HANSA, investing to create long-term growth 2020 - HANSA INVESTMENT COMPANY LIMITED - Hansa Trust

 
HANSA INVESTMENT
                    COMPANY LIMITED

HANSA, investing to create
long-term growth

                                          2020
                    Period End Report
                   For the Period Ended
                         31 March 2020
WELCOME

I’m pleased to present the first Period-End Report for Hansa Investment Company Ltd (“the Company”, “HICL”)
to the shareholders.

2019 and the start of 2020 have been extremely busy. HICL was incorporated in Bermuda and was listed in
the London Stock Exchange on the 29 August 2019, following the transfer of business from Hansa Trust PLC
("Hansa Trust"). Latterly, and as I write this to you, we find ourselves in unprecedented times with the world
in a struggle against a virus that has claimed the lives of hundreds of thousands of people globally and rocked
economies and financial systems to their cores.

Despite the corporate changes during the year, the Investment Policy and underlying portfolio remained largely
unchanged and continued to be managed by our Portfolio Manager, Hansa Capital Partners LLP ("HCP").
Alec Letchfield understandably has focused his piece on the impact the virus has had on markets and on our
portfolio, as well as considering where events might go from here. You can read his update later in this Report.

Our Interim Report in September 2019 included a good deal of information on the Scheme of Redomiciliation.
This Period-End Report will repeat elements of that information for those readers who might have missed it.

You will also note some administrative changes: as part of the Scheme of Redomiciliation, our new Company issued
five shares for every one Hansa Trust share. This has led to changes in the quoted NAV per share, market share price
of each class of share and dividends per share when they are announced. The Company also pays quarterly dividends
rather than semi-annual. As a newly formed company, HICL has no historical performance. To give shareholders
a more meaningful representation of the performance of the portfolio since 1 April 2019, we have also included
a non-statutory, pro-forma unaudited set of Financial Statements incorporating the performance of Hansa Trust as
relevant, as well as the required statutory Financial Statements since HICL's inception. I would encourage you to look
at both the statutory Financial Statements as well as the non-statutory, pro-forma, Financial Statements included
in this Report. Together they paint a more meaningful picture of performance for the year and also comparable
historical information. Our Board has also undergone a change with three new Directors. Biographies of our Directors
can be found on the Company’s website (www.hansaicl.com) and within this Report.

I wish you and your families well during these challenging times.

Yours sincerely

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
2    Strategic Report                                                     48 Independent Auditor's Report to                                           70 Pro-Forma Balance Sheet (Unaudited) for
2    Chairman’s Report to the Shareholders                                   the Members of Hansa Investment                                              the combined Hansa Trust PLC and Hansa
6    The Board of Directors                                                  Company Ltd                                                                  Investment Company Ltd Group
8    The Board                                                            53     Financial Statements                                                  71 Pro-Forma Statement of Changes in Equity
10   Long-Term Performance                                                53     Income Statement                                                         (Unaudited) for the combined Hansa Trust
11   Organisation and Objectives                                          54     Balance Sheet                                                            PLC and Hansa Investment Company Ltd
20   Portfolio Manager’s Report                                           55     Statement of Changes in Equity                                        72 Pro-Forma Cash Flow Statement
32   Portfolio Statement                                                  55     Cash Flow Statement                                                      (Unaudited) for the combined Hansa Trust
34   Shareholder Profile and Engagement                                   56     Notes to the Financial Statements                                        PLC and Hansa Investment Company Ltd

                                                                                                                                                                                                                 Reports
                                                                                                                                                                                                                 Corporate Governance
37   Corporate Governance Reports                                                                                                                      73 Notes to the Condensed Pro-Forma
                                                                          68 Pro-Forma Financial Statements                                               Financial Statements
37   Report of the Directors                                              68 Introduction to the Pro-Forma Financial
38   Corporate Governance Report                                             Statements                                                                76 Notice of the Annual General Meeting
43   Audit Committee Report                                               69 Pro-Forma Income Statement (Unaudited)                                    79 Investor Information
45   Directors’ Remuneration Report                                          for the combined Hansa Trust PLC and                                      80 Company Information
                                                                             Hansa Investment Company Ltd Group                                        82 Glossary of Terms

                                                                                                                                                                                                                 Financial Statements
Long-Term                                    Rolling Five Year NAV Returns (per annum)
Highlights 2020                              2011 – 2020

                                             18
Graphs represent the combined results        16

                                                                                                                       15.4%
of the Company with Hansa Trust PLC.

                                                                                                                                                                                                                 Financial Statements
                                                                                                                                                                                                                 Pro-Forma
                                             14
To that end, where historic information
relating to Hansa Trust PLC is quoted        12
on a ‘per share’ basis, it has been          10
converted to be consistent with the
                                                                          8.0%

number of HICL shares in issue.                          8
                                                         6
                                                                                                                                    6.0%

                                                                                                                                                                          5.9%

                                                                                                                                                                                                     1.5%
                                                                                                         4.9%

                                                                                                                                                                                          4.7%
                                                                                                                                                                  4.3%
                                                                                                                                                  0.6%
                                                         4
                                                                                        3.1%

                                                         2

                                                                                                                                                                                                                 General Meeting
                                                                                                                                                                                                                 Notice of the Annual
                                               0 2011           2012    2013       2014       2015       2016      2017      2018         2019                                                   2020
                                             It is the goal of the Company to make money for shareholders on a long-term basis (five years).
                                             The Board monitors the five year NAV returns as the primary achievement of the Company’s goal.

                                             Dividend payments for year to end March (pence per share)
                                             2011 – 2020
                                                                    3.6

                                                                                                                                                                                                                 Investor Information
                                                                    3.2
                                             Pence per HICL Share

                                                                                                                                                                                                     0.8
                                                                    2.8
                                                                                                                           2.2          1.6        1.6             1.6    1.6             1.6
                                                                    2.4
                                                                                                              2.3                                                                                    0.8
                                                                    2.0
                                                                                               2.1
                                                                    1.6
                                                                    1.2                                                                                                                              0.8
                                                                                                                                        1.6        1.6             1.6    1.6             1.6
                                                                    0.8
                                                                                                                           1.0
                                                                                 0.7           0.7            0.7                                                                                    0.8
                                                                    0.4

                                                                    0
                                                                          2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020
                                                                                 1st Interim Paid                   2nd Interim Paid               3rd Interim Paid               4th Interim Paid
                                             The Dividend Policy can be found on page 17 of these Financial Statements and on the Company’s website.
                                             It can be summarised as the declaration at the beginning of the year of four equal dividends, paid in
                                             November, February, April and May.

                                             Five Year Nav and Share Price Total Return
                                             2015 – 2020
                                                   50%

                                                   40%

                                                   30%

                                                   20%

                                                   10%

                                                               0%

                                             -10%

                                             -20%
                                               Mar-15                                                Mar-16                    Mar-17                    Mar-18                  Mar-19                 Mar-20
                                                                                   NAV Cum Income TR                                    Ord Share TR                     A Ord Share TR

                                                                                                                                              Hansa Investment Company Ltd Period End 2020 1
STRATEGIC REPORT

Chairman’s Report to the
Shareholders
JONATHAN DAVIE
Chairman

Strategic Report
Chairman’s Report to the Shareholders
Strategic Report TABS

                                                 INTRODUCTION
                                                 This is my first Period-End Report to shareholders since becoming
                                                 Chairman of Hansa Investment Company Ltd (“the Company”,
                                                 “HICL”) on 29 August 2019 and it comes at a very challenging
                                                 time for all of us, due to the Coronavirus pandemic. I am pleased
                                                 to be able to say all your Directors and the many people who
                                                 support the Company with various services are presently fit
                                                 and well.
                                                 You will hopefully all be aware that the business successfully
                                                 redomiciled to Bermuda in August 2019, following the
                                                 substantial vote in favour of our proposals in July 2019
                                                 which culminated in the formation of HICL. That said, the
                                                 Investment Objective, Policy and Strategy, as well as the key
                                                 service providers, most notably our Portfolio Manager, remain
                                                 unchanged. The Company continues to seek to achieve its
                                                 investment objective of growing the Company over the medium
                                                 to long-term by primarily investing in third-party funds and
                                                 global equities.
                                                 As a result of the redomicile and formation of a new Company;
                                                 when past performance of the business is referenced, the
                                                 Board considers the performance of the Company to be
                                                 combined with the relevant history from its predecessor, Hansa
                                                 Trust. As such, this, and future Reports, will reference the
                                                 combined performance of, and comparisons between, Hansa
                                                 Trust & HICL and portfolio performances, with notes, where
                                                 relevant, explaining how the data has been derived. Pro-forma
                                                 financial information is provided in the Financial Statements
                                                 at the back of this document to reflect this combined and
                                                 historical performance.
                                                 SHAREHOLDER RETURNS
                                                 The past six months since the Interim Report has shown
                                                 a decline in the Net Asset Value (“NAV”) of 48.3p per share,
                                                 from 278.5p per share to 230.2p per share as at 31 March 2020.
                                                 Similarly, over the past 12 months since 1 April 2019, NAV has
                                                 declined 50.9p per share from 281.1p per share. During the
                                                 past six months, the discount has increased from 32.0% to
                                                 43.1% for the Ordinary shares and from 32.8% to 41.2% for
                                                 the “A” Ordinary shares over the same period. This compares
                                                 with an increase in the discount from 30.5% to 43.1% for the
                                                 Ordinary share and from 30.6% to 41.2% for the “A” Ordinary
                                                 shares over the 12 month period.

2 Hansa Investment Company Ltd Period End 2020
Strategic Report
                                                                                                                                                  Reports
                                                                                                                                                  Corporate Governance
                                                                                                                                                  Financial Statements
There have been two drivers to the fall in NAV. Firstly, Ocean            on. I am also fearful in particular of how the relationship between
Wilson Holdings Ltd (“OWHL") and, secondly, Covid-19. The fall            China and the West develops as we come out of this crisis. The
in the NAV for the 12 months to 31 March 2020 was 16.9%                   National People’s Congress declaration of new security plans for
(Total Return), principally caused by the 42.1% fall in the price         Hong Kong in defiance of the 1997 “One Country Two Systems’’
of OWHL which reflected the fall in the Wilson Sons share price           agreement with the UK does not bode well for the future.
from R$37.1 to R$28.4 over the 12 month period, combined

                                                                                                                                                  Financial Statements
                                                                                                                                                  Pro-Forma
                                                                          This, combined with an inevitable decline in global trade, the still
with a 25% fall in the value of the Real against the US Dollar.
                                                                          to be felt effects of Brexit, the sharp decline in the oil price, the
The NAV decline of 7.4% in the portfolio ex Ocean Wilson
                                                                          possibility of more countries adopting negative interest rates,
is similar to the fall of 7.0% in the MSCI All Country World
                                                                          the uncertainty of the direction of inflation or deflation and the
Index (GBP).
                                                                          spectre of climate change hovering over us all makes this a very
This is a disappointing result for the period. Many investment            challenging time for investment managers.
companies with a March year-end will be reporting results
                                                                          Choppy waters remain but the Board is confident that our

                                                                                                                                                  General Meeting
                                                                                                                                                  Notice of the Annual
heavily impacted by Covid-19. I am pleased to say our NAV
                                                                          Manager can navigate these and work towards achieving our
has recovered by 13.3% (Total Return) as at the date of
                                                                          investment objectives. Indeed, since the 31 March the fund is
19 June 2020 and the Directors continue to see long-term value
                                                                          up 12.9% to £312.0m as at 19 June 2020, having also paid out
in OWHL. Indeed, some of your Directors have increased their
                                                                          a £960k dividend in May 2020.
holdings in your Company in the past six months. I bought
a further 25,000 Ordinary share and 100,000 “A” Ordinary                  CHANGES TO THE BOARD
shares in the period and William Salomon also added                       In my first statement to you in the Interim Report, I noted that
380,000 Ordinary shares and 20,000 “A” Ordinary shares.                   a number of corporate changes had occurred. Given this is

                                                                                                                                                  Investor Information
Simona Heidempergher has also made an initial investment of               the first Period-End of the Company, I should like to repeat
6,400 “A” Ordinary shares.                                                elements of that Statement and start by thanking my fellow
                                                                          Directors at Hansa Trust for their years of dedicated service to
PROSPECTS
                                                                          the company. Their wisdom and insights brought much value
I mentioned in my Interim Report the perverse effects that
                                                                          to all shareholders. I should also like to take this opportunity to
Quantitative Easing ("QE") had had on investment decisions
                                                                          thank Mr Teideman, who has retired having been a consultant
and the deferment of recessionary forces. Well, the Coronavirus
                                                                          to Hansa Trust. Mr Teideman was also a director of Hansa Trust
pandemic has certainly brought QE back into the forefront of the
                                                                          for 12 years between 1991 and 2003 and then, more recently,
battle, to reduce the number of businesses going under during
                                                                          a consultant to the audit committee.
the lockdown and ensure that citizens still have access to some
income and the ability to feed their families. The timing of the          I should like to welcome and introduce our new Directors:
end of this pandemic is impossible to predict, hence making it
                                                                          Richard Lightowler, who is a resident of Bermuda and a retired
particularly challenging for making investment decisions. As Yogi
                                                                          KPMG Partner, is taking over from me as Chairman of the
Berra once said “it ain’t over till it’s over’’! However, it is already
                                                                          Audit Committee. He has extensive experience in risk and
clear the only possible end to the present unsustainable situation
                                                                          corporate governance and significant transaction experience
will be when a suitable vaccine is discovered and a significant
                                                                          including redomiciliations.
majority of the population has been inoculated. It is of course
possible the pandemic will evaporate when “herding’’ has                  Simona Heidempergher, who has extensive experience as an
succeeded in infecting about 60% of the population with the               executive and non-executive director in a range of companies,
virus, or the lockdown has succeeded in banishing it. History tells       including listed companies, investment funds and research
us that without a suitable vaccine it will revisit us at least once       organisations, across multiple jurisdictions. Simona is a director
more, probably during the winter months. It is also disappointing         of, among other entities, TR European Growth Trust and
to see a “beggar thy neighbour’’ attitude and lack of a coordinated       Henderson Asset Management Investment Trust – both listed on
international effort by governments to meet the challenge head            the London Stock Exchange.

                                                                                            Hansa Investment Company Ltd Period End 2020 3
STRATEGIC REPORT

Chairman’s Report to the Shareholders
Continued

Nadya Wells has 25 years’ experience in emerging and frontier       whereupon shareholders in Hansa Trust became shareholders
markets as a long-term investor and corporate governance            in Hansa Investment Company Limited, a new Bermudan
specialist. She spent 13 years as portfolio manager with the        registered company.
Capital Group, investing in Global Emerging Markets and prior
                                                                    On 29 August 2019, pursuant to the Scheme, the issued
to that five years with INVESCO Asset Management Limited
                                                                    share capital of Hansa Trust was de-listed and cancelled.
investing in public and private equity managing a closed
                                                                    New shares were re-issued by the Company at that time
ended fund.
                                                                    and, on 29 August 2019, 40,000,000 Ordinary shares of one
The Directors have overall responsibility for and oversight of      pence each (“Ordinary shares”) were admitted to listing on
the Company’s activities. The Directors are responsible for         the premium segment of the Official List and 80,000,000
determining its investment objective, policy and strategy,          ‘A’ Ordinary shares of one pence each (“ ‘A’ Ordinary shares”)
reviewing the investment activity and performance and the           were admitted to listing on the standard segment of the Official
control and supervision of the Portfolio Manager.                   List and in respect of each class, were admitted to trading on
                                                                    the Main Market of the London Stock Exchange.
The biographies of the Directors can be found on pages 6 and 7
as well as on the Company's website.                                Ordinary Shareholders and ‘A’ Ordinary Shareholders in Hansa
                                                                    Trust at close of business on 28 August 2019 will have received
SCHEME OF REDOMICILIATION
                                                                    five Ordinary shares or ‘A’ Ordinary shares respectively in Hansa
I include below a brief summary of the project.
                                                                    Investment Company Limited in exchange for each existing
In 2018 the board of Hansa Trust began to formally consider         share held.
redomiciling to an alternative jurisdiction, as a result of
                                                                    For more information please see the Company’s prospectus
increasing concerns over the political climate in the UK and
                                                                    https://www.hansaicl.com/~/media/Files/H/Hansa-Investment-
the instability and uncertainty this created for Hansa Trust.
                                                                    Company-Limited/documents/hansa-investment-company-ltd-
Hansa Trust’s globally diversified assets, very few of which
                                                                    prospectus.pdf
were UK-based, enabled the opportunity to redomicile without
significantly impacting the existing structure or anticipated       Following 29 August 2019, all day-to-day business operations
performance of the business as a whole.                             of Hansa Trust terminated and all ongoing operations are within
                                                                    HICL. Many of the service providers that worked for Hansa
After due consideration of a number of potential jurisdictions,
                                                                    Trust have been retained by the Company although there have
Bermuda was deemed by the Hansa Trust board as the
                                                                    been some changes. The current key suppliers are summarised
most appropriate jurisdiction, in order to mirror the existing
                                                                    on pages 13 and 14
investment strategy, portfolio and capital structure, without
any material impact on returns. A proposal to this effect           The Board has estimated the total cost of the project to research
(“the Scheme”) was duly put to shareholders by the board of         and deliver the redomiciliation of the business to be c £2.1m
Hansa Trust on 29 July 2019 and was passed by shareholders          (equivalent to 17.8 p per share or 0.78% of 31 March 2020
of both share classes, who voted in significant numbers and         NAV). This cost has been incurred over two financial years
overwhelmingly in favour of the Scheme.                             – initially by Hansa Trust during its 2018/19 financial year
                                                                    followed by Hansa Trust and HICL during the financial year
The Scheme was sanctioned by the Court on 27 August 2019.
                                                                    2019/20.
Following this, Hansa Trust successfully redomiciled its business
to Bermuda pursuant to the Scheme as of 29 August 2019,

4 Hansa Investment Company Ltd Period End 2020
Strategic Report
                                                                                                                                     Reports
                                                                                                                                     Corporate Governance
                                                                                                                                     Financial Statements
ENVIRONMENTAL, SOCIAL AND CORPORATE
GOVERNANCE ("ESG") MATTERS
ESG considerations will play an increasingly important part in
the decision making processes of funds and their Managers the
world over.

                                                                                                                                     Financial Statements
                                                                                                                                     Pro-Forma
As a Board, we have asked our Manager to review their ESG
processes and report back in due course. We are of the view
that good returns and well run sustainable business models will
go hand in hand.
Further, we are cognisant that, as part of the redomicile of the
business to Bermuda, and in a normal, non-Covid-19, year
there will be a substantial increase in Director travel to attend

                                                                                                                                     General Meeting
                                                                                                                                     Notice of the Annual
Board meetings in Bermuda. Therefore, as a matter of policy,
the Board has elected to offset the carbon impact specifically of
travel on behalf of the business. This is detailed more fully in the
Organisation and Objectives section on page 19.
COMPANY AUDITOR
As previously announced, the Board of the Company have
appointed PricewaterhouseCoopers Ltd of Bermuda (“PwC”)

                                                                                                                                     Investor Information
to audit the Company.
On behalf of the Board, I extend our well wishes to
you, our shareholders, and your families during these
unprecedented times.

Jonathan Davie
Chairman
24 June 2020     

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

                                                                                    Hansa Investment Company Ltd Period End 2020 5
STRATEGIC REPORT

The Board
of Directors

 The Directors who                         JONATHAN DAVIE
                                           (Chairman)
                                                                                            RICHARD LIGHTOWLER
                                                                                            (Audit Committee Chairman)
 served the Company                        Jonathan became a Director and                   Richard became a Director of the
 during the period to                      Chairman of the Company in June 2019.
                                           He remains a Director of Hansa Trust PLC
                                                                                            Company in June 2019. Richard has
                                                                                            25 years’ experience in public accounting
 31 March 2020 are:                        whilst it is run down, joining that board        and recently retired as partner of KPMG
                                           in January 2013. He is also a partner of         in Bermuda after 19 years in that role.
                                           First Avenue Partners, an alternatives           He was head of the KPMG Insurance
                                           advisory boutique.                               Group in Bermuda for 14 years,
                                                                                            a member of the firm's Global Insurance
                                           Jonathan qualified as a Chartered                Leadership Team and Global Lead
                                           Accountant and then joined George                Partner for large international insurance
                                           M. Hill and Co. and became an                    groups listed on the New York and
                                           authorised dealer on the London Stock            London Stock Exchanges.
                                           Exchange. The firm was acquired by
                                           Wedd Durlacher Mordaunt and Co.                  Richard has significant regulatory
                                           where Jonathan became a partner in               experience, advising the Bermuda
                                           1975. He was the senior dealing partner          Monetary Authority and working with
                                           of the firm on acquisition by Barclays           clients regulated by the PRA, FRC and
                                           Bank to form BZW in 1986.                        FCA as well as other international
                                                                                            regulators. He has a continuing role
                                           Jonathan developed BZW’s Fixed                   advising the Bermuda Monetary Authority
                                           Income business prior to becoming                on regulatory matters. He also has
                                           chief executive of the Global Equities           extensive experience in risk and corporate
                                           Business in 1991. In 1996 he became              governance and significant transaction
                                           deputy chairman of BZW and then vice             experience including redomiciliations.
                                           chairman of Credit Suisse First Boston           Richard is based in Bermuda. Richard also
                                           in 1998 on their acquisition of most of          holds directorships with Geneva Re and
                                           BZW’s businesses. He focused on the              Oakley Capital.
                                           development of Credit Suisse’s Middle
                                           Eastern business. He retired from Credit
                                           Suisse in February 2007.

                                                                    Meetings Total Period                            Meetings Total Period
                                                                    attended   Meetings                              attended   Meetings

                                           Strategic                      1            1    Strategic                      1            1
                                           Board                          2            2    Board                          2            2
                                           Audit Committee                1            1    Audit Committee                1            1

6 Hansa Investment Company Ltd Period End 2020
Strategic Report
                                                                                                                                                                                   Reports
                                                                                                                                                                                   Corporate Governance
                                                                                                                                                                                   Financial Statements
SIMONA HEIDEMPERGHER                                       WILLIAM SALOMON                                            NADYA WELLS

Simona became a Director of the                            William became a Director of the Company                   Nadya became a Director of the
Company in June 2019. Simona                               in June 2019. He remains a Director of                     Company in June 2019. Nadya has
has extensive experience as an                             Hansa Trust PLC whilst it is run down,                     25 years’ experience in emerging and
executive and non-executive director                       joining that board in 1999 and has                         frontier markets as a long-term investor

                                                                                                                                                                                   Financial Statements
                                                                                                                                                                                   Pro-Forma
in a range of companies, including                         a significant, long standing, investment in                and corporate governance specialist.
listed companies, investment funds                         the Company.                                               She spent 13 years as portfolio manager
and research organisations, across                                                                                    with the Capital Group investing in
multiple jurisdictions.                                    William’s experience in investments and                    Global Emerging Markets and prior
                                                           finance is important to the Board in                       to that five years with INVESCO Asset
For the past 17 years, she has been                        developing and monitoring investments                      Management Limited, investing in
director of Merifin Capital, an established                in special investment themes and in the                    public and private equity managing

                                                                                                                                                                                   General Meeting
                                                                                                                                                                                   Notice of the Annual
European privately owned investment                        Company’s strategic investment through                     a closed ended fund. She started her
company. Prior to this she had roles                       Ocean Wilsons Holdings Limited in                          career in management consultancy with
as a research associate at Heidrick                        Wilson Sons.                                               Ernst & Young.
& Struggles, a leading executive-level
                                                           William is the senior partner of Hansa
search and leadership consultancy firm                                                                                She holds non-executive directorships
                                                           Capital Partners LLP (“Hansa Capital
and as project coordinator at Ambrosetti                                                                              at Sberbank of Russia where she is chair
                                                           Partners”), the Portfolio Manager and
Group, an Italian consulting company.                                                                                 of the Audit Committee and sits on risk

                                                                                                                                                                                   Investor Information
                                                           Additional Administrative Services
Currently, Simona is the lead independent                                                                             and strategy committees and at Baring
                                                           Provider, deputy chairman of Ocean
non-executive director of Aquafil SpA                                                                                 Emerging Europe plc where she is Senior
                                                           Wilsons Holdings Limited and its listed
where she is Chairman of the audit and                                                                                Independent Director. She also works
                                                           subsidiary Wilson Sons Limited. He is
risk committee and a member of the                                                                                    in academia conducting research and
                                                           also a shareholder representative on the
remuneration committee. Alongside                                                                                     consulting in the public and private sector
                                                           investment advisory committee for DV4 Ltd
this, Simona is a member of the Board                                                                                 on financing in Global Health. She holds
                                                           (“DV4”) and Chairman of ScotGems PLC
of Directors of the Stramongate Group,                                                                                an MBA from INSEAD, France.
                                                           investment trust. William was formerly the
a Luxembourg public company, TR                                                                                            
                                                           vice chairman of Close Asset Management
European Growth Trust, a Henderson
                                                           Limited and chairman of the merchant
Asset Management Investment Trust
                                                           bank Rea Brothers PLC.
listed on the London Stock Exchange
and FBK Fondazione Bruno Kessler,                               
a research organisation.
                                 Meetings Total Period                                      Meetings Total Period                                     Meetings      Total Period
                                 attended   Meetings                                        attended   Meetings                                       attended        Meetings

Strategic                               1            1     Strategic                               1            1    Strategic                                  1             1
Board                                   2            2     Board                                   2            2    Board                                      2             2
Audit Committee                         1            1     Audit Committee                         1            1    Audit Committee                            1             1

Note:
1) On incorporation on 21 June 2019, the Company was set up with two initial Directors, Dawn Griffiths and Christopher Garrod. Both served from incorporation until
   26 June 2019 when, at the Company's first Board meeting, the current Board members were appointed.
2) As part of the incorporation of the Company, a number of set-up meetings occurred involving, at different times during the process, the initial Directors,
   or combinations of one or more of the current Directors. These meetings have not been listed above as they are not recurring operational meetings.
3) Dividend policy is set by the Board as a whole. At the time of announcement of a quarterly dividend, if such announcement did not coincide with a scheduled
   meeting of the Board, a committee of the Board meets to consider the financial information required before such an announcement can be officially released.
   These meetings are not listed above..

                                                                                                               Hansa Investment Company Ltd Period End 2020 7
STRATEGIC REPORT

The Board
The Board

Board members are selected based on their individual and             INVESTMENT STRATEGY
complementary skills and experience and their ability to commit      The Portfolio Manager, engaged by and acting on behalf of the
sufficient time to drive the Company's success. All Directors will   Company, seeks to build a multi-strategy portfolio by seeking
retire at each AGM and offer themselves for consideration for        investments across four key investment categories, in addition
re‑election. The Board recommends the re‑appointment of each         to its strategic investment in OWHL:
of the Directors, based on their continuing contribution to the
                                                                     • Core – investments, typically through third-party funds,
Company and its shareholders.
                                                                       that the Company can expect to hold throughout the
                                                                       economic cycle;
The Board is charged by the shareholders with the responsibility
for looking after the affairs of the Company. It involves the        • Thematic – investments, typically through third-party funds,
stewardship of the Company’s assets and liabilities and the            that reflect key investment themes which the Portfolio
pursuit of growth of shareholder value in accordance with the          Manager believes will generate excess returns;
investment objective. These responsibilities are discharged in
                                                                     • Diversifying Assets – investments, typically through
many ways and are explained below.
                                                                       third‑party funds and directly, that creates asset
                                                                       diversification within the portfolio; and
INVESTMENT OBJECTIVE AND POLICY, STRATEGY
The Company objective is to grow the net assets of the               • Global Equities – a diversified portfolio of global equities
Company over the medium to long-term by investing in                   identified by the Portfolio Manager as having long term
a diversified and multi-strategy portfolio.                            growth potential.

The Company will seek to achieve its investment objective            While the proportion of the portfolio represented by each
by investing in third-party funds, global equities and other         of these categories will vary over time, the Board establishes
international financial securities. The Company may invest in        parameters for the Portfolio Manager based on its view of the
quoted and unquoted securities. The Company’s portfolio will         global investment markets. At the Period-End, the Board had
typically comprise at least 30 investments.                          set the following guidelines for each category as a percentage
                                                                     of the portfolio (including the strategic investment in OWHL):
The Company holds a strategic position in the share capital of
OWHL which represents the Company’s largest holding. The             • Core: 0-45%
Company will not make further investments into OWHL.                 • Thematic: 0-25%

The Company has no set maximum or minimum exposures to               • Diversifying Assets: 0-40%
any asset class, geography or sector and will seek to achieve        • Global Equities: 0-40%
an appropriate spread of risk by investing in a diversified global
portfolio of securities and other assets.                            Following the Period-End, at its May meeting, the Board
                                                                     increased the upper limit of the Core silo to 50%. All other
                                                                     limits remain unchanged.

8 Hansa Investment Company Ltd Period End 2020
Strategic Report
                                                                                                                    Reports
                                                                                                                    Corporate Governance
                                                                                                                    Financial Statements
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.

                                                                                                                    Financial Statements
                                                                                                                    Pro-Forma
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

                                                                                                                    General Meeting
                                                                                                                    Notice of the Annual
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.

                                                                                                                    Investor Information
The Board’s primary goal is for the Company to generate
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 page 14 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.

                                                                   Hansa Investment Company Ltd Period End 2020 9
STRATEGIC REPORT

Long‑Term Performance

TEN YEAR COMPANY PERFORMANCE STATISTICS
                                        Net Asset Value
                                            per share –
                        Shareholders’     Ordinary and             Annual             Share Price (Bid)                  Discount/(Premium)
Year ended 31 March            Funds       ‘A’ Ordinary         Dividends           Ordinary       ‘A’ Ordinary       Ordinary      ‘A’ Ordinary
2020                       £276.3m                230.2p             3.2p           130.9p            135.5p           43.1%             41.2%
2019                       £337.3m                281.1p             3.2p           195.5p            195.0p           30.5%             30.6%
2018                       £323.1m                269.3p             3.2p           198.5p            195.5p           26.3%             27.4%
2017                       £307.5m                256.3p             3.2p           173.3p            169.6p           32.4%             33.8%
2016                       £255.6m                213.0p             3.2p           146.0p            145.1p           31.5%             31.9%
2015                       £273.3m                227.8p             3.2p           172.0p            165.5p           24.5%             27.3%
2014                       £287.4m                239.5p             3.2p           175.9p            175.5p           26.6%             26.7%
2013                       £259.9m                216.6p             3.0p           166.8p            163.0p           23.0%             24.7%
2012                       £268.2m                223.5p             2.8p           181.0p            178.3p           19.0%             20.2%
2011                       £264.1m                220.1p             0.7p           194.2p            190.5p           11.8%             13.5%
2010                       £215.0m                179.2p             5.0p           151.0p            147.0p           15.7%             18.0%

The table includes information relating to HICL and historic information relating to Hansa Trust PLC. The year ended 31 March 2020
notes HICL information. The historic year ends 2019-2010 all relate to Hansa Trust PLC. 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 there are five times as many shares in issue in each share class of HICL as there were in Hansa Trust PLC.
The Company's KPIs can be found on page 14.
To 31 March 2020             1 year     3 years     5 years   10 years   To 31 March 2020                   1 year   3 years   5 years   10 years

Share Price Total Return                                                 Net Asset Value Total Return Performance
  Ordinary shares (%)     (31.6)% (20.3)% (16.5)%             1.7%        Net Asset Value (%)      (16.9)% (6.7)%              8.0%      44.5%
 ‘A’ non‑voting Ordinary (29.0)% (15.6)% (10.0)%             8.5%
  shares (%)

10 Hansa Investment Company Ltd Period End 2020
Strategic Report
Organisation and Objectives
Organisation and Objectives

                                                                                                                                            Reports
                                                                                                                                            Corporate Governance
                                                                                                                                            Financial Statements
This section explains how the Board has organised the                    the engagement of the Portfolio Manager to be in the best
Company and seeks to deliver its objectives.                             interests of the shareholders.

BOARD COMMITTEES                                                         Remuneration Committee
The Directors consider that, in order to fulfil their responsibilities   The independent members of the Board fulfil the function
as the Directors of the Company, they should all be members of           of the Remuneration Committee. The Committee is chaired

                                                                                                                                            Financial Statements
                                                                                                                                            Pro-Forma
every sub-committee where possible.                                      by Simona Heidempergher. The level of Directors’ fees is
                                                                         monitored annually and will be formally reviewed every three
Audit Committee                                                          years, in the light of their duties and also relative to other
The Audit Committee, which meets at least twice a year,                  comparable companies.
consists of all independent Directors of the Board. Richard
Lightowler is the Chairman of the Audit Committee.                       REQUIREMENTS OF S172 UK COMPANIES ACT
                                                                         In line with disclosures of its UK investment company peers, the

                                                                                                                                            General Meeting
                                                                                                                                            Notice of the Annual
The AIC Code of Corporate Governance ("the AIC Code")                    Board intends to describe how it has met the requirements of
indicates that all independent Directors can be members                  s172 of the UK Companies Act as applicable to your Company.
of the Audit Committee. The Board is of the opinion that,                This includes an explanation of how the Board has sought to
particularly as the Company has relatively few directors,                promote the Company for the benefit of its members, how it
shareholders benefit from the views of all Directors. Therefore,         has taken into account the likely long-term consequences of
Jonathan Davie, as Chairman of the Company, is also                      decisions and how it fosters relationships with stakeholders.
a member of this Committee. The Board further acknowledges               The Board has identified the Company's shareholders and its

                                                                                                                                            Investor Information
that the Code states all Committee members should be                     main service providers as its key stakeholders.
independent. Therefore, William Salomon is not a member of
the Committee.                                                           SHAREHOLDER INTERACTION & PROMOTING THE
                                                                         COMPANY
Nomination Committee                                                     The shareholder base is a mixture of retail investors, wealth
The independent members of the Board fulfil the function of              managers, asset managers and private clients across both
the Nomination Committee. The Committee is chaired by Nadya              classes of the Company's shares. The Board monitors the
Wells. Appointments are made on merit and against objective              changes in each shareholder base at its quarterly Board
criteria in accordance with the AIC Code. The Board considers            meetings. The Company communicates through publication
it is of paramount importance to shareholders that, after                of Year-end and Interim Financial Statements, through detailed
consideration of the skills and experience needed by the Board,          quarterly and monthly factsheets as well as through the
candidates are chosen on the basis of merit only and that there          Company's website. The Company will also hold a UK based
should be no discrimination in the choice of directors for any           shareholder meeting with presentations by the Board and key
reason. The Board has determined that all Directors will retire          service providers to keep shareholders informed.
and offer themselves for re-election each year at the AGM and
this policy includes any Directors appointed during the year.            The Board seeks to understand the opinions of a wide
                                                                         variety of shareholders. This was of particular importance
Management Engagement Committee                                          during the 2019 redomiciliation project whereby the views
The independent members of the Board fulfil the function of              of a significant number of shareholders were solicited as
the Management Engagement Committee. The Committee                       the project progressed and comments were reflected where
is chaired by Jonathan Davie. The level of management fees,              the Board felt it appropriate. The Company maintains
level of service provided and the performance of the Portfolio           a dedicated email address for shareholders to contact the Board
Manager are reviewed on a regular basis to ensure these remain           (HICLenquiry@hansacap.com).
competitive and in the best interests of shareholders. The Board,
after the annual recommendation of this Committee, considers

                                                                                         Hansa Investment Company Ltd Period End 2020 11
STRATEGIC REPORT

Organisation and Objectives
Continued

The Board aims to provide transparency and clarity to investors   Manager to review its ESG processes and report back to the
and to promote demand for the Company's shares, creating          Board in due course. We are of the view that good returns and
a positive impact on the discount.                                well run sustainable business models will go hand in hand.

Promotion of the Company is also part of the discount policy,     SERVICE PROVIDERS
the purpose of which is to encourage outside demand for the       Service Provider Policy
Company’s shares and thereby reduce any discount at which         The Board consists entirely of non-executive Directors; it
the shares sell in relation to the NAV.                           delegates the day to day implementation of its policies to third
                                                                  party service providers. The Board has contractually delegated
The Company has the following initiatives and activities:         to external organisations the management of the investment
                                                                  portfolio, the custodial services which include safeguarding
• Recognising the growing number of retail investors,             of the assets and the day to day accounting and company
  we continue to develop the Period-End and Interim Reports,      secretarial requirements. Each of these contracts is only entered
  the monthly and quarterly factsheet and the website to          into after proper consideration of the quality and cost of
  make them more interesting and easier to use.                   services, which are regularly reviewed and monitored either by
                                                                  the Board or its Committees. The Board recognises it is these
• Edison Research produces written research on the Company,       key service providers and, importantly, their staff who are critical
  its investments and its progress. Edison also facilitates       to the success and smooth running of your Company.
  wider access to IFA and investor platforms. Such research is
  distributed to many thousands of investors.                     The Board, in seeking to engage organisations which can
                                                                  provide the relevant levels of experience and expertise at an
• Edison also facilitates an ongoing program of outreach          acceptable cost, carries out the following activities:
  meetings between the Portfolio Manager and existing and
  potential investors.                                            • Monitors third party suppliers, performance and costs
                                                                    The Board, at its regular meetings, reviews reports prepared
• The remit of Winterflood Securities, as the Company’s             by both the Portfolio Manager and the Administrator,
  corporate stockbroker, is to assist in proactively promoting      which enable it to monitor the performance and costs of
  the Company and enhancing its market coverage.                    the third party suppliers to the Company. The Additional
                                                                    Administrative Services Provider ("AASP") has an ongoing
• In addition to Edison and Winterflood Securities                  dialogue with each supplier to monitor its processes and
  initiatives, our Portfolio Manager, Hansa Capital Partners,       systems and feedback any concerns that might be arising.
  is increasing the numbers of presentations to existing and        In addition, a Director will seek to meet with key suppliers
  potential investors.                                              once a year (or more frequently as is necessary).

We are working with Link Asset Services, the Company’s            • Monitors Portfolio Manager performance
Registrars, and Orient Capital, the Company's Register Analyst,     The Board reviews reports prepared by the Portfolio Manager
to improve our understanding of our shareholder base and to         at its regular meetings, which enables it to monitor the
proactively contact key shareholder groups to promote interest.     investment risks and returns. The Portfolio Manager attends
                                                                    each Board meeting to provide an update on Investment
LONG-TERM IMPACT OF DECISIONS                                       Performance and enable the Directors to actively question
The Board believes that consideration of environmental, social      the risks and investment performance within the portfolio.
and governance ("ESG") factors will play an increasingly
important part in the decision making processes of funds and
their managers the world over. As a Board, we have asked our

12 Hansa Investment Company Ltd Period End 2020
Strategic Report
                                                                                                                                          Reports
                                                                                                                                          Corporate Governance
                                                                                                                                          Financial Statements
• Determines investment strategy, guidelines and restrictions        The terms of the portfolio management agreement permit
  The Board determines the investment strategy in conjunction        either party to terminate the agreement by giving to the other
  with the Portfolio Manager. The strategy is monitored              not less than 12 months’ notice, or such shorter period as
  regularly and refinements are made to it as required,              is mutually acceptable. There is no agreement between the
  with formal review at the Board’s annual strategy meeting.         Company and the Portfolio Manager concerning compensation
                                                                     in respect to the termination of the agreement. In its annual

                                                                                                                                          Financial Statements
                                                                                                                                          Pro-Forma
   The Board issues formal investment guidelines and                 assessment of the Portfolio Manager, the Board concluded
   restrictions, compliance with these is reported by the            that, because of the skills and experience of the management
   Portfolio Manager’s compliance officer on a regular basis and     team it is in the best interest of shareholders that the Portfolio
   is also monitored independently by the Administrator and          Manager remains in place under the present terms. Details
   Alternative Investment Fund Manager ("AIFM").                     of the fees paid to the Portfolio Manager can be found in
                                                                     Note 3 on page 58.
• Determines gearing levels and capital preservation through

                                                                                                                                          General Meeting
                                                                                                                                          Notice of the Annual
  the use of hedging instruments                                     HCP also acts as the Additional Administrative Services Provider
  The Board, taking account of advice from the Portfolio             ("AASP") to the Company. This role ensures a number of the
  Manager, determines the maximum level of borrowings the            day to day processes for the Company are carried out as well
  Company will undertake at the time of borrowing. Details of        as providing oversight of, and a liaison between, a number of
  the borrowing limits can be found on page 15.                      the Company's service providers and the Company itself. HCP
                                                                     is paid £115,000 per annum for this service. HCP is not the
The key service provider relationship to the Company is Hansa        Company Secretary – see below.

                                                                                                                                          Investor Information
Capital Partners as the Portfolio Manager and Additional
Administrative Services Provider to the Company.                     Auditor
                                                                     The Company's Auditor is PricewaterhouseCoopers Ltd
THE PROVIDERS                                                        ("PwC"), a Bermudan registered firm. The Board have
Portfolio Manager & Additional Administrative                        developed a strong working relationship during the Auditor's
Services Provider                                                    first year with the Company and have been happy with
Hansa Capital Partners LLP ("HCP") is the Portfolio Manager          the rigour and challenge offered. The reappointment of
for the Company. It is responsible for all assets in the portfolio   PwC as Auditor to the Company will be proposed at the
other than the Company's investment in OWHL. The Board is            forthcoming AGM.
in regular contact with the investment management team at
HCP which is led by Alec Letchfield. Additionally, Alec Letchfield   Auditor independence rules restrict the amount and type of
is invited to quarterly meetings of the Board to formally            non-audit related work that can be performed by a company's
present portfolio updates and discuss market trends. The             auditor. Any non-audit related work must be pre-approved by
Portfolio Manager's detailed review of the year can be found         the Board. Currently, PwC provides only audit services to the
on page 20.                                                          Company (Details in Note 4 on page 59).

HCP charges an investment management fee at an annual rate           Company Secretary
of 1% of the net assets of the Company (after any borrowings)        The Company engages Conyers Corporate Services (Bermuda)
but, after deducting the value of the investment in OWHL, on         Ltd ("Conyers") as its Company Secretary. During the period to
which no fee is payable. Hanseatic Asset Management LBG,             31 March 2020, the Company Secretary has charged £17,647
a company connected to Hansa Capital Partners LLP and which          for the period ended 31 March 2020.
is also the AIFM, separately charges an investment management
fee to the investment subsidiary of OWHL.

                                                                                     Hansa Investment Company Ltd Period End 2020 13
STRATEGIC REPORT

Organisation and Objectives
Continued

Alternative Investment Fund Manager                                    Additionally, whilst not specifically KPIs, the cost of managing
As a Bermudan resident, the Company is defined as                      the Company is monitored against the NAV (the ratio between
a non‑EU Alternative Investment Fund ("AIF") under the EU's            costs and NAV is also known as the ‘ongoing charges
Alternative Investment Fund Manager's Directive ("AIFMD").             percentage per annum ratio’); and the discount/premium the
As such, the Company and the AIFM are only subject to                  shares sell at in relation to the NAV are likewise monitored.
the AIFMD rules in a limited way – specifically in relation to
marketing of the Company's shares in the EU. The Company               The Board of Directors monitors the returns made in
appointed Hanseatic Asset Management LGB, with effect from             absolute (firstly) and relative (secondly) terms against the KPIs
29 August 2019, to act as its AIFM with responsibilities for the       established. The comparisons are made over 1, 3, 5 and 10 year
Portfolio Management and Risk Management. The AIFM has                 time horizons.
sub-contracted to Hansa Capital Partners LLP the provision of
Portfolio Management services. The AIFM does not charge                i) Shareholders – Total Returns
a direct fee for its services although it does recharge any third
                                                                       To 31 March 2020                  1 year    3 years    5 years   10 years
party fees incurred.
                                                                       Share Price Total Return
                                                                         Ordinary shares             (31.6)% (20.3)% (16.5)%            1.7%
Administrator
                                                                        ‘A’ non‑voting Ordinary     (29.0)% (15.6)% (10.0)%            8.5%
The Company engages Maitland Administration Services Limited
                                                                         shares
as its Administrator. The Administrator has charged £81,653 for
the period ended 31 March 2020.
                                                                       ii) Company – Total Returns
                                                                       These comparisons are used to determine the effectiveness
Custodian
                                                                       of the Investment Strategy and of the Portfolio Management.
The Company has engaged Banque Lombard Odier & Cie SA
                                                                       The KPIs below should also be noted.
("Lombard Odier") as the Company’s Custodian. During the
period to 31 March 2020, Lombard Odier charged £78,806 for             To 31 March 2020                  1 year    3 years    5 years   10 years

the Custodial service.                                                 NAV                           (16.9)%      (6.7)%     8.0% 44.5%
                                                                       Relative comparison
KEY PERFORMANCE INDICATORS AND OTHER MEASURES                          Peer group average            (13.5)%      (6.7)%     10.3% 62.9%
The Board, regularly and at least quarterly, reviews the returns       * See website for peer group members
and the performance of the Company, including an analysis
using the KPIs listed below.                                           iii) Discount/Premium
                                                                       A comparison is made between the (discount)/premium of the
The Board considers that the use of a single benchmark will            Company’s two classes of shares, those of the Company’s peer
not always offer shareholders the relevance and the clarity            group and of the AIC average.
needed with regard to the performance of their Company
                                                                                                         1 year    3 years    5 years   10 years
against its investment objective. The overall assessment of the
                                                                       To 31 March 2020                average    average    average    average
performance of the Company with reference to the KPIs is given
                                                                       Ordinary shares (%)             (33.5)     (29.2)     (29.3)     (25.4)
by the Chairman is his report on page 2.
                                                                       ‘A’ non-voting Ordinary         (33.5)     (30.8)     (30.9)     (26.9)
                                                                       shares (%)
Returns are compared with a number of measures including the
                                                                       Peer group (%)                   (7.4)      (7.5)      (7.4)       (7.4)
return of a government bond, using the 10 year UK Gilt Return
                                                                       AIC (%)                          (6.4)
(FTSE All Stocks Gilts Total Return Index); to the rate of inflation
(real returns are important to shareholders) and with those of         Note: AIC only produces AIC average for 1 year.
our peer group and appropriate indices for different elements of
the portfolio.

14 Hansa Investment Company Ltd Period End 2020
Strategic Report
                                                                                                                                              Reports
                                                                                                                                              Corporate Governance
                                                                                                                                              Financial Statements
During the period, the Board considered the following Investment          • Core – investments, typically through third-party funds,
Companies to be HICL's Peers (noted with their AIC Sector):                 that the Company can expect to hold throughout the cycle;
Artemis Alpha Trust (UK All Companies)                                    • Thematic – investments, typically through third-party funds,
AVI Global Trust (Global)                                                   that reflect key investment themes which the Portfolio
Caledonia (Global)                                                          Manager believes will generate excess returns;

                                                                                                                                              Financial Statements
                                                                                                                                              Pro-Forma
Capital Gearing (Flexible)
                                                                          • Diversifying Assets – investments, typically through
Fidelity Special Values (UK All Companies)
                                                                            third‑party funds and directly, that creates asset
Henderson Opportunities (UK All Companies)
                                                                            diversification within the portfolio;
Henderson Alternative Strategies (Flexible)
RIT Capital Partners (Flexible)                                           • Global Equities – a diversified portfolio of global equities
Ruffer Investment Co (Flexible)                                             identified by the Portfolio Manager as having long-term
Witan (Global)                                                              growth potential.

                                                                                                                                              General Meeting
                                                                                                                                              Notice of the Annual
iv) Expense ratios
                                                                          While the proportion of the portfolio represented by each
To 31 March 2020              1 year     3 years     5 years   10 years
                                                                          of these categories will vary over time, the Board may set
Ongoing annual charges (%)      1.1        1.2         1.1        1.0
                                                                          parameters for the Portfolio Manager based on its view of the
To comply with the Packaged Retail and Insurance-based                    global investment markets. At the current time, the Board has
Investment Products Regulation (“PRIIP”), the Company has                 set the following guidelines for each category as a percentage
issued a PRIIP's Key Information Document (“KID”) for each                of the portfolio value (including the strategic investment
of its two share classes. In the PRIIPs, KID regulations are very         in OWHL):

                                                                                                                                              Investor Information
prescriptive as to how costs are calculated and presented. In
particular, as well as the costs of the Company itself noted              • Core: 0-45%
above, the PRIIPs calculation also incorporates the costs of the
                                                                          • Thematic: 0-25%
directly held fund investment vehicles themselves, but not those
for directly held equities. Based upon the financial results for          • Diversifying Assets: 0-40%
the year to 31 March 2020, the PRIIPs KID cost ratio is 1.82%
                                                                          • Global Equities: 0-40%
per annum.
                                                                          The above limits were in place throughout the period.
v) Key Performance Indicators
                                                                          Subsequent to the period end, but prior to the date of signing
The following are the KPIs the Board uses to assess the returns
                                                                          of this Report, the upper limit for Core assets was increased
of elements of the portfolio and of the Company as a whole.
                                                                          to 50%.

To 31 March 2020                1 year    3 years    5 years   10 years
                                                                          Borrowing Limits
FTSE UK Gilts All Stocks      9.9%       14.5%      26.1%      77.3%
                                                                          The Board believes shareholders’ returns may be enhanced
TR Index
                                                                          if the Company borrows money at appropriate times for the
UK CPI Inflation              1.5%       6.0%        8.9% 22.4%           purpose of investment. The Company has an unsecured lending
MSCI ACWI NR (GBP)           (7.0)%      5.8%       37.8% 116.9%          facility through its Custodian, Lombard Odier. The Board have
                                                                          agreed to a nominal maximum loan of £30m, subject to there
LIMITS                                                                    being sufficient value and diversity within the portfolio to meet
Investment Guidelines                                                     the lender's borrowing requirements. The Portfolio Manager
The Portfolio Manager, on behalf of the Company, seeks to                 is able to utilise that facility as required up to the upper
build a multi-strategy portfolio by seeking investments across            limit available.
four key investment categories under its mandate:

                                                                                          Hansa Investment Company Ltd Period End 2020 15
STRATEGIC REPORT

Organisation and Objectives
Continued

PRINCIPAL RISKS                                                     Internal Risks
The Board reviews the principal risks from the perspective          Internal and operational risks to shareholders and their
of the long-term shareholders, the main risk being that over        returns are:
the long‑term (which we determine to be greater than five
                                                                    • portfolio (stock and sector selection and concentration),
years) they do not make a return from their investment in the
Company. The Board considers and monitors the principal risks       • balance sheet (gearing),
facing the Company, including those that would threaten its
                                                                    • administrative mismanagement. In respect of the risks
business model, future returns, solvency and liquidity. The Board
                                                                      associated with administration, changes to the current
considers the risks the Company, and therefore shareholders,
                                                                      taxation environment of Bermuda.
face can be divided into external and internal risks.
                                                                    The Board also considers the risks to the Company’s two
External risks                                                      share prices, apart from those mentioned above, which
External risks to shareholders and their returns are those that     includes the risk of higher discounts. The Board monitors the
can severely influence the investment environment within            discount and seeks to identify the drivers and manage through
which the Company operates. These risks include anti-business       transparent communication and shareholder engagement.
government policies, protracted economic recession, declining       However, given the Company’s stated objective of increasing
corporate profitability, increased taxation, high unemployment      shareholder value over the long-term, the Board does not
and high, uncontrolled, inflation. The impact of such an            consider short‑term NAV or share price volatility to be a risk to
environment could lead to sharp rises in interest rates and         long‑term shareholders.
a decline in equity and bond markets. Deflation is also a source
of concern in some countries, but unless deflation accelerated      Details of how the principal risks arising from financial
sharply it is not thought to be a significant impediment            instruments (as determined by the Financial Reporting Council)
to growth. However, it may lead to negative interest rates          are managed, have been summarised in Note 20 of the
which could damage the banking system's profitability and           Financial Statements on pages 63 to 65.
the levels of savings available for investment. At their Board
meetings and at the annual strategy meeting, the Directors          Covid-19
and the Management consider long-term risks that concern            The Board focuses on events that damage economies and
them, including:                                                    which may, as a result, impact the Company’s ability to make
• Instability – political and economic – particularly associated    a return for shareholders over the medium to long-term.
  with Brazil.                                                      From its recognition as a growing issue by the World Health
                                                                    Organisation in early 2020, Covid-19 continues to disrupt
• Economic, currency and equity declines.
                                                                    economies across the globe. At this stage it is unclear as to the
• Societal and structural changes, regardless of source/reason      longer term impact of the disease on both broader economies,
  but quite possibly triggered by Covid-19, that potentially        corporate profitability and potential company defaults.
  impact the Company’s investment strategy and its ability to       We are however comforted by the extent and speed of both
  generate growth over the medium to long‑term.                     government and central bank actions which hopefully will help
                                                                    counterbalance the impacts of the disease and enable stock
• The growth of global debt.
                                                                    markets to look through to more normalised market conditions.

It should be stressed these are the external risks which most
                                                                    That said, this report is being delivered at a time when
concern the Directors and the Management, not forecasts
                                                                    the future is very uncertain, with a wide range of possible
of future events. The mitigation of these risks is achieved by
                                                                    outcomes. In its report, the Portfolio Manager comprehensively
sensible stock and sector diversification and adherence to the
                                                                    explains both the portfolio performance in the last quarter,
Board’s investment restrictions and guidelines.
                                                                    when the impact of the virus compared to previous pandemics
                                                                    became clearer, as well as its views for the future.

16 Hansa Investment Company Ltd Period End 2020
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