Annual Report
31 March
2024
ii
Hansa Investment Company Limited Annual Report 31 March 2024
We are globally diversified, 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 different
Rather than seeking to replicate indices we look to identify those
areas of the market which offer 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 flexible 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 significant internal investment, we share an alignment of
interest and, importantly, are not driven by asset gathering for
the sake of profit maximisation.
To see more: www.hansaicl.com
Hansa Investment Company Limited
Registered in Bermuda company number: 54752
1
OVERVIEW
Contents
Overview
ii The power of investing differently.
2 Financial summary
3 Chairman’s report
6 Long-term performance
Portfolio Manager’s Review
8 Portfolio Manager’s report
27 The portfolio
Strategic Review
30 Investment objective, strategy and performance
33 Shareholder profile
35 Stakeholder engagement
39 Principal risks
Governance
42 The Board of Directors
44 Organisation and objectives
49 Report of the Directors
51 Corporate Governance Report
55 Audit Committee Report
57 Directors’ Remuneration Report
60 Nominations Committee Report
Financial Statements
62 Independent auditor’s report
66 Income Statement
67 Balance Sheet
68 Statement of Changes in Equity
69 Cash Flow Statement
70 Notes to the Financial Statements
Additional Information
82 Notice of the Annual General Meeting
85 Investor information
87 Glossary of terms
2
Hansa Investment Company Limited Annual Report 31 March 2024
Financial summary
As at 31 March 2024
‘A’ NON-VOTING ORDINARY SHARES
Share price
204.0p
Discount
46.1%
Gross yield
1.6%
ORDINARY SHARES
Share price
210.0p
Discount
44.6%
Gross yield
1.5%
NAV per share
378.8p
Total assets
£454.9m
Annual dividend payments Five year total return cumulative performance
pence per share
3.2
0
0.8
1.6
2.4
1st interim paid 2nd interim paid 3rd interim paid
4th interim paid Payable Predicted
Geographic exposure Sector exposure
Industrials 28.4%
Financials 13.9%
Information Technology 13.3%
Diversified 9.9%
Consumer Discretionary 9.2%
Health Care 7.4%
Materials 4.1%
Communications Services 3.6%
Real Estate 3.3%
Energy 2.9%
Consumer Staples 2.2%
Cash/Liquidity Funds 1.2%
Utilities 0.7%
North America 41.3%
Latin America 21.8%
Diversified 9.9%
Developed Europe ex UK 8.6%
Asia Pacific ex Japan 7.1 %
Japan 4.7%
UK 4.2%
Cash/Liquidity Funds 1.2%
Middle East & Africa 0.8%
Emerging Europe 0.3%
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.
NAV Cum Income Ordinary Share Price ‘A’ non-voting Ordinary Share Price
50
%
-40
Mar 20Mar 19 Mar 21 Mar 22 Mar 23 Mar 24
2020-212019-20 2021-22 2022-23 2023-24
3
OVERVIEW
Shareholder Returns
It is very pleasing to report an increase of
14.6% over the year in the value of Hansa
Investment Company Limited’s (“Hansa”,
“the Company”, HICL) investment
portfolio. Our Portfolio Manager, Alec
Letchfield and his team at Hansa Capital
Partners LLP (HCP, “Hansa Capital
Partners”, “PM”, “the Manager”) have
performed well in a very challenging
market. Additionally, after a period of
underperformance, it is very gratifying to
report an increase of 55.3% in the value of
our holding in Ocean Wilsons Holdings
Limited (OWHL, “Ocean Wilsons”).
Overall, the net asset value increased
from 305.8p to 378.8p as at 31 March
2024, generating a 23.9% increase in the
portfolio. The shareholders also received
dividends totalling 3.2p per share during
the period, implying a total NAV return of
25.1% for the year.
The Ordinary share price has increased
from 174.0p to 210.0p, whilst the ‘A’
Ordinary shares increased from 170.5p to
204.0p. Regrettably the discount on the
Ordinary shares increased from 43.1% to
44.6% and the ‘A’ Ordinary shares increased
from 44.2% to 46.1%.
More details about our results and
performance can be found on page
2 and also in our Portfolio Manager’s
detailed review of markets and portfolio
performance in his Report starting on
page 8.
Strategy
As memories of near-zero inflation
and interest rates recede, the debate in
markets has moved to where the natural
rate of interest settles, with markets
anticipating it to be approximately 2.5%,
whilst leading economists such as Larry
Summers lean towards the number being
4.5%. I prefer the latter view as if inflation
gets back to 2% then a real rate of 2.5% is
not unusual or unreasonable, particularly
with the backdrop of voracious and
increasing government debt requirements
in all parts of the world.
Alec Letchfield and his team at Hansa
Capital Partners, supported by the Board
continue to look for opportunities to
broaden and diversify the portfolio. This
has been most notable with an increasing
investment in Japan. Our commitment
to Private Markets continues to grow as
planned, with our strategy to continue to
commit approximately £10m each year to
this sector.
As a consequence of our recent rolling
commitment to an annual investment
in Private Equity and Venture Capital
opportunities, the Board has decided
to include this as one of the four key
investment categories. Consequently,
the Core and Thematic categories have
been combined.
Ocean Wilsons Holdings Limited
As you will recall Ocean Wilsons
announced on 12 June 2023 that it was
undertaking a strategic review involving
its investment in Wilson Sons and that all
strategic options were being considered.
A further announcement on 15 November
2023 confirmed that a number of
indicative non-binding offers had been
received, but the process remains ongoing.
Recent results have been very encouraging,
with an excellent performance by both
Wilson Sons and the investment portfolio,
which is continuing to demonstrate
strong resilience. The Board awaits
further updates, as I am sure do all other
shareholders. It needs to be borne in mind
that as stated by Ocean Wilsons, there can
be no certainty as to the outcome of its
deliberations and decisions.
Your Board remains vigilant on this very
important matter for all our shareholders
and continues to review and update
potential strategic options.
Prospects
Stock markets have had a particularly
good run in the second half of our financial
year. Pleasingly, this has continued
into May.
Whilst I have been correct on interest
rates being higher for longer than the
market participants anticipated and the
oil price remaining firm, I have completely
underestimated the continuing high levels
of liquidity in markets, the sudden arrival
of AI and the reasonably dovish comments
from the Fed about progress towards their
2% inflation target.
As has been pointed out by some leading
financial commentators, the relentless
increase in outstanding US debt will
probably become a serious problem at
some point. This, of course, does not
only apply to the US. What is particularly
troubling is the fact there seems no
determination to take any action on this.
If anything, the opposite is true, with
increasing amounts of debt being issued
to bribe voters and special interest groups.
I can only assume this will continue to
reduce, to some degree, the speed of the
decline in inflation and interest rates.
Chairman’s report
Jonathan Davie
Chairman
Dear Shareholder
4
Hansa Investment Company Limited Annual Report 31 March 2024
It will be interesting to see if Chairman
Powell starts to make any comments on
this issue.
The recent increase in the price of gold
is begging the question of whether it is
signalling problems ahead, or just catching
up with global events of both an economic
and political nature. The ominous increase
in the price of oil together with events in
Ukraine and the Middle East will need to
be monitored carefully.
On a more positive note, it is encouraging
to find Europe getting through the recent
winter with little stress on gas prices or
its supply. In fact, stocks of gas seem to
indicate a lowering of demand next year
due to present storage reserves.
Discount Management
The Board is disappointed and frustrated
that the discount has widened during a
period of good investment performance.
Our present policy of not intervening to
try to reduce the discount will remain
in place until we have learned about the
outcome of Ocean Wilsons deliberations
on the options open to Wilson Sons.
At that time the Board will carry out a
thorough review of its present discount
management policies.
Dividends
The Board has decided to continue with its
existing dividend policy of paying quarterly
interim payments of 0.8p per share, being
an annual total of 3.2p per share. The
present plan will continue until such time
as the dividend is fully covered by net
revenue. It will then increase in line with
any improvement in the net revenue of the
Company. Currently the income generated
by the portfolio is insufficient to meet this
dividend commitment, with the shortfall
being made up by drawing from Hansa’s
reserves. In principle, the Board does not
believe it to be in the Company’s best
interests to use capital as a source from
which to pay dividends. As I mentioned in
my Half-Year Report, our dividend policy
will be reviewed after the Ocean Wilsons
board have completed their deliberations
on the strategic options open to the
holding in Wilson Sons Limited.
Company Bye-laws
As you may recall, one of the resolutions
passed at Hansa’s Annual General Meeting
on 27 July 2023 was to ensure that all
shareholders, if so requested, supply
information relating to their tax residency.
We have engaged Computershare to
work with Hansa’s management team
to try to find and engage shareholders
who have not yet responded to requests
for information. I am pleased to report
that some progress is being made on this
issue, although much work remains to be
done. I will keep shareholders updated
on progress.
Shareholder Event
As you may recall, we held an event at the
Mayfair Hotel in London on 27 September
2023. The presentation was live streamed
via our website for those who could not
attend in person.
It is our intention to hold a similar
meeting on 25 September 2024 which
will include presentations from myself,
William Salomon and Alec Letchfield and
the opportunity for attendees, whether in
person or online, to ask questions.
ESG Matters
The Board remains responsible for the
Company’s ESG policy. In 2020, the Board
adopted our Manager’s Responsible
Investing Policy. HCP continues to
develop and refine its policy in line with
the evolving nature of ESG’s integration
within financial services. As previously
reported in 2022, the Hanseatic Group,
of which our Manager is a part, became
signatories to the UN PRI, a UN-supported
network of investors works to promote
sustainable investment. I am pleased to
be able to report that they have recently
received a positive response to their first
annual submission.
Key Performance Indicators
(KPIs)
The Board has completed its annual
review of our investment KPIs and decided
to maintain our previous investment
stance. However, I should like to direct
you to page 30 where we have added
further colour to our decision to review
investment performance versus a range of
KPIs as opposed to a single benchmark.
Our dividend policy
will be reviewed after
the Ocean Wilsons
board have completed
their deliberations on
the strategic options
open to the holding in
Wilson Sons Limited.
5
OVERVIEW
Board composition
Nadya Wells has chosen not to stand for
re-election as a Director of the Company
at the AGM as a result of additional
professional commitments that she
intends to take on. The Board is starting
the process of identifying a director to join
the Board in Nadya’s place.
Following Nadya’s decision to not
stand for re-election, with effect from
14 June 2024, the Board has appointed
Simona Heidempergher to chair the
Nomination Committee in addition
to her continuing role as Chair of the
Remuneration Committee.
I should like to take this opportunity to
thank Nadya for her excellent and valuable
contributions to the business of the
Company and the Board over the period
since the Company was formed in 2019
and the whole Board wishes her well in
her future roles.
Annual General Meeting (AGM)
and Amendment to Bye-laws
At the end of these Financial Statements,
you will find a notice regarding our
upcoming AGM, to be held on 2 August
2024 in Bermuda. Within the notice you
will find several resolutions that are
presented annually. Additionally, you will
note a further resolution to adopt new
Bye-laws, which is to effect two changes to
the Company Bye-laws.
First, in line with developments in market
and industry practice and to enable
the Company to promote efficient,
cost effective and modern methods
of engagement with shareholders, the
Company is proposing an update to
Bye-law 19 which allows the Board to
determine how dividends are paid to
Members in the most efficient manner.
The Board intends to stop paying cash
dividends by cheque and move toward
payment of all dividends to Members by
inter-bank transfer and electronic means.
Secondly, as you may recall, one of the
resolutions passed at the Company’s
AGM on 27 July 2023 was to ensure
that all shareholders, if so requested,
supply information relating to their
tax residency. To assist the existing
process, the Company is proposing
an update to Bye-law 83, Globally tax
authorities and government agencies
require financial institutions, including
investment companies, to collect and
report certain tax information in relation
to their shareholders. In principle, this
should only affect a very small number
of our shareholders who are personally
on our share register. 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. This proposed update
to Bye-law 83 is intended to encourage
action from those few shareholders who
fail to provide the information required by
withholding the payment of dividends to
any non-responding shareholders, until
such time as the required information is
received, so as to enable the Company to
satisfy its reporting requirements. We have
also engaged Computershare to work with
us to try to find and engage shareholders
who have not yet responded to requests
for information. I am pleased to report
that some progress is being made on this
issue, although much work remains to be
done. I will keep shareholders updated
on progress.
Please see page 38 for more detail on the
proposed changes and the more detailed
reasoning behind the proposals.
I should like to thank my fellow Board
members, as well as Alec Letchfield and
his team at Hansa Capital Partners, for
their dedicated hard work during this
past year. We appreciate the support of
our shareholders, for whom we are all
constantly seeking to deliver value over the
longer-term. I believe the Company is in a
very good position to do this, whatever the
markets and global economies may have
in store for us in the future.
Jonathan Davie
Chairman
14 June 2024
We appreciate the
support of our
shareholders, for whom
we are all constantly
seeking to deliver value
over the longer-term.
6
Hansa Investment Company Limited Annual Report 31 March 2024
Long-term performance
Ten year company performance statistics
As at 31 March
Shareholders’
Funds
Net Asset Value
per share –
Ordinary and
‘A’ Ordinary
Annual
dividends Ordinary ‘A’ Ordinary Ordinary ‘A’ Ordinary
2024 £454.6m 378.8p 3.2p 210.0p 204.0p 44.6% 46.1%
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 7.8p 3.2p 172.0p 165.5p 24.5% 27.3%
2014 £287.4m 239.5p 3.2p 175.9p 175.5p 26.6% 26.7%
The table includes information relating to HICL and historic information relating to Hansa Trust. The years ended 2020–2024 notes
HICL information. The historic year ends 2014–2019 all relate to Hansa Trust. So that data is consistent and comparable, the historic
data in columns “Net Asset Value per Share”, “Annual Dividends” and “Share Price (Mid)” have been restated to reflect that, as part of the
redomicile of the business of Hansa Trust to HICL in August 2019, HICL issued five times as many shares in each share class of HICL as
there were in Hansa Trust.
The Company’s KPIs can be found further on in the Report.
To 31 March 2024 1 year 3 years 5 years 10 years
Total Return (%)
Ordinary shares 22.7% 11.4% 1 7.4 % 43.1%
‘A’ non-voting Ordinary shares 21.8% 8.0% 14.4% 39.7%
NAV 25.1% 2 7.4% 42.6% 79.0%
Share price (mid) Discount/ (Premium)
PORTFOLIO MANAGER’S REVIEW
Portfolio
Manager’s
Review
7
Key questions
for the
year ahead.
Portfolio Manager’s report
8
Hansa Investment Company Limited Annual Report 31 March 2024
9
PORTFOLIO MANAGER’S REVIEW
elevated if structurally higher inflation
was to be avoided. This in turn was seen
by many as creating a no-win situation,
whereby a recession was seen as an almost
inevitable side effect of the higher rates.
The outcome was very different from
this. Most notably, inflation came rattling
back. In the US, inflation in March 2023
was at 5.0% and rapidly fell back to 3.1%
by the end of November, before slightly
increasing to 3.5% in March 2024. Europe
saw inflation fall even more dramatically,
from 6.9% to 2.4% during the financial
year, with some regional variations such
as Germany where the inflation rate took
longer to decline. The UK was the laggard
but even here inflation declined to 3.2% by
March 2024 and even beat Rishi Sunak’s
target levels which looked optimistic only
a few months back.
Similarly, growth levels have confounded
the bears with economies mostly avoiding
even modest recessions. Most notably,
despite the much higher interest rates, the
US economy has remained remarkably
robust. Buoyed by both a consumer who
is still willing to spend and a corporate
sector that seems to be largely unaffected
by the higher borrowing costs, growth
stayed in the black. Other economies were
a little more mixed, with Germany for
example dipping into mild recession, but
overall the outcome was much better than
forecast by most. Whether this means
we have avoided recession completely, or
merely delayed it, is up for debate.
An area where forecasters were proved
right was interest rates remaining higher
for longer but, even here, it was for the
wrong reasons. Central bankers were
Market review
Every year stock markets have their
notable features, whether it is bull
markets, the occasional crash or bubbles
forming. The last financial year was no
exception, but what was of particular note
was the degree to which it confounded
broker forecasts. As we sit here reviewing
the various broker predictions for last
year, we struggle to remember a year
when commentators got it so wrong on so
many fronts.
Directionally, with very few exceptions,
almost all commentators expected muted
markets and many thought further falls
were on the cards. Following on from the
challenging 2023 financial year, inflation
was forecast to remain sticky and high,
necessitating that interest rates remain
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
US Europe UK
CPI
March 2023 March 2024 Dec 2023 Forecast from IMF Oct 2022 Report
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
US UK Germany Japan China
Annualised Quarterly GDP Growth
FY Q1 FY Q2 FY Q3
Chart 1: Actual inflation in 2024 financial year has been much lower than consensus forecasts.
Chart 2: Major economies have been surprisingly robust and mostly avoided recessions in the last year.
Source: Bloomberg, IMF
Source: Bloomberg
Alec Letchfield
Portfolio Manager
10
Hansa Investment Company Limited Annual Report 31 March 2024
initially behind the curve as the sharp
rise in inflation in 2022 caught them
somewhat by surprise. They then pivoted
to become inflation hawks and shot up
rates, quicker and higher than many
anticipated, in an effort to control the
inflationary pressure. Although inflation
then started falling sharply as price rises,
firstly of goods and then of services,
dropped away, central bankers continued
in their higher for longer rhetoric, while
investors started anticipating multiple
rate cuts in 2024. Now, when inflation
has slightly increased again in the US
and investors have dramatically reduced
their rate cut expectations, the Fed has
switched to become modestly dovish, still
predicting it will soon be cutting rates.
At the country level, the forecasters’ track
record was little better. The consensus
coming into the last financial year was for
emerging markets, Japan and Europe, to
outperform the US. Partially, this was a
reflection of emerging markets being seen
as having been more prudent in their fiscal
and monetary policies, both during and
after COVID, and with many exiting the
tightening phase of their monetary cycles
last year, whereas developed markets were
earlier in their cycles. With the valuation
gap between the US and the rest of the
world also extreme, largely due to the
preponderance of technology companies
within the US stock market, almost all
commentators were underweight in the
US and overweight in the other regions.
Yet again the US confounded the bears. In
what is almost certainly one of the largest,
if not the largest, money losing trades of
recent times, the desire to forecast the
demise of the US was once again proved
to be wrong. As we always say, you bet
against the US at your own peril! Rising by
26.2% in the year, the US market helped
drag the wider stock market up by 20.5%
by virtue of it now accounting for a lofty
63.7% of the World Index. Underlying
this performance were five US mega-cap
technology names – Microsoft, Alphabet,
Amazon, NVIDIA and Meta – with the
group surging by 80.7% over the year as
AI fever grabbed investors’ imaginations.
Outside of these names however the story
was less good, with the rest of the S&P 500
rising by just 16.1%. This concentration
created a challenging backdrop for many
active managers with most being not only
underweight in the wider US market but
also underweight in the mega-cap five
names, due to their high valuations and for
risk management reasons with managers
unwilling to have such a large proportion
of their funds invested in such a small
number of names.
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Jan-2021 Apr-2021 Jul-2021 Oct-2021 Jan-2022 Apr-2022 Jul-2022 Oct-2022 Jan-2023 Apr-2023 Jul-2023 Oct-2023 Jan-2024
US CPI European CPI UK CPI US Interest Rate European Interest Rate UK Interest Rate
Inflation is coming down...
But rates are staying high...
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
S&P 500 S&P 500 Equal Weighted MSCI ACWI MSCI ACWI Equal Weighted
FY2024 Performance (GBP)
Chart 3: Interest rates remain high despite inflation falling sharply.
Chart 4: The performance of S&P 500 and MSCI ACWI in the last year has been driven by a few mega-cap tech names.
Source: Bloomberg
Source: Bloomberg
11
PORTFOLIO MANAGER’S REVIEW
2000
2500
3000
3500
4000
4500
5000
Jan-2021 Apr-2021 Jul-2021 Oct-2021 Jan-2022 Apr-2022 Jul-2022 Oct-2022 Jan-2023 Apr-2023 Jul-2023 Oct-2023 Jan-2024
Fed rate increases from 0.25% to 0.5%
Fed rate increases from 1.0% to 1.75%
Fed rate increases from 1.75% to 2.5%
Fed rate increases from 3.25% to 4.0%
Fed rate increases from 4.0% to 4.5%
Fed rate increases from 5.25% to 5.5%
US CPI falls to 3.1% and
Jerome Powell indicates
rate cuts in 2024
US CPI increases from
1.4% to 5% over a few
months
Fed rate stays low regardless of
increasing inflation
CPI ticks up from 3.1% to 3.4%
CPI
drops to
3.2%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
MSCI Emerging Markets
Index
MSCI Emerging Markets
Europe Index
MSCI Emerging Asia Index MSCI Emerging Latin
America Index
FY2024 Performance (GBP)
Driven by the
weak Chinese
performance
Outside the US the picture was mixed. The
emerging markets could only manage a
5.8% rise, but this was largely a reflection
of the poor performance of China which
faces challenges on a multitude of fronts.
Not only has it failed to deliver the post-
COVID rebound many had hoped for, but
China has also become embroiled in a
wider East versus West struggle. It wasn’t
all one-way traffic within the emerging
markets, however, with countries such
as India and Brazil producing excellent
returns. Japan was also notably strong.
Despite seeing numerous false dawns,
the current revival appears to be more
persistent with numerous measures
being put into place by the government
and genuine change happening in the
corporate sector.
An area where there was little consensus
was the outlook for bonds. On the one
hand, some believed yields being back at
levels where they offered a real alternative
to equities, combined with the prospect of
slowing growth, created a better backdrop
for bonds (albeit one which was better
for government bonds and shorter dated
investment grade debt, than for high
yield bonds where spreads remained
extremely tight). On the other, a number
of commentators argued we were entering
a more protracted bear market in bonds
that would take many years to play out
with the spectre that this might become
disorderly due to the high debt taken
on in many areas of the economy. The
year-end outcome of global government
bonds falling by 3.9% suggested a rather
poor backdrop, although global high
yield bonds rose by 8.7%. The journey,
however, was anything but muted
with the asset class seeing wild swings
depending on which camp held sway as
the year progressed.
Chart 5: Performance has diverged across the emerging markets.
Chart 6: US Treasuries have been muted overall in the last year but the journey has been volatile.
Source: Bloomberg
Source: Bloomberg
Bloomberg US Long Treasury Total Return Index
Emerging markets
could only manage
a 5.8% rise, but
this was largely a
reflection of the poor
performance of China.
12
Hansa Investment Company Limited Annual Report 31 March 2024
In contrast to the excitement seen in
bonds, alternative investments were more
muted over the past year. Private Equity
(PE), which was one of the bright spots in
the 2023 financial year bear market, was
more muted in the 2024 financial year.
Whilst the final year numbers are yet to
fully come through, the returns to the
end of December 2023 were a rise of 4.1%.
This relative underperformance versus
public markets is unsurprising with the
sector typically lagging public market
performance by six to nine months.
Hopefully this represents the full extent of
the underperformance. However, we do
note one or two worrying signs in the form
of PE firms being built on a model of cheap
debt and a number of managers engaging
in activities such as continuation funds,
which smells a little like the can being
kicked down the road.
Key questions for the year ahead
Despite our scepticism on broker
forecasts, it doesn’t mean we disregard
them entirely. Instead, we believe markets
are faced with just a handful of important
drivers and questions at any one time.
Understanding what these drivers are and
where the consensus stands on them is
key to constructing portfolios. Often there
are a number of likely outcomes and our
aim is to create all-weather portfolios that
can thrive in these different scenarios.
Hence, as we enter the 2025 financial year,
we view the following as being key to the
success of markets in the year ahead:
1. Has the battle against inflation been
won and are we returning to a low
inflation environment?
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FY 2023 FY 2024 (to end Dec 2023)
USD Performance
Private Equity MSCI ACWI
Private Equity was more
robust in FY 2023...
... although has had more muted
performance in FY 2024
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Global Markets (DM/EM/FM)
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Japan
Europe
Brazil
India
China
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EMBI Global
EM Local Currency Government Bonds
Bloomberg Commodity Index
Gold
Copper
WTI Cushing
USD/EUR
USD/GBP
USD/BRL
% Return (GBP)
Chart 7: Private markets lagged in FY 2024 following good relative performance in FY 2023 (in USD).
Chart 8: Performance of equity markets by country, global bonds, commodities and currencies.
Source: Preqin
Source: Bloomberg
13
PORTFOLIO MANAGER’S REVIEW
2. Is a recession inevitable in the next year?
3. Is it too early to buy bonds?
4. Contrasting Asian fortunes – Japan
versus China.
5. What are the tail risks in the
year ahead?
1. Has the battle against inflation
been won and are we returning to a
low inflation environment?
As discussed previously, 2023 was notable
for the extent to which inflation fell back
from the extremes of 2022. The headline
forecasts are, however, still above central
bank targets raising the question as to
whether it is only a matter of time before
this final inflation is eradicated, or if the
low hanging fruit has been had and this
last element of inflation will prove to be
stickier and ultimately necessitate central
bankers to remain hawkish for longer.
Initially, the consensus was that
COVID had caused a reset in the world
inflationary order and a number of
the factors that had caused persistent
deflation over the past 10 years, such
as globalisation and the power of the
corporate sector over the labour force,
were coming to an end. Hence, whilst the
base effect from the supernormal inflation
of 2022 meant that inflation appeared
to be dropping sharply, inflation is now
structurally higher.
There is, however, an alternative view
to which we are becoming increasingly
sympathetic. For much of the post-
COVID period commentators have been
trying to overlay conventional economic
cycle analysis in what is, in practice, a
completely unique backdrop. This played
out in the form of revenge buying, as
consumers exited COVID lockdowns with
supply unable to meet demand. We then
had service sector and wage inflation
as certain sectors were hit by labour
shortages due to people retiring early or
making lifestyle choices favouring their
quality of life over work. Increasingly,
however, these factors are proving to be
temporary and we are seeing a return to
pre-COVID norms. On the goods side,
demand has fallen away and supply has
caught up (and in some places overtaken
demand). On the service side, which
initially looked to be stickier, we are
seeing signs that important components
of service inflation, such as shelter costs
and wage inflation, are normalising.
Hence, whilst the jury remains out, we
are increasingly optimistic that inflation
is not structurally very high, albeit we
equally do not see markets moving back
to a deflationary backdrop anytime soon.
This could prove positive for interest
rates, markets and long duration assets
in general.
2. Is a recession inevitable in the next
year?
One would think that if we are seeing the
last remnants of COVID passing their
way through the system, with inflation
beaten and rate cuts on the cards, this
would remove the threat of recession.
Unfortunately, the reality is not quite as
simple. The challenge with inflation and
rates is that inflation is backward looking,
whereas rates are instruments that impact
economies in the future. It would appear
that central bankers would rather err on
the side of caution and ensure inflation is
completely eradicated from the system,
before they risk loosening monetary policy
and avoid running the risk that they need
to pivot by moving too early. No central
banker wants to be remembered as the
one who caused deep, entrenched, long-
term inflation and would rather keep rates
higher for longer even if this catalysed
a recession.
Our hope, and view, is that the data
continues to indicate that the inflationary
battle is won and central bankers will
stay true to their word of being driven
by the data. Encouragingly more recent
comments from the Federal Reserve
governors have been saying just this with
even more hawkish members, such as
Governor Waller, sounding more dovish
in their comments. Reinforcing this
Chart 9: The Fed’s dot plot indicates rate cuts in 2024.
Source: The Federal Reserve. The dots represent the Fed members’ projections for interest rates.
Fed policymakers’ projections for the midpoint of US interest rates (%)
7.0
6.0
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*
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******
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*
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* ****
*
*** *
**
***** *
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3.0 *
* **** *
*
**** *
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2.0
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2023 2024 2025 2026 Longer Term
14
Hansa Investment Company Limited Annual Report 31 March 2024
position is the prospect of a US election.
Despite claims of independence, central
bankers are increasingly driven by political
pressure, and the pressure on them to
shore up the economy in an election year
will be powerful. Hence, we would argue
that without a significant policy misstep, a
recession should be avoided, and, at worst,
any recession will be a soft one.
3. Is it too early to buy bonds?
Interlinked with the outlook for interest
rates and inflation is the outlook for
bonds. Depending on which side wins
through, bonds will rise or fall accordingly.
If inflation does in fact remain persistent,
necessitating that rates have to go higher
and potentially catalysing a recession in
the process, this will likely weigh heavily
on bond prices in 2024. Conversely, if the
disinflation we saw in 2023 continues
bringing forward the prospect of rate cuts,
then the rally we saw in the latter part of
the year is likely to continue.
Regardless of which scenario plays out,
the rise in yields seen over the past 18
months has seen bonds shift from a
position of having deeply unattractive
risk/reward characteristics, with zero
yields, zero inflation and zero rates
making them extremely vulnerable to any
disappointment, to one where they now
have historically more normal yields with
positive real yields and for the first time in
many years providing a genuine alternative
to equities. Whilst we would avoid high
yield bonds, given their sensitivity to
recession, and with spreads not offering
a sufficient margin of safety, we do think
that short and mid duration bonds can
be bought and, if held to maturity, should
provide attractive returns.
4. Contrasting Asian fortunes – Japan
versus China
One of the most notable features of the
past 12 months has been the starkly
diverging fortunes of China and Japan.
As highlighted above, China faced
challenges within its important real estate
sector, from geopolitical pressure and
from a sluggish post-COVID rebound,
whereas Japan was enjoying the benefits
of government measures encouraging
corporates to become more competitive
and, to some degree, its economy
benefiting at the expense of China.
The key question for the year ahead is
whether to expect more of the same or
if a contrarian view is the way forward?
Typically, we would tend to favour the
contrarian view. Japan has a long history
of grabbing failure from the jaws of success
as efforts to change eventually peter
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UK Japan Euro Area US China
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2-Yr US Treasury 10-Yr US Treasury 30-Yr US Treasury Global Investment
Grade
Global High Yield US Tips EM Sovereigns EM Aggregate
31 Mar 2022 31 Mar 2024
Chart 10: The IMF is forecasting positive real GDP growth for 2024.
Chart 11: Yields have significantly increased over the last two years.
Source: IMF
Source: Bloomberg
PORTFOLIO MANAGER’S REVIEW
15
out, often due to political instability and
institutional inertia. This time around
though we are feeling more optimistic.
Politically, Japan is looking unusually
stable at the governmental level (although
political manoeuvring is always going
on within the Liberal Democratic Party)
and, even without this stability, there is
cross-party acceptance that Japan has to
be more ambitious in its actions if it is to
compensate for the structural challenges
it faces. With an aging population and the
Chinese powerhouse breathing down its
neck, Japan increasingly recognises radical
action is needed and productivity growth
is a necessity if it is not to slide into
oblivion. This recognition, combined with
Japan’s starting point of low valuations and
deeply inefficient balance sheets, creates
huge opportunities for investors, especially
given the herd-like mentality of corporate
Japan – if one does it, others tend to follow
to avoid losing face.
Clearly, this change in direction is not
without risks. Time and again, Japan has
failed to deliver and even if it is successful,
we would expect it to be a slow and rather
tortuous journey but, even so, we remain
significantly overweight in Japanese
equities at this juncture.
Conversely, China’s history has been one of
substantial structural gains interspersed
by the occasional missteps which have
typically represented excellent buying
opportunities. Whether it was Tiananmen
Square in 1989, when China faced
significant sanctions from the developed
world, or the aftershocks of the Asian
crisis in the early 2000s, these in fact
represented excellent entry points.
Why then would we not view the current
situation in China as being another
opportunity to buy? Well, it possibly does
represent a tactical buying opportunity,
but our main concern at this juncture
is that we see several significant binary
risks. Following his coronation as
president for life, Xi Jinping has shown
his hand on two counts. One, he is an
unashamed communist leader who will
unilaterally move the goal posts in the
pursuit of his goals. Whether it is the
overnight regulation of the education
sector or installing government officials
into the big Chinese tech companies, this
changing backdrop makes investing very
difficult. Two, the growing wedge between
the East and the West is creating a
potentially significant risk to stock prices.
In particular we would highlight the
situation with Taiwan. Whilst one would
hope that the fate of Russia following its
invasion of Ukraine would put Xi off from
forcibly taking control of Taiwan, the
unification of Taiwan and China is Xi’s
ultimate aspiration and the one thing you
can say about Xi is that he always follows
through on his word. How the West and
the US would react to such a move is open
to debate, but one would not want to be
a holder of Chinese assets at that point.
Whilst we do not think China will invade
Taiwan imminently, it represents a binary
risk that we feel is not well compensated
at this point.
A couple of years back we had pondered
whether we should be adding a structural
position in China, reflecting its growing
economic power and importance on the
world stage. Ultimately, we decided not to
as we saw the negatives discussed above
starting to evolve. Instead, we remain
content to leave it to our specialist Asian
managers to invest in China on a tactical
basis as they see fit and not to view
the current situation as a time to add a
structural stake to our portfolios.
5. What are the tail risks in the year
ahead?
As long-term investors, tail risks always
remain at the forefront of our minds, as it
is often these that catalyse more extreme
pullbacks in stock markets. Worryingly
the current environment looks especially
vulnerable to such risks. Structural shifts,
as we are seeing at present, often place
considerable stress on those areas of
the market that have been built on the
continuation of the status quo.
Top of the list is the step change in rates
and bond yields. As we have discussed in
the past, a number of sectors built their
business models on rates remaining low,
gorging themselves on free money and
boosting their returns in the process.
Commercial real estate and private equity
are particularly notable on this front. Both
sectors took on more and more debt and
saw their fund sizes ramp up on the back
of the often-illusory high returns they
generated. Already, the speed with which
yields have risen has placed pressure on a
number of players. Commercial real estate
has been at the forefront of this with the
funding issues coming at a time when
the demand for real estate has dropped
sharply, due to the trend towards working
from home post-COVID. PE has been
more immune, but it is possible that a
slower-motion crash may be in motion.
Currently the PE firms have been kicking
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MSCI Japan MSCI China
12m GBP Performance to 31 Mar 2024
Chart 12: Japan has outperformed China by over 35% in the last 12 months.
Source: Bloomberg
16
Hansa Investment Company Limited Annual Report 31 March 2024
the can down the road, by slowing their
realisations and avoiding taking any losses
through the use of structures such as
continuation funds. Ultimately, they are
gambling markets will normalise and they
will have avoided the need to sell at more
distressed levels. Time will tell.
This slow-motion crash may also be the
key story for other sectors in the year
ahead. The next couple of years will be a
much more active period for the rollover
of debt and it will be interesting to see
which companies and sectors have been
swimming naked. At this point we’re
not overly worried about the broader
corporate sector, with companies typically
managing themselves more prudently post
the financial crisis, with lower levels of
debt and generally longer maturity profiles,
but it will be an area to watch closely,
especially if economies dip into recession.
Perhaps more worrying is the debt that
has been accumulated in the government
sector. Crises rarely strike the same area
twice and, whereas corporates were the
main victims in the Global Financial
Crisis (GFC), government debt is looking
more vulnerable this time around.
Typically, governments, in particular
developed market governments, are seen
as possessing more prudent finances
and often have the luxury that they are
perceived as the safest form of debt and
hence are able to fund their debt come
whatever. Government debt levels have,
however, been rising sharply over recent
years and dangerously so in many cases.
Having spent their way out of the GFC,
governments then embarked on a second
round of major spending to dampen the
impact of COVID. This pushed borrowing
up to precariously high levels and could
result in a disorderly sell-off if confidence
is lost. We have seen a mini version of
this already with the Truss/Kwarteng
debacle in late 2022, resulting in a collapse
in gilt prices on the back of imprudent
policy measures.
Despite the challenges faced in the UK,
it is in practice a sideshow with the real
danger lying in the US. US debt levels
have risen significantly in recent years,
rising from $10 trillion in 2000 to $33
trillion in 2023, at a time when funding
costs are becoming more expensive and
the demand for US bonds is diminishing.
Importantly, both China and Japan, who
have historically been important marginal
buyers of US government bonds, are
increasingly looking elsewhere. Japan is
likely to start investing more into domestic
bonds on the back of higher yields, as it
moves away from its Yield Curve Control
measures, while China is trying to wean
itself off buying US Treasuries to reduce its
dependence on the US market, in light of
the sanctions the West put on Russia post
its invasion of Ukraine.
At this stage we have a watching brief on
the situation and do not anticipate an
imminent collapse in the US government
bond market. Partly this reflects the lack
of options for global investors, with the
US bond markets remaining the only real
viable option to absorb global liquidity, but
also the US has the luxury of being able to
print money to ultimately fund this debt.
Nonetheless, we will be monitoring the
situation closely and we hope that debt
is ultimately reduced to lower and more
sustainable levels and doesn’t become a
source of global market volatility.
The other tail risk we watch closely is
geopolitical. For many years we have
had relative geopolitical harmony with
the US hegemony creating a favourable
backdrop for global stock markets and
with the US’s influence encouraging the
adoption of capitalist models based on the
rule of law, with the desire to do business
being at the heart of the US mantra.
Increasingly, however, the combination
of the rising power of the East with the
unholy undemocratic alliance between
China, Russia and India, and to some
extent the US stepping back from its
role as the global policeman, is creating
a less stable and more volatile global
backdrop. Already we have seen this with
Russia’s invasion of Ukraine and now the
conflict in the Middle East. Dictators and
undemocratic actors around the world are
increasingly seeing the model established
by the East as a real alternative to the one
pushed forward by the US and the West
for several decades.
Unfortunately, we fear future years will
see geopolitics becoming an even greater
problem and whilst one would have
hoped that the events in Ukraine and
the Middle East would have solidified
the world against tyranny, they have in
fact polarised the world into competing
factions. Hence, whilst we have typically
ignored geopolitical risk in the past, often
viewing it as an entry point into markets,
we are increasingly having to factor these
risks into our investment rationales, which
is particularly challenging given the binary
nature of the outcomes.
US debt levels have
risen significantly in
recent years, rising
from $10 trillion in 2000
to $33 trillion in 2023,
at a time when funding
costs are becoming
more expensive and
the demand for US
bonds is diminishing.
17
PORTFOLIO MANAGER’S REVIEW
Conclusion
Almost invariably the drivers of stock
market returns can be distilled down
to two or three key factors. The last
financial year was all about inflation, with
few market participants predicting the
extent to which it would pullback which
set-off a domino effect of missed growth
targets, interest rates remaining high and
surprisingly strong equity markets.
Inflation is also likely to play an important
role in the year ahead, with the focus now
on whether inflation can be brought back
to central bank targets, freeing up central
bankers to start cutting rates and avoiding
a hard landing. Previously we had been
more in the camp that the low hanging
fruit had been had with this last slice of
inflation proving more challenging to
remove, creating scope for disappointment
as rates stay higher for longer. More
recently, however, we had become more
sympathetic to this rump inflation also
dropping out as important inflationary
components such as shelter inflation and
wages become less problematic. Recent
data has indicated that inflation has
ticked back up in early 2024 leading to
the possibility of delays in global rate cuts
which may well disappoint markets, who
seemed to think inflation had been beaten.
We are still of the view that inflation is
on the downward trajectory, even if the
journey is not as linear as markets had
hoped it would be, although there is a risk
that central banks will cut too much, too
fast due to political pressure.
This backdrop should create a reasonable
environment for global stock markets
with falling inflation, peak rates and a soft
landing good for both equities and bonds.
Volatility is however likely to remain a
feature. The inflationary journey will in all
probability be a mixed one and certainly
not linear. As alluded to above, there is
the real risk of policy misstep by central
banks who are not as independent as
many believe them to be. Similarly, we do
not think we are returning to the backdrop
we saw in the 2010s. As we have discussed
in the past, we view this period as being
something of an anomaly and think it
unlikely we will return to an environment
dominated by low volatility, deflation
and zero rates any time soon. Hence,
whilst remaining broadly pro-risk as we
enter the 2025 financial year, we have
introduced more balance into portfolios
both at the country level, including a
meaningful overweight to Japan, but also
across asset classes with bonds becoming
a genuine alternative to equities. We
have also blended styles through owning
value and growth rather than the rather
unidirectional portfolios we ran over the
last cycle. We remain vigilant and think
active management will be even more
important for the period ahead.
Portfolio Review and Activity
Global equity markets performed very
strongly over the course of the financial
year, with the MSCI ACWI NR Index (GBP)
rising 20.6%. Bonds struggled, with the
FTSE UK Gilts All Stocks TR Index flat
over the year, with investors pushing back
their forecasts for interest rate cuts as
inflation fell more slowly than some had
hoped. The UK CPI rose 3.2% over the year.
The portfolio performed very well during
the year with the Company’s NAV total
return outperforming the global market,
with a gain of 25.1%. As well as being
ahead of all three KPIs, this return is
also strongly ahead of the performance
of a traditional 60:40 equities and bonds
portfolio (up 12.0% over the financial year).
The Company’s position in Ocean Wilsons
was a strong contributor during the
financial year, with a return of 64.8%.
The Company’s net asset value per share
rose from 305.0p at the end of March 2023
to 378.6p at the end of March 2024; with
3.2p per share having been paid out in
dividends during that time.
Core and Thematic Funds
The Core Regional and Thematic silo
returned 19.2% for the financial year.
The Company’s North American holdings
were amongst the strongest performers
largely keeping up with the regional index.
Pershing Square Holdings delivered a
return of 46.4% over the financial year. The
manager’s decision to initiate a position
in Alphabet in early 2023 proved to be an
excellent one with the company strongly
contributing to performance throughout
the year. A position in Chipotle Mexican
Grill also increased significantly in value
following very strong results, which
I’ve made clear with
President Xi that we
seek competition,
not conflict.
Joe Biden on China
We have to stop being
naive about the threat
we face from China.
We no longer have the
luxury of time. We need
to act now to get ahead
of this threat.
Mike Rogers, Republican
House Armed Services
Committee chairman
Western countries led
by the United States
have contained and
suppressed us in an all-
round way, which has
brought unprecedented
severe challenges to
our development.
Xi Jinping
Insofar as Canada is
concerned, they have
consistently given space
to anti-India extremists
and violence.
Indian foreign ministry
They chose to attack
us and undermine
us with a scale of
misinformation and
disinformation in their
media that was comical.
Justin Trudeau on India
Rising geopolitical tensions:
Hansa Investment Company Limited Annual Report 31 March 2024
18
PORTFOLIO MANAGER’S REVIEW
showed traffic growth accelerating and
successful new product launches. The
company continues to grow its restaurant
count at 10% a year in North America
and is now increasing investment in its
international expansion. Findlay Park
American gained 28.9%, while Select
Equity increased by 23.4%, with Select
slightly lagging due to its lower exposure
to large cap technology stocks. Beutel
Goodman US Value did well considering
its value bias with a return over the last
year of 17.2%.
In Japan, two new positions, Arcus Japan
and Alma Eikoh Japan Large Cap, were
added in November and they have since
performed well with returns of 15.4% and
11.2%, respectively, since purchase. Arcus’
largest holding, IHI Corp, performed very
strongly in February and March 2024 as
investors forecasted the company would
post record operating profits for the
year ahead. The company had suffered
with an issue in its aero engines division
that has now largely been contained,
which led to a large operating loss in
the year ending March 2024. For Alma,
Mitsubishi Heavy Industries was a strong
performer benefiting from the thematic
drivers of increasing defence expenditure
and the energy transition. The Japanese
government has been investing heavily to
improve their defensive capabilities in the
face of a more assertive China following
decades of relative calm. Indus Japan
gained 9.8% over the year, while Simplex
Value Up has been more muted, up 4.5%,
as its small/mid-cap bias and benchmark
agnostic strategy meant it benefited less
from the broad market upswell.
Within our emerging and frontier
market holdings, BlackRock Frontier
Investment Trust continued its strong
run with a return over the last 12 months
of 19.5%, compared to the MSCI FM Index
which gained 11.5%. Much of the trust’s
financial services exposure performed
well, with Bank of Georgia seeing a
significant increase in its share price
following its acquisition of Armenian
Once again BlackRock Frontier Investment
Trust was a strong contributor to
performance, returning 19.5% over the last
twelve months. Saudi IT company Elm was
the trust’s top performer.
US commercial real estate has been a
huge beneficiary of low interest rates.
The current higher rate world is now
testing many business models.
19
Hansa Investment Company Limited Annual Report 31 March 2024
20
PORTFOLIO MANAGER’S REVIEW
bank Ameriabank, which allowed the
company to access the fast-growing
Armenian market. The manager also
added to its position in Bank Central Asia
in Indonesia given its relatively stronger
funding franchise, though performance
has been volatile since. E-commerce
company Kaspi performed well after
announcing net profit numbers that were
up 60% from the previous year, with strong
growth in all areas of the business. In
the last quarter we sold KLS Corinium
Emerging Markets Equity following poor
performance and a rapid decline in assets
under management and added Redwheel
Next Generation Emerging Markets
Equity, which we feel is better placed to
succeed going forward.
Schroder Asian Total Return benefited
from its significant underweight to China
throughout the year, gaining 8.7% over the
whole year, while the MSCI AC Asia Pacific
ex Japan Index was up just 5.3% over the
last 12 months. Aside from the structural
underweight to China, the manager’s
holdings in the semiconductor producers,
TSMC and Samsung Electronics,
performed strongly as they benefited from
the surge in interest in AI. These were the
fund’s largest two holdings accounting for
c.18% of the fund at the end of March 2024.
NTAsian Discovery delivered an annual
return of 7.7%.
There were some exceptional
performances in the thematic holdings,
with RA Capital International
Healthcare gaining 42.7%. The fund has
seen several of its portfolio companies
being acquired over the last six months.
Icosavax was acquired by AstraZeneca at
slightly above the IPO price, representing
a gain of over 160% over the last year.
Carmot Therapeutics was acquired by
Roche for $2.7bn upfront reflecting a 3.5x
uplift from the company’s last valuation,
with an additional $400m if certain
milestones are met. The company has a
series of promising treatments for type
RA Capital International Healthcare’s
+42.7% gain was helped in part by
AstraZeneca’s $1.1 billion acquisition of
respiratory vaccine developer Icosavax.
Photo courtesy of AstraZeneca.
After many years of stagnation, Japan is
starting to benefit from a more dynamic
corporate sector, driven in part by
government-induced change. The
question with Japan, as ever, is whether
the changes are persistent.
21
Hansa Investment Company Limited Annual Report 31 March 2024
2 diabetes and obesity, areas which have
seen a surge in investor interest over the
last year. Worldwide Healthcare Trust
made a return of 8.3% over 12 months,
while BB Biotech was down 6.9% over
the year.
Both technology funds had strong years
with Polar Capital Global Technology
gaining 26.8% and GAM Star Disruptive
Growth increasing 33.7%. The Polar
fund has leant into AI with a significant
amount of its holdings positioned to
directly benefit from the increased
investor interest in the area. Its top 10
holdings include five of the Magnificent
Seven (NVIDIA, Microsoft, Meta, Alphabet
and Apple) with Amazon also being a
large position for much of the last year.
The fund is also significantly overweight
semiconductors with Advanced Micro
Devices, TSMC and Samsung Electronics
all in the portfolio (alongside NVIDIA)
over the course of the year. GAM is slightly
different with the manager being more
cautious on AI with a smaller weighting to
semiconductors and more investments in
small and mid-cap technology companies.
Polar Capital Global Insurance has
also performed well, gaining 21.3%
over the year. Pricing in the insurance
market continues to be strong with many
companies producing significantly higher
profits off the back of it.
Diversifying Funds
The diversifying holdings are intended
to provide an alternative source of
returns, whilst dampening volatility and
displaying low beta to the equity market.
It is pleasing that they have contributed
positively over the longer-term, especially
when compared to the strongly negative
returns from bonds in that period. The
Diversifying silo returned 5.3% over the
year, while the FTSE All Stocks Gilts Index
was flat. Over three years, the diversifying
silo has returned 13.0%, far ahead of the
20.6% loss of the Gilts Index.
Some of the portfolio’s alternative hedge
funds have performed especially strongly.
Prana Absolute Return made an
impressive 17.2% over the year. The fund is
an equity market neutral long/short fund
specialising in investing in the financials
and business services sectors. The strategy
focuses on trying to hit singles rather
than home runs, meaning that no one
particular trade was a big winner for the
fund, but more the team got the general
direction of travel of the market correct.
As well as a leaning into AI, Polar Capital
Global Technology is significantly
overweight semiconductors, with Advanced
Micro Devices, TSMC, Samsung Electronics
and NVIDIA all in its portfolio.
Photo courtesy of TSMC.
22
PORTFOLIO MANAGER’S REVIEW
Some long positioning in the insurance
industry contributed positively with some
banking positions benefiting from higher
interest rates as well. The two trend-
following CTA funds, GAM Systematic
Core Macro and Schroder GAIA
BlueTrend, also performed strongly over
the year with returns of 7.6% and 13.6%,
respectively. BlueTrend has benefited
from being more trend focused while
the GAM strategy, which has a value
model alongside its trend model, has not
been quite as strong although it has still
performed well.
Nephila Iron Catastrophe Fund, a
specialist strategy investing in catastrophe
bonds and other insurance-related
securities, also continued to perform
well and is now up 24.2% since purchase
in May 2023. We believe these strong
returns reflect the extremely strong pricing
environment in the space and will have
been boosted by the relatively low US
hurricane activity during the 2023 season.
Pricing continues to look attractive for
the 2024 season, remaining at similar
levels to the previous year, with only a
limited amount of new capital entering the
market. The macro trading fund Hudson
Bay rose 5.6% over the year. The fund has
performed well during the period we have
held it, but we took the decision to reduce
its position size at the end of the year after
the manager changed the liquidity terms
and increased the amount of costs charged
to investors as fund expenses. MKP
Opportunity Fund made a small loss over
the year, being down 0.2%.
The portfolio’s diversifying fixed income
holdings mostly managed to deliver
positive performance over the year, despite
gilts being flat over that period. Selwood
Liquid Credit Strategy was the strongest,
gaining 14.5%. The fund sells credit default
swaps to investors looking for protection
against potential defaults of investment
grade debt. Demand has remained robust
as rising rates have made some investors
nervous about whether companies will be
able to refinance their debt piles. Apollo
Total Return also performed well, being
up 8.4% over the year. BioPharma Credit
had a poor first six months but was
stronger in the latter part of the year and
delivered a return of 1.6% over 12 months.
The company had a difficult period in
mid-2023 when a loan to LumiraDx looked
in danger of default. However, the manager
took a very active role in the situation and
forced the company to sell itself to Roche
Nephila Iron Catastrophe Fund benefited
from a strong pricing environment and a
relatively low level of US hurricane activity.
23
Hansa Investment Company Limited Annual Report 31 March 2024
in January 2024, in a deal which will return
the majority of the manager’s invested
capital. The market reacted positively to
this development, making up the earlier
losses and vindicating the protection the
manager wrote into their loan agreement
which allowed them to force the sale.
Private Equity
As we look to add an element of private
equity exposure to the portfolio, we made
four commitments during the financial
year. These were to BPEA EQT Mid-
Market Growth Partnership, Triton 6,
TrueBridge Capital Partners Fund VIII
and TrueBridge Direct Fund III. These
now sit alongside prior commitments
to TA XV, Khosla Ventures VIII, GGV
Discovery IV-US and GGV Discovery IV-
Asia. All are Limited Partnership vehicles
that will draw down capital over several
years as the managers identify investment
opportunities. We feel we are putting
together a very high-quality group of funds
in the private equity arena that will add
differentiated exposures to the portfolio.
It can take several years to build a private
equity portfolio and it is important not
to rush to reach a target allocation and
overcommit. While private equity markets
have been more sedate over the last year,
we anticipate activity picking up during
the year ahead and we will continue to be
prudent about which funds we commit
to. Such investing requires a long-term
mindset that we think sits well with the
portfolio’s structure.
Global Equities (direct)
The portfolio rose 14.7% over the past
year, with the biggest contributors
being Interactive Brokers, Subsea 7
and Bergman & Beving. The biggest
detractors were CK Hutchison, Orion and
Dollar General.
It’s been an exciting journey over the
past seven years as we transitioned the
portfolio from UK equities to a global
equity portfolio. During this time, we’ve
achieved an annualized return of 10%.
Last year, our portfolio exceeded
expectations, achieving a remarkable 20%
earnings growth, surpassing our initial
projection of 10%. Despite this exceptional
performance, we think the intrinsic values
should grow by 10% in the next year, in
line with consensus analyst forecasts.
What’s truly compelling is the potential
for further performance improvement.
Despite the impressive growth, our
businesses continue to be undervalued,
trading at just 70% of our growing
Bergman & Beving, the Swedish-listed
group specialising in acquiring and
developing niche companies in the
industrial and construction industries, was a
significant contributor to performance. We
added to our holding during the year.
Photo courtesy of Bergman & Beving
24
25
PORTFOLIO MANAGER’S REVIEW
intrinsic value. Our portfolio’s current P/E
ratio of 10.9x 2024 earnings may appear
conservative compared to the market’s
18x, but the quality of our businesses
remains underappreciated. Should
the market recognise this quality and
revalue our holdings, we’re positioned to
compound at even higher rates.
GCO embodies the qualities we prize
in our investments: a high-quality
business with sustainable growth, led by
a management team that’s both aligned
and accomplished. Yet, despite these
remarkable attributes, GCO remains
underappreciated, affording us the
opportunity to own it with a significant
margin of safety.
Let’s delve into the pillars of our
investment thesis:
Quality: With a rich 160-year history,
GCO stands as a stalwart in the insurance
industry, offering credit insurance
alongside traditional homeowner and
auto coverage. Despite the perceived risk
in credit insurance, GCO’s disciplined
underwriting practices and the market’s
oligopolistic nature have ensured
consistent profitability and high margins.
Growth: Over the past two decades, GCO
has delivered impressive growth, boasting
a 15.6% CAGR in book value per share, far
outpacing global peers. With a promising
outlook for continued growth, fuelled by
its excess capital of €1.3 bn for strategic
acquisitions, GCO is primed to sustain its
trajectory of double-digit growth in book
value and EPS.
Management: The Serra family’s majority
ownership spanning over 75 years
underscores their prudent stewardship
of GCO. Their conservative management
style, characterised by a long-term
horizon and strategic capital allocation,
resonates with our investment philosophy.
Instead of chasing short-term gains,
they prioritise value creation through
counter-cyclical capital deployment and
astute acquisitions.
Valuation: Despite its sterling
fundamentals, GCO’s valuation remains
compelling. While our initial investment in
2020 was made at 9.5x P/E and 0.8x book
value, GCO’s current trading multiples of
7x P/E and 0.8x book represent an even
wider discount to historical and peer
averages. The valuation remaining low has
worked to our advantage as we were able
to add to our holding at attractive prices.
Despite the stubbornly low valuation
the shares have returned 80% since our
investment, as GCO has produced robust
earnings growth and dividends. We
estimate the business’s intrinsic value at
€54 per share today, with the potential
to reach €92 in the next 4-5 years if they
maintain their low teens ROE, offering
us an enhanced margin of safety at the
current price of €35.
In summary, GCO epitomises the type
of investment opportunity we actively
seek—combining quality, growth, sound
management and attractive valuation—a
recipe for sustainable long-term
value creation.
Overall, we remain optimistic about the
future prospects of our portfolio and are
excited about the opportunities that lie
ahead. We look forward to continuing our
journey of delivering strong returns for our
investors, while carefully managing risk
and maintaining our focus on long-term
value creation.
During the year as well as initiating a
position in Eurowag, we added to our
positions in Bergman & Beving, Subsea
7, Interactive Brokers, GCO, Glencore
and CTT, reduced our positions in
EXOR, CK Hutchison and Arch and
sold our positions in ViaSat, CVS and
Dollar General.
Ocean Wilsons Holdings
As the largest integrated provider of
port and maritime logistics in Brazil, the
Ocean Wilsons subsidiary, Wilson Sons,
has a strong competitive position. It is
the leading provider of towage services
in Brazil with the largest and most
modern fleet, as well as operating major
container terminals in the north and
south of the country: Salvador and Rio
Grande. The company is benefiting from
the continuing recovery in global trade,
as well as a rebounding demand for its
offshore energy-linked services, which
should provide the basis for improved
performance of the firm’s assets.
Wilson Sons operational results have
shown strong growth across the business
during 2023 and the fourth quarter results
(released in March 2024) reflected this.
There was strong revenue growth over
the course of the year (10.6% higher than
the prior year), driven by excellent towage
results, operational growth in container
terminals and a strong recovery in offshore
energy-linked services. Results in the
towage division were particularly strong,
with higher volumes and an increase in
average revenue per manoeuvre, combined
with the launch of two new tugboats.
In the container terminal division,
operational growth has been mainly driven
by a surge in volume at the Rio Grande
terminal (+21.9%). The number of vessel
turnarounds in the offshore support bases
were 37.6% higher than the previous year,
thanks to markedly higher demand for the
company’s offshore energy-linked services.
The investment portfolio shares many
characteristics with the portfolio held
directly within Hansa Investment
Company, with a preference for funds
with clearly defined strategies run by
managers with skin in the game. The
portfolio delivered a return of 10.1% for
the 2023 calendar year, with particularly
strong performance coming from its core
regional exposures later in the year. The
most recent valuation for the investment
portfolio was $310.9m as at the end of
December 2023. Performance has been
helped by thematic exposures to the
technology and insurance sectors. Several
of the technology holdings have benefited
significantly from the surge in investor
interest in AI, while the insurance industry
has seen elevated pricing continue into
2024. Some of the largest private equity
positions include venture capital funds
of funds managed by Stepstone, US
buyout and growth funds managed by
KKR and TA Associates and a financials-
focused fund managed by Reverence
Capital. Dividends totalling $9.1m, in four
tranches, were paid to the parent company
from the portfolio throughout the year.
The board of Ocean Wilsons Holdings has
proposed increasing the annual dividend
payment to shareholders from 70p to 85p
per share from 14 June 2024.
Following its 12 June 2023 announcement
regarding the strategic review of the
OWHL’s investment in Wilson Sons, the
board of OWHL updated investors on 15
November 2023 to state they have engaged
Banco BTG Pactual S.A. as an advisor. The
board also confirmed they have received
a number of indicative non-binding offers.
The board has previously stated that the
review will consider all potential strategic
options and there can be no certainty as to
its outcome. We will report on any further
developments as they are made known.
Alec Letchfield
Chief Investment Officer
March 2024
Hansa Investment Company Limited Annual Report 31 March 2024
A New Panamax container vessel enters the
port of Santos, supported by Wilson Sons
tugboats. New Panamax ships can carry up
to 13,000 twenty-foot cargo units and weigh
up to 120,000 tonnes.
26
27
PORTFOLIO MANAGER’S REVIEW
Investments
Fair value
£000
% of net
assets
Core Regional Funds / Thematic Assets
Findlay Park American Fund 31,578 6.9
iShares Core S&P 500 UCITS EFT 27,202 6.0
Select Equity Offshore Ltd 22,690 5.0
Blackrock European Hedge 1 7,3 87 3.8
Pershing Square Holdings Ltd 13,482 3.0
Schroder ISF Asian Total Return 11,516 2.5
Polar Capital Global Technology 10,056 2.2
BA Beutel Goodman US Value Fund 9,338 2.1
iShares Core MSCI Europe UCITS ETF 9,331 2.1
Schroder ISF Global Recovery 8,817 1.9
Polar Capital Insurance Fund 8,349 1.9
Indus Japan Long-Only Fund 7,878 1.7
Armistice Capital Offshore Fund Ltd 6,592 1.5
Simplex Value UP Master Fund 5,735 1.3
GAM Star Fund PLC – Disruptive Growth 5,502 1.2
Redwheel Next Generation 4,855 1.0
iShares Core EM IMI UCITS ETF 4,408 0.9
NTAsian Discovery Fund 4,385 1.0
BlackRock Frontiers Investment Trust PLC 4,051 0.9
RA Capital International Healthcare Fund 3,769 0.8
Impax Environmental Markets Fund 3,662 0.8
Ishares MSCI World Energy Sector UCITS ETF 3,250 0.7
Ishares MSCI Global Markets & Mining Prods ETF 1,751 0.4
Arcus Japan 1,731 0.4
BB Biotech AG 1,699 0.4
Alma Capital 1,668 0.4
230,682 50.8
Strategic
Ocean Wilsons Holdings Limited
1
130,004 28.6
Wilson Sons 96,263 21.2
Ocean Wilsons (Investments) Limited 33,741 7.4
130,004 28.6
The portfolio
As at 31 March 2024
Continued >
28
Hansa Investment Company Limited Annual Report 31 March 2024
Investments
Fair value
£000
% of net
assets
Diversifying
Global Event Partners Ltd 8,269 1.8
DV4 Ltd
2
7,6 97 1.7
Hudson Bay International Fund Ltd 4,061 0.9
Selwood AM - Liquid Credit Strategy 3,889 0.9
GAM Systematic Core Macro (Cayman) Fund 3,361 0.6
MKP Opportunity Offshore Ltd 3,328 0.7
Schroder GAIA BlueTrend 3,277 0.7
Nephila Iron Catastrophe Fund Ltd 3,141 0.7
Apollo Total Return Fund 2,618 0.6
Keynes Systematic Absolute Return Fund 2,542 0.6
Prana Absolute Return Fund 2 ,178 0.5
BH Absolute Return Government Bond 1,820 0.4
Vanguard US Govt Bond Index Fund 1,492 0.3
BioPharma Credit PLC 1,259 0.3
Lazard Convertible Global 717 0.2
49,649 10.9
Global Equities (direct)
Interactive Brokers Group Inc 6,365 1.4
Grupo Catalana Occidente SA 4,691 1.0
Subsea 7 4,598 1.0
Orion Engineered Carbons SA 3,902 0.9
Arch Capital Group Ltd 3,896 0.9
Exor NV 3,302 0.7
Bergman & Beving 3,104 0.7
Coats Group PLC 2,778 0.6
Glencore PLC 1,719 0.4
CK Hutchison 1,630 0.4
CTT-Correios de Portugal 1,553 0.3
Eurowag 938 0.2
38,476 8.5
Private Assets
Khosla Ventures VIII 135 0.0
BPEA Equity Mid-Market Growth Partnership 99 0.0
Truebridge Direct VIII 80 0.0
Truebridge Capital VIII 28 0.0
342 0.0
Total investments 4 49,1 53 98.8
Net current liabilities (421) (0.1)
Net current assets 5,815 1.3
Net assets 454,547 100.0
1
Hansa Investment Company Ltd owns 9,352,770 shares in Ocean Wilsons Holdings Limited (OWHL). In order to better reflect Hansa Investment Company’s
exposure to different market silos, the two subsidiaries of OWHL, Wilson Sons and Ocean Wilsons (Investments) Limited (OWIL), are shown separately above.
The fair value of the Company’s holding in OWHL has been apportioned across the two subsidiaries in the ratio of the latest reported NAV of OWIL, that being
the NAV of OWIL shown per the 31 December 2023 OWHL Financial Statements, to the market value of OWHL’s holding in Wilson Sons, that being the bid share
price of Wilson Sons multiplied by the number of shares held by OWHL at 31 March 2024.
2
The holdings within the private assets silo, as well as DV4 Ltd are unlisted Private Equity holdings. As such, their 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
2929
Strategic
Review
Hansa Investment Company Limited Annual Report 31 March 2024
30
Investment objective policy
The Company objective is to grow the net assets of the Company over the medium to long-term by investing in a diversified and
multi-strategy portfolio.
The Company seeks to achieve its investment objective by investing in third-party funds, global equities and other international financial
securities. The Company may invest in quoted and unquoted securities.
The Company currently holds a strategic position in the share capital of OWHL. The Company will not make further investments
into OWHL.
The Company has no set maximum or minimum exposures to any asset class, geography or sector and will seek to achieve an
appropriate spread of risk by investing in a diversified global portfolio of securities and other assets.
Investment strategy
The Portfolio Manager, engaged by and acting on behalf of the Company, seeks to build a multi-strategy portfolio by selecting
investments across four key investment categories, in addition to the strategic investment in OWHL:
• Core / Thematic – investments, typically through third-party funds, selected by the Portfolio Manager to provide appropriate regional
and thematic exposures.
• Thematic – investments, typically through third-party funds, that reflect key investment themes the Portfolio Manager believes will
generate excess returns.
• Diversifying Assets – investments, typically through third-party funds and directly, that create asset diversification within the portfolio.
• Global Equities (direct) – a diversified portfolio of global equities identified 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. These can be adjusted by the Board. While the proportion of the portfolio
represented by each of these categories will vary over time, the Board establishes parameters for the Portfolio Manager, based on its
view of the global investment environment. The Board has set the following guidelines for each category as a percentage of the portfolio
(including the strategic investment in OWHL):
• Core / Thematic: 0-75%
• Diversifying Assets: 0-40%
• Global Equities: 0-40%
• Private Assets: 0-15%
The 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. These investments range from those sectors benefiting from
structurally higher growth, such as technology, to assets which the Company believes stand on unwarranted discounts to their
intrinsic value.
During the year, further commitments to limited partnerships have been made as part of the build-out of a private equity programme.
This follows the prior year’s agreement between the Portfolio Manager and the Board to add an allocation to Private Equity and Venture
Capital to the Portfolio. This is expected to be a multi-year programme, which will develop access to investments that are not available in
public markets. The long-term nature of private equity aligns well with the long-term investment horizon of the Company, and the Board
believes this new exposure will be seen as very attractive by existing and potential future shareholders.
Borrowing limits
The Board considers whether returns may be enhanced if the Company introduces leverage at appropriate times. The 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 sufficient value and diversity within the portfolio to meet the lender’s borrowing requirements. The Portfolio Manager is able
to utilise this facility as required up to the upper limit available. No amounts have been drawn from this facility during the year.
Investment monitoring and key performance indicators (KPIs)
We recognise that measuring the performance of portfolios is essential to both determining if they are meeting their return targets
and the risks taken in achieving these returns. However, we also passionately believe that the benchmarks and/or comparators
against which portfolios are measured should be appropriate for achieving the end objectives, with poorly chosen benchmarks often
encouraging short-term actions which more often than not are damaging to meeting the longer-term aspirations.
Investment objective, strategy and performance
STRATEGIC REVIEW
31
It is for this reason that we believe it right to adopt a handful of KPIs rather than a single benchmark. As long-term multi-asset class
investors we are seeking to both preserve and grow the real spending power of our capital over time through the dynamic selection of
different countries, assets and sectors. No one benchmark captures this approach and, indeed, the adoption of a single benchmark may
result in the fund deviating from its longer-term goals in the pursuit of short-term returns.
Instead, the Board believes that considering the portfolio performance against the following KPIs will provide a more informed
understanding of the performance of the portfolio and if it is meeting its longer-term objectives:
Objective KPI Indices used
Safe return UK Government bonds FTSE Gilts All Stocks TR Index
Growing the real spending power of money
through time
Achieve returns that are higher than inflation UK CPI
Long-term capital growth Equity market performance MSCI All Country World Index (both market cap
weighted and equally weighted to remove the
distorting effect of the Magnificent 7)
The Board regularly, and at least quarterly, reviews the returns and the performance of the Company with the Portfolio Manager,
including an analysis using the KPIs.
Additionally, whilst not specifically a KPI, the cost of managing the Company is monitored against the NAV (the ratio between costs and
the NAV is also known as the ‘ongoing charges percentage per annum ratio’); and the discount/premium the shares sell at in relation to
the NAV are likewise monitored.
The Board of Directors monitors the returns made in absolute and relative terms against the KPIs established. The comparisons are
made over 1, 3, 5 and 10 year time horizons.
i) Shareholders and company – total returns
To 31 March 2024 1 year 3 years 5 years 10 years
Share price total return
Ordinary shares 22.7% 11.4% 1 7.4 % 43.1%
‘A’ non voting Ordinary shares 21.8% 8.0% 14.4% 39.7%
Portfolio NAV 25.1% 2 7.4% 42.6% 79.0%
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 2024
1 year
average
3 years
average
5 years
average
10 years
average
Share price total return
Ordinary shares (41.4%) (38.4%) (36.9%) (31.9%)
‘A’ non voting Ordinary shares (42.9%) (39.4%) (37.3%) (33.2%)
AIC (%) (12.1%) (8.7%) (7.6%) (5.4%)
Note: AIC only produces an AIC average for one year.
Whilst there are investment trusts that exhibit one or more similarities to the Company, the Board does not consider the Company to
have any direct peers.
Hansa Investment Company Limited Annual Report 31 March 2024
32
iii) Key performance indicators
The following are the KPIs the Board uses to assess the returns of elements of the portfolio and of the Company as a whole.
To 31 March 2024 1 year 3 years 5 years 10 years
NAV Total Return 25.1% 2 7.4% 42.6% 79.0%
NAV Total Return (Ex OWHL) 14.0% 10.6% 37.0% 71.8%
FTSE UK Gilts All Stocks TR Index 0.0% -20.6% -1 7.5% 7.8 %
UK CPI Inflation 3.2% 21.6% 24.3% 33.4%
MSCI ACWI NR (GBP) 20.6% 33.8% 73.9% 203.3%
iv) Expense ratios
To 31 March 2024 1 year 3 years 5 years 10 years
Ongoing annual charges (%) 1.0 1.1 1.1 1.1
To comply with the Packaged Retail and Insurance-based Investment Products Regulation (PRIIP), the Company has issued a PRIIPs
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
financial results for the year to 31 March 2023, the PRIIP KID cost ratio is 1.78% per annum.
STRATEGIC REVIEW
33
Capital structure
The Company has 40,000,000 Ordinary shares of 1p (1/3 of the total capital) and 80,000,000 ‘A’ non-voting Ordinary shares of 1p (2/3 of
the total capital) each in issue. The Ordinary shareholders are entitled to one vote per Ordinary share held. The ‘A’ non-voting Ordinary
shares do not entitle the holders to vote or receive notice of meetings, but in all other respects they have the same rights as the
Company’s Ordinary shares. See also Note 13 in the Notes to the Financial Statements.
Shareholder profile
The Company’s shares owned at 31 March 2024 are as follows:
Ordinary shares ‘A’ non-voting ordinary shares
Institutional and wealth managers 16,326,624 40.82% 72,605,306 90.76%
Directors 11,220,745 28.05% 3,817,123 4.77%
Private individuals 12,423,589 31.06% 3,348,753 4.19%
Other 29,042 0.07% 228,818 0.29%
40,000,000 80,000,000
Substantial shareholders
As at 31 March 2024, 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 25.87%
Victualia Limited Partnership 10,347,125 25.87%
Sky Hill Limited 1,730,000 4.33%
These holdings are correct as of 31 March 2024 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. The late-1950s also saw the
acquisition of a significant shareholding of Ocean Wilsons Holdings Limited through the issuance of the ‘A’ non-voting Ordinary shares
by the Company’s predecessor, Hansa Trust. Over the following decades, the Salomon family helped to build the publicly-owned and
independently run investment company we know today, with its focus on delivering reliable long-term asset growth for shareholders.
The wider Salomon family remain significant investors in the Company. William Salomon, Sir Walter’s son, a director of HICL and Senior
Partner of the Company’s Portfolio Manager, is interested in 10,347,125 of the shares held by Victualia Limited Partnership, representing
25.9% of the voting share capital. In addition, William Salomon has further interests in the Company’s shares; the total interest is detailed
in the Directors’ Interests section. Other members of the wider Salomon family, who are also descendants of Sir Walter, are interested in
a further 12m shares in the Company.
Restrictions associated within the share classes
The giving of powers to issue or buy back the Company’s shares requires an appropriate resolution to be passed by shareholders.
Proposals for the renewal of the Board’s powers to buy back shares are set out in the Notice of the Annual General Meeting.
There are: no restrictions concerning the transfer of securities in the Company; no agreements between holders of securities regarding
their transfer known to the Company; and no agreements between the Company and its Directors concerning compensation for loss
of office. Notwithstanding the foregoing, the Company can require any holder of the Ordinary voting shares to transfer some or all of its
shares (or otherwise refuse to register any transfer of shares) to avoid the Company, if the Company were a company which was resident
for tax purposes in the UK, being regarded as a “close company” as defined in s.414 of the UK Income and Corporation Taxes Act 1988, to
another person whose holding of such shares, in the sole and conclusive determination of the Board, would not 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.
Shareholder profile
Hansa Investment Company Limited Annual Report 31 March 2024
34
As at 14 June 2024, the date of signing of the Annual Financial Statements, there have been no disclosures to the Company of changes of
interests under DTR 5.
Board and management shareholdings
Directors’ Interests
The interests of Directors and their connected parties in the Company at 31 March 2024 are shown below:
Ordinary shares
of 1p each
‘A’ non-voting ordinary shares
of 1p each
Nature of
interest
W Salomon 11,1 69,34 5 27. 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 14 June 2024, 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
£3,065,129 (including Portfolio Management and Additional Administrative Services Provider (AASP) functions). The fees outstanding at
the year end amounted to £285,000. 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 14 June 2024, the date of signing of this Annual Report, the management and staff of the wider Portfolio Manager’s group
(Hanseatic Asset Management LBG, an Investment Manager and AIFM located and regulated in Guernsey), excluding the holding
of William Salomon, shown above, were interested in circa 10.3m shares in the Company – a mixture of Ordinary and ‘A’ non-voting
Ordinary shares.
STRATEGIC REVIEW
35
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. This includes an explanation of how the Board has sought to promote the Company for the benefit
of its members, how it has taken into account the likely long-term consequences of decisions and how it fosters relationships with
stakeholders. The Company is an investment company with an appointed Portfolio Manager. As a result, it has no direct employees or
customers. The Board has identified the Company’s shareholders, its Portfolio Manager (as well as the Additional Administrative Services
Provider, “AASP”), its other key service providers as its key stakeholders.
STAKEHOLDER INTERACTION
Shareholders
The shareholder base is a mixture of private investors, wealth managers and asset managers across both
classes of the Company’s shares. The Board monitors changes in the shareholder base at its Board meetings.
The 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. The Company
also holds periodic shareholder presentations incorporating presentations by the Board and key service
providers to keep shareholders informed.
The Board seeks to understand the opinions of a wide variety of shareholders. The Company maintains
a dedicated email address for shareholders to contact the Board (HICLenquiry@hansacap.com) and
shareholder correspondence and feedback is a regular item of discussion at Board meetings.
The Company continues to meet shareholders and other interested parties facilitated by its broker, as well
as through direct contact. The 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.
The Board uses 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. The next shareholder event is planned for 25 September 2024 as a
hybrid online and physical meeting.
Portfolio Manager
and AASP
The Board’s main working relationship is with the staff of HCP as the Portfolio Manager and the AASP.
HCP is responsible for the Company’s portfolio management (including asset allocation, stock and sector
selection in accordance with guidelines established by the Board). It is also responsible for administrative
and operational functions including day-to-day oversight of the other key service providers (Administrators,
Custodians, Registrar and Company Secretarial). Successful management of shareholders’ assets by the
Portfolio Manager is crucial to enable the Company to deliver its investment strategy and meet its objective.
The AASP also assists with the preparation of the Annual and Half-Year Financial Statements as well as
Factsheets and website updates. The 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 (Apex Fund Administration Services (UK) Ltd),
Custodian (Lombard Odier) and Registrar (Computershare Investor Services (Bermuda) Limited). Whilst the
Board looks to the Portfolio Manager and the AASP to keep a day-to-day oversight of these providers, they
are contracted directly to the Company. As such, the Board retains ultimate responsibility for their roles. The
AASP reports regularly on operational matters. The Board seeks to visit each provider at least annually for a
face-to-face meeting to discuss service levels, operations and future developments.
Stakeholder engagement
Hansa Investment Company Limited Annual Report 31 March 2024
36
Main areas of engagement
KEY AREA TOPIC ENGAGEMENT AND OUTCOMES
Investment strategy
and ESG matters
The 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.
The Board has engaged with the Portfolio Manager and
encouraged them to develop a responsible investment
policy. The Board notes that the Hanseatic Group, of
which the Portfolio Manager is a member, is a signatory
to the UNPRI. The Board wholeheartedly supports this
policy. See page 45 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.
The Board is mindful of, and regularly considers, the
share price compared to the NAV and related discount.
The Board is of the view that providing transparency
and clarity to investors, as well as promoting demand
for the Company’s shares, should create a positive
impact on the discount for the medium to longer-term.
To this end, the Board has redeveloped the Company’s
website, its Annual and Half-Year Financial Statements
and its factsheets and quarterly reviews. The Board
continues to develop the Company’s branding and
communications strategy with shareholders and
potential shareholders alike. The 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.
The 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 readily available. This in due course
should increase demand for the Company’s shares.
Each investment company 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. The
Board has considered a share buy-back policy but does
not consider this would have a significant effect 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 benefits of
diversification generated by the investment portfolio.
STRATEGIC REVIEW
37
Capital structure
The Company has two separate share classes,
both of which are traded on the LSE. The
Ordinary shareholders are entitled to one vote
per Ordinary share held. The ‘A’ non-voting
Ordinary shares do not entitle the holders to
vote or receive notice of meetings, but in all
other respects they have the same rights as the
Company’s Ordinary shares. Consideration has
been given to whether the two share classes
could be merged in some way.
The current position of Ordinary and ‘A’ Ordinary share
classes remains unchanged as the majority of Ordinary
shareholders have informed the Board they do not wish
to alter the present structure at the present time.
Dividends
The Board continues to support maintaining
the dividend at 3.2p until it is fully covered by
net income. At that time it plans to increase it
in line with any increase in the net income of
the Company.
The 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 insufficient to meet this
dividend commitment and the shortfall is made up from
the Company’s reserves. In principle, your Board does
not believe it to be in the Company’s best interests to
use capital as a source from which to pay dividends.
Maintaining levels
of service from
service providers
The Company does not have direct employees.
Rather, its operations are conducted by several
key service providers. The Company enters into
service-level agreements with each provider.
The Board oversees these services to ensure
best practice is followed and that the Company
is receiving a comprehensive service and value
for money.
The independent members of the Board annually
review the performance of the Portfolio Manager.
Additionally, the day-to-day performance of other
key service providers (Administrator, Custodian and
Registrar) are monitored by the AASP on behalf of the
Board. In addition, there is an annual review of service
providers' annual Controls Audit Reports. Members of
the Board also visit each key service provider annually
to review performance and understand any changes in
their businesses.
Notice period for general meetings
The Company’s Bye-Laws permit that the Company’s general meetings (other than AGMs) may be held on 14 days’ notice.
Annual General Meeting
The Company’s Notice of Annual General Meeting is included in this Report.
Authority to repurchase ‘A’ non-voting Ordinary shares
A resolution will be proposed at the forthcoming AGM, seeking shareholder approval for the renewal of the authority for the Company
to repurchase its own ‘A’ non-voting Ordinary shares. The Board believes the ability of the Company to repurchase its own ‘A’ non-voting
Ordinary shares in the market could potentially benefit all equity shareholders of the Company in the long-term.
The Company’s Bye-laws are drafted in such a way that the Company may from time to time purchase and cancel its own shares.
However, the Company requires that shareholders’ approval to repurchase shares be sought. At the AGM the Company will therefore
seek the authority to purchase up to 11,992,000 ‘A’ non-voting Ordinary shares (representing 14.99% of the Company’s issued ‘A’ non-
voting Ordinary share capital, the maximum permitted under the FCA Listing Rules), at a price not less than 1p per share (the nominal
value of each share) and not more than 5% above the average of the middle-market quotations for the five business days preceding
the day of purchase or, where a series of transactions have taken place the higher of the last independent trade and current highest
independent bid on the trading venue where the purchase(s) will be carried out. The authority being sought, the full text of which can be
found in the Notice of Meeting, will last until the date of the next AGM.
The Company is seeking authority to use its realised capital reserve to allow repurchase of shares in the market. The decision as to
whether the Company repurchases any shares will be at the absolute discretion of the Board. Any shares purchased will be cancelled.
The Directors consider that all the resolutions to be proposed at the forthcoming AGM, as set out in the Notice of AGM, 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 significant proportion of votes have been cast against a resolution at the AGM, the Company will explain, when
announcing the results of voting, what action it intends to take to understand the reasons behind the results of the vote.
Hansa Investment Company Limited Annual Report 31 March 2024
38
Bye-laws
The Company seeks shareholder approval to amend its Bye-
laws. The resolution will be proposed as a special resolution. The
proposed amendments are being introduced in the Bye-laws
primarily to:
• provide the Company with a more modern, efficient and cost-
effective approach to paying dividends to shareholders; and
• encourage action from the very small number of shareholders
who fail to provide information required by the Company to
enable it to meet its reporting obligations under the Foreign
Account Tax Compliance Act (FATCA), the Common Reporting
Standard (CRS) or any similar law or regulation.
In more detail, the key proposed changes are as follows:
a) Method of Payment of Dividends – Bye-law 19
Bye-law 19 has been updated to provide the Company with
discretion to prescribe the manner in which dividends and other
monies are paid. Currently the Company pays dividends by
cheque or electronic payment. The use of cheques has reduced
in recent years, while development of new payment methods
(that offer greater efficiency, improved security of payments and
reduced costs) has steadily increased. There has therefore been
a move by companies across the market to re-evaluate their
dividend payment processes and allow their Boards to determine
the most efficient manner to pay dividends to shareholders,
including that it is in the best interests of members for payments
to be made exclusively by inter-bank transfer or other electronic
means approved by the Board. The updates to Bye-law 19 will
provide the Company with the same discretions, and the ability to
apply different methods of payments or different combinations of
methods to different shareholders or groups of shareholders.
Where payment of the dividend or other monies cannot be
made by the Company to a Member in the method prescribed
by the Board using the information that member has provided,
or the member has not provided the Company with the required
information, account or address details necessary in order for
the Company to make the payment, a new Bye-law 19.3 has been
included to provide that such dividend or other monies will be
treated as unclaimed until the Member can provide the required
details to the Company.
b) Withholding payment of dividends from shareholders who
refuse to provide FATCA or CRS information to the Company -
Bye-law 83.
The FATCA rules which require certain non-US financial
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
financial institution must comply with its FATCA due diligence
and reporting obligations, whether imposed under a direct
agreement between the financial institution and the IRS, or
under the domestic law of the jurisdiction in which the financial
institution is established. In addition, the financial institution may
be subject to financial 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 deficient, and the Company may be subject to
negative intervention from the authorities in Bermuda, including
finding itself subject to financial penalties. There are a small
number of shareholders who do not respond to requests for
information. In order to resolve this, the Company’s Bye-laws were
updated in 2023 to put in place a mechanism (under Bye-law 83)
to obtain the required information or remove the Non-Responders
from the Company’s register of members.
As a further effort by the Company to encourage Non-Responders
to provide the required information, the Company has proposed
updates to Bye-law 83.3 to allow the Company to withhold
payment of dividends to Non-Responders until they provide the
required FATCA/CRS information to the Company. To the extent
exercised, this withholding sanction will only be implemented
after efforts by the Company to first obtain the necessary
information from the Non-Responder.
Please also see set out in the AGM Notice on page 82 a
summary of the two proposed amendments to the Bye-laws.
STRATEGIC REVIEW
39
The Company has risk management processes in place which enables the Board to identify, assess and manage the principal risks faced
by the Company. Consistent with the AIC Code and UK Corporate Governance Code, these risks are considered to have the potential to
threaten the Company’s business model, future performance/returns, solvency, liquidity, reputation, or regulatory status. An integral part
of this process is the maintenance and ongoing evaluation of the Company’s Risk Assessment & Controls (RAC) Matrix, which identifies
both the risks and associated controls operating within the Company and relevant third-party service providers. To ensure emerging
risks are assessed on an ongoing basis, the Board reviews the RAC Matrix at each Board meeting, considering HICL’s current and future
anticipated risk environment. The Board 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). The 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. The main risk being that over the long-term (determined as greater
than five years), shareholders do not make a return from investing in the Company. The Company’s closed-ended fund structure is
also considered to be in alignment with its stated objective, especially within extremely volatile market conditions. This is due to the
portfolio not having to be managed and maintained to manage potential significant redemptions or short-term liquidity needs as
open-ended funds would. Additionally, the closed-ended structure can take advantage of less liquid market opportunities as part of its
portfolio holdings.
The principal risks and uncertainties identified and associated controls in place to manage these risks are described below:
PRINCIPAL RISKS EXTERNAL CONTROLS TO MITIGATE RISKS
Market risk – long-term
company share performance
Market risk includes interest rate,
currency, equity, credit, inflation,
concentration, liquidity and macro
geopolitical risks.
The Board:
• has appointed an appropriate PM whose performance for the Company is reviewed and
challenged on a quarterly basis;
• has set investment guidelines and restrictions, which are reported against by the PM on a
monthly basis;
• operates an asset allocation model, which is regularly reviewed and discussed with the PM; and
• monitors and discusses portfolio construct and performance quarterly.
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.
The Board:
• regularly reviews the share price, discount level and portfolio performance;
• maintains periodic oversight on shareholder-base;
• actively seeks feedback both directly from shareholders and indirectly through the Company’s
Broker or specific 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.
The Board:
• obtains regular updates and advice from relevant professional advisers;
• maintains oversight and receives regular reporting on the legislative and regulatory changes,
which impact HICL, as monitored by the PM;
• maintains the Company’s membership with the Association of Investment Companies;
• has adopted the PM’s responsible investing policy;
• has set explicit expectations on the integration of ESG considerations within the investment
process;
• continues to develop ESG disclosures in compliance with reporting regulations; and
• receives documented confirmation of the PM’s adherence to relevant regulatory requirements
and emerging sanction risks.
Reputational risk
Negative behaviours, publications
or market sentiment impacting the
reputation of the Company.
The Company:
• requires the annual selection of Board members, all of whom must have a commitment
to governance;
• 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
Hansa Investment Company Limited Annual Report 31 March 2024
40
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 financial information.
• Identification and certification 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 effectiveness 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. This 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 financial 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
The Company through its Bye-laws has indemnified its Directors and Officers to the fullest extent permissible by law. During the year the
Company also purchased and maintained liability insurance for its Directors and Officers.
Going concern
The Company’s business activities, together with the factors likely to affect its future development, performance and position, including
its financial position, are set out in the Chairman’s 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. The 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. The Directors consider 12 months to be a relatively short time frame when considering performance and look to the
longer-term for both the performance and risks associated with the Company. The Directors consider a period of five years to be a more
representative period, which aligns with the Portfolio Manager’s longer-term horizon. This period is sufficiently long to manage short-
term market volatility and allow longer-term performance to work through. The Board continually monitors the Investment Strategy
and Investment Guidelines issued to the Portfolio Manager and directs the Portfolio Manager to target long-term capital preservation.
Further, whilst the Board has sanctioned the use of gearing, the facility available to the Portfolio Manager is relatively small compared
to the NAV of the Company. Finally, a number of the more significant costs in each financial year are contracted to be calculated on the
basis of the underlying NAV of the Company. As such, in a period of negative portfolio performance, the cost base should also fall.
Barring unforeseen circumstances and taking account of the Company’s current position, the principal risks, the longer-term strategy
for the portfolio, including a diversified and liquid asset base and the lack of gearing, the Directors confirm they have a reasonable
expectation that the Company will continue to operate and meet its liabilities as they fall due for the next five years.
GOVERNANCE
41
Governance
41
Hansa Investment Company Limited Annual Report 31 March 2024
42
The Directors who served the Company during the year to 31 March 2024 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 20
years. He was head of the KPMG Insurance
Group in Bermuda for 15 years, a member
of the firm’s Global Insurance Leadership
Team and Global Lead Partner for a
number of large international insurance
groups listed on the New York and London
Stock Exchanges.
Richard has significant regulatory
experience, 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 significant transaction
experience. Richard is based in Bermuda.
Richard also holds non-executive
directorships with Aspen Insurance
Holdings, Geneva Re, Oakley Capital
Investments and Phoenix Re Limited.
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 qualified as a Chartered
Accountant and then joined George M.
Hill and Co. and became an authorised
dealer on the London Stock Exchange.
The firm was acquired by Wedd Durlacher
Mordaunt and Co. where Jonathan
became a partner in 1975. He was the
senior dealing partner of the firm on its
acquisition by Barclays Bank to form BZW
in 1986.
Jonathan developed BZW’s Fixed Income
business prior to becoming chief executive
of the Global Equities Business in 1991.
In 1996 he became deputy chairman of
BZW and then vice chairman of Credit
Suisse First Boston (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 21 years, she has been
a director of Merifin 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 firm
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 The European Smaller
Companies Trust, a Janus Henderson
Asset Management Investment Trust
listed on the London Stock Exchange and
director of Industrie Saleri Italo S.p.A. an
Italian private company in the automotive
supplier sector.
Following Nadya Wells’ decision to not
stand for re-election, with effect from
14 June 2024, the Board has appointed
Simona Heidempergher to chair the
Nomination Committee in addition
to her continuing role as Chair of the
Remuneration Committee.
The Board of Directors
GOVERNANCE
43
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
significant, long standing, investment in
the Company.
William’s experience in investments and
finance is important to the Board in
developing and monitoring investments
in special investment themes and in the
Company’s strategic investment through
Ocean Wilsons Holdings Limited in
Wilson Sons.
William is the senior partner of Hansa
Capital Partners LLP, the Portfolio
Manager and Additional Administrative
Services Provider, deputy chairman of
Ocean Wilsons Holdings Limited and a
director of its Brazilian listed subsidiary
Wilson Sons Holdings Brasil S.A.. 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 29 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 five
years with INVESCO Asset Management
Limited, investing in public and private
equity managing a closed ended fund.
She started her career in management
consultancy with Ernst & Young.
She holds a non-executive directorship
at Baring Emerging EMEA Opportunities
plc where she is senior independent
director. Nadya is 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 financing in Global Health. She holds
an MBA from INSEAD, France.
You will note from the Chairman’s
Report that Nadya has chosen not to
stand for re-election as a Director of
the Company at the AGM as a result of
additional professional commitments
that she intends to take on. The Board
is starting the process of identifying a
director to join the Board in Nadya’s place.
Nadya will remain as a Director until the
Company’s AGM.
Board members are selected based
on their individual and complementary
skills and experience and their
ability to commit sufficient time
to drive the Company’s success.
All Directors will retire at each
AGM and offer themselves for
consideration for re‑election.
The Board recommends the
re‑appointment of each of the four
Directors who have put themselves
forward, 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 office.
Hansa Investment Company Limited Annual Report 31 March 2024
44
This section explains how the Board has organised the Company
and seeks to deliver its objectives.
Board committees and roles
The Directors consider that, in order to fulfil their responsibilities
as the Directors of the Company, they should all be members of
every sub-committee where possible. Where a Director cannot
be a member of a committee, they should attend the meetings
unless a conflict exists and it would be inappropriate for them to
be present.
Audit Committee
Richard Lightowler is the Chairman of the Audit Committee.
The Audit Committee consists of all independent Directors of
the Board. The Audit Committee exists to assist the Board in
the financial 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 assessment of the independence, performance and
quality of Company’s external auditor PricewaterhouseCoopers
Ltd. The Committee meets at least twice a year – timed to review
the Annual and Half-Year Financial Statements prior to their
approval and release.
The 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. The Board is of the opinion that, particularly as the
Company has relatively few Directors, shareholders benefit from
the views of all Directors. Therefore, Jonathan Davie, as Chairman
of the Company, is also a member of this Committee. The Board
further acknowledges that the AIC Code states all Committee
members should be independent. Therefore, William Salomon
is not a member of the Committee although attends as a non-
member. The Committee reports its recommendations to the
Board for final approval.
See page 55 for the Audit Committee Report
Nomination Committee
The Committee was chaired by Nadya Wells throughout the
Company’s financial year. All independent members of the Board
are members of the Nomination Committee. William Salomon
attends the Committee but is not a member.
The 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 identified,
the Committee is responsible for identifying and nominating
candidates to fill Board vacancies as and when they arise.
Following Nadya’s decision to not stand for re-election, with
effect from 14 June 2024, the Board has appointed Simona
Heidempergher to chair the Nomination Committee, in addition
to her continuing role as Chair of the Remuneration Committee.
See page 60 for the Nomination Committee Report.
Management Engagement Committee
The Committee is chaired by Jonathan Davie. All independent
members of the Board are members of the Management
Engagement Committee. The 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.
The level of management fees, level of service provided and the
performance of the Portfolio Manager are reviewed on a regular
basis to ensure these remain competitive and in the best interests
of shareholders. The Board, after the annual recommendation
of this Committee, considers whether the engagement of the
Portfolio Manager is in the best interests of the shareholders.
The 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.
The Committee reports its recommendations to the Board for
final approval.
Remuneration Committee
The 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. The 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.
The 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. The level of directors’ fees should be set at
a level which attracts and retains high calibre candidates. Fees
are monitored against external benchmarks taking specific note
of each Director’s duties, time commitments to properly fulfil
all obligations and duties and also relative to other comparable
companies in comparable jurisdictions. No Director sets their own
individual remuneration.
The Committee reports its recommendations to the Board for
final approval.
See page 57 for the Directors’ Remuneration Report.
Organisation and objectives
GOVERNANCE
45
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 effective action to
be taken and are committed to doing so. It is the Board’s belief
that responsible investing and a well-run sustainable business
model aids in generating superior long-term returns.
The Board is responsible for the Company’s ESG policy. In
2020, the Board adopted the Portfolio Manager’s Responsible
Investment Policy, which is applied to all Company investments
in funds and companies, in both public and private markets.
In line with the evolving nature of ESG’s integration within
financial services, the PM continues to review and develop their
policy of responsible investing within their investment process.
This involves ensuring environmental, social and governance
factors are 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.
This certainly includes the negatives – such as understanding how
companies are lowering their carbon emissions, ensuring they are
not using forced or child labour in their supply chains, taking care
not to deplete natural resources, or be involved in deforestation.
But it also includes the positive impacts, for example, knowing
if a company is taking advantage of the opportunities it may
have from climate change by developing greener energies,
recycling 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 benefits for the Company, as well as the
environment and the greater society.
Following the first UNPRI submission by the Hanseatic Group,
made in 2023, we are pleased to report that they received very
positive feedback on both their policies and approach adopted.
Fund investments
HCP seeks to invest in funds who are responsible owners of their
investee companies, have specific consideration as to how their
investee companies manage their ESG responsibilities and seek
to engage with those company boards, if they are failing in their
duties. Where a manager is not living up to these standards, HCP
will first seek to engage the management team and encourage
improvement. If the managers engagement is weak, or if the
communicated concerns are not sufficiently addressed and their
positive commitment to do so is not apparent, HCP’s ultimate
action would be to reduce the current investment, exit, or not
invest in the first place. Whilst HCP does not seek to exclude
fund managers that invest in sectors such as energy or countries
such as China, it would, 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. The Board oversees a long-term and sustainable
approach to business strategy of the Company. This in part is
done by adopting a Responsible Investment Policy, which aims to
integrate sustainability, climate-related risks and opportunities,
social responsibility and strong governance into the Company’s
investment process. This 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
identified, assessed and managed by HCP as the Portfolio
Manager. As part of the portfolio risk management and
monitoring process, HCP combines long-term and purpose-driven
engagement with underlying fund managers and companies,
active voting and setting a clear escalation framework. This
approach aims to identify and address climate-related issues
and minimise systemic risks that may impact the assets within
the portfolio. Engagement can take several forms, including
regular and ad hoc meetings with management, formal written
correspondence, or the Portfolio Manager participating in relevant
Hansa Investment Company Limited Annual Report 31 March 2024
46
shareholder votes for current investments.
Strategy
The Company’s strategic objective is to grow its net assets
over the medium to long-term by investing in a diversified and
multi-strategy portfolio. In line with this objective, the Board
are responsible for pursuing the growth of shareholder value.
Responsible investment and the integration of ESG risks and
opportunities within the investment process is aligned with the
Company’s values and heritage. HCP becoming a signatory to
UNPRI is part of our overall strategy.
Metrics and targets
In relation to the Portfolio Manager’s investment process, a
more holistic approach is taken by assessing an investment by
their intent and direction of travel, rather than purely by specific
targeted metrics. The ESG assessment of a fund manager or
company will involve HCP developing a view by utilising their
published ESG reporting, the information received through the
due diligence and engagement processes and other external
research. The Company has no material information to report in
relation to metrics and targets.
Ocean Wilsons Holdings Limited
OWHL has two investments – Ocean Wilsons Investments Ltd, an
investment portfolio and a holding in Wilson Sons Holdings Brasil
S.A., a Brazilian maritime business. From an ESG standpoint, our
Portfolio Manager is also the investment advisor to the Ocean
Wilsons Investments’ portfolio. The Board understands that our
Portfolio Manager is engaging with Ocean Wilsons Investments’
board on their Responsible Investing Policy. As a Board we
receive periodic updates from Wilson Sons, an operating business
with several thousand employees, regarding their business
including issues relevant to ESG considerations. Wilsons Sons
is listed on the Novo Mercado (“New Market”) B3 listed segment
and is a member of the Carbon Disclosure Project which, in
partnership with companies and governments, aims to build a
truly sustainable economy, by measuring and understanding the
environmental impact. In 2022, Wilson Sons achieved a grade B
performance in the climate change questionnaire for the maritime
transportation segment. This was an improvement from the
grade C performance achieved in 2021, making Wilson Sons in
line with 44% of companies in the maritime sector that publicly
disclose their data to CDP. Wilson Sons continues to be proud of
their focused approach to health & safety, staff wellbeing and the
preservation of the environment and communities they operate
in. This continued focus was awarded through the “Great Place
to Work” certification, which is a standard of excellence for work
environments, and have been ranked in the top quintile of the
S&P Global 2022 Corporate Sustainability Assessment. As in
many heavy industries, there is a focus on safety and improving
working practices to minimise staff injuries. To this end, Wilson
Sons has a non-negotiable commitment to ensuring the health
and safety conditions of all employees, customers and third
parties at their facilities. Their commitment to maintaining
an increasingly safe working environment is reflected by their
continuous trend of reduction in lost-time injuries, which in 2022
was reduced to a frequency rate of 0.50 incidents per one million
hours worked. This rate exceeds the world-class benchmark.
Additionally, the reduction of Greenhouse Gas emissions remains
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 Sustainability Report, published on their
website www.wilsonsons.com.br/en.
Carbon offset and charitable support
Each year, there are a number of flights for individual Directors
to attend Board meetings in Bermuda. Therefore, the Board
has elected to offset the carbon impact of its travel on behalf
of the business though a relationship with Greenfleet Australia
(www.greenfleet.com.au). This year, circa 163 tonnes of carbon
dioxide has been offset. Greenfleet Australia runs a tree planting
offset programme.
Additionally, during the year the Board looked for an
environmental cause to sponsor that has direct relevance to
Bermuda, our country of domicile. Given its island status,
Bermudians are more aware than most of the marine
environment. Marine life is under threat from climate change,
acidification of the sea, pollution and invasive species. But these
threats are compounded by overfishing, which strips the ocean of
life, and so reduces its capacity to produce oxygen, absorb carbon
dioxide and regulate the climate. It’s estimated that almost 94% of
commercial fish stocks are fully or overexploited and 90% of large,
predatory fish are gone. Overfishing therefore represents a major
threat for the food security of millions and could have devastating
consequences for Earth’s climate if these ecosystems fail. Amongst
many worthy organisations, we discovered the Blue Marine
Foundation, an environmental charity dedicated to restoring
the ocean to health by addressing overfishing and supporting
marine conservation projects. The ocean is the world’s largest
carbon sink: by combating overfishing and the associated impact
on the wider marine environment, Blue Marine aims to help life
in the ocean perform its vital function of stabilising the Earth’s
climate. By partnering with Blue Marine, the Company supports
their work around the world ultimately benefiting us all and, in
particular, maritime communities like Bermuda. The Company
has committed to a charitable gift of £10,000 per annum towards
Blue Marine’s work.
Streamlined Energy and Carbon Reporting (SECR) and
Greenhouse Gas Emissions (GGE)
The Company has no direct greenhouse gas emissions to report
from the day-to-day operations of its business. However, as noted
above, the attendance of Directors at Board meetings in Bermuda
means travel related carbon emissions which are “Scope 3 Indirect
Emissions” for the purposes of the SECR. The Board has further
estimated the emissions associated with the flights to be in the
region of 237 tonnes of CO2 in any ‘normal’ year.
Social, Community, Human Rights, Employee
Responsibilities Policy
The Company does not have any employees. The Company has
no direct social, community or human rights impact. Its principal
responsibility to shareholders is to ensure the investment portfolio
is properly invested and managed.
GOVERNANCE
47
Service providers
Service Provider Policy
The Company has no employees and operates through third
party service providers. The Board has contractually delegated
to external organisations the management of the investment
portfolio, the custodial services which include safeguarding of the
assets and the day-to-day accounting and company secretarial
requirements. Each of these contracts is only entered into after
proper consideration of the quality and cost of services, which are
regularly reviewed and monitored.
The key service provider relationship to the Company is Hansa
Capital Partners as the Portfolio Manager and Additional
Administrative Services Provider (AASP) to the Company.
The 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
The Board, at its regular meetings, reviews reports prepared by
both the Portfolio Manager and the Administrator, which enable it
to monitor the performance and costs of the third-party suppliers
to the Company. The Additional Administrative Services Provider
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
The Board reviews reports prepared by the Portfolio Manager
at its regular meetings, which enables it to monitor the
investment performance, risks and returns. The Portfolio
Manager attends each Board meeting where there is an active
dialogue on performance, process, risks and opportunities and
governance matters.
The Board identifies key controls and regularly monitors them
through compliance reports on control effectiveness.
Determines investment strategy, guidelines and restrictions
The Board determines the investment strategy in conjunction
with the Portfolio Manager. The strategy is monitored regularly
with adjustments made as required.
The Board issues formal investment guidelines and restrictions;
compliance with these is reported by the Portfolio Manager’s
compliance officer quarterly and is also monitored independently
by the Administrator.
Determines gearing levels and capital preservation through
the use of hedging instruments
The Board, taking account of advice from the Portfolio Manager,
determines the maximum level of borrowings the Company
will undertake. The Company will not invest in derivatives for
speculative gain, but may use derivatives for efficient 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. The Board is in regular
contact with the investment management team at HCP which
is led by Alec Letchfield. Additionally, Alec Letchfield is invited
to quarterly meetings of the Board to formally present portfolio
updates and discuss market trends. The Portfolio Manager’s
detailed review of the year can be found 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) and after
deducting the value of the investment in OWHL, on which no fee
is payable. The Portfolio Manager has charged £2,917,937 for the
year ended 31 March 2024 (year ended 31 March 2023: £2,824,000).
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.
The terms of the Portfolio Management Agreement permit either
party to terminate the agreement by giving to the other not less
than 12 months’ notice, or such shorter period as is mutually
acceptable. There is no agreement between the Company and
the Portfolio Manager concerning compensation in respect to
the termination of the agreement. In its annual assessment of the
Portfolio Manager, the Board concluded that, because of the skills
and experience of the management team it is in the best interest
of shareholders that the Portfolio Manager remains in place under
the present terms. Details of the fees paid to the Portfolio Manager
can be found in Note 3 to the Financial Statements.
HCP also acts as the AASP to the Company. This role ensures a
number of the day-to-day processes for the Company are carried
out, as well as providing oversight of, and a liaison between, a
number of the Company’s service providers and the Company
itself. HCP is paid £115,000 per annum for this service (year ended
31 March 2023: £115,000).
Auditor
The Company’s independent Auditor is PricewaterhouseCoopers
Ltd, a Bermudan registered firm. 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
The Company has engaged Conyers Corporate Services (Bermuda)
Limited (“Conyers”) as its Company Secretary. During the year
to 31 March 2024, Conyers has charged £44,156 (year ended 31
March 2023: £38,275).
Alternative Investment Fund Manager
As a Bermudan resident, the Company is defined as a UK
Alternative Investment Fund (AIF) under the UK Alternative
Investment Fund Manager’s Directive (UK AIFMD). As such, the
Company and the AIFM are subject to a more limited set of UK
AIFMD requirements, which are largely in relation to marketing
the Company’s shares into the UK. The Company appointed
Hanseatic Asset Management LBG, with effect from 29 August
2019, to act as its AIFM, with responsibilities for the Portfolio
Management and Risk Management functions. The AIFM has
delegated the provision of Portfolio Management services to
Hansa Capital Partners LLP but remains responsible for the
Risk Management function. The AIFM does not charge a direct
Hansa Investment Company Limited Annual Report 31 March 2024
48
fee for its services, although it does recharge any third-party
fees incurred.
Administrator
The Company has engaged Apex Fund Administration Services
(UK) Ltd as its Administrator. The Administrator has charged
£152,722 for the year ended 31 March 2024 (year ended 31 March
2023: £149,722).
Custodian
The Company has engaged Banque Lombard Odier & Cie SA as
the Company’s Custodian. During the year to 31 March 2024,
Lombard Odier charged £182,717 for the custodial service (year
ended 31 March 2023: £180,335).
Registrar
During the year, the Company’s Registrar was transferred from
Link Market Services (Guernsey) Limited) to Computershare
Investor Services (Bermuda) Limited (“Computershare”). The total
Registrar charges were £134,083 for the year ended 31 March 2024
(year ended 31 March 2023: £91,728).
GOVERNANCE
49
The 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
The 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.
The effect of this consideration upon the principal decisions taken by the Company during the financial year is set out in further detail
in the Strategic Report.
Items reported within the Directors’ Report
Disclosure to the Auditor of Relevant Audit Information
The Directors confirm that, so far as they are aware, having made such enquiries and having taken such steps as they consider they
reasonably ought, they have provided the Auditor with all the information necessary for it to be able to prepare its Report. In doing so
each Director has made themself aware of any information relevant to the audit and established that the Company’s Auditor is aware of
that information. The Directors are not aware of any information relevant to the audit of which the Company’s Auditor is unaware.
Board composition and diversity
The Board recognises and is supportive of the new FCA Listing Rules (LR 9.8.6(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 of UK incorporated companies are required to report annually on whether the specific three FCA targets have been
met, and if they have not been met, the reasons why. These 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;
The tables below set out the gender and ethnic diversity composition of the Board as at 31 March 2024. The Board is pleased to report it
is compliant with each of the three FCA targets as at 31 March 2024. Two of the five Directors are women (40%), one of whom holds the
senior position of SID, and one of the five Directors is from a minority ethnic background. As reported elsewhere in this Annual Report,
Nadya Wells has chosen not to stand for re-election at the Company’s forthcoming AGM. She remains a Director of the Company at the
time of signing of this Annual Report. The Board is starting the process of identifying a director to join the Board in Nadya’s place and will
update Shareholders in its next Annual Report regarding ongoing board diversity against the Listing Rule targets.
As per LR 9.8.6(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
Hansa Investment Company Limited Annual Report 31 March 2024
50
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 a Bermudan
incorporated, externally managed closed-ended investment company. As such, HICL does not have any employees or appoint
executive board positions. Accordingly, the senior board positions which the Company defines as applicable are Chairman and Audit
Committee Chairman.
This 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
The Company’s Capital Structure is described in the “Shareholder Profile and Engagement” section.
Corporate Governance Report
The Corporate Governance Report, including the Financial Risk Management Review of the Company, is included in this Report.
Approval of the Directors
The 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
14 June 2024
GOVERNANCE
51
Corporate Governance Code
Internal Controls
The UK Corporate Governance Code (“UK Code”), requires the
directors of UK listed companies to review the effectiveness of
the company’s risk management and system of internal controls
on an annual basis. The Board is committed to sound corporate
governance, robust risk management processes and effective
systems of internal controls. The Board reviews and considers the
effectiveness of internal controls regularly and review exception
reporting at least quarterly. The Directors, through the procedures
outlined below, keep the system of risk management and internal
controls under review.
The Board recognises its ultimate responsibility for the
Company’s system of risk management and internal controls
and for monitoring their effectiveness. In order to perform this
responsibility the Board receives regular reports on all aspects
of risk management and internal control from the Company’s
service providers (including financial, operational and compliance
controls, risk management and relationships with other service
providers); the Board will instigate necessary action in response to
any significant failings or weaknesses identified by these reports.
Financial Reporting
The Board has a responsibility to present a fair, balanced and
understandable assessment of annual, half-year and other price
sensitive public reports and reports to regulators, as well as
to provide information required to be presented by statutory
requirements. To ensure this responsibility is fulfilled, all
such reports are reviewed and approved by the Board prior to
their issue.
The Board confirms there have been no specific events since 31
March 2024, of which the Board is aware, which would have a
material impact on the Company.
Compliance with the provisions of the UK
Corporate Governance Code
The Board of Hansa Investment Company has considered
the Principles and Provisions of the AIC Code. The AIC Code
addresses the Principles and Provisions set out in the UK Code,
as well as setting out additional Provisions on issues that are of
specific relevance to the Company.
The Board considers that reporting against the Principles and
Provisions of the AIC Code, which has been endorsed by the FRC
in the UK, provides more relevant information to shareholders.
The Company has complied with the Principles and Provisions of
the AIC Code.
The AIC Code is available on the AIC website (www.theaic.
co.uk). It includes an explanation of how the AIC Code adapts the
Principles and Provisions set out in the UK Code to make them
relevant for investment companies.
Association of Investment Companies Code
The AIC Code has 17 principles. The 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 effective board, whose
role is to promote the long-term sustainable success
of the company, generating value for shareholders and
contributing to wider society.
The Board is formed of five Directors with a complementary
mix of skills and experience to lead the Company. 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 significant and relevant
experience. All Directors are focused on generating long-term
value for shareholders and there is significant share ownership
in the Company’s shares amongst the Directors. The 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.
The Board believes that the Company’s purpose, values and
strategy are clear: to create long-term growth of shareholder
value. The Board fosters a culture that is open to new ideas
and is able to influence its service providers through effective
challenge and regular robust review of performance. The
Board sets the standard for openness and professionalism
that the Company’s key service providers follow. In particular,
there is regular interaction between the Board and the
Company’s Portfolio Manager and also the AASP for day to
day liaison with other service providers.
C. The board should ensure that the necessary resources
are in place for the company to meet its objectives and
measure performance against them. The board should
also establish a framework of prudent and effective
controls, which enable risk to be assessed and managed.
The Board, through the work of its Committees and regular
Board meetings ensures regular measurement against the
Company’s objectives. The adequacy and effectiveness 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
effective engagement with, and encourage participation
from, these parties.
The Board considers its stakeholders to be its shareholders
and its key service providers. The 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 25 September 2024, quarterly factsheets, website
Corporate Governance Report
Hansa Investment Company Limited Annual Report 31 March 2024
52
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. The
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.
Principle E is omitted by the AIC Code.
Division of Responsibilities
F. The chair leads the board and is responsible for its
overall effectiveness in directing the company. They
should demonstrate objective judgement throughout their
tenure and promote a culture of openness and debate. In
addition, the chair facilitates constructive board relations
and the effective contribution of all non-executive
directors, and ensures that directors receive accurate,
timely and clear information.
The Chairman is Jonathan Davie. The Chairman promotes and
encourages active participation from all Directors at Board
meetings. Further, whilst adhering to membership guidelines,
sub-committees also seek to include as many Directors as
possible to ensure a broad range of views. All Directors receive
regular monthly and quarterly information prepared by the
Portfolio Manager and Administrator, as well as portfolio
performance presentations from the Portfolio Manager.
G. The board should consist of an appropriate combination
of directors (and, in particular, independent non-executive
directors) such that no one individual or small group of
individuals dominates the board’s decision making.
The Board consists of five Directors. All have a financial
background but each also brings individual specialisms and
experience that are complimentary. Their biographies are
noted earlier on in the Report. Four Directors are deemed
independent. The fifth, William Salomon, is the Senior
Partner of the Company’s Portfolio Manager and, therefore, is
deemed non-independent. All Directors are actively involved
in decisions and committees unless conflicts 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 firm. Nor
does he participate in decisions regarding the Company’s
largest asset (by value) OWHL, due to him being a director
of that company. Finally, Mr Salomon is not a member of
the Audit, Nominations or Remuneration Committees due
to his non-independent status, although he does attend
meetings of those Committees. The culture of open and
honest communication and forthright discussion means no
individual or small group dominate decision making.
H. Non-executive directors should have sufficient time to
meet their board responsibilities. They should provide
constructive challenge, strategic guidance, offer specialist
advice and hold third party service providers to account.
The Directors confirm they have sufficient time to meet their
responsibilities. Directors consult with the Company before
accepting other appointments, to confirm capacity to do
so and that no conflict exists. In considering appointments
and potential conflicts 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. The
Portfolio Manager and AASP report to scheduled Board
meetings, giving the Directors the opportunity to challenge
performance, raise issues and offer guidance.
I. The board, supported by the company secretary, should
ensure that it has the policies, processes, information,
time and resources it needs in order to function effectively
and efficiently.
The Company Secretary and AASP support the Board
in identifying and monitoring all governance matters.
Additionally, Directors are able to consult external
professional advisors to assist them in the performance
of their duties as and when required. Board reporting and
materials are refined on an ongoing basis.
Composition, succession and evaluation
J. Appointments to the board should be subject to a formal,
rigorous and transparent procedure, and an effective
succession plan should be maintained. Both appointments
and succession plans should be based on merit and
objective criteria and, within this context, should promote
diversity of gender, social and ethnic backgrounds,
cognitive and personal strengths.
The Board has appointed a Nominations Committee chaired
by an independent director. The Nominations Committee
conducts a formal due diligence process on all appointments
and considers annually the continued suitability and
performance of directors. The Company believes a diverse
Board brings many benefits 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.
The Directors have a broad range of backgrounds including
investment management, finance and banking as well as
operational experience. Biographies of all Directors are shown
earlier on in the Report. Each director retires and is subject
to re-election at the AGM. The decision to propose directors
for Nomination at the AGM is made by the Nomination
Committee. The Nominations Committee is tasked with
maintaining a broad range of skills and experiences at times
of succession.
L. Annual evaluation of the board should consider its
composition, diversity and how effectively members
work together to achieve objectives. Individual evaluation
should demonstrate whether each director continues to
contribute effectively.
The Nominations Committee is responsible for the ongoing
consideration of Board composition and to identify any
skills gap, now or in the future. The Nomination Committee
considers Board effectiveness annually.
GOVERNANCE
53
Audit, risk and internal control
M. The board should establish formal and transparent
policies and procedures to ensure the independence and
effectiveness of external audit functions and satisfy itself
on the integrity of financial and narrative statements.
The Board has specifically delegated the appointment and
monitoring of the Company’s external Auditor to its Audit
Committee. The Company’s Auditor was formally appointed in
November 2019. The tender process was led by the Chairman
of the Audit Committee. The Audit Committee considers the
independence and effectiveness of the external Auditor at
least annually. The Company’s Auditor does not provide other
services to the Company. The Company rigorously follows
policy and procedure to ensure effectiveness of the external
audit and integrity of financial reporting. 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.
The Board considers and approves all relevant shareholder
communications. The 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. The Audit Committee considers the
fairness of the Financial Statements before recommending
them to the Board for approval.
The 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 identified by the Board and risk appetite
established against these risks. Day to day risk management
is undertaken by the Portfolio Manager and AASP within
the parameters established by the Board. The Board meets
with the Portfolio Manager at each scheduled Board meeting
where there is opportunity to discuss particular aspects
of the portfolio and associated risks. Operational risk and
compliance reporting are also regularly discussed by the
Board. 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.
The remuneration of Directors is overseen by the
Remuneration Committee, chaired by Simona Heidempergher.
The Directors each receive a fixed annual fee and do not
receive any additional element based on performance of the
Company. Additionally, Directors offer themselves annually for
re-election at the Company’s AGM.
Q. A formal and transparent procedure for developing policy
on remuneration should be established. No director should
be involved in deciding their own remuneration outcome.
The Directors’ Remuneration Report notes that each
Director is paid a fixed fee representative of their roles
and additional responsibilities on the Board. This fee level
is reviewed by the Remuneration Committee 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
The Directors are responsible for ensuring that:
• Adequate accounting records are kept, that are sufficient to
show and explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial position
of the Company and enable them to ensure that the Financial
Statements are consistent with the relevant requirements under
the UK Companies Act 2006.
• The assets of the Company are safeguarded; and for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
• The Report of the Directors and other information included
in the Annual Report is prepared in accordance with both
Company Law in Bermuda and, where required, the UK. The
Directors are also responsible for ensuring the Annual Report
includes information required by the Listing Rules of the FCA.
• The Company has effective internal control systems, designed
to ensure that adequate accounting records are maintained; and
that financial information on which the business decisions are
made, which is issued for publication, is reliable. Such a system
of internal control can provide only reasonable, but not absolute,
assurance against material misstatement or loss.
• The Company Financial Statements for each financial year are
prepared in accordance with International Financial Reporting
Standards (IFRS). IFRS means standards and interpretations
issued (or adopted) by the International Accounting Standards
Board (IASB). The Directors must not approve the Financial
Statements unless they are satisfied they give a true and fair
view of the state of affairs and profit or loss of the Company for
that period.
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.
Hansa Investment Company Limited Annual Report 31 March 2024
54
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 effectiveness of the Company’s systems of risk
management and internal controls.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company’s website: www.HansaICL.com. Visitors to the website
need to be aware that legislation governing the preparation
and dissemination of the Financial Statements may differ from
legislation in their own jurisdictions.
Responsibility statement
The Directors confirm that:
• The Financial Statements are prepared in accordance with
applicable international accounting standards and present
fairly, in all material respects, the financial position of Hansa
Investment Company.
• The Strategic Report, including the Chairman’s 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.
The 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
14 June 2024
GOVERNANCE
55
The Audit Committee comprises solely independent Directors, as required by the AIC Code and endorsed by the FRC. It is chaired by
Richard Lightowler. Given the size of the Board and the range of experience they bring, all non-committee Directors are invited to attend
the Audit Committee meetings. However, only the independent member Directors are able to vote. Recommendations of the Audit
Committee are brought before the whole Board for discussion and ratification.
The Audit Committee ensures fair, balanced and understandable reporting of Company results.
The principal roles of the Audit Committee are to ensure that:
• the integrity of financial 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 effectiveness of the external Auditor is maintained and monitored. The Committee also reviews the
external Auditor performance in terms of quality and value;
• the financial reporting internal controls system of the Company are adequate and effective.
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 Officer) and Legal Advisers.
In its review of the Financial Statements, the Committee pays particular attention to the ownership of assets, the valuations of the
portfolio and recognition of income. In this regard we receive regular reporting from the Portfolio Manager and AASP, including reports
on the effectiveness 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.
The Company’s Custodian confirms title of all assets in its custody. In its consideration of valuations, the Committee notes that 76% 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
24% unquoted fund investments, the majority primarily hold traded securities. Valuations for these funds are supplied by third party
managers. The Audit Committee recognises that 52% of the total portfolio assets are Level 1 and 45% are Level 2 securities. Given the
significant level of externally valued assets, the Committee is satisfied with the valuation process. There is very limited management
judgement in determining valuations. The Company holds approximately £8m (1.7%) in private assets carried at valuations determined
by the investment manager. The Audit Committee considers the work done by the Portfolio manager, including obtaining audited
NAVs and the work of the external Auditor in its assessment of fair values reported. Revenue recognition does not involve significant
judgement or the use of estimates.
The Audit Committee also considers the potential need for an internal audit function on an annual basis, recognising the FRC guidance
on proportionality. The Audit Committee considers internal compliance testing at the Administrator and Portfolio Manager to be
sufficiently independent and robust to negate the need for a standalone internal audit function.
No material control weaknesses or incidents of potential fraud were identified. The Company’s service providers implement clear
whistleblowing, anti-bribery and corruption policies. The Company received direct reporting from service providers on internal controls
and audit reports on their internal controls.
The Committee is authorised by the Board to investigate any activity within its terms of reference, to seek any information it requires
from any officer or service provider to the Company, to obtain outside legal or other independent professional advice and to secure the
attendance of third parties with relevant experience and expertise if it considers this necessary.
The Chairman of the Audit Committee formally reports to the Board following each Audit Committee meeting and on other occasions as
requested by the Board.
The Audit Committee confirmed 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
The 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. The Committee also meets with
the Auditor in an executive session at least annually. The current audit partner is Scott Watson-Brown who has led the audit since the
Company’s inception in June 2019 and the appointment of PricewaterhouseCoopers Ltd as its Auditor.
Audit Committee Report
Hansa Investment Company Limited Annual Report 31 March 2024
56
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.
Company Auditor
The Company’s independent Auditor is PricewaterhouseCoopers Ltd, a Bermudan registered firm (“PwC Bermuda”). PwC Bermuda has
audited the Company since our incorporation in 2019. Their audit has been supported by PricewaterhouseCoopers LLP of the UK (“PwC
UK”). To improve the efficiency of the audit, the Directors recommend the appointment of PwC UK as the Company’s Auditor for the
year ended 31 March 2025. PwC Bermuda will continue to provide support to PwC UK. The Audit Committee and Board remain very
satisfied with quality of work by the external auditors. This change in roles is being made for efficiency purposes only.
For and on behalf of the Audit Committee.
Richard Lightowler
Audit Committee Chairman
14 June 2024
GOVERNANCE
57
Annual statement
The Company has five non-executive Directors. The Board has appointed a Remuneration Committee. The 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
The Board’s policy is that the remuneration of non-executive Directors should be a fixed-fee only. This fee should reflect the experience of
each director, time commitment required to fulfil the role, market conditions, financial and reputational risks undertaken and additional
responsibilities. The remuneration does not include a performance related element and Directors do not receive bonuses, share
options, pensions or long-term incentive schemes. The aggregate remuneration of the Board will be kept within the limits set out in the
Company’s Bye-laws, as amended from time to time.
In assessing current and future levels of director compensation, the Remuneration Committee seeks external comparative information,
such as the use of independent external surveys. This includes the fees paid by other similar companies (both industry and jurisdiction),
seeking input from recruitment specialists familiar with the external market, assessing the time commitment for each of the Directors
in their appointed roles and considering the responsibilities their roles bring. The increasing demands being placed on all NEDs by
shareholders, regulators and markets are also factored.
The fees for the non-executive Directors are within the limits (maximum total fee of $600,000) as set out in the Company’s Bye-laws. The
maximum is set as a USD amount. The equivalent is £474,985 if translated at the applicable rate on 31 March 2024.
The Remuneration Committee has reviewed the Directors’ salaries against available comparables during the year. The Committee
concluded that Directors’ salaries were to remain unchanged during the financial year to 31 March 2024 and to increase by an
inflationary amount from 1 April 2024. The new total salary is $415,000.
Directors’ service contracts
It is the Board’s policy that every Director has a service contract. None of the service contracts is for a fixed term. The terms of
appointment provide that a Director shall retire and be subject to re-election at the first AGM after appointment. The Board has decided
each Director will retire annually at the AGM and seek re-election as appropriate. The terms also provide that either party may give three
months’ notice. In certain circumstances a Director may be removed without notice and compensation will not be due on leaving office.
There are no agreements between the Company and its Directors concerning compensation for loss of office.
Policy for notice periods
The current Directors’ service contracts stipulate three months’ written notice to be given by either the Director or the Company to
terminate the services of a Director. The Board consider this is sufficient notice to ensure an orderly hand over between the parties.
Shareholders’ views on remuneration policy
The formal views of unconnected shareholders have not been sought in the preparation of this policy.
Employees
The Company does not have any employees, only non-executive Directors.
Annual report on remuneration
Directors’ Emoluments (Audited)
The Company does not have any employees, only non-executive Directors who receive only a basic fee, plus repayment of expenses
incurred in the course of performing their duties. Therefore, the use of the detailed remuneration table, as prescribed in the legislation, is
not appropriate here. A condensed table showing the information relevant to the Directors’ remuneration is shown in its place.
The Directors who received fees during the year received the following emoluments in the form of fees. For clarity, these amounts are
quoted in the currency as per their service contract. The Director’s remuneration is set in USD, as is common for most Bermudan
companies. The following table notes the Directors current annual fee as at 31 March 2024. It also notes their fee, in USD, for the current
and prior financial years. The equivalent Sterling fees are shown as converted at the relevant pay date of each fee:
Directors’ Remuneration Report
Hansa Investment Company Limited Annual Report 31 March 2024
58
2024
fee
$000
2024
fee
£000
2023
fee
$000
2023
fee
£000
Jonathan Davie (Chairman) 100 79 85 72
Simona Heidempergher 80 64 65 55
Richard Lightowler 90 71 75 63
William Salomon
3
25 20 25 21
Nadya Wells 80 63 65 55
375 298 315 266
The Company also pays the expenses of the Directors to attend the Board meetings. Directors’ travel costs incurred during the year were
£126,000 (2023: £141,000).
Statement of shareholder voting
Votes in respect of the resolution to approve the Directors’ Remuneration Report at the Company’s AGM in August 2023 were cast
as follows:
No. of
shares
voted
% of
votes
cast
Votes cast in favour 21,435,454 98.13
Votes cast against 40 9,169 1.87
Total votes cast 21,844,623 100.00
Votes withheld 0
Directors’ interests (audited)
Directors must seek permission from the Chairman before trading in shares, taking note of any Closed Periods. Other than that, there are
no specific rules on Directors’ shareholdings.
The interests of Directors and their connected parties in the Company at 31 March 2024 are shown below:
Ordinary shares
of 1p each
‘A’ non-voting ordinary shares
of 1p each
Nature of
interest2024 2023 2024 2023
Jonathan Davie 45,000 45,000 230,000 230,000 Beneficial
William Salomon 11,1 69,34 5 11,169,3 45 3,587,123 3,508,723 Beneficial
Simona Heidempergher 6,400 6,400 – – Beneficial
As at 14 June 2024, the date of signing of these 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 £3,065,129
(including Portfolio Management and AASP functions). The fees outstanding at the year end amounted to £285,000. 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.
GOVERNANCE
59
Your Company’s performance
The graph below shows the ten-year cumulative total return to shareholders:
Directors’ attendance
The Directors meet as a Board on a quarterly basis and at other times as necessary and the table below sets out the number of
operational meetings and the attendance at them by each Director.
Board
1
Strategy
Day
Audit
Committee
Remuneration
Committee
Nomination
Committee
Management
Engagement
Committee
3
Number of Meetings 9 2 2 2 1 -
Jonathan Davie 9 2 2 2 1 -
Simona Heidempergher 8 2 2 2 1 -
Richard Lightowler 9 2 2 2 1 -
William Salomon
2
5 2 2 2 1 -
Nadya Wells 7 2 2 2 1 -
1
“Board” includes full meetings of the Board, of which there were five 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. These ‘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. Therefore, 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.
3
The Management Engagement Committee column is shows no meetings within the Financial Year. This is because the meetings were
held in Bermuda in February 2023 and April 2024 – thus missing our financial year ended 31 March 2024.
On behalf of the Board, I confirm that the above Report on Directors’ Remuneration summarises, as applicable, for the year ended 31
March 2024:
(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
14 June 2024
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24
NAV Cum Income TR Ord Share TR A Ord Share TR
Hansa Investment Company Limited Annual Report 31 March 2024
60
The Committee was chaired by Nadya Wells throughout the financial year. All independent members of the Board are members of the
Nomination Committee. William Salomon attends the Committee but is not a member.
Role
The 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 identified, the Committee is responsible
for identifying and nominating candidates to fill 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. The Board considers it is of paramount importance to shareholders that, after consideration of the skills and
experience needed by the Board, candidates are chosen on the basis of their contribution to the Company’s needs and that there should
be no discrimination in the choice of Directors for any reason. The Nominations Committee pays due regard to the final rules published
by the Financial Conduct Authority in April 2022 in respect of diversity and inclusion on company boards and executive management.
The Company believes a diverse Board brings many benefits 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.
The Board has determined that all Directors will retire and offer themselves for re-election each year at the AGM and this policy includes
any Directors appointed during the year. The Committee reports its recommendations to the Board for final approval.
Activities during the year
The Nomination Committee met twice during the year. The Committee has developed a Skills Matrix to summarise the knowledge,
skills, experience and overall competence of each Director. This included anonymised feedback from the other Board members as well
as feedback from each individual Director themselves. The 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 specific 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 effectively.
Following the annual review of Board Skills, the Nomination Committee was supportive of re-appointing the Directors to the Board
within the 2024 AGM. However, Nadya Wells has chosen not to stand for re-election at the forthcoming AGM due to additional
professional commitments. Consequently, as of 14 June 2024, Nadya’s responsibility as Chair of the Nominations Committee has passed
to Simona Heidempergher.
Succession planning
The current Directors were all originally appointed in June 2019. Following Nadya’s decision, the Board is in the process of identifying
a director to join in Nadya’s place. 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
Simona Heidempergher
Chairman of the Nomination Committee
14 June 2024
Nominations Committee Report
FINANCIAL STATEMENTS
61
Financial
Statements
61
Hansa Investment Company Limited Annual Report 31 March 2024
62
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 financial statements present fairly, in all material respects, the financial position of Hansa Investment Company
Limited (the Company) as at 31 March 2024, and its financial performance and its cash flows for the year then ended in accordance with
IFRS Accounting Standards.
What we have audited
The Company’s financial statements comprise:
• the balance sheet as at 31 March 2024;
• the income statement for the year then ended;
• the statement of changes in equity for the year then ended;
• the cash flow statement for the year then ended; and
• the notes to the financial statements, comprising material accounting policy information and other explanatory information.
Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the financial statements.
These are cross-referenced from the financial statements and are identified as audited.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the International Code of Ethics for Professional Accountants (including
International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and the
ethical requirements of the Chartered Professional Accountants of Bermuda Rules of Professional Conduct (CPA Bermuda Rules) that are
relevant to our audit of the financial statements in Bermuda. We have fulfilled our other ethical responsibilities in accordance with the
IESBA Code and the ethical requirements of the CPA Bermuda Rules.
Our audit approach
Overview
Overall materiality: £4,545,000 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 financial statements
• significant 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
FINANCIAL STATEMENTS
63
Audit scope
As part of designing our audit, the risks of material misstatement in the financial statements were assessed and materiality determined.
In particular, consideration was given to where management made subjective judgements; for example, in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our
audits, 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.
The scope of our audit was tailored in order to perform sufficient work to enable us to provide an opinion on the financial statements
as a whole, taking into account the structure of the Company, the accounting processes and controls, and the industry in which the
Company operates.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the
financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material
if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the
financial statements.
Based on our professional judgement, certain quantitative thresholds for materiality were determined, including the overall materiality
for the financial statements as a whole as set out in the table below. These, 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 effect of misstatements, both
individually and in aggregate, on the financial statements as a whole.
Overall materiality
£4,545,000
How we determined it
Approximates 1% of net assets
Rationale for the materiality benchmark applied
The 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 identified during our audit above £227,000, 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 significance in our audit of the financial
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Valuation and existence of investments
Refer to notes 1(c) Non-current investments and 8
Investments held at fair value through profit or loss
to the financial statements for disclosures of related
accounting policies and balances.
The investment portfolio as at 31 March 2024 is comprised
of listed equity investments valued at £325 million (72%)
and unquoted investments valued at £124 million (28%).
We focused on the valuation and existence of listed and
unquoted investments because the investment portfolio
represents the principal element of net asset value as
disclosed in the Company’s balance sheet.
Our approach to addressing the matter involved the following
procedures, amongst others:
Listed equity investments:
• Tested the existence of the listed investment portfolio by agreeing the
holdings for investments to an independent custodian confirmation.
• Tested the valuation of the listed investments by agreeing the prices
used in the valuation to independent third-party sources.
Unquoted investments:
• Understood and evaluated the controls around the pricing of unquoted
investments including the final approval of the valuation by the
Manager and the Board of Directors.
• Obtained direct confirmation of the existence of investments held and
the price from each fund administrator.
• Recalculated 100% of the unquoted portfolio’s fair value as at year end
and compared to management’s valuation.
• Obtained an understanding of the underlying methodology applied
to each unquoted investment through review of their most recently
available audited financial statements to evaluate whether it was
based on fair value.
Based on the procedures detailed above, we did not identify
any misstatements which required reporting to those charged
with governance.
Hansa Investment Company Limited Annual Report 31 March 2024
64
KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Accuracy, occurrence and completeness of
investment income
Refer to notes 1(e) Investment income and return
of capital and 2 Investment income to the financial
statements for disclosures of related accounting
policies and balances.
Investment income consists of dividend income of
£7.8 million.
We focused on the accuracy, occurrence and completeness
of investment income recognition as incomplete or
inaccurate income could have a material impact on the
Company’s net asset value and dividend cover.
We also focused on the accounting policy for income
recognition along with its allocation and presentation
in the income statement as set out in the requirements
of The Association of Investment Companies Statement
of Recommended Practice (the “AIC SORP”) as
incorrect application could indicate a misstatement in
income recognition.
Our approach to addressing the matter involved the following
procedures, amongst others:
• 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.
• Tested the accuracy of dividend receipts by agreeing the dividend rates
from investments to independent market data.
• Tested investment holdings, on a sample basis, that all related
dividends declared in the market had been recorded.
• Tested occurrence by confirming that all dividends recorded in the
period had been declared in the market by investment holdings.
• 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 assessing
management’s judgement of the nature, facts and circumstances in
determining the classification of the distribution.
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. The other information comprises the Annual Report (but does not include the
financial statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
UK Corporate Governance Code
We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s compliance
with the Code does not properly disclose a departure from a relevant provision of the Code specified, under the Listing Rules of the FCA,
for review by the auditors.
Responsibilities of management and those charged with governance for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS Accounting
Standards and for such internal control as management determines is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either
intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
FINANCIAL STATEMENTS
65
As part of an audit in accordance with ISAs, we exercise
professional judgement and maintain professional scepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal control.
• Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management.
• Conclude on the appropriateness of management’s use of the
going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt
on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are
inadequate, 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
financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, actions taken
to eliminate threats or safeguards applied.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
The engagement partner on the audit resulting in this
independent auditor’s report is Scott Watson-Brown.
PricewaterhouseCoopers Ltd.
Chartered Professional Accountants
Hamilton, Bermuda
14 June 2024
Hansa Investment Company Limited Annual Report 31 March 2024
66
Year ended
31 March
2024
Year ended
31 March
2023
Note
Revenue
£000
Capital
£000
Total
£000
Revenue
£000
Capital
£000
Total
£000
Gains/(losses) on investments held at fair value through profit or loss 8 - 88,760 88,760 - (14,924) (14,924)
Foreign Exchange (losses)/gains - (492) (492) - 327 327
Income
Investment income 2 7,780 - 7,780 6,892 - 6,892
7,7 80 88,268 96,048 6,892 (14,597) ( 7,7 05)
Portfolio management fees 3 (2,950) - (2,950) (2,824) - (2,824)
Other expenses 4 (1,676) - (1,676) (1,527) - (1,527)
(4,626) - (4,626) (4,351) - (4,351)
Income/(losses) before finance costs 3,15 4 88,268 91,422 2,541 (14,597) (12,056)
Finance costs 5 - - - (1) - (1)
Income/(losses) for the year 3,1 54 88,268 91,422 2,540 (14,597) (12,057)
Return per Ordinary and ‘A’ non-voting Ordinary share 7 2.6p 73.6p 76.2p 2 .1p (12.2)p (10.1)p
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/(expense) 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 IFRS Accounting Standards (“IFRS”).
All revenue and capital items in the above Statement derive from continuing operations.
The accompanying notes on pages 70 to 80 are an integral part of this Statement.
Income Statement
For the year ended 31 March 2024
FINANCIAL STATEMENTS
67
Note
31 March
2024
£000
31 March
2023
£000
Non-current assets
Investments held at fair value through profit or loss 8 449,153 353,262
4 49,1 53 353,262
Current assets
Trade and other receivables 10 1,463 128
Cash and cash equivalents 11 4,352 13,987
5,815 14,115
Current liabilities
Trade and other payables 12 (421) (412)
Net current assets 5,394 13,703
Net assets 454,547 366,965
Capital and reserves
Called up share capital 13 1,200 1,200
Contributed surplus 14 322,839 323,799
Retained earnings 15 130,508 41,966
Total shareholders’ funds 454,547 366,965
Net asset value per Ordinary and ‘A’ non-voting Ordinary share 16 378.8p 305.8p
The Financial Statements of Hansa Investment Company Limited, registered in Bermuda under company number 54752, set out on
pages 66 to 69 were approved by the Board of Directors on 14 June 2024 and were signed on its behalf by
Jonathan Davie
Chairman
The accompanying notes on pages 70 to 80 are an integral part of this Statement.
Balance Sheet
As at 31 March 2024
Hansa Investment Company Limited Annual Report 31 March 2024
68
For the year ended 31 March 2024 Note
Share
capital
£000
Contributed
surplus
reserve
£000
Retained
earnings
£000
Total
£000
Equity at 1 April 2023 1,200 323,799 41,966 366,965
Profit for the year - - 91,422 91,422
Dividends 6 - (960) (2,880) (3,840)
Equity at 31 March 2024 1,200 322,839 130,508 454,547
For the year ended 31 March 2023 Note
Share
capital
£000
Contributed
surplus
reserve
£000
Retained
earnings
£000
Total
£000
Equity at 1 April 2022 1,200 324,759 56,903 382,862
Loss for the year - - (12,057) (12,057)
Dividends 6 - (960) (2,880) (3,840)
Equity at 31 March 2023 1,200 323,799 41,966 366,965
The accompanying notes on pages 70 to 80 are an integral part of this Statement.
Statement of Changes in Equity
FINANCIAL STATEMENTS
69
Note
Year ended
31 March
2024
£000
Year ended
31 March
2023
£000
Cash flows from operating activities
Income / (loss)* 91,422 (12,056)
Adjustments for:
Realised gains on investments 8 (6,228) (5,571)
Unrealised (gains)/losses on investments 8 (82,532) 20,495
Foreign exchange 492 (327)
(Increase)/decrease in trade and other receivables 10 (1,335) 73
Increase in trade and other payables 12 9 44
Purchase of non-current investments (69,313) (78,568)
Sale of non-current investments 62,182 90,368
Net cash (outflow)/inflow from operating activities (5,303) 14,458
Cash flows from financing activities
Interest paid on bank loans - (1)
Dividends paid 6 (3,840) (3,840)
Drawdown/(repayment) of loans - -
Net cash outflow from financing activities (3,840) (3,841)
(Decrease)/increase in cash and cash equivalents (9,1 43) 10,617
Cash and cash equivalents at start of financial year 13,987 3,043
Effect of foreign exchange rate changes (492) 327
Cash and cash equivalents at end of year 11 4,352 13,987
*Includes dividends received of £7,602,000 (2023: £6,810,000) and interest received of nil (2023: £nil).
The accompanying notes on pages 70 to 80 are an integral part of this Statement.
Cash Flow Statement
For the year ended 31 March 2024
Hansa Investment Company Limited Annual Report 31 March 2024
70
Notes to the Financial Statements
1 Material accounting policy information
Hansa Investment Company Limited is a company limited by
shares, registered and domiciled in Bermuda with its registered
office shown on page 85. The principal activity of the
Company is an investment vehicle.
(a) Basis of preparation
The Financial Statements of the Company have been prepared
in accordance with IFRS Accounting Standards (“IFRS”). IFRS
means standards and interpretations issued (or adopted)
by the International Accounting Standards Board (they
comprise: International 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 a going concern basis under the historic
cost convention, modified by financial assets held at fair value
through profit or loss with the assertion of the Board on page
40. 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
material accounting policy information adopted is 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 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 in accordance with the International Private Equity and
Venture Capital Valuation Guidelines. Private equity investments
are carried at the fair value as reported by the Private Equity
Fund Manager (PEFM). In the absence of a valuation by the
PEFM at the balance sheet date, additional procedures to
determine the reasonableness of the fair value estimate for
inclusion in the Financial Statements are performed. These
may include direct enquiries of the PEFM of the investment to
understand, amongst others, valuation process and techniques
used, external experts used in the valuation process and
updated details of the underlying portfolio. In addition, the
Company can obtain external independent valuation data and
benchmarks to validate fair value estimates. Further, recent
arms-length market transactions between knowledgeable
and willing parties where available might also be considered.
Subsequent to the balance sheet date, the Administrator, will
review subsequent valuations released by the Private Equity
fund to look for consistency with the estimations made as
described above.
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.
(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 which are charged to
the capital column of the Income Statement.
(g) Taxation
Under Bermuda law, to the extent the Company remains out
of scope of the Corporate Income Tax Act 2023 (the “CIT Act”),
the Company is not required to pay taxes in Bermuda on either
income or capital gains.
Bermuda enacted the CIT Act on 27 December 2023. Entities
FINANCIAL STATEMENTS
71
subject to tax under the CIT Act are the Bermuda constituent
entities of multi-national groups. A multi-national group is
defined under the CIT Act as a group with entities in more
than one jurisdiction with consolidated revenues of at least
EUR750mm for two out of the four previous fiscal years. If
Bermuda constituent entities of a multi-national group are
subject to tax under the CIT Act, such tax is charged at a rate
of 15 per cent of the net taxable income of such constituent
entities as determined in accordance with and subject to
the adjustments set out in the CIT Act (including in respect
of foreign tax credits applicable to the Bermuda constituent
entities).
Consolidated revenues of the Company’s group are less than
EUR750mm in each previous fiscal year. On this basis, the
Company is not, and neither is it expected to be, in scope of the
CIT Act regime.
(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 gains or
losses arising from a change in exchange rates, subsequent
to the date of the transaction, are included as exchange gains
or losses in the capital or revenue column of the Income
Statement, depending on whether the gains or losses are of a
capital or revenue nature respectively.
(i) Retained Earnings
Contributed Surplus
The following are credited or charged to this reserve via the
capital column of the Income Statement:
• gains and losses on the disposal of investments;
• exchange differences of a capital nature;
• expenses charged to the capital column of the Income
Statement in accordance with the above accounting
policies; and
• increases and decreases in the valuation of investments held
at the balance sheet date.
Revenue Reserves
The following are credited or charged to this reserve via the
revenue column of the Income Statement:
• net revenue recognised in the revenue column of the
Income Statement.
Under Bermuda 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 2024.
The most recent valuation statement was received on 21
February 2024 stating the value of the Company’s holding as at
31 December 2023. In the absence of a valuation for 31 March
2024 from DV4, the Company performed additional procedures
to determine the reasonableness of the fair value estimate
for inclusion in the Financial Statements. Direct enquiries of
the manager of DV4 were made in July 2020 to understand,
amongst others, valuation process and techniques used,
external experts used in the valuation process and updated
details of underlying property portfolio. It has been confirmed
with DV4’s manager that the valuation procedures discussed in
July 2020 are still the same used now. In addition, the Company
has compared the historic valuation movements of DV4 to the
FTSE350 Real Estate Index. Based on the information obtained
and additional analysis performed the Company is satisfied
that DV4 is carried in these Financial Statements at an amount
that represents its best estimate of fair value at 31 March 2024.
It is believed the value of DV4 as at 31 March 2024 will not
be materially different, but this valuation is based on historic
valuations by DV4, does not have a readily available third
party comparator and, as such, is an estimate. There are no
significant judgements.
(k) Adoption of new and revised standards
At the date of authorisation of these Financial Statements there
were no standards and amendments to the standards, which
have not been applied in these Financial Statements.
In the current financial period the Company has applied the
following amendments to standards:
• Amendments to IAS1 ‘Classification of liabilities as current or
non-current’ (effective for accounting periods beginning on
or after 1 January 2023).
• IFRS 17, ‘Insurance contracts’ (effective for accounting periods
beginning on or after 1 January 2023).
• Amendments to IAS 8 ‘Definition of Accounting Estimates’
(effective for accounting periods on or after 1 January 2023).
• Amendments to IAS 1 and IFRS Practice Statement 2
‘Disclosure of Accounting Policies’ (effective for accounting
periods on or after 1 January 2023).
• Amendments to IAS 12 ‘Deferred Tax related to Assets and
Liabilities arising from a Single Transaction’ (effective for
accounting periods on or after 1 January 2023).
There is no material impact on the Financial Statements or the
amounts reported from the adoption of these amendments to
the standards.
Relevant International Accounting Standards that have yet to be
adopted:
IAS 1 – Classification of liabilities as current or non-current
(effective 1 January 2024). The IASB has amended IAS 1
Presentation of Financial Statements to clarify its requirement
for the presentation of liabilities depending on the rights
that exist at the end of the reporting period. The amendment
requires liabilities to be classified as non-current if the entity
has a substantive right to defer settlement for at least 12 months
at the end of the reporting period. The amendment no longer
refers to unconditional rights.
IAS 1 – Non-current liabilities with covenants (effective 1
January 2024). The IASB has amended IAS 1 Presentation of
Financial Statements to introduce additional disclosures for
liabilities with covenants within 12 months of the reporting
period. The additional disclosures include the nature of
covenants, when the entity is required to comply with
covenants, the carrying amount of related liabilities and
circumstances that may indicate that the entity will have
difficulty complying with the covenants.
(l) Operating Segments
The Company considers it has one operating segment for the
purposes of IFRS 8.
Hansa Investment Company Limited Annual Report 31 March 2024
72
2 Investment income
Revenue
Year ended
31 March
2024
£000
Revenue
Year ended
31 March
2023
£000
Income from quoted investments
Dividends 7,780 6,892
Total income 7,7 80 6,892
Note: Of the dividend income received during the financial year, £5.3m was received from the Company’s Strategic Holding in OWHL
by way of a dividend received on 15 June 2023. The remainder was received from holdings within the Global Equity (direct) & Core
Regional silos.
3 Portfolio management fee
Revenue
Year ended
31 March
2024
£000
Revenue
Year ended
31 March
2023
£000
Portfolio management fee 2,950 2,824
Total management fee 2,950 2,824
As disclosed on page 47, the portfolio management fee is charged 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.
4 Other expenses
Revenue
Year ended
31 March
2024
£000
Revenue
Year ended
31 March
2023
£000
Administration fees 154 150
Directors' remuneration 298 262
Auditor's remuneration for audit of the Company’s Annual Financial Statements 92 68
Printing fees 57 36
Directors' liability insurance 67 67
Marketing 75 140
Registrar's fees 80 93
Banking charges 19 38
Secretarial services 159 153
Travel expenses 126 217
Broker fees 32 25
Stock Exchange listing fees 42 50
Safe custody fees 184 180
Management fee rebate from GAM (13) (28)
Other 304 76
Total other expenses 1,676 1,527
FINANCIAL STATEMENTS
73
5 Finance costs
Revenue
Year ended
31 March
2024
£000
Revenue
Year ended
31 March
2023
£000
Interest payable - 1
Total finance costs - 1
As disclosed on page 30, the 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 sufficient value and diversity within the portfolio to meet the lender’s
borrowing requirements. The facility is used periodically for short-term transactional funding requirements. As a result, the cost
incurred in finance fees are not necessarily consistent between financial years.
6 Dividends paid
Year ended
31 March
2024
£000
Year ended
31 March
2023
£000
Amounts recognised as distributed to shareholders in the year are as follows:
Fourth interim dividend for 2023 (paid 26 May 2023): 0.8p (2022: 0.8p) 960 960
First interim dividend for 2024 (paid 25 August 2023): 0.8p (2023: 0.8p) 960 960
Second Interim dividend for 2024 (paid 24 November 2023): 0.8p (2023: 0.8p) 960 960
Third Interim dividend for 2024 (paid 23 February 2024): 0.8p (2023:0.8p) 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
2024
£000
Year ended
31 March
2023
£000
First interim dividend for 2024 (paid 25 August 2023): 0.8p (2023: 0.8p) 960 960
Second Interim dividend for 2024 (paid 24 November 2023): 0.8p (2023: 0.8p) 960 960
Third Interim dividend for 2024 (paid 23 February 2024): 0.8p (2023:0.8p) 960 960
Fourth interim dividend for 2023 (payable 31 May 2024):0.8p 2023 (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 2024. No final dividend is proposed for the year ended 31 March 2024. .
7 Return on ordinary shares (equity)
Revenue
year ended
31 March
2024
Capital
year ended
31 March
2024
Total
year ended
31 March
2024
Revenue
year ended
31 March
2023
Capital
year ended
31 March
2023
Total
year ended
31 March
2023
Returns per share 2.6p 73.6p 76.2p 2.1p (12.2)p (10.1)p
Hansa Investment Company Limited Annual Report 31 March 2024
74
Returns
Revenue return per share is based on the revenue attributable to equity shareholders of £3,154,000 (2023: £2,540,000).
Capital return per share is based on the capital profit attributable to equity shareholders of £88,268,000 (2023: loss of £14,597,000).
Total return per share is based on a combination of revenue and capital returns attributable to equity shareholders, amounting to net
profit of £91,422,000 (2023: loss of £12,057,000).
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.
8 Investments held at fair value through profit or loss
Listed
£000
Unquoted
£000
2024
Total
£000
2023
Total
£000
Cost at 1 April 242,560 76,138 318,698 324,927
Investment holding gains at 1 April 21,400 13,1 64 34,564 55,059
Valuation as at 1 April 263,960 89,302 353,262 379,986
Movements in the year:
Purchases at cost 53,016 16,297 69,313 78,568
Sales – proceeds (71,652) 9,470 (62,182) (90,368)
Movement in investment holding Gains/(losses) 79,412 9,348 88,760 (14,924)
Valuation as at 31 March 324,736 124,417 4 49,15 3 353,262
Cost as at 31 March 230,152 101,905 332,057 318,698
Investment holding gains 94,584 22,512 11 7,0 96 34,564
Valuation as at 31 March 324,736 124,417 4 49,15 3 353,262
2024
£000
2023
£000
Gains on sales 6,228 5,571
Movement in investment holding gains/(losses) 82,532 (20,495)
Gains/(losses) on investments held at fair value through profit or loss 88,760 (14,924)
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:
2024
£000
2023
£000
Purchases 13 38
Sales 11 18
24 56
FINANCIAL STATEMENTS
75
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 2024 are detailed below:
Exc. Minority Interest
Country of
incorporation
or
registration
Class of
Capital
%
of class
held
Latest
available
accounts
Total
capital and
reserves
$000
Profit after
tax for the
period
$000
Ocean Wilsons Holdings Limited Bermuda Ordinary 26.5 31.12.2023 601,504 6 7,0 4 8
Ocean Wilsons Holdings Limited is included as part of the investment portfolio in accordance with IAS 28 - Investment in Associates.
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.
2024
£000
2023
£000
Amounts due from brokers 1,353 -
Prepayments and accrued income 110 128
1,463 128
11 Cash and cash equivalents
2024
£000
2023
£000
Cash at bank 348 13,987
Cash funds 4,004 -
4,352 13,987
12 Trade and other payables
2024
£000
2023
£000
Other creditors and accruals 421 412
421 412
13 Called up share capital
2024
£000
2023
£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.
Hansa Investment Company Limited Annual Report 31 March 2024
76
14 Contributed surplus
2024
£000
2023
£000
Opening balance at 1 April 323,799 324,759
Dividend paid (960) (960)
Closing balance at 31 March 322,839 323,799
15 Retained earnings
Revenue
2024
£000
Capital –
other
2024
£000
Capital –
investment
holding
profit
2024
£000
Reserves
Total
retained
earnings
2024
£000
Revenue
2023
£000
Capital –
other
2023
£000
Capital –
investment
holding
profit
2023
£000
Reserves
Total
retained
earnings
2023
£000
Opening balance at 1 April (2,364) 9,766 34,564 41,966 (2,024) 3,868 55,059 56,903
Profit/(loss) for the year 3,154 5,736 82,533 91,422 2,540 5,898 (20,495) (12,057)
Dividend paid (2,880) - - (2,880) (2,880) - - (2,880)
Closing balance at 31 March (2,090) 15,502 11 7,0 97 130,508 (2,364) 9,766 34,564 41,966
16 Net asset value
2024
£000
2023
£000
NAV per Ordinary and ‘A’ non-voting Ordinary share 378.8p 305.8p
The NAV per Ordinary and ‘A’ non-voting Ordinary share is based on the net assets attributable to equity shareholders of £454,547,000
(2023: £366,965,000) and on 40,000,000 Ordinary shares (2023: 40,000,000) and 80,000,000 ‘A’ non-voting Ordinary shares (2023:
80,000,000) in issue at 31 March 2024.
17 Commitments and contingencies
The Company has the following outstanding commitments as at 31 March 2024 (2023: £2.0m):
Outstanding
commitment in
local currency GBP
BPEA EQT Mid-Market Growth Partnership 1,7 74,644 1,404,879
GGV Discovery IV - Asia 600,000 474,984
GGV Discovery IV - US 600,000 474,984
Khosla Ventures VIII 1,020,000 80 7,4 73
TA Associates XV 3,600,000 2,849,905
Triton VI 1,740,000 1,4 8 7,5 61
TrueBridge Direct Fund III 183,000 144,870
TrueBridge Capital Partners Fund VIII 864,000 683,977
10,381,644 8,328,633
FINANCIAL STATEMENTS
77
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 affect the valuation of the investment portfolio. 1) the direct exposure where
an investment is denominated and paid for in a currency other than Sterling; and 2) the indirect exposure where an investment has
substantial non-Sterling underlying investment and/or cash flows. The Company does not normally hedge against foreign currency
movements affecting the value of the investment portfolio, but takes account of this risk when making investment decisions. Some
of the fund investments into which the Company invests will, in part or in whole, hedge some of their underlying currency risk, but
this will be known at the time of investment and will form part of the investment decision. In those cases, the hedging will not remove
the exposure to the underlying country or market sector. The Portfolio Manager monitors the effect of foreign currency fluctuations
through the pricing of the investments by the various markets.
Direct
foreign
currency risk
2024
£000
No direct
foreign
currency risk
2024
£000
Total
2024
£000
Direct
foreign
currency risk
2023
£000
No direct
foreign
currency risk
2023
£000
Total
2023
£000
Investments 135,145 314,008 449,153 115,139 238,123 353,262
Other receivables including prepayments 34 1,319 1,353 72 56 128
Cash at bank - 4,352 4,352 - 13,987 13,987
Current liabilities (15) (406) (421) - (412) (412)
135,1 64 319,273 454,437 115,211 251,754 366,965
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 2024 and 31
March 2023. 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 effect on the Company:
US$
2024
£000
Euro
2024
£000
Other
2024
£000
US$
2023
£000
Euro
2023
£000
Other
2023
£000
Income statement - profit/(loss) 687 20 22 918 (328) (204)
Equity shareholders funds 10,670 955 1,891 9,228 692 1,601
11,357 975 1,913 10,146 364 1,397
Note: Other includes exposure to foreign currencies excluding US dollar and Euro.
A 10% strengthening of Sterling against the above currencies would result in an equal and opposite effect on the above amounts.
Hansa Investment Company Limited Annual Report 31 March 2024
78
Interest rate risk
Interest rate movements may affect the level of income receivable on cash deposits and the interest payable on the Company’s
variable rate borrowings.
The Company has banking facilities amounting to £30m (2023: £30m) which are available for the Portfolio Manager to use in
purchasing investments; the costs of which are based on the prevailing LIBOR rate, plus an agreed margin. The Company does not
normally hedge against interest rate movements affecting the value of the investment portfolio, but takes account of this risk when an
investment is made utilising the facility. The level of banking facilities used is monitored by both the Board and the Portfolio Manager
on a regular basis. The impact on the returns and net assets of the Company for every 1% change in interest rates, based on the
amount drawn down at the Year-End under the facility, would be £nil (2023: £nil). The level of banking facilities utilised at 31 March
2024 was £nil (2023: £1,000).
Interest rate changes usually impact equity prices. The level and direction of change in equity prices is subject to prevailing local and
world economic conditions as well as market sentiment, all of which are very difficult to predict with any certainty. The Company has
floating rate financial assets, consisting of bank balances and cash funds that have received average rates of interest during the year
of 0% on bank balances.
Cash flow
interest
rate risk
2024
£000
No
interest
rate risk
2024
£000
Total
2024
£000
Cash flow
interest
rate risk
2023
£000
No
interest
rate risk
2023
£000
Total
2023
£000
Investments - 449,153 449,153 - 353,262 353,262
Other receivables including prepayments - 1,463 1,463 - 128 128
Cash at bank 4,352 - 4,352 13,987 - 13,987
Current liabilities - (421) (421) - (412) (412)
4,352 450,195 454,547 13,987 352,978 366,965
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, £96.5m as valued at 31 March 2024 (2023: £83.7m) and
as a proportion of the NAV, 21.2% (2023: 22.8%). Shareholders should be aware that if anything of a severe and untoward nature were
to happen to this company, it could result in a significant impact on the NAV and share price. However, it should also be noted that
the exposure of Hansa Investment Company Limited to the currency, country and market- based risk exposure of Ocean Wilsons is,
to an extent, mitigated by the diverse nature of the two investments within Ocean Wilsons. Wilson Sons, corresponding to 61.6% of
Ocean Wilsons’ NAV, has a direct exposure to the Brazilian economy, whereas Ocean Wilsons Investments has a diverse Investment
portfolio and corresponds to the other 38.4%. It is an investment the Board pays close attention to and it should be pointed out
that the risks associated with it are very different from those of the other companies represented in the portfolio. The Board itself
regularly undertakes a thorough review of its business and prospects and has determined that its future holds a lot of promise. As a
consequence, the Board believes the risk involved in the investment is worthwhile.
The performance of the portfolio as a whole is not designed to correlate with that of any market index. Should the portfolio of the
Company, as detailed on pages 27 and 28, rise or fall in value by 10% from the year end valuation, the effect on the Company’s
profit and equity would be an equal rise or fall of £44.9m (2023: £35.3m).
Credit risk
The Company only transacts with regulated institutions on normal market terms, which are trade date plus one to three days in the
case of equities. Fund investment settlement periods will vary from fund to fund and are defined by the individual managers. The
levels of amounts outstanding from brokers and fund managers are regularly reviewed by the Portfolio Manager. The duration of credit
risk associated with the investment transactions is the period between the date the transaction took place, the trade date, the date the
stock and cash were transferred and the settlement date. The level of risk during the period is the difference between the value of the
original transaction and its replacement with a new transaction. The amounts due to/(from) brokers at 31 March 2024 are shown in
Note 10 and Note 12 on page 75.
The Company’s maximum exposure to credit risk on cash is £4.4m (2023: £14.0m) and on cash funds is £nil (2023: £nil). Surplus cash
is on deposit with the Depositary/Custodian.
FINANCIAL STATEMENTS
79
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 21.2% (2023: 22.8%), unquoted equity investments of
2.6% (2023: 2.6%) and investments into open-ended investment funds with varying liquidity terms of 58.6% (2023: 58.6%).
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 2024 is shown on
pages 27 and 28. This can be used broadly to ascertain the levels of liquidity within the portfolio, although liquidity will vary with
each investment – particularly the funds.
Capital management
The Company considers its capital to be its issued share capital and reserves and whilst the Company has access to loan facilities it
is not considered or used as core capital, but primarily to meet the cash timing requirements of opportunistic investment strategies
and thereby enhance shareholder returns. The Board regularly monitors its share discount policy and the level of discounts and whilst
it has the option to repurchase shares, it considers the best means of attaining a good rating for the shares is to concentrate on good
shareholder returns.
However, the Board believes the ability of the Company to repurchase its own ‘A’ non-voting Ordinary shares in the market may
potentially enable it to benefit all equity shareholders of the Company. The repurchase of ‘A’ non-voting Ordinary shares, at a discount
to the underlying NAV, would enhance the NAV per share of the remaining equity shares and might also enable the Company to
address more effectively any imbalance between supply and demand for the Company’s ‘A’ non-voting Ordinary shares.
19 Fair value hierarchy and financial liabilities
IFRS 13 ‘Fair Value Measurement’ requires an entity to classify fair value measurements, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
Level 3: inputs for the asset or liability not based on observable market data (unobservable inputs).
The financial assets and liabilities, measured at fair value, in the Statement of Financial Position, grouped into the fair value hierarchy
and valued in accordance with the accounting policies in Note 1, are detailed below:
Year ended 31 March 2024
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
Financial assets at fair value through profit or loss
Quoted equities 192,221 - - 192,221
Unquoted equities - - 8,040 8,040
Fund investments 42,692 206,200 - 248,892
Fair Value 234,913 206,200 8,040 4 49,15 3
Year ended 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 37, 82 6 169,362 - 207,1 88
Investment in subsidiary - - - -
Fair Value 174,768 169,362 9,132 353,262
The Company’s policy is to recognise transfers into and out of the different fair value hierarchy levels at the date of the event
orchange in circumstances that caused the transfer to occur.
Hansa Investment Company Limited Annual Report 31 March 2024
80
A reconciliation of fair value measurements in Level 3 is set out in the following table:
31 March
2024
equity
investments
£000
31 March
2023
equity
investments
£000
Opening Balance 9,132 8,917
Transferred from Level 1 - -
Purchases 367 -
Sales (Capital Distribution) (402) -
Total (losses)/gains included in gains/(losses) on investments in the Income Statement:
on assets sold - -
on assets held at year end (1,057) 215
Closing Balance 8,040 9,132
As at 31 March 2024, 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 2024. The most recent valuation statement was received on 21 February 2024 and relates to
the DV4 portfolio at 31 December 2023. 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 2024 from DV4,
the Company performed additional procedures to determine the reasonableness of the fair value estimate for inclusion in the Financial
Statements. Direct enquiries of the manager of DV4 were made in July 2020 to understand, amongst others, valuation process and
techniques used, external experts used in the valuation process and updated details of underlying property portfolio. In addition, the
Company has obtained external independent valuation data and compared the historic valuation movements of DV4 to that data. It
has been confirmed with DV4’s manager that the valuation procedures discussed in July 2020 are still the same used now. In addition,
the Company has compared the historic valuation movements of DV4 to the FTSE350 Real Estate Index. Based on the information
obtained and additional analysis performed the Company is satisfied that DV4 is carried in these Financial Statements at an amount
that represents its best estimate of fair value at 31 March 2024. It is believed the value of DV4 as at 31 March 2024 will not be
materially different, but this valuation is based on historic valuations by DV4, does not have a readily available third party comparator
and, as such, is an estimate. If the value of the investment was to increase or decrease by 10%, while all other variables remained
constant, the return and net assets attributable to shareholders for the year ended 31 March 2024 would have increased or decreased
by £770,000 (2023: £913,000). 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.
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 2024,
are disclosed in the Governance Section – Service Providers on pages 47 to 48 and in Note 3 on page 72. Details of the
relationship between the Company and the Directors, including amounts paid during the period to 31 March 2024, are disclosed in the
Governance Section – The Board on page 42 and also in the Directors’ Remuneration Report on pages 57 to 59.
21 Controlling parties
At 31 March 2024 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 33.
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
81
Additional
Information
81
Hansa Investment Company Limited Annual Report 31 March 2024
82
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 the Hamilton
Princess Hotel, 76 Pitts Bay Rd, Pembroke HM 08, Bermuda
on Friday 2 August 2024 at 9:00 a.m. (Bermuda time) for the
following purposes:
Agenda
• To appoint a chairperson of the meeting.
• To confirm notice.
Resolutions
1. To receive and consider the audited Financial Statements and
the Reports of the Directors and Auditor for the year ended 31
March 2024.
2. To re-elect Jonathan Davie (a biography and Board
endorsement can be found earlier on in the report) as a
Director of the Company.
3. To re-elect Richard Lightowler (a biography and Board
endorsement can be found earlier on in the report) as a
Director of the Company.
4. To re-elect William Salomon (a biography and Board
endorsement can be found earlier on in the report) as a
Director of the Company.
5. To re-elect Simona Heidempergher (a biography and Board
endorsement can be found earlier on in the report) as a
Director of the Company.
6. To approve the Directors’ Remuneration Report.
7. To approve the Directors’ Remuneration Policy and authorise
the Board to determine the remuneration of the Directors.
8. To approve the Company’s Dividend Policy as can be found
earlier on in the Annual Report.
9. To appoint PricewaterhouseCoopers LLP as Auditor of the
Company and to authorise the Directors to determine the
remuneration of the Auditor.
10. Approval to repurchase up to 14.99% of the ‘A’ non-voting
Ordinary shares of 1p each in the issued shares capital of the
Company (the “Shares”).
THAT the Company be and hereby is unconditionally authorised
to make market purchases up to an aggregate of 11,992,000 shares
at a price (exclusive of expenses) which is:
• not less than 1p per share; and
• not more than the higher of: i) 5% above the average of the
middle-market quotations (as derived from and calculated
by reference to the Daily Official List of the London Stock
Exchange) for ‘A’ non-voting Ordinary shares of 1p each in the
five business days immediately preceding the day on which the
share is purchased; and ii) the higher of the last independent
trade and the then current highest independent bid.
AND
THAT the approval conferred by this resolution shall expire on the
date of the next AGM (except in relation to the purchase of shares,
the contract for which was concluded before such date and which
might be executed wholly or partly after such date) unless the
authority is renewed or revoked at any other general meeting prior
to such time.
11. Special Resolution
That the amended Bye-laws produced to the meeting by
the Chair be adopted as the Bye-laws of the Company in
substitution for, and to the exclusion of, the Company’s
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 amended Bye-laws proposed at the AGM if
approved by shareholders.
This summary is intended only to highlight the principal
amendments which are likely to be of interest to shareholders. It
is not intended to be comprehensive and cannot be relied upon
to identify all amendments or issues which may be of interest to
all shareholders. This summary is not a substitute for reviewing
the full terms of the amended Bye-laws which will be available
for inspection at the Company’s registered office, and also at the
registered office of Hansa Capital Partners LLP being 50 Curzon
Street, London, England, W1J 7UW, in each case from the date of
the AGM Notice until the close of the AGM. The amended 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.aspx19
Method of Payment
This Bye-law has been updated in line with wider market
developments to provide the Company with discretion to
prescribe the manner in which dividends and other monies are
paid, including (in the best interests of members and to take
advantage of greater efficiency, improved security of payments
and reduced costs) for payments to be made exclusively by inter-
bank transfer or other electronic means approved by the Board.
83.3 – Obligations to provide information to the Company
This Bye-law has been updated to allow the Company to withhold
payment of dividends to any shareholder that fails to provide
requested FATCA/CRS information to the Company within the
period set out in Bye-law 83.1; being 30 days. This withholding
sanction will only be implemented after efforts by the Company
to first obtain the necessary information from the non-responding
shareholder. The withholding of payment of dividends is intended
to be a further mechanism to encourage non-responding
shareholders to provide the required information.
For and on behalf of Conyers Corporate Services (Bermuda)
Limited
Vida Kam
Secretary
14 June 2024
ADDITIONAL INFORMATION
83
Notes for Shareholders
1 Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001 (as amended), only those members
registered in the register of members of the Company 48 hours
before the Annual General Meeting (i.e. by close of business
UK time on 31 July 2024) (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 The appointment of a proxy will not affect the right of a
member to attend and vote in person at the Meeting or
adjourned meeting. A member that is a corporation may
appoint a representative to attend and vote on its behalf at
the Meeting by delivering evidence of such appointment to
the Company’s registrar no later than 48 hours before the time
fixed for the Meeting (i.e. by 1:00pm UK time on 31 July 2024)
or any adjourned meeting.
4 In order to be valid, the proxy appointment (together with any
power of attorney or other authority (if any) under which it is
signed, or a notarised certified copy of that authority) must
be returned by one of the following methods, in each case so
as to arrive no later than 1:00pm UK time on 31 July 2024 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.investorcentre.co.uk/eproxy by
using the details on your Form of Proxy; or
in hard copy form by post, by courier or by hand to the
Company’s Registrars, Computershare Investor Services
(Bermuda) Limited, c/o The Pavilions, Bridgwater Road,
Bristol BS99 6ZY.
If you need help with voting online or need to request a
proxy form, please contact our Registrars, Computershare
Investor Services (Bermuda) Limited on +44 (0370) 702
0000. Calls are charged at the standard geographic rate and
will vary by provider. Calls outside the UK will be charged
at the applicable international rate. They are open between
09:00 – 17:30, Monday to Friday excluding public holidays
in England and Wales. Alternatively, Computershare
at WebCorres@computershare.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 specifications and must contain the information
required for such instruction, as described in the CREST
Manual (available via www.euroclear.com/CREST). The
message, regardless of whether it constitutes the appointment
of a proxy or is an amendment to the instruction given to
a previously appointed proxy must, in order to be valid, be
transmitted so as to be received by the issuer’s agent ID 3RA50
by 1:00pm UK time on 30 July 2024. 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. The
Company may treat as invalid a CREST Proxy Instruction
in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
2 In the case of Depositary Interest Holders, a form of direction
may be requested and completed in order to instruct
Computershare Company Nominees 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 to Computershare Investor
Services (Bermuda) Limited, c/o The Pavilions, Bridgwater
Road, Bristol BS99.
3 To be effective, a valid form of direction (and any power of
attorney or other authority under which it is signed) must be
received electronically or delivered to Computershare Investor
Services (Bermuda) Limited, c/o The Pavilions, Bridgwater
Road, Bristol BS99 by no later by 1:00pm UK time on 30 July
2024 or 72 hours before any adjourned Meeting.
4 The Depositary will appoint the Chairman of the meeting
as its proxy to cast your votes. The Chairman may also vote
Hansa Investment Company Limited Annual Report 31 March 2024
84
or abstain from voting as he or she thinks fit on any other
business (including amendments to resolutions) which may
properly come before the meeting.
5 The ‘Vote Withheld’ option is provided to enable you to
abstain from voting on the resolutions. However, it should be
noted that a ‘Vote Withheld’ is not a vote in law and will not
be counted in the calculation of the proportion of the votes
‘For’ and ‘Against’ a resolution.
6 Depositary Interest holders wishing to attend the meeting
should contact the Depositary at Computershare Investor
Services (Bermuda) Limited, c/o The Pavilions, Bridgwater
Road, Bristol BS99 or by emailing UKALLDITeam2@
computershare.co.uk by no later than by 1:00pm UK time on
30 July 2024.
All holders
1 The quorum for the Annual General Meeting shall be two or
more shareholders present in person or by proxy. If within
two hours from the time appointed for the meeting a quorum
is not present, the meeting shall be adjourned to the next
business day at the same time and place or to such other time
and place as the Directors may determine, and if a quorum is
not present at any such adjourned meeting, the meeting shall
be dissolved.
2 As of 14 June 2024 the Company’s total number of shares in
issue is 40,000,000 Ordinary shares of 1p each and 80,000,000
‘A’ non-voting Ordinary shares of 1p each in issue. The
Ordinary shareholders are entitled to one vote per Ordinary
share held. The ‘A’ non-voting Ordinary shares do not entitle
the holders to vote or receive notice of meetings, but in all
other respects they have the same rights as the Company’s
Ordinary shares.
3 A copy of this notice and other information can be found
at https://www.hansaicl.com/shareholder-information/
financial-and-investment-reporting/year-2024.aspx#2024
ADDITIONAL INFORMATION
85
Company information
The Company currently manages its affairs so as to be a qualifying
investment company for ISA purposes, for both the Ordinary and
‘A’ non-voting Ordinary shares. It is the present intention that the
Company will conduct its affairs so as to continue to qualify for ISA
products. In addition, the Company currently conducts its affairs
so shares issued by Hansa Investment Company Limited can be
recommended by independent financial advisers to ordinary retail
investors, in accordance with the Financial Conduct Authority’s
(FCA) rules in relation to non-mainstream investment products
and intends to continue to do so for the foreseeable future. The
shares are excluded from the FCA’s restrictions which apply to
non-mainstream investment products, because they are excluded
securities as defined 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
The Company has 40,000,000 Ordinary shares of 1p each and
80,000,000 ‘A’ non-voting Ordinary shares of 1p each in issue. The
Ordinary shareholders are entitled to one vote per Ordinary share
held. The ‘A’ non-voting Ordinary shares do not entitle the holders
to vote or receive notice of meetings, but in all other respects they
have the same rights as the Company’s Ordinary shares.
Secretary and registered office
Conyers Corporate Services (Bermuda) Limited
Clarendon House
2 Church Street PO Box HM666
Hamilton HM CX Bermuda
Investor information
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 certificated holding in the
Company’s shares.
Registrar
Computershare Investor Services (Bermuda) Limited
c/o 13 Castle Street
St Helier
Jersey
JE1 1ES
Telephone: +44 (0) 370 707 4040
Email: info@computershare.co.je
Website: www.computershare.com/je
If you have a query, you can call our Shareholder helpline
on +44 (0) 370 707 4040. Calls are charged at the standard
geographic rate and will vary by provider. Calls outside
the United Kingdom will be charged at the applicable
international rate. Lines are open between 08:30 - 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
Hansa Investment Company Limited Annual Report 31 March 2024
86
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
The 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
Investor disclosure
AIFMD
Hansa Investment Company Limited’s AIFMD Investor Disclosure
document can be found on its website. The document is a
regulatory requirement and summarises key features of the
Company for investors.
Packaged Retail and Insurance-based Investment
Products (PRIIPs)
The Company’s AIFM, Hanseatic Asset Management LBG, is
responsible for applying the product governance rules defined
under the MiFID II legislation on behalf of Hansa Investment
Company Limited. Therefore, the AIFM is deemed to be the
‘Manufacturer’ of Hansa Investment Company’s two share classes.
Under MiFID II, the Manufacturer must make available Key
Information Documents (KIDs) for investors to review 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
Winterflood Investment Trusts
Administrator
Apex Fund Administration Services (UK) Ltd
Alternative Investment Fund Manager
Hanseatic Asset Management LBG
ADDITIONAL INFORMATION
87
Association of Investment Companies (AIC)
The 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. Therefore, the Company
follows the AIC Code of Corporate Governance and the Board
considers that the AIC’s guidance on issues facing the industry
remains very relevant to the operations of the Company.
Alternative Investment Fund Managers Directive
(AIFMD)
The AIFMD is a regulatory framework for alternative investment
fund managers (AIFMs), including managers of hedge funds,
private equity firms and investment trusts. Its scope is broad and,
with a few exceptions, covers the management, administration
and marketing of alternative investment funds (AIFs). Its focus is
on regulating the AIFM rather than the AIFs.
Annual Dividend / Dividend
The amount paid by the Company to shareholders in dividends
(cash or otherwise) relating to a specific financial year of the
Company. The Company’s dividend policy is to announce its
expected level of dividend payment at the start of each financial
year. Barring unforeseen circumstances, the Company then
expects to make four interim dividend payments each year – at
the end of August, November and February during that financial
year and at the end of May following the end of the financial year.
Bid Price
The price at which you can sell shares determined by supply
and demand.
Capital Structure
The stocks and shares that make up a company’s capital i.e.
the amount of ordinary and preference shares, debentures and
unsecured loan stock etc. which are in issue.
Closed-ended
A company with a fixed number of shares in issue.
Depositary/Custodian
A financial institution acting as a holder of securities
for safekeeping.
Discount
When the share price is lower than the NAV, it is referred to as
trading at a discount. The discount is expressed as a percentage 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 Annual Report.
Five Year Rolling NAV Return (per annum)
The rate at which, compounded for five years, will equal the five
year NAV total return to end March, assuming dividends are
always reinvested at pay date.
Five Year NAV and Share Price Total Return
Rebased from 0% at the start of the five year period, this is
the rate at which the Company’s NAV and share prices would
have returned at any period from that starting point, assuming
dividends are always reinvested at pay date. The Company will
continue to quote results from its predecessor, Hansa Trust 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)
This is a document of a form stipulated under the PRIIPs
Regulations. It provides basic, pre-contractual, information about
the Company and its share classes in a simple and accessible
manner. It is not marketing material. The UK regulatory
authorities have introduced legislation from 1 January 2023 to
amend some of the disclosures in the KID for UK shareholders.
The Company’s AIFM will be producing both UK KIDs and
European KIDs going forward.
Key Performance Indicators (KPIs)
A set of quantifiable measures a company uses to gauge its
performance over time. These metrics are used to determine a
company’s progress in achieving its strategic and operational
goals and also to compare a company’s finances and performance
against other businesses within its industry. In the case of historic
information, the KPIs will be compared against data of both the
Company and, prior to the Company’s formation, from Hansa
Trust Ltd.
Glossary of terms
Hansa Investment Company Limited Annual Report 31 March 2024
88
Market Capitalisation
The market value of a company’s shares in issue. This figure is
found by taking the stock price and multiplying it by the total
number of shares outstanding.
Mid Price
The average of the Bid and Offer Prices of a particular
traded share.
Net Asset Value (NAV)
The value of the total assets minus liabilities of a company.
Net Asset Value Total Return
See Total Return.
Offer Price
The price at which you can buy shares determined by supply
and demand.
Ordinary Shares
Shares representing equity ownership in a company allowing
investors to receive dividends. Ordinary shareholders have the
pro-rata right to a company’s residual profits. In other words, they
are entitled to receive dividends if any are available after payments
to financial lenders and dividends on any preferred shares are paid.
They are also entitled to their share of the residual economic value
of the company should the business unwind.
Hansa Investment Company Limited has two classes of Ordinary
shares – the Ordinary shares (40 million shares) and the ‘A’ non-
voting Ordinary shares (80 million shares). Both have the same
financial interest in the underlying assets of the Company and
receive the same dividend per share, but differ only in that only the
former shares have voting rights, whereas the latter do not. They
trade separately on the London Stock Exchange, nominally giving
rise to different share prices at any given time.
Premium
When the share price is higher than the NAV it is referred to as
trading at a premium. The premium is expressed as a percentage of
t h e N AV.
Packaged Retail and Insurance-based Investment Product
(PRIIP)
Packaged retail investment and insurance-based products (PRIIPs)
make up a broad category of financial assets that are regularly
provided to consumers in the European Union. The term PRIIPs,
created by the European Commission to regulate the underlying
market, is defined as any product manufactured by the financial
services industry, to provide investment opportunities to retail
investors, where the amount repayable is subject to fluctuation
because of exposure to reference values, or the performance of
underlying assets not directly purchased by the retail investor. See
also Key Information Document (KID).
Shareholders’ Funds/Equity Shareholders’ Funds
This value equates to the NAV of the Company. See NAV.
Spread
The difference between the Bid and Ask price.
Tradable Instrument Display Mnemonics (TIDM)
A short, unique code used to identify UK-listed shares. The TIDM
code is unique to each class of share and to each company. 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
The Total Return to a shareholder is a measure of the performance
of the company’s share price over time. It combines share price
appreciation/depreciation and dividends paid to show the total
return to the shareholder expressed as an annualised percentage.
In the case of historic information, the Total Return will include
data against data of both the Company and, prior to the Company’s
formation, from Hansa Trust 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