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