level
search and leadership consultancy rm
and as project coordinator at Ambrosetti
Group, an Italian consulting company.
Currently, Simona is the chair of the board
of directors of the Stramongate Group, a
Luxembourg public company, director of
e European Smaller Companies Trust,
a Janus Henderson Asset Management
Investment Trust listed on the London
Stock Exchange and director of Industrie
Saleri Italo S.p.A. an Italian private
company in the automotive supplier
sector.
The Board of Directors
41
GOVERNANCE
William Salomon Nadya Wells
Nominations Committee Chair and
Senior Independent Director
William became a Director of the
Company in June 2019. He was a Director
of Hansa Trust from 1999 until its
liquidation in November 2021. He has a
signicant, long standing, investment in
the Company.
William’s experience in investments and
nance is important to the Board in
developing and monitoring investments
in special investment themes and in the
Company’s strategic investment through
Ocean Wilsons Holdings Limited in
Wilson Sons.
William is the senior partner of Hansa
Capital Partners LLP, the Portfolio
Manager and Additional Administrative
Services Provider, deputy chairman of
Ocean Wilsons Holdings Limited and a
director of its Brazilian listed subsidiary
Wilson Sons Holdings Brasil S.A.. He is
also a shareholder representative on the
investment advisory committee for DV4
Ltd (“DV4”). William was formerly the vice
chairman of Close Asset Management
Limited and chairman of the merchant
bank Rea Brothers PLC.
Nadya became a Director of the Company
in June 2019. Nadya has 28 years’
experience in emerging and frontier
markets as a long-term investor and
corporate governance specialist. She
spent 13 years as portfolio manager with
the Capital Group investing in Global
Emerging Markets and prior to those ve
years with INVESCO Asset Management
Limited, investing in public and private
equity managing a closed ended fund.
She started her career in management
consultancy with Ernst & Young.
She holds a non-executive directorship
at Baring Emerging EMEA Opportunities
plc where she is senior independent
director. Nadya is an independent non-
executive director on the boards of various
Luxembourg SICAVs managed by large
global asset managers. She also works
in academia conducting research and
consulting in the public and private sector
on nancing in Global Health. She holds
an MBA from INSEAD, France.
Board members are selected
based on their individual and
complementary skills and experience
and their ability to commit suicient
time to drive the Company’s
success. All Directors will retire at
each AGM and oer themselves
for consideration for re-election.
The Board recommends the
re-appointment of each of the
Directors, based on their continuing
contribution to the Company
and its shareholders. The service
contracts between the Company
and each of the Directors do not
allow for any compensation payment
in the event of loss of oice.
42
Hansa Investment Company Limited Annual Report 31 March 2023
is section explains how the Board has organised the Company
and seeks to deliver its objectives.
Board committees and roles
e Directors consider that, in order to full their responsibilities
as the Directors of the Company, they should all be members of
every sub-committee where possible. Where a Director cannot
be a member of a committee, they should attend the meetings
unless a conict exists and it would be inappropriate for them to
be present.
Audit Committee
Richard Lightowler is the Chairman of the Audit Committee.
e Audit Committee consists of all independent Directors of
the Board. e Audit Committee exists to assist the Board in
the nancial and narrative reporting of information relating
to the Company, the review of the Internal Controls and Risk
Management systems, the oversight of the Company’s annual
audit and in the liaison with, and assessment of, the Company’s
external Auditor PricewaterhouseCoopers Ltd. e Committee
meets at least twice a year – timed to review the Annual and Half-
Year Financial Statements prior to their approval and release.
e AIC Code of Corporate Governance (“the AIC Code”)
indicates that all independent Directors can be members of the
Audit Committee including, if agreed by the Board, the Chairman
of the Board. e Board is of the opinion that, particularly as the
Company has relatively few Directors, shareholders benet from
the views of all Directors. erefore, Jonathan Davie, as Chairman
of the Company, is also a member of this Committee. e Board
further acknowledges that the AIC Code states all Committee
members should be independent. erefore, William Salomon
is not a member of the Committee although attends as a non-
member. e Committee reports its recommendations to the
Board for nal approval.
See page 53 for the Audit Committee Report
Nomination Committee
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.
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 identied, the Committee is responsible for identifying and
nominating candidates to ll Board vacancies as and when they
arise.
See page 58 for the Nomination Committee Report.
Management Engagement Committee
e Committee is chaired by Jonathan Davie. All independent
members of the Board are members of the Management
Engagement Committee. e Committee has two primary roles.
Firstly, to review the functional and operational performance of
the Portfolio Manager with the Company’s investment policy.
Secondly, to review annually the performance of any other key
service providers to the Company.
e level of management fees, level of service provided and the
performance of the Portfolio Manager are reviewed on a regular
basis to ensure these remain competitive and in the best interests
of shareholders. e Board, after the annual recommendation
of this Committee, considers whether the engagement of the
Portfolio Manager is in the best interests of the shareholders.
e Committee members also carry out periodic visits to the key
service providers as well as seeking feedback on the performance
of other service providers from the Portfolio Manager in its
capacity as Additional Administrative Service Provider.
e Committee reports its recommendations to the Board for
nal approval.
Remuneration Committee
e Committee is chaired by Simona Heidempergher. All
independent members of the Board are members of the
Remuneration Committee. William Salomon attends the
Committee but is not a member. e Committee is responsible
for the broad policy for the remuneration of the Company’s
Chairman and non-executive Directors pursuant to the
Company’s Bye-Laws. e Committee takes into account all
factors which it deems necessary. When setting the remuneration
policy for Directors, the Committee reviews remuneration
trends across the wider industry, including the use of external
independent surveys, and considers the ongoing appropriateness
and relevance of the remuneration policy. e level of directors’
fees should be set at a level which attracts and retains high
calibre candidates. Fees are monitored against external
benchmarks taking specic note of each Director’s duties, time
commitments to properly full all obligations and duties and
also relative to other comparable companies in comparable
currencies. No Director sets their own individual remuneration.
e Committee reports its recommendations to the Board for
nal approval.
See page 54 for the Directors’ Remuneration Report.
Senior Independent Director (“SID”)
During the Company’s nancial year, Nadya Wells was appointed
to act as the Company’s Senior Independent Director. e SID
acts 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 when necessary.
Organisation and objectives
43
GOVERNANCE
Long-term impact of decisions – ESG matters
In the natural positive progression of HCP’s commitment to
further integrating ESG and climate relevant considerations
within its investment process, the Hanseatic Group, of which
HCP is a member, has become a signatory of the United Nations
supported Principles for Responsible Investment (“UNPRI”).
With ever-growing global concerns and developments
surrounding matters such has climate change, social inequalities
and ethical corporate strategy and governance, the Board
believes there is a communal duty for meaningful and eective
action to be taken and are committed to doing so. It is the Board’s
belief that responsible investing and a well-run sustainable
business model aids in generating superior long-term returns.
e Board is responsible for the Company’s ESG policy. In
2020, the Board adopted the Portfolio Manager’s Responsible
Investment Policy, which is applied to all Company investments
in funds and companies, in both public and private markets.
In line with the evolving nature of ESG’s integration within
nancial services, the PM continues to review and develop their
policy of responsible investing within their investment process.
is involves ensuring environmental, social and governance
factors are integrated throughout the investment management
process, including within the due diligence, decision-making and
investment monitoring processes.
As long-term investors, HCP has a natural desire to be a
responsible investor and a good corporate citizen. HCP’s approach
begins by communicating its expectations to fund and company
investments that they should take ESG issues seriously, clearly
report on them, be responsible owners and to continuously show
positive indicators of aspiring to do the right thing.
HCP does not operate an exclusionary policy, as excluding whole
sectors or countries is not a sustainable, or reasonable approach
to its investment activities. Each fund manager or company is
assessed as an individual, taking into account the sector and
country within which they operate and their direction of travel in
ESG enhancements.
HCP seeks to ensure that all investee managers and companies
are thinking longer term and that they are also thinking about
their longer-term impacts across the spectrum of their business.
is certainly includes the negatives – such as understanding
how companies are lowering their carbon emissions, ensuring
they are not using forced or child labour in their supply chains,
taking care not to deplete natural resources, or be involved
in deforestation. But it also includes the positive impacts, for
example, knowing if a company is taking advantage of the
opportunities it may have from climate change by developing
greener energies, recycling used clothing, or designing
biodegradable fabrics. HCP’s involvement with the managers and
companies is ongoing and pushes them to manage the risks and
take advantage of the opportunities in a tailored and considered
manner. A manner that reaps longer-term benets for the
Company, as well as the environment and the greater society.
Fund investments
HCP seeks to invest in funds who are responsible owners of their
investee companies, have specic consideration as to how their
investee companies manage their ESG responsibilities and seek
to engage with those company boards, if they are failing in their
duties. Where a manager is not living up to these standards, HCP
will rst seek to engage the management team and encourage
improvement. If the managers engagement is weak, or if the
communicated concerns are not suciently addressed and their
positive commitment to do so is not apparent, HCP’s ultimate
action would be to reduce current investment, exit, or not invest
in the rst place. Whilst HCP does not seek to exclude fund
managers that invest in sectors such as energy or countries
such as China, it would, however, expect such managers to
properly articulate how they operate in such areas and manage
the potential ESG considerations. HCP’s investment philosophy
favours those fund managers who are typically long-term in
their approach and seeks to invest in high-quality, well-managed
companies that are often higher-returning. As a result, although
we do not set limits, there is a natural bias away from these
companies and sectors that score less well on ESG metrics.
Company investments
When considering direct equity investments HCP seeks to ensure
that company management teams are responsible custodians
of their businesses, report clearly on ESG metrics and seek to
improve on those areas in which they are lagging.
Taskforce on Climate-Related Financial Disclosures
As a closed-ended investment company, HICL is exempt from
the annual reporting requirement to publish statements in line
with the Taskforce on Climate-Related Disclosures’ (“TCFD”)
framework of recommendations and recommended disclosures.
However, considering the Board and the PM’s approach to
responsible investing and the Company’s core investment
objective to generate superior, but sustainable, medium to
long-term growth in shareholder value, we have elected to
provide relevant information on our approach to the TCFD
recommendations.
Governance
Strong corporate governance practices are intrinsic to how the
Board operates. e Board oversees a long-term and sustainable
approach to business strategy of the Company. is in part is
done by adopting a Responsible Investment Policy, which aims to
integrate sustainability, climate-related risks and opportunities,
social responsibility and strong governance into the Company’s
investment process. is is consistent with HCP’s approach to its
ESG assessment of fund managers and company investments.
Risk Management
Climate-related risks within the Company’s investments are
identied, assessed and managed by HCP as the Portfolio
Manager. As part of the portfolio risk management and
monitoring process, HCP’s combines long-term and purpose-
driven engagement with underlying fund managers and
companies, active voting and setting a clear escalation
framework. is approach aims to identify and address
climate-related issues and minimise systemic risks that may
impact the assets within the portfolio. Engagement can take
several forms, including regular and ad hoc meetings with
management, formal written correspondence, or the Portfolio
Manager participating in relevant shareholder votes for current
investments.
44
Hansa Investment Company Limited Annual Report 31 March 2023
Strategy
e Company’s strategic objective is to grow its net assets
over the medium to long-term by investing in a diversied 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 specic
targeted metrics. e 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. e 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. e 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. is
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, sta wellbeing and the preservation of the environment
and communities they operate in. is continued focus was
awarded through the “Great Place to Work” certication, 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
sta 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.
eir commitment to maintaining an increasingly safe working
environment is reected 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. is 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 oset and charitable support
Each year, there are a number of ights for individual Directors
to attend Board meetings in Bermuda. erefore, the Board has
elected to oset the carbon impact of its travel on behalf of the
business though a relationship with Greeneet Australia (www.
greeneet.com.au). is year, circa 237 tonnes of carbon dioxide
has been oset. Greeneet Australia runs a tree planting oset
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,
acidication of the sea, pollution and invasive species. But these
threats are compounded by overshing, 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 sh stocks are fully or overexploited and 90% of
large, predatory sh are gone. Overshing 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 overshing and
supporting marine conservation projects. e ocean is the
world’s largest carbon sink: by combating overshing 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
beneting us all and, in particular, maritime communities like
Bermuda. e 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”)
e 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. e Board has
further estimated the emissions associated with the ights to be
in the region of 237 tonnes of CO2 in any ‘normal’ year.
Social, community, human rights, employee
responsibilities policy
e Company does not have any employees. e 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.
45
GOVERNANCE
Service providers
Service Provider Policy
e Company has no employees and operates through third
party service providers. e Board has contractually delegated
to external organisations the management of the investment
portfolio, the custodial services which include safeguarding of the
assets and the day-to-day accounting and company secretarial
requirements. Each of these contracts is only entered into after
proper consideration of the quality and cost of services, which are
regularly reviewed and monitored.
e key service provider relationship to the Company is Hansa
Capital Partners as the Portfolio Manager and Additional
Administrative Services Provider (“AASP”) to the Company.
e Board carries out the following activities as part of its
oversight of third party service providers:
Monitors performance, costs and commitment to a
successfully implemented controls environment
e Board, at its regular meetings, reviews reports prepared
by both the Portfolio Manager and the Administrator, which
enable it to monitor the performance and costs of the third-
party suppliers to the Company. e Additional Administrative
Services Provider has an ongoing dialogue with each provider to
monitor their processes and systems and, in addition, members
of the Board meet with key providers at least annually to discuss
performance.
Monitors Portfolio Manager performance
e Board reviews reports prepared by the Portfolio Manager at
its regular meetings, which enables it to monitor the investment
performance, risks and returns. e Portfolio Manager attends
each Board meeting where there is an active dialogue on
performance, process, risks and opportunities and governance
matters.
e Board identies key controls and regularly monitors them
through compliance reports on control eectiveness.
Determines investment strategy, guidelines and restrictions
e Board determines the investment strategy in conjunction
with the Portfolio Manager. e strategy is monitored regularly
with adjustments made as required.
e Board issues formal investment guidelines and restrictions;
compliance with these is reported by the Portfolio Manager’s
compliance ocer quarterly and is also monitored independently
by the Administrator.
Determines gearing levels and capital preservation through
the use of hedging instruments
e Board, taking account of advice from the Portfolio Manager,
determines the maximum level of borrowings the Company
will undertake. e Company will not invest in derivatives for
speculative gain, but may use derivatives for ecient portfolio
management and hedging purposes.
The providers
Portfolio Manager & Additional Administrative Services
Provider
Hansa Capital Partners LLP is the Portfolio Manager for the
Company. It is responsible for all assets in the portfolio, other
than the Company’s investment in OWHL. e Board is in regular
contact with the investment management team at HCP which
is led by Alec Letcheld. Additionally, Alec Letcheld is invited
to quarterly meetings of the Board to formally present portfolio
updates and discuss market trends. e Portfolio Manager’s
detailed review of the year can be found on page 8.
HCP charges a portfolio management fee at an annual rate of
1% of the net assets of the Company (after any borrowings),
after deducting the value of the investment in OWHL, on which
no fee is payable. e Portfolio Manager has charged £2,824,000
for the year ended 31 March 2023 (year ended 31 March 2022:
£3,010,000). Hanseatic Asset Management LBG, a company
connected to Hansa Capital Partners and which is also the
AIFM, separately charges an investment management fee to the
investment subsidiary of OWHL.
e terms of the Portfolio Management Agreement permit either
party to terminate the agreement by giving to the other not less
than 12 months’ notice, or such shorter period as is mutually
acceptable. ere is no agreement between the Company and
the Portfolio Manager concerning compensation in respect to
the termination of the agreement. In its annual assessment of the
Portfolio Manager, the Board concluded that, because of the skills
and experience of the management team it is in the best interest
of shareholders that the Portfolio Manager remains in place
under the present terms. Details of the fees paid to the Portfolio
Manager can be found in Note 3 to the Financial Statements.
HCP also acts as the AASP to the Company. is role ensures a
number of the day-to-day processes for the Company are carried
out, as well as providing oversight of, and a liaison between, a
number of the Company’s service providers and the Company
itself. HCP is paid £115,000 per annum for this service (year
ended 31 March 2022: £115,000).
Auditor
e Company’s Auditor is PricewaterhouseCoopers Ltd, a
Bermudan registered rm. e Board is satised with the quality
of work performed by PwC. e reappointment of PwC as Auditor
to the Company will be proposed at the forthcoming AGM.
Auditor independence rules restrict the amount and type of non-
audit related work that can be performed by a company’s Auditor.
Any non-audit related work must be pre-approved by the Board.
PwC did not provide any non-audit services in the year.
Company Secretary
e Company has engaged Conyers Corporate Services
(Bermuda) Ltd (“Conyers”) as its Company Secretary. During the
year to 31 March 2023, Conyers has charged £38,275 (year ended
31 March 2022: £32,713).
46
Hansa Investment Company Limited Annual Report 31 March 2023
Alternative Investment Fund Manager
As a Bermudan resident, the Company is dened 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. e Company appointed
Hanseatic Asset Management LBG, with eect from 29 August
2019, to act as its AIFM, with responsibilities for the Portfolio
Management and Risk Management functions. e AIFM has
delegated the provision of Portfolio Management services to
Hansa Capital Partners LLP but remains responsible for the Risk
Management function. e AIFM does not charge a direct fee
for its services, although it does recharge any third-party fees
incurred.
Administrator
e Company has engaged Maitland Administration Services
Limited as its Administrator. e 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
e 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
e Company’s Registrar is Link Market Services (Guernsey)
Limited (“Link”). e 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”). e Directors
thank Link for their work with the Company and its predecessor,
Hansa Trust, and look forward to working with Computershare.
47
GOVERNANCE
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 eect 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 conrm 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 specic 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.
Gender Diversity
Number of
Board
members
Percentage
of the
Board
Number of
senior
positions
on the
Board
1
Men 3 60% 2
Women 2 40% 1
Other - - -
Not specified/prefer not to say - - -
Report of the Directors
48
Hansa Investment Company Limited Annual Report 31 March 2023
Ethnic Diversity
Number of
Board
members
Percentage
of the
Board
Number of
senior
positions
on the
Board
1
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 denes 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 Prole 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
49
GOVERNANCE
Corporate governance code
Internal Controls
e UK Corporate Governance Code (“UK Code”), requires the
directors of UK listed companies to review the eectiveness of
the company’s risk management and system of internal controls
on an annual basis. e Board is committed to sound corporate
governance, robust risk management processes and eective
systems of internal controls. e Board reviews and considers
the eectiveness of internal controls regularly and review
exception reporting at least quarterly. e Directors, through the
procedures outlined below, keep the system of risk management
and internal controls under review.
e Board recognises its ultimate responsibility for the
Company’s system of risk management and internal controls
and for monitoring their eectiveness. In order to perform
this responsibility the Board receives regular reports on all
aspects of risk management and internal control from the
Company’s service providers (including nancial, operational and
compliance controls, risk management and relationships with
other service providers); the Board will instigate necessary action
in response to any signicant failings or weaknesses identied by
these reports.
Financial Reporting
e Board has a responsibility to present a fair, balanced and
understandable assessment of annual, half-year and other price
sensitive public reports and reports to regulators, as well as
to provide information required to be presented by statutory
requirements. To ensure this responsibility is fullled, all such
reports are reviewed and approved by the Board prior to their
issue.
e Board conrms there have been no specic events since 31
March 2023, of which the Board is aware, which would have a
material impact on the Company.
Compliance with the provisions of the UK
Corporate Governance Code
e Board of Hansa Investment Company has considered
the Principles and Provisions of the AIC Code. e AIC Code
addresses the Principles and Provisions set out in the UK Code,
as well as setting out additional Provisions on issues that are of
specic relevance to the Company.
e Board considers that reporting against the Principles and
Provisions of the AIC Code, which has been endorsed by the FRC
in the UK, provides more relevant information to shareholders.
e Company has complied with the Principles and Provisions of
the AIC Code.
e AIC Code is available on the AIC website (www.theaic.
co.uk). It includes an explanation of how the AIC Code adapts the
Principles and Provisions set out in the UK Code to make them
relevant for investment companies.
Association of Investment Companies Code
e AIC Code has 17 principles. e Company sets out below
how it has complied with the Principles and Provisions:
Board Leadership and Purpose
A. A successful company is led by an eective board, whose
role is to promote the long-term sustainable success
of the company, generating value for shareholders and
contributing to wider society.
e Board is formed of ve Directors with a complementary
mix of skills and experience to lead the Company. Two
Directors served on the board of the Company’s predecessor,
Hansa Trust, whilst three Directors were appointed at
the formation of HICL. All have signicant and relevant
experience. All Directors are focused on generating long-term
value for shareholders and there is signicant share
ownership in the Company’s shares amongst the Directors.
e Board engages at least quarterly with its Portfolio
Manager challenging performance, process, risk, cost and
strategy.
B. The board should establish the company’s purpose,
values and strategy, and satisfy itself that these and its
culture are aligned. All directors must act with integrity,
lead by example and promote the desired culture.
e Board believes that the Company’s purpose, values and
strategy are clear: to create long-term growth of shareholder
value. e Board fosters a culture that is open to new ideas
and is able to inuence its service providers through eective
challenge and regular robust review of performance. e
Board sets the standard for openness and professionalism
that the Company’s key service providers follow. In particular,
there is regular interaction between the Board and the
Company’s Portfolio Manager and also the AASP for day to
day liaison with other service providers.
C. The board should ensure that the necessary resources
are in place for the company to meet its objectives and
measure performance against them. The board should
also establish a framework of prudent and eective
controls, which enable risk to be assessed and managed.
e Board, through the work of its Committees and regular
Board meetings ensures regular measurement against the
Company’s objectives. e adequacy and eectiveness of
internal controls is considered at each Board meeting.
D. In order for the company to meet its responsibilities to
shareholders and stakeholders, the board should ensure
eective engagement with, and encourage participation
from, these parties.
e Board considers its stakeholders to be its shareholders
and its key service providers. e Board is committed to
transparent reporting in all its communications. It actively
engages with shareholders via an annual general meeting,
periodic shareholder presentations, the next of which will
be held on 27 September 2023, quarterly factsheets, website
Corporate Governance Report
50
Hansa Investment Company Limited Annual Report 31 March 2023
communication and with feedback also received through
outreach programmes by the Company’s broker and Portfolio
Manager, as well as direct one-to-one correspondence. e
Board engages with other key service providers through the
operations of its AASP on a day to day basis, as well as via at
least one annual meeting with each to ensure accountability
and value-added performance. e Board has also
established the role of Senior Independent Director. e SID
acts 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 when necessary.
Principle E is omitted by the AIC Code.
Division of Responsibilities
F. The chair leads the board and is responsible for its
overall eectiveness in directing the company. They
should demonstrate objective judgement throughout their
tenure and promote a culture of openness and debate. In
addition, the chair facilitates constructive board relations
and the eective contribution of all non-executive
directors, and ensures that directors receive accurate,
timely and clear information.
e Chairman is Jonathan Davie. e Chairman promotes
and encourages active participation from all Directors at
Board meetings. Further, whilst adhering to membership
guidelines, sub-committees also seek to include as many
Directors as possible to ensure a broad range of views. All
Directors receive regular monthly and quarterly information
prepared by the Portfolio Manager and Administrator, as well
as portfolio performance presentations from the Portfolio
Manager.
G. The board should consist of an appropriate combination
of directors (and, in particular, independent non-
executive directors) such that no one individual or small
group of individuals dominates the board’s decision
making.
e Board consists of ve Directors. All have a nancial
background but each also brings individual specialisms and
experience that are complimentary. eir biographies are
noted earlier on in the Report. Four Directors are deemed
independent. e fth, William Salomon, is the Senior
Partner of the Company’s Portfolio Manager and, therefore, is
deemed non-independent. All Directors are actively involved
in decisions and committees unless conicts exist which
preclude this. Accordingly, Mr Salomon does not participate
in the evaluation of the performance of the Portfolio
Manager due to his role as senior partner of that rm. Nor
does he participate in decisions regarding the Company’s
largest asset (by value) OWHL, due to him being a director
of that company. Finally, Mr Salomon is not a member of
the Audit, Nominations or Remuneration Committees due
to his non-independent status, although he does attend
meetings of those Committees. e culture of open and
honest communication and forthright discussion means no
individual or small group dominate decision making.
H. Non-executive directors should have suicient time to
meet their board responsibilities. They should provide
constructive challenge, strategic guidance, oer
specialist advice and hold third party service providers to
account.
e Directors conrm they have sucient time to meet their
responsibilities. Directors consult with the Company before
accepting other appointments, to conrm capacity to do
so and that no conict exists. In considering appointments
and potential conicts of interests the Board considers
the available time each Director has to commit to the
Company. A formal calendar exists for the Board meetings
and sub-committees. Ad-hoc meetings may be arranged
without advance materials for time-sensitive matters. e
Portfolio Manager and AASP report to scheduled Board
meetings, giving the Directors the opportunity to challenge
performance, raise issues and oer guidance.
I. The board, supported by the company secretary, should
ensure that it has the policies, processes, information,
time and resources it needs in order to function
eectively and eiciently.
e Company Secretary and AASP support the Board
in identifying and monitoring all governance matters.
Additionally, Directors are able to consult external
professional advisors to assist them in the performance
of their duties as and when required. Board reporting and
materials are rened on an ongoing basis.
Composition, succession and evaluation
J. Appointments to the board should be subject to a
formal, rigorous and transparent procedure, and an
eective succession plan should be maintained. Both
appointments and succession plans should be based
on merit and objective criteria and, within this context,
should promote diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths.
e Board has appointed a Nominations Committee chaired
by Nadya Wells. e Nominations Committee conducts
a formal due diligence process on all appointments and
considers annually the continued suitability and performance
of directors. e Company believes a diverse Board brings
many benets and, as such, there is no restriction placed on
Board membership. Inclusivity, diversity, variety of experience
and personal strengths are all incorporated in the decision
making for director selection and succession planning.
K. The board and its committees should have a combination
of skills, experience and knowledge. Consideration
should be given to the length of service of the board as a
whole and membership regularly refreshed.
e Directors have a broad range of backgrounds including
investment management, nance and banking as well
as operational experience. Biographies of all Directors
are shown earlier on in the Report. Each director retires
and is subject to re-election at the AGM. e decision to
propose directors for Nomination at the AGM is made by
the Nomination Committee. e Nominations Committee
is tasked with maintaining a broad range of skills and
experiences at times of succession.
51
GOVERNANCE
L. Annual evaluation of the board should consider its
composition, diversity and how eectively members
work together to achieve objectives. Individual evaluation
should demonstrate whether each director continues to
contribute eectively.
e Nominations Committee is responsible for the ongoing
consideration of Board composition and to identify any
skills gap, now or in the future. e Nomination Committee
considers Board eectiveness annually.
Audit, risk and internal control
M. The board should establish formal and transparent
policies and procedures to ensure the independence and
eectiveness of external audit functions and satisfy itself
on the integrity of financial and narrative statements.
e Board has specically delegated the appointment and
monitoring of the Company’s external Auditor to its Audit
Committee. e Company’s Auditor was formally appointed in
November 2019. e tender process was led by the Chairman
of the Audit Committee. e Audit Committee considers the
independence and eectiveness of the external Auditor at
least annually. e Company’s Auditor does not provide other
services to the Company. e Company rigorously follows
policy and procedure to ensure eectiveness of the external
audit and integrity of nancial reporting. Refer also to the
Audit Committee Report.
N. The board should present a fair, balanced and
understandable assessment of the company’s position
and prospects.
e Board considers and approves all relevant shareholder
communications. e Annual and Half-Year Reports are
reviewed by the Board to ensure they present a fair and
balanced view including commentary on going concern
and long-term viability. e Audit Committee considers the
fairness of the Financial Statements before recommending
them to the Board for approval.
e Annual and Half-Year Reports provide fair, balanced and
understandable commentary on the Company’s performance
and prospects.
O. The board should establish procedures to manage risk,
oversee the internal control framework, and determine
the nature and extent of the principal risks the company
is willing to take in order to achieve its long-term strategic
objectives.
Principal risks are identied by the Board and risk appetite
established against these risks. Day to day risk management
is undertaken by the Portfolio Manager and AASP within
the parameters established by the Board. e Board meets
with the Portfolio Manager at each scheduled Board meeting
where there is opportunity to discuss particular aspects
of the portfolio and associated risks. Operational risk and
compliance reporting are also regularly discussed by the
Board. Emerging risks are monitored and incorporated into
the risk appetite framework as they arise.
Remuneration
P. Remuneration policies and practices should be designed
to support strategy and promote long-term sustainable
success.
e remuneration of Directors is overseen by the
Remuneration Committee, chaired by Simona
Heidempergher. e Directors each receive a xed annual
fee and do not receive any additional element based on
performance of the Company. Additionally, Directors oer
themselves annually for re-election at the Company’s AGM.
Q. A formal and transparent procedure for developing policy
on remuneration should be established. No director
should be involved in deciding their own remuneration
outcome.
e Directors’ Remuneration Report notes that each Director
is paid a xed fee representative of their roles and additional
responsibilities on the Board. is fee level is reviewed
by the Remuneration Committee annually considering
performance, time commitments and market conditions.
Recommendations are made to the Board for approval.
Further detail is provided in the Remuneration Committee
Report.
R. Directors should exercise independent judgement and
discretion when authorising remuneration outcomes,
taking account of company and individual performance,
and wider circumstances.
Performance, individual contribution and market conditions
are all considered when setting directors’ fees.
Compliance with The Financial Conduct Authority
Listing Rules
e Directors are responsible for ensuring that:
• Adequate accounting records are kept, that are sucient to
show and explain the Company’s transactions and disclose
with reasonable accuracy at any time the nancial position
of the Company and enable them to ensure that the Financial
Statements are consistent with the relevant requirements
under the UK Companies Act 2006.
• e assets of the Company are safeguarded; and for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
• e Report of the Directors and other information included in
the Annual Report is prepared in accordance with Company
Law in the UK. e Directors are also responsible for ensuring
the Annual Report includes information required by the Listing
Rules of the FCA.
• e Company has eective internal control systems, designed
to ensure that adequate accounting records are maintained;
and that nancial information on which the business decisions
are made, which is issued for publication, is reliable. Such a
system of internal control can provide only reasonable, but not
absolute, assurance against material misstatement or loss.
• e Company Financial Statements for each nancial year are
prepared in accordance with International Financial Reporting
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 satised they give a true and fair
view of the state of aairs and prot or loss of the Company for
that period.
52
Hansa Investment Company Limited Annual Report 31 March 2023
In preparing these Financial Statements, the Directors are
required to:
• select suitable accounting policies and apply them
consistently;
• make judgements and estimates that are reasonable and
prudent;
• state whether they have been prepared in accordance with
International Financial Reporting Standards; and
• prepare the Financial Statements on the going concern
basis, unless it is inappropriate to presume the Company will
continue in business.
Under the FCA Listing Rules and the UK Code, the Board is
responsible for:
• disclosing how it has applied the principles and complied with
the provisions of the AIC Code and, thereby, the UK Code, or
where not, to explain the reasons for divergence.
• reviewing the eectiveness of the Company’s systems of risk
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
and dissemination of the Financial Statements may dier from
legislation in their own jurisdictions.
Responsibility statement
e Directors conrm that:
• e Financial Statements are prepared in accordance with
applicable international accounting standards and present
fairly, in all material respects, the nancial position of Hansa
Investment Company.
• e Strategic Report, including the Chairman’s Statement
and the Report of the Directors includes a fair review of the
development and performance of the business and the position
of the Company, together with a description of the principal
risks and uncertainties it faces.
e Directors consider the Annual Report and Financial
Statements, taken as a whole, are fair, balanced and
understandable. Further commentary demonstrating the
Company’s performance, business model and strategy has been
included within the Annual Report.
For and on behalf of the Board
Jonathan Davie
26 June 2023
53
GOVERNANCE
e Audit Committee comprises solely independent Directors,
as required by the AIC Code and endorsed by the FRC. It is
chaired by Richard Lightowler. Given the size of the Board and
the range of experience they bring, all non-committee Directors
are invited to attend the Audit Committee meetings. However,
only the independent member Directors are able to vote.
Recommendations of the Audit Committee are brought before
the whole Board for discussion and ratication.
e Audit Committee ensures fair, balanced and understandable
reporting of Company results.
e principal roles of the Audit Committee are to ensure that:
• the integrity of nancial reporting within the Annual and
Half-Year Reports taken as a whole are fair, balanced and
understandable and provide information necessary for
shareholders to assess the Company’s performance, business
model and strategy;
• the independence, objectivity and eectiveness of the external
Auditor is maintained and monitored. e Committee also
reviews the external Auditor performance in terms of quality
and value;
• the nancial reporting internal controls system of the
Company are adequate and eective.
Financial Reporting and Internal Controls
In discharging its duties and, in particular, matters relating to the
approval of the Annual Report, Half-Year Report and the review
of the Company’s internal controls, the Committee considers
reports and presentations made by the Company’s Auditor,
Administrator, Company Secretary, Additional Administrative
Services Provider (including those of its Compliance Ocer) and
Legal Advisers.
In its review of the Financial Statements, the Committee pays
particular attention to the ownership of assets, the valuations of
the portfolio and recognition of income. In this regard we receive
regular reporting from the Portfolio Manager and AASP, including
reports on the eectiveness of internal controls in these areas.
In addition, the Committee discusses with, and receives reports
from, the Auditor on the nature and scope of work performed on
valuation and ownership of assets and on income recognition.
e Company’s Custodian conrms title of all assets in its
custody. In its consideration of valuations, the Committee notes
that 75% of the Investment portfolio by value is held in assets
that are either traded or listed on an exchange or are cash.
Further, of the remaining 25% unquoted fund investments,
the majority primarily hold traded securities. Valuations for
these funds are supplied by third party managers. e Audit
Committee recognises that 57% of the total portfolio assets are
Level 1 and 40% are Level 2 securities. Given the signicant level
of externally valued assets, the Committee is satised with the
valuation process. ere is very limited management judgement
in determining valuations. Revenue recognition does not involve
signicant judgement or the use of estimates.
e Audit Committee also considers the potential need for an
internal audit function on an annual basis, recognising the FRC
guidance on proportionality. e Audit Committee considers
internal compliance testing at the Administrator and Portfolio
Manager to be suciently independent and robust to negate the
need for a standalone internal audit function.
No material control weaknesses or incidents of potential fraud
were identied. e Company’s service providers implement
clear whistleblowing, anti-bribery and corruption policies. e
Company received direct reporting from service providers on
internal controls and audit reports on their internal controls.
e Committee is authorised by the Board to investigate any
activity within its terms of reference, to seek any information it
requires from any ocer or service provider to the Company, to
obtain outside legal or other independent professional advice and
to secure the attendance of third parties with relevant experience
and expertise if it considers this necessary.
e Chairman of the Audit Committee formally reports to the
Board following each Audit Committee meeting and on other
occasions as requested by the Board.
e Audit Committee conrmed to the Board that the Annual
Report, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to
assess the Company’s position and performance, business model
and strategy.
Audit: Independence and quality
e Audit Committee considers the external Auditor’s
independence, objectivity, scope of work engagement team
experience, compliance with relevant ethical and professional
standards and overall quality of service through a process of
feedback from the Company advisors, including the AASP, the
Portfolio Manager and direct discussion with the Auditor. e
Committee also meets with the Auditor in an executive session at
least annually. e current audit partner is Scott Watson-Brown
who has led the audit since the Company’s inception in June
2019 and the appointment of PricewaterhouseCoopers Ltd as its
Auditor.
Auditors’ remuneration and terms of engagement are approved
by the Audit Committee. Any non-audit services must be pre-
approved by the Audit Committee to ensure objectivity and
independence of the audit is not compromised. No non-audit
services are provided by PricewaterhouseCoopers Ltd to the
Company. Further information on fees paid to the Auditor is
contained in “Other Expenses” within Note 4 of the Financial
Statements.
For and on behalf of the Audit Committee.
Richard Lightowler
Audit Committee Chairman
26 June 2023
Audit Committee Report
54
Hansa Investment Company Limited Annual Report 31 March 2023
Annual statement
e Company has ve non-executive Directors. e Board has appointed a Remuneration Committee. e Chairman of this Committee
is Simona Heidempergher. 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
e Board’s policy is that the remuneration of non-executive Directors should be a xed-fee only. is fee should reect the experience
of each director, time commitment required to full the role, market conditions, nancial and reputational risks undertaken and
additional responsibilities. e remuneration does not include a performance related element and Directors do not receive bonuses,
share options, pensions or long-term incentive schemes. e 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. is 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. e increasing demands being placed on all
NEDs by shareholders, regulators and markets are also factored.
e 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.
e maximum is set as a USD amount. e equivalent is £325,203 if translated at the applicable rate on 31 March 2023. e 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. e increase is for two reasons:
• During the year, the Remuneration Committee has assessed, and increased, Director remuneration for the rst 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) eective 1 October 2022. is 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 sucient 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 xed term. e terms of
appointment provide that a Director shall retire and be subject to re-election at the rst AGM after appointment. e Board has
decided each Director will retire annually at the AGM and seek re-election as appropriate. e 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 oce. ere are no agreements between the Company and its Directors concerning compensation for loss of oce.
Policy for notice periods
e 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. e Board consider this is sucient notice to ensure an orderly hand over between the parties.
Shareholders’ views on remuneration policy
e formal views of unconnected shareholders have not been sought in the preparation of this policy.
Employees
e Company does not have any employees, only non-executive Directors.
Annual report on remuneration
Directors’ Emoluments (Audited)
e 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. erefore, 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.
Directors’ Remuneration Report
55
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
fee
$000
2023
fee
£000
2022
fee
$000
2022
fee
£000
Jonathan Davie (Chairman) 85 72 70 53
Simona Heidempergher 65 55 50 38
Richard Lightowler 75 63 60 46
William Salomon
3
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 eective 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
shares
voted
% of
votes
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 specic rules on Directors’ shareholdings.
e 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
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.
56
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:
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.
Board
1
Strategy
Day
Audit
Committee
Remuneration
Committee
Nomination
Committee
Management
Engagement
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
William Salomon
2
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.
%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
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
57
GOVERNANCE
On behalf of the Board, I conrm 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
58
Hansa Investment Company Limited Annual Report 31 March 2023
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 identied, 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 benets 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 oer 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 specic 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 eectively.
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 oered 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
Nominations Committee Report
FINANCIAL STATEMENTS
Financial
Statements
59
60
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 signicant 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 identied 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 sucient 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 fullled 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.
In addition to determining materiality, amongst other factors, the following were assessed in
designing our audit:
• the risk of material misstatement in the nancial statements
• signicant accounting estimates
• the risk of management override of internal controls
• Valuation and existence of investments
• Accuracy, occurrence and completeness of investment income
Materiality
Key audit
matters
Audit
scope
61
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
signicant 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 sucient 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 inuenced 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 inuence 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 eect 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
Rationale for the materiality benchmark applied
is benchmark was applied as a generally accepted audit practice for
investment company audits.
We agreed with the Audit Committee that we would report to them misstatements identied 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 signicance 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
Refer to notes 1(c) and 8 to the financial statements
for disclosures of related accounting policies and
balances.
e investment portfolio at the year end was comprised
of listed equity investments valued at £264 million (75%)
and unquoted investments valued at £90 million (25%).
We focused on the existence of both listed and unquoted
investments, as listed investments comprise the majority
of the investments balance and unquoted investments
are, individually and in aggregate, material to the nancial
statements.
We focused on the valuation of listed equity investments
because listed investments represent the principal
element of the net asset value as disclosed on the Balance
Sheet in the nancial statements. We also focused on the
valuation of the unquoted investments as the valuation of
these investments is material to the Company.
Listed equity investments: We tested the existence of the listed
investment portfolio by agreeing the holdings for investments to an
independent custodian conrmation.
We tested the valuation of the listed investments by agreeing the prices
used in the valuation to independent third-party sources.
Unquoted investments: We understood and evaluated the controls
around the pricing of unquoted investments including the nal approval
of the valuation by the Manager and the Board.
• We obtained direct conrmation of the existence of investments
held and the price from each fund administrator. We used these two
key inputs to recalculate the valuation applied by management. is
recalculation was performed for 100% of the unquoted investments.
• We obtained an understanding of the underlying methodology applied
to each unquoted investment through review of their most recently
available audited nancial statements to evaluate whether it was
based on fair value.
Based on the procedures detailed above, no misstatements were
identied which required reporting to those charged with governance.
62
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
investment income
Refer to notes 1(e) and 2 to the financial statements
for disclosures of related accounting policies and
balances.
Investment income consists of dividend income of £6.9
million. As part of our procedures, we focused on the
accuracy, occurrence and completeness of investment
income recognition as incomplete or inaccurate income
could have a material impact on the Company’s net
asset value and dividend cover. We also focused on the
accounting policy for income recognition along with its
allocation and presentation in the Income Statement
as set out in the requirements of e Association of
Investment Companies Statement of Recommended
Practice (the “AIC SORP”) as incorrect application could
indicate a misstatement in income recognition.
We assessed the accounting policy for investment income recognition
for compliance with accounting standards and the AIC SORP and
performed testing to evaluate whether income had been accounted for
in accordance with this stated accounting policy. We found that the
accounting policies implemented were in accordance with accounting
standards and the AIC SORP, and that income has been accounted for in
accordance with the stated accounting policy.
We tested the accuracy of dividend receipts by agreeing the dividend
rates from investments to independent market data.
To test for completeness, we tested, for a sample of investment holdings
in the portfolio, that all dividends declared in the market by investment
holdings had been recorded. We tested occurrence by conrming that
all dividends recorded in the period had been declared in the market by
investment holdings, and we traced a sample of dividends received to
bank statements.
We also tested the allocation and presentation of investment income
between the revenue and capital return columns of the Income
Statement in line with the requirements set out in the AIC SORP by
determining reasons behind dividend distributions.
Based on the procedures detailed above we did not identify any
misstatements which required reporting to those charged with
governance
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 identied 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 specied, 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 inuence the economic decisions of users taken on the basis of these nancial statements.
63
FINANCIAL STATEMENTS
As part of an audit in accordance with ISAs, we exercise
professional judgment and maintain professional scepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the
nancial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is sucient and appropriate to provide
a basis for our opinion. e risk of not detecting a material
misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal control.
• Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an
opinion on the eectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of the
going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast signicant doubt
on the Company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures
in the 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
report. However, future events or conditions may cause the
Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the
nancial statements, including the disclosures, and whether
the nancial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the
audit and signicant audit ndings, including any signicant
deciencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with
governance, we determine those matters that were of most
signicance in the audit of the nancial statements of the current
period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public
interest benets of such communication.
e engagement partner on the audit resulting in this
independent auditor’s report is Scott Watson-Brown.
PricewaterhouseCoopers Ltd.
Chartered Professional Accountants
Hamilton, Bermuda
26 June 2023
64
Hansa Investment Company Limited Annual Report 31 March 2023
Year ended
31 March
2023
Year ended
31 March
2022
Note
Revenue
£000
Capital
£000
Total
£000
Revenue
£000
Capital
£000
Total
£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.
Income Statement
For the year ended 31 March 2023
65
FINANCIAL STATEMENTS
Note
31 March
2023
£000
31 March
2022
£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.
Balance Sheet
As at 31 March 2023
66
Hansa Investment Company Limited Annual Report 31 March 2023
For the year ended 31 March 2023 Note
Share
capital
£000
Contributed
surplus
reserve
£000
Retained
earnings
£000
Total
£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
For the year ended 31 March 2022 Note
Share
capital
£000
Contributed
surplus
reserve
£000
Retained
earnings
£000
Total
£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.
Statement of Changes in Equity
67
FINANCIAL STATEMENTS
Note
Year ended
31 March
2023
£000
Year ended
31 March
2022
£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
Eect 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.
Cash Flow Statement
For the year ended 31 March 2023
68
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 oice
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.
69
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 dierences 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 dierent, 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 eective:
• Amendments to IAS1 ‘Classification of liabilities as current or non-current’ (eective for accounting periods beginning on or after 1
January 2023).
• IFRS 17, ‘Insurance contracts’ (eective for accounting periods beginning on or after 1 January 2023).
• Amendments to IAS 8 ‘Definition of Accounting Estimates’ (eective for accounting periods on or after 1 January 2023)
• Amendments to IAS 1 and IFRS Practice Statement 2 ‘Disclosure of Accounting Policies’ (eective 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’ (eective 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 (eective 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.
70
Hansa Investment Company Limited Annual Report 31 March 2023
2 Investment income
Revenue
Year ended
31 March
Revenue
2023
£000
Revenue
Year ended
31 March
Revenue
2022
£000
Income from quoted investments
Dividends 6,892 5,904
Total income 6,892 5,904
3 Portfolio management fee
Revenue
Year ended
31 March
2023
£000
Revenue
Year ended
31 March
2022
£000
Portfolio management fee 2,824 3,010
Total management fee 2,824 3,010
4 Other expenses
Revenue
Year ended
31 March
2023
£000
Revenue
Year ended
31 March
2022
£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
71
FINANCIAL STATEMENTS
5 Finance costs
Revenue
Year ended
31 March
2023
£000
Revenue
Year ended
31 March
2022
£000
Interest payable 1 -
Total finance costs 1 -
6 Dividends paid
Year ended
31 March
2023
£000
Year ended
31 March
2022
£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
31 March
2023
£000
Year ended
31 March
2022
£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
year ended
31 March
2023
Capital
year ended
31 March
2023
Total
year ended
31 March
2023
Revenue
year ended
31 March
2022
Capital
year ended
31 March
2022
Total
year ended
31 March
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.
72
Hansa Investment Company Limited Annual Report 31 March 2023
8 Investments held at fair value through profit or loss
Listed
£000
Unquoted
£000
2023
Total
£000
2022
Total
£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
£000
2022
£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
£000
2022
£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
or
registration
Class of
Capital
%
of class
held
Latest
available
accounts
Total
capital and
reserves
Profit after
tax for the
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.
73
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
74
Hansa Investment Company Limited Annual Report 31 March 2023
15 Retained earnings
Revenue
2023
£000
Capital -
other
2023
£000
Capital -
investment
holding
profit
2023
£000
Reserves
Total
retained
earnings
2023
£000
Revenue
2022
£000
Capital -
other
2022
£000
Capital -
investment
holding
profit
2022
£000
Reserves
Total
retained
earnings
2022
£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
£000
2022
£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 aect 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 aecting 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 eect of foreign currency fluctuations
through the pricing of the investments by the various markets.
75
FINANCIAL STATEMENTS
Direct
foreign
currency risk
2023
£000
No direct
foreign
currency risk
2023
£000
Total
2023
£000
Direct
foreign
currency risk
2022
£000
No direct
foreign
currency risk
2022
£000
Total
2022
£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
the currencies shown, this would have had
the following eect on the Company:
US$
2023
£000
Euro
2023
£000
Other
2023
£000
US$
2022
£000
Euro
2022
£000
Other
2022
£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 eect on the above amounts.
Interest rate risk
Interest rate movements may aect 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 aecting 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 diicult 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
interest
rate risk
2023
£000
No
interest
rate risk
2023
£000
Total
2023
£000
Cash flow
interest
rate risk
2022
£000
No
interest
rate risk
2022
£000
Total
2022
£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
76
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 dierent 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 eect 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 dierence 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 eectively 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:
77
FINANCIAL STATEMENTS
31 March 2023
Level 1
£000
Level 2
£000
Level 3
£000
Total
£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
31 March 2022
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
Financial assets at fair value through profit or loss
Quoted equities 136,771 - - 136,771
Unquoted equities - - 8,917 8,917
Fund investments 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 dierent fair value hierarchy levels at the date of the event
orchange 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
2023
equity
investments
£000
31 March
2022
equity
investments
£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 dierent, but this valuation is based on historic valuations by DV4, does not have a readily available third party
78
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.
ADDITIONAL INFORMATION
Additional
Information
79
80
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 ursday 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 conrm 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 Heidempergher (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 Ocial List of the London Stock
Exchange) for ‘A’ non-voting Ordinary shares of 1p each in the
ve 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.
is 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. is 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 oce, [also being the venue
of the AGM] and also at the registered oce 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. e 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.hansaicl.com/
shareholder-information/regulatory-information.aspx
1.1 - Interpretation
A denition of “Common Reporting Standard” has been included.
is is used in Bye-Law 83 (Obligation to provide information to
the Company).
A denition of “FATCA” has been included. is is used in Bye-
Law 83 (Obligation to provide information to the Company).
A denition of “Hansa Trust” has been included. is is used in
Bye-Law 15.4 (Untraced Shareholders).
A denition of “US Tax Code” has been included. is 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
81
ADDITIONAL INFORMATION
more generally to remove longstanding untraced shareholders,
having followed due process.
e 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
e 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 reect the Company’s more direct approach
to notication including sending a notice to a shareholder’s last
known address and showing that reasonable eorts have been
made to trace a shareholder,
such as engaging a professional asset reunication company.
ese changes reect 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
eorts have been used to trace the shareholder including, if
necessary, appointing a professional asset reunication company.
15.1 (c) - Untraced Shareholders
e language has been updated to reect 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
e language has been updated to reect 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.
ese 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
is 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
is 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
is Bye-Law has been updated to include denitions 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, certicates, waivers,
documents or forms relating to the holder is provided to the
Company. is 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.
e 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 specied 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
satised, 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 certicates as requested by the Company in order for the
Company to exercise their rights and entitlements under Bye-
Law 83.
82
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 eects 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
83
ADDITIONAL INFORMATION
Notes for Shareholders
1 Pursuant to Regulation 41 of the Uncerticated Securities
Regulations 2001 (as amended), only those members
registered in the register of members of the Company 48
hours before the Annual General Meeting (i.e. by close
of business UK time on 25 July 2023) (or if the Meeting is
adjourned, in the register of members of the Company 48
hours before the date and time of the adjourned meeting)
(the “Meeting”) shall be entitled to attend or vote at the
Meeting in respect of the number of shares registered in
their respective names at that time. Changes to entries on
the register of members after that time will be disregarded in
determining the rights of any person to attend or vote at the
Meeting.
2 Registered members of the Company may vote at the Meeting
(whether by show of hands or poll) in person or by proxy
or corporate representative. A member may appoint one or
more persons as his proxy to attend and vote at the Meeting
on his behalf. A proxy need not be a member. Where more
than one proxy is appointed the instrument of proxy must
specify the number of shares each proxy is entitled to vote.
3 e appointment of a proxy will not aect the right of a
member to attend and vote in person at the Meeting or
adjourned meeting. A member that is a corporation may
appoint a representative to attend and vote on its behalf at
the Meeting by delivering evidence of such appointment to
the Company’s registrar no later than 48 hours before the
time xed for the Meeting (i.e. by 1:00pm UK time on 25 July
2023) or any adjourned meeting.
4 In order to be valid, the proxy appointment (together with
any power of attorney or other authority (if any) under which
it is signed, or a notarised certied copy of that authority)
must be returned by one of the following methods, in each
case so as to arrive no later than 1:00pm UK time on 25 July
2023 or, in the case of an adjourned meeting, not less than 48
hours before the time appointed for holding such adjourned
meeting (ignoring for these purposes non-working days) or
(in the case of a poll taken otherwise than at or on the same
day as the Meeting or adjourned meeting) for the taking of
the poll at which it is to be used: via www.signalshares.com
by logging on and selecting the ‘Proxy Voting’ link. If you have
not previously registered for electronic communications, you
will rst be asked to register as a new user, for which you will
require your investor code (“IVC”), (which can be found on
your share certicate), family name and postcode (if resident
in the UK); or
in hard copy form by post, by courier or by hand to the
Company’s Registrars, Link Group, PXS 1, Central Square, 29
Wellington Street, Leeds, LS1 4DL.
If you need help with voting online or need to request a proxy
form, please contact our Registrars, Link Group, on 0371 664
0300. Calls are charged at the standard geographic rate and
will vary by provider. Calls outside the UK will be charged
at the applicable international rate. ey are open between
09:00 – 17:30, Monday to Friday excluding public holidays
in England and Wales. Alternatively, you can email Link at
shareholderenquiries@linkgroup.co.uk.
Notes for Depositary Interest Holders
1 You will not receive a form of direction for the Annual General
Meeting in the post. Depositary Interests may be voted
through the CREST Proxy Voting Service in accordance with
the procedures set out in the CREST manual.
In order for a proxy appointment or instruction made
using the CREST service to be valid, the appropriate
CREST message (a “CREST Proxy Instruction”) must be
properly authenticated in accordance with Euroclear UK
& Ireland Limited’s specications and must contain the
information required for such instruction, as described
in the CREST Manual (available via www.euroclear.com/
CREST). e message, regardless of whether it constitutes
the appointment of a proxy or is an amendment to the
instruction given to a previously appointed proxy must, in
order to be valid, be transmitted so as to be received by the
issuer’s agent ID RA10 by 1:00pm UK time on 24 July 2023. For
this purpose, the time of receipt will be taken to be the time
(as determined by the time stamp applied to the message by
the CREST Application Host) from which the issuer’s agent
is able to retrieve the message by enquiry to CREST, in the
manner prescribed by CREST. After this time any change of
instructions to proxies appointed through CREST should be
communicated to the appointee through other means. CREST
members and, where applicable, their CREST sponsors, or
voting service providers should note that Euroclear UK &
Ireland Limited does not make available special procedures
in CREST for any particular message. Normal system timings
and limitations will, therefore, apply in relation to the input
of CREST Proxy Instructions. It is the responsibility of the
CREST member concerned to take (or, if the CREST member
is a CREST personal member, or sponsored member, or
has appointed a voting service provider, to procure that his
CREST sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure that a message is
transmitted by means of the CREST system by any particular
time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting system providers
are referred, in particular, to those sections of the CREST
Manual concerning practical limitations of the CREST system
and timings. e Company may treat as invalid a CREST
Proxy Instruction in the circumstances set out in Regulation
35(5)(a) of the Uncerticated Securities Regulations 2001.
2 In the case of Depositary Interest Holders, a form of direction
may be requested and completed in order to instruct Link
Market Services Trustees Limited, the Depositary, to vote on
the holder’s behalf at the Meeting by proxy or, if the Meeting
is adjourned, at the adjourned meeting. Requests for a hard
copy should be sent Link Group, PXS 1, Central Square, 29
Wellington Street, Leeds, LS1 4DL (telephone number: 0371
664 0300).
3 To be eective, a valid form of direction (and any power of
attorney or other authority under which it is signed) must
be received electronically or delivered to Link Group, PXS 1,
Central Square, 29 Wellington Street, Leeds, LS1 4DL by no
later by 1:00pm UK time on 24 July 2023 or 72 hours before
any adjourned Meeting.
4 e Depositary will appoint the Chairman of the meeting
as its proxy to cast your votes. e Chairman may also vote
84
Hansa Investment Company Limited Annual Report 31 March 2023
or abstain from voting as he or she thinks t on any other
business (including amendments to resolutions) which may
properly come before the meeting.
5 e ‘Vote Withheld’ option is provided to enable you to
abstain from voting on the resolutions. However, it should be
noted that a ‘Vote Withheld’ is not a vote in law and will not
be counted in the calculation of the proportion of the votes
‘For’ and ‘Against’ a resolution.
6 Depositary Interest holders wishing to attend the meeting
should contact the Depositary at Link Group, PXS 1, Central
Square, 29 Wellington Street, Leeds, LS1 4DL or by email by
using nominee.enquiries@linkgroup.co.uk by no later than by
1:00pm UK time on 24 July 2023.
All holders
1 e quorum for the Annual General Meeting shall be two or
more shareholders present in person or by proxy. If within
two hours from the time appointed for the meeting a quorum
is not present, the meeting shall be adjourned to the next
business day at the same time and place or to such other time
and place as the Directors may determine, and if a quorum is
not present at any such adjourned meeting, the meeting shall
be dissolved.
2 As of 26 June 2023 the Company’s total number of shares in
issue is 40,000,000 Ordinary shares of 1p each and 80,000,000
‘A’ non-voting Ordinary shares of 1p each in issue. e
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
85
ADDITIONAL INFORMATION
Company information
e Company currently manages its aairs so as to be a qualifying
investment company for ISA purposes, for both the Ordinary and
‘A’ non-voting Ordinary shares. It is the present intention that
the Company will conduct its aairs so as to continue to qualify
for ISA products. In addition, the Company currently conducts
its aairs so shares issued by Hansa Investment Company
Limited can be recommended by independent nancial advisers
to ordinary retail investors, in accordance with the Financial
Conduct Authority’s (“FCA”) rules in relation to non-mainstream
investment products and intends to continue to do so for the
foreseeable future. e shares are excluded from the FCA’s
restrictions which apply to non-mainstream investment products,
because they are excluded securities as dened in the FCA
Handbook Glossary. Finally, Hansa Investment Company Limited
is registered as a Reporting Financial Institution with the US IRS
for FATCA purposes.
Capital structure
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
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.
Secretary and registered oice
Conyers Corporate Services (Bermuda) Limited
Clarendon House
2 Church Street PO Box HM666
Hamilton HM CX Bermuda
Investor disclosure
AIFMD
Hansa Investment Company Limited’s AIFMD Investor Disclosure
document can be found on its website. e document is a
regulatory requirement and summarises key features of the
Company for investors.
Packaged Retail and Insurance-based Investment
Products (“PRIIPs”)
e Company’s AIFM, Hanseatic Asset Management LBG, is
responsible for applying the product governance rules dened
under the MiFID II legislation on behalf of Hansa Investment
Company Limited. erefore, the AIFM is deemed to be the
‘Manufacturer’ of Hansa Investment Company’s two share classes.
Under MiFID II, the Manufacturer must make available Key
Information Documents (“KIDs”) for investors to review if they so
wish ahead of any purchase of the Company’s shares.
Links to these documents can be found on the Company’s
website: www.hansaicl.com.
Service providers
Independent Auditor
PricewaterhouseCoopers Ltd
Solicitors – Bermuda
Conyers Dill & Pearman Limited
Solicitors – UK
Dentons UK and Middle East LLP
Custodian
Banque Lombard Odier & Cie SA
Stockbroker
Winterood Investment Trusts
Administrator
Maitland Administration Services Limited
Alternative Investment Fund Manager
Hanseatic Asset Management LBG
Investor information
86
Hansa Investment Company Limited Annual Report 31 March 2023
Financial calendar
Company year end
31 March
Annual Report sent to shareholders
June
Annual General Meeting
July/August
Announcement of half-year results
November
Half-year Report sent to shareholders
December
Interim dividend payments
August, November, February and May
Share price listings
e price of your shares can be found on our website. In addition,
share price information for Ordinary shares / ‘A’ non-voting
Ordinary shares can be found via the following codes:
ISIN
BMG428941162 / BMG428941089
SEDOL
BKLFC18 / BKLFC07
Reuters
HAN.L / HANA.L
Bloomberg
HAN LN / HANA LN
TIDM
HAN / HANA
Legal Entity Identifier
213800RS2PWJXS2QDF66
Register for updates
To receive the latest news
and views on the Company,
please register at
www.hansaicl.com
Please contact the Portfolio Manager, as
below, if you have any queries concerning the
Company’s investments or performance.
Portfolio Manager and additional administrative
services provider
Hansa Capital Partners LLP
50 Curzon Street
London
W1J 7UW
Telephone: +44 (0) 207 647 5750
Email: hiclenquiry@hansacap.com
Website: www.hansagrp.com
Please contact the Registrars, as below, if you
have a query about a certicated holding in the
Company’s shares.
Registrar
Link Market Services (Guernsey) Limited
Mont Crevelt House
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.
Further information about Hansa Investment
Company Limited, including monthly fact
sheets, stock exchange announcements and
shareholder presentations, can be found on the
Company’s website: www.hansaicl.com
87
ADDITIONAL INFORMATION
Association of Investment Companies (“AIC”)
e Association of Investment Companies is the UK trade
association for closed-ended investment companies (www.
theaic.co.uk). Despite the Company not being UK domiciled, the
Company is UK listed and operates in most ways in a similar
manner to a UK Investment Trust. erefore, the Company
follows the AIC Code of Corporate Governance and the Board
considers that the AIC’s guidance on issues facing the industry
remains very relevant to the operations of the Company.
Alternative Investment Fund Managers Directive
(“AIFMD”)
e AIFMD is a regulatory framework for alternative investment
fund managers (“AIFMs”), including managers of hedge funds,
private equity rms and investment trusts. Its scope is broad and,
with a few exceptions, covers the management, administration
and marketing of alternative investment funds (“AIFs”). Its focus is
on regulating the AIFM rather than the AIFs.
Annual Dividend / Dividend
e amount paid by the Company to shareholders in dividends
(cash or otherwise) relating to a specic nancial year of the
Company. e Company’s dividend policy is to announce its
expected level of dividend payment at the start of each nancial
year. Barring unforeseen circumstances, the Company then
expects to make four interim dividend payments each year – at
the end of August, November and February during that nancial
year and at the end of May following the end of the nancial year.
Bid Price
e price at which you can sell shares determined by supply
and demand.
Capital Structure
e stocks and shares that make up a company’s capital i.e.
the amount of ordinary and preference shares, debentures and
unsecured loan stock etc. which are in issue.
Closed-ended
A company with a xed number of shares in issue.
Depositary/Custodian
A nancial institution acting as a holder of securities for
safekeeping.
Discount
When the share price is lower than the NAV, it is referred to as
trading at a discount. e discount is expressed as a percentage of
t h e N AV.
Expense Ratio
An expense ratio is determined through an annual calculation,
where the operating expenses are divided by the average NAV.
Note there is also a description of an additional PRIIPs KID
Ongoing Charges Ratio explained in the 31 March 2022
Annual Report.
Five Year Rolling NAV Return (per annum)
e rate at which, compounded for ve years, will equal the ve
year NAV total return to end March, assuming dividends are
always reinvested at pay date.
Five Year NAV and Share Price Total Return
Rebased from 0% at the start of the ve year period, this is
the rate at which the Company’s NAV and share prices would
have returned at any period from that starting point, assuming
dividends are always reinvested at pay date. e Company will
continue to quote results from its predecessor, Hansa Trust Ltd,
as part of that reporting so shareholders can see the longer-term
performance of the portfolio.
Gearing
Gearing refers to the level of borrowing related to equity capital.
Hedging
Strategy used to reduce risk of loss from movements in interest
rates, equity markets, share prices or currency rates.
Issued Share Capital
Issued share capital is the total number of shares subscribed to by
the shareholders.
Key Information Document (“KID”)
is is a document of a form stipulated under the PRIIPs
Regulations. It provides basic, pre-contractual, information about
the Company and its share classes in a simple and accessible
manner. It is not marketing material. e UK regulatory
authorities have introduced legislation from 1 January 2023 to
amend some of the disclosures in the KID for UK shareholders.
e Company’s AIFM will be producing both UK KIDs and
European KIDs going forward.
Key Performance Indicators (“KPIs”)
A set of quantiable measures a company uses to gauge its
performance over time. ese metrics are used to determine a
company’s progress in achieving its strategic and operational
goals and also to compare a company’s nances and performance
against other businesses within its industry. In the case of historic
information, the KPIs will be compared against data of both the
Company and, prior to the Company’s formation, from Hansa
Trust Ltd.
Glossary of terms
88
Hansa Investment Company Limited Annual Report 31 March 2023
Market Capitalisation
e market value of a company’s shares in issue. is gure is
found by taking the stock price and multiplying it by the total
number of shares outstanding.
Mid Price
e average of the Bid and Oer Prices of a particular
traded share.
Net Asset Value (“NAV”)
e value of the total assets minus liabilities of a company.
Net Asset Value Total Return
See Total Return.
Oer Price
e price at which you can buy shares determined by supply
and demand.
Ordinary Shares
Shares representing equity ownership in a company allowing
investors to receive dividends. Ordinary shareholders have the
pro-rata right to a company’s residual prots. In other words, they
are entitled to receive dividends if any are available after payments
to nancial lenders and dividends on any preferred shares are
paid. ey are also entitled to their share of the residual economic
value of the company should the business unwind.
Hansa Investment Company Limited has two classes of Ordinary
shares – the Ordinary shares (40 million shares) and the ‘A’ non-
voting Ordinary shares (80 million shares). Both have the same
nancial interest in the underlying assets of the Company and
receive the same dividend per share, but dier only in that only
the former shares have voting rights, whereas the latter do not.
ey trade separately on the London Stock Exchange, nominally
giving rise to dierent share prices at any given time.
Premium
When the share price is higher than the NAV it is referred to as
trading at a premium. e premium is expressed as a percentage
of the NAV.
Packaged Retail and Insurance-based Investment
Product (“PRIIP”)
Packaged retail investment and insurance-based products
(“PRIIPs”) make up a broad category of nancial assets that are
regularly provided to consumers in the European Union. e
term PRIIPs, created by the European Commission to regulate the
underlying market, is dened as any product manufactured by the
nancial services industry, to provide investment opportunities
to retail investors, where the amount repayable is subject to
uctuation because of exposure to reference values, or the
performance of underlying assets not directly purchased by the
retail investor. See also Key Information Document (“KID”).
Shareholders’ Funds/Equity Shareholders’ Funds
is value equates to the NAV of the Company. See NAV.
Spread
e dierence between the Bid and Ask price.
Tradable Instrument Display Mnemonics (“TIDM”)
A short, unique code used to identify UK-listed shares. e TIDM
code is unique to each class of share and to each company. It
allows the user to ensure they are referring to the right share.
Previously known as EPIC.
Total Return
When measuring performance, the actual rate of return of an
investment or a pool of investments over a given evaluation
period. Total return includes interest, capital gains, dividends and
distributions realised over a given period of time.
Total Return – Shareholder
e Total Return to a shareholder is a measure of the performance
of the company’s share price over time. It combines share price
appreciation/depreciation and dividends paid to show the total
return to the shareholder expressed as an annualised percentage.
In the case of historic information, the Total Return will include
data against data of both the Company and, prior to the
Company’s formation, from Hansa Trust Ltd.
89
OVERVIEW
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