Hansa Investment Company Limited

Year-End Report

For the Year Ended

31March 2022

HANSA, investing to create

long-term growth

2022

HANSA INVESTMENT

COMPANY LIMITED

THIS DOCUMENT IS IMPORTANT and if you are a holder of Ordinary shares it requires your immediate attention. If you are in doubt as to the action you should take

or the contents of this document, you should seek advice from an independent ﬁnancial advisor, authorised if in the UK under the Financial Services and Markets Act

2000, or other appropriately authorised ﬁnancial advisor if outside of the UK. If you have sold or transferred your Ordinary shares in the Company, you should send

this document, immediately to the purchaser or transferee; or to the stockbroker, bank or other agent through whom the sale or transfer was effected for onward

transmission as soon as practicable.

COMPANY REGISTRATION AND NUMBER: The Company is registered in Bermuda under company number 54752.

I am pleased to present the third Year-End Report for Hansa Investment Company Limited to shareholders.

During our ﬁnancial year, the world has continued to experience heightened economic and political turbulence.

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 on page 2 as well as the expanded ESG

disclosures on page 12. With regard to the latter, your Board has worked closely with the Portfolio Manager to

ﬁnesse their Responsible Investing Policy. Your Board wholeheartedly endorses the Manager's plans and we disclose

signiﬁcant detail about their initiatives in that section.

Finally, I remind you that details of our upcoming AGM are at the back of this Annual Report. Please do take the time

to read, consider and vote if eligible to do so. We also plan on holding a shareholder update in September. Plans are

at an early stage, but we would like to reach as many interested parties as possible and so it is likely we will retain the

virtual presentation as adopted in previous years.

Yours sincerely

WELCOME

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

2 Strategic Report

2 Chairman’s Report to the Shareholders

4 The Board of Directors

6 The Board

8 Long-Term Performance

9 Organisation and Objectives

24 Portfolio Manager’s Report

36 Portfolio Statement

38 Shareholder Proﬁle and Engagement

41 Corporate Governance Reports

41 Report of the Directors

42 Corporate Governance Report

47 Audit Committee Report

49 Directors’ Remuneration Report

52 Independent Auditor's Report to

the Members of Hansa Investment

Company Limited

57 Financial Statements

57 Income Statement

58 Balance Sheet

59 Statement of Changes in Equity

59 Cash Flow Statement

61 Notes to the Financial Statements

74 Notice of the Annual General Meeting

77 Investor Information

79 Company Information

80 Glossary of Terms

Long-Term

Highlights 2022

Graphs represent the combined results

of the Company with Hansa Trust. To

that end, prior to August 2019 where

historic information relating to Hansa

Trust is quoted on a ‘per share’ basis,

it has been converted to be consistent

with the number of HICL shares

in issue. There is no benchmark to

disclose.

Rolling Five Year NAV Returns to end March (per annum)

2013 – 2022

2022202120202019201820172016201520142013

4.9%

15.4%

5.9%

4.3%

4.7%

8.9%

5.7%

6.0%

0.6%

1.5%

It is the goal of the Company to make money for shareholders on a long-term basis (ﬁve years).

The Board monitors the ﬁve year NAV returns as the primary achievement of the Company’s goal.

Dividend payments for year to end March (pence per share)

2013 – 2022

2022-2023

2021-20222020-20212019-20202018-20192017-20182016-20172015-20162014-20152013-2014

Pence per HICL Share

1st Interim Paid

4th Interim Paid3rd Interim Paid

2nd Interim Paid

PredictedPayableFinal Dividend

0.4

0.8

1.2

1.6

2.0

2.4

2.8

3.2

3.6

1.0

1.6

1.6 1.6

1.6

0.8

3.2

0.8

2.2

1.6

1.61.6 1.6 1.6

The Dividend Policy can be found on page 21 of these Financial Statements and on the Company’s website.

Itcan be summarised as the declaration at the beginning of the year of four equal dividends, paid in November,

February, April and May.

Five Year NAV and Share Price Total Return

2017 – 2022

NAV

Ordinary Share Price

‘A’ Ordinary Share Price

Mar-17Mar-18Mar-19Mar-20Mar-2

ar-22

-30%

-20%

-10%

10%

20%

30%

40%

50%

60%

Hansa Investment Company Limited For the Year Ended 31 March 2022 1

STRATEGIC REPORT

Chairman’s Report to the

Shareholders

INTRODUCTION

I am pleased to report that our Portfolio Manager and other

service providers to Hansa Investment Company (“HICL”, “the

Company”) remain resilient and have not been operationally

affected by any Covid-19 problems or the conﬂict in Ukraine.

SHAREHOLDER RETURNS

For the year ended 31 March 2022, the Net Asset Value

(“NAV”) has increased by 12.5p per share, from 306.6p

per share to 319.1p per share. Regrettably, during the past

12 months there has been an increase in the discount from

35.4% to 37.8% for the Ordinary shares and from 35.3% to

39.5% for the ‘A’ Ordinary shares. More detail on these and the

longer-term performance can be found on page 8, as well as

our Portfolio Manager’s detailed review of markets and portfolio

performance in his report on page 24.

Our Portfolio Manager, Alec Letchﬁeld and his team at Hansa

Capital Partners LLP (“Hansa Capital Partners”, “HCP”) has

continued to produce satisfactory risk adjusted returns to

shareholders. The portfolio he manages (the Company's

investment portfolio excluding Ocean Wilsons Holdings Ltd

(“OWHL”, “Ocean Wilsons”) has seen a gross time-weighted

total return of 1.1% in the past year, whilst our investment

in OWHL has seen a gross time-weighted return of 24.7%.

The latter was driven in part, by Wilson Sons Limited share

price increase in Sterling terms by 77.9%, whilst increasing in

Brazilian Real terms by 41.0%, the difference being the rally in

the price of the Brazilian Real against Sterling. Collectively, the

entire HICL portfolio has seen a gross time-weighted return of

6.2% for the twelve months ended 31 March 2022.

PROSPECTS

Writing about prospects and the future direction of markets

is always challenging at the best of times. However, I cannot

remember a time when there were so many moving parts in

the ﬁnancial world, particularly interest rates, inﬂation and

monetary tightening, and a war of which the outcome and its

timing is impossible to predict at the time of writing. As such

we are faced with a highly uncertain geopolitical backdrop and

a lack of cohesive leadership which is creating the potential for

policy missteps and an environment that many younger market

practitioners will not have experienced during their lifetime.

In my Interim Report I mentioned the emergence of noticeable

inﬂationary trends, international tensions and energy shortages

which sadly have only increased since then. Of course, much of

this increase has been the result of Russia’s invasion of Ukraine.

Many forecasters have different views of when and at what

level inﬂation will peak in this cycle. My sense is that it will

probably stay elevated for longer than presently anticipated,

because of the labour shortages and production bottlenecks

(such as those driven by China's Zero-Covid policy and the

resulting lockdowns) and the ongoing disruptions in Ukraine.

The anticipated rises in interest rates and monetary tightening

as Quantitative Easing becomes Quantitative Tightening will

ultimately achieve the objective of reducing inﬂation, assuming

the Federal Reserve Board and other major Central Banks do

not cut short their campaign because of recessionary fears. One

has to remember the years of the inﬂationary build up created

by interest rate suppression, Quantitative Easing and lax lending

to get a feel for the size of the bubble that is now deﬂating.

The actions of the Central Banks will probably cause recessions,

which means equity markets probably still have some way to

fall before the bottoming out process can begin. This will, of

course, create great opportunities for the patient investor to buy

quality stocks at attractive prices.

On a more positive note, it has been encouraging to note the

improvement in the Ocean Wilsons share price and the excellent

contribution from Wilson Sons Limited (“Wilson Sons”),

partially created by the long-awaited increase in the value of the

Brazilian Real.

STRATEGY

Alec Letchﬁeld and his team, supported by the Board, have

taken a slightly more defensive position in the past year which

has helped our overall performance. They have managed

our portfolio effectively through these challenging times for

investors, which includes negligible economic exposure to

Russian assets, but there has been some inevitable collateral

damage to our portfolio from the market’s reaction to the

war in Ukraine. 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.

JONATHAN DAVIE

Chairman

Strategic Report

Chairman’s Report to the Shareholders

Strategic Report TABS

2 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

DIVIDEND POLICY

The Board continues to support our strategy of maintaining the

dividend at 3.2p until it is fully covered by net revenue income

and then increase it in line with any increase in the net revenue

income of the Company.

DISCOUNT MANAGEMENT

It is a great frustration to the Board and our shareholders that the

discount has not tightened over the past year, much of this can

probably be put down to a general widening of investment trust

spreads, due to market volatility and declining retail participation

in the markets. The Board continues to take the view that share

buybacks can only offer a short-term solution. It would increase

risk concentration as the proportion of the portfolio invested in

Ocean Wilsons would automatically increase, which the Board

wishes to avoid in line with the Company’s long-term strategy.

LIQUIDITY & INVESTOR BASE

The Board continue to work with our broker Winterﬂood and

Edison to promulgate the Hansa story and are now working

with Warhorse Partners, a brand and marketing specialist to the

Investment Trust industry, to explore alternate and fresh forms

of investor outreach and messaging.

INVESTMENT IN OCEAN WILSONS HOLDINGS LTD

As mentioned earlier in this Report, it is encouraging to note

the improvement in the value of Wilson Sons Ltd and the uplift

in the share price of Ocean Wilsons Holdings, after a period of

underperformance created mainly by the declining Brazilian Real.

Our strategy on the various options relating to OWHL mentioned

in my Report last year remain unchanged. 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.

Hansa Investment Company Limited For the Year Ended 31 March 2022 3

STRATEGIC REPORT

The Board

of Directors

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.

RICHARD LIGHTOWLER

(Audit Committee Chairman)

Richard became a Director of the

Company in June 2019. Richard has

25 years’ experience in public accounting

being partner of KPMG in Bermuda for

19 years. He was head of the KPMG

Insurance Group in Bermuda for 15 years,

a member of the ﬁrm’s Global Insurance

Leadership Team and Global Lead Partner

for a number of large international

insurance groups listed on the New York

and London Stock Exchanges.

Richard has signiﬁcant regulatory

experience, advising the Bermuda

Monetary Authority and working with

clients regulated by the PRA, FRC and

FCA, as well as other international

regulators. He also has extensive

experience in risk and corporate

governance and signiﬁcant transaction

experience including redomiciliations.

Richard is based in Bermuda. Richard

also holds directorships with Geneva

Re, Aspen Insurance Holdings and

Oakley Capital.

Meetings

attended

Total

Meetings

Board 5 5

Audit Committee 2 2

Meetings

attended

Total

Meetings

Board 5 5

Audit Committee 2 2

The Directors who

served the Company

during the year to

31 March 2022 are:

4 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

SIMONA HEIDEMPERGHER

Simona became a Director of the

Company in June 2019. Simona has

extensive experience as an executive

and non-executive director in a range of

companies, including listed companies,

investment funds and research

organisations, across multiple jurisdictions.

For the past 19 years, she has been

a director of Meriﬁn Capital, an established

European privately owned investment

company. 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.

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.

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

attended

Total

Meetings

Board 5 5

Audit Committee 2 2

Meetings

attended

Total

Meetings

Board 5 5

Audit Committee 2 2

Meetings

attended

Total

Meetings

Board 5 5

Audit Committee 2 2

Note:

The meetings listed above are the main events held during the year at which all Directors attend. Additionally, there have been numerous meetings and Board calls

to consider and approve operational requirements for the Company, such as quarterly dividends. These meetings are arranged as and when required and require the

meeting to be quorate but not necessarily attended by all Directors. These have not been listed above.

The Board normally holds an annual Strategy session in February. This was delayed to April 2022 due to the outbreak of the Omicron variant of Covid-19 so the Board

could meet face-to-face.

Hansa Investment Company Limited For the Year Ended 31 March 2022 5

STRATEGIC REPORT

The Board

Board members are selected based on their individual and

complementary skills and experience and their ability to commit

sufﬁcient time to drive the Company’s success. All Directors will

retire at each AGM and offer themselves for consideration for

re-election. The Board recommends the re-appointment of each

of the Directors, based on their continuing contribution to the

Company and its shareholders.

The Board is charged by the shareholders with the responsibility

for looking after the affairs of the Company. It involves the

stewardship of the Company’s assets and liabilities and the

pursuit of growth of shareholder value in accordance with the

investment objective. These responsibilities are discharged in

many ways and are explained below.

INVESTMENT OBJECTIVE POLICY

The Company objective is to grow the net assets of the

Company over the medium to long-term by investing in

a diversiﬁed and multi-strategy portfolio.

The Company seeks to achieve its investment objective by

investing in third-party funds, global equities and other

international ﬁnancial securities. The Company may invest in

quoted and unquoted securities. The Company’s portfolio will

typically comprise at least 30 investments.

The Company holds a strategic position in the share capital of

OWHL, which represents the Company’s largest holding. The

Company will not make further investments into OWHL.

The Company has no set maximum or minimum exposures to

any asset class, geography or sector and will seek to achieve

an appropriate spread of risk by investing in a diversiﬁed global

portfolio of securities and other assets.

INVESTMENT STRATEGY

The Portfolio Manager, engaged by and acting on behalf of the

Company, seeks to build a multi-strategy portfolio by selecting

investments across four key investment categories, in addition

to the strategic investment in OWHL:

• Core – investments, typically through third-party funds,

that the Company can expect to hold throughout the

economic cycle.

• Thematic – investments, typically through third-party funds,

that reﬂect key investment themes the Portfolio Manager

believes will generate excess returns.

• Diversifying Assets – investments, typically through

third-party funds and directly, that create asset diversiﬁcation

within the portfolio.

• Global Equities – a diversiﬁed portfolio of global equities

identiﬁed by the Portfolio Manager as having long-term

growth potential.

The Company has no set maximum or minimum exposures to

any asset class, geography or sector, the Board does, however,

set guidelines which the Portfolio Manager adheres to. These

can be adjusted by the Board. While the proportion of the

portfolio represented by each of these categories will vary

over time, the Board establishes parameters for the Portfolio

Manager, based on its view of the global investment markets.

The Board set the following guidelines for each category as

a percentage of the portfolio (including the strategic investment

in OWHL):

• Core: 0-50%

• Thematic: 0-25%

• Diversifying Assets: 0-40%

• Global Equities: 0-40%

6 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

The Portfolio Manager has a strong focus on identifying

investments with excellent fundamentals and a similar

investment philosophy to HCP. In particular, taking a long-term

approach to investing, good alignment and not seeking to

replicate a benchmark. These investments range from those

sectors beneﬁting from structurally higher growth, such as

technology, to assets which the Company believes stand on

unwarranted discounts to their intrinsic value.

INVESTMENT MONITORING AND

KEY PERFORMANCE INDICATORS (“KPIS”)

The Company believes this investment strategy may produce

returns not replicated by movements in any market index.

Furthermore, the Board considers that the use of a single

benchmark will not always offer shareholders the relevance

and the clarity needed with regard to the performance of

the Company.

The Board’s primary goal is for the Company to generate

long-term returns for shareholders and so will compare the

Company’s performance against that of a safe return from

an appropriate Government bond – for this the Board has

elected to follow the FTSE Gilts All Stocks TR Index (Bloomberg:

FTFIBGT). The Board’s second goal is for the Company to

achieve returns that are higher than inﬂation and use the

UK’s CPI (Bloomberg: UKRPCHVJ) as the KPI for comparison.

Finally, the Board compares the Company’s returns with those

of an appropriate index – for which the Board has elected to

follow the performance in GBP of the MSCI All Country World

Index excluding Frontier Markets (Bloomberg: NDUEACWF).

Seepage17 for the further discussion on the KPIs.

POLICY ON BOARD COMPOSITION

Appointments to the Board are made on merit and against

objective criteria, in accordance with the AIC Corporate

Governance Code. The Board considers it is of paramount

importance to shareholders that, after consideration of the skills

and experience needed by the Board, candidates are chosen on

the basis of their contribution to the Company’s needs and that

there should be no discrimination in the choice of Directors for

any reason.

Hansa Investment Company Limited For the Year Ended 31 March 2022 7

STRATEGIC REPORT

Long-Term Performance

TEN YEAR COMPANY PERFORMANCE STATISTICS

Year ended 31March

Shareholders’

Funds

Net Asset Value

per share –

Ordinary and

‘A’Ordinary

Annual

Dividends Ordinary ‘A’ Ordinary Ordinary ‘A’ Ordinary

2022 £382.9m 319.1p 3.2p 198.5p 193.0p 37.8% 39.5%

2021 £367.9m 306.6p 3.2p 198.0p 198.5p 35.4% 35.3%

2020 £276.3m 230.2p 3.2p 130.9p 135.5p 43.1% 41.2%

2019 £337.3m 281.1p 3.2p 195.5p 195.0p 30.5% 30.6%

2018 £323.1m 269.3p 3.2p 198.5p 195.5p 26.3% 27.4%

2017 £307.5m 256.3p 3.2p 173.3p 169.6p 32.4% 33.8%

2016 £255.6m 213.0p 3.2p 146.0p 145.1p 31.5% 31.9%

2015 £273.3m 227.8p 3.2p 172.0p 165.5p 24.5% 27.3%

2014 £287.4m 239.5p 3.2p 175.9p 175.5p 26.6% 26.7%

2013 £259.9m 216.6p 3.0p 166.8p 163.0p 23.0% 24.7%

2012 £268.2m 223.5p 2.8p 181.0p 178.3p 19.0% 20.2%

The table includes information relating to HICL and historic information relating to Hansa Trust. The years ended 2020-2022 notes

HICL information. The historic year ends 2011-2019 all relate to Hansa Trust. So that data is consistent and comparable, the historic

data in columns “Net Asset Value per Share”, “Annual Dividends” and “Share Price (Mid)” have been restated to reﬂect that, as

part of the redomicile of the business of Hansa Trust to HICL in August 2019, HICL issued ﬁve times as many shares in each share

class of HICL as there were in Hansa Trust.

The Company’s KPIs can be found on page17.

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

Share Price (Mid)

Discount/(Premium)

8 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Organisation and Objectives

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.

Hansa Investment Company Limited For the Year Ended 31 March 2022 9

STRATEGIC REPORT

SHAREHOLDER INTERACTION & PROMOTING THE COMPANY

Stakeholder Interaction

Shareholders The shareholder base is a mixture of private investors, wealth managers and asset managers

across both classes of the Company’s shares. The Board monitors changes in the shareholder

base at its quarterly Board meetings. The Company communicates through the publication

of Year-End and Half-Year Financial Statements, through detailed quarterly and monthly

factsheets, as well as through the Company’s website. The Company also holds shareholder

presentations incorporating presentations by the Board and key service providers to keep

shareholders informed.

The Board seeks to understand the opinions of a wide variety of shareholders. The

Company maintains a dedicated email address for shareholders to contact the Board

([email protected]) and shareholder correspondence and feedback is a regular item

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.

Organisation and Objectives

Continued

10 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Main areas of engagement

Key Area Issue Engagement & Outcomes

Investment Strategy &

ESG matters

The Board has control over the Company’s

investment in OWHL but, otherwise,

all investments are managed by HCP as

Portfolio Manager.

The Investment Strategy incorporates

appropriate ESG considerations.

The Board has engaged with the Portfolio

Manager and encouraged them to develop

a responsible investment policy. The Board

understands HCP has made signiﬁcant progress

and is expecting to become a signatory to the

UNPRI within the coming ﬁnancial year. The

Board wholeheartedly supports this policy.

Discount Management The Board is mindful of and regularly

discusses the hare price compared to NAV

and related discount. The Board is of the view

that providing transparency and clarity to

investors, as well as promoting demand for

the Company’s shares, should create a positive

impact on the discount for the medium to

longer-term. To this end, the Board continues

its discussions with Warhorse Partners,

a brand and marketing specialist focused on

the asset management industry, to review the

Company’s branding and communications

strategy with shareholders and potential

shareholders alike. The aim of the project is to

enhance and broaden the understanding of

the Company, with the ultimate objective of

widening the shareholder base and deepening

the market for shares.

It is a great frustration to the Board that the

discount has not tightened over the past

year. It is also noted that there has been

general widening of investment trust spreads

due to market volatility and declining retail

participation in the markets.

Dividend Policy & Share

Buybacks

The Board continues to support maintaining

the dividend at 3.2p until it is fully covered by

net income. At that time it plans to increase it

in line with any increase in the net income of

the Company.

The Board believes that share buybacks can

only offer a short-term solution. To buy back

shares would increase risk concentration,

as the proportion of the portfolio invested

in Ocean Wilsons would increase which the

Board wishes to avoid.

The Board continues to provide transparency of

dividend and buy back policies to shareholders

in documents and presentations.

Hansa Investment Company Limited For the Year Ended 31 March 2022 11

STRATEGIC REPORT

Key Area Issue Engagement & Outcomes

Maintaining levels of

service from Service

Providers

The Company does not have direct

employees. Rather, its operations are

conducted by several key service providers.

The Company enters into service-level

agreements with each provider. The Board

oversees these services to ensure that best

practice is followed and that the Company is

receiving a comprehensive service and value

for money.

The independent members of the Board

annually review the performance of the

Portfolio Manager. Additionally, the day-to-day

performance of other key service providers

(Administrator, Custodian and Registrar) are

monitored by the AASP on behalf of the

Board. In addition, there is an annual review

of service providers' annual Controls Audit

Reports. Members of the Board also visit

each key service provider annually to review

performance and understand any changes in

their businesses.

LONG-TERM IMPACT OF DECISIONS – ESG MATTERS

With ever-growing global concerns and developments

surrounding matters such has climate change, social

inequalities and ethical corporate strategy and governance,

the Board believes there is a communal duty for meaningful

and effective action to be taken and are committed to doing

so. It is the Board's belief that responsible investing and

a well-run sustainable business model aids in generating

superior long-term returns.

The Board is responsible for the Company's ESG policy. In

2020, the Board adopted the Portfolio Manager’s (“PM”)

Responsible Investment Policy, which is applied to all Company

investments in funds and companies, in both public and

private markets. In line with the evolving nature of ESG’s

integration within ﬁnancial services, the PM continues to

review and develop their policy of responsible investing within

their investment process. This involves ensuring environmental,

social and governance factors are more seamlessly integrated

throughout the investment management process, including

within the due diligence, decision-making and investment

monitoring processes. With such purposeful integration of

ESG considerations within the investment process, it can aid

in fostering an economically efﬁcient and sustainable global

ﬁnancial system and enhance investment performance.

As long-term investors, HCP has a natural desire to be

a responsible investor and a good corporate citizen. HCP’s

approach begins by communicating its expectations to fund

and company investments that they should take ESG issues

seriously, clearly report on them, be responsible owners and

to continuously show positive indicators of aspiring to do the

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

Organisation and Objectives

Continued

12 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

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

Hansa Investment Company Limited For the Year Ended 31 March 2022 13

STRATEGIC REPORT

state their commitment to the climate agenda and to building

solutions that adapt to the new scenarios established by the

challenges imposed by climate change in the world.

Risk Management

Climate-related risks within the Company's investments are

identiﬁed, assessed and managed by HCP as the Portfolio

Manager, with such to be reported to the Board for our

oversight. As part of the portfolio risk management and

monitoring process, HCP’s approach combines long-term

and purpose-driven engagement with underlying fund

managers and companies, active voting and setting a clear

escalation framework. This approach aims to identify and

address climate-related issues and minimise systemic risks that

may impact the assets within the portfolio. Engagement can

take several forms, including regular and ad hoc face-to-face

(or video) meetings with management, formal written

correspondence, or the Portfolio Manager participating in

relevant shareholder votes for current investments. Within

the last year, further enhancements to the Company’s voting

process have been made, albeit all voting decisions are made

and directed by the HCP only. Taking such an active approach

to investing may involve voting against the management of an

underlying investment if its impact can help manage climate

related risks and drive positive change.

Strategy

The Company’s strategic objective is to grow its net assets over

the medium to long-term, by investing in a diversiﬁed and

multi-strategy portfolio and, in line within this objective, the

Board are responsible for pursuing the growth of shareholder

value. Responsible investment and the integration of ESG risks

and opportunities consideration within the investment process is

believed to be aligned with the Company’s values and heritage.

In line with our future commitment to become signatories of

the UNPRI, a key objective we intend to pursue is to encourage

our investments to embed ESG risks and opportunities into their

own strategies, direction and goals. An example of a climate-

related opportunity could include the increased alignment of

fund managers and companies sustainable investing practises,

providing a more diverse pool of responsible investment

opportunities for the Company. An example of climate-related

risk could include regulatory, market and reputational risks.

Metrics & Targets

In relation to the Portfolio Manager's investment process,

a more holistic approach is taken by assessing an investment by

their intent and direction of travel, rather than purely by speciﬁc

targeted metrics. The ESG assessment of a fund manager or

company will involve HCP developing a view by utilising their

published ESG reporting, the information received through the

due diligence and engagement processes and other external

research. The Company has no material information to report

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-

Organisation and Objectives

Continued

14 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

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.

Hansa Investment Company Limited For the Year Ended 31 March 2022 15

STRATEGIC REPORT

The Board issues formal investment guidelines and

restrictions, compliance with these is reported by the

Portfolio Manager’s compliance ofﬁcer on a regular basis

and is also monitored independently by the Administrator.

• Determines gearing levels and capital preservation through

the use of hedging instruments

The Board, taking account of advice from the Portfolio

Manager, determines the maximum level of borrowings the

Company will undertake at the time of borrowing. Details

of the borrowing limits can be found on page 18. The

Company will not invest in derivatives for speculative gain,

but may use derivatives for efﬁcient portfolio management

and hedging purposes.

The key service provider relationship to the Company is Hansa

Capital Partners as the Portfolio Manager and Additional

Administrative Services Provider to the Company.

THE PROVIDERS

Portfolio Manager & Additional Administrative

ServicesProvider

Hansa Capital Partners LLP is the Portfolio Manager for the

Company. It is responsible for all assets in the portfolio, other

than the Company’s investment in OWHL. The Board is in

regular contact with the investment management team at HCP

which is led by Alec Letchﬁeld. Additionally, Alec Letchﬁeld

is invited to quarterly meetings of the Board to formally

present portfolio updates and discuss market trends. The

Portfolio Manager’s detailed review of the year can be found

onpage 24.

HCP charges an investment management fee at an annual rate

of 1% of the net assets of the Company (after any borrowings)

but, after deducting the value of the investment in OWHL, on

which no fee is payable. The Portfolio Manager has charged

£3,010,000 for the year ended 31 March 2022 (year ended

31 March 2021: £2,621,000). Hanseatic Asset Management

LBG, a company connected to Hansa Capital Partners LLP

and which is also the AIFM, separately charges an investment

management fee to the investment subsidiary of OWHL.

The terms of the Portfolio Management Agreement permit

either party to terminate the agreement by giving to the other

not less than 12 months’ notice, or such shorter period as

is mutually acceptable. There is no agreement between the

Company and the Portfolio Manager concerning compensation

in respect to the termination of the agreement. In its annual

assessment of the Portfolio Manager, the Board concluded

that, because of the skills and experience of the management

team it is in the best interest of shareholders that the Portfolio

Manager remains in place under the present terms. Details

of the fees paid to the Portfolio Manager can be found in

Note 3 on page 64.

HCP also acts as the Additional Administrative Services Provider

(“AASP”) to the Company. This role ensures a number of the

day-to-day processes for the Company are carried out as well

as providing oversight of, and a liaison between, a number

of the Company’s service providers and the Company itself.

HCP is paid £115,000 per annum for this service (year ended

31 March 2021: £115,000). HCP is not the Company Secretary

– see below.

Auditor

The Company’s Auditor is PricewaterhouseCoopers Ltd,

a Bermudan registered ﬁrm. The Board have developed

a strong working relationship with the Auditor and have

been happy with the rigour and challenge offered. The

reappointment of PwC as Auditor to the Company will be

proposed at the forthcoming AGM.

Auditor independence rules restrict the amount and type of

non-audit related work that can be performed by a company’s

auditor. Any non-audit related work must be pre-approved by

the Board. Currently, PwC provides only audit services to the

Company (details in Note 4 on page 64).

Company Secretary

The Company has engaged Conyers Corporate Services

(Bermuda) Ltd (“Conyers”) as its Company Secretary.

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

Organisation and Objectives

Continued

16 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

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 on page 2.

In discussions between the Board and the Portfolio Manager,

returns are compared with a number of measures, including

the return of a government bond, using the 10 year UK Gilt

Return (FTSE All Stocks Gilts Total Return Index); to the rate

of inﬂation (real returns are important to shareholders) and

with those of appropriate indices for different elements of

the portfolio.

Additionally, whilst not speciﬁcally KPIs, the cost of managing

the Company is monitored against the NAV (the ratio between

costs and NAV is also known as the ‘ongoing charges

percentage per annum ratio’); and the discount/premium the

shares sell at in relation to the NAV are likewise monitored.

The Board of Directors monitors the returns made in

absolute (ﬁrstly) and relative (secondly) terms against the

KPIs established. The comparisons are made over 1, 3, 5 and

10 year time horizons.

i) Shareholders – Total Returns

To 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%

‘A’ non-voting Ordinary

(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

Hansa Investment Company Limited For the Year Ended 31 March 2022 17

STRATEGIC REPORT

Organisation and Objectives

Continued

To comply with the Packaged Retail and Insurance-based

Investment Products Regulation (“PRIIP”), the Company has

issued a PRIIP’s Key Information Document (“KID”) for each

of its two share classes. In the PRIIPs, KID regulations are very

prescriptive as to how costs are calculated and presented.

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.

18 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

When considering the Company’s principal risks and

uncertainties, the Board assesses this in line with the

Company’s stated objective of generating superior, but

sustainable, long-term growth in shareholder value. The main

risk being that over the long-term (determined as greater than

ﬁve years), shareholders do not make a return from investing

in the Company. The Company's closed-ended fund structure

is also considered to be in alignment with its stated objective,

especially within extremely volatile market conditions. This is

due to the portfolio not having to be managed and maintained

to manage potential signiﬁcant redemptions or short-term

liquidity needs as open-ended funds would. The closed-ended

structure can take advantage of less liquid market opportunities

as part of Its portfolio holdings.

The principal risks and uncertainties identiﬁed and associated controls in place to manage these risks are described below:

PRINCIPAL RISKS – EXTERNAL CONTROLS TO MITIGATE RISKS

Market Risk – Long-Term Company

Share Performance

Types of market risk considered include

interest rate, currency, equity, credit,

concentration, liquidity and macro

geo-political risks.

The Board:

• has appointed an appropriate PM whose performance for the Company is

reviewed and challenged on a quarterly basis;

• has set investment guidelines and restrictions, which are reported against by the

PM on a monthly basis;

• operates an asset allocation model, which is regularly reviewed and discussed

with the PM; and

• monitors and discusses portfolio construct and performance quarterly.

Company Shares – Performance,

Price, Liquidity and Discount

Monitoring

Low market trading volumes of

Company shares and the discount to

the NAV becoming inherent in the share

price.

The Board:

• regularly reviews the share price, discount level and portfolio performance;

• maintains periodic oversight on shareholder-base;

• actively seeks feedback both directly from shareholders and indirectly through the

Company’s Broker (Winterﬂood) or speciﬁc outreach programmes (Edison); and

• has the ability to buy-back non-voting shares of the Company.

Hansa Investment Company Limited For the Year Ended 31 March 2022 19

STRATEGIC REPORT

Organisation and Objectives

Continued

PRINCIPAL RISKS – EXTERNAL CONTROLS TO MITIGATE RISKS

Tax, Accounting, Legal &

Regulatory risks

Adverse outcomes resulting from

legislative changes to tax, legal and

regulatory requirements. Adverse

outcomes from not meeting ESG

expectations.

The Board:

• obtains regular updates and advice from relevant professional advisers;

• maintains oversight and receives regular reporting on the legislative and

regulatory changes, which impact HICL, as monitored by the PM;

• maintains the Company’s membership with the Association of Investment

Companies;

• has adopted the PM's responsible investing policy;

• has set explicit expectations on the integration of ESG considerations within

the investment process and continues to look to emerging guidance to further

develop the Company’s level of ESG disclosures; and

• receives documented conﬁrmation of the PM’s adherence to relevant regulatory

requirements and emerging sanction risks.

Reputational risk

Negative behaviours, publications

or market sentiment impacting the

reputation of the Company.

The Company:

• requires the annual selection of Board members, all of whom must have

a commitment to governance;

• communicates with investors and the public in a clear and transparent

manner; and

• has set pre-approval procedures for accuracy and reliability of such information.

PRINCIPAL RISKS – INTERNAL CONTROLS TO MITIGATE RISKS

Operational risk

Risks associated with process, system

and control failures in all operational

areas, associated with the Company’s

reliance on third-party service providers,

due to having no employees.

Operational areas considered includes

Liquidity, Safeguarding of Assets and

Reliability of Financial Reporting.

• Investment guidelines require investments to be in generally liquid assets with an

asset allocation to avoid concentrations.

• An overdraft facility provides a contingency for any short-term liquidity

shortfall. A pre-approval payment process is in place as part of an overall cash

management process.

• Due diligence is undertaken prior to appointing all service providers. Periodic

performance reviews of these providers are made and, where relevant, the

Company annually requests independent service provider assurance reports on

the operating effectiveness of their internal controls.

• An independent Custodian is appointed to safeguard the Company’s assets.

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.

20 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

PRINCIPAL RISKS – INTERNAL CONTROLS TO MITIGATE RISKS

Gearing/Balance Sheet risk

Risk of over-gearing the balance

sheet and creating nancial stress on

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.

DIVIDEND POLICY AND DIVIDEND PAYMENTS

Dividend Policy

The Board’s dividend policy is to pay four similar interim

dividends each year. The Board will declare the rate of the four

dividends at the beginning of the ﬁnancial year in question.

The Board anticipates dividends to be paid in August, during

the ﬁnancial year, followed by November and February, with

the fourth being paid in the May following the end of the

ﬁnancial year. The Board continues to support our strategy of

maintaining the dividend at 3.2p until it is fully covered by net

revenue income and then increase it in line with any increase in

the net revenue income of the Company. If circumstances are

such that the level of cash income generated by the portfolio is

insufﬁcient to meet the dividend commitment, the shortfall may

be made up from the Company’s reserves. Under certain one-off

circumstances an extra and ﬁnal dividend may be proposed at

the Company’s Annual General Meeting.

Dividend Payments

The dividends paid are as follows:

2021-2022

£000

Ordinary and ‘A’ non-voting Ordinary shares

First interim paid 0.8p (August 2021) per share 960

Second interim paid 0.8p (November 2021) per share 960

Third interim paid 0.8p (February 2022) per share 960

Fourth interim paid 0.8p (May 2022) per share 960

Total dividends 3,840

The Board is not proposing a ﬁnal dividend per Ordinary and

‘A’ non-voting Ordinary share class.

Hansa Investment Company Limited For the Year Ended 31 March 2022 21

STRATEGIC REPORT

Organisation and Objectives

Continued

Dividend History

Being only three years old, the Company does not have

a sufﬁciently long dividend history itself. However, combining

its dividends paid during the year with dividends paid out

to shareholders of Hansa Trust in prior periods (years ended

31 March 2019 and before) over the previous ten years is

as follows:

DIVIDEND PAYMENTS FOR YEAR TO END MARCH

(PENCE PER SHARE)

Pence per HICL Share

1st Interim Paid

4th Interim Paid3rd Interim Paid

2nd Interim Paid

PredictedPayableFinal Dividend

0.4

0.8

1.2

1.6

2.0

2.4

2.8

3.2

3.6

1.0

1.6

1.6 1.6

1.6

0.8

3.2

0.8

2.2

1.6

0.8

1.6 1.6 1.6

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

2019-20

2020-21

2021-22

2022-23

Note: The dividend history represents the combined results of the Company

with Hansa Trust including, where relevant, the dividend rate converted into the

number of shares in issue by HICL. It also reects 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.

22 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Longer-Term Viability Statement

In addition to the Statement of Going Concern, the Directors

are also required to make a statement concerning the

longer-term viability of the Company. As stated previously in

the wider Strategic Report, the Directors consider 12 months

to be a relatively short time frame when considering

performance and look to the longer-term for both the

performance and risks associated with the Company.

The Directors consider a period of ﬁve years to be a more

representative period which aligns to the Portfolio Manager’s

longer-term horizon. This period is sufﬁciently long to

manage short-term market volatility and allow longer-term

performance to work through. The Board continually monitors

the Investment Strategy and Investment Guidelines issued

to the Portfolio Manager and directs the Portfolio Manager

to target long-term capital preservation. Further, whilst the

Board has sanctioned the use of gearing, the facility available

to the Portfolio Manager is relatively small compared to the

NAV of the Company. Finally, a number of the more signiﬁcant

costs in each ﬁnancial year are contracted to be calculated,

on the basis of the underlying NAV of the Company. As such,

in a period of negative portfolio performance, the cost base

should also fall.

Barring unforeseen circumstances and taking account of the

Company’s current position including the lingering global

effects of the Covid-19 pandemic, the principal risks, the

longer-term strategy for the portfolio including a diversiﬁed

and liquid asset base and the lack of gearing, the Directors

conﬁrm they have a reasonable expectation that the Company

will continue to operate and meet its liabilities as they fall due

for the next ﬁve years.

Hansa Investment Company Limited For the Year Ended 31 March 2022 23

STRATEGIC REPORT

MARKETS IN 2022 – THREADING THROUGH THE EYE OF THE NEEDLE

Market backdrop

As the adage goes “There are decades where nothing happens;

and there are weeks where decades happen” and the ﬁrst

quarter of 2022 felt very much like this both from a stock

market and a geo-political perspective.

The year started in a similar vein to how 2021 ended. Inﬂation

continued to spike higher, buoyed by a blend of rising

commodity prices, labour markets regaining some of their

pricing power and structural supply side issues. Unlike last year

however, central banks began to acknowledge that this was not

necessarily a temporary, post-Covid, phenomena, but instead

that there were more worrying structural elements to the

price hikes. Hence the quarter saw central banks increasingly

shift from viewing their role as one of preventing a COVID-

induced economic depression to one of preventing the current

high inﬂation from becoming ingrained in the system and

consequently much harder to eliminate over the longer-term.

Chart 1: Inﬂation moving higher

Mar-09

Aug-09

Jan-10

Jun-10

Nov-10

Apr-11

Sep-11

Feb-12

Jul-12

Dec-12

May-13

Oct-13

Mar-14

Aug-14

Jan-15

Jun-15

Nov-15

Apr-16

Sep-16

Feb-17

Jul-17

Dec-17

May-18

Oct-18

Mar-19

Aug-19

Jan-20

Jun-20

Nov-20

Apr-21

Sep-21

Feb-22

YoY %

-4

-2

US Core CPI

US CPI

Country GDP Company MV Index MV

Source: Bloomberg

Our view, which broadly matched the consensus, was that there

were good reasons to believe the extremes in inﬂation would

start to ease somewhat as the year progressed. Partly this was

a function of economic growth slowing from the post-Covid

economic rebound, combined with supply chains normalising

as companies adapted as they exited the lockdowns, but also

we expected some of the major inﬂationary forces, such as

oil prices, to start annualising out with 2022 unlikely to see

the same degree of prices rises as 2021. Where we differed

from the market however was that, whilst we saw inﬂation

edging back this year, we were of the view that some of the

inﬂationary forces were more structural and ultimately would

likely require more aggressive actions by central banks in terms

of their longer-term rate setting if they were to hit their inﬂation

targets. Potentially this would be the catalyst for the next

recession and accompanying bear market, albeit we saw this as

a problem to be managed down the road.

Hence whilst the prospect of higher rates was not initially

taken well by markets, the blend of declining inﬂation as the

year progressed, together with economic growth being lower

but still above trend potentially created a backdrop that we

Portfolio Manager’s Report

24 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

viewed as broadly favourable for equities. To be clear though

we were very much of the view that markets were unlikely to

repeat the double digit returns of the previous two years and

increasingly we saw longer-term market returns as being much

more modest, with the high returns of recent years probably

‘borrowed’ from future stock market returns. We also felt the

chances of a policy mistake were much higher for the year

ahead resulting in more volatility in markets with the potential

for market losses if there was a policy misstep.

Chart 2: Historic LT returns versus our future forecasts

Private

equity

CommoditiesHedge

Funds

Global

Equities

Emerging

Market Equities

Equities

EM Bonds

(LC)

US IG

Corporates

Treasuries

CashInﬂation

Materials

Banks

Div Fin

Semis

Cons Dur

Transport

Auto

Energy

Cosn Svs

Insurance

Real Estate

S/w & Svs

Tech H/w & Equip

Retailing

Media

Comm Svs & Supp

FD & Drg Retail

HC Equip & Svs

Utilities

Telecom

HH & PP

FD, Bev & Tob

Pharma

European sectors 20-year correlation with inﬂation expectations

10%

12%

14%

Annualised return (USD)

Historic Nominal return

Expected Nominal return

Country GDP Company MV Index MV

3.9%

2.4%

4.5%

8.1%

8.5%

6.4%

10.9%

6.6%

9.5%

8.6%

9.1%

6.9%

9.7%

3.8%

2.4%

6.5%

8.5%

12.6%

0.6%

0.5%

1.3%

2.4%

Source: Internal; Bloomberg

Then, in late February, we saw the invasion of Ukraine by

Russia. Whilst there had been speculation that Russia was

preparing for an invasion for some time, the view of most

informed commentators was that this was the normal

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.

Hansa Investment Company Limited For the Year Ended 31 March 2022 25

STRATEGIC REPORT

Unfortunately Putin’s actions have placed further stress on

a system already under immense pressure. Whilst largely

irrelevant from an economic perspective, Russia is the second

largest producer of commodities globally in terms of energy,

metals and soft commodities. With commodities a key

component of inﬂation the last thing needed is further pressure

on prices through rising costs of energy, key metals such as

palladium and nickel and important food stuffs such as corn

and wheat and fertilisers. Furthermore, not only does inﬂation

come under pressure but there are important implications for

economic growth especially in Europe. Consumers face yet

more pressure as utility and fuel bills rise to a point where it is

likely to place real pressure on their ability to spend on goods

and services. Similarly, many industries face potentially much

higher energy costs, squeezing margins and even the risk of

energy outages if Putin decides to double down and limit the

supply of oil and gas into Europe.

Chart 3: The importance of Russia in commodity markets

Russian Federation 26.3%

Russian Federation 31.6%

Norway 9.5%

USA 9.5%

Libya 8.4%

Others 9.5%

EU27 Imports of Crude Oil, 2021 EU27 Imports of Gas, 2021

Algeria 3.2%

Algeria 17.3%

Azerbaijan 5.3%

Saudi Arabia 5.3%

Iraq 7.4%

Nigeria 7.4%

Kazakhstan 8.4%

Others 8.2%

Nigeria 4.1%

UK 5.1%

Qatar 7.1%

Norway 12.2%

USA 14.3%

Source: Food and Agricultural Organization of the United Nations

As a result the ﬁrst quarter has been something of a roller

coaster for global stock markets. January saw markets sell-

off sharply, as investors came to terms with higher inﬂation

and a realisation that rates would need to move much higher

if inﬂation was to return to target levels. Intra-market the

moves were even more extreme, reﬂecting the fact that higher

discount rates imply lower valuations for longer duration

companies, resulting in a signiﬁcant rotation out of growth

areas such as technology into the more cyclical areas of the

markets, particularly commodities. These moves were ampliﬁed

towards the end of February when Russia invaded Ukraine.

Markets took a further lurch downwards as they came to terms

with the ramiﬁcation of these events and many commodity

prices spiked up in a disorderly fashion.

Interestingly, markets rallied as we neared the end of March.

Whilst perhaps hard to rationalise given the very uncertain

world in which we currently live, it likely reﬂects a belief that

some form of peace agreement will be reached between Russia

and Ukraine and with it recession in Europe is avoided, and

perhaps that the worst of the risks on the energy front will not

come to fruition. Our view is that saying anything on these

points is fraught with uncertainty.

In summary, world equity markets fell by 5.4% in Q1, albeit

with wide variations across countries and sectors. The US,

being a relatively closed economy and largely self-sufﬁcient

for energy, fell by 4.9% whereas Europe, being more directly

impacted by events in Ukraine and highly dependent on Russian

oil and gas, fell by 7.9%. Amongst the other world markets,

Japan fell by 6.8%, India by 1.8% and the UK, given its large

commodity component, rose by 1.7%. Interestingly, China fell

by 14.2% reﬂecting the challenges of continuing with its zero

Covid policy and possibly a backlash against those countries

with lower governance standards in the light of Russia’s actions.

At the sector level unsurprisingly energy has been strong, rising

Portfolio Manager’s Report

Continued

26 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

by 21.2% over the quarter, whereas technology, being a long

duration sector, fell by 10.3% as the fear of rising interest rates

weighed on it.

Perhaps the most notable performance for the quarter however

occurred in the bond markets. Having been in a multi-year

bull market, as persistently low inﬂation drove interest rates

ever lower, many bond prices have been falling sharply by

bond market standards. With inﬂation rates spiking higher

and central banks beginning to react by both withdrawing

liquidity and increasing interest rates, bonds have unsurprisingly

underperformed. The important global Treasury market has

fallen by some 5.5% in the year-to-date, US investment

grade by 8.3% and the UK government bond market by just

under 10%.

Finally, commodity prices have again jumped higher with

the Russia/Ukraine situation placing further pressure on an

already tight market. Gold and copper rose by 5.9% and 6.7%

respectively, but the standout performer was energy, with

European brent crude rising by 37.6% to $106.60/barrel, a level

not seen since 2014.

Chart 4: Performance of countries, sectors and asset classes (GBP)

Dark bars represent Q1 2022 returns

Light bars represent returns from January 2021 to March 2022

% Return (GBP)

Global Markets (DM/EM/FM)

Developed Markets

Emerging Markets

Frontier Markets

North America

Japan

Europe

Brazil

India

China

Global High Yield

Global Treasury

Global Aggregate Corporate Bond

EMBI Global

EM Global Diversied

Gold

Bloomberg Commodity Index

Copper

WTI Cushing

USD/EUR

USD/GBP

USD/BRL

Source: Bloomberg

CurrenciesCommoditiesFixed IncomeEquities

-40%

-20%

20%

40%

60%

80%

100%

120%

Market Outlook

Positioning portfolios in the current environment is fraught with

difﬁculty and unfortunately the range of potential outcomes is

very wide and, to a degree, binary in nature. Betting on ‘black’

and being wrong could have disastrous implications in terms

of performance!

Whilst there are many different permutations for how markets

pan out, the two core scenarios that we see for the year ahead

are as follows:

Scenario 1…..the bear case

As discussed above, whereas markets had previously expected

there to be a signiﬁcant transitory element to the current high

inﬂation, it is very possible that there are much deeper, more

structural factors behind the current price rises. Commodities,

for example, may continue to remain high for some time to

come. Having been through many years of underinvestment as

investors shied away from the sector having been burnt in the

prior cycle, commodities have effectively been starved of capital

for the past few years. Exacerbating this problem has been the

Hansa Investment Company Limited For the Year Ended 31 March 2022 27

STRATEGIC REPORT

impact of ESG. The desire to move to a more environmentally

friendly world (quite rightly, in our opinion) has meant many

investors and banks have limited their investment into the

sector. Unfortunately, whilst this move is a laudable one, the

timeframe has perhaps been overly ambitious. Whilst ultimately

a zero-carbon world is undoubtedly achievable, in the short to

medium-term a combination of both fossil fuels and renewables

is required if we are to meet our energy needs. As has been

illustrated all too painfully by recent events, outsourcing your

energy production to regions such as Russia and claiming your

carbon footprint has improved, is not always a desirable thing

to do. Energy security as well as how it is sourced are equally

important for meeting a country’s energy requirements.

Compounding the issue has been labour costs. For many

years now corporates have dominated at the expense of the

labour market. Due to the strength of their negotiating power,

companies have been able to minimise labour costs in pursuit

of higher margins and in the process the share of corporate

proﬁtability has increased sharply as a percentage of global GDP,

whereas that of labour has fallen precipitously.

Chart 5: Corporates have beneﬁted at the expense of labour markets in recent years

Dec-70

Jun-73

Dec-75

Jun-78

Dec-80

Jun-83

Dec-85

Jun-88

Dec-90

Jun-93

Dec-95

Jun-98

Dec-00

Jun-03

Dec-05

Jun-08

Dec-10

Jun-13

Dec-15

Jun-18

Dec-20

Wages % of US Gross Domestic Income

Corporate Proﬁts % of US GDP (RHS)

Wages % of US Gross Domestic Income

Corporate Proﬁts % of US GDP

Country GDP Company MV Index MV

Source: Bloomberg

Covid however appears to have shifted the balance of power.

A combination of people viewing their quality of life as more

important than simple remuneration has meant many industries,

such as hospitality, have seen a sharp reduction in labour supply

and a corresponding uptick in wage inﬂation. With the pandemic

also encouraging companies to focus more on supply chain

security and shift less of their supply chains to cheaper labour

markets such as China, the greater use of domestic labour in

developed markets has only served to exacerbate this problem.

Unfortunately, this backdrop of rising inﬂation has come at a time

when economic growth is likely to slow. Partly this is a natural

phenomenon as economies slow following a year of supernormal

growth as we exited the pandemic, but also it reﬂects our current

late cycle position when growth would naturally be expected to

fall. The risk now is that the situation in Ukraine may be the straw

that breaks the camel’s back, forcing economies into recession as

conﬁdence levels fall, especially in Europe and with rising energy

costs placing pressure on corporate proﬁtability.

Portfolio Manager’s Report

Continued

28 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Chart 6: Rising inﬂation and falling growth – stagﬂation?

2023202220212020201920182017

Materials

Banks

Div Fin

Semis

Cons Dur

Transport

Auto

Energy

Cosn Svs

Insurance

Real Estate

S/w & Svs

Tech H/w & Equip

Retailing

Media

Comm Svs & Supp

FD & Drg Retail

HC Equip & Svs

Utilities

Telecom

HH & PP

FD, Bev & Tob

Pharma

European sectors 20-year correlation with inﬂation expectations

Annualised return (USD)

Country GDP Company MV Index MV

IMF Forecast

Risk of growth declining

faster than expected while

inﬂation remains elevated?

2.4%

4.5%

8.1%

8.5%

6.4%

10.9%

6.6%

9.5%

8.6%

9.1%

6.9%

9.7%

3.8%

2.4%

6.5%

8.5%

12.6%

0.6%

0.5%

1.3%

2.4%

-4%

-2%

10%

US GDP Growth

US CPI Inﬂation

Source: Bloomberg; IMF

As a result Central Banks are facing what may be an

unwinnable battle as they attempt to head off signiﬁcantly

higher inﬂation at a time when global economies are slowing.

On the one hand they may accept inﬂation needs to stay high

if they are to avoid pushing economies into recession. Equally

they may be of the view that bringing inﬂation back to target

is a necessary evil if we are to avoid baking inﬂation into the

system and making the problem much harder to resolve in

the longer term. Threading economies through the eye of the

needle may well be possible, but it does look as though the

hole is becoming an increasingly small one!

Scenario 2……the alternative scenario

There is, however, an alternative to this doomsday scenario for

stock markets.

On the inﬂationary front, many commentators believe that

whilst there are undoubtedly structural elements to the current

inﬂationary picture, the core underlying drivers are the result of

the pandemic. As economies reopened there was a mismatch

between demand and the ability for supply chains to meet this

demand, especially with the ongoing zero Covid policy in China.

Naturally over time you would expect these imbalances to

resolve themselves. Also, in hindsight, it appears many elements

of the government and Central Bank Covid stimulus packages

were not needed and in practice added fuel to an already hot

ﬁre. With many of these packages now running off and with

interest rates now rising, this should remove an important driver

of inﬂation.

Equally comparisons between now and the 1970s seem to be

particularly wide of the mark, as economies then were very

different from those existing currently. Whereas in the seventies

trade unions held economies to ransom and commodities were

a much larger proportion of the global economy, now markets

are highly interconnected and technology focused. Many would

also highlight that for the majority of recent years it has been

deﬂation that has been the main problem impacting economies,

not inﬂation, and question whether economies are really that

different now from those pre-Covid.

Hansa Investment Company Limited For the Year Ended 31 March 2022 29

STRATEGIC REPORT

Chart 7: Energy intensity of the global economy has

declined since the late 1970s

Energy consumption per GDP, World

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

2019

Quadrillion Btu per trilion dollars GDP

Source: US Energy Information Administration

Similarly, it is very possible that the full extent of the growth

pressures is being overplayed. No-one is in any doubt growth

rates will be lower this year than they were last, but what is up

for debate is whether global economies are necessarily heading

for recession (and a corresponding bear market). 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).

Chart 8: Growth forecasts (IMF)

Emerging EconomiesAdvanced EconomiesJapanEuro AreaUS

Materials

Banks

Div Fin

Semis

Cons Dur

Transport

Auto

Energy

Cosn Svs

Insurance

Real Estate

S/w & Svs

Tech H/w & Equip

Retailing

Media

Comm Svs & Supp

FD & Drg Retail

HC Equip & Svs

Utilities

Telecom

HH & PP

FD, Bev & Tob

Pharma

European sectors 20-year correlation with inﬂation expectations

Annualised return (USD)

2022

2023

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

Source: IMF

Stock markets are likely to perform acceptably in such

a backdrop, especially given the lack of alternatives and, whilst

no one is arguing we are entering a goldilocks period for global

stock markets, the backdrop is not nearly so bad as the gloom

mongers would have you believe.

Portfolio Manager’s Report

Continued

30 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Portfolio positioning

The million-dollar question of course is how do you position

portfolios given these potentially very different, very

distinct outcomes?

Scenario 1 is bad for stock markets on many levels. Recessions

and bear markets in equities go hand in hand and the

combination of high inﬂation and rising rates will almost

certainly be the death knell of the multi-year bull market in

bonds. Hence not only do risk assets come under pressure, but

also defensive assets, a scenario where the 60:40 balanced

portfolio between equities and bonds will not bail out investors

and may in fact perform very poorly.

At the sector level Scenario 1 also has major implications.

Whereas previously a low inﬂation, low interest rate

environment favoured high growth companies and made value

and commodity investing less attractive, 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!

Hansa Investment Company Limited For the Year Ended 31 March 2022 31

STRATEGIC REPORT

In contrast, whilst bonds may well be oversold in the short-

term and their relative valuation to equities has improved

signiﬁcantly, we continue to see few attractions for longer-term

investors. Typically, when multi-year bull markets break they fall

for longer than you anticipate (just as bull markets typically go

on for longer) and one should not forget just how powerful

the downward pressures have been on rates for many years,

combined with the impact of Central Banks buying a large

proportion of their national debt. Typically, where we are present

in bonds we prefer those managers who either have the ability

to short, are highly active or who play in the more complex

areas of the market.

Summary

Current market conditions are extraordinarily complex, with very

different potential outcomes which unfortunately may lead to

wide variances in asset class performance. Positioning portfolios

in such a backdrop is challenging to say the least.

At Hansa we are fortunate to possess a number of structural

advantages that work in our favour. Typically, we manage highly

diversiﬁed portfolios both by asset class but also by geography.

Our managers are highly experienced and have almost invariably

managed portfolios through multiple cycles and different

market conditions. Whilst there will be periods where they

‘get it wrong’ we rest assured in the longevity and strength of

their investment processes and, ultimately, by their focus on

good quality companies which become stronger during periods

of turmoil.

Perhaps most important however is our genuine long-term

investment horizon. It is this that enables us to focus on

identifying great quality investments rather than seeking to time

markets. As noted many times in the past trying to time markets

is incredibly difﬁcult. Even if you are successful (read lucky!) in

calling a market sell-off you then need to time when it is right

to re-enter markets. So often we have seen investors get the

ﬁrst part of this right only to miss the next cycle completely

by staying cautious for too long. Through the application of

this long-term philosophy this should enable us to continue to

deliver robust, repeatable investment performance.

Chart 9: Long-term market chart highlighting how periods of sell-off diminish in importance over time

1927

1930

1933

1936

1939

1942

1945

1948

1951

1954

1957

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

2017

2020

100

1000

10000

S&P 500 Index (Log scale)

Wall Street Crash

1929

Recession

1937-38

Kennedy slide

1962

Black Monday

1987

Dot-com Bubble

2000s

GFC

2007-08

COVID

2020

Source: Bloomberg

Portfolio Review and Activity

During what has been a volatile period for markets, your

Company produced a return of 5.1% for the full ﬁnancial year.

Ocean Wilsons Holdings has been a strong contributor over that

time, with a return of 24.7%. The key performance indicators

for the past 12 months were varied, with the MSCI ACWI NR

Index (GBP) being up 12.7% and the UK CPI being up 7.0%

as inﬂation has come through strongly, while the FTSE UK Gilts

All Stocks TR Index declined 5.1%. The UK equity market, as

measured by the FTSE All Share TR Index, rose 13.0%. The

Company’s NAV per share has increased from 306.6p at the

end of March 2021 to 319.1p at the end of March 2022, with

3.2p per share having been paid out in dividends during the

ﬁnancial year.

Portfolio Manager’s Report

Continued

32 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Core and Thematic Funds

For the ﬁnancial year the Core Regional silo has gained 1.5%,

while the Thematic silo is down 2.2%.

The North American holdings were among the strongest

contributors to performance over the last year. Despite declining

in the ﬁnal quarter of the year, Findlay Park American, Select

Equity and Vulcan Value Equity are all up quite strongly over

the year with returns of 12.7%, 8.8% and 2.6%, respectively.

These funds tend to have a lower exposure to the more cyclical

parts of the market, such as energy and ﬁnancials, which have

been stronger in recent months. Findlay Park’s exposure to

stocks such as TopBuild, Ferguson and Home Depot detracted

later in the year on concerns that rising rates will slow down

the housing market in the US, although the manager remains

positive about the long-term outlook for residential housing

activity. Pershing Square Holdings avoided the market falls

of the last quarter, making a gain of 0.2% and it is up an

impressive 17.9% over the year. These gains have partly been

the result of interest rate swaptions that the manager realised

in January, generating $1.45bn on $188m invested by the fund.

Some of these proceeds were then invested into Netﬂix, which

the manager had been looking at for some time, as a dip in its

share price driven by worries about subscriber growth created

an entry opportunity. Given concerns about rising interest rates

the manager decided to take out new interest rate swaptions

during the quarter that had strike prices somewhat out of the

money and with a longer-term expiration. These have already

tripled in value, although they have not yet been realised.

The portfolio’s Japanese holdings fell over the last quarter of the

year, with Goodhart Partners: Hanjo and Indus Japan now

being down 12.2% and 4.2%, respectively, over the last year.

Detractors within the Indus fund included positions in Fujitsu

(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%.

Hansa Investment Company Limited For the Year Ended 31 March 2022 33

STRATEGIC REPORT

Some of the strongest returns in the Diversifying silo came from

the two trend-following CTA funds, which did especially well in

the ﬁnal quarter, with Schroder GAIA BlueTrend and GAM

Systematic Core Macro rising 18.0% and 7.5%, respectively,

over the year. Performance has come from a range of sources

for these funds, but positions in commodities have been

notable contributors for both. BioPharma Credit has also been

particularly strong, registering a 10.8% gain for the ﬁnal quarter

to bring it to be up 18.8% over the year. Performance was

particularly strong in February when the company announced

it was providing Collegium Pharmaceutical with a new senior

secured term loan for $650m to fund its proposed acquisition of

BioDelivery Sciences International.

Both macro funds continue to produce steady returns,

with MKP Opportunity being up 4.6% over the year and

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

Portfolio Manager’s Report

Continued

34 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

ﬂow despite an enviable track record of compounding tangible

book value per share at 9% for 15 years. If oil capex does

improve, we think the upside is signiﬁcant but if it does not our

downside should be protected.

During the year we initiated a position in Glencore and sold

our positions in Alphabet, Berkshire Hathaway, C&C, Hilton

Food, Iridium, Marel, Nexon, Samsung and TripAdvisor.

Ocean Wilsons Holdings

Operating activity through 2021 has been solid and the

company has reported strong growth in both revenues and

proﬁts, despite the business being impacted by the limited

availability of empty containers and worldwide logistics

bottlenecks. The business achieved record cargo handling

ﬁgures at its Salvador container terminal through the course

of the year, where the new berth infrastructure has supported

increased efﬁciency. Other achievements during 2021 included

the listing of the Wilson Sons’ subsidiary on the Novo Mercado

segment of the stock market, which required the company to

adopt corporate governance practices over and above those

required by Brazilian law. A six-for-one stock split has been

approved by shareholders for Wilson Sons, which took place

on 16 May. The investment portfolio continues to show strong

performance, with the most recent December 2021 valuation

being 13.4% larger than the December 2020 valuation.

The Ocean Wilsons Holdings share price gained 7.5% in the

quarter on a total return basis and it is up 24.7% over the

last 12 months. The share price represents a discount to the

look-through NAV of 47.8%, based on the market value of the

Wilson Sons shares together with the latest valuation of the

investment portfolio.

The investment portfolio shares many characteristics with the

portfolio held directly within Hansa Investment Company, with

a preference for funds with clearly deﬁned strategies run by

long-term, conviction managers. It has a signiﬁcant private

equity programme invested in Limited Partnerships, and recently

many of these funds have been making signiﬁcant distributions

and delivering strong returns. While paying out $2.5m for

dividend payments in each of May and August 2021, the

portfolio increased in value to $351.8m at the end of December

2021, up from $332.7m at the end of April 2021 and $310.3m

at the end of December 2020.

The fourth quarter (calendar year) results for Wilson Sons

(released in March) were signiﬁcantly ahead of the prior year,

with earnings of $34.0m, 6.8% higher than the same quarter in

2020. Performance for the full year was strong with earnings of

$159.4m, 16.3% ahead of 2020. Container terminals were able

to deliver growing revenues despite the challenges affecting

global trade, thanks to robust ﬁrst half results in 2021 and

an improved revenue mix. Volumes increased at the Salvador

terminal, mainly driven by higher trans-shipment and imports of

empty containers, while renewable energy stood out during the

year in terms of imports.

The towage division reported good results as operating volumes

were driven by strong commodity exports and LNG imports.

The division’s EBITDA margin increased due to better average

revenue per manoeuvre and more special operations, which

were up over 50% for the year. While there remains some

uncertainty around global trade during 2022, the company

expects trade ﬂow to support strong towage results while

maritime services to the oil and gas industry are expected

to recover.

Alec Letchﬁeld

May 2022

Hansa Investment Company Limited For the Year Ended 31 March 2022 35

STRATEGIC REPORT

Investments

Fair value

£000

Percentage of

Net Assets

Core Regional Funds

Findlay Park American Fund 28,712 7.5

Vulcan Value Equity Fund 24,076 6.3

Select Equity Offshore Ltd 20,282 5.3

BlackRock Strategic Hedge Fund 13,923 3.6

Schroder ISF Asian Total Return 11,819 3.1

Goodhart Partners: Hanjo Fund 10,278 2.7

Pershing Square Holdings Ltd 9,908 2.6

Adelphi European Select Equity Fund 8,114 2.1

Indus Japan Long-Only Fund 7,020 1.8

Egerton Long-Short Fund Ltd 6,521 1.7

Prince Street Institutional Offshore Ltd 5,838 1.5

iShares Core MSCI Europe UCITS ETF 5,608 1.5

iShares Core EM IMI UCITS ETF 4,309 1.1

NTAsian Discovery Fund 4,003 1.1

BlackRock Frontiers Investment Trust PLC 3,445 0.9

KLS Corinium Emerging Markets Equity Fund 2,703 0.7

Total Core Regional Funds 166,559 43.5

Strategic

Wilson Sons (through the holding in Ocean Wilsons Holdings) * 56,771 14.8

Ocean Wilsons Investments Limited (through the holding in

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

Portfolio Statement

As at 31 March 2022

Portfolio Statement

36 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Investments

Fair value

£000

Percentage of

Net Assets

Diversifying

Global Event Partners Ltd 10,571 2.8

DV4 Ltd ** 8,917 2.3

Hudson Bay International Fund Ltd 4,944 1.3

MKP Opportunity Offshore Ltd 3,192 0.8

Keynes Systematic Absolute Return Fund 2,521 0.7

Apollo Total Return Fund 2,436 0.6

Selwood AM – Liquid Credit Strategy 2,302 0.6

Lazard Convertible Global 1,995 0.5

BH Absolute Return Government Bond 1,749 0.5

Vanguard US Govt Bond Index Fund 1,595 0.4

GAM Systematic Core Macro (Cayman) Fund 1,444 0.4

BioPharma Credit PLC 1,423 0.4

Schroder GAIA BlueTrend 1,361 0.4

Total Diversifying 44,450 11.7

Thematic Assets

GAM Star Fund PLC – Disruptive Growth 22,377 5.8

SPDR MSCI World Financials UCITS ETF 8,338 2.2

Impax Environment Markets Fund 4,868 1.3

BB Biotech AG 3,388 0.9

RA Capital International Healthcare Fund 2,325 0.6

Worldwide Healthcare Trust PLC 2,076 0.5

iShares MSCI Global Markets & Mining Prods ETF 1,068 0.3

iShares MSCI World Energy Sector UCITS ETF 1,061 0.3

Total Thematic 45,501 11.9

Total Investments 379,986 99.2

Net Current Liabilities (368) (0.1)

Non-Current Assets 3,244 0.9

Net Assets 382,862 100.0

Note:

* Hansa Investment Company Ltd owns 9,352,770 shares in Ocean Wilsons Holdings Limited. In order to better reﬂect Hansa Investment Company’s exposure to different

market silos, the two subsidiaries of OWHL, Wilson Sons and Ocean Wilsons (Investments) Ltd (“OWIL”), are shown separately above. The fair value of Hansa Investment

Company’s holding in OWHL has been apportioned across the two subsidiaries in the ratio of the latest reported NAV of OWIL, that being the NAV of OWIL shown per

the 31 December 2021 OWHL Financial Statements, to the market value of OWHL’s holding in Wilson Sons, that being the bid share price of Wilson Sons multiplied by

the number of shares held by OWHL at 31 March 2022.

** DV4 Ltd is an unlisted Private Equity holding. As such, its value is estimated as a Level 3 Asset in Note 20. All other valuations are either derived from information

supplied by listed sources or from pricing information supplied by third party fund managers.

Hansa Investment Company Limited For the Year Ended 31 March 2022 37

STRATEGIC REPORT

Capital Structure

The Company has 40,000,000 Ordinary shares of 1p (1/3 of

the total capital) and 80,000,000 ‘A’ non-voting Ordinary

shares of 1p (2/3 of the total capital) each in issue. The Ordinary

shareholders are entitled to one vote per Ordinary share held.

The ‘A’ non-voting Ordinary shares do not entitle the holders to

vote or receive notice of meetings, but in all other respects they

have the same rights as the Company’s Ordinary shares.

Shareholder Proﬁle

The Company’s shares owned at 31 March 2022 are as follows:

Ordinary

‘A’ non-voting

Ordinary shares

Institutional &

Wealth Managers

16,237,782 40.60% 72,347,254 90.43%

Directors 11,220,745 28.05% 3,738,723 4.67%

Private Individuals 12,492,197 31.23% 3,677,670 4.60%

Other 49,276 0.12% 236,353 0.30%

40,000,000 80,000,000

Substantial Shareholders

As at 31 March 2022, the Directors were aware of the interests

(opposite) in the Ordinary shares of the Company, which

exceeded 3% of the voting issued share capital of that class.

The following information is disclosed in accordance

with the DTR 7.2.6 of the FCA Disclosure Guidance and

Transparency Rules.

The Company’s capital structure and voting rights are

summarised above and in Note 14 on page 67.

• The giving of powers to issue or buy back the Company’s shares

requires an appropriate resolution to be passed by shareholders.

Proposals for the renewal of the Board’s powers to buy back

shares are set out in the Notice of the Annual General Meeting

on pages 74 to 76.

• There are: no restrictions concerning the transfer of securities

in the Company; no special rights with regard to control

attached to securities; no agreements between holders of

securities regarding their transfer known to the Company;

no agreements which the Company is party to that affect its

control following a takeover bid; and no agreements between

the Company and its Directors concerning compensation for

loss of ofﬁce. Notwithstanding the foregoing, the Company

may require any holder of shares to transfer some or all of its

shares (or otherwise refuse to register any transfer of shares) to

avoid the Company, if the Company were a company which

was resident for tax purposes in the UK, being regarded as

a “close company” as deﬁned in s.414 of the UK Income and

Corporation Taxes Act 1988, to another person whose holding

of such shares, in the sole and conclusive determination of the

Board, would not cause the Company to be a close company.

Additionally, the Company’s Bye-Laws provide for the voting

rights of Ordinary shares to be automatically reallocated

to other shareholders to prevent the Company becoming

a close company. The reallocation mechanism operates where

a transfer of shares or other change in the interests of holders

of shares occurs and would cause the Company to become

a close company. In these circumstances, the voting rights

attaching to the affected shares are reallocated by enhancing

the voting rights of the smallest registered shareholders on

a temporary basis pending the operation of the compulsory

transfer provisions referred to above.

No. of voting

% of voting

Nomolas Ltd 10,347,125 25.9%

Victualia Limited Partnership 10,347,125 25.9%

These holdings are correct as of 31 March 2022 and have not

changed as at the signing date of these Financial Statements.

William Salomon is interested in 10,347,125 of the shares held

by Victualia Limited Partnership, representing 25.9% of the

voting share capital. In addition, William Salomon has further

interests in the Company’s shares; the total interest is detailed in

the Directors’ Interests section below.

As at 17 June 2022, the date of signing of the Year-End

Financial Statements, there have been no disclosures to the

Company of changes of interests under DTR 5.

Shareholder Prole and

Engagement

Shareholder Prole and Engagement

38 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

BOARD AND MANAGEMENT SHAREHOLDINGS

Directors and Directors’ Interests

The present members of the Board are shown on pages 4 and 5.

The Board’s policy is that all Directors retire annually. All

Directors being eligible, at the forthcoming Annual General

Meeting, will retire and seek re-election in accordance with

the Board’s policy. The contracts of employment between

the Company and each of the Directors do not allow for any

compensation payment in the event of loss of ofﬁce.

The interests of Directors and their connected parties in the Company at 31 March 2022 are shown below:

Ordinary shares

of 1p each

‘A’ non-voting

Ordinary shares

of 1p each

Nature of

interest

2022 % 2022 %

W Salomon 11,169,345 27.92% 3,508,723 4.39%

Beneﬁcial

J Davie 45,000 0.11% 230,000 0.29%

Beneﬁcial

S Heidempergher 6,400 0.02% – –

Beneﬁcial

Total 11,220,745 28.05% 3,738,723 4.68%

As at 17 June 2022, the date of signing the Year-End

Financial Statements, there were no changes to report to the

Directors’ holdings.

William Salomon is the senior partner of Hansa Capital Partners

LLP. Fees payable to Hansa Capital Partners LLP amounted

to £3,010,000 (including Portfolio Management and AASP

functions). The fees outstanding at the year end amounted to

£255,719. During the year, no rights to subscribe for the shares

of the Company were granted to, or exercised by Directors,

their spouses or infant children.

PORTFOLIO MANAGER’S INTERESTS

As at 17 June 2022, the date of signing of this Year-End Report,

the management and staff of the Portfolio Manager’s group,

excluding the holding of William Salomon, shown above, were

interested in approximately 10.3m shares in the Company – a

mixture of Ordinary and ‘A’ non-voting Ordinary shares.

NOTICE PERIOD FOR GENERAL MEETINGS

The Company’s Bye-Laws permit the Company’s general

meetings (other than AGMs) may be held on 14 days’ notice.

ANNUAL GENERAL MEETING

The Company’s Notice of Annual General Meeting is included in

this Report on page74.

Authority to repurchase ‘A’ non-voting Ordinary shares

A resolution will be proposed at the forthcoming AGM, seeking

shareholder approval for the renewal of the authority for the

Company to repurchase its own ‘A’ non-voting Ordinary shares.

The Board believes the ability of the Company to repurchase

its own ‘A’ non-voting Ordinary shares in the market could

potentially beneﬁt all equity shareholders of the Company in

the long-term. The repurchase of ‘A’ non-voting Ordinary shares

at a discount to the underlying NAV would enhance the NAV

per share of the remaining equity shares.

Hansa Investment Company Limited For the Year Ended 31 March 2022 39

STRATEGIC REPORT

The Company’s Bye-Laws are drafted in such a way that the

Company may from time to time purchase and cancel its own

shares. However, the Company requires that shareholders’

approval to repurchase shares be sought. At the AGM the

Company will therefore seek the authority to purchase up

to 11,992,000 ‘A’ non-voting Ordinary shares (representing

14.99% of the Company’s issued ‘A’ non-voting Ordinary share

capital, the maximum permitted under the FCA Listing Rules),

at a price not less than 1p per share (the nominal value of

each share) and not more than 5% above the average of the

middle-market quotations for the ﬁve business days preceding

the day of purchase or, where a series of transactions have

taken place the higher of the last independent trade and

current highest independent bid on the trading venue where

the purchase(s) will be carried out. The authority being sought,

the full text of which can be found in the Notice of Meeting,

will last until the date of the next AGM.

The Company is seeking authority to use its realised capital

reserve to allow repurchase of shares in the market. The

decision as to whether the Company repurchases any shares

will be at the absolute discretion of the Board. Any shares

purchased will be cancelled.

The Directors consider that all the resolutions to be proposed

at the forthcoming AGM as set out in the Notice of AGM on

page 74, are in the best interests of shareholders as a whole

and unanimously recommend all shareholders to vote in favour.

Guidance on how to vote at the AGM can be found in the

notes to the Notice of AGM on pages 75 and 76.

If the Board considers a signiﬁcant proportion of votes have

been cast against a resolution at the AGM, the Company will

explain, when announcing the results of voting, what action it

intends to take to understand the reasons behind the results of

the vote.

APPROVAL OF THE DIRECTORS

The Directors consider the Year-End Report and Financial

Statements, taken as a whole, is fair, balanced and

understandable and provides the information necessary

for shareholders to assess the Company’s position and

performance, business model and strategy.

For and on behalf of the Board

Jonathan Davie

Chairman

17 June 2022

Shareholder Prole and Engagement

Continued

40 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

CORPORATE GOVERNANCE REPORTS

The Directors have chosen to report on some of those items

within the body of the Strategic Report, while others remain

within the Report of the Directors.

ITEMS INCLUDED WITHIN THE STRATEGIC REPORT

The following items are listed within the Strategic Report:

• Statement of the existence of qualifying indemnity provisions

for Directors – see page 22.

• Dividend policy and payments made during the year,

summarised in the Organisation & Objectives section

– seepage 21.

• Names of Directors, at any time in the year – seepages4

to5 for the Directors’ details and attendance at

Company meetings.

• Greenhouse Gas Emissions – see page 15

• Policy on Board Composition – see page 7 within

“The Board”.

• Stakeholder Engagement – While the Company has no

employees, suppliers or customers, the Directors give

regular consideration to the need to foster the Company’s

business relationships with its stakeholders, in particular

with shareholders and service providers. The effect of this

consideration upon the principal decisions taken by the

Company during the ﬁnancial year is set out in further detail

in the Strategic Report on pages 9 to 15.

ITEMS REPORTED WITHIN THE DIRECTORS’ REPORT

Disclosure to the Auditor of Relevant Audit Information

The Directors conﬁrm that, so far as they are aware, having

made such enquiries and having taken such steps as they

consider they reasonably ought, they have provided the Auditor

with all the information necessary for it to be able to prepare its

Report. In doing so each Director has made themself aware of

any information relevant to the audit and established that the

Company’s Auditor is aware of that information. The Directors

are not aware of any information relevant to the audit of which

the Company’s Auditor is unaware.

Capital Structure

The Company’s Capital Structure is described in the “Investor

Information Section” on page 77.

Corporate Governance Report

The Corporate Governance Report, including the Financial

Risk Management Review of the Company, is included in this

document starting on page 42.

Future Developments and Post Balance Sheet Events

As disclosed on page17, 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

onpages 2 to 40.

For and on behalf of the Board

Jonathan Davie

Chairman

17 June 2022

Report of the Directors

Corporate Governance Reports

Report of the Directors

Hansa Investment Company Limited For the Year Ended 31 March 2022 41

CORPORATE GOVERNANCE REPORTS

CORPORATE GOVERNANCE CODE

Internal Controls

The UK Corporate Governance Code (“UK Code”) (issued

July 2018 Code for accounting periods beginning on or after

1 January 2019), which can be found on the website of

the Financial Reporting Council (“FRC”) (www.frc.org.uk),

requires the directors of UK listed companies to review

the effectiveness of the company’s risk management and

system of internal controls on an annual basis. The Directors

recognise the importance of sound corporate governance,

robust risk management processes and effective systems of

internal controls. They review the effectiveness of these on at

least an annual basis. The Directors, through the procedures

outlined below, keep the system of risk management and

internal controls under review. The Board has identiﬁed risk

management controls in the key areas of business objectives,

accounting, compliance, operations and secretarial as areas to

be included in the extended review.

The Board recognises its ultimate responsibility for the

Company’s system of risk management and internal controls

and for monitoring their effectiveness. In order to perform this

responsibility the Board receives regular reports on all aspects

of risk management and internal control from the Company’s

service providers (including ﬁnancial, operational and

compliance controls, risk management and relationships with

other service providers); the Board will instigate necessary action

in response to any signiﬁcant failings or weaknesses identiﬁed

by these reports. However, it must be noted this system is

designed to manage rather than eliminate the risk of failure to

achieve business objectives and can only provide reasonable and

not absolute assurance against material misstatement or loss.

Financial Reporting

The Board has a responsibility to present a fair, balanced and

understandable assessment of annual, half-year and other price

sensitive public reports and reports to regulators, as well as

to provide information required to be presented by statutory

requirements. To ensure this responsibility is fulﬁlled, all such

reports are reviewed and approved by the Board prior to

their issue.

The Board conﬁrms there have been no speciﬁc events since

31 March 2022, of which the Board is aware, which would

have a material impact on the Company.

COMPLIANCE WITH THE PROVISIONS OF THE UK

CORPORATE GOVERNANCE CODE

The Board of Hansa Investment Company has considered

the Principles and Provisions of the AIC Code. The AIC Code

addresses the Principles and Provisions set out in the UK Code,

as well as setting out additional Provisions on issues that are of

speciﬁc relevance to the Company.

The Board considers that reporting against the Principles

and Provisions of the AIC Code, which has been endorsed

by the FRC in the UK, provides more relevant information

to shareholders.

The Company has complied with the Principles and Provisions of

the AIC Code.

The AIC Code is available on the AIC website (www.theaic.

co.uk). It includes an explanation of how the AIC Code adapts

the Principles and Provisions set out in the UK Code to make

them relevant for investment companies.

ASSOCIATION OF INVESTMENT COMPANIES CODE

The AIC Code has 17 principles. The principles are listed below

together with the Board’s response as to how it seeks to meet

the principle’s recommendation:

Board Leadership and Purpose

A. A successful company is led by an effective board, whose

role is to promote the long-term sustainable success of the

company, generating value for shareholders and contributing

to wider society.

The Board is formed of ﬁve Directors with a complementary

mix of skills and experience to lead the Company.

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.

Corporate Governance Report

42 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

B. The board should establish the company’s purpose, values

and strategy, and satisfy itself that these and its culture are

aligned. All directors must act with integrity, lead by example

and promote the desired culture.

The Board believes that the Company’s purpose, values and

strategy are clear: to create long-term growth of shareholder

value. The Board sets the standard for openness and

professionalism that the Company’s key service providers

follow. In particular, there is regular interaction between the

Board and the Company’s Portfolio Manager and also the

AASP for day to day liaison with other service providers.

C. The board should ensure that the necessary resources are in

place for the company to meet its objectives and measure

performance against them. The board should also establish

a framework of prudent and effective controls, which enable

risk to be assessed and managed.

The Board receives regular and detailed reports from the

Portfolio Manager regarding investment performance as

well as market trends and views on risks. The Board has

set a number of KPIs (see page 17) against which the

performance of elements of the portfolio can be considered.

The Board receives regular risk and compliance reporting

including from key service providers.

D. In order for the company to meet its responsibilities to

shareholders and stakeholders, the board should ensure

effective engagement with, and encourage participation

from, these parties.

The Board considers its stakeholders to be its shareholders

and its key service providers. It actively engages with

shareholders via an annual general meeting, shareholder

presentations, quarterly factsheets, website communication

and with feedback also received through outreach

programmes such as Edison, as well as direct one-to-one

correspondence. The Board engages with other key service

providers through the operations of its AASP on a day to day

basis, as well as via an annual meeting with each or more

frequently if an issue arises.

E. Principle E is omitted by the AIC Code.

Division of Responsibilities

F. The chair leads the board and is responsible for its overall

effectiveness in directing the company. They should

demonstrate objective judgement throughout their tenure

and promote a culture of openness and debate. In addition,

the chair facilitates constructive board relations and the

effective contribution of all non-executive directors, and

ensures that directors receive accurate, timely and clear

information.

The Chairman is Jonathan Davie. The Chairman promotes

and encourages active participation from all Directors at

Board meetings. Further, whilst adhering to membership

guidelines, sub-committees also seek to include as many

Directors as possible to ensure a broad range of views. All

Directors receive regular monthly and quarterly information

prepared by the Portfolio Manager and Administrator,

as well as portfolio performance presentations from the

Portfolio Manager.

G. The board should consist of an appropriate combination

of directors (and, in particular, independent non-executive

directors) such that no one individual or small group of

individuals dominates the board’s decision making.

The Board consists of ﬁve Directors. All have a ﬁnancial

background but each also brings individual specialisms

and experience that are complimentary. Their biographies

are noted on pages 4 and 5. Four Directors are deemed

independent. The ﬁfth, William Salomon, is the Senior

Partner of the Company’s Portfolio Manager and, therefore,

is deemed non-independent. All Directors are non-

executive. All Directors are actively involved in decisions

and committees unless conﬂicts exist which preclude this.

Therefore, Mr Salomon does not participate in the evaluation

of the performance of the Portfolio Manager due to his role

as senior partner of that ﬁrm. Nor does he participate in

decisions regarding the Company’s largest asset (by value)

OWHL, due to him being a director of that company. Finally,

Mr Salomon is not a member of the Audit Committee due

to his non-independent status, although he does attend

meetings of that Committee.

Hansa Investment Company Limited For the Year Ended 31 March 2022 43

CORPORATE GOVERNANCE REPORTS

H. Non-executive directors should have sufﬁcient time to meet

their board responsibilities. They should provide constructive

challenge, strategic guidance, offer specialist advice and hold

third party service providers to account.

The Directors consider they have sufﬁcient time to meet

their responsibilities. Directors consult with the Company

before accepting other appointments to conﬁrm capacity to

do so and that no conﬂict exists. A formal timetable exists

for the Board meetings and sub-committees. In considering

appointments and potential conﬂicts of interests the Board

considers the available time each Director has to commit

to the Company. The Portfolio Manager and AASP report

to scheduled Board meetings, giving the Directors the

opportunity to challenge performance, raise issues and

offer guidance.

I. The board, supported by the company secretary, should ensure

that it has the policies, processes, information, time and

resources it needs in order to function effectively and efﬁciently.

The Company Secretary and AASP support the Board

in identifying and monitoring all governance matters.

Additionally, Directors are able to consult external

professional advisors to assist them in the performance of

their duties as and when required. Board reporting and

materials are reﬁned on an ongoing basis.

Composition, succession and evaluation

J. Appointments to the board should be subject to a formal,

rigorous and transparent procedure, and an effective

succession plan should be maintained. Both appointments

and succession plans should be based on merit and objective

criteria and, within this context, should promote diversity

of gender, social and ethnic backgrounds, cognitive and

personal strengths.

The Board has appointed a Nominations Committee chaired

by Nadya Wells. The Committee seeks to meet annually to

give full and ongoing consideration to succession planning

after consideration of the skills and experience needed by

the Board. Ahead of any appointment, the Committee is

tasked with evaluating the skills required of a candidate to

ensure the Board retains the range of skills required. The

Company believes a diverse Board brings many beneﬁts and,

as such, there is no restriction placed on Board membership.

K. The board and its committees should have a combination of

skills, experience and knowledge. Consideration should be

given to the length of service of the board as a whole and

membership regularly refreshed.

The Directors have a broad range of backgrounds including

investment management, ﬁnance and banking as well

as operational experience. Biographies of all Directors

are shown on pages 4 and 5. As noted in J above, the

Nominations Committee is tasked with maintaining a broad

range of skills and experiences at times of succession.

L. Annual evaluation of the board should consider its

composition, diversity and how effectively members work

together to achieve objectives. Individual evaluation should

demonstrate whether each director continues to contribute

effectively.

The Nominations Committee is responsible for the ongoing

consideration of Board composition and to identify any skills

gap – now or in the future. The Nomination Committee

considers Board effectiveness annually.

Audit, risk and internal control

M. The board should establish formal and transparent

policies and procedures to ensure the independence and

effectiveness of external audit functions and satisfy itself on

the integrity of ﬁnancial and narrative statements.

The Board has speciﬁcally delegated the appointment and

monitoring of the Company’s external Auditor to its Audit

Committee. The Company’s Auditor was formally appointed

in November 2019. The tender process was led by the

Chairman of the Audit Committee. To ensure independence,

the Company’s Auditor does not provide other services to

the Company. The Company rigorously follows policy and

procedure to ensure effectiveness of the external audit and

integrity of ﬁnancial reporting.

N. The board should present a fair, balanced and understandable

assessment of the company’s position and prospects.

The Board considers and approves all relevant shareholder

communications. The Year-End Report is reviewed by

the Board to ensure it presents a fair and balanced view

including commentary on going concern and long-term

viability. The Audit Committee considers the fairness of the

Financial Statements before recommending them to the

Board for approval.

Corporate Governance Report

Continued

44 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

O. The board should establish procedures to manage risk,

oversee the internal control framework, and determine the

nature and extent of the principal risks the company is willing

to take in order to achieve its long-term strategic objectives.

Principal risks are identiﬁed by the Board and risk appetite

established against these risks. Day to day risk management

is undertaken by the Portfolio Manager and AASP within

the parameters established by the Board. The Board meets

with the Portfolio Manager at each scheduled Board

meeting where there is opportunity to discuss particular

aspects of the portfolio and associated risks. Operational

risk and compliance reporting are also regularly discussed by

the Board.

Remuneration

P. Remuneration policies and practices should be designed to

support strategy and promote long-term sustainable success.

The remuneration of Directors is overseen by the

Remuneration Committee, chaired by Simona

Heidempergher. The Directors each receive a ﬁxed annual

fee and do not receive any additional element based on

performance of the Company. Additionally, Directors offer

themselves annually for re-election at the Company’s AGM.

Q. A formal and transparent procedure for developing policy on

remuneration should be established. No director should be

involved in deciding their own remuneration outcome.

The Directors’ Remuneration Report (pages 49 to 51) notes

that each Director is paid a ﬁxed fee representative of their

roles and additional responsibilities on the Board. This fee

level is reviewed by the Remuneration Committee making

use of external evidence before being recommended to the

wider Board.

R. Directors should exercise independent judgement and

discretion when authorising remuneration outcomes, taking

account of company and individual performance, and wider

circumstances.

The Directors’ Remuneration Report (pages 49 to 51) notes

that each Director is paid a ﬁxed fee representative of their

roles and additional responsibilities on the Board. There

are no additional performance-related elements to any

Director’s remuneration.

COMPLIANCE WITH THE FINANCIAL CONDUCT

AUTHORITY UKLA LISTING RULES

The Directors are responsible for ensuring that:

• Adequate accounting records are kept, that are sufﬁcient to

show and explain the Company’s transactions and disclose

with reasonable accuracy at any time the ﬁnancial position of

the Company and enable them to ensure that the Financial

Statements are consistent with the relevant requirements

under the UK Companies Act 2006.

• The assets of the Company are safeguarded; and for taking

reasonable steps for the prevention and detection of fraud

and other irregularities.

• The Report of the Directors and other information included

in the Year-End Report is prepared in accordance with

Company Law in the UK. The Directors are also responsible

for ensuring the Year-End Report includes information

required by the Listing Rules of the FCA.

• The Company has effective internal control systems,

designed to ensure that adequate accounting records are

maintained; and that ﬁnancial information on which the

business decisions are made, which is issued for publication,

is reliable. Such a system of internal control can provide only

reasonable, but not absolute, assurance against material

misstatement or loss.

• The Company Financial Statements for each ﬁnancial year

are prepared in accordance with International Financial

Reporting Standards (“IFRS”) adopted pursuant to

Regulation (EC) No 1606/2002 as it applies in the European

Union. The Directors must not approve the Financial

Statements unless they are satisﬁed they give a true and fair

view of the state of affairs and proﬁt or loss of the Company

for that period.

Hansa Investment Company Limited For the Year Ended 31 March 2022 45

CORPORATE GOVERNANCE REPORTS

In preparing these Financial Statements, the Directors are

required to:

• select suitable accounting policies and apply

them consistently;

• make judgements and estimates that are reasonable

and prudent;

• state whether they have been prepared in accordance with

International Financial Reporting Standards (“IFRS”) adopted

pursuant to Regulation (EC) No 1606/2002 as it applies in the

European Union; and

• prepare the Financial Statements on the going concern

basis, unless it is inappropriate to presume the Company will

continue in business.

Under the FCA UKLA Listing Rules and the UK Code, the Board

is responsible for:

• Disclosing how it has applied the principles and complied

with the provisions of the AIC Code and, thereby, the UK

Code, or where not, to explain the reasons for divergence.

• Reviewing the effectiveness of the Company’s systems of risk

management and internal controls.

The Directors are responsible for the maintenance and integrity

of the corporate and ﬁnancial information included on the

Company’s website: www.HansaICL.com. Visitors to the website

need to be aware that legislation governing the preparation

and dissemination of the Financial Statements may differ from

legislation in their own jurisdictions.

RESPONSIBILITY STATEMENT

The Directors conﬁrm that to the best of their knowledge:

• The Financial Statements are prepared in accordance with

applicable international accounting standards and present

fairly, in all material respects, the ﬁnancial position of Hansa

Investment Company.

• The Strategic Report, including the Chairman’s Report to the

Shareholders and the Report of the Directors includes a fair

review of the development and performance of the business

and the position of the Company, together with a description

of the principal risks and uncertainties it faces.

The Directors consider the Year-End Report and Financial

Statements, taken as a whole, are fair, balanced and

understandable. Further detail demonstrating the Company’s

performance, business model and strategy has been included

within the Strategic Report on pages 2 to 40.

For and on behalf of the Board

Jonathan Davie

17 June 2022

Corporate Governance Report

Continued

46 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

The Audit Committee comprises solely independent Directors,

as required by the AIC Code and endorsed by the FRC. It is

chaired by Richard Lightowler. Given the size of the Board and

the range of experience they bring, all non-committee Directors

are invited to attend the Audit Committee meetings. However,

only the independent member Directors are able to vote.

Recommendations of the Audit Committee are brought before

the whole Board for discussion and ratiﬁcation.

The terms of reference of the Committee are determined by the

Committee and approved by the Board and include, but are not

restricted to, the following:

• To consider and make a recommendation to the Board as

to the appointment of the external Auditor, tendering of

the external audit, approval of the annual audit fee and

any questions relating to the resignation or dismissal of

the Auditor.

• To determine with the external Auditor the nature and scope

of the audit.

• To review and monitor the independence of the external

Auditor including pre-approval, of any, non-audit services to

the Company.

• To consider the performance of the Auditor.

• To review the Half-Year and Year-End Financial Reports

before submission to the Board, focusing particularly on:

• any changes in accounting policies and practices;

• major judgemental areas;

• signiﬁcant adjustments resulting from the audit;

• the going concern assumption;

• compliance with Accounting Standards and

Governance Codes;

• compliance with FCA Listing Rules and legal

requirements; and

• valuation of unquoted investments.

• To discuss issues and matters arising from the annual audit

with the Auditor.

• To review the Auditor’s audit ﬁndings and responses to it,

including holding an executive session with the Auditor.

• To review and monitor the effectiveness of the Company’s

Internal Control and Risk framework prior to endorsement

by the Board.

• To review service providers’ AAF 01/06 or ISAE 3402 reports.

As conﬁrmed at the Company’s AGM in August 2021,

PricewaterhouseCoopers Ltd remains as the Company’s

Independent Auditor.

In discharging its duties and, in particular, matters relating to

the approval of the Year-End Report, Half-Year Report and

the review of the Company’s internal controls, the Committee

considers reports and presentations made by the Company’s

Auditor, Administrator, Company Secretary, Additional

Administrative Services Provider (including those of its

Compliance Ofﬁcer) and Legal Advisers.

In its review of the Financial Statements, the Committee pays

particular attention to the ownership of assets, the valuations

of the portfolio, recognition of income and areas of signiﬁcant

judgement. In this regard we receive regular reporting from

the Portfolio Manager including reports on the effectiveness

of internal controls in these areas. In addition, the Committee

discusses the Auditor’s scope of work in these areas.

With regard to the ownership of assets, the Company’s

Custodian and Administrator have conﬁrmed the ownership

of all assets to the Audit Committee’s satisfaction. With regard

to the valuations, the Audit Committee notes that 70% of

the Investment portfolio by value is held in assets that are

either traded or listed on an exchange or are cash. Further, of

the remaining 30% unquoted fund investments, the majority

primarily hold traded securities. Valuations for these funds

are supplied by third party managers. The Audit Committee

recognises that the 44% of the total portfolio are Level 1 and

54% are Level 2 securities. The Committee is satisﬁed with

the valuation process. With regard to revenue recognition, the

Audit Committee reviewed the external Auditor’s approach

to the audit prior to the commencement of the audit. The

results of the audit in this area were discussed with the external

Auditor and there were no signiﬁcant issues arising in relation

to the recognition of revenue.

Audit Committee Report

Hansa Investment Company Limited For the Year Ended 31 March 2022 47

CORPORATE GOVERNANCE REPORTS

The Audit Committee considers the potential need for an

internal audit function on an annual basis, recognising the FRC

guidance on proportionality. The Audit Committee considers

internal compliance testing at the Administrator and Portfolio

Manager to be sufﬁciently independent and robust to negate

the need for a standalone internal audit function.

The Committee is authorised by the Board to investigate any

activity within its terms of reference, to seek any information it

requires from any ofﬁcer or service provider to the Company, to

obtain outside legal or other independent professional advice

and to secure the attendance of third parties with relevant

experience and expertise if it considers this necessary.

The Chairman of the Audit Committee formally reports to the

Board following each Audit Committee meeting and on other

occasions as requested by the Board.

A separate evaluation of Committee members is not conducted.

Rather, their suitability and effectiveness is considered as part of

the annual Board evaluation process which is described within

the Corporate Governance Report on page 42.

The Audit Committee, having considered its responsibilities and

its reporting to the Board, conﬁrms it is not aware of any matter

which it should bring to the attention of either the Board or the

Auditor and considers the Year-End Report, taken as a whole, is

fair, balanced and understandable and provides the information

necessary for shareholders to assess the Company’s position and

performance, business model and strategy.

The Audit Committee considers the external Auditor’s

independence, objectivity, scope of work and overall quality

as well as cost effectiveness through a process of feedback

from the Company advisors, including the Company Secretary,

the AASP, the Portfolio Manager and discussion with the

Auditors. The Committee also meets with the Auditor in

executive session at least annually. The current audit partner

is Scott Watson-Brown who has led the audit since the

Company's inception in June 2019 and the appointment of

PricewaterhouseCoopers Ltd as its auditor.

The level of non-audit services provided to the Company by

the Auditor is monitored, as is the Auditor’s objectivity in

providing such services, to ensure that the independence of

the audit team from the Company is not compromised. No

non-audit services are provided by PricewaterhouseCoopers

Ltd to the Company. Further information on fees paid to the

Auditor is contained in “Other Expenses” within Note 4 of the

Financial Statements.

For and on behalf of the Audit Committee.

Richard Lightowler

Audit Committee Chairman

17 June 2022

Audit Committee Report

Continued

48 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Directors’ Remuneration Report

The Board produces a separate report on the Directors’

Remuneration and, by approving it, conﬁrms its accuracy.

There are elements of the Directors’ Remuneration Report that

are subject to audit as disclosures in accordance with “IAS24

– Related Party Disclosures” which have been presented here.

These are labelled as “audited”, with the Auditor’s report

included on page 52.

Ordinary resolutions for the approval of this Report will be put

to shareholders at the forthcoming AGM.

ANNUAL STATEMENT

The Company has ﬁve non-executive Directors. The Board has

appointed a Remuneration Committee. The Chairman of this

Committee is Simona Heidempergher who has signed this

Statement on behalf of the Board.

This is the third year of the Company’s operation. Each Director

was appointed during June 2019 following the creation of the

Company. Each Director presents themselves for annual re-

election at the Company’s AGM.

POLICY ON DIRECTORS’ REMUNERATION

The Board’s policy is that the remuneration of non-executive

Directors should include a basic pay level and should reﬂect the

experience of the Board as a whole, be appropriate for the work

carried out and the responsibilities, ﬁnancial and reputational

risks undertaken, including additional remuneration for any

roles in addition to the responsibilities of the non-executive

director role – for example, the chairman. The remuneration

does not include a performance related element and Directors

do not receive bonuses, share options, pensions or long-term

incentive schemes. The total remuneration of the Board will be

kept within the limits set out in the Company’s Bye-Laws, as

amended from time to time.

In assessing current and future levels of director compensation,

the Remuneration Committee seeks external comparative

information when assessing the remuneration of existing

Directors. This includes the fees paid by other similar companies

(both industry and jurisdiction) as well as seeking input from

recruitment specialists familiar with the external market.

The fees for the non-executive Directors are within the limits

(maximum total fee of $350,000) as set out in the Company’s

Bye-Laws. The maximum is set as a USD amount. The equivalent

is £266,383 if translated at the applicable rate on 31 March

2022. The Board has reviewed the current maximum annual fee

for director remuneration and will seek shareholder approval to

increase this to $400,000 per annum (£304,437 if translated

at the applicable rate on 31 March 2022) at the upcoming

AGM. The increase is to allow sufﬁcient headroom over the

fees payable to existing directors to appoint another director if

required or as part of board succession planning.

DIRECTORS’ SERVICE CONTRACTS

It is the Board’s policy that every Director has a service contract.

None of the service contracts is for a ﬁxed term. The terms of

appointment provide that a Director shall retire and be subject

to re-election at the ﬁrst AGM after appointment. The Board

has decided each Director will retire annually at the AGM

and seek re-election as appropriate. The terms also provide

that either party may give three months’ notice. In certain

circumstances a Director may be removed without notice and

compensation will not be due on leaving ofﬁce. There are no

agreements between the Company and its Directors concerning

compensation for loss of ofﬁce.

FUTURE POLICY TABLE

All of the Directors are non-executive, whose only remuneration

is a fee. The implementation of the above current policy could

give rise to the following increase in fees:

Current

total fee

£000

Potential future

total fee

£000

Non-executive Director fees 194* 266**

Note:

* This fee represents the current Directors’ fees translated from USD

to Sterling for the year ended 31 March 2022. For information, annual

current Director fees are noted in the table below.

** This amount is the current upper limit of remuneration of $350,000,

converted at the exchange rate to GBP on 31 March 2022. The Board

will seek permission at the upcoming AGM via a resolution put to

shareholder vote to increase this upper limit to $400,000 per annum.

POLICY FOR NOTICE PERIODS

The current Directors’ service contracts stipulate three months’

written notice to be given by either the Director or the Company

to terminate the services of a Director. The Board consider this

is sufﬁcient notice to ensure an orderly hand over between

the parties.

Hansa Investment Company Limited For the Year Ended 31 March 2022 49

CORPORATE GOVERNANCE REPORTS

SHAREHOLDERS’ VIEWS ON REMUNERATION POLICY

The formal views of unconnected shareholders have not been

sought in the preparation of this policy.

EMPLOYEES

The Company does not have any employees, only

non-executive Directors.

ANNUAL REPORT ON REMUNERATION

Directors’ Emoluments (Audited)

The Company does not have any employees, only non-executive

Directors who receive only a basic fee, plus repayment of

expenses incurred in the course of performing their duties.

Therefore, the use of the detailed remuneration table,

as prescribed in the legislation, is not appropriate here.

A condensed table showing the information relevant to the

Directors’ remuneration is shown in its place.

The Directors who received fees during the year received the

following emoluments in the form of fees. For clarity, these

amounts are quoted in the currency as per their service contract.

The Director’s remuneration is set in USD, as is common for

many Bermudan companies. Therefore, additionally, their

current annual fee is also quoted in Sterling. This conversion has

been made at the relevant exchange rate on 31 March 2022:

Annual

Fee

$000

2022

Fee

£000

2022

Total

£000

2021

Fee

£000

2021

Total

£000

Jonathan Davie (Chairman) 70 53 53 51 51

Richard Lightowler 60 46 46 43 43

Simona Heidempergher 50 38 38 36 36

William Salomon 25 19 19 18 18

Nadya Wells 50 38 38 36 36

255 194 194 184 184

The annual fee paid to each Director, in USD, remains unchanged

from the date of their appointments in June 2019. Changes in

the above table between the prior period and the current year are

due to movement in exchange rates (USD to Sterling).

The Company also pays the expenses of the Directors to attend

the Board meetings, fees incurred during the year was £48,170

(2021: nil – due to Covid-19 travel restrictions).

STATEMENT OF SHAREHOLDER VOTING

Votes in respect of the resolution to approve the Directors’

Remuneration Report at the Company’s AGM in August 2021

were cast as follows:

No. of

shares voted

% of

votes cast

Votes cast in favour 21,370,153

100.00

Votes cast against 0 0.00

Total votes cast 21,370,153

100.00

Votes withheld 0

DIRECTORS’ INTERESTS (AUDITED)

Directors must seek permission from the Chairman before

trading in shares, taking note of any Closed Periods. Other than

that, there are no speciﬁc rules on Directors’ shareholdings.

The interests of Directors and their connected parties in the

Company at 31 March 2022 are shown below:

Ordinary shares

of 1p each

‘A’ non-voting

Ordinary

shares of 1p each

Nature

interest

2022 2021 2022 2021

Jonathan Davie

45,000 45,000 230,000 230,000 Beneﬁcial

William Salomon

11,169,345 11,169,345 3,508,723 3,463,223 Beneﬁcial

Simona

Heidempergher

6,400 6,400 – – Beneﬁcial

As at 17 June 2022, the date of signing of these Year-End

Financial Statements, there were no changes to report to the

Directors’ holdings.

William Salomon is the senior partner of Hansa Capital Partners

LLP. Fees payable to Hansa Capital Partners LLP as Portfolio

Manager amounted to £3,010,000. The fees outstanding at

the year-end amounted to £255,719. During the year, no rights

to subscribe to the shares of the Company were granted to,

orexercised by Directors, their spouses or infant children.

Directors’ Remuneration Report

Continued

50 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

YOUR COMPANY’S PERFORMANCE

The graph below shows the ten-year cumulative total return

to shareholders:

TEN YEAR NET ASSET VALUE AND

SHARE PRICE TOTAL RETURN

NAV Cum Income TR

Ord Share TR

‘A’ Ord Share TR

Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22

-30%

-20%

-10%

10%

20%

30%

40%

50%

60%

80%

70%

DIRECTORS’ ATTENDANCE

The Directors meet as a Board on a quarterly basis and at other

times as necessary and the table below sets out the number of

operational meetings and the attendance at them by each Director.

Board

Audit

Committee

Number of meetings held 5 2

Number of meetings attended:

Jonathan Davie (Chairman) 5 2

Richard Lightowler 5 2

Simona Heidempergher 5 2

William Salomon 5 2

Nadya Wells 5 2

Notes:

1) The meetings listed above are the main events held during the year

at which all Directors attend. Additionally, there have been numerous

meetings and board calls to consider and approve operational

requirements for the Company, such as quarterly dividends. These

meetings are arranged as and when required and require the meeting to

be quorate but not necessarily attended by all Directors. These have not

been listed above.

2) The Board has amalgamated its annual Strategy meeting into

its Board meeting schedule. As such, it will no longer be listed as

a 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

have been taken.

For and on behalf of the Board

Simona Heidempergher

Chairman of the Remuneration Committee

17 June 2022

Hansa Investment Company Limited For the Year Ended 31 March 2022 51

Independent Auditor’s Report to the

Board of Directors and Shareholders of

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, included on pages 57 and 73, comprise:

• the balance sheet as at 31 March 2022;

• the income statement for the year then ended;

• the statement of changes in equity for the year then ended;

• the cash ﬂow statement for the year then ended; and

• the notes to the ﬁnancial statements, which include signiﬁcant accounting policies and other explanatory information.

Certain required disclosures have been presented elsewhere in the Year-End Report, rather than in the notes to the ﬁnancial

statements. These are cross-referenced from the ﬁnancial statements and are identiﬁed as audited.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards

are further described in the Auditor’s responsibilities for the audit of the nancial statements section of our report.

We believe that the audit evidence we have obtained is sufﬁcient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the International Code of Ethics for Professional Accountants (including

International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and the

ethical requirements of the Chartered Professional Accountants of Bermuda Rules of Professional Conduct (CPA Bermuda Rules) that

are relevant to our audit of the ﬁnancial statements in Bermuda. We have fulﬁlled our other ethical responsibilities in accordance

with the IESBA Code and the ethical requirements of the CPA Bermuda Rules.

Materiality

Our audit approach

Overview

• Overall materiality: £3,828,000, based on 1% of net assets.

Audit scope

• In addition to determining materiality, we also assessed, amongst other factors, the following

in designing our audit:

– the risk of material misstatement in the ﬁnancial statements

– signiﬁcant accounting estimates

– the risk of management override of internal controls

Key audit matters

• Valuation and existence of investments; and

• Accuracy, occurrence and completeness of investment income

52 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Audit scope

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the ﬁnancial

statements. In particular, we considered where management made subjective judgements; for example, in respect of signiﬁcant

accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in

all of our audits, we also addressed the risk of management override of internal controls, including, among other matters,

consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufﬁcient work to enable us to provide an opinion on the ﬁnancial

statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the

industry in which the Company operates.

Materiality

The scope of our audit was inﬂuenced by our application of materiality. An audit is designed to obtain reasonable assurance

whether the ﬁnancial statements are free from material misstatement. Misstatements may arise due to fraud or error.

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.

Hansa Investment Company Limited For the Year Ended 31 March 2022 53

Independent Auditor’s Report to the

Board of Directors and Shareholders of

HansaInvestment Company Limited, continued

Independent Auditor’s Report to the

Board of Directors and Shareholders of

HansaInvestment Company Limited, continued

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most signiﬁcance in our audit of the ﬁnancial

statements of the current period. These matters were addressed in the context of our audit of the ﬁnancial statements as

a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER

Valuation and existence of

investments

Refer to notes 1(d) and 9 to the

ﬁnancial statements for disclosures

of related accounting policies and

balances.

The investment portfolio at the period

end comprised listed equity investments

valued at £290 million (76%) and

unlisted fund investments valued at

£90 million (24%). We focused on the

existence of both listed and unlisted

investments, as listed investments

comprise the majority of the investments

balance and unlisted investments are,

individually and in aggregate, material

to the ﬁnancial statements. We focused

on the valuation of listed investments

because listed investments represent the

principal element of the net asset value

as disclosed on the Balance Sheet in the

ﬁnancial statements. We also focused on

the valuation of the unlisted investments

as the valuation of these investments is

material to the Company.

Listed investments: We tested the existence of the listed investment portfolio by

agreeing the holdings for investments to an independent custodian conﬁrmation.

We tested the valuation of the listed investments by agreeing the prices used

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.

54 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Other information

Management is responsible for the other information. The other information comprises the Year-End Report (but does not

include the ﬁnancial statements and our auditor’s report thereon).

Our opinion on the ﬁnancial statements does not cover the other information and we do not express any form of assurance

conclusion thereon.

In connection with our audit of the ﬁnancial statements, our responsibility is to read the other information identiﬁed above and,

in doing so, consider whether the other information is materially inconsistent with the ﬁnancial statements or our knowledge

obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude

that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in

this regard.

UK Corporate Governance Code

We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s

compliance with the Code does not properly disclose a departure from a relevant provision of the Code speciﬁed, under the

Listing Rules of the FCA, for review by the auditors.

Responsibilities of management and those charged with governance for the ﬁnancial statements

Management is responsible for the preparation and fair presentation of the ﬁnancial statements in accordance with International

Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and for

such internal control as management determines is necessary to enable the preparation of ﬁnancial statements that are free from

material misstatement, whether due to fraud or error.

In preparing the ﬁnancial statements, management is responsible for assessing the Company’s ability to continue as a going

concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless

management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s ﬁnancial reporting process.

Auditor’s responsibilities for the audit of the ﬁnancial statements

Our objectives are to obtain reasonable assurance about whether the ﬁnancial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is

a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in

the aggregate, they could reasonably be expected to inﬂuence the economic decisions of users taken on the basis of these

ﬁnancial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout

the audit. We also:

• Identify and assess the risks of material misstatement of the ﬁnancial statements, whether due to fraud or error, design and

perform audit procedures responsive to those risks, and obtain audit evidence that is sufﬁcient and appropriate to provide a basis

for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,

as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures

made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit

evidence obtained, whether a material uncertainty exists related to events or conditions that may cast signiﬁcant doubt on the

Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw

attention in our auditor’s report to the related disclosures in the ﬁnancial statements or, if such disclosures are inadequate,

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.

Hansa Investment Company Limited For the Year Ended 31 March 2022 55

Independent Auditor’s Report to the

Board of Directors and Shareholders of

HansaInvestment Company Limited, continued

• Evaluate the overall presentation, structure and content of the ﬁnancial statements, including the disclosures, and whether the

ﬁnancial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the

audit and signiﬁcant audit ﬁndings, including any signiﬁcant deﬁciencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements

regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to

bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters that were of most

signiﬁcance in the audit of the ﬁnancial statements of the current period and are therefore the key audit matters. We describe

these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely

rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of

doing so would reasonably be expected to outweigh the public interest beneﬁts of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Scott Watson-Brown.

PricewaterhouseCoopers Ltd

Chartered Professional Accountants

Hamilton, Bermuda

17 June 2022

56 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

FINANCIAL STATEMENTS

Income Statement

For the year ended 31 March 2022

Hansa Investment Company Limited For the Year Ended 31 March 2022 57

Year ended

31 March 2022

Year ended

31 March 2021

Notes

Revenue

£000

Capital

£000

Total

£000

Revenue

£000

Capital

£000

Total

£000

Gains on investments held at fair value

through proﬁt or loss

9 – 17,065 17,065 – 93,032 93,032

Foreign Exchange gains/(losses) – 80 80 – (181) (181)

Investment income 2 5,904 – 5,904 6,350 – 6,350

5,904 17,145 23,049 6,350 92,851 99,201

Portfolio management fees 3 (3,010) – (3,010) (2,621) – (2,621)

Other expenses 4 (1,227) – (1,227) (1,149) – (1,149)

(4,237) – (4,237) (3,770) – (3,770)

Income for the year 1,667 17,145 18,812 2,580 92,851 95,431

Return per Ordinary and ‘A’ non-voting

Ordinary share

7 1.4p 14.3p 15.7p 2.2p 77.4p 79.6p

The Company does not have any income or expense not included in the above Statement. Accordingly, the “Income for the Year”

is also the “Total Comprehensive Income for the Year”, as deﬁned in IAS 1 (revised) and no separate Statement of Comprehensive

Income has been presented.

The total column of this statement represents the Company’s Income Statement, prepared in accordance with International

Financial Reporting Standards (“IFRS”) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

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 on pages 61 to 73 are an integral part of this Statement.

FINANCIAL STATEMENTS

Balance Sheet

As at 31 March 2022

58 Hansa Investment Company Limited For the Year Ended 31 March 2022

The accompanying notes on pages 61 to 73 are an integral part of this Statement.

Notes

2022

£000

2021

£000

Non-current assets

Investments in subsidiary at fair value through proﬁt or loss 8 – 3,179

Investments held at fair value through proﬁt or loss 9 379,986 365,268

379,986 368,447

Current assets

Trade and other receivables 11 201 177

Cash and cash equivalents 12 3,043 2,833

3,244 3,010

Current liabilities

Trade and other payables 13 (368) (3,567)

Net current assets/(liabilities) 2,876 (557)

Net assets 382,862 367,890

Capital and reserves

Called up share capital 14 1,200 1,200

Contributed surplus 15 324,759 326,019

Retained earnings 16 56,903 40,671

Total equity shareholders’ funds 382,862 367,890

Net asset value per Ordinary and ‘A’ non-voting Ordinary share 17 319.1p 306.6p

The Financial Statements of Hansa Investment Company Limited, registered in Bermuda under company number 54752, set out on

pages 57 to 60 were approved by the Board of Directors on 17 June 2022 and were signed on its behalf by

Jonathan Davie

Chairman

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Statement of Changes in Equity

For the year ended 31 March 2022

Hansa Investment Company Limited For the Year Ended 31 March 2022 59

Notes

capital

2022

£000

Contributed

surplus

reserve

2022

£000

Retained

earnings

2022

£000

Total

2022

£000

Net assets at 1 April 2021 1,200 326,019 40,671 367,890

Proﬁt for the year – – 18,812 18,812

Dividends 6 – (1,260) (2,580) (3,840)

Net assets at 31 March 2022 1,200 324,759 56,903 382,862

Statement of Changes in Equity

For the year ended 31 March 2021

Notes

Share capital

2021

£000

Contributed

surplus

reserve

2021

£000

(Accumu-

lated losses)/

retained

earnings

2021

£000

Total

2021

£000

Net assets at 1 April 2020 1,200 327,939 (52,840) 276,299

Proﬁt for the year – – 95,431 95,431

Dividends 6 – (1,920) (1,920) (3,840)

Net assets at 31 March 2021 1,200 326,019 40,671 367,890

The accompanying notes on pages 61 to 73 are an integral part of this Statement.

FINANCIAL STATEMENTS

Cash Flow Statement

For the year ended 31 March 2022

Notes

Year ended

31 March 2022

£000

Year ended

31 March 2021

£000

Cash ﬂows from operating activities

Income for the year* 18,812 95,431

Adjustments for:

Realised (gains)/losses on investments 9 (5,440) 2,011

Unrealised gains on investments 9 (11,625) (95,043)

Foreign exchange (80) 181

(Increase)/decrease in trade and other receivables 11 (24) 2,326

Decrease in trade and other payables 13 (20) (146)

Purchase of non-current investments (30,840) (27,416)

Sale of non-current investments 33,187 28,444

Net cash inﬂow from operating activities 3,970 5,788

Cash ﬂows from ﬁnancing activities

Dividends paid 6 (3,840) (3,840)

Net cash outﬂow from ﬁnancing activities (3,840) (3,840)

Increase in cash and cash equivalents 130 1,948

Cash and cash equivalents at beginning of ﬁnancial year 2,833 1,066

Effect of foreign exchange rate changes 80 (181)

Cash and cash equivalents at end of year 12 3,043 2,833

*Includes dividends received of £5,918,000 (2021: £6,172,000) and interest received of £nil (2021: nil).

The accompanying notes on pages 61 to 73 are an integral part of this Statement.

60 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Hansa Investment Company Limited For the Year Ended 31 March 2022 61

1 ACCOUNTING POLICIES

Hansa Investment Company Limited is a company limited by shares, registered and domiciled in Bermuda with its registered ofﬁce

shown on page 78. The principal activity of the company is set out in the strategic report on pages 2 to 40.

(a) Basis of preparation

The Financial Statements of the Company have been prepared in accordance with International Financial Reporting Standards

(“IFRS”) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. IFRS means standards and

interpretations issued (or adopted) by the International Accounting Standards Board (IASB) (they comprise: International Financial

Reporting Standards, International Accounting Standards (IAS) and Interpretations developed by the IFRS Interpretations Committee

or the former Standing Interpretations Committee (SIC)) or IFRS that have been adopted in the relevant jurisdiction.

These Financial Statements are presented in Sterling because that is the currency of the primary economic environment in which the

Company operates.

The Financial Statements have been prepared on an historical cost and going concern basis in line with the assertion of the Board on

page 22. The Financial Statements have also been prepared in accordance with the AIC Statement of Recommended Practice (“SORP”)

for investment trusts, issued by the AIC in October 2019, to the extent that the SORP does not conﬂict with IFRS. The principal

accounting policies adopted are set out below.

(b) Basis of non-consolidation

IFRS 10 stipulates that subsidiaries and associates of Investment Entities are not consolidated but, rather stated at fair value unless

the conditions for certain exemptions from this treatment are met. Hansa Investment Company Ltd meets all three characteristics

of an Investment Entity as described by IFRS 10. Last ﬁnancial year the Company had one, 100% owned, subsidiary Hansa Trust

Limited. The Company became the 100% owner of Hansa Trust’s shares as part of the Scheme of Arrangement on 29 August 2019.

Hansa Trust Limited was dissolved during the year to 31 March 2022.

In order to better reﬂect the activities of an investment company and in accordance with guidance issued by the AIC, supplementary

information which analyses the Income Statement between items of a revenue and capital nature, has been presented alongside the

Income Statement.

(d) Non-current investments

As the Company’s business is investing in ﬁnancial assets, with a view to proﬁting from their total return in the form of income

received and increases in fair value, investments are classiﬁed at fair value through proﬁt or loss on initial recognition in accordance

with IFRS 9. The Company manages and evaluates the performance of these investments on a fair value basis, in accordance with its

investment strategy and information about the investments is provided on this basis to the Board of Directors.

Investments are recognised and derecognised on the trade date. For listed investments fair value is deemed to be bid market prices, or

closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock Exchange’s electronic trading service,

covering most of the market including all FTSE 100 constituents and most liquid FTSE 250 constituents, along with some other securities.

Fund investments are stated at fair value through proﬁt or loss as determined by using the most recent available valuation. In some

cases, this will be by reference to the most recent valuation statement supplied by the fund’s manager. In other cases, values may be

available through the fund being listed on an exchange or via pricing sources such as Bloomberg.

Private equity investments are stated at fair value through proﬁt or loss as determined by using various valuation techniques, in

accordance with the International Private Equity and Venture Capital Valuation Guidelines. In the absence of a valuation at the

balance sheet date, additional procedures to determine the reasonableness of the fair value estimate for inclusion in the ﬁnancial

statements may be used. These could include direct enquiries of the manager of the investment to understand, amongst others,

valuation process and techniques used, external experts used in the valuation process and updated details of underlying portfolio.

In addition, the Company can obtain external independent valuation data and compare this to historic valuation movements of the

asset. Further, recent arms-length market transactions between knowledgeable and willing parties where available might also be

considered. The investment in the Company’s subsidiary undertaking is stated at fair value for the prior year.

Unrealised gains and losses, arising from changes in fair value, are included in net proﬁt or loss for the period as a capital item in the

Income Statement and are ultimately recognised in the Capital Reserves.

Notes to the Financial Statements

FINANCIAL STATEMENTS

62 Hansa Investment Company Limited For the Year Ended 31 March 2022

1 ACCOUNTING POLICIES (CONTINUED)

(e) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank, short-term deposits and cash funds with an original maturity of three months

orless and are subject to an insigniﬁcant risk of changes in capital value.

(f) Investment Income and return of capital

Dividends receivable on equity shares are recognised on the ex-dividend date. Where no ex-dividend date is quoted, dividends

are recognised when the Company’s right to receive payment is established. Dividends and Real Estate Investment Trusts’ (“REIT”)

income are all stated net of withholding tax. In many cases, Bermudan companies cannot recover foreign incurred taxes withheld on

dividends and capital transactions. As a result, any such taxes incurred will be charged as an expense and included here. When an

investee company returns capital to the Company, the amount received is treated as a reduction in the book cost of that investment

and is classiﬁed as sale proceeds.

(g) Expenses

All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement

except as follows:

(i) expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the

Income Statement.

(h) Taxation

Under current Bermuda law, the Company is not required to pay taxes in Bermuda on either income or capital gains. The Company

has received an undertaking from the Bermuda government exempting it from all local income, withholding and capital gains taxes

being imposed and will be exempted from such taxes until 31 March 2035.

(i) Foreign Currencies

Transactions denominated in foreign currencies are recorded in the local currency, at the actual exchange rates as at the date of the

transaction. Assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rate of exchange

prevailing at the balance sheet date. Any gain or losses arising from a change in exchange rates, subsequent to the date of the

transaction, is included as an exchange gain or losses in the capital or revenue column of the Income Statement, depending on

whether the gain or losses is of a capital or revenue nature respectively.

(j) Retained Earnings

Contributed Surplus

The following are credited or charged to this reserve via the capital column of the Income Statement:

• gains and losses on the disposal of investments;

• exchange differences of a capital nature;

• expenses charged to the capital column of the Income Statement in accordance with the above accounting policies; and

• increases and decreases in the valuation of investments held at the balance sheet date.

Revenue Reserves

The following are credited or charged to this reserve via the revenue column of the Income Statement:

• net revenue recognised in the revenue column of the Income Statement.

Notes to the Financial Statements

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Hansa Investment Company Limited For the Year Ended 31 March 2022 63

1 ACCOUNTING POLICIES (CONTINUED)

(k) Signiﬁcant Judgements and Estimates

The key signiﬁcant estimate to report, concerns the Company’s valuation of its holding in DV4 Ltd. DV4 is valued using the most

recent estimated NAV as advised to the Company by DV4, adjusted for any further drawdowns, distributions or redemptions

between the valuation date and 31 March 2022. The most recent valuation statement was received on 4 March 2022 stating

the value of the Company’s holding as at 31 December 2021. In the absence of a valuation for 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.

(l) Adoption of new and revised standards

At the date of authorisation of these Financial Statements the following standards and amendments to standards, which have not

been applied in these Financial Statements, were in issue, but not yet effective:

• Amendments to IAS1 ‘Classiﬁcation of liabilities as current or non-current’ (effective for accounting periods beginning on or after

1 January 2023).

• IFRS 17, ‘Insurance contracts’ (effective for accounting periods beginning on or after 1 January 2023).

• Amendments to IAS 8 ‘Deﬁnition of Accounting Estimates’ (effective for accounting periods on or after 1 January 2023).

• Amendments to IAS 1 and IFRS Practice Statement 2 ‘Disclosure of Accounting Policies’ (effective for accounting periods on or

after 1 January 2023).

• Amendments to IAS 12 ‘Deferred Tax related to Assets and Liabilities arising from a Single Transaction’ (effective for accounting

periods on or after 1 January 2023).

The Company does not believe there will be a material impact on the Financial Statements or the amounts reported from the

adoption of these standards.

In the current ﬁnancial period the Company has applied to the following amendments to standards:

• IFRS 9, IAS 39, IFRS 7, IFRS 16 and IFRS 4: Interest Rate Benchmark Reform – phase 2 (amended) (effective for accounting periods

beginning on or after 1 January 2021).

There is no material impact on the Financial Statements or the amounts reported from the adoption of these amendments to

the standards.

(m) Intercompany loan

At the year ended 31 March 2022 there is no longer an intercompany loan as Hansa Trust Limited was dissolved on 9 November

2021. In the year to 31 March 2021 the intercompany loan was recognised at cost, being the fair value of the consideration

receivable. The amounts falling due for repayment within one year were included under current liabilities in the Balance Sheet for

the year ended 31 March 2021.

(n) Operating Segments

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

Notes to the Financial Statements

FINANCIAL STATEMENTS

64 Hansa Investment Company Limited For the Year Ended 31 March 2022

2 INVESTMENT INCOME

Revenue

Year ended

31 March 2022

£000

Revenue

Year ended

31 March 2021

£000

Income from quoted investments

Dividends 5,904 6,350

Total income 5,904 6,350

3 PORTFOLIO MANAGEMENT FEE

Revenue

Year ended

31 March 2022

£000

Revenue

Year ended

31 March 2021

£000

Portfolio management fee 3,010 2,621

Total management fee 3,010 2,621

4 OTHER EXPENSES

Revenue

Year ended

31 March 2022

£000

Revenue

Year ended

31 March 2021

£000

Administration fees 155 143

Directors’ remuneration 188 195

Auditor’s remuneration for:

– audit of the Company’s Annual accounts 76 80

Printing fees 30 36

Director’s liability insurance 69 74

Marketing 127 79

Registrar's fees 82 83

Banking charges 15 1

Secretarial services 167 121

Travel expenses 80 (4)

Legal fees – redomicile project – 17

Broker fees 26 21

Stock Exchange listing fees 46 52

Safe custody fees 185 165

Management fee rebate from GAM (138) –

Other 119 86

Total Other Expenses 1,227 1,149

5 FINANCE COSTS

Revenue

Year ended

31 March 2022

£000

Revenue

Year ended

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.

Notes to the Financial Statements

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Hansa Investment Company Limited For the Year Ended 31 March 2022 65

6 DIVIDENDS PAID

Year ended

31 March 2022

£000

Year ended

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.

7 RETURN ON ORDINARY SHARES (EQUITY)

Revenue

Year ended

31 March

2022

Capital

Year ended

31 March

2022

Total

Year ended

31 March

2022

Revenue

Year ended

to 31March

2021

Capital

Year ended

to 31March

2021

Total

Year ended

to 31March

2021

Returns per share 1.4p 14.3p 15.7p 2.2p 77.4p 79.6p

Returns

Revenue return per share is based on the revenue attributable to equity shareholders of £1,667,000 (2021: £2,580,000).

Capital return per share is based on the capital proﬁt attributable to equity shareholders of £17,145,000 (2021: £92,851,000).

Total return per share is based on the combination of revenue and capital returns attributable to equity shareholders, amounting to

net proﬁt of £18,812,000 (2021: £95,431,000).

Both revenue and capital return are based on 40,000,000 Ordinary shares and 80,000,000 ‘A’ non-voting Ordinary shares, in issue

throughout the year.

Notes to the Financial Statements

FINANCIAL STATEMENTS

66 Hansa Investment Company Limited For the Year Ended 31 March 2022

8 INVESTMENTS IN SUBSIDIARY AT FAIR VALUE THROUGH PROFIT OR LOSS

During the year Hansa Trust Ltd was dissolved. Therefore, the remaining intercompany balance, along with the share capital and

other reserves of Hansa Trust Ltd were reduced and then cancelled. As a result, there is no investment in subsidiary as at 31 March

2022. As at 31 March 2021, the Company owned 100% of the ordinary share capital and voting rights of Hansa Trust PLC formerly

an investment trust, registered and operating in England. The fair value at 31 March 2021 was £3,179,000. As at 31 March 2021,

Hansa Trust PLC was no longer trading and was not beneﬁcially entitled to any investments except for an intercompany loan.

The intercompany loan was originally created as part of the Scheme of Domiciliation in August 2019 to reﬂect the transfer of

the beneﬁcial title of the portfolio from Hansa Trust PLC to the Company. As at 31 March 2021 there remained a relatively small

intercompany balance between the two entities which fully settled with Hansa Investment Company Limited on the dissolution of

Hansa Trust Limited on 9 November 2021 giving a nil balance as at 31 March 2022. As part of the process of dissolution, Hansa

Trust PLC had re-registered as Hansa Trust Limited.

9 INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

Listed

£000

Unquoted

£000

2022

Total

£000

2021

Total

£000

Cost as at 1 April 246,951 74,883 321,834 324,873

Investment holding gains/(losses) at 1 April 30,333 13,101 43,434 (51,609)

Valuation as at 1 April 277,284 87,984 365,268 273,264

Movements in the year:

Purchases at cost 30,530 310 30,840 27,416

Sales – proceeds (32,223) (964) (33,187) (28,444)

Movement in investment holding gains 14,680 2,385 17,065 93,032

Valuation as at 31 March 290,271 89,715 379,986 365,268

Cost as at 31 March 250,660 74,267 324,927 321,834

Investment holding gains as at 31 March 39,611 15,448 55,059 43,434

Valuation as at 31 March 290,271 89,715 379,986 365,268

2022

£000

2021

£000

Gains/(losses) on sales 5,440 (2,011)

Movement in investment holding gains 11,625 95,043

Gains on investments held at fair value through proﬁt or loss 17,065 93,032

Transaction costs

During the year expenses were incurred in acquiring and disposing of investments classiﬁed as fair value through proﬁt or loss.

Thesehave been expensed through capital and are included within gains on investments in the Income Statement. The total costs

were as follows:

2022

£000

2021

£000

Purchases 14 22

Sales 23 23

37 45

Notes to the Financial Statements

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Hansa Investment Company Limited For the Year Ended 31 March 2022 67

10 SIGNIFICANT HOLDING

The Company’s holdings of 10% or more of any class of shares in investment companies and 20% or more of any class of shares in

non-investment companies as at 31 March 2022 are detailed below:

Exc. Minority Interest

Country of

incorporation

or registration

Class of

capital

% of

class

held

Latest

available

accounts

Total

capital and

reserves

Proﬁt

after

tax for

the year

Ocean Wilsons Holdings Limited Bermuda Ordinary 26.5 31.12.21 $593,657,000 $63,687,000

Ocean Wilsons Holdings Limited is included as part of the investment portfolio in accordance with IAS 28 – Investment in Associates.

11 TRADE AND OTHER RECEIVABLES

The Company applies the IFRS 9 simpliﬁed approach to measuring expected credit losses, which uses a lifetime expected loss

allowance for all trade receivables and contract assets.

2022

£000

2021

£000

Prepayments and accrued income 201 177

201 177

12 CASH AND CASH EQUIVALENTS

2022

£000

2021

£000

Cash at bank 3,043 2,833

3,043 2,833

13 TRADE AND OTHER PAYABLES

2022

£000

2021

£000

Intercompany Loan – 3,179

Other creditors and accruals 368 388

368 3,567

Note: Hansa Trust Limited was dissolved on 9 November 2021. As a result, the remaining Intercompany loan balance was cancelled at this time as well as the equity

investment in the subsidiary of the same value. See Note 20 for information on the equity Investment. See Note 8 for a more detailed explanation of the dissolution process.

14 CALLED UP SHARE CAPITAL

2022

£000

2021

£000

40,000,000 Ordinary shares of 1p 400 400

80,000,000 ‘A’ non-voting Ordinary shares of 1p 800 800

1,200 1,200

The ‘A’ non-voting Ordinary shares do not entitle the holders to receive notices or to vote, either in person or by proxy, at any

general meeting of the Company, but in all other respects rank pari passu with the Ordinary shares of the Company.

Notes to the Financial Statements

FINANCIAL STATEMENTS

68 Hansa Investment Company Limited For the Year Ended 31 March 2022

15 CONTRIBUTED SURPLUS

2022

£000

2021

£000

Opening balance at 1 April 326,019 327,939

Dividend paid (1,260) (1,920)

Closing balance at 31 March 324,759 326,019

16 RETAINED EARNINGS

Reserves Reserves

Revenue

2022

£000

Capital –

Other

2022

£000

Capital –

Investment

holding

proﬁts

2022

£000

Total

retained

earnings

2022

£000

Revenue

2021

£000

Capital –

Other

2021

£000

Capital –

Investment

holding

proﬁts

2021

£000

Total

(accumulated

losses)/

retained

earnings

2021

£000

Opening balance at 1 April (1,111) (1,652) 43,434 40,671 (1,771) 540 (51,609) (52,840)

Proﬁt/(loss) for the year 1,667 5,520 11,625 18,812 2,580 (2,192) 95,043 95,431

Dividend paid (2,580) – – (2,580) (1,920) – – (1,920)

Closing balance at 31 March (2,024) 3,868 55,059 56,903 (1,111) (1,652) 43,434 40,671

17 NET ASSET VALUE

2022 2021

NAV per Ordinary and ‘A’ non-voting Ordinary share 319.1p 306.6p

The NAV per Ordinary and ‘A’ non-voting Ordinary share is based on the net assets attributable to equity shareholders of

£382,862,000 (2021: £367,890,000) and on 40,000,000 Ordinary shares (2021: 40,000,000) and 80,000,000 ‘A’ non-voting

Ordinary shares (2021: 80,000,000) in issue at 31 March 2022.

18 COMMITMENTS AND CONTINGENCIES

The Company has no outstanding commitments as at 31 March 2022.

19 FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS

The Company’s ﬁnancial instruments comprise securities, cash balances, debtors and creditors. These assets are classiﬁed in the

following measurement categories:

• those to be measured subsequently at fair value through proﬁt or loss; and

• those to be measured at amortised cost.

The ﬁnancial assets held at amortised cost include trade and other receivables, cash and cash equivalents.

Risk Objectives and Policies

The objective of the Company is to achieve growth of shareholder value commensurate with the risks taken, bearing in mind that

the protection of long-term shareholder value is paramount. The policy of the Board is to provide a framework within which the

Portfolio Manager can operate and deliver the objectives of the Company. In pursuing its investment objective, the Company is

exposed to a variety of risks that could result in either a reduction in the Company’s net assets and/or a reduction of the proﬁts

available for dividends.

These risks include those identiﬁed by the accounting standard IFRS 7, being market risk (comprising currency risk, interest rate risk

and other price risk), liquidity risk and credit risk. The Directors’ approach to the management of these is set out below. The Board,

in conjunction with the Portfolio Manager and Company Secretary, oversees the Company’s risk management.

Notes to the Financial Statements

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Hansa Investment Company Limited For the Year Ended 31 March 2022 69

19 FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (CONTINUED)

Risks Associated with Financial Instruments

Foreign currency risk

Foreign currency risks arise in two distinct areas which affect the valuation of the investment portfolio. 1) the direct exposure where

an investment is denominated and paid for in a currency other than Sterling; and 2) the indirect exposure where an investment has

substantial non-Sterling underlying investment and/or cash ﬂows. The Company does not normally hedge against foreign currency

movements affecting the value of the investment portfolio, but takes account of this risk when making investment decisions. Some

of the fund investments into which the Company invests will, in part or in whole, hedge some of their underlying currency risk,

but this will be known at the time of investment and will form part of the investment decision. In those cases, the hedging will not

remove the exposure to the underlying country or market sector. The Portfolio Manager monitors the effect of foreign currency

ﬂuctuations through the pricing of the investments by the various markets.

Direct

foreign

currency

risk

2022

£000

No direct

foreign

currency

risk

2022

£000

Total

2022

£000

Direct

foreign

currency

risk

2021

£000

No direct

foreign

currency

risk

2021

£000

Total

2021

£000

Investments 115,858 264,128 379,986 127,772 237,496 365,268

Other receivables including prepayments 29 172 201 126 51 177

Cash at bank 24 3,019 3,043 – 2,833 2,833

Current liabilities – (368) (368) – (388) (388)

115,911 266,951 382,862 127,898 239,992 367,890

Note: Direct foreign currency risk includes direct exposure to USD and Euro currencies.

Foreign currency sensitivity

The following table illustrates the sensitivity of the proﬁt/loss for the year and the shareholders’ funds in regard to the Company’s

ﬁnancial assets and ﬁnancial liabilities. It assumes a 10% depreciation of Sterling against foreign currencies at 31 March 2022 and

31 March 2021. These percentages have been determined based on the average market volatility in exchange rates in the previous

12 months. The sensitivity analysis is based on the Company’s monetary foreign currency ﬁnancial instruments held at each balance

sheet date.

US$

2022

£000

Euro

2022

£000

Other

2022

£000

US$

2021

£000

Euro

2021

£000

Other

2021

£000

If Sterling had weakened by 10% against the currencies shown, this would have had the following effect on the Company:

Income statement – proﬁt/(loss) 785 (331) (191) 3,029 509 851

Equity shareholder funds 8,536 1,453 1,600 8,291 2,201 2,297

9,321 1,122 1,409 11,320 2,710 3,148

Note: Other includes exposure to foreign currencies excluding US dollar and Euro.

A 10% strengthening of Sterling against the above currencies would result in an equal and opposite effect on the above amounts.

Notes to the Financial Statements

FINANCIAL STATEMENTS

70 Hansa Investment Company Limited For the Year Ended 31 March 2022

19 FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (CONTINUED)

Interest rate risk

Interest rate movements may affect the level of income receivable on cash deposits and the interest payable on the Company’s

variable rate borrowings.

The Company has banking facilities amounting to £30m (2021: £30m) which are available for the Portfolio Manager to use in

purchasing investments; the costs of which are based on the prevailing LIBOR rate, plus an agreed margin. The Company does not

normally hedge against interest rate movements affecting the value of the investment portfolio, but takes account of this risk when

an investment is made utilising the facility. The level of banking facilities used is monitored by both the Board and the Portfolio

Manager on a regular basis. The impact on the returns and net assets of the Company for every 1% change in interest rates, based

on the amount drawn down at the Year-End under the facility, would be £nil (2021: £nil). The level of banking facilities utilised at

31 March 2022 was £nil (2021: £nil).

Interest rate changes usually impact equity prices. The level and direction of change in equity prices is subject to prevailing local and

world economic conditions as well as market sentiment, all of which are very difﬁcult to predict with any certainty. The Company

has ﬂoating rate ﬁnancial assets, consisting of bank balances and cash funds that have received average rates of interest during the

year of 0.0% on bank balances.

Cash ﬂow

interest

rate risk

2022

£000

interest

rate risk

2022

£000

Total

2022

£000

Cash ﬂow

interest

rate risk

2021

£000

interest

rate risk

2021

£000

Total

2021

£000

Investments – 379,986 379,986 – 365,268 365,268

Other receivables including prepayments – 201 201 – 177 177

Cash at bank 3,043 – 3,043 2,833 – 2,833

Current liabilities – (368) (368) – (388) (388)

3,043 379,819 382,862 2,833 365,057 367,890

Other price risk

By the nature of its activities, the Company’s investments are exposed to market price ﬂuctuations. NAV is calculated and reported

daily to the London Stock Exchange. The Portfolio Manager and the Board monitor the portfolio valuation on a regular basis and

consideration is given to hedging the portfolio against large market movements.

The Company’s investment in Ocean Wilsons is large both in absolute terms, £93.5m as valued at 31 March 2022 (2021:

£78.6m) and as a proportion of the NAV, 24.4% (2021: 21.4%). Shareholders should be aware that if anything of a severe and

untoward nature were to happen to this company, it could result in a signiﬁcant impact on the NAV and share price. However,

it should also be noted that the exposure of Hansa Investment Company Limited to the currency, country and market based risk

exposure of 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, as detailed on pages 36 and 37, rise or fall in value by 10% from the year end valuation, the effect on the Company’s

proﬁt and equity would be an equal rise or fall of £38.0m (2021: £36.8m).

Notes to the Financial Statements

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Hansa Investment Company Limited For the Year Ended 31 March 2022 71

19 FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (CONTINUED)

Credit Risk

The Company only transacts with regulated institutions on normal market terms, which are trade date plus one to three days in

the case of equities. Fund investment settlement periods will vary from fund to fund and are deﬁned by the individual managers.

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 on page 67.

The Company’s maximum exposure to credit risk on cash is £3.0m (2021: £2.8m) and on cash funds is £nil (2021: £nil). Surplus cash

is on deposit with the Depositary/Custodian.

Liquidity Risk

The liquidity risk to the Company is that it is unable to meet its obligations as they fall due, as a result of a lack of available cash and

an inability to dispose of investments in a timely manner. A substantial proportion of the Company’s portfolio is held in liquid quoted

investments; however, there is a large, Strategic, holding in Ocean Wilsons of 24.4% (2021: 21.4%), unquoted equity investments

of 2.3% (2021: 2.2%) and investments into open-ended investment funds with varying liquidity terms of 61.7% (2021: 59.9%).

The Portfolio Manager takes into consideration the liquidity of each investment when purchasing and selling, in order to maximise

the returns to shareholders, by placing suitable transaction levels into the market. Special consideration is given to investments

representing more than 5% of the investee company. A detailed list of the investments, split by silo, held at 31 March 2022 is

shown on pages 36 and 37. This can be used broadly to ascertain the levels of liquidity within the portfolio, although liquidity will

vary with each investment – particularly the funds.

Capital Management

The Company considers its capital to be its issued share capital and reserves and whilst the Company has access to loan facilities it

is not considered or used as core capital, but primarily to meet the cash timing requirements of opportunistic investment strategies

and thereby enhance shareholder returns. The Board regularly monitors its share discount policy and the level of discounts and

whilst it has the option to repurchase shares, it considers the best means of attaining a good rating for the shares is to concentrate

on good shareholder returns.

However, the Board believes the ability of the Company to repurchase its own ‘A’ non-voting Ordinary shares in the market may

potentially enable it to beneﬁt all equity shareholders of the Company. The repurchase of ‘A’ non-voting Ordinary shares, at a discount

to the underlying NAV, would enhance the NAV per share of the remaining equity shares and might also enable the Company to

address more effectively any imbalance between supply and demand for the Company’s ‘A’ non-voting Ordinary shares.

20 FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Fair Value Hierarchy

IFRS 13 ‘Fair Value Measurement’ requires an entity to classify fair value measurements, using a fair value hierarchy that reﬂects the

signiﬁcance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly

(i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3: inputs for the asset or liability not based on observable market data (unobservable inputs).

Notes to the Financial Statements

FINANCIAL STATEMENTS

72 Hansa Investment Company Limited For the Year Ended 31 March 2022

20 FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (CONTINUED)

The ﬁnancial assets and liabilities, measured at fair value, in the Statement of Financial Position, grouped into the fair value hierarchy

and valued in accordance with the accounting policies in Note 1, are detailed below:

31March 2022

Level 1

£000

Level 2

£000

Level 3

£000

Total

£000

Financial assets at fair value through proﬁt or loss

Quoted equities 136,771 – – 136,771

Unquoted equities – – 8,917 8,917

Fund investments 27,328 206,970 – 234,298

Net fair value 164,099 206,970 8,917 379,986

31March 2021

Level 1

£000

Level 2

£000

Level 3

£000

Total

£000

Financial assets at fair value through proﬁt or loss

Quoted equities 136,680 – – 136,680

Unquoted equities – – 8,055 8,055

Fund investments 14,188 206,345 – 220,533

Investment In subsidiary – – 3,179 3,179

Net fair value 150,868 206,345 11,234 368,447

The Company’s policy is to recognise transfers into and out of the different fair value hierarchy levels at the date the event or change

in circumstances that caused the transfer occurred.

A reconciliation of fair value measurements in Level 3 is set out in the following table:

2022

Equity

investments

£000

2021

Equity

investments

£000

Opening Balance 11,234 12,455

Dissolution of Hansa Trust (3,179) –

Capital Distribution (648) –

Total gains or losses included in gains on investments in the Income Statement:

– on assets held at year end 1,510 (1,221)

Closing Balance 8,917 11,234

Note: Hansa Trust Limited was dissolved on 9 November 2021. As a result, the remaining equity investment was cancelled at this time as well as the Intercompany

loan balance with the subsidiary of the same value. See Note 13 for information on the Intercompany loan balance. See Note 8 for a more detailed explanation of the

dissolution process.

Notes to the Financial Statements

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Hansa Investment Company Limited For the Year Ended 31 March 2022 73

20 FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (CONTINUED)

As at 31 March 2022, the investment in DV4 has been classiﬁed as Level 3. This is because the investment has been valued using the

most recent estimated NAV as advised to the Company by DV4, adjusted for any further drawdowns, distributions or redemptions

between the valuation date and 31 March 2022. The most recent valuation statement was received on 4 March 2022 and relates to

the DV4 portfolio at 31 December 2021. Additionally, the underlying assets of DV4 are all Real Estate in nature and, as such, there

is not a readily comparable market of identical assets for valuation purposes. In the absence of a valuation for 31 March 2022 from

DV4, the Company performed additional procedures to determine the reasonableness of the fair value estimate for inclusion in the

Financial Statements. Direct enquiries of the manager of DV4 were made in July 2020 to understand, amongst others, valuation

process and techniques used, external experts used in the valuation process and updated details of underlying property portfolio.

In addition, the Company has obtained external independent valuation data and compared the historic valuation movements of

DV4 to that data. It has been conﬁrmed with DV4's manager that the valuation procedures discussed in July 2020 are still the same

used now. In addition, the Company has compared the historic valuation movements of DV4 to the FTSE350 Real Estate Index.

Based on the information obtained and additional analysis performed the Company is satisﬁed that DV4 is carried in these Financial

Statements at an amount that represents its best estimate of fair value at 31 March 2022. It is believed the value of DV4 as at

31 March 2022 will not be materially different, but this valuation is based on historic valuations by DV4, does not have a readily

available third party comparator and, as such, is an estimate. If the value of the investment was to increase or decrease by 10%,

while all other variables remained constant, the return and net assets attributable to shareholders for the year ended 31 March 2022

would have increased or decreased by £892,000 (2021: £806,000). The Board considers 10% to be a potential movement between

valuation periods borne out by historic valuation trends. However, this does not preclude the valuation moving a greater amount

than 10% in the future. The subsidiary has been valued taking into account the latest assets and liabilities remaining In Hansa Trust.

21 RELATED PARTIES & TRANSACTIONS WITH THE PORTFOLIO MANAGER

William Salomon is a Director of the Company and Senior Partner of the Company’s Portfolio Manager. Details of the relationship

between the Company and Hansa Capital Partners LLP, including amounts paid during the year and owing at 31 March 2022,

aredisclosed in the Strategic Report – Shareholder Proﬁle and Engagement on pages 38 to 40 and in Note 3 on page 64. Details

of the relationship between the Company and the Directors, including amounts paid during the period to 31 March 2022,

aredisclosed in the Strategic Report – The Board on page 6 and also in the Directors’ Remuneration Report on pages 49 to 51.

22 CONTROLLING PARTIES

At 31 March 2022 Victualia Limited Partnership and Nomolas Ltd each held 25.9% of the issued Ordinary shares.

Additionalinformation is disclosed in the Strategic Report – Substantial Shareholders on page 38.

23 POST BALANCE SHEET EVENTS

There are no signiﬁcant events that have occurred after the end of the reporting year to the date of this report which

require disclosure.

Notes to the Financial Statements

74 Hansa Investment Company Limited For the Year Ended 31 March 2022

Notice of the Annual General Meeting

NOTICE OF THE ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting

of the Members of the Company will be held at Clarendon

House, 2 Church Street, Hamilton, HM 11, Bermuda on

Thursday 11 August at 10:00 a.m. (Bermuda time) for the

following purposes:

Agenda

• To appoint a chairperson of the meeting.

• To conﬁrm notice.

Resolutions

1 To receive and consider the audited Financial Statements

and the Reports of the Directors and Auditor for the year

ended 31 March 2022.

2 To re-elect Jonathan Davie (a biography and Board

endorsement can be found on page 4) as a Director of

the Company.

3 To re-elect Richard Lightowler (a biography and Board

endorsement can be found on page 4) as a Director of

the Company.

4 To re-elect Nadya Wells (a biography and Board

endorsement can be found on page 5) as a Director of

the Company.

5 To re-elect William Salomon (a biography and Board

endorsement can be found on page 5) as a Director of

the Company.

6 To re-elect Simona Heidempergher (a biography and Board

endorsement can be found on page 5) as a Director of

the Company.

7 To approve the Directors’ Remuneration Report.

8 To approve the Directors’ Remuneration Policy and

authorise the Board to determine the remuneration of

the Directors. Further, as per the Policy as presented on

page49, to increase the current upper annual limit of

Directors’ remuneration to $400,000. Thus, also approve

the amendment to the Company’s bye-law 44.1(a) to

replace the text “not exceed US$350,000 per annum”

with “not exceed US$400,000 per annum”.

9 To approve the Company’s Dividend Policy as can be found

on page 21 of the Annual Report.

10 To appoint PricewaterhouseCoopers Ltd as Auditor of the

Company and to authorise the Directors to determine the

remuneration of the Auditor.

11 Approval to repurchase up to 14.99% of the

‘A’ non-voting Ordinary shares of 1p each in the issued

shares capital of the Company (the “Shares”).

THAT the Company be and hereby is unconditionally

authorised to make market purchases up to an aggregate

of 11,992,000 shares at a price (exclusive of expenses)

which is:

a) not less than 1p per share; and

b) not more than the higher of: i) 5% above the average

of the middle-market quotations (as derived from

and calculated by reference to the Daily Ofﬁcial List

of the London Stock Exchange) for ‘A’ non-voting

Ordinary shares of 1p each in the ﬁve business days

immediately preceding the day on which the share is

purchased; and ii) the higher of the last independent

trade and the then current highest independent bid.

AND

THAT the approval conferred by this resolution shall expire

on the date of the next AGM (except in relation to the

purchase of shares, the contract for which was concluded

before such date and which might be executed wholly or

partly after such date) unless the authority is renewed or

revoked at any other general meeting prior to such time.

Dated: 17 June 2022

Shane Reynolds

For and on behalf of

Conyers Corporate Services (Bermuda) Limited

Secretary

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Hansa Investment Company Limited For the Year Ended 31 March 2022 75

Notes for Shareholders

1 Pursuant to Regulation 41 of the Uncertiﬁcated Securities

Regulations 2001 (as amended), only those members

registered in the register of members of the Company

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:

a) via www.signalshares.com by logging on and

selecting the ‘Proxy Voting’ link. If you have not

previously registered for electronic communications,

you will ﬁrst be asked to register as a new user, for

which you will require your investor code (“IVC”),

(which can be found on your share certiﬁcate), family

name and postcode (if resident in the UK); or

b) in hard copy form by post, by courier or by hand to

the Company’s Registrars, Link Group, PXS 1, Central

Square, 29 Wellington Street, Leeds, LS1 4DL.

If you need help with voting online or need to request

a proxy form, please contact our Registrars, Link

Group, on 0371 664 0300. Calls are charged at the

standard geographic rate and will vary by provider.

Calls outside the UK will be charged at the applicable

international rate. They are open between 09:00 – 17:30,

Monday to Friday excluding public holidays in England

and Wales. Alternatively, you can email Link at

shareholder[email protected].

Notes for Depositary Interest Holders

1 You will not receive a form of direction for the Annual

General Meeting in the post. Depositary Interests may

be voted through the CREST Proxy Voting Service

in accordance with the procedures set out in the

CREST manual.

In order for a proxy appointment or instruction made

using the CREST service to be valid, the appropriate

CREST message (a “CREST Proxy Instruction”) must be

properly authenticated in accordance with Euroclear UK

& Ireland Limited’s speciﬁcations and must contain the

information required for such instruction, as described

in the CREST Manual (available via www.euroclear.com/

CREST). The message, regardless of whether it constitutes

the appointment of a proxy or is an amendment to the

instruction given to a previously appointed proxy must,

in order to be valid, be transmitted so as to be received

by the issuer’s agent ID RA10 by 2:00pm UK time on

8 August 2022. For this purpose, the time of receipt

will be taken to be the time (as determined by the time

stamp applied to the message by the CREST Application

Host) from which the issuer’s agent is able to retrieve the

message by enquiry to CREST, in the manner prescribed by

76 Hansa Investment Company Limited For the Year Ended 31 March 2022

Notice of the Annual General Meeting

Continued

CREST. After this time any change of instructions to proxies

appointed through CREST should be communicated to

the appointee through other means. CREST members

and, where applicable, their CREST sponsors, or voting

service providers should note that Euroclear UK & Ireland

Limited does not make available special procedures in

CREST for any particular message. Normal system timings

and limitations will, therefore, apply in relation to the

input of CREST Proxy Instructions. It is the responsibility

of the CREST member concerned to take (or, if the CREST

member is a CREST personal member, or sponsored

member, or has appointed a voting service provider, to

procure that his CREST sponsor or voting service provider(s)

take(s)) such action as shall be necessary to ensure

that a message is transmitted by means of the CREST

system by any particular time. In this connection, CREST

members and, where applicable, their CREST sponsors

or voting system providers are referred, in particular,

to those sections of the CREST Manual concerning

practical limitations of the CREST system and timings. The

Company may treat as invalid a CREST Proxy Instruction

in the circumstances set out in Regulation 35(5)(a) of the

Uncertiﬁcated Securities Regulations 2001.

2 In the case of Depositary Interest Holders, a form of

direction may be requested and completed in order

to instruct Link Market Services Trustees Limited, the

Depositary, to vote on the holder’s behalf at the Meeting

by proxy or, if the Meeting is adjourned, at the adjourned

meeting. Requests for a hard copy should be sent Link

Group, PXS 1, Central Square, 29 Wellington Street, Leeds,

LS1 4DL (telephone number: 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 [email protected] by no

later than by 2:00pm UK time on 8 August 2022.

All Holders

1 The quorum for the Annual General Meeting shall be two

or more shareholders present in person or by proxy. If

within two hours from the time appointed for the meeting

a quorum is not present, the meeting shall be adjourned

to the next business day at the same time and place or to

such other time and place as the Directors may determine,

and if a quorum is not present at any such adjourned

meeting, the meeting shall be dissolved.

2 As of 17 June 2022 the Company’s total number of shares

in issue is 40,000,000 Ordinary shares of 1p each and

80,000,000 ‘A’ non-voting Ordinary shares of 1p each

in issue. The Ordinary shareholders are entitled to one

vote per Ordinary share held. The ‘A’ non-voting Ordinary

shares do not entitle the holders to vote or receive notice

of meetings, but in all other respects they have the same

rights as the Company’s Ordinary shares.

3 A copy of this notice and other information can be found

at https://www.hansaicl.com/shareholder-information/

ﬁnancial-and-investment-reporting/year-2022#2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

Investor Information

INVESTOR INFORMATION

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.

Hansa Investment Company Limited For the Year Ended 31 March 2022 77

INVESTOR INFORMATION

Investor Information

Continued

CONTACT DETAILS

Email: [email protected]

Website: www.hansaicl.com

Company Secretary (and Company’s Registered Ofﬁce)

Conyers Corporate Services (Bermuda) Limited

Clarendon House, 2 Church Street

PO Box HM666, Hamilton HM CX

Bermuda

Phone: +1 441 279 5373

Website: www.conyers.com

Please contact the Portfolio Manager, as below, if you have any

queries concerning the Company’s investments or performance.

Portfolio Manager

Hansa Capital Partners LLP

50 Curzon Street

London W1J 7UW

Telephone: +44 (0) 207 647 5750

Email: [email protected]

Website: www.hansagrp.com

The Company’s website includes the following:

– Monthly Fact Sheets

– Stock Exchange Announcements

– Details of the Board Statements

– Annual and Interim Reports

– Share Price Data Reports

Please contact the Registrars, as below, if you have a query

about a certiﬁcated holding in the Company’s shares.

Link Group

10th Floor

Central Square

29 Wellington Street

Leeds LS1 4DL

If you do not have internet access you can call the Shareholder

Support Centre on 0371 664 0300. Calls are charged at the

standard geographic rate and will vary by provider. Calls outside

the UK will be charged at the applicable international rate.

They are open between 09:00 – 17:30, Monday to Friday

excluding public holidays in England and Wales.

Email: [email protected]

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

78 Hansa Investment Company Limited For the Year Ended 31 March 2022

Strategic Report

Corporate Governance

Reports Financial Statements

Notice of the Annual

General Meeting Investor Information

AI Terminal

10497_10-k_2022-07-13_98870cc9-65a3-41e0-9716-554308932269.html

More from Hansa Investment Company Limited

Talk to a Data Expert