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Share Name Share Symbol Market Type Share ISIN Share Description
Hansa Investment Company Limited LSE:HAN London Ordinary Share BMG428941162 ORD 1P (DI)
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  -2.00 -0.89% 222.00 216.00 228.00 4,779 16:35:21
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 6.7 2.3 9.2 24.1 89

Hansa Investment Company Limited Annual Financial Report

23/06/2021 8:59am

UK Regulatory (RNS & others)


Hansa Investment (LSE:HAN)
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TIDMHAN TIDMHAN TIDMHANA

RNS Number : 8254C

Hansa Investment Company Limited

23 June 2021

Hansa , investing to create long-term growth

Year-End Report

For the Year Ended

31 March 2021

WELCOME

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

Our financial year has seen some of the greatest social and economic upheavals of modern times, as the world wrestled with the impact of the Covid-19 virus. During our year, we have all observed governments try a variety of strategies to contain the virus and protect their populations as treatments and vaccines were developed. It is very encouraging to see the excellent progress made in many parts of the world in combating the pandemic. I am pleased to say that, at the end of our year, the fight back is well and truly underway and, whilst I am sure there will be bumps in the road, vaccines have been shown to be highly effective.

Unsurprisingly, it has been a very challenging year for the investment management community, with many finding themselves caught out, either being invested in the wrong sectors, or selling just at the wrong time as markets initially fell sharply and then rebounded almost as quickly. We have been very fortunate that our Portfolio Manager, Alec Letchfield, invested the Company in sectors that have proven to be very resilient during this period. Alec has written a detailed analysis in his Portfolio Manager's Report which I recommend to you.

I also draw your attention to my Chairman's Report to the Shareholders. Whilst I have left Alec to cover the wider market and our portfolio in some detail, in my report I summarise the outcomes of a strategy review the Board undertook during the year with our Portfolio Manager and our Broker, Winterflood. The review was to reconfirm our overall strategy and also to consider options available to the Board, to try to reduce the stubborn discount that both of the Company's share classes continue to experience. These topics were also raised in our most recent online shareholder presentation. If you missed this event, the slides and audio are available on our website.

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.

Yours sincerely

Jonathan Davie

THIS DOCUMENT IS IMPORTANT and if you are a holder of Ordinary shares it requires your immediate attention. If you are in doubt as to the action you should take or the contents of this document, you should seek advice from an independent financial advisor, authorised if in the UK under the Financial Services and Markets Act 2000, or other appropriately authorised financial advisor if outside of the UK. If you have sold or transferred your Ordinary shares in the Company, you should send this document, immediately to the purchaser or transferee; or to the stockbroker, bank or other agent through whom the sale or transfer was effected for onward transmission as soon as practicable.

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

Strategic Report

Chairman's Report to the Shareholders

The Board of Directors

The Board

Long-Term Performance

Organisation and Objectives

Portfolio Manager's Report

Portfolio Statement

Shareholder Profile and Engagement

Corporate Governance Reports

Report of the Directors

Corporate Governance Report

Audit Committee Report

Directors' Remuneration Report

Independent Auditor's Report to the Members of Hansa Investment Company Limited

Financial Statements

Income Statement

Balance Sheet

Statement of Changes in Equity

Cash Flow Statement

Notes to the Financial Statements

Pro-Forma Financial Statements

Introduction to the Pro-Forma Financial Statements

Pro-Forma Income Statement (Unaudited) for the combined Hansa Investment Company Limited Group

Pro-Forma Balance Sheet (Unaudited) for the combined Hansa Investment Company Limited Group

Pro-Forma Statement of Changes in Equity (Unaudited) for the combined Hansa Investment Company Limited Group

Pro-Forma Cash Flow Statement (Unaudited) for the combined Hansa Trust and Hansa Investment Company Limited

Notes to the Condensed Pro-Forma Financial Statements

Notice of the Annual General Meeting

Investor Information

Company Information

Glossary of Terms

Chairman's Report to the Shareholders

Introduction

This is my second Annual Report to shareholders since becoming Chairman of Hansa Investment Company Limited ("the Company", "HICL"). I am pleased to be able to say that all your Directors and the many people who support the Company with various services continue to be in good health.

It has been a very challenging year for the investment management community with many being, with the wonderful benefit of hindsight, either in the wrong sectors at the wrong time, or in cash because of what the Covid-19 pandemic might do to asset values. Fortunately, governments and central banks arrived in time to avoid a depression, albeit at some cost to their GDP/Debt ratios.

Shareholder Returns

For the year to 31 March 2021, the Net Asset Value ("NAV") has increased 76.4p per share, from 230.2p per share to 306.6p per share. During the past 12 months, there has also been a decrease in the discount, from 43.1% to 35.4% for the Ordinary shares and from 41.2% to 35.3% for the "A" Ordinary shares. More detail on these and the longer-term performance can be found later in the report, as well as our Portfolio Manager's detailed review of markets and portfolio performance in his Report.

Our Portfolio Manager, Alec Letchfield of Hansa Capital Partners LLP ("Hansa Capital Partners", "HCP") has continued to produce excellent risk adjusted to shareholders. The funds he manages (the portfolio excluding Ocean Wilson Holdings Ltd ("OWHL", "Ocean Wilsons") has seen a total return of 33.7% in the past year, whilst our investment in OWHL has seen a total return of 38.9% and the Wilson Sons Ltd share price has increased in Sterling terms by 28.7%, whilst increasing in Brazilian Reals by 56.5%, the difference being caused by the continuing decline in the Real.

I think it worth noting Alec's performance against that of his peer group over the past five years and congratulate him on being a very steady hand on the investment tiller in the past challenging year, where it has been very easy to panic with resultant poor investment returns.

Prospects

In my Annual Report last year, I offered the opinion that the only possible solution to the pandemic was the discovery of a vaccine, or a time when "herding" succeeded in reducing or eliminating the virus. I also expressed disappointment at the "beggar thy neighbour" attitude and lack of coordinated international effort by governments to meet the challenge head on. It is very encouraging to see the progress that has been made in vaccine discovery and distribution across the world in the past year, although there is inevitably still a long way to go to get everyone vaccinated and to start to prepare for annual jabs if the virus does not naturally fade away. The equity and commodity markets have taken on a very positive tone in the last half of our financial year, as a result of the vaccination programme and the anticipated demand from consumers, who have managed to build up their savings during the lockdowns and now want to come out to frolic.

Whilst I have no doubt this will happen, the quantum of spending and its durability are very difficult to forecast and may end in disappointment for market participants. A number of academic studies done on the past history of pandemics have shown that the period after these events tended to be deflationary, although the demographic distribution may change that with the increase in retirees in relation to the working population and the reduced birth rate now taking place.

The concerns about inflation associated with the flood of liquidity created by central banks and the consequential rise in interest rates will continue in my view, as the markets show many signs of rich valuations, whether it is the price of Bitcoin, the high (by historic comparisons) level of many stock markets, the rise in nearly all commodity prices and the Reddit/Robin Hood retail investors pushing some stocks to nosebleed levels.

Regrettably, the economy in Brazil continues to struggle with the Covid-19 crisis and a surge in inflation for many basic items, which has resulted in nearly 10% of the population not having enough food. Unsurprisingly the popularity of President Bolsonaro has declined sharply and the release of Lula da Silva has added more uncertainty in regards to the political direction of Brazil. However, despite the aforementioned challenges Wilson Sons continues to do well in the present difficult circumstances. In its recently released quarterly results, Wilson Sons reported increases in Container Terminal volumes and Towage manoeuvres in Q1 21 compared to the same period one year ago.

I remain concerned about present relations between the USA and China, which now seems to have developed a more coordinated policy with its neighbour Russia. It is now totally clear that whichever party is in power in the USA, the relations with China and Russia will become more strident and the Taiwan Strait will continue to be an area of increasing tension and hence market risk.

It all adds up to great uncertainty for the equity markets generally and underscores the importance of sector and geographic selection combined with sensible diversification which is our Company's mantra. I continue to have great faith in Alec Letchfield's ability to steer us through these choppy waters and create good risk-adjusted returns.

Strategy

Your Board has spent some time in the past year reviewing key elements of its strategy with its Portfolio Manager and Broker, Winterflood. This review was felt to be relevant and important, not just because of the unprecedented market conditions but also, in part, considering the relatively wide discount which has continued since 2006/2007. The review focused upon the various options available to the Directors to positively influence the discount to NAV of both share classes in the medium to long-term. A summary of each of the main themes considered follows below, but a common theme was that it was important for the Board to explain as clearly as possible its views on key issues shareholders raise. For completeness, the review of strategy did not result in any amendment to the investment mandate given to the Portfolio Manager. The Board is of the view that the investment portfolio managed by the Portfolio Manager continues to perform well.

Dividend policy

The Board has held the dividend since the arrival of Alec Letchfield as CIO of the Portfolio Manager. A number of shareholders have expressed interest in increasing it, whilst others do not wish this to happen as it is partially funded from capital. Our policy is to maintain the present dividend until it is fully covered by net income and then increase it in line with any growth in the net income of the Company.

Discount management

The Board recognises that the present discount continues to be an understandable irritant and frustration to many shareholders, including your Directors. The Board continues to take the view that share buybacks offer only a short-term solution. To buy back shares would require the sale of elements of the more liquid holdings within our portfolio, which with the benefit of hindsight and as detailed in the report from our Portfolio Manager, would have been the wrong thing to have done in recent times. Additionally, share buybacks would also increase the proportion of the portfolio invested in Ocean Wilsons. Experience within the UK Investment Trust community has shown that isolated share buybacks, whilst having some short-term effect, depending on their size, have little long--term benefit

Liquidity & Investor Base

The Board has always been of the view that providing transparency and clarity to investors as well as promoting demand for the Company's shares, would create a positive impact on the discount for the medium to longer-term. Following Winterflood's review and a discussion between the Board and Winterflood, it was recognised more work was required to reach out to the personal investor sector. To this end, the Company has begun a marketing review with Warhorse Partners, a brand and marketing specialist to the asset management industry, to consider all forms of its investor messaging and outreach. The project will seek to widen the shareholder base, as well as review the technologies involved in keeping interested parties updated on our progress.

Investment in Ocean Wilson Holdings Ltd

As mentioned earlier in this Report, whilst the management of Wilson Sons have done a really excellent job for shareholders against a background of a challenging and unhelpful political environment and Covid-19, they could not escape the reality of the falling Brazilian Real. The Board notes the continuing activities of the Wilson Sons' board to create value including the attempt to sell certain key assets in that company, which unfortunately did not come to pass. In particular, the Board notes the recent news that Wilson Sons has proposed a corporate restructuring, which would result in Wilson Sons moving from being a Bermudan based parent company to being a Brazilian domiciled entity. The restructuring does not change the current ownership of Wilson Sons but it is hoped it will increase stock liquidity and promote a wider share ownership, especially amongst Brazilians, including several institutional investors in Brazil currently restricted from investing. The Board notes that the initial view of the market appears to have been favourable.

The Board has examined the options relating to the Company's holding in OWHL, including the possibility of distributing the OWHL holding to our shareholders. The Board came to the conclusion that any distribution would have the effect of HICL losing its strategic influence in OWHL. Whilst such a move may result in a narrowing of the discount in the short-term, it would not appeal to long-term shareholders, particularly at a time when the discount is presently unusually large. Some shareholders may recall that OWHL went from 61.5p in February 2003 to 957.5p in April 2007. However, should a sale of Wilson Sons come to pass, it could open up a number of positive opportunities for both OWHL and HICL. The Directors are of the view that the current holding value of Wilson Sons and, therefore, OWHL remain significantly below their intrinsic value. It is for this reason that the Board believes this is a holding in which significant value remains for the Company.

Share Classes

The present share structure is not strictly a matter for the Board but for Ordinary shareholders. The current position is that the majority of Ordinary shareholders do not wish to change the structure. It is worth remembering that whilst "A" Ordinary shareholders are not entitled to vote at shareholder meetings, they otherwise share the same financial risks and rewards as Ordinary shareholders and also participated in the decision to move the domicile to Bermuda.

ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE ("ESG") MATTERS

Henceforth, ESG considerations will play an increasingly important part in the decision-making processes of funds and their managers.

Our Portfolio Manager has developed a Responsible Investment Policy during the last year, incorporating feedback from our Board. As a Board, we consider it both incorporates the important responsibilities this Company has, as an investor, with the context of our long-term growth strategy. We remain of the view that good returns and well-run sustainable business models will go hand in hand.

As a significant element of Ocean Wilsons Holdings, the Board receives regular updates regarding Wilson Sons and, as part of that, ESG considerations are discussed. I am pleased to report that Wilsons Sons continues to see a decade-long trend of reduction in Lost-time Injuries - which is a reflection of their commitment to create an increasingly safe working environment. In the 10 years since 2011, there has been a 91% decrease in Lost-time Injuries. Additionally, Greenhouse Gas emissions have been reduced by 12% since 2013.

Please see later in this report for more details regarding ESG matters.

Company Auditor

As of the Company's most recent AGM in July 2020, PricewaterhouseCoopers Ltd of Bermuda ("PwC") were appointed to audit the Company.

On behalf of the Board, I should like to extend our well wishes to you, our shareholders, and your families.

Jonathan Davie

Chairman

22 June 2021

I would draw shareholders' attention to the Glossary of Terms which can be found at the end of this Year-End Report. I hope it is helpful in understanding a business, ever more complicated by regulation and jargon.

The Board of Directors

The Directors who served the Company during the year to 31 March 2021 are:

Jonathan Davie

(Chairman)

Jonathan became a Director and Chairman of the Company in June 2019. He remains a Director of Hansa Trust whilst it is run down, joining that board in January 2013. He is also a partner of First Avenue Partners, an alternatives advisory boutique.

Jonathan qualified as a Chartered Accountant and then joined George M. Hill and Co. and became an authorised dealer on the London Stock Exchange. The firm was acquired by Wedd Durlacher Mordaunt and Co. where Jonathan became a partner in 1975. He was the senior dealing partner of the firm on 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      Total 
                   attended   Meetings 
Board                     5          5 
Audit Committee           2          2 
 

Simona Heidempergher

Simona became a Director of the Company in June 2019. Simona has extensive experience as an executive and non-executive director in a range of companies, including listed companies, investment funds and research organisations, across multiple jurisdictions.

For the past 18 years, she has been 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 TR European Growth Trust, a Janus Henderson Asset Management Investment Trust listed on the London Stock Exchange and director of Industrie Saleri Italo S.p.A. an Italian private company in the automotive supplier sector.

 
                   Meetings      Total 
                   attended   Meetings 
Board                     5          5 
Audit Committee           2          2 
 

William Salomon

William became a Director of the Company in June 2019. He remains a Director of Hansa Trust whilst it is run down, having joined that board in 1999. 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 ("Hansa Capital Partners"), the Portfolio Manager and Additional Administrative Services Provider, deputy chairman of Ocean Wilsons Holdings Limited and a director of its listed subsidiary Wilson Sons Limited. He is also a shareholder representative on the investment advisory committee for DV4 Ltd ("DV4") and chairman of ScotGems PLC investment trust. William was formerly the vice chairman of Close Asset Management Limited and chairman of the merchant bank Rea Brothers PLC.

 
                   Meetings      Total 
                   attended   Meetings 
Board                     5          5 
Audit Committee           2          2 
 

Nadya Wells

Nadya became a Director of the Company in June 2019. Nadya has 26 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 non-executive directorships at Sberbank of Russia where she is chair of the audit committee and sits on risk and strategy committees and 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 Luxembourgish SICAVs managed by Aberdeen Standard Investments Luxembourg. She also works in academia conducting research and consulting in the public and private sector on financing in Global Health. She holds an MBA from INSEAD, France.

 
                   Meetings      Total 
                   attended   Meetings 
Board                     5          5 
Audit Committee           2          2 
 

Note:

The meetings listed above are the main events held during the year at which all Directors attend. Additionally, there have been numerous meetings and Board calls to consider and approve operational requirements for the Company, such as quarterly dividends. These meetings are arranged as and when required and require the meeting to be quorate but not necessarily attended by all directors. These have not been listed above.

The Board normally holds an annual Strategy session in February. This has been delayed to August 2021 in the hope that the Board will be able to meet face-to-face.

The Board

Board members are selected based on their individual and complementary skills and experience and their ability to commit sufficient time to drive the Company's success. All Directors will retire at each AGM and offer themselves for consideration for re--election. The Board recommends the re--appointment of each of the Directors, based on their continuing contribution to the Company and its shareholders.

The Board is charged by the shareholders with the responsibility for looking after the affairs of the Company. It involves the stewardship of the Company's assets and liabilities and the pursuit of growth of shareholder value in accordance with the investment objective. These responsibilities are discharged in many ways and are explained below.

INVESTMENT OBJECTIVE AND POLICY, STRATEGY

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 will seek 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 seeking investments across four key investment categories, in addition to its 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 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 mutual agreement. 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. At the year end, and for the significant majority of the Company's financial year, the Board had 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%

During the year, the Board increased the upper limit for the Core silo from 45% to 50%.

The Portfolio Manager has a strong focus on seeking undervalued investments and those not readily available to the general public. The Company's size and flexible structure also enables it to invest in unconventional investments, which often cannot be accommodated by more traditional, larger fund managers, typically less flexible in their approach. 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, including other listed investments companies.

Investment Monitoring AND KEY PERFORMANCE INDICATORS

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 its: (i) peer group; and (ii) 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 further in the report 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 merit only and that there should be no discrimination in the choice of Directors for any reason.

Long -- Term Performance

TEN YEAR COMPANY PERFORMANCE STATISTICS

 
                              Net Asset 
                              Value per 
                                share - 
                               Ordinary                          Share Price 
 Year ended   Shareholders'     and 'A'      Annual                    (Bid)            Discount/(Premium) 
   31 March           Funds    Ordinary   Dividends  Ordinary   'A' Ordinary  Ordinary        'A' Ordinary 
2021              GBP367.9m      306.6p        3.2p    198.0p         198.5p     35.4%               35.3% 
2020              GBP276.3m      230.2p        3.2p    130.9p         135.5p     43.1%               41.2% 
2019              GBP337.3m      281.1p        3.2p    195.5p         195.0p     30.5%               30.6% 
2018              GBP323.1m      269.3p        3.2p    198.5p         195.5p     26.3%               27.4% 
2017              GBP307.5m      256.3p        3.2p    173.3p         169.6p     32.4%               33.8% 
2016              GBP255.6m      213.0p        3.2p    146.0p         145.1p     31.5%               31.9% 
2015              GBP273.3m      227.8p        3.2p    172.0p         165.5p     24.5%               27.3% 
2014              GBP287.4m      239.5p        3.2p    175.9p         175.5p     26.6%               26.7% 
2013              GBP259.9m      216.6p        3.0p    166.8p         163.0p     23.0%               24.7% 
2012              GBP268.2m      223.5p        2.8p    181.0p         178.3p     19.0%               20.2% 
2011              GBP264.1m      220.1p        0.7p    194.2p         190.5p     11.8%               13.5% 
 

The table includes information relating to HICL and historic information relating to Hansa Trust. The years ended 2021-2020 notes HICL information. The historic year ends 2019-2011 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 (Bid)" 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 later in the report.

 
  To 31 March 2021  1 year  3 years  5 years  10 years 
Share Price Total 
 Return 
Ordinary shares 
 (%)                 54.2%     5.4%    48.8%     21.5% 
 
 'A' non--voting 
 Ordinary shares 
 (%)                 49.3%     7.4%    50.2%     24.6% 
 
 
 To 31 March 2021  1 year  3 years  5 years  10 years 
Net Asset Value Total Return Performance 
Net Asset Value 
 (%)                34.8%    18.3%    53.4%     58.0% 
 

Organisation and Objectives

This section explains how the Board has organised the Company and seeks to deliver its objectives.

BOARD COMMITTEES

The Directors consider that, in order to fulfil their responsibilities as the Directors of the Company, they should all be members of every sub-committee where possible.

Audit Committee

The Audit Committee, which meets at least twice a year, consists of all independent Directors of the Board. Richard Lightowler is the Chairman of the Audit Committee.

The AIC Code of Corporate Governance ("the AIC Code") indicates that all independent Directors can be members of the Audit Committee. The Board is of the opinion that, particularly as the Company has relatively few directors, shareholders benefit from the views of all Directors. Therefore, Jonathan Davie, as Chairman of the Company, is also a member of this Committee. The Board further acknowledges that the 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 on merit 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 merit only 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 annually and will be formally reviewed every three years, in the light of their 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 your 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 Board has identified the Company's shareholders and its main service providers as its key stakeholders.

SHAREHOLDER INTERACTION & PROMOTING THE COMPANY

The shareholder base is a mixture of retail investors, wealth managers, asset managers and private clients across both classes of the Company's shares. The Board monitors the changes in each shareholder base at its quarterly Board meetings. The Company communicates through publication of Year-End and Interim Financial Statements, through detailed quarterly and monthly factsheets, as well as through the Company's website. The Company also holds shareholder presentations incorporating presentations by the Board and key service providers to keep shareholders informed.

The Board seeks to understand the opinions of a wide variety of shareholders. The Company maintains a dedicated email address for shareholders to contact the Board (HICLenquiry@hansacap.com) and shareholder correspondence and feedback is a regular item of discussion at the Board's meetings.

The Company continues to meet shareholders and other interested parties facilitated by Edison and Winterflood as well as a result of direct contact.

Investors are also kept informed through detailed factsheets, Interim and Annual Financial Statements, paid-for editorial pieces by Edison Research and discussion with media organisations. During the year, to enable shareholders to meet with the Board and Portfolio Manager during the Covid-19 pandemic, the Board trialled the use of 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.

An item raised by several shareholders over recent times through a variety of forums concerns the size of the discount to NAV of each of the Company's share classes. The Board has always been of the view that providing transparency and clarity to investors, as well as promoting demand for the Company's shares, would create a positive impact on the discount for the medium to longer-term. During the year, the Company asked Winterflood to help review the options available to the Board at the current time to drive the discount lower. The options considered included suggestions made by shareholders in recent correspondence. Following Winterflood's review and a discussion between the Board and Winterflood, it was recognised more work was to be done to reach out to the self-selected investor sector. To this end, the Company has begun a marketing review with Warhorse Partners to consider all forms of its investor messaging and outreach.

We are working with Link Group, the Company's Registrars, and Orient Capital, the Company's Register Analyst, to improve our understanding of our shareholder base and to proactively engage with key shareholder groups to promote interest.

LONG-TERM IMPACT OF DECISIONS - ESG MATTERS

ESG considerations will play an increasingly important part in the decision-making processes of funds and their managers the world over.

Our Portfolio Manager has developed a Responsible Investment Policy during the last year incorporating feedback from our Board. As a Board, we consider it both incorporates the important responsibilities this Company has as an investor, with the context of our long-term growth strategy. Therefore, the Board has given its approval for the Portfolio Manager to apply its Responsible Investment Policy when managing the Company's current and future investment portfolio.

As a long-term investor, HCP has a natural desire to be a responsible investor and good corporate citizen. This is reflected in the belief that such businesses and investments are likely to generate superior long-term returns and, furthermore, consideration of such issues is an important element in the assessment of potential risks. The Responsible Investment Policy seeks to incorporate ESG factors into investment decision-making. The Manager is not pursuing an exclusionary policy through negatively screening potential funds or companies and thereby restricting our investment universe, but instead will engage with those companies and funds which they feel are falling short on their responsibilities. However, there is an expectation that our existing investments should take ESG issues seriously, to clearly report on them and to aspire to do the right thing. Where a portfolio manager or company is not living up to these standards our Portfolio Manager will engage with them to encourage improvement with the ultimate sanction being exiting, or not investing in, a fund or company if their concerns are not sufficiently addressed

Fund Investments

Whilst our Manager does not seek to exclude fund managers invested in sectors or geographies with higher ESG risk, they would also expect such managers to properly articulate how they operate in such areas and manage the potential ESG considerations. Their investment philosophy favours those managers who are typically long-term in their approach and seek to invest in high quality companies that are well managed and often higher returning. As a result, many will either not invest in, or have a high hurdle before they will invest in, those business that are, for example, focused in the energy, natural resources or commodities, or in countries with poor corporate governance frameworks. Accordingly, although we do not set thresholds there is a natural bias away from those companies and sectors that score less well on ESG metrics.

Company Investments

When considering our direct equity investments our Manager considers not just the target company industry and business model, but also that management teams are responsible custodians of their businesses, report clearly on ESG metrics and seek to improve on those areas in which they are failing. Again, as for our fund selection, our Manager does not necessarily exclude specific sectors or countries but instead, for those companies where inherent ESG risk is higher focused on how these companies manage these issues and their responsibilities.

Over the last 12 months, our Portfolio Manager has participated in all shareholder votes for our current investments and will continue to actively engage and participate in all future votes for all investments.

The full Responsible Investment Policy can be found on the Portfolio Manager's website with the following link:

www.hansagrp.com//media/Files/H/Hanseatic-Group-V2/hansa-responsible-investing-Dec-2020.pdf

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 Wilson Investments, 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 regular updates from Wilson Sons, an operating business with several thousand employees, regarding their business including issues relevant to ESG considerations. Wilson Sons are justifiably 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 in an increasingly safe working environment. In the 10 years since 2011, there has been a 91% decrease in Lost-time Injuries. Additionally, Greenhouse Gas emissions have been reduced by 12% since 2013. Wilson Sons has also taken decisive steps to protect the safety and wellbeing of its employees during the Covid-19 pandemic. Many of their head-office staff continue to work mainly from home and, for those who can't, changes have been instituted to minimise the amount of mixing to reduce the risk of cross infection.

Carbon Offset

We recognise that, as part of the redomicile of the business to Bermuda, and in a normal, non-Covid-19, year there will be a number of individual Director flights 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. However, for the year ended 31 March 2021, the Covid-19 pandemic has seen that reduced to almost zero. 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 and costs

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 its 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 risks and returns. The Portfolio Manager attends each Board meeting to provide an update on Investment Performance and enable the Directors to actively question the risks and investment performance within the portfolio.

Determines investment strategy, guidelines and restrictions

The Board determines the investment strategy in conjunction with the Portfolio Manager. The strategy is monitored regularly and refinements are made to it as required, with formal review at the Board's annual strategy meeting.

The Board issues formal investment guidelines and restrictions, compliance with these is reported by the Portfolio Manager's compliance officer on a regular basis and is also monitored independently by the Administrator.

Determines gearing levels and capital preservation through the use of hedging instruments

The Board, taking account of advice from the Portfolio Manager, determines the maximum level of borrowings the Company will undertake at the time of borrowing. Details of the borrowing limits can be found further on in the report. The Company will not invest in derivatives but may hold 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 ("HCP") 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 below in the report.

HCP charges an investment management fee at an annual rate of 1% of the net assets of the Company (after any borrowings) but, after deducting the value of the investment in OWHL, on which no fee is payable. The Portfolio Manager has charged GBP2,621,000 for the year ended 31 March 2021 (for the Combined Group, year ended 31 March 2020: GBP2,441,000). Hanseatic Asset Management LBG, a company connected to Hansa Capital Partners LLP and which is also the AIFM, separately charges an investment management fee to the investment subsidiary of OWHL.

The terms of the portfolio management agreement permit either party to terminate the agreement by giving to the other not less than 12 months' notice, or such shorter period as is mutually acceptable. There is no agreement between the Company and the Portfolio Manager concerning compensation in respect to the termination of the agreement. In its annual assessment of the Portfolio Manager, the Board concluded that, because of the skills and experience of the management team it is in the best interest of shareholders that the Portfolio Manager remains in place under the present terms. Details of the fees paid to the Portfolio Manager can be found in Note 3.

HCP also acts as the Additional Administrative Services Provider ("AASP") to the Company. This role ensures a number of the day to day processes for the Company are carried out as well as providing oversight of, and a liaison between, a number of the Company's service providers and the Company itself. HCP is paid GBP115,000 per annum for this service (for the Combined Group, year ended 31 March 2020: GBP119,000). HCP is not the Company Secretary - see below.

Auditor

The Company's Auditor is PricewaterhouseCoopers Ltd, a Bermudan registered firm. The Board have developed a strong working relationship with the Auditor and have been happy with the rigour and challenge offered. The reappointment of PwC as Auditor to the Company will be proposed at the forthcoming AGM.

Auditor independence rules restrict the amount and type of non-audit related work that can be performed by a company's auditor. Any non-audit related work must be pre-approved by the Board. Currently, PwC provides only audit services to the Company (details in Note 4).

Company Secretary

The Company has engaged Conyers Corporate Services (Bermuda) Ltd ("Conyers") as its Company Secretary. During the year to 31 March 2021, the Company Secretary has charged GBP5,919 (for the period ended 31 March 2020: GBP17,647 although this included a number of one-off set up fees).

Alternative Investment Fund Manager

As a Bermudan resident, the Company is defined as a non -- EU Alternative Investment Fund ("AIF") under the EU's Alternative Investment Fund Manager's Directive ("AIFMD"). As such, the Company and the AIFM are only subject to the AIFMD rules in a limited way - specifically in relation to marketing of the Company's shares in the EU. The Company appointed Hanseatic Asset Management LGB, 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 GBP143,517 for the year ended 31 March 2021 (for the Combined Group, year ended 31 March 2020: GBP138,214).

Custodian

The Company has engaged Banque Lombard Odier & Cie SA ("Lombard Odier") as the Company's Custodian. During the year to 31 March 2021, Lombard Odier charged GBP163,308 for the custodial service (period ended 31 March 2020: GBP78,806. Note: this was only for part of the year to 31 March 2020 as Lombard Odier was not the Custodian for Hansa Trust).

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 will not always offer shareholders the relevance and the clarity needed with regard to the performance of their Company against its investment objective. The overall assessment of the performance of the Company is given by the Chairman in his Report.

In discussions between the Board and the Portfolio Manager, returns are compared with a number of measures including the return of a government bond, using the 10 year UK Gilt Return (FTSE All Stocks Gilts Total Return Index); to the rate of inflation (real returns are important to shareholders) and with those of our peer group and 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 2021  1 year  3 years  5 years  10 years 
Share Price Total 
 Return 
Ordinary shares      54.2%     5.4%    48.8%     21.5% 
 
 'A' non--voting 
 Ordinary shares     49.3%     7.4%    50.2%     24.6% 
 

ii) Company - Total Returns

These comparisons are used to determine the effectiveness of the Investment Strategy and of the Portfolio Management. The KPIs below should also be noted.

 
    To 31 March 2021  1 year  3 years  5 years  10 years 
NAV                    34.8%    18.3%    53.4%     58.0% 
Relative comparison 
Peer group average     46.6%    29.2%    64.8%    124.8% 
 

* See below for peer group members.

iii) Discount/Premium

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

 
                     1 year   3 years   5 years  10 years 
 To 31 March 2021   average   average   average   average 
Ordinary shares 
 (%)                 (35.9)    (31.8)    (31.0)    (27.5) 
'A' non-voting 
 Ordinary shares 
 (%)                 (35.0)    (32.6)    (32.1)    (28.8) 
Peer group (%)        (8.3)     (6.5)     (6.8)     (6.7) 
AIC (%)               (6.6) 
 

Note: AIC only produces AIC average for 1 year.

During the year, the Board considered the following investment companies to be HICL's Peers (noted with their AIC Sector):

Artemis Alpha Trust (UK All Companies)

AVI Global Trust (Global)

Caledonia (Global)

Capital Gearing (Flexible)

Fidelity Special Values (UK All Companies)

Henderson Opportunities (UK All Companies)

Henderson Alternative Strategies (Flexible)

RIT Capital Partners (Flexible)

Ruffer Investment Co (Flexible)

Witan (Global)

iv) Expense ratios

 
 To 31 March 2021  1 year  3 years  5 years  10 years 
Ongoing annual 
 charges (%)          1.0      1.1      1.1       1.0 
 

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 2021, the PRIIP KID cost ratio is 2.06% 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 2021  1 year  3 years  5 years  10 years 
NAV                   34.8%    18.3%    53.4%     58.0% 
FTSE UK Gilts 
 All Stocks TR 
 Index               (5.5%)     7.7%    15.4%     59.3% 
UK CPI Inflation       0.7%     4.2%     9.2%     18.7% 
MSCI ACWI NR (GBP)    38.9%    43.0%    94.0%    179.3% 
 

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 mutual agreement. 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 believes shareholders' 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 have agreed to a nominal maximum loan of GBP30m, 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 that facility as required up to the upper limit available.

PRINCIPAL RISKS

The Board reviews the principal risks from the perspective of the long-term shareholders, the main risk being that over the long -- term (which we determine to be greater than five years) they do not make a return from their investment in the Company. The Board considers and monitors the principal risks facing the Company, including those that would threaten its business model, future returns, solvency and liquidity. The Board considers the risks the Company, and therefore shareholders, face can be divided into external and internal risks.

External risks

External risks to shareholders and their returns are those that can severely influence the investment environment within which the Company operates. These risks include anti-business government policies, protracted economic recession, declining corporate profitability, increased taxation, high unemployment and high, uncontrolled, inflation. The impact of such an environment could lead to sharp rises in interest rates and a decline in equity and bond markets. Deflation is also a source of concern in some countries, but unless deflation accelerated sharply it is not thought to be a significant impediment to growth. However, it may lead to negative interest rates which could damage the banking system's profitability and the levels of savings available for investment. At their Board meetings and at the annual Strategy meeting, the Directors and the Management consider long-term risks that concern them, including:

   --      Instability - political and economic - particularly associated with Brazil. 
   --      Economic, currency and equity declines. 

-- Societal and structural changes, regardless of source/reason but quite possibly triggered by Covid-19, that potentially impact the Company's investment strategy and its ability to generate growth over the medium to long -- term.

   --      The growth of global debt. 
   --      Abuse of fiat money creation by Central Banks. 

It should be stressed these are the external risks which most concern the Directors and the Management, not forecasts of future events. The mitigation of these risks is achieved by sensible stock and sector diversification and adherence to the Board's investment restrictions and guidelines.

Internal Risks

Internal and operational risks to shareholders and their returns are:

   --      Portfolio (stock and sector selection and concentration). 
   --      Balance sheet (gearing). 

-- Administrative mismanagement. In respect of the risks associated with administration, or changes to the current taxation environment of Bermuda.

The Board also considers the risks to the Company's two share prices, apart from those mentioned above, which includes the risk of higher discounts. The Board monitors the discount and seeks to identify the drivers and manage through transparent communication and shareholder engagement. However, given the Company's stated objective of increasing shareholder value over the long-term, the Board does not consider short -- term NAV or share price volatility to be a risk to long -- term shareholders.

Details of how the principal risks arising from financial instruments (as determined by the Financial Reporting Council) are managed, have been summarised in Note 19 of the Financial Statements.

Covid-19

The Board focuses on events that damage economies and which may, as a result, impact the Company's ability to make a return for shareholders over the medium to long-term. After the rollercoaster Markets experienced in spring 2020 as the scale of the pandemic became apparent, Covid-19 continues to disrupt economies and populations across the globe. However, the Board is of the opinion that the worst is probably behind us and is optimistic that the ongoing global vaccine rollout will help limit the future economic damage from this virus. The Board, with the Portfolio Manager, continues to focus on the likely future economic impacts as the world emerges from the pandemic and how these, in turn should influence our investment approach.

The Board is pleased to report that your Company and its service providers all were able to continue to work with minimal disruption during the various lockdowns and restrictions imposed over the last 18 months. The Board wishes to thank the team members at each of its service providers for their extra efforts to maintain their high level of service to the Company during this difficult time.

It is also worth considering some of the more structural elements of the Company and its service providers at this time of uncertainty:

-- Gearing: Whilst the Company has access to a loan facility, that facility is relatively modest compared to the Company's size and has not been used in the year to 31 March 2021. As a result, regardless of the valuation fluctuations experienced over the last 18 months, at no time was the Company in a position where it would be forced to sell assets to manage debt covenants.

-- Discount management: The Company has stated previously that, whilst it has the ability to buy back shares, it does not believe doing so is an effective, long-term, method to reduce the discount for the benefit of all shareholders. With the market sell-off and the widening of discounts across the industry, the Company's discount management policy has the benefit of not forcing the sales of assets to raise cash to adhere to a discount management mechanism by facilitating share buybacks. Additionally, the repurchase of the Company's shares would further concentrate our OWHL exposure and, therefore, our exposure to Brazilian risk.

-- Dividend: The Company announced in April its expected dividend level and schedule for the year 2021/22, which involved leaving the level and timing of dividends unchanged from the previous period. Barring unforeseen circumstances, the Board expects to continue to follow that guidance regardless of the amount of income raised from dividends received in any given period.

-- Liquidity of the portfolio: Cash requirements are monitored closely. If lower dividend income was to lead to a short-term cashflow requirement, such as for expenses or dividend payments, the Company could meet that requirement through a combination of sales of liquid assets or use of the Company's loan facility for a short time. A significant proportion of the portfolio (circa 72%) has daily or weekly liquidity rising to 88% having at least monthly liquidity. Underlying investments are largely in publicly traded investments. For the purposes of this analysis, the shares held in the Company's Strategic Holding, OWHL, are assumed to have daily liquidity. Whilst the Board would not normally use the holding in OWHL as a source of funding, if circumstances dictated that it was necessary, then the Board could do so

The Board is confident the Company is securely positioned despite the ongoing impact of Covid-19 and equipped to navigate through as the future becomes clearer.

DIVID POLICY AND DIVID 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 Company expects the dividends to grow over time reflecting the longer -- term returns of the portfolio. 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 
                                      GBP000 
Ordinary and 'A' non-voting 
 Ordinary shares 
First interim paid 0.8p (August 
 2020) per share                         960 
Second interim paid 0.8p (November 
 2020) per share                         960 
Third interim paid 0.8p (February 
 2021) per share                         960 
Fourth interim paid 0.8p (May 
 2021) per share                         960 
Total dividends                        3,840 
 

The Board is not proposing a final dividend per Ordinary and 'A' non-voting Ordinary share class.

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 has embarked on a project 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.

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. Additionally, given the unprecedented times we continue to live through, a section specifically considering Covid-19 has been added following the risk analysis.

After due consideration of the Balance Sheet, including the ongoing global impact of Covid-19 activities of the Company, estimated liabilities for the 12 months following the signing of this Report and having made appropriate enquiries, the Directors have concluded the Company has adequate resources to continue in operational existence for the foreseeable future. Assets of the Company consist of securities, the majority of which are traded on recognised stock exchanges, or open ended funds run by established managers. For this reason, they continue to adopt the going concern basis in preparing the Financial Statements.

Longer-Term Viability Statement

In addition to the Statement of Going Concern, the Directors are also required to make a statement concerning the longer -- term viability of the Company. As stated previously in the wider Strategic Report, the Directors consider 12 months to be a relatively short time frame when considering performance and look to the longer -- term for both the performance and risks associated with the Company. The Directors consider a period of five years to be a more representative period which aligns to the Portfolio Manager's longer-term horizon. This period is sufficiently long to manage short-term market volatility and allow longer-term performance to work through. The Board continually monitors the Investment Strategy and Investment Guidelines issued to the Portfolio Manager and directs the Portfolio Manager to target long-term capital preservation. Further, whilst the Board has sanctioned the use of gearing, the facility available to the Portfolio Manager is relatively small compared to the NAV of the Company. Finally, a number of the more significant costs in each financial year are contracted to be calculated, on the basis of the underlying NAV of the Company. As such, in a period of negative portfolio performance, the cost base should also fall.

Barring unforeseen circumstances and taking account of the Company's current position including the effects over the previous 18 months 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. Whilst there is still uncertainty relating to Covid-19, there will be new opportunities arising from changes to people's lives and it is important we identify those emerging trends for the long-term growth of the portfolio.

Portfolio Manager's Report

Market Commentary

This time last year markets had just experienced a sudden collapse, as the global nature of the pandemic and the drastic impact of the lockdowns enacted by governments to combat it were becoming clear to investors. There was much uncertainty in the air and few were predicting the strength of the subsequent rebound that we have seen in markets. However, during the 12 months since then, global equities have gained 38.9% and hedge funds are up 20.2%, while global treasuries have fallen 8.3%. (Sources: MSCI ACWI + Frontier Markets, HFRI Fund Weighted Composite and Bloomberg Barclays Global Treasury TR Unhedged GBP.)

In March 2020 stock markets sat at a fork in the road. Conventionally, when the economy experiences a downturn at the end of a cycle it takes many months, if not years, to purge the system of the excesses that have built up and for the credit and interest rate cycles to normalise and the slow rebuilding process to begin. This downturn and the speed of the subsequent recovery were very different. Firstly, it was catalysed by governments locking down economies to stymie the spread of the disease. It wasn't, as is normally the case, caused by either structural imbalances or a more conventional cyclical downturn. Companies and sectors just ceased to trade or traded at much lower levels. This meant that as economies exited the lockdown period many companies and sectors were either able to return, or expected to ultimately return, to something like normality quite rapidly. Clearly certain parts of the economy would be more impaired than others, but on the whole markets were of the view that many companies would return to something like their pre -- Covid-19 levels within a relatively short period of time.

The second factor driving the rebound were the actions taken by governments and central banks. With the Global Financial Crisis fresh in their minds, central banks and, to a lesser extent, governments had a playbook as to how to deal with periods of distress and dislocation. Initially they threw copious amounts of liquidity at markets, in the form of lower interest rates and either restarting or increasing quantitative easing programmes. Governments also stepped up to the plate through massive fiscal packages which reached levels last seen post the Second World War. Most importantly they introduced measures to shore up the corporate credit sector. Recognising the systemic risks posed by widespread corporate defaults, policymakers instigated a number of packages which sought to underpin corporate balance sheets. Measures such as furlough schemes to help employment, loan programmes and extensions on debt repayments all helped mitigate the risk of widespread corporate collapse.

Finally, the composition of the stock market aided the rebound. The current cycle has been dominated by the rise of big tech. Through a fortuitous blend of different technologies, such as the internet, computing power, mobile communications and cloud storage, coming together at the same time we have seen the advent of new industries such as social media, but also old industries being disrupted by new technologies, especially in the retail and banking arena. To a greater or lesser extent all companies and sectors are undergoing a period of change. As a result, the technology sector has surged from 19% of the S&P 500 in 2010 to 30% at the beginning of 2020 (based on the same companies).

Whilst in a conventional cycle one would normally expect those sectors which drove the market up to lead it down again (as the inevitable excesses are cleansed from the system, valuations hitting bubble territory and too much capital being injected into the sector in question) this cycle was again unique. Rather than being the catalyst for collapse, the government lockdowns accelerated many of the trends seen in the technology sector with adoption rates soaring. With large swathes of the population working from home we saw a boom in online shopping, a surge in social media and, in the corporate world, we swapped face-to-face meetings and travel for Zoom to remain connected. As a result, the tech sector actually increased in value with the FANMAGs (Facebook, Amazon, Netflix, Microsoft, Apple and Google) alone now accounting for some 27% of the S&P 500 Index. Capping the year off, Tesla entered the S&P 500 with a market capitalisation that exceed

Hence, whilst in conventional cycles rapid recoveries are rare, this cycle was unique in that it was able to rebound almost overnight in what genuinely looked like a V-shaped recovery. From their lows at the end of March, markets rose in a straight line as the factors highlighted above came together to enable markets to climb a wall of fear such that, by the end of October, markets were flat for the year despite most countries being far from out of the woods as far as Covid-19 was concerned.

The last couple of months of 2020 looked more precarious, with many believing markets had risen too far too fast, combined with some looming event risks. The first risk faced by markets was the long-awaited US election. Whilst there were a multitude of potential outcomes investors seemed most concerned that either the result was inconclusive and that deciding the winner would require a long, drawn-out legal battle, or that the Democrats would achieve a landslide victory and feel emboldened to enact some of the more left-leaning policies, including the breakup of the technology sector and higher taxation. In the event whilst President Trump disputed the result the outcome was seen as being something of a goldilocks scenario for markets with Joe Biden, the newly elected president, seen as a more stable actor on the global stage, but equally the modest scale of the win making some of the more extreme policy measures less likely.

The other event concerning markets was a further round of lockdowns, with cases of Covid-19 accelerating again as economies exited the first lockdown and the traditional winter flu season arrived. Many, including us if we're honest, had thought governments would be extremely reticent about locking down their economies again given the already substantial impact of the first lockdown. This raised the spectre of a double dip recession which would likely weigh heavily on markets given the extent of their rebound post the first lockdown. The news on vaccines, however, trumped these fears. In what is one of the greatest triumphs for the ingenuity of mankind and a vindication of the biotechnology sector, we have seen not just one but a host of working vaccines which exceeded even the most optimistic expectations in terms of efficacy and safety. With the prospect of a widespread roll-out of the vaccines, markets were able to look through the impact of the lockdowns. The first three months of 2021 have seen the roll-out proceed at an impressive pace in several countries, most notably the US and UK, and the early signs from these countries regarding case numbers and hospital admissions have been encouraging.

As a result of the strength of the recovery, stock markets have experienced remarkably robust performance across the board over the past year. We have seen rises of 38.9%, 42.5% and 29.0% for the MSCI World, MSCI North America and MSCI China indices, respectively. Europe and the UK, up 30.2% and 20.0%, respectively, have lagged the US. Emerging markets have had a relatively strong period, rising by 42.3%, but frontier markets have been noticeably weaker with a gain of 25.1%. At the sector level, the rotation away from growth stocks and towards more value areas of the market that we have seen in the last few months has not been strong enough to stop technology being one of the strongest areas of the market over the last year, with the MSCI ACWI Information Technology Index being up 54.3% for the year. Consumer discretionary and materials have been even stronger than tech over this period, up nearly 60%, while consumer staples, utilities and real estate have been much weaker with returns of between 10% and 17%.

Bond markets have had a difficult year. After holding their value, and even making some gains in the early part of the recovery, global treasuries began to sell off in the autumn as yields climbed higher. This process has continued in the early part of 2021, with the US 10-year yield almost doubling in three months as it reached 1.74% at the end of March. The Global Treasury Index has produced a negative return of -8.3% over the last year, while the FTSE Gilts All Stocks Index has returned -5.5%. Credit markets, however, performed much better as the health of corporates improved and the prospect of widespread defaults reduced. Over the year investment grade debt rose by 0.4% and high yield by 12.6%.

The commodity markets have seen contrasting fortunes. Gold's defensive attributes, which came to the fore in the depths of the crisis last year, have since held it back, and metal has declined by 3.7% over the year. In sharp contrast, oil, which had collapsed as demand went away has staged a recovery with the prices of both Brent and WTI up about 160% over the year. In a similar way, the copper price is 58.7% higher than it was 12 months ago.

Finally, in the alternatives space, while hedge fund returns were more muted than equities, they have nonetheless provided strong returns over the last year, with the HFRI Composite Index gaining 20.5%.

Positioning & Outlook

Having remained resolutely pro-equities throughout the current cycle, we had entered 2020 feeling modestly optimistic on the prospects for markets in the year ahead. Whilst we didn't see them replicating 2019's strong returns, we equally thought the drivers that had prevailed throughout the cycle (which we'll come to shortly) remained in place. Clearly this didn't look particularly clever in the March trough, but we kept a level head, didn't capitulate and retained our positioning based on a belief that the actions of central banks and governments in injecting additional liquidity into markets were extremely supportive of asset prices and that whilst it would take some time for economies to recover to their pre-Covid-19 levels, the trough in economies probably occurred in March or April 2020. Together with our long-term positive view this suggested sitting tight was the appropriate course of action. Ultimately this proved to be the correct decision which, combined with our significant positions in technology and biotechnology, resulted in a very favourable outcome for the year.

The year ahead is looking more nuanced. In contrast to our more positive view on markets for much of the current cycle, many other commentators have typically had a more negative skew, with our optimistic stance feeling quite lonely at points! Interestingly, more recently the consensus seems to have moved much closer to our position which makes the contrarian in us a little more wary.

So what are the arguments looking ahead?

Well, in many ways they haven't really changed much. The current cycle has not been about robust growth but rather a liquidity driven cycle. Time and again central banks have thrown liquidity at markets to resolve potential problems. This has fed into risk assets in two key ways. Firstly, the process of pushing interest rates and bond yields down has forced investors to move up the risk spectrum in pursuit of returns. With near zero or even negative yields throughout many of the developed world bond markets there really was no alternative but for investors to seek solace in equities. More recently bond yields have risen but equities still look reasonably attractive on a relative basis. The second driver is the deployment of the excess capital. Like water in a plumbing system, capital flowing around the financial markets needs to find a home and clearly in this cycle it has been one of driving asset prices higher. Whilst the marginal impact of this liquidity on the real economy seems to be diminishing, its impact on asset levels shows no signs of abating.

Hence with liquidity now being boosted, not only by central bank measures but also by government fiscal packages, stock markets look to be underpinned, at least in the short--term

2021 should also benefit from an improving economic outlook. Assuming there is a significant vaccine roll-out, economic growth should improve dramatically on last year. Whilst something of an optical illusion, with even a modest rebound producing a substantial uplift in growth given the low base level, stock markets typically react well to meaningful uplifts in growth. In turn this economic growth should feed through to an improving picture for company earnings, that whilst varying from country to country is likely to be positive and synchronised.

This growth does however potentially create a very different intra-market dynamic. As discussed above, one of the features of the current cycle has been the outperformance of growth stocks over value due to the dearth of growth on offer. If we do see a rebound in economic growth in 2021 then it is possible cyclical stocks will outperform as they can deliver this growth at cheaper valuations. We have already seen the beginnings of this shift, with value stocks outperforming growth stocks in recent months. The key question though is whether this is the beginning of a multi-year shift into value, or just a temporary phenomenon as markets normalise from last year? At this point the jury is firmly out albeit we acknowledge that some broadening of portfolios in the current year is probably sensible.

At the country level, any rotation towards value will likely lead to a shift out of US and Chinese equities and into some of the other more cyclical markets. Europe and the EMs in particular would be beneficiaries of such a shift, with their economies dominated by older, more cyclical industries with relatively little exposure to tech. With the US dollar weakening, this further strengthens the investment case for EMs which typically prosper in such a backdrop.

The flip side to such a shift is likely be a move out of government bonds. Whilst we expect liquidity to remain plentiful and interest rates low, it seems likely that we have reached peak liquidity and rates are unlikely to move lower in the next year as we start the exit process from the challenges faced in 2020. Combined with an improving growth picture the outlook for bonds looks relatively unattractive in the coming months.

In contrast commodities look to be better placed being more pro-cyclical in nature, albeit there are long-term structural issues as the world shifts towards renewables over the longer -- term.

Risks

The risks to this broadly constructive outlook can be categorised into shorter-term factors and longer-term, more structural, challenges.

Starting with the short-term factors, most worrying would be anything that derails the expected rebound in economic growth. Whether it be delays in the vaccine roll-out programme or, worse, that vaccines are found to be ineffective in treating certain strains of the virus. These outcomes would be extremely damaging to sentiment, given the already considerable growth expectations built into asset prices.

Much more material however are the longer-term structural risks. The current cycle has been driven by a cocktail of low interest rates, muted inflation and abundant liquidity. Anything that changes this mix would have significant implications for markets and market constituents. It is possible that the foundations are being laid for just such a scenario. In recent times the accepted wisdom has been one of central banks targeting low, stable inflation and governments viewing fiscal policy as being of limited use, especially when debt levels are high. 2020 saw significant shifts on both fronts. Central banks appear to be shifting to a policy of inflation targeting through cycles, viewing higher inflation as a price worth paying in the pursuit of higher growth and lower unemployment. Similarly, governments have shifted from their stance of largely ignoring fiscal policy to one of injecting more fiscal stimulus into the system, despite the fact that debt levels are already high by historical standards. Whilst central banks and governments have arguably had little choice given the unprecedented challenges faced by the global economy over the past year, it is possible we are at the beginning of a multi-year structural shift which may ultimately lead to the end of the current cycle and the dominant trends within it. At this stage it's probably too early to say this with any conviction but certainly it is something that is high on our radar.

Perhaps the biggest contrarian risk however is that markets gap up. Whilst the natural focus of market commentators is to look at those factors which might derail the current cycle, it is possible that the bigger risk to many investors is that markets make a leg up with cash levels still high. As is often the case at the end of cycles, stock markets do not typically peter out, but instead explode in a froth of irrational exuberance as retail investors jump on the bandwagon and the fear of missing out becomes overwhelming. We're perhaps seeing some tentative signs of this with, for example, record numbers of SPACs being launched and names such as Tesla rising exponentially, but not yet to a degree where we feel the need to step back from markets.

Conclusion

Just when you think you have seen it all, markets have an uncanny knack of doing something to prove you wrong (and they certainly delivered on this front in 2020!). Whilst clearly not yet out of the woods, especially as we sit here writing these comments in a lockdown of sorts, 2021 is looking more optimistic as the vaccine roll-out programme continues in earnest. The blend of better growth together with still abundant liquidity should serve to underpin risk assets and, as a result, we see little reason to deviate from our positive stance on equities and more cautious view on bonds. As articulated above there are clearly risks to this scenario and, not least, the amount of good news already baked into markets, which will undoubtedly make them vulnerable to any disappointments.

The bigger challenge in our mind however is the intra-market movements and the degree to which stock markets pivot away from growth, technology and the US and towards some of the more cyclical names and markets as the year progresses. As discussed above there are compelling arguments for this to happen, given the cheaper valuations on offer in these more cyclical markets and we will look to make some modest shifts in this direction, but at this stage we would view it as more of a trade than a longer-term trend. For this to become a long -- term theme we would need to see structural changes on the interest rate, inflation and liquidity front. Watch this space.

Portfolio Review and Activity

During what was a very strong 12 months for equity markets, your Company produced an NAV total return of 34.8% for the financial year (year to 31 March 2020: -16.9%), after a 2.2% rise in the final quarter. The key performance indicators for the year were 38.9% for the MSCI ACWI NR Index (in Sterling) (year to 31 March 2020: -7.0%), -5.5% for the FTSE UK Gilts All Stocks TR Index (year to 31 March 2020: 9.9%) and 0.7% for UK CPI Index (year to 31 March 2020: 1.5%). The UK equity market, as measured by the FTSE All Share TR Index, rose 26.7%. Ocean Wilsons Holdings has been a strong contributor to performance for the year, although it was more muted in the final quarter. The Company's NAV increased from 230.2p per share at the end of March 2020 and 300.9p per share at the end of December 2020 to 306.6p per share at the end of March 2021.

Core and Thematic Funds

The Core Regional silo finished off the year with an increase of 1.1% in the quarter, while the Thematic silo was a little stronger with a gain of 4.4%. Both have been strong over the financial year with the Core Regional silo gaining 37.1% and the Thematic silo a very impressive 63.5%.

The North American holdings have been an important driver of performance in the Core Regional silo this year, as the US market has led most other developed markets. This was again true this quarter, despite some signs of a rotation away from its dominant technology sector early in the quarter. Vulcan Value Equity and Select Equity were up 5.8% and 5.3%, respectively, during the quarter, taking their returns for the year to 49.9% and 44.2%, which were both ahead of the North America index. Pershing Square Holdings had an extremely good year thanks to the deft reinvestment of proceeds from some lucrative protective CDS trades around the time that markets began to turn. The holding was up an impressive 77.7% over the year, but only up 0.9% for the quarter. Findlay Park American Fund has been slightly weaker than the other holdings, rising 3.3% in the quarter and 29.8% over the year, partly owing to being underweight technology and having a higher cash weighting which has been a drag on performance. However, the cash allocation has been reducing during the past year, reflecting the managers' confidence in the ability of their portfolio companies to deliver strong earnings growth in 2021 and it is now at 5.3%, close to its lowest level for a decade.

While the European holdings have produced positive returns over the year, they struggled more in the last quarter, with Adelphi European Select declining 7.7% and BlackRock Strategic Equity Hedge Fund (the new name for BlackRock European Hedge Fund) falling 3.6%. These two funds have risen 24.9% and 24.4%, respectively over the year, while the Vanguard FTSE Developed Europe ex UK tracker fund is up 33.8%. The Adelphi fund's recent weaker performance has been driven by some underperformance of stocks in the consumer discretionary and technology sectors, such as The Hut Group, Just Eat Takeaway and TeamViewer, as some of the stocks that are perceived to have benefited from lockdown have been punished. However, some of the fund's recent purchases, such as AUTO1 Group and Dr Martens, both acquired at IPO, were strong contributors during the quarter.

The emerging market holdings have had a good year, despite a slow start to their recovery after the market falls in early 2020. Asia has been particularly strong and Schroder Asian Total Return and NTAsian Discovery Fund have contributed well with gains of 53.5% and 63.2%, respectively over the year and 3.5% and 7.0% over the quarter. The Schroder fund's 32% exposure to information technology has benefited it this year, with large holdings such as TSMC and Samsung Electronics delivering strong gains. NTAsian has seen strong returns across its portfolio, but several of its Vietnam holdings have made notable gains as the country seems to have made a smooth political transition. The shares of Mobile World, a mobile retailer, FPT, an IT conglomerate and Military Commercial, a bank, have all more than doubled in price this past year. Elsewhere, Prince Street DigDec Fund has had an extremely strong year (up 88.6%) thanks to its focus on companies benefiting from the digital transition.

GAM Star Disruptive Growth gained 4.1% in the quarter to give it a 74.8% return over the year, as it benefited from strength in the technology sector, as well as from owning companies in other sectors, such as Walt Disney and Boohoo, which are experiencing strong growth. Healthcare holdings also performed well over the year and during the quarter, as RA Capital International Healthcare and BB Biotech gained 8.7% and 5.8%, respectively, taking them to 32.3% and 48.7% returns for the year. Impax Environmental Markets Fund gained 3.8% in the quarter and 64.8% over the year, as several of its holdings involved in improving power network and energy efficiency, such as Generac and PTC, performed very strongly.

Diversifying Funds

The Diversifying silo produced a return of 1.9% over the quarter, taking its return over the financial year to 8.6%. The holdings in this silo are designed to dampen volatility and show lower correlation to the equity market.

Both macro funds have produced positive returns over the year, with Hudson Bay being particularly strong, up 22.8%, while MKP Opportunity Fund gained 4.5%. Over the quarter the funds were up 9.0% and 2.1%, respectively. Global Event Partners made a pleasing recovery from its losses early in 2020 by returning 35.7% over the financial year and 4.6% in the last quarter.

The two trend-following CTA funds both made gains this quarter, with the GAM Systematic Core Macro fund rising 7.2% while Schroder GAIA BlueTrend was up 1.3%. Over the past year these funds have risen 3.6% and 3.1%, respectively. The BlueTrend fund proved its defensive worth in the early part of 2020, but has struggled slightly for direction since, although its positive return over the year is a reasonable result.

CZ Absolute Alpha , a UK equity market-neutral fund, had a difficult first half of the year as a result of its long bias to value stocks, but has since improved its performance and it made a muted gain of 1.4% this quarter to take it a 14.0% return over the year. Much of its gain came in the third quarter when its largest individual position, RSA, was the subject of a takeover approach. More recently it has benefited from positive moves in the banking sector and from its holding in International Airlines Group, an obvious beneficiary of reopening, which has more than doubled in price since November, as well as from a short position in the industrial sector.

Keynes Systematic Absolute Return Fund and Apollo Total Return Fund have both produced solid returns for the year, rising by 10.4% and 14.0%, respectively. Selwood Liquid Credit Strategy has been more muted, with a 0.3% rise over the quarter bringing it to a 1.8% return for the year, while Vanguard US Government Bond Index Fund has been a victim of rising yields and its 4.1% fall over the quarter led it to be down 4.7% over the year.

Global Equities

The portfolio was up 48.8% over the course of the year, with the biggest positive contributors being Samsung, Iridium and Nexon. The biggest detractors were ViaSat, Orange and Hyve Group.

It has been an interesting 12 months for the Direct Equity silo to say the least. In our last Annual Report, we broke the group down into three buckets with respect to how we saw the pandemic affecting them: Beneficiaries, Long-term Unaffected and Threatened. We were broadly correct in our assessment as the Beneficiaries (Interactive Brokers, Hilton Food, Nexon and Dollar General) grew revenues 26% on average, the Long-term Unaffected (majority of the Global Equities Silo) saw a 10% revenue decline and the Threatened (Hyve, C&C and TripAdvisor) saw revenues fall 52%. Counterintuitively the returns have been the exact opposite over the past 12 months, starting at close to the lows, with the holdings in the Threatened bucket the best performing and the Beneficiaries the worst as the markets began pricing in a potential recovery.

Over the course of the year we rotated the portfolio as we sold out of White Mountains, Orange, Hyve and Howard Hughes, as well as reducing the Covid-19 beneficiaries to fund new positions. These were businesses we felt would be in a stronger position post-Covid-19 but which experienced short -- term headwinds. We used the proceeds to purchase Grupo Catalana Occidente, Coats, Arch Capital, Marel, Viasat and CTT - Correios De Portugal.

The turnover of holdings was much higher than we would normally expect in any given period, but it was an exceptional year and the market offered us some exciting opportunities to upgrade the portfolio's long-term return potential. The new positions share the familiar characteristic we look for of either being owner operated or having a strong founder mentality with four of the six additions run by the founders or the founding family, while the other two, having been founded in the 16th and 18th centuries have proven they have a culture that can stand the test of time.

The importance we place on owner-operator management teams only increases in times of crises like last year. They can look beyond the immediate short-term threats and invest for the long-term, where our time horizons are aligned. As an example, Marel was able to improve its competitive position with the excellent acquisition of TREIF and had the presence of mind to buy back shares at an attractive valuation. CK Hutchison took advantage of the high valuations available in the telecom tower sector to sell their towers for a fantastic price and use that money to buy back its undervalued stock. It was a busy year for Exor who walked away from the sale of PartnerRE when the acquiror tried to lower the price. They also successfully concluded the merger of Fiat and Peugeot to create Stellantis, which was no mean feat with so many interested stakeholders. The management also found the time to acquire the Chinese Luxury brand Shang Xia and buy 25% of Christian Louboutin. There are rumours they are looking to add Giorgio Armani to their portfolio of luxury brands which are anchored around the crown jewel, Ferrari. If this was not enough, they have deployed $250m of venture capital investment since they formed EXOR Seeds in 2017, the majority of which was invested in the past 12 months.

When we wrote to you a year ago, we attempted to express how excited we were about the future returns because the portfolio was trading close to 50% of its intrinsic value. Today the portfolio is at 73% of intrinsic value yet we are even more excited because the businesses we own are in a better position than they were pre-Covid-19. Whether that be through value accretive M&A or because the business is now much bigger, such as Interactive Brokers, who have managed to almost double their accounts and client equity over the past 12 months, or TripAdvisor who may have finally found a way of monetising their 400m+ user base through a subscription service. We believe the portfolio is very well -- positioned to benefit as our businesses grow and the market begins to understand the investments they have been making and their improved competitive positions.

During the quarter we began building positions in ViaSat and CTT and added to both Orion Engineered Carbons and Subsea 7. We trimmed our positions in Nexon and Iridium as they approached our measure of intrinsic value.

Ocean Wilsons Holdings

Although Brazil has suffered badly during the Covid-19 pandemic and with the situation sadly not yet showing significant improvement, Wilson Sons has been able to continue to provide port and maritime logistics services throughout the crisis. Although the business had been affected by weaker demand at its ports and in its oil services division, the company has been able to post robust results. There have also been some positive developments in the last year which should be supportive for the company's future. The Rio Grande terminal was certified in October 2020 with a 15-metre draft for its navigation channel, allowing the terminal to receive larger super-post-Panamax vessels, which will help to strengthen its position as a principal hub port in the southern region of Brazil. Maritime reforms passed by Congress in December 2020 are also hoped to stimulate container volumes in the group's ports by encouraging the transport of cargo by water between domestic ports. More recently the oil price has made a substantial recovery and while it is expected this will take some time to filter down to demand in the oil services division, the business is well -- positioned to profit from an expected recovery in the industry.

The results for Wilson Sons for the fourth quarter of 2020 were released during the period. They showed earnings (EBITDA) of $30.7m, 23.7% higher than the prior year. For the year as a whole EBITDA was roughly flat in dollar terms at $141.6m, which was a sign of the company's resilience despite the pandemic. During this time there has been a significant weakening of the Brazilian Real and in the local currency EBITDA for the year was 31.9% higher than the previous year.

Container terminal results were impacted by lower import volumes in the fourth quarter of 2020 as business confidence and Brazilian economic indicators remained soft. However, transhipment volumes were up at both terminals over the course of the year and this is likely to further improve at Rio Grande, as a result of its navigation channel's new deeper draft.

The towage division reported good results, with revenues up 10.8% over the quarter, while the full year results to December 2020 showed revenues 8.8% higher and EBITDA 12.1% higher than the previous year. There was an improved revenue mix and higher volumes and the average deadweight of vessels attended was 15.7% higher in the quarter, reflecting higher volumes in ports that operate larger ships. The division's ability to attend these larger ships will be further boosted over the coming three years by the construction of six new 80-tonne tugboats that will be delivered by the shipyard.

With global equity markets continuing their recovery, the investment portfolio and cash under management increased by $28.5m over the three months to the end of December 2020, to sit at $310.3m. The portfolio continues to be biased towards equities, both public and private, reflecting its long -- term nature, but also includes some assets which display lower correlation to equity markets.

After the strength of the previous quarter, the final quarter of the financial year was more muted for the Ocean Wilsons Holdings share price, with an increase of just 1.2%. Over the previous 12 months, however, the return has been 38.7%, taking account of the two dividends paid to the Company in June and November. The Ocean Wilsons Holdings share price represents a discount to the look-through NAV of 34.3%, based on the market value of the Wilson Sons shares, together with the latest valuation of the investment portfolio. As mentioned in Jonathan Davie's Chairman's Report to the Shareholders, Wilson Sons has proposed a corporate restructuring which would result in Wilson Sons moving from being a Bermudan based parent company to being a Brazilian domiciled entity. Whilst the restructuring does not immediately change the current ownership of Wilson Sons, it is expected that it will increase stock liquidity and promote a wider share ownership especially amongst Brazilians, including several institutional investors in Brazil currently restricted from investing because of its non-Brazilian domicile. The initial view by the market appears to have been favourable.

Alec Letchfield

May 2021

Portfolio Statement

 
                                             Fair value  Percentage of 
Investments                                      GBP000     Net Assets 
Core Regional Funds 
Findlay Park American Fund                       25,474            6.9 
Vulcan Value Equity Fund                         20,153            5.5 
Select Equity Offshore Ltd                       18,645            5.1 
BlackRock Strategic Hedge Fund                   13,696            3.7 
Schroder ISF Asian Total Return                  12,422            3.4 
Adelphi European Select Equity Fund              11,937            3.2 
Goodhart Partners: Hanjo Fund                    11,712            3.2 
Pershing Square Holdings Ltd                      8,497            2.3 
Indus Japan Long-Only Fund                        7,330            2.0 
Prince Street Institutional Offshore 
 Ltd                                              6,833            1.8 
Egerton Long-Short Fund Ltd                       6,201            1.7 
Vanguard FTSE Developed Europe ex UK 
 Equity Index Fund                                4,304            1.2 
Ishares Core EM IMI UCITS ETF                     4,298            1.2 
BlackRock Frontiers Investment Trust 
 PLC                                              3,284            0.9 
NTAsian Discovery Fund                            3,127            0.8 
                  Total Core Regional Funds     157,913           42.9 
Strategic 
Wilson Sons (through the holding in 
 Ocean Wilsons Holdings) *                       38,653           10.5 
Ocean Wilsons Investments Limited (through 
 the holding in Ocean Wilsons Holdings) 
 *                                               39,910           10.9 
Total Strategic                                  78,563           21.4 
Global Equities 
Exor NV                                           4,717            1.3 
Interactive Brokers Group Inc                     4,113            1.1 
Samsung Electronics Co Ltd                        3,553            1.0 
CK Hutchison                                      3,084            0.8 
Grupo Catalana Occidente SA                       2,747            0.7 
Orion Engineered Carbons SA                       2,659            0.7 
Nexon Co. Ltd                                     2,598            0.7 
Subsea 7                                          2,333            0.6 
Arch Capital Group Ltd                            2,085            0.6 
TripAdvisor Inc                                   2,066            0.6 
Iridium Communications Inc                        1,884            0.5 
Marel                                             1,871            0.5 
Dollar General                                    1,769            0.5 
Alphabet Inc                                      1,719            0.5 
CVS Health Corp                                   1,690            0.5 
Berkshire Hathaway Inc                            1,611            0.4 
Hilton Food Group PLC                             1,450            0.4 
C&C Group PLC                                     1,150            0.3 
Coats Group PLC                                     994            0.3 
Viaset Inc                                          800            0.2 
CTT-Correios de Portugal                            718            0.2 
                      Total Global Equities      45,611           12.4 
Diversifying 
Global Event Partners Ltd                        10,253            2.8 
DV4 Ltd **                                        8,055            2.2 
Hudson Bay International Fund Ltd                 4,729            1.3 
MKP Opportunity Offshore Ltd                      3,052            0.8 
Vanguard US Govt Bond Index Fund                  2,845            0.8 
Selwood AM - Liquid Credit Strategy               2,533            0.7 
Keynes Systematic Absolute Return Fund            2,447            0.7 
Apollo Total Return Fund                          2,386            0.6 
CZ Absolute Alpha UCITS Fund                      1,389            0.4 
BioPharma Credit PLC                              1,290            0.3 
GAM Systematic Core Macro (Cayman) 
 Fund                                             1,059            0.3 
Schroder GAIA BlueTrend                             869            0.2 
                         Total Diversifying      40,907           11.1 
Thematic Assets 
GAM Star Fund PLC - Disruptive Growth            25,108            6.8 
Impax Environment Markets Fund                    4,630            1.3 
BB Biotech AG                                     4,009            1.1 
RA Capital International Healthcare 
 Fund                                             3,211            0.9 
SPDR MSCI World Financials UCITS ETF              2,962            0.8 
Worldwide Healthcare Trust PLC                    2,354            0.6 
Total Thematic                                   42,274           11.5 
Total Investments                               365,268           99.3 
Net Current Liabilities                           (557)          (0.2) 
Non-Current Assets                                3,179            0.9 
Net Assets                                      367,890          100.0 
 

Note:

* Hansa Investment Company Limited 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 2020 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 2021.

** DV4 Ltd is an unlisted Private Equity holding. As such, its value is estimated as a Level 3 Asset in Note 20. All other valuations are either derived from information supplied by listed sources or from pricing information supplied by third party fund managers.

Shareholder Profile and Engagement

Capital Structure

The Company has 40,000,000 Ordinary shares of 1p (1/3 of the total capital) and 80,000,000 'A' non-voting Ordinary shares of 1p (2/3 of the total capital) each in issue. The Ordinary shareholders are entitled to one vote per Ordinary share held. The 'A' non-voting Ordinary shares do not entitle the holders to vote or receive notice of meetings, but in all other respects they have the same rights as the Company's Ordinary shares.

Shareholder Profile

The Company's shares owned at 31 March 2021 are as follows:

 
                                          'A' non--voting 
                        Ordinary                 Ordinary 
                          shares                   shares 
Institutional 
 & Wealth 
 Managers             16,146,698  40.37%       72,363,747  90.45% 
Directors             11,220,745  28.05%        3,693,223   4.62% 
Private Individuals   12,568,864  31.42%        2,812,406   3.52% 
Other                     63,693   0.16%        1,130,624   1.41% 
                      40,000,000               80,000,000 
 

Substantial Shareholders

As at 31 March 2021, the Directors were aware of the interests (opposite) in the Ordinary shares of the Company, which exceeded 3% of the voting issued share capital of that class.

The following information is disclosed in accordance with the DTR 7.2.6 of the FCA Disclosure Guidance and Transparency Rules.

The Company's capital structure and voting rights are summarised above and in Note 14.

The giving of powers to issue or buy back the Company's shares requires an appropriate resolution to be passed by shareholders. Proposals for the renewal of the Board's powers to buy back shares are set out in the Notice of the Annual General Meeting.

There are: no restrictions concerning the transfer of securities in the Company; no special rights with regard to control attached to securities; no agreements between holders of securities regarding their transfer known to the Company; no agreements which the Company is party to that affect its control following a takeover bid; and no agreements between the Company and its Directors concerning compensation for loss of office. Notwithstanding the foregoing, the Company may require any holder of shares to transfer some or all of its shares (or otherwise refuse to register any transfer of shares) to avoid the Company, if the Company were a company which was resident for tax purposes in the UK, being regarded as a "close company" as defined in s.414 of the UK Income and Corporation Taxes Act 1988, to another person whose holding of such shares, in the sole and conclusive determination of the Board, would not cause the Company to be a close company. Additionally, the Company's Bye -- Laws provide for the voting rights of Ordinary shares to be automatically reallocated to other shareholders to prevent the Company becoming a close company. The reallocation mechanism operates where a transfer of shares or other change in the interests of holders of shares occurs and would cause the Company to become a close company. In these circumstances, the voting rights attaching to the affected shares are reallocated by enhancing the voting rights of the smallest registered shareholders on a temporary basis pending the operation of the compulsory transfer provisions referred to above.

 
                                    No. of 
                                    voting  % of voting 
                                    shares       shares 
Nomolas Ltd                     10,347,125        25.9% 
Victualia Limited Partnership   10,347,125        25.9% 
 

These holdings are correct as of 31 March 2021 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 22 June 2021, the date of signing of the Year-End Financial Statements, there have been no disclosures to the Company of changes of interests under DTR 5.

BOARD AND MANAGEMENT SHAREHOLDINGS

Directors and Directors' Interests

The present members of the Board are shown above in the report.

The Board's policy is that all Directors retire annually. All Directors being eligible, at the forthcoming Annual General Meeting, will retire and seek re-election in accordance with the Board's policy. The contracts of employment between the Company and each of the Directors do not allow for any compensation payment in the event of loss of office.

The interests of Directors and their connected parties in the Company at 31 March 2021 are shown below:

 
                                         'A' non--voting 
                     Ordinary shares     Ordinary shares        Nature 
                          of 1p each          of 1p each   of interest 
                        2021       %         2021      % 
W Salomon         11,169,345  27.92%    3,463,223  4.33%    Beneficial 
J Davie               45,000   0.11%      230,000  0.29%    Beneficial 
S Heidempergher        6,400   0.02%            0  0.00%    Beneficial 
Total             11,220,745  28.05%    3,693,223  4.62% 
 

As at 22 June 2021, 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 GBP2,621,000 (including Portfolio Management and AASP functions). The fees outstanding at the year end amounted to GBP245,958. 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 22 June 2021, the date of signing of this Year-End Report, the management and staff of the Portfolio Manager's group, excluding the holding of William Salomon, shown above, were interested in approximately 10.3m shares in the Company - a mixture of Ordinary and 'A' non-voting Ordinary shares.

Notice Period for General Meetings

The Company's Bye--Laws permit the Company's general meetings (other than AGMs) may be held on 14 days' notice.

ANNUAL GENERAL MEETING

The Company's Notice of Annual General Meeting is included in this Report.

Authority to repurchase 'A' non-voting Ordinary shares

A resolution will be proposed at the forthcoming AGM, seeking shareholder approval for the renewal of the authority for the Company to repurchase its own 'A' non-voting Ordinary shares. The Board believes the ability of the Company to repurchase its own 'A' non-voting Ordinary shares in the market could potentially benefit all equity shareholders of the Company in the long-term. The repurchase of 'A' non-voting Ordinary shares at a discount to the underlying NAV would enhance the NAV per share of the remaining equity shares.

The Company's Bye-Laws are drafted in such a way that the Company may from time to time purchase and cancel its own shares. However, the Company requires that shareholders' approval to repurchase shares be sought. At the AGM the Company will therefore seek the authority to purchase up to 11,992,000 'A' non-voting Ordinary shares (representing 14.99% of the Company's issued 'A' non-voting Ordinary share capital, the maximum permitted under the FCA Listing Rules), at a price not less than 1p per share (the nominal value of each share) and not more than 5% above the average of the middle-market quotations for the five business days preceding the day of purchase or, where a series of transactions have taken place the higher of the last independent trade and current highest independent bid on the trading venue where the purchase(s) will be carried out. The authority being sought, the full text of which can be found in the Notice of Meeting, will last until the date of the next AGM.

The Company is seeking authority to use its realised capital reserve to allow repurchase of shares in the market. The decision as to whether the Company repurchases any shares will be at the absolute discretion of the Board. Any shares purchased will be cancelled.

The Directors consider that all the resolutions to be proposed at the forthcoming AGM as set out in the Notice of AGM, are in the best interests of shareholders as a whole and unanimously recommend all shareholders to vote in favour. Guidance on how to vote at the AGM can be found in the notes to the Notice of AGM.

If the Board considers a significant proportion of votes have been cast against a resolution at the AGM, the Company will explain, when announcing the results of voting, what action it intends to take to understand the reasons behind the results of the vote

Approval of the Directors

The Directors consider the Year-End Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

For and on behalf of the Board

Jonathan Davie

Chairman

22 June 2021

Report of the Directors

The Directors have chosen to report on some of those items within the body of the Strategic Report, while others remain within the Report of the Directors.

ITEMS INCLUDED WITHIN THE STRATEGIC REPORT

The following items are listed within the Strategic Report:

Statement of the existence of qualifying indemnity provisions for Directors.

Dividend policy and payments made during the year, summarised in the Organisation & Objectives section.

Names of Directors, at any time in the year - see above for the Directors' details and attendance at Company meetings.

Greenhouse Gas Emissions.

Policy on Board Composition.

Stakeholder Engagement - While the Company has no employees, suppliers or customers, the Directors give regular consideration to the need to foster the Company's business relationships with its stakeholders, in particular with shareholders and service providers. The effect of this consideration upon the principal decisions taken by the Company during the financial year is set out in further detail in the Strategic Report.

ITEMS REPORTED WITHIN THE DIRECTORS' REPORT

Disclosure to the Auditor of Relevant Audit Information

The Directors confirm that, so far as they are aware, having made such enquiries and having taken such steps as they consider they reasonably ought, they have provided the Auditor with all the information necessary for it to be able to prepare its Report. In doing so each Director has made himself aware of any information relevant to the audit and established that the Company's Auditor is aware of that information. The Directors are not aware of any information relevant to the audit of which the Company's Auditor is unaware.

Capital Structure

The Company's Capital Structure is described in the "Investor Information Section".

Corporate Governance Report

The Corporate Governance Report, including the Financial Risk Management Review of the Company, is included in this document.

Future Developments and Post Balance Sheet Events

The Company does not have any imminent events or post-balance sheet items to report.

APPROVAL OF THE DIRECTORS

The Directors consider the Year-End Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy. Further details demonstrating the Company's performance, business model and strategy have been included within the Strategic Report.

For and on behalf of the Board

Jonathan Davie

Chairman

22 June 2021

Corporate Governance Report

CORPORATE GOVERNANCE CODE

Internal Controls

The UK Corporate Governance Code ("UK Code") (issued July 2018 Code for accounting periods beginning on or after 1 January 2019), which can be found on the website of the Financial Reporting Council ("FRC") (www.frc.org.uk), requires the Directors of UK listed companies to review the effectiveness of the Company's risk management and system of internal controls on an annual basis. The Directors recognise the importance of sound corporate governance, robust risk management processes and effective systems of internal controls. They review the effectiveness of these on at least an annual basis. The Directors, through the procedures outlined below, keep the system of risk management and internal controls under review. The Board has identified risk management controls in the key areas of business objectives, accounting, compliance, operations and secretarial as areas to be included in the extended review.

The Board recognises its ultimate responsibility for the Company's system of risk management and internal controls and for monitoring their effectiveness. In order to perform this responsibility the Board receives regular reports on all aspects of risk management and internal control from the Company's service providers (including financial, operational and compliance controls, risk management and relationships with other service providers); the Board will instigate necessary action in response to any significant failings or weaknesses identified by these reports. However, it must be noted this system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

Financial Reporting

The Board has a responsibility to present a fair, balanced and understandable assessment of annual, half--year and other price sensitive public reports and reports to regulators, as well as to provide information required to be presented by statutory requirements. To ensure this responsibility is fulfilled, all such reports are reviewed and approved by the Board prior to their issue.

The Board confirms there have been no specific events since 31 March 2021, of which the Board is aware, which would have a material impact on the Company.

COMPLIANCE WITH THE PROVISIONS OF THE UK CORPORATE GOVERNANCE CODE

The Board of Hansa Investment Company has considered the Principles and Provisions of the AIC Code. The AIC Code addresses the Principles and Provisions set out in the UK Code, as well as setting out additional Provisions on issues that are of specific relevance to the Company.

The Board considers that reporting against the Principles and Provisions of the AIC Code, which has been endorsed by the FRC in the UK, provides more relevant information to shareholders.

The Company has complied with the Principles and Provisions of the AIC Code.

The AIC Code is available on the AIC website (www.theaic.co.uk). It includes an explanation of how the AIC Code adapts the Principles and Provisions set out in the UK Code to make them relevant for investment companies.

ASSOCIATION OF INVESTMENT COMPANIES CODE

The AIC Code has 17 principles. The principles are listed below together with the Board's response as to how it seeks to meet the principle's recommendation:

Board Leadership and Purpose

A successful company is led by an effective board, whose role is to promote the long-term sustainable success of the company, generating value for shareholders and contributing to wider society.

The Board is formed of five Directors with a complementary mix of skills and experience to lead the Company. Two Directors served on the board of the Company's predecessor, Hansa Trust, whilst three Directors were newly appointed to HICL. All have significant and relevant experience. All Directors are focused on generating long--term value for shareholders and there is significant share ownership in the Company's shares amongst the Directors.

The board should establish the company's purpose, values and strategy, and satisfy itself that these and its culture are aligned. All directors must act with integrity, lead by example and promote the desired culture.

The Board believes that the Company's purpose, values and strategy are clear: to create long--term growth of shareholder value. The Board sets the standard for openness and professionalism that the Company's key service providers follow. In particular, there is regular interaction between the Board and the Company's Portfolio Manager and also AASP for day to day liaison with other service providers.

The board should ensure that the necessary resources are in place for the company to meet its objectives and measure performance against them. The board should also establish a framework of prudent and effective controls, which enable risk to be assessed and managed.

The Board receives regular and detailed reports from the Portfolio Manager regarding investment performance as well as market trends and views on risks. The Board has set a number of KPIs against which the performance of elements of the portfolio can be considered. The Board receives regular risk and compliance reporting.

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 suppliers. 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 suppliers through the operations of its AASP on a day to day basis, as well as via an annual meeting with each or more frequently if an issue arises

Principle E is omitted by the AIC Code.

Division of Responsibilities

The chair leads the board and is responsible for its overall effectiveness in directing the company. They should demonstrate objective judgement throughout their tenure and promote a culture of openness and debate. In addition, the chair facilitates constructive board relations and the effective contribution of all non-executive directors, and ensures that directors receive accurate, timely and clear information.

The Chairman is Jonathan Davie who joined Hansa Trust as a Director in January 2013 - also serving as its Chair of its Audit Committee. The Chairman promotes and encourages active participation from all Directors at Board meetings. Further, whilst adhering to membership guidelines, sub--committees also seek to include as many Directors as possible to ensure a broad range of views. All Directors receive regular monthly and quarterly information prepared by the Portfolio Manager and Administrator, as well as portfolio performance presentations from the Portfolio Manager.

The board should consist of an appropriate combination of directors (and, in particular, independent non-executive directors) such that no one individual or small group of individuals dominates the board's decision making.

The Board consists of five Directors. All have financial backgrounds but each also brings individual specialisms and experience that are complimentary. Their biographies are noted earlier In the report. Four Directors are deemed independent. The fifth, William Salomon, is the Senior Partner of the Company's Portfolio Manager and, therefore, is deemed non-independent. All Directors are non-executive. All Directors are actively involved in decisions and committees unless conflicts exist which preclude this. Therefore, Mr Salomon does not participate in the evaluation of the performance of the Portfolio Manager due to his role as senior partner of that firm. Nor does he participate in decisions regarding the Company's largest asset (by value) OWHL, due to him being a director of that company. Finally, Mr Salomon is not a member of the Audit Committee due to his non-independent status, although he does attend meetings of that Committee.

Non-executive directors should have sufficient time to meet their board responsibilities. They should provide constructive challenge, strategic guidance, offer specialist advice and hold third party service providers to account.

The Directors consider they have sufficient time to meet their responsibilities. Directors consult with the Company before accepting other appointments to confirm capacity to do so and that no conflict exists. A formal timetable exists for the Board meetings and sub-committees. In considering appointments and potential conflicts of interests the Board considers the available time each Director has to commit to the Company. The Portfolio Manager and AASP report to scheduled Board meetings, giving the Directors the opportunity to challenge performance, raise issues and offer guidance.

The board, supported by the company secretary, should ensure that it has the policies, processes, information, time and resources it needs in order to function effectively and efficiently.

The Company Secretary and AASP support the Board in identifying and monitoring all governance matters. Additionally, Directors are able to consult external professional advisors to assist them in the performance of their duties as and when required. Board reporting and materials are refined on an ongoing basis.

Composition, succession and evaluation

Appointments to the board should be subject to a formal, rigorous and transparent procedure, and an effective succession plan should be maintained. Both appointments and succession plans should be based on merit and objective criteria and, within this context, should promote diversity of gender, social and ethnic backgrounds, cognitive and personal strengths.

The Board has appointed a Nominations Committee chaired by Nadya Wells. The Committee meets annually to give full and ongoing consideration to succession planning. Ahead of any appointment, the Committee is tasked with evaluating the skills required of a candidate to ensure the Board retains the range of skills required. The Company believes a diverse Board brings many benefits and, as such, there is no restriction placed on Board membership.

The board and its committees should have a combination of skills, experience and knowledge. Consideration should be given to the length of service of the board as a whole and membership regularly refreshed.

The Directors have a broad range of backgrounds including investment management, finance and banking as well as operational experience. Biographies of all Directors are shown above. As noted in J above, the Nominations Committee is tasked with maintaining a broad range of skills and experiences at times of succession.

Annual evaluation of the board should consider its composition, diversity and how effectively members work together to achieve objectives. Individual evaluation should demonstrate whether each director continues to contribute effectively.

The Nominations Committee is responsible for the ongoing consideration of Board composition and to identify any skills gap - now or in the future. The Nomination Committee considers Board effectiveness at least annually.

Audit, risk and internal control

The board should establish formal and transparent policies and procedures to ensure the independence and effectiveness of external audit functions and satisfy itself on the integrity of financial and narrative statements

The Board has specifically delegated the appointment and monitoring of the Company's external Auditor to its Audit Committee. The Company's Auditor was formally appointed in November 2019. The tender process was led by the Chairman of the Audit Committee. To ensure independence, the Company's Auditor does not provide other services to the Company. The Company rigorously follows policy and procedure to ensure effectiveness of the external audit and integrity of financial reporting.

The board should present a fair, balanced and understandable assessment of the company's position and prospects.

The Board considers and approves all relevant shareholder communications. The Year-End Report is reviewed by the Board to ensure it presents a fair and balanced view including commentary on going concern and long-term viability. The Audit Committee considers the fairness of the Financial Statements before recommending them to the Board for approval.

The board should establish procedures to manage risk, oversee the internal control framework, and determine the nature and extent of the principal risks the company is willing to take in order to achieve its long-term strategic objectives.

Principal risks are identified by the Board and risk appetite established against these risks. Day to day risk management is undertaken by the Portfolio Manager and AASP within the parameters established by the Board. The Board meets with the Portfolio Manager at each scheduled Board meeting where there is opportunity to discuss particular aspects of the portfolio and associated risks. Operational risk and compliance reporting are also regularly discussed by the Board.

Remuneration

Remuneration policies and practices should be designed to support strategy and promote long-term sustainable success.

The remuneration of Directors is overseen by the Remuneration Committee, chaired by Simona Heidempergher. The Directors each receive a fixed annual fee and do not receive any additional element based on performance of the Company. Additionally, Directors offer themselves annually for re-election at the Company's AGM.

A formal and transparent procedure for developing policy on remuneration should be established. No director should be involved in deciding their own remuneration outcome.

The Directors' Remuneration Report notes that each Director is paid a fixed fee representative of their roles and additional responsibilities on the Board. This fee level is reviewed by the Remuneration Committee making use of external evidence before being recommended to the wider Board.

Directors should exercise independent judgement and discretion when authorising remuneration outcomes, taking account of company and individual performance, and wider circumstances

The Directors' Remuneration Report notes that each Director is paid a fixed fee representative of their roles and additional responsibilities on the Board. There are no additional performance-related elements to any Director's remuneration.

COMPLIANCE WITH THE FINANCIAL CONDUCT AUTHORITY UKLA LISTING RULES

The Directors are responsible for ensuring that:

Adequate accounting records are kept, that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements are consistent with the relevant requirements under the UK Companies Act 2006.

The assets of the Company are safeguarded; and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Report of the Directors and other information included in the Year-End Report is prepared in accordance with Company Law in the UK. The Directors are also responsible for ensuring the Year-End Report includes information required by the Listing Rules of the FCA.

The Company has effective internal control systems, designed to ensure that adequate accounting records are maintained; and that financial information on which the business decisions are made, which is issued for publication, is reliable. Such a system of internal control can provide only reasonable, but not absolute, assurance against material misstatement or loss.

The Company Financial Statements for each financial year are prepared in accordance with international financial reporting standards ("IFRS") adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. The Directors must not approve the Financial Statements unless they are satisfied they give a true and fair view of the state of affairs and profit or loss of the Company for that period.

In preparing these Financial Statements, the Directors are required to:

select suitable accounting policies and apply them consistently;

make judgements and estimates that are reasonable and prudent;

state whether they have been prepared in accordance with International Financial Reporting Standards ("IFRS") adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.; and

prepare the Financial Statements on the going concern basis, unless it is inappropriate to presume the Company will continue in business.

Under the FCA UKLA Listing Rules and the UK Code, the Board is responsible for:

Disclosing how it has applied the principles and complied with the provisions of the AIC Code and, thereby, the UK Code, or where not, to explain the reasons for divergence.

Reviewing the effectiveness of the Company's systems of risk management and internal controls

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website: www.HansaICL.com. Visitors to the website need to be aware that legislation governing the preparation and dissemination of the Financial Statements may differ from legislation in their own jurisdictions.

RESPONSIBILITY STATEMENT

The Directors confirm that to the best of their knowledge:

The Financial Statements are prepared in accordance with applicable international accounting standards and present fairly, in all material respects, the financial position of Hansa Investment Company.

The Strategic Report, including the Chairman's Report to the Shareholders and the Report of the Directors includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties it faces.

The Directors consider the Year-End Report and Financial Statements, taken as a whole, are fair, balanced and understandable. Further detail demonstrating the Company's performance, business model and strategy has been included within the Strategic Report.

For and on behalf of the Board

Jonathan Davie

22 June 2021

Audit Committee Report

The Audit Committee comprises solely independent Directors, as required by the AIC Code and endorsed by the FRC. It is chaired by Richard Lightowler. Given the size of the Board and the range of experience they bring, all non-committee Directors are invited to attend the Audit Committee meetings. However, only the independent member Directors are able to vote. Recommendations of the Audit Committee are brought before the whole Board for discussion and ratification.

The terms of reference of the Committee are determined by the Committee and approved by the Board and include, but are not restricted to, the following:

-- To consider and make a recommendation to the Board as to the appointment of the external Auditor, tendering of the external audit, approval of the annual audit fee and any questions relating to the resignation or dismissal of the Auditor.

   --      To determine with the external Auditor the nature and scope of the audit. 

-- To review and monitor the independence of the external Auditor including pre-approval, of any, non-audit services to the Company.

   --      To consider the performance of the Auditor. 

-- To review the Half-Year and Year-End Financial Reports before submission to the Board, focusing particularly on:

o any changes in accounting policies and practices;

o major judgemental areas;

o significant adjustments resulting from the audit;

o the going concern assumption;

o compliance with Accounting Standards and Governance Codes;

o compliance with FCA Listing Rules and legal requirements; and

o 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 July 2020, 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 76% of the Investment portfolio by value is held in assets that are either traded or listed on an exchange. Further, of the remaining 24% unquoted fund investments, the majority primarily hold traded securities. Valuations for these funds are supplied by third party managers. The Audit Committee recognises that the 40% of the total portfolio are Level 1 and 58% are Level 2 securities. The Committee is satisfied with the valuation process. With regard to revenue recognition, the Audit Committee reviewed the external Auditor's approach to the audit prior to the commencement of the audit. The results of the audit in this area were discussed with the external Auditor and there were no significant issues arising in relation to the recognition of revenue.

The Audit Committee considers the potential need for an internal audit function on an annual basis, recognising the FRC guidance on proportionality. The Audit Committee considers internal compliance testing at the Administrator and Portfolio Manager to be sufficiently independent and robust to negate the need for a standalone internal audit function.

The Committee is authorised by the Board to investigate any activity within its terms of reference, to seek any information it requires from any officer or service provider to the Company, to obtain outside legal or other independent professional advice and to secure the attendance of third parties with relevant experience and expertise if it considers this necessary.

The Chairman of the Audit Committee formally reports to the Board following each Audit Committee meeting and on other occasions as requested by the Board.

A separate evaluation of Committee members is not conducted. Rather, their suitability and effectiveness is considered as part of the annual Board evaluation process which is described within the Corporate Governance Report.

The Audit Committee, having considered its responsibilities and its reporting to the Board, confirms it is not aware of any matter which it should bring to the attention of either the Board or the Auditor and considers the Year-End Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

The Audit Committee considers the external Auditor's independence, objectivity, scope of work and overall quality as well as cost effectiveness through a process of feedback from the Company advisors, including the Company Secretary, 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.

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

22 June 2021

Directors' Remuneration Report

The Board produces a separate report on the Directors' Remuneration and, by approving it, confirms its accuracy. There are elements of the Directors' Remuneration Report that are subject to audit as disclosures in accordance with "IAS 24 - Related Party Disclosures" which have been presented here. These are labelled as "audited", with the Auditor's report included.

Ordinary resolutions for the approval of this Report will be put to shareholders at the forthcoming AGM.

ANNUAL STATEMENT

The Company has five non-executive Directors. The Board has appointed a Remuneration Committee. The Chairman of this Committee is Simona Heidempergher who has signed this Statement on behalf of the Board.

This is the second 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 GBP253,623 if translated at the applicable rate on 31 March 2021.

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 policy could give rise to the following increase in fees:

 
                             Potential 
                   Current      future 
                 total fee   total fee 
                    GBP000      GBP000 
Non--executive        185*       254** 
 Director fees 
 

Note:

* This fee represents the current Directors' fees translated from USD to Sterling for the year ended 31 March 2021. 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 2021.

POLICY FOR NOTICE PERIODS

The current Directors' service contracts stipulate three months' written notice to be given by either the Director or the Company to terminate the services of a Director. The Board consider this is sufficient notice to ensure an orderly hand over between the parties.

SHAREHOLDERS' VIEWS ON REMUNERATION POLICY

The formal views of unconnected shareholders have not been sought in the preparation of this policy.

EMPLOYEES

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

ANNUAL REPORT ON REMUNERATION

Directors' Emoluments (Audited)

The Company does not have any employees, only non--executive Directors who receive only a basic fee, plus repayment of expenses incurred in the course of performing their duties. Therefore, the use of the detailed remuneration table, as prescribed in the legislation, is not appropriate here. A condensed table showing the information relevant to the Directors' remuneration is shown in its place.

The Directors who received fees during the year received the following emoluments in the form of fees. For clarity, these amounts are quoted in the currency as per their service contract. The director's remuneration is set in USD as is common for many Bermudan companies. Therefore, additionally, their current annual fee is also quoted in Sterling. This conversion has been made at the relevant exchange rate on 31 March 2021:

 
                       Annual     2021     2021     2020     2020 
                          Fee      Fee    Total      Fee    Total 
                         $000   GBP000   GBP000   GBP000   GBP000 
Jonathan Davie 
 (Chairman)                70       51       51       33       33 
Richard Lightowler         60       43       43       37       37 
Simona Heidempergher       50       36       36       31       31 
William Salomon            25       18       18       12       12 
Nadya Wells                50       36       36       31       31 
                          255      185      185      144      144 
 

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) and also that the prior period did not constitute a full year of operation for the Company.

The Company also pays the expenses of the Directors to attend the Board meetings, although no fees were incurred during the year due to Covid-19 travel restrictions (period-ended 31 March 2020: GBP31,344).

STATEMENT OF SHAREHOLDER VOTING

Votes in respect of the resolution to approve the Directors' Remuneration Report at the Company's AGM in July 2020 were cast as follows:

 
                           No. of    % of 
                           shares   votes 
                            voted    cast 
Votes cast in favour   21,879,450   98.87 
Votes cast against        251,070    1.13 
Total votes cast       22,130,520  100.00 
Votes withheld                727 
 

Votes in respect of the resolution to approve the Directors' Remuneration Policy at the Company's AGM in July 2020 were cast as follows:

 
                           No. of    % of 
                           shares   votes 
                            voted    cast 
Votes cast in favour   21,881,127   99.99 
Votes cast against            120    0.01 
Total votes cast       22,881,247  100.00 
Votes withheld            250,000 
 

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 2021 are shown below:

 
                                           'A' non--voting 
                        Ordinary               Ordinary            Nature 
                         shares                shares of               of 
                       of 1p each               1p each          interest 
                       2021        2020       2021       2020 
Jonathan 
 Davie               45,000      45,000    230,000    230,000  Beneficial 
William 
 Salomon         11,169,345  10,959,345  3,463,223  1,935,500  Beneficial 
Simona 
 Heidempergher        6,400       6,400          -          -  Beneficial 
 

As at 22 June 2021, 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 GBP2,621,000. The fees outstanding at the year -- end amounted to GBP245,958. 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' ATTANCE

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.

 
                                            Audit 
                                Board   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 normally holds an annual Strategy session in February. This has been delayed to August 2021 in the hope that the Board will be able to meet face to face.

On behalf of the Board, I confirm that the above Report on Directors' Remuneration summarises, as applicable, for the year ended 31 March 2021:

   (a)           the major decisions on Directors' remuneration; 
   (b)           any substantial changes relating to Directors' remuneration made during the year; and 

(c) the context in which those changes occurred and decisions have been taken.

For and on behalf of the Board

Simona Heidempergher

Chairman of the Remuneration Committee

22 June 2021

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 
  Limited (the Company) as at 31 March 2021, and its financial performance 
  and its cash flows for the year then ended in accordance with International 
  Financial Reporting Standards adopted pursuant to Regulation (EC) 
  No 1606/2002 as it applies in the European Union. 
  What we have audited 
  The Company's financial statements, comprise: 
  the balance sheet as at 31 March 2021; 
  the income statement for the year then ended; 
  the statement of changes in equity for the year then ended; 
  the cash flow statement for the year then ended; and 
  the notes to the financial statements, which include significant 
  accounting policies and other explanatory information. 
  Certain required disclosures have been presented elsewhere in the 
  Year-End Report, rather than in the notes to the financial statements. 
  These are cross-referenced from the financial statements and are 
  identified as audited. 
 

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report.

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

Independence

We are independent of the Company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and the ethical requirements of the Chartered Professional Accountants of Bermuda Rules of Professional Conduct (CPA Bermuda Rules) that are relevant to our audit of the financial statements in Bermuda. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the ethical requirements of the CPA Bermuda Rules.

 
                     Our audit approach 
                      Overview 
                      Overall materiality: GBP3,679,000, based on 1% of 
    Materiality       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 
                      Accuracy, occurrence and completeness of investment 
                      income 
                      Consideration of impacts of Covid--19 
 

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            GBP3,679,000 
How we determined it           1% of net assets. 
Rationale for the materiality  We applied this benchmark, which is 
 benchmark applied              generally accepted auditing practice 
                                for investment company audits. 
 

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above GBP183,950, as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 
 Key Audit Matter                     How our audit addressed the key audit matter 
 Valuation and existence              Listed investments: We tested the existence 
  of investments                       of the listed investments by agreeing the 
  Refer to notes 1(d) and              holdings for investments to an independent 
  9 to the financial statements        custodian confirmation. No differences were 
  for disclosures of related           identified by our testing which required reporting 
  accounting policies and              to those charged with governance. 
  balances.                            We tested the valuation of the listed equity 
  The investment portfolio             investments by agreeing the prices used in 
  at the year end comprised            the valuation to independent third-party sources. 
  listed investments valued            No misstatements were identified by our testing 
  at GBP277 million (76%)              which required reporting to those charged 
  and unlisted investments             with governance. 
  valued at GBP88 million              Unlisted investments: We tested the existence 
  (24%). We focused on                 of the unlisted investments by agreeing the 
  the existence of both                holdings for investments to a confirmation 
  listed and unlisted investments,     from each fund administrator. No differences 
  as listed investments                were identified by our testing which required 
  comprise the majority                reporting to those charged with governance. 
  of the investments balance           We understood and evaluated the controls around 
  and unlisted investments             the pricing of unlisted investments including 
  are, individually and                the final approval of the valuation by the 
  in aggregate, material               Portfolio Manager and the Board. We assessed 
  to the financial statements.         the approach used by the Portfolio Manager 
  We focused on the valuation          in valuing these investments, which consisted 
  of listed investments                of obtaining the most recent valuation provided 
  because listed investments           by the fund administrator for each investment 
  represent the principal              at the year end. 
  element of the net asset             We obtained a direct confirmation of the investments 
  value as disclosed on                held and the price from each fund administrator. 
  the Balance Sheet in                 We used these two key inputs to recalculate 
  the financial statements.            the valuation applied by management. This 
  We also focused on the               recalculation was performed for 100% of the 
  valuation of the unlisted            unlisted investments. 
  investments as the valuation         We obtained an understanding of the underlying 
  of these investments                 methodology applied to each unlisted investment 
  is material to the net               through review of their most recently available 
  asset value.                         audited financial statements to evaluate whether 
                                       it was based on fair value. 
                                       Based on the procedures detailed above, no 
                                       misstatements were identified which required 
                                       reporting to those charged with governance. 
 Accuracy, occurrence                 We assessed the accounting policy for dividend 
  and completeness of investment       income recognition for compliance with accounting 
  income                               standards and the AIC SORP and performed testing 
  Refer to notes 1(f) and              to evaluate whether income had been accounted 
  2 to the financial statements        for in accordance with this stated accounting 
  for disclosures of related           policy. We found that the accounting policies 
  accounting policies and              implemented were consistent with accounting 
  balances.                            standards and the AIC SORP, and that income 
  We focused on the accuracy,          has been accounted for in accordance with 
  occurrence and completeness          the stated accounting policy. 
  of dividend income recognition       We tested the accuracy of dividend receipts 
  as incomplete or inaccurate          by agreeing the dividend rates from investments 
  income could have a material         to independent market data. No misstatements 
  impact on the Company's              were identified which required reporting to 
  net asset value and dividend         those charged with governance. 
  cover. We also focused               To test for completeness, we tested, for a 
  on the accounting policy             sample of investment holdings in the portfolio, 
  for income recognition               that all dividends declared in the market 
  and its presentation                 by investment holdings had been recorded. 
  in the Income Statement              We tested occurrence by testing that all dividends 
  for compliance with the              recorded in the year had been declared in 
  requirements of The Association      the market by investment holdings, and we 
  of Investment Companies              traced a sample of dividends received to bank 
  Statement of Recommended             statements. Our testing did not identify any 
  Practice (the "AIC SORP")            misstatements which required reporting to 
  as incorrect application             those charged with governance. 
  could result in a misstatement       We also tested the allocation and presentation 
  in income recognition.               of dividend 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. Our procedures did not identify 
                                       any misstatements which required reporting 
                                       to those charged with governance. 
 Consideration of impacts             We evaluated the Directors' assessment of 
  of Covid -- 19                       the impact of the Covid -- 19 pandemic on 
  Refer to the Strategic               the Company by: 
  report and note 1(a)                 Evaluating management's assessment of operational 
  to the financial statements          impacts, considering their consistency with 
  which disclose the basis             other available information and our understanding 
  of preparation of the                of the business and assessing the potential 
  financial statements                 impact on the financial statements. 
  and the impact of the                Testing the impact of Covid--19 on the valuation 
  Covid--19 pandemic.                  of sampled investments. 
  The Covid--19 outbreak               We obtained and evaluated the Directors' going 
  has been declared a pandemic         concern assessment which reflects conditions 
  by the World Health Organisation.    up to the point of approval of the Year-End 
  Since the first quarter              Report by: 
  of 2020, it has caused               Obtaining evidence to support the key assumptions 
  significant economic                 and forecasts driving the Directors' assessment. 
  uncertainty globally                 This included reviewing the Directors' assessment 
  and disruption to supply             of the Company's financial position and forecasts, 
  chains and travel, slowed            their assessment of liquidity as well as their 
  global growth and caused             review of the operational resilience of the 
  volatility in global                 Company and oversight of key third party service 
  markets and in exchange              providers. 
  rates.                               We assessed the disclosures presented in the 
  The Directors have prepared          Year-End Report in relation to Covid -- 19 
  the financial statements             by: 
  of the Company on a going            Reading the other information, including the 
  concern basis, and believe           Principal Risks and Longer-Term Viability 
  this assumption remains              Statement set out in the Strategic Report, 
  appropriate. This conclusion         and assessing its consistency with the financial 
  is based on the assessment           statements and the evidence we obtained in 
  that, notwithstanding                our audit. 
  the significant market               Our conclusions relating to other information 
  uncertainties, they are              are set out in the 'Other information' section 
  satisfied that the Company           of our report. 
  has adequate resources 
  to continue in operational 
  existence for the foreseeable 
  future and that the Company 
  and its key third party 
  service providers have 
  in place appropriate 
  business continuity plans 
  and will be able to maintain 
  service levels throughout 
  the Covid -- 19 pandemic. 
 

Other information

Management is responsible for the other information. The other information comprises Year-End Report (but does not include the financial statements and our auditor's report thereon).

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

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

UK Corporate Governance Code

We have nothing to report in respect of our responsibility to report when the Directors' statement relating to the Company's compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified, under the Listing Rules of the FCA, for review by the auditors.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

-- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

-- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

-- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

-- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

-- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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

PricewaterhouseCoopers Ltd

Chartered Professional Accountants

Hamilton, Bermuda

22 June 2021

Income Statement

For the year ended 31 March 2021

 
                                              Year ended                21 June 2019 to 
                                             31 March 2021               31 March 2020 
                                       Revenue  Capital    Total  Revenue   Capital     Total 
                                Notes   GBP000   GBP000   GBP000   GBP000    GBP000    GBP000 
Gains/(losses) on investments 
 held at fair value 
 through profit or loss             9        -   93,032   93,032        -  (50,965)  (50,965) 
Foreign Exchange losses                      -    (181)    (181)        -     (104)     (104) 
Investment income                   2    6,350        -    6,350   1,159*         -     1,159 
                                         6,350   92,851   99,201    1,159  (51,069)  (49,910) 
Portfolio management 
 fees                               3  (2,621)        -  (2,621)  (1,441)         -   (1,441) 
Other expenses                      4  (1,149)        -  (1,149)  (1,488)         -   (1,488) 
                                       (3,770)        -  (3,770)  (2,929)         -   (2,929) 
Income/(expense) before 
 finance costs                           2,580   92,851   95,431  (1,770)  (51,069)  (52,839) 
Finance costs                       5        -        -        -      (1)         -       (1) 
Income/(expense) for 
 the year                                2,580   92,851   95,431  (1,771)  (51,069)  (52,840) 
Return per Ordinary 
 and 'A' non-voting 
 Ordinary share                     7     2.2p    77.4p    79.6p   (1.5p)   (42.6p)   (44.1p) 
 
 

The Company does not have any income or expense not included in the above Statement. Accordingly, the "Income/(expense) 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 Investment income in the prior period as denoted by an asterisk has been restated in line with the modified income recognition policy as detailed in Note 1(f).

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.

Balance Sheet

As at 31 March 2021

 
                                                            2021      2020 
                                                  Notes   GBP000    GBP000 
Non-current assets 
Investments in subsidiary at fair value 
 through profit or loss                               8    3,179     3,179 
Investments held at fair value through profit 
 or loss                                              9  365,268   273,264 
                                                         368,447   276,443 
Current assets 
Trade and other receivables                          11      177     2,503 
Cash and cash equivalents                            12    2,833     1,066 
                                                           3,010     3,569 
Current liabilities 
Trade and other payables                             13  (3,567)   (3,713) 
Net current liabilities                                    (557)     (144) 
Net assets                                               367,890   276,299 
Capital and reserves 
Called up share capital                              14    1,200     1,200 
Contributed surplus                                  15  326,019   327,939 
Retained earnings/(accumulated losses)               16   40,671  (52,840) 
Total equity shareholders' funds                         367,890   276,299 
Net asset value per Ordinary and 'A' non-voting 
 Ordinary share                                      17   306.6p    230.2p 
 
 

The Financial Statements of Hansa Investment Company Limited, registered in Bermuda under company number 54752, were approved by the Board of Directors on 22 June 2021 and were signed on its behalf by

Jonathan Davie

Chairman

Statement of Changes in Equity

For the year ended 31 March 2021

 
                                      Contributed 
                               Share      surplus   Retained 
                             capital      reserve   earnings    Total 
                                2021         2021       2021     2021 
                     Notes    GBP000       GBP000     GBP000   GBP000 
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 
 
 

Statement of Changes in Equity

For the period 21 June 2019 to 31 March 2020

 
                                                             Contributed 
                                                      Share      surplus  Accumulated 
                                                    capital      reserve       losses     Total 
                                                       2020         2020         2020      2020 
                                            Notes    GBP000       GBP000       GBP000    GBP000 
Net assets at 21 June 2019                                -            -            -         - 
Issue of share capital 29 August 2019          14     1,200            -            -     1,200 
Transfer of assets from Hansa Trust            15         -      330,819            -   330,819 
Losses for the period                                     -            -     (52,840)  (52,840) 
Dividends                                       6         -      (2,880)            -   (2,880) 
Net assets at 
 31 March 2020                                        1,200      327,939     (52,840)   276,299 
 
 

Cash Flow Statement

For the year ended 31 March 2021

 
                                                                          21 June 
                                                            Year ended    2019 to 
                                                              31 March   31 March 
                                                                  2021       2020 
                                                     Notes      GBP000     GBP000 
Cash flows from operating activities 
Profit/(loss) before finance costs*                             95,431   (52,839) 
Adjustments for: 
Realised losses/(gains) on investments                   9       2,011      (644) 
Unrealised (gains)/losses on investments                 9    (95,043)     51,609 
Foreign exchange                                                   181        104 
Decrease/(Increase) in trade and other receivables      11       2,326    (2,503) 
(Decrease)/Increase in trade and other payables         13       (146)        534 
Purchase of non-current investments                           (27,416)   (17,059) 
Sale of non-current investments                                 28,444     22,980 
Net cash inflow from operating activities                        5,788      2,182 
Cash flows from financing activities 
Interest paid on bank loans                              5           -        (1) 
Inter-Company Loan with Hansa Trust                                  -      1,869 
Dividends paid                                           6     (3,840)    (2,880) 
Net cash outflow from financing activities                     (3,840)    (1,012) 
Increase in cash and cash equivalents                            1,948      1,170 
Cash and cash equivalents at beginning of 
 financial year (21 June 2019 for comparable 
 period)                                                         1,066          - 
Effect of foreign exchange rate changes                          (181)      (104) 
Cash and cash equivalents at end of period              12       2,833      1,066 
 
 

*Includes dividends received of GBP6,172,000 (2020: GBP1,042,000) and interest received of GBPnil (2020: GBP1,000).

Notes to the Financial Statements

ACCOUNTING POLICIES

Hansa Investment Company Limited is a company limited by shares, registered and domiciled in Bermuda with its registered office. The principal activity of the company is set out in the strategic report.

Basis of preparation

The Financial Statements of the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS") adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. IFRS means standards and interpretations issued (or adopted) by the International Accounting Standards Board (IASB) (they comprise: International Financial Reporting Standards, International Accounting Standards (IAS) and Interpretations developed by the IFRS Interpretations Committee or the former Standing Interpretations Committee (SIC)) or IFRS that have been adopted in the relevant jurisdiction.

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

The Financial Statements have been prepared on an historical cost and going concern basis in line with the assertion of the Board and also in line with the Board's analysis of the impact of Covid-19 on the Company except for the valuation of investments. 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 April 2021, to the extent that the SORP does not conflict with IFRS. The principal accounting policies adopted are set out below.

Basis of non-consolidation

IFRS 10 stipulates that subsidiaries and associates of Investment Entities are not consolidated but, rather stated at fair value unless the conditions for certain exemptions from this treatment are met. Hansa Investment Company Limited meets all three characteristics of an Investment Entity as described by IFRS 10. The Company has one, 100% owned, subsidiary Hansa Trust Ltd. The Company became the 100% owner of Hansa Trust's shares as part of the Scheme of Arrangement on 29 August 2019. It is the Intention for Hansa Trust Ltd to be dissolved now that the legal title of the portfolio Investments have been transferred to the Company.

Presentation of Income Statement

In order to better reflect the activities of an investment company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature, has been presented alongside the Income Statement.

Non-current investments

As the Company's business is investing in financial assets, with a view to profiting from their total return in the form of income received and increases in fair value, investments are classified at fair value through profit or loss on initial recognition in accordance with IFRS 9. The Company manages and evaluates the performance of these investments on a fair value basis, in accordance with its investment strategy and information about the investments is provided on this basis to the Board of Directors.

Investments are recognised and derecognised on the trade date. For listed investments fair value is deemed to be bid market prices, or closing prices for SETS stocks sourced from the London Stock Exchange. SETS is the London Stock Exchange's electronic trading service, covering most of the market including all FTSE 100 constituents and most liquid FTSE 250 constituents, along with some other securities.

Fund investments are stated at fair value through profit or loss as determined by using the most recent available valuation. In some cases, this will be by reference to the most recent valuation statement supplied by the fund's manager. In other cases, values may be available through the fund being listed on an exchange or via pricing sources such as Bloomberg.

Private equity investments are stated at fair value through profit or loss as determined by using various valuation techniques, in accordance with the International Private Equity and Venture Capital Valuation Guidelines. In the absence of a valuation at the balance sheet date, additional procedures to determine the reasonableness of the fair value estimate for inclusion in the financial statements may be used. These could include direct enquiries of the manager of the investment to understand, amongst others, valuation process and techniques used, external experts used in the valuation process and updated details of underlying portfolio. In addition, the Company can obtain external independent valuation data and compare this to historic valuation movements of the asset. Further, recent arms-length market transactions between knowledgeable and willing parties where available might also be considered. The investment in the Company's subsidiary undertaking is stated at fair value.

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.

ACCOUNTING POLICIES (CONTINUED)

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank, short-term deposits and cash funds with an original maturity of three months or less and are subject to an insignificant risk of changes in capital value.

Investment Income and return of capital

Dividends receivable on equity shares are recognised on the ex-dividend date. Where no ex-dividend date is quoted, dividends are recognised when the Company's right to receive payment is established. Dividends and Real Estate Investment Trusts' ("REIT") income are all stated net of withholding tax. In many cases, Bermudan companies cannot recover foreign incurred taxes withheld on dividends and capital transactions. As a result, any such taxes incurred will be charged as an expense and included here. For clarity, this is a change of accounting policy to that that was in operation at the end of the prior period in 31 March 2020 when there was no netting off and taxation was shown as a separate note. As such, the comparable information has been restated with GBP205,000 of Irrecoverable Foreign Withholding Tax being netted off against Dividend Income.

When an investee company returns capital to the Company, the amount received is treated as a reduction in the book cost of that investment and is classified as sale proceeds.

Expenses

All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement except as follows:

(i) expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the Income Statement.

Taxation

Under current Bermuda law, the Company is not required to pay taxes in Bermuda on either income or capital gains. The Company has received an undertaking from the Bermuda government exempting it from all local income, withholding and capital gains taxes being imposed and will be exempted from such taxes until 31 March 2035.

Foreign Currencies

Transactions denominated in foreign currencies are recorded in the local currency, at the actual exchange rates as at the date of the transaction. Assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rate of exchange prevailing at the balance sheet date. Any gain or losses arising from a change in exchange rates, subsequent to the date of the transaction, is included as an exchange gain or losses in the capital or revenue column of the Income Statement, depending on whether the gain or losses is of a capital or revenue nature respectively.

Retained Earnings

Contributed Surplus

The following are credited or charged to this reserve via the capital column of the Income Statement:

gains and losses on the disposal of investments;

exchange differences of a capital nature;

expenses charged to the capital column of the Income Statement in accordance with the above accounting policies; and

increases and decreases in the valuation of investments held at the balance sheet date.

Revenue Reserves

The following are credited or charged to this reserve via the revenue column of the Income Statement:

net revenue recognised in the revenue column of the Income Statement.

ACCOUNTING POLICIES (CONTINUED)

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 2021. The most recent valuation statement was received on 24 February 2021 stating the value of the Company's holding as at 31 December 2020. The Company has considered the ongoing impact of Covid-19, the associated financial impact on certain industries and its potential impact on asset values. In the absence of a valuation for 31 March 2021 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 2021. It is believed the value of DV4 as at 31 March 2021 will not be materially different, but this valuation is based on historic valuations by DV4, does not have a readily available third party comparator and, as such, is an estimate. There are no significant judgements.

Adoption of new and revised standards

At the date of authorisation of these Financial Statements the following standards and amendments to standards, which have not been applied in these Financial Statements, were in issue, but not yet effective:

-- 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).

-- Amendments to IAS1 'Classification of liabilities as current or non-current' (effective for accounting periods beginning 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:

-- Amendments to IFRS 3 'Definition of Business' (effective for accounting periods beginning on or after 1 January 2020).

-- Amendments to IAS 1 & IAS 8 'Definition of Material' (effective for accounting periods beginning on or after 1 January 2020).

-- Amendments to IFRS 9, IAS 39 and IFRS 7 'Interest Rate Benchmark Reform' (effective for accounting periods beginning on or after 1 January 2020).

There is no material impact on the Financial Statements or the amounts reported from the adoption of these amendments to the standards.

Intercompany loan

The intercompany loan is recognised at cost, being the fair value of the consideration receivable. The amounts falling due for repayment within one year are included under current liabilities in the Balance Sheet.

Operating Segments

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

INVESTMENT INCOME

 
                                                                     Revenue 
                                                          Revenue    21 June 
                                                       Year ended    2019 to 
                                                         31 March   31 March 
                                                             2021       2020 
                                                           GBP000     GBP000 
Income from quoted investments 
Dividends                                                   6,350      1,158 
Other income 
Interest receivable on AAA rated money market funds             -          1 
Total income                                                6,350      1,159 
 
 

PORTFOLIO MANAGEMENT FEE

 
                                          Revenue 
                               Revenue    21 June 
                            Year ended    2019 to 
                              31 March   31 March 
                                  2021       2020 
                                GBP000     GBP000 
Portfolio management fee         2,621      1,441 
Total management fee             2,621      1,441 
 
 

OTHER EXPENSES

 
                                                          Revenue 
                                               Revenue    21 June 
                                            Year ended    2019 to 
                                              31 March   31 March 
                                                  2021       2020 
                                                GBP000     GBP000 
Administration fees                                143         82 
Directors' remuneration                            195        144 
Auditor's remuneration for: 
- audit of the Company's Annual accounts            80         55 
Printing fees                                       36         15 
Director's liability insurance                      74         38 
Marketing                                           79         39 
Registrar's fees                                    83        119 
Banking charges                                      1          2 
Secretarial services                               121         85 
Travel expenses                                    (4)         74 
Legal fees - redomicile project                     17        381 
Broker fees                                         21         15 
Stock Exchange listing fees                         52        247 
Safe custody fees                                  165         99 
Other                                               86         93 
Total Other Expenses                             1,149      1,488 
 
 

FINANCE COSTS

 
                                     Revenue 
                          Revenue    21 June 
                       Year ended    2019 to 
                         31 March   31 March 
                             2021       2020 
                           GBP000     GBP000 
Interest payable                -          1 
Total Finance Costs             -          1 
 
 

DIVIDS PAID

 
                                                                     21 June 
                                                       Year ended    2019 to 
                                                         31 March   31 March 
                                                             2021       2020 
                                                           GBP000     GBP000 
Amounts recognised as distributed to shareholders 
 in the year are as follows: 
First and Second interim dividend for 2020 (paid 
 29 November 2020): 1.6p                                        -      1,920 
Fourth interim dividend for 2020 (paid 29 May 2020): 
 0.8p                                                         960          - 
First interim dividend for 2021 (paid 28 August 
 2020): 0.8p                                                  960          - 
Second interim dividend for 2021 (paid 30 November 
 2020): 0.8p                                                  960          - 
Third interim dividend for 2021 (paid 26 February 
 2021): 0.8p (2020: 0.8p)                                     960        960 
Total Dividends Paid                                        3,840      2,880 
 
 

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.

 
                                                                   21 June 
                                                     Year ended    2019 to 
                                                       31 March   31 March 
                                                           2021       2020 
                                                         GBP000     GBP000 
First and second interim dividend for 2020 (paid 
 29 November 2020): 1.6p                                      -      1,920 
First interim dividend for 2021 (paid 28 August 
 2020): 0.8p                                                960          - 
Second interim dividend for 2021 (paid 30 November 
 2020): 0.8p                                                960          - 
Third interim dividend for 2021 (paid 26 February 
 2021): 0.8p (2020: 0.8p)                                   960        960 
Fourth interim dividend for 2021 (payable 28 May 
 2021): 0.8p (2020:0.8p)                                    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 2021. No final dividend is proposed for the year ended 31 March 2021.

RETURN ON ORDINARY SHARES (EQUITY)

 
                                                  Total    Revenue    Capital      Total 
                        Revenue      Capital       Year    21 June    21 June    21 June 
                     Year ended   Year ended      ended    2019 to    2019 to    2019 to 
                       31 March     31 March   31 March   31 March   31 March   31 March 
                           2021         2021       2021       2020       2020       2020 
Returns per share          2.2p        77.4p      79.6p     (1.5)p    (42.6)p    (44.1)p 
 
 

Returns

Revenue return per share is based on the revenue attributable to equity shareholders of GBP2,580,000 (2020: GBP(1,771,000)).

Capital return per share is based on the capital profit/(loss) attributable to equity shareholders of GBP92,851,000 (2020: GBP(51,069,000)).

Total return per share is based on the combination of revenue and capital returns attributable to equity shareholders, amounting to net profit/(loss) of GBP95,431,000 (2020:(GBP52,840,000)).

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/period.

INVESTMENTS IN SUBSIDIARY AT FAIR VALUE THROUGH PROFIT OR LOSS

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 GBP3,179,000 (2020: GBP3,179,000). 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 Redomiciliation in August 2019 to reflect the transfer of the beneficial title of the portfolio from Hansa Trust PLC to the Company. There remains a relatively small intercompany balance between the two entities. At the time of signing of these Financial Statements, and as part of the process of liquidation, Hansa Trust PLC had re-registered as Hansa Trust Limited as part of the process of liquidation. It is anticipated that the remaining intercompany balance, along with the share capital and other reserves of Hansa Trust Limited will be reduced and then cancelled when Hansa Trust Limited is, ultimately, put into liquidation.

INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

 
                                                                  2021      2020 
                                            Listed  Unquoted     Total     Total 
                                            GBP000    GBP000    GBP000    GBP000 
Cost at 1 April 2020/(21 June 
 2019)                                     225,985    98,888   324,873         - 
Investment holding (losses) at 1 April 
 2020/(21 June 2019)                      (42,582)   (9,027)  (51,609)         - 
Valuation as at 1 April 2020/(21 
 June 2019)                                183,403    89,861   273,264         - 
Movements in the year: 
Purchases at cost                           23,967     3,449    27,416   347,209 
Sales - proceeds                          (24,925)   (3,519)  (28,444)  (22,980) 
Transferred from Unquoted to 
 Listed                                     23,688  (23,688)         -         - 
Movement in investment holding 
 gains/(losses)                             71,151    21,881    93,032  (50,965) 
Valuation as at 31 March                   277,284    87,984   365,268   273,264 
Cost                                       246,951    74,883   321,834   324,873 
Investment holding gains/(losses)           30,333    13,101    43,434  (51,609) 
                                           277,284    87,984   365,268   273,264 
 
 
 
                                                              2021      2020 
                                                            GBP000    GBP000 
(Losses)/gains on sales                                    (2,011)       644 
Movement in investment holding gains/(losses)               95,043  (51,609) 
Gains/(losses) on investments held at fair value through 
 profit or loss                                             93,032  (50,965) 
 
 

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:

 
               2021     2020 
             GBP000   GBP000 
Purchases        22       15 
Sales            23       15 
                 45       30 
 
 

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 2021 are detailed below:

 
                                                                              Exc. Minority Interest 
                                   Country                                        Total       Profit 
                                        of      Class    % of      Latest       capital        after 
                             incorporation         of   class   available           and      tax for 
                           or registration    capital    held    accounts      reserves   the period 
Ocean Wilsons Holdings 
 Limited                 Bermuda            Ordinary   26.5    31.12.20    $555,782,000  $38,712,000 
 
 

Ocean Wilsons Holdings Limited is included as part of the investment portfolio in accordance with IAS 28 - Investment in Associates.

TRADE AND OTHER RECEIVABLES

The Company applies the IFRS 9 simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade receivables and contract assets.

 
                                    2021     2020 
                                  GBP000   GBP000 
Prepayments and accrued income       177       83 
Investments pending settlement         -    2,420 
                                     177    2,503 
 
 

CASH AND CASH EQUIVALENTS

 
                  2021     2020 
                GBP000   GBP000 
Cash at bank     2,833    1,066 
                 2,833    1,066 
 
 

TRADE AND OTHER PAYABLES

 
                                  2021     2020 
                                GBP000   GBP000 
Intercompany Loan                3,179    3,179 
Other creditors and accruals       388      534 
                                 3,567    3,713 
 
 

CALLED UP SHARE CAPITAL

 
                                                     2021     2020 
                                                   GBP000   GBP000 
40,000,000 Ordinary shares of 1p                      400      400 
80,000,000 'A' non-voting Ordinary shares of 1p       800      800 
                                                    1,200    1,200 
 
 

The 'A' non-voting Ordinary shares do not entitle the holders to receive notices or to vote, either in person or by proxy, at any general meeting of the Company, but in all other respects rank pari passu with the Ordinary shares of the Company.

CONTRIBUTED SURPLUS

 
                                                     2021     2020 
                                                   GBP000   GBP000 
Opening balance at 31 March 2020 (21 June 2019)   327,939        - 
Transfer of assets from Hansa Trust                     -  330,819 
Dividend paid                                     (1,920)  (2,880) 
Balance at 31 March                               326,019  327,939 
 
 

RETAINED EARNINGS

 
                                      Reserves                                     Reserves 
                     Revenue   Capital        Capital      Total  Revenue   Capital        Capital      Total 
                               - Other   - Investment   retained            - Other   - Investment   retained 
                                              holding   earnings                           holding   earnings 
                                              profits                                      profits 
                        2021      2021           2021       2021     2020      2020           2020       2020 
                      GBP000    GBP000         GBP000     GBP000   GBP000    GBP000         GBP000     GBP000 
Opening balance at 
 1 April 2020 (21 
 June 2019)          (1,771)       540       (51,609)   (52,840)        -         -              -          - 
Profit/(loss) for 
 the year              2,580   (2,192)         95,043     95,431  (1,771)       540       (51,609)   (52,840) 
Dividend paid        (1,920)         -              -    (1,920)        -         -              -          - 
Closing balance at 
 31 March            (1,111)   (1,652)         43,434     40,671  (1,771)       540       (51,609)   (52,840) 
 
 

NET ASSET VALUE

 
                                                       2021    2020 
NAV per Ordinary and 'A' non-voting Ordinary share   306.6p  230.2p 
 
 

The NAV per Ordinary and 'A' non-voting Ordinary share is based on the net assets attributable to equity shareholders of GBP367,890,000 (2020: GBP276,299,000) and on 40,000,000 Ordinary shares (2020: 40,000,000) and 80,000,000 'A' non-voting Ordinary shares (2020: 80,000,000) in issue at 31 March 2021.

COMMITMENTS AND CONTINGENCIES

The Company has no outstanding commitments as at 31 March 2021 and 31 March 2020.

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.

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  No direct              Direct  No direct 
                                foreign    foreign             foreign    foreign 
                               currency   currency            currency   currency 
                                   risk       risk    Total       risk       risk    Total 
                                   2021       2021     2021       2020       2020     2020 
                                 GBP000     GBP000   GBP000     GBP000     GBP000   GBP000 
Investments                     127,772    237,496  365,268     98,846    174,418  273,264 
Other receivables including 
 prepayments                        126         51      177         24      2,479    2,503 
Cash at bank                          -      2,833    2,833          -      1,066    1,066 
Current liabilities                   -      (388)    (388)          -      (534)    (534) 
                                127,898    239,992  367,890     98,870    177,429  276,299 
 
 

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 2021 and 31 March 2020. 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$     Euro    Other      US$     Euro    Other 
                                      2021     2021     2021     2020     2020     2020 
                                    GBP000   GBP000   GBP000   GBP000   GBP000   GBP000 
If Sterling had weakened by 10% against the currencies shown, this 
 would have had the following effect on the Company: 
Income statement - profit/(loss)     3,029      509      851  (1,096)    (323)    (229) 
Equity shareholder funds             8,291    2,201    2,297    6,896    1,494    1,741 
                                    11,320    2,710    3,148    5,800    1,171    1,512 
 
 

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.

Note: The disclosure on the sensitivity to Foreign Currency was not disclosed in prior year.

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 GBP30m (2020: GBP30m) 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 GBPnil (2020: GBPnil). The level of banking facilities utilised at 31 March 2021 was GBPnil (2020: GBPnil).

Interest rate changes usually impact equity prices. The level and direction of change in equity prices is subject to prevailing local and world economic conditions as well as market sentiment, all of which are very difficult to predict with any certainty. The Company has floating rate financial assets, consisting of bank balances and cash funds that have received average rates of interest during the year of 0.0% on bank balances.

 
                              Cash flow         No           Cash flow         No 
                               interest   interest            interest   interest 
                                   rate       rate                rate       rate 
                                   risk       risk    Total       risk       risk    Total 
                                   2021       2021     2021       2020       2020     2020 
                                 GBP000     GBP000   GBP000     GBP000     GBP000   GBP000 
Investments                           -    365,268  365,268          -    273,264  273,264 
Other receivables including 
 prepayments                          -        177      177          -      2,503    2,503 
Cash at bank                      2,833          -    2,833      1,066          -    1,066 
Current liabilities                   -      (388)    (388)          -      (534)    (534) 
                                  2,833    365,057  367,890      1,066    275,233  276,299 
 
 

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, GBP78.6m as valued at 31 March 2021 (2020: GBP60.8m) and as a proportion of the NAV, 21.4% (2020: 22.0%). 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 49.2% of Ocean Wilsons' NAV, has a direct exposure to the Brazilian economy, whereas Ocean Wilsons Investments is not exposed to Brazil and corresponds to the other 50.8%. 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 above in the report, 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 GBP36.8m (2020: GBP27.6m).

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 2021 are shown in Note 11 and Note 13.

The Company's maximum exposure to credit risk on cash is GBP2.8m (2020: GBP1.1m) and on cash funds is GBPnil (2020: GBPnil). 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 21.4% (2020: 22.0%), unquoted equity investments of 2.2% (2020: 3.4%) and investments into open-ended investment funds with varying liquidity terms of 59.9% (2020: 53.4%).

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 2021 is shown earlier in the report. This can be used broadly to ascertain the levels of liquidity within the portfolio, although liquidity will vary with each investment - particularly the funds.

Capital Management

The Company considers its capital to be its issued share capital and reserves and whilst the Company has access to loan facilities it is not considered or used as core capital, but primarily to meet the cash timing requirements of opportunistic investment strategies and thereby enhance shareholder returns. The Board regularly monitors its share discount policy and the level of discounts and whilst it has the option to repurchase shares, it considers the best means of attaining a good rating for the shares is to concentrate on good shareholder returns.

However, the Board believes the ability of the Company to repurchase its own 'A' non-voting Ordinary shares in the market may potentially enable it to benefit all equity shareholders of the Company. The repurchase of 'A' non-voting Ordinary shares, at a discount to the underlying NAV, would enhance the NAV per share of the remaining equity shares and might also enable the Company to address more effectively any imbalance between supply and demand for the Company's 'A' non-voting Ordinary shares.

FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Fair Value Hierarchy

IFRS 13 'Fair Value Measurement' requires an entity to classify fair value measurements, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

   Level 1:     quoted prices (unadjusted) in active markets for identical assets or liabilities; 

Level 2:

inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3: inputs for the asset or liability not based on observable market data (unobservable inputs).

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:

 
                                         Level 1  Level 2  Level 3    Total 
                          31 March 2021   GBP000   GBP000   GBP000   GBP000 
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 
 
 
 
                                         Level 1  Level 2  Level 3    Total 
                          31 March 2020   GBP000   GBP000   GBP000   GBP000 
Financial assets at fair value through 
 profit or loss 
Quoted equities                          116,310        -        -  116,310 
Unquoted equities                              -        -    9,276    9,276 
Fund investments                               -  147,678        -  147,678 
Investment In subsidiary                       -        -    3,179    3,179 
Net fair value                           116,310  147,678   12,455  276,443 
 
 

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:

 
                                                                 2021          2020 
                                                               Equity        Equity 
                                                          investments   investments 
                                                               GBP000        GBP000 
Opening Balance                                                12,455             - 
Transferred from Level 1                                            -             - 
Purchases (Capital Drawdown)                                        -         9,276 
Purchase of Hansa Trust                                             -       332,019 
Sales (Capital Distribution)                                        -     (328,840) 
Total gains or losses included in gains on investments 
 in the Income Statement: 
- on assets held at year end                                  (1,221)             - 
Closing Balance                                                11,234        12,455 
 
 

FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)

As at 31 March 2021, 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 2021. The most recent valuation statement was received on 24 February 2021 and relates to the DV4 portfolio at 31 December 2020. 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. The Company has considered the ongoing impact of Covid-19, the associated financial impact on certain industries and its potential impact on asset values. In the absence of a valuation for 31 March 2021 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 2021. It is believed the value of DV4 as at 31 March 2021 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 2021 would have increased or decreased by GBP806,000 (2020: GBP928,000). The Board considers 10% to be a potential movement between valuation periods borne out by historic valuation trends. However, this does not preclude the valuation moving a greater amount than 10% in the future. The subsidiary has been valued taking into account the latest assets and liabilities remaining In Hansa Trust.

RELATED PARTIES & TRANSACTIONS WITH THE PORTFOLIO MANAGER

William Salomon is a Director of the Company and Senior Partner of the Company's Portfolio Manager. Details of the relationship between the Company and Hansa Capital Partners LLP, including amounts paid during the year and owing at 31 March 2021, are disclosed in the Strategic Report - Shareholder Profile and Engagement and in Note 3. Details of the relationship between the Company and the Directors, including amounts paid during the period to 31 March 2020, are disclosed in the Strategic Report - The Board and also in the Directors' Remuneration Report.

CONTROLLING PARTIES

At 31 March 2021 Victualia Limited Partnership and Nomolas Ltd each held 25.9% of the issued Ordinary shares. Additional information is disclosed in the Strategic Report - Substantial Shareholders.

POST BALANCE SHEET EVENTS

There are no significant events that have occurred after the end of the reporting year to the date of this report which require disclosure.

Pro-Forma Income Statement (Unaudited) for the combined Hansa Investment Company Limited Group

For the year ended 31 March 2021

 
                                                     Year ended                     Year ended/period 
                                                    31 March 2021                      31 March 2020 
                                                                                             Hansa 
                                                           Hansa   Combined     Hansa   Investment   Combined 
                                              Hansa   Investment      Group     Trust      Company      Group 
                                              Trust      Company       Year   1 April      21 June       Year 
                                               Year         Year      ended      2019         2019      ended 
                                              ended        ended   31 March     to 31           to   31 March 
                                           31 March     31 March       2021     March     31 March       2020 
                                               2021         2021      Total      2020         2020      Total 
                                             GBP000       GBP000     GBP000    GBP000       GBP000     GBP000 
Gains/(losses) on investments held 
 at fair value through profit or 
 loss                                             -       93,032     93,032   (7,004)     (50,965)   (57,969) 
Foreign exchange gain/(loss)                      -        (181)      (181)         8        (104)       (96) 
Investment income                                 -        6,350      6,350     5,963        1,159      7,122 
                                                  -       99,201     99,201   (1,033)     (49,910)   (50,943) 
Portfolio management fees                         -      (2,621)    (2,621)   (1,000)      (1,441)    (2,441) 
Other expenses                                    -      (1,149)    (1,149)   (1,378)      (1,488)    (2,866) 
                                                  -      (3,770)    (3,770)   (2,378)      (2,929)    (5,307) 
Profit/(loss) before finance costs                -       95,431     95,431   (3,411)     (52,839)   (56,250) 
Finance costs                                     -            -          -         -          (1)        (1) 
Profit/(loss) for the year                        -       95,431     95,431   (3,411)     (52,840)   (56,251) 
Return per Ordinary and 'A' non--voting 
 Ordinary share                                   -        79.6p      79.6p    (2.8)p      (44.1)p    (46.9)p 
 

Pro-Forma Balance Sheet (Unaudited) for the combined Hansa Investment Company Limited Group

as at 31 March 2021

 
                                                      Combined     Combined 
                                                         Group        Group 
                                                    Year Ended   Year Ended 
                                                      31 March     31 March 
                                                          2021         2020 
                                                        GBP000       GBP000 
Non-current assets 
Investments held at fair value through profit 
 or loss                                               365,268      273,264 
                                                       365,268      273,264 
Current assets 
Trade and other receivables                                177        2,503 
Cash and cash equivalents                                2,833        1,066 
                                                         3,010        3,569 
 
Current liabilities 
Trade and other payables                                 (388)        (534) 
Net current assets                                       2,622        3,035 
 
Net assets                                             367,890      276,299 
 
Capital and reserves 
Called up share capital                                  1,200        1,200 
Contributed surplus reserve                            326,019      327,939 
Retained earnings / (Accumulated losses)                40,671     (52,840) 
Total equity shareholders' funds                       367,890      276,299 
 
Net asset value per Ordinary and 'A' non-voting 
 Ordinary share                                         306.6p       230.2p 
 

Pro-Forma Statement of Changes in Equity (Unaudited) for the combined Hansa Investment Company Limited Group

For the year ended 31 March 2021

 
                                                     (Accumulated 
                                        Contributed      losses)/ 
                                 Share      surplus      Retained 
                               capital      reserve      earnings    Total 
                                GBP000       GBP000        GBP000   GBP000 
Net assets at 1 April 2020       1,200      327,939      (52,840)  276,299 
Profit for the year                  -            -        95,431   95,431 
Dividends                            -      (1,920)       (1,920)  (3,840) 
Net assets at 31 March 2021      1,200      326,019        40,671  367,890 
 

Pro-Forma Statement of Changes in Equity (Unaudited) for the combined Hansa Investment Company Limited Group

For the year ended 31 March 2020

 
                                                                            (Accumulated 
                                                      Capital  Contributed      losses)/ 
                                           Share   redemption      surplus      Retained 
                                         capital      reserve      reserve      earnings     Total 
                                          GBP000       GBP000       GBP000        GBP000    GBP000 
Net assets at 1 April 2019                 1,200          300            -       335,850   337,350 
Hansa Trust loss for year                      -            -            -       (3,411)   (3,411) 
Dividends paid by Hansa Trust                  -            -            -       (1,920)   (1,920) 
Capital reorganisation as part of the 
 scheme                                        -        (300)      330,819     (330,519)         - 
Hansa Investment Company Limited loss 
 for the year                                  -            -            -      (52,840)  (52,840) 
Dividends paid by Hansa Investment 
 Company Limited                               -            -      (2,880)             -   (2,880) 
As at 31 March 2020                        1,200            -      327,939      (52,840)   276,299 
 

Pro-Forma Cash Flow Statement (Unaudited) for the combined Hansa Trust and Hansa Investment Company Limited

For the year ended 31 March 2021

 
                                                         Combined     Combined 
                                                            Group        Group 
                                                       Year-ended   Year-ended 
                                                         31 March     31 March 
                                                             2021         2020 
                                                           GBP000       GBP000 
Cash flows from operating activities 
Profit/(loss) before finance costs                         95,431     (56,250) 
Adjustments for: 
Realised losses/(gains) on investments                      2,011      (3,051) 
Unrealised (gains)/losses on investments                 (95,043)       61,020 
Foreign exchange                                              181           96 
Decrease/(increase) in trade and other receivables          2,326      (1,385) 
Decrease in trade and other payables                        (146)      (1,499) 
Purchase of non-current investments                      (27,416)     (29,984) 
Sale of non-current investments                            28,444       34,542 
Net cash inflow from operating activities                   5,788        3,489 
Cash flows from financing activities 
Interest paid on bank loans                                     -          (1) 
Dividends paid                                            (3,840)      (4,800) 
Net cash outflow from financing activities                (3,840)      (4,801) 
Increase/(decrease) in cash and cash equivalents            1,948      (1,312) 
Cash and cash equivalents at 1 April                        1,066        2,474 
Foreign exchange                                            (181)         (96) 
Cash and cash equivalents at end of year                    2,833        1,066 
 

Notes to the Condensed Pro-Forma Financial Statements (Unaudited)

ACCOUNTING POLICIES

   (a)    Basis of preparation 

The Pro-Forma Financial Statements of the Company have been prepared under the historical cost convention, except for the measurement at fair value of investments, and primarily using the principles of International Financial Reporting Standards ("IFRS") as adopted by the European Union, with the following significant departures:

Hansa Investment Company Limited and, as of the implementation of the Scheme on 29 August 2019, its 100% subsidiary Hansa Trust together are referred to as the "Group" or "Combined Group" for the purposes of the Pro-Forma Financial Statements. Under IFRS 10 'Consolidated Financial Statements', from 29 August 2019 onwards, Hansa Investment Company Limited meets the definition of an investment entity and as such any subsidiaries, namely Hansa Trust, are accounted for at fair value through profit or loss in accordance with IFRS 9 'Financial Instruments'. These Pro-Forma Financial Statements have been prepared assuming that any subsidiaries are consolidated, rather than accounted for at fair value. Prior to 29 August 2019, Hansa Trust was a standalone entity - itself deemed to be an investment entity.

A consequence of the consolidation of subsidiaries is that these Pro-Forma Financial Statements are Consolidated Financial Statements and therefore contain comparative and historical information which encompasses the whole Group. Practically, comparative and historical information is derived from Hansa Trust.

The Group has not presented a Consolidated Income Statement in accordance with the Guidance Issued by the Association of Investment Companies with respect to the allocation between Income and Capital. Income and Capital columns have been combined for each consolidated entity to simplify the presentation of the statement itself.

EPS/NAV per share for comparable numbers brought forward from Hansa Trust have been restated to reflect the new number of Hansa Investment Company Limited shares in issue. EPS and NAV per share throughout the Interim Report reflect the number of Hansa Investment Company Limited shares in issue.

The Directors have adopted the proposed departures as they believe the results of the Pro-Forma Financial Statements better enable shareholders to understand the elements of the value of the Company at the year end as well, as compare to prior years.

These Pro-Forma Financial Statements are presented in Sterling, the currency of the primary economic environment in which the Company operates.

INCOME

 
                                                                                        Hansa 
                                                                           Hansa   Investment 
                                                    Hansa                  Trust      Company 
                                       Hansa   Investment     Combined   1 April      21 June     Combined 
                                       Trust      Company        Group      2019         2019        Group 
                                  Year ended   Year ended   Year ended     to 31        to 31   Year ended 
                                    31 March     31 March     31 March     March        March     31 March 
                                        2021         2021         2021      2020         2020         2020 
                                      GBP000       GBP000       GBP000    GBP000       GBP000       GBP000 
Income from quoted investments 
Dividends                                  -        6,350        6,350     5,959        1,158        7,117 
Other income 
Interest receivable on AAA 
 rated 
 money market funds                        -            -            -         4            1            5 
Total income                               -        6,350        6,350     5,963        1,159        7,122 
 

PORTFOLIO MANAGEMENT FEE

 
                                                                                  Hansa 
                                                                     Hansa   Investment 
                                              Hansa                  Trust      Company 
                                 Hansa   Investment     Combined   1 April      21 June     Combined 
                                 Trust      Company        Group      2019         2019        Group 
                            Year ended   Year ended   Year ended     to 31        to 31   Year ended 
                              31 March     31 March     31 March     March        March     31 March 
                                  2021         2021         2021      2020         2020         2021 
                                GBP000       GBP000       GBP000    GBP000       GBP000       GBP000 
Portfolio management fee             -        2,621        2,621     1,000        1,441        2,441 
Total management fee                 -        2,621        2,621     1,000        1,441        2,441 
 

OTHER EXPENSES

 
                                                                                         Hansa 
                                                                            Hansa   Investment 
                                                     Hansa                  Trust      Company 
                                        Hansa   Investment     Combined   1 April      21 June     Combined 
                                        Trust      Company        Group      2019         2019        Group 
                                   Year ended   Year ended   Year ended     to 31        to 31   Year ended 
                                     31 March     31 March     31 March     March        March     31 March 
                                         2021         2021         2021      2020         2020         2020 
                                       GBP000       GBP000       GBP000    GBP000       GBP000       GBP000 
Administration fees                         -          143          143        57           82          139 
AIFM                                        -            -            -        54            -           54 
Directors' remuneration                     -          195          195        58          144          202 
Auditors' remuneration for: 
- audit of the Company's 
 Year/Period-End Report                     -           80           80        44           55           99 
Fees payable to the Auditor 
 for other services: 
Printing fees                               -           36           36        32           15           47 
Directors' liability insurance              -           74           74        19           38           57 
Marketing                                   -           79           79        64           39          103 
Registrar's fees                            -           83           83        12          119          131 
Banking charges                             -            1            1        62            2           64 
Secretarial services                        -          121          121        61           85          146 
Travel expenses                             -          (4)          (4)        14           74           88 
Legal fees - redomicile project             -           17           17       734          381        1,115 
Broker fees                                 -           21           21        19           15           34 
Stock Exchange listing fees                 -           52           52        36          247          283 
Safe custody fees                           -          165          165        49           99          148 
Other                                       -           86           86        63           93          156 
Total other expenses                        -        1,149        1,149     1,378        1,488        2,866 
 

DIVIDS PAID & DECLARED

 
                                                   (Unaudited) 
                                                      Combined  (Unaudited) 
                                                         Group     Combined 
                                                          Year        Group 
                                                         ended   Year ended 
                                                      31 March     31 March 
                                                          2021         2020 
                                                        GBP000       GBP000 
Second interim dividend for Hansa Trust 2019 
 (paid May 2019): 1.6p                                       -        1,920 
First interim dividend for 2021 (paid August 
 2020): 0.8p (2020: 0.8p)                                  960          960 
Second interim dividend for 2021 (paid November 
 2020): 0.8p (2020:0.8p)                                   960          960 
Third interim dividend for 2021 (paid February 
 2021):0.8p (2020: 0.8p)                                   960          960 
Fourth interim dividend for 2021 (payable May 
 2021): 0.8p (2020:0.8p)                                   960          960 
                                                         3,840        5,760 
 

RETURN PER SHARES

The returns stated below are based on 120,000,000 shares, being the number of shares in issue at the end of the period for HICL, with the comparable having been rebased to this number of shares (Hansa Trust had 24,000,000 shares in issue) for comparison purposes.

 
                                                  Hansa Investment 
                               Hansa Trust             Company           Combined Group 
                                         Pence                 Pence                 Pence 
                            GBP000   per share    GBP000   per share    GBP000   per share 
Year ended 31 March 2021         -           -    95,431        79.6    95,431        79.6 
Year ended 31 March 2020   (3,411)       (2.8)  (52,840)      (44.1)  (56,251)      (46.9) 
 

FINANCIAL INFORMATION

The year-end pro-forma financial information was approved by a committee of the Board of Directors on 22 June 2021.

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 Monday 9 August at 11:00 a.m. (Bermuda time) for the following purposes:

Agenda

To appoint a chairperson of the meeting.

To confirm notice.

Resolutions

To receive and consider the audited Financial Statements and the Reports of the Directors and Auditor for the year ended 31 March 2021.

To re-elect Jonathan Davie (a biography and Board endorsement can be found earlier in the report) as a Director of the Company.

To re-elect Richard Lightowler (a biography and Board endorsement can be found earlier in the report) as a Director of the Company.

To re-elect Nadya Wells (a biography and Board endorsement can be found earlier in the report) as a Director of the Company.

To re-elect William Salomon (a biography and Board endorsement can be found earlier in the report) as a Director of the Company.

To re-elect Simona Heidempergher (a biography and Board endorsement can be found earlier in the report) as a Director of the Company.

To approve the Directors' Remuneration Report.

To approve the Company's Dividend Policy as can be found earlier in the Annual Report.

To appoint PricewaterhouseCoopers Ltd as Auditor of the Company and to authorise the Directors to determine the remuneration of the Auditor.

Approval to repurchase up to 14.99% of the 'A' non--voting Ordinary shares of 1p each in the issued shares capital of the Company (the "Shares").

THAT the Company be and hereby is unconditionally authorised to make market purchases up to an aggregate of 11,992,000 shares at a price (exclusive of expenses) which is:

            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.

The amendment and full restatement of the Company's bye-laws by the substitution of Bye -- law 25.4 with the following new Bye-law 25.4 to provide for the delivery to members of information, notices and documents by making the foregoing available on a website or by other electronic means notified to the Members from time to time:

"25.4 The Board may deliver to Members any information, notices or documents by making such information, notices and documents available on a website or by other electronic means. The Board may make available any such information, notices or documents at www.hansaicl.com or at such other website or by other electronic means as notified to the Members from time to time. The Board shall procure that information or documents provided to a Member via such a website shall be made available until the conclusion of the meeting to which they relate (if applicable)."

Dated: 22 June 2021

Shane Reynolds

For and on behalf of

Conyers Corporate Services (Bermuda) Limited

Secretary

Notes for Shareholders

1 Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 (as amended), only those members registered in the register of members of the Company 48 hours before the Annual General Meeting (i.e. by close of business UK time on 5 August 2021) (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 3:00pm UK time on 9 August 2021) 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 3:00pm UK time on 5 August 2021 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 shareholderenquiries@linkgroup.co.uk.

Notes for Depositary Interest Holders

1 You will not receive a form of direction for the Annual General Meeting in the post. Depositary Interests may be voted through the CREST Proxy Voting Service in accordance with the procedures set out in the CREST manual.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications and must contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com/CREST). The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer's agent ID RA10 by 3:00pm UK time on 4 August 2021. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST, in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of

the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

2 In the case of Depositary Interest Holders, a form of direction may be requested and completed in order to instruct Link Market Services Trustees Limited, the Depositary, to vote on the holder's behalf at the Meeting by proxy or, if the Meeting is adjourned, at the adjourned meeting. Requests for a hard copy should be sent Link Group, PXS 1, Central Square, 29 Wellington Street, Leeds, LS1 4DL (telephone number: 0871 664 0300 or 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 3:00pm UK time on 4 August 2021) or 72 hours before any adjourned Meeting.

4 The Depositary will appoint the Chairman of the meeting as its proxy to cast your votes. The Chairman may also vote or abstain from voting as he or she thinks fit on any other business (including amendments to resolutions) which may properly come before the meeting.

5 The 'Vote Withheld' option is provided to enable you to abstain from voting on the resolutions. However, it should be noted that a 'Vote Withheld' is not a vote in law and will not be counted in the calculation of the proportion of the votes 'For' and 'Against' a resolution.

6 Depositary Interest holders wishing to attend the meeting should contact the Depositary at Link Group, PXS 1, Central Square, 29 Wellington Street, Leeds, LS1 4DL or by email by using nominee.enquiries@linkgroup.co.uk by no later than by 3:00pm UK time on 4 August 2021.

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 22 June 2021 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-2021#2021 

Investor Information

The Company currently manages its affairs so as to be a qualifying investment company for ISA purposes, for both the Ordinary and 'A' non-voting Ordinary shares. It is the present intention that the Company will conduct its affairs so as to continue to qualify for ISA products. In addition, the Company currently conducts its affairs so shares issued by Hansa Investment Company Limited can be recommended by independent financial advisers to ordinary retail investors, in accordance with the Financial Conduct Authority's ("FCA") rules in relation to non--mainstream investment products and intends to continue to do so for the foreseeable future. The shares are excluded from the FCA's restrictions which apply to non--mainstream investment products, because they are excluded securities defined in the FCA Handbook Glossary. Finally, Hansa Investment Company is registered as a Reporting Financial Institution with the US IRS for FATCA purposes.

   Investor   Disclosure 

AIFMD

Hansa Investment Company's AIFMD Investor Disclosure document can be found on its website. The document is a regulatory requirement and summarises key features of the Company for investors. It can be viewed at: www.hansaicl.com/shareholder-information/regulatory-information.aspx

Packaged Retail and Insurance-based Investment Products ("PRIIPs")

The Company's AIFM, Hanseatic Asset Management LBG, is responsible for applying the product governance rules defined under the MiFID II legislation on behalf of Hansa Investment Company Limited. Therefore, the AIFM is deemed to be the 'Manufacturer' of Hansa Investment Company's two share classes. Under MiFID II, the Manufacturer must make available Key Information Documents ("KIDs") for investors to review if they so wish ahead of any purchase of the Company's shares. Links to these documents can also be found on the Company's website for good measure: www.hansaicl.com/shareholder-information/regulatory-information.aspx

Capital Structure

The Company has 40,000,000 Ordinary shares of 1p each and 80,000,000 'A' non--voting Ordinary shares of 1p each in issue. The Ordinary shareholders are entitled to one vote per Ordinary share held. The 'A' non--voting Ordinary shares do not entitle the holders to vote or receive notice of meetings, but in all other respects they have the same rights as the Company's Ordinary shares.

Contact Details

Email: hiclenquiry@hansacap.com

Website: www.hansaicl.com

Company Secretary (and Company's Registered Office)

Conyers Corporate Services (Bermuda) Limited

Clarendon House, 2 Church Street

PO Box HM666, Hamilton HM CX

Bermuda

Phone: +1 441 279 5373

Website: www.conyers.com

Please contact the Portfolio Manager, as below, if you have any queries concerning the Company's investments or performance.

Portfolio Manager

Hansa Capital Partners LLP

50 Curzon Street

London W1J 7UW

Telephone: +44 (0) 207 647 5750

Email: hiclenquiry@hansacap.com

Website: www.hansagrp.com

The Company's website includes the following:

- Monthly Fact Sheets

- Stock Exchange Announcements

- Details of the Board Statements

- Annual and Interim Reports

- Share Price Data Reports

Please contact the Registrars, as below, if you have a query about a certificated holding in the Company's shares.

Link Group

10th Floor

Central Square

29 Wellington Street

Leeds LS1 4DL

If you do not have internet access you can call the Shareholder Support Centre on 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the UK will be charged at the applicable international rate.

They are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales.

Email: shareholderenquiries@linkgroup.co.uk

www.linkgroup.eu

Share Price Listings

The price of your shares can be found on our website and in the Financial Times under the heading 'Investment Companies'.

In addition, share price information can be found under the following:

   ISIN                                                         Code 
   Ordinary shares                                     BMG428941162 
   'A' non-voting Ordinary shares              BMG428941089 

SEDOL

   Ordinary shares                                     BKLFC18 
   'A' non-voting Ordinary shares              BKLFC07 

Reuters

   Ordinary shares                                     HAN.L 
   'A' non-voting Ordinary shares              HANA.L 

Bloomberg

   Ordinary shares                                     HAN LN 
   'A' non-voting Ordinary shares              HANA LN 

TIDM

   Ordinary shares                                     HAN 
   'A' non-voting Ordinary shares              HANA 

Legal Entity Identifier: 213800RS2PWJXSZQDF66

Useful Internet Addresses

   Association of Investment Companies           www.theaic.co.uk 
   London Stock Exchange                                   www.londonstockexchange.com 
   TrustNet                                                          www.trustnet.com 
   Interactive Investor                                         www.iii.co.uk 
   Morningstar                                                    www.morningstar.com 
   Edison                                                              www.edisongroup.com 

Financial Calendar

   Company year end                                            31 March 
   Annual Report sent to shareholders                30 June 
   Annual General Meeting                                  9 August 
   Announcement of Half Year results                November 
   Interim Report sent to shareholders               December 

Interim dividend payments

August, November, February & May

Company Information

Registered in Bermuda company number: 54752

BOARD OF DIRECTORS

Jonathan Davie (Chairman)

Simona Heidempergher

Richard Lightowler

William Salomon

Nadya Wells

SECRETARY AND REGISTERED OFFICE

Conyers Corporate Services (Bermuda) Limited

Clarendon House

2 Church Street

PO Box HM666

Hamilton HM CX

Bermuda

PORTFOLIO MANAGER AND ADDITIONAL ADMINISTRATIVE SERVICES PROVIDER

Hansa Capital Partners LLP

50 Curzon Street

London W1J 7UW

INDEPENT AUDITOR

PricewaterhouseCoopers Ltd

Washington House

4th Floor, 16 Church Street,

Hamilton HM11,

Bermuda

SOLICITORS

Dentons

1 Fleet Place

London EC4M 7WS

REGISTRAR

Link Market Services (Guernsey) Limited

Mont Crevelt House

Bulwer Avenue

St. Sampson

Guernsey

GY2 4LH

CUSTODIAN

Banque Lombard Odier & Cie SA

11 Rue de la Corraterie

1204 Geneva

Switzerland

STOCKBROKER

Winterflood Investment Trusts

The Atrium Building

Cannon Bridge

25 Dowgate Hill

London EC4R 2GA

ADMINISTRATOR

Maitland Administration Services Limited

Hamilton Centre

Rodney Way

Chelmsford

Essex

CM1 3BY

ALTERNATIVE INVESTMENT FUND MANAGER

Hanseatic Asset Management LBG

Tudor House

Le Bordage

St Peter Port

Guernsey

GY1 1WD

Glossary of Terms

Association of Investment Companies ("AIC")

The Association of Investment Companies is the UK trade association for closed-ended investment companies. It represented Hansa Trust prior to the redomiciliation of the business. Despite the Company not being UK domiciled, the Company is UK listed and operates in most ways in a similar manner to a UK Investment Trust. Therefore, the Company follows the AIC Code of Corporate Governance and the Board considers that the AIC's guidance on issues facing the industry remains very relevant to the operations of the Company.

Alternative Investment Fund Managers Directive ("AIFMD")

The AIFMD is a regulatory framework for alternative investment fund managers ("AIFMs"), including managers of hedge funds, private equity firms and investment trusts. Its scope is broad and, with a few exceptions, covers the management, administration and marketing of alternative investment funds ("AIFs"). Its focus is on regulating the AIFM rather than the AIF.

Annual Dividend/Dividend

The amount paid by the Company to shareholders in dividends (cash or otherwise) relating to a specific financial year of the Company. The Company's dividend policy is to announce its expected level of dividend payment at the start of each financial year. Barring unforeseen circumstances, the Company then expects to make four interim dividend payments each year - at the end of August, November and February during that financial year and at the end of May following the end of the financial year.

Bid Price

The price at which you can sell shares determined by supply and demand.

Capital Structure

The stocks and shares that make up a company's capital i.e. the amount of ordinary and preference shares, debentures and unsecured loan stock etc. which are in issue.

Closed-ended

A company with a fixed number of shares in issue.

Depositary/Custodian

A financial institution acting as a holder of securities for safekeeping.

Discount

When the share price is lower than the NAV, it is referred to as trading at a discount. The discount is expressed as a percentage of the NAV.

Expense Ratio

An expense ratio is determined through an annual calculation, where the operating expenses are divided by the average NAV. Note there is also a description of an additional PRIIPs KIDs.

Five Year Rolling NAV Return (per annum)

The rate at which, compounded for five years, will equal the five year NAV total return to end March, assuming dividends are always reinvested at pay date.

Five Year NAV and Share Price Total Return

Rebased from 0% at the start of the five year period, this is the rate at which the Company's NAV and share prices would have returned at any period from that starting point, assuming dividends are always reinvested at pay date. As part of the calculation of the Company's Five Year NAV and Share Price Total Return, the Company will continue to use and quote results from its predecessor, Hansa Trust, as part of that reporting so shareholders can see the longer-term performance of the portfolio.

Gearing

Gearing refers to the level of borrowing related to equity capital.

Hedging

Strategy used to reduce risk of loss from movements in interest rates, equity markets, share prices or currency rates.

Issued Share Capital

Issued share capital is the total number of shares subscribed to by the shareholders.

Key Information Document ("KID")

This is a document of a form stipulated under the PRIIPs Regulations. It provides basic, pre-contractual, information about the Company and its share classes in a simple and accessible manner. It is not marketing material.

Key Performance Indicators ("KPIs")

A set of quantifiable measures that a company uses to gauge its performance over time. These metrics are used to determine a company's progress in achieving its strategic and operational goals and also to compare a company's finances and performance against other businesses within its industry. In the case of historic information, the KPIs will be compared against data of both the Company and, prior to the Company's formation, from Hansa Trust Ltd.

Market Capitalisation

The market value of a company's shares in issue. This figure is found by taking the stock price and multiplying it by the total number of shares outstanding.

Mid Price

The average of the Bid and Offer Prices of a particular traded share.

Net Asset Value/NAV

The value of the total assets minus liabilities of the company.

Net Asset Value Total Return

See Total Return.

Offer Price

The price at which you can buy shares determined by supply and demand.

Ordinary Shares

Shares representing equity ownership in a company allowing investors to receive dividends. Ordinary shareholders have the pro--rata right to a company's residual profits. In other words, they are entitled to receive dividends if any are available after payments to financial lenders and dividends on any preferred shares are paid. They are also entitled to their share of the residual economic value of the company should the business unwind.

Hansa Investment Company Limited has two classes of Ordinary share. The Ordinary (40m shares) and the 'A' non-voting Ordinary shares (80m shares). Both have the same financial interest in the underlying assets of the Company and receive the same dividend, but differ only in that only the former shares have voting rights, whereas the latter do not. They trade separately on the London Stock Exchange, nominally giving rise to different share prices at any given time.

Premium

When the share price is higher than the NAV it is referred to as trading at a premium. The premium is expressed as a percentage of the NAV.

Packaged Retail and Insurance-based Investment Product ("PRIIP")

Packaged retail investment and insurance-based products ("PRIIPs") make up a broad category of financial assets that are regularly provided to consumers in the European Union. The term PRIIPs, created by the European Commission to regulate the underlying market, is defined as any product manufactured by the financial services industry, to provide investment opportunities to retail investors, where the amount repayable is subject to fluctuation because of exposure to reference values, or the performance of underlying assets not directly purchased by the retail investor.

Shareholders' Funds/Equity Shareholders' Funds

This value equates to the NAV of the Company. See NAV.

Spread

The difference between the Bid and Ask price.

Tradable Instrument Display Mnemonics ("TIDM")

A short, unique code used to identify UK-listed shares. The TIDM code is unique to each class of share and to each company. It allows the user to ensure they are referring to the right share. Previously known as EPIC.

Total Return

When measuring performance, the actual rate of return of an investment or a pool of investments over a given evaluation period. Total return includes interest, capital gains, dividends and distributions realised over a given period of time. In the case of historic information, the Total Return will include data against data of both the Company and, prior to the Company's formation, from Hansa Trust Ltd.

Total Return - Shareholder

The Total Return to a shareholder is a measure of the performance of the Company's share price over time. It combines share price appreciation/depreciation and dividends paid to show the total return to the shareholder expressed as an annualised percentage.

VIX Index

The VIX, or the CBOE Volatility Index, is a widely used measure of the implied volatility of the stock market, based on S&P 500 index options. It is calculated and published by the Chicago Board Options Exchange.

Hansa Investment Company Limited

Clarendon House

2 Church Street

PO Box HM666

Hamilton HM CX

Bermuda

T : +44 (0) 207 647 5750

E : hiclenquiry@hansacap.com

Visit us at

www.hansaicl.com

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